SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

£	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2011

£	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______ to __________

COMMISSION FILE NUMBER: 333-128532

CHISEN ELECTRIC CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		20-2190950
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

No. 1188, Taihu Avenue, Changxing Economic Development Zone, Changxing, Zhejiang Province,

The People’s Republic of China

(Address of principal executive offices)

(86) 572-6267666

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes S No £

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer £

Accelerated Filer S

Non-Accelerated Filer £

Smaller Reporting Company S

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of February 13, 2012, the registrant had 500,000,000 shares of common stock, par value $0.001 per share, issued and outstanding.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION		2

ITEM 1. FINANCIAL STATEMENTS		2

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION		25

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		36

ITEM 4. CONTROLS AND PROCEDURES		37

PART II OTHER INFORMATION		38

ITEM 1. LEGAL PROCEEDINGS		38

ITEM 1A. RISK FACTORS		38

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		38

ITEM 3. DEFAULTS UPON SENIOR SECURITIES		38

ITEM 4. MINING SAFETY DISCLOSURE		38

ITEM 5. OTHER INFORMATION		38

ITEM 6. EXHIBITS		39

SIGNATURES		47

EXHIBIT 31.1

EXHIBIT 31.2

EXHIBIT 32.1

EXHIBIT 32.2

-1-

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Chisen Electric Corporation

Index to Consolidated Financial Statements

For the nine months ended December 31, 2011

		Page

Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income		3 – 4

Unaudited Condensed Consolidated Balance Sheets		5 – 6

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity		7

Unaudited Condensed Consolidated Statements of Cash Flows		8 – 9

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements		10 – 24

-2-

Chisen Electric Corporation

Unaudited Condensed Consolidated Statements of Operations and

Other Comprehensive Income

For the nine months ended December 31, 2011 and 2010

			Three months ended December 31						Nine months ended December 31
			2011			2010			2011			2010
	Note		US$’000			US$’000			US$’000			US$’000
Operating revenues:
Net sales to third parties				35,160			67,670			102,900			194,712

Cost of sales				(28,073	)		(59,200	)		(87,315	)		(170,460	)

Gross income				7,087			8,470			15,585			24,252

Operating expenses:
Sales, marketing and distribution				(2,390	)		(2,560	)		(7,031	)		(8,111	)
General and administrative				(2,812	)		(987	)		(6,597	)		(2,628	)

Operating income				1,885			4,923			1,957			13,513

Other income, net				418			276			619			889
Loss on disposal of scrap inventories				(6,092	)		(2,307	)		(6,092	)		(2,307	)
Provision for inventories				(5,431	)		-			(5,431	)		-
Interest income				479			117			1,184			315
Interest expense				(2,009	)		(940	)		(4,846	)		(2,231	)

(Loss) Income before income taxes				(10,750	)		2,069			(12,609	)		10,179

Income taxes benefit (expense)		4		434			(1,260	)		352			(2,421	)

(Loss) Income before extraordinary items				(10,316	)		809			(12,257	)		7,758

Extraordinary gain (less applicable income taxes of US$0)		19(a)		-			1,738			13,117			1,738
Extraordinary loss (less applicable income taxes of US$0)		19(b)		-			-			(1,848	)		-

Net (loss) income including non-controlling interests				(10,316	)		2,547			(988	)		9,496

Less: Net income attributable to non-controlling interests				(53	)		-			(64	)		-

Net (loss) income attributable to CIEC common stockholders				(10,369	)		2,547			(1,052	)		9,496

Amounts attributable to CIEC common stockholders

(Loss) Income before extraordinary item				(10,369	)		809			(12,321	)		7,758

Extraordinary gain				-			1,738			13,117			1,738
Extraordinary loss				-			-			(1,848	)		-

Net (loss) income attributable to CIEC common stockholders				(10,369	)		2,547			(1,052	)		9,496

Other comprehensive income
Foreign currency translation adjustment				256			561			1,297			1,115

Comprehensive (loss) income				(10,113	)		3,108			245			10,611

The financial statements should be read in conjunction with the accompanying notes.

-3-

Chisen Electric Corporation

Unaudited Condensed Consolidated Statements of Operations and

Other Comprehensive Income

For the nine months ended December 31, 2011 and 2010

		Three months ended December 31					Nine months ended December 31
		2011			2010		2011			2010
	Note	Shares			Shares		Shares			Shares

(Loss) Earnings per share	3
Weighted average number of common stock outstanding - basic and diluted			500,000,000			500,000,000		500,000,000			500,000,000

			US$			US$		US$			US$

Net (loss) income per share of common stock outstanding before extraordinary items - basic and diluted			(0.021	)		0.002		(0.025	)		0.016

Net (loss) income per share of common stock outstanding after extraordinary items - basic and diluted			(0.021	)		0.005		(0.002	)		0.019

The financial statements should be read in conjunction with the accompanying notes.

-4-

Chisen Electric Corporation

Unaudited Condensed Consolidated Balance Sheets

As of December 31, 2011 and March 31, 2011

			As of December 31,		As of March 31,
			2011		2011
	Note		US$’000		US$’000
ASSETS

Current assets:
Cash and cash equivalents				7,170		7,630
Restricted bank balances		5		64,947		44,289
Other financial assets		6		755		4,662
Trade receivables, net				40,518		65,233
Other receivables				8,699		4,618
Compensation receivable		19(a)		7,978		-
Prepayments				9,264		6,564
Due from a related party		14(b)		5		8
Inventories, net		7		22,615		25,173
Assets classified as held for sale				-		2,582
Deferred tax assets		4(c)		1,302		-

Total current assets				163,253		160,759

Available-for-sale financial assets		8		2,961		2,761
Long-term land lease prepayments, net		10		5,055		4,249
Property, plant and equipment, net		9		49,266		16,633
Deposit for acquisition of land and property, plant and equipment				8,259		3,838

Total assets				228,794		188,240

The financial statements should be read in conjunction with the accompanying notes.

-5-

Chisen Electric Corporation

Unaudited Condensed Consolidated Balance Sheets

As of December 31, 2011 and March 31, 2011

			As of December 31,		As of March 31
			2011		2011
	Note		US$’000		US$’000
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Trade payables				9,801		15,765
Notes payable		11		13,224		48,640
Accrued expenses and other accrued liabilities				20,311		11,065
Due to related parties		14(b)		3,356		4,126
Income taxes payable				523		955
Short-term bank borrowings		12		139,512		65,159
Liabilities directly associated with assets classified as held for sale				-		1,109

Total current liabilities				186,727		146,819

Government subsidies		13		60		95
Deferred tax liabilities		4(c)		460		460

Total non-current liabilities				520		555

Total liabilities				187,247		147,374

Commitments and contingencies		15		-		-

Stockholders’ equity:
Preferred stock, US$0.001 par value each:
10,000,000 shares authorized and no shares issued and outstanding				-		-
Common stock, US$0.001 par value each:
1,000,000,000 shares authorized, 500,000,000 shares issued and outstanding as of December 31, 2011 and 50,000,000 shares issued and outstanding as of March 31, 2011				500		50
Capital reserves				144		144
Statutory reserves				4,142		3,704
Accumulated other comprehensive income				3,788		2,491
Retained earnings				32,441		34,381

Total CIEC stockholders’ equity				41,015		40,770

Non-controlling interests				532		96

Total stockholders’ equity				41,547		40,866

Total liabilities and stockholders’ equity				228,794		188,240

The financial statements should be read in conjunction with the accompanying notes.

-6-

Chisen Electric Corporation

Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity

For the nine months ended December 31, 2011

	Common stock issued								Accumulated other					Total CIEC			Non-		Total
	Number of shares		Amount		Capital reserves		Statutory reserves		comprehensive income		Retained earnings			stockholders’ equity			controlling interests		stockholders’ equity
			US$’000		US$’000		US$’000		US$’000		US$’000			US$’000			US$’000		US$’000

Balance as of April 1, 2011		50,000,000		50		144		3,704		2,491		34,381			40,770			96		40,866

Net income		-		-		-		-		-		(1,052	)		(1,052	)		64		(988	)

Forward stock split (Note)		450,000,000		450		-		-		-		(450	)		-			-		-

Transfer to statutory reserves		-		-		-		438		-		(438	)		-			-		-

Foreign currency translation adjustment		-		-		-		-		1,297		-			1,297			-		1,297

Capital contributed by non-controlling interests		-		-		-		-		-		-			-			372		372

Balance as of December 31, 2011		500,000,000		500		144		4,142		3,788		32,441			41,015			532		41,547

Note:

In October 2011, the board of directors approved a 10-for-1 forward stock split of the common stock of the Company without changing its par value, which has become effective since November 22, 2011. The difference in value of common stock issued without changing the par value as a result of the forward stock split of US$450,000 has been debited to retained earnings.

The financial statements should be read in conjunction with the accompanying notes.

-7-

Chisen Electric Corporation

Unaudited Condensed Consolidated Statements of Cash Flows

For the nine months ended December 31, 2011 and 2010

			Nine months ended December 31,
			2011			2010
	Note		US$’000			US$’000
Cash flows from operating activities
Net (loss) income				(988	)		9,496
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation of property, plant and equipment				1,412			807
Impairment loss on plant and machinery and leasehold improvement		19(b)		1,848			-
Net gain on disposal of land use rights and buildings		19(a)		(13,117	)		-
Loss on disposal of property, plant and equipment				-			18
Amortization of long-term land lease prepayments				71			12
Exchange differences				87			252
Provision for warranty costs				457			818
Government grant recognized				(38	)		(36	)
Provision for inventories				5,431			-
Deferred taxes				(1,302	)		-
Changes in assets and liabilities:
Other financial assets				4,052			1,718
Trade receivables, net				26,746			(17,812	)
Other receivables				(4,050	)		(7,080	)
Prepayment				(2,497	)		(2,034	)
Due from related parties				4			4
Inventories				(2,143	)		4,465
Trade payables				(6,453	)		(266	)
Notes payable				(36,931	)		12,553
Accrued expenses and other accrued liabilities				8,444			686
Due to related parties				(899	)		2,393
Income taxes payable				(461	)		958

Net cash (used in) provided by operating activities				(20,327	)		6,952

Cash flows from investing activities
Purchase of property, plant and equipment				(32,546	)		(3,396	)
Addition of long-term land lease prepayment				(745	)		-
Proceeds on disposal of property, plant and equipment				-			1
Compensation received for loss on plant and machinery and leasehold improvement				6,658			-
Investment in restricted bank balances, net				(19,279	)		(4,386	)
Deposit paid for acquisition of land and buildings				(7,146	)		(798	)
Acquisition of available-for-sale financial assets				-			(1,826	)

Net cash used in investing activities				(53,058	)		(10,405	)

The financial statements should be read in conjunction with the accompanying notes.

-8-

Chisen Electric Corporation

Unaudited Condensed Consolidated Statements of Cash Flows

For the nine months ended December 31, 2011 and 2010

	Nine months ended December 31,
	2011			2010
	US$’000			US$’000
Cash flows from financing activities
Proceeds from short-term bank loans		42,662			14,368
Repayment of short-term bank loans		(31,721	)		(10,209	)
Proceeds from bills financing		91,686			3,025
Repayment of bills financing		(30,304	)		(3,781	)
Capital contributed by non-controlling interest		372			88

Net cash provided by financing activities		72,695			3,491

Net (decrease) increase in cash and cash equivalents		(690	)		38

Cash and cash equivalents, beginning of period		7,630			6,019

Effect on exchange rate changes		230			180

Cash and cash equivalents, end of period		7,170			6,237

Supplemental disclosure of cash flow information
Interest received		1,184			315
Interest paid		5,271			2,186
Tax paid		1,382			1,458

The financial statements should be read in conjunction with the accompanying notes.

-9-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

ORGANIZATION AND PRINCIPAL ACTIVITIES

Chisen Electric Corporation (“Chisen Electric”), formerly known as World Trophy Oufitters, Inc., was formed as a Nevada corporation on January 13, 2005. Its common stocks are currently trading on the Over-The-Counter Quote Board under the symbol “CIEC”.

Chisen Electric is an investment holding company with no operations. The principal activities of its subsidiaries (together with Chisen Electric, collectively referred as “the Company”) are the manufacture and sales of sealed lead-acid battery products and investment holding.

As of May 27, 2011, Chisen Electric has fully disposed of its interest in Chisen Technology Holdings Corporation (“Chisen Technology”) for a cash consideration of US$10. Chisen Technology has no operation since the date of incorporation. The fair value of Chisen Technology at the date of disposal was net liabilities of US$496. The disposal of Chisen Technology has no significant impact on the value of the Company’s assets, operating cash flows as well as earnings per share.

Details of Chisen Electric’s subsidiaries as of December 31, 2011 are as follows:

Name	Place and date of establishment / incorporation	Percentage of effective equity interest / voting right attributable to the Company	Principal activities

Fast More Limited (“Fast More”)	Hong Kong December 17, 2007	100%	Investment holding

Zhejiang Chisen Electric Co., Limited * (“Zhejiang Chisen”) (Formerly known as Changxing Chisen Electric Co., Limited)	Zhejiang, the People’s Republic of China (“PRC”) February 25, 2002	100%	Manufacture and sales of sealed lead-acid battery products

Chisen Electric Jiangsu Co., Limited * (“Chisen Jiangsu”)	Jiangsu, PRC August 23, 2010	98%	Manufacture and sales of sealed lead-acid battery products

These are direct translation of the name in Chinese for identification purpose only and are not the official name in English.

-10-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentations

The accompanying unaudited condensed consolidated financial statements as of December 31, 2011 have been prepared based upon Securities and Exchange Commission rules that permit reduced disclosure for interim periods and include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the financial position, results of operations and cash flows as of December 31, 2011 and for all periods presented. Information as of March 31, 2011 was derived from the audited consolidated financial statements of the Company for the year ended March 31, 2011.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“USGAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Chisen Electric's Form 10-K filed on June 14, 2011 for the year ended March 31, 2011. The results of operations for both the three months and nine months ended December 31, 2011 are not necessarily indicative of the operating results to be expected for the full year ending March 31, 2012.

The condensed consolidated financial statements and accompanying notes are presented in United States dollars and prepared in conformity with USGAAP which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of consolidation

The consolidated financial statements include the financial information of Chisen Electric and its subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation.

Recent accounting pronouncement

In December 2011, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (ASU) 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities”. The amendments in this ASU require an entity to disclose information about offsetting and related arrangements on its financial position. This includes the effect or potential effect of rights of offset associated with an entity’s recognized assets and recognized liabilities and require improved information about financial instruments and derivative instruments that are either (1) offset in accordance with Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with Section 210-20-45 or Section 915-10-45. The amendments are effective for annual reporting periods beginning on or after January 1, 2013 and retrospective disclosure is required for all comparative periods presented. No early adoption is permitted. The Company believes that the adoption of ASU 2011-11 will not have any impact on the Company's consolidated results of operation and financial condition.

-11-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

(LOSS) EARNINGS PER SHARE

Basic (loss) earnings per share is computed by dividing (loss) income available to common stockholders by the weighted-average number of common stocks outstanding during the period. Diluted (loss) earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common stocks that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no potentially dilutive securities for both the three months and nine months ended December 31, 2011 and 2010. As a result of a forward stock split, the calculation of basic and diluted (loss) earnings per common stock for all periods presented are adjusted retrospectively.

INCOME TAXES

Chisen Electric had a net operating loss carry-forward for income tax reporting purposes that might be offset against future taxable income. No tax benefit has been reported in the financial statements, because Chisen Electric believes that it is more likely than not that the carry-forwards will finally expire and therefore cannot be used. Accordingly, the potential tax benefits of the loss carry-forwards are offset by a valuation allowance of the same amount.

Chisen Electric’s subsidiaries are subject to income taxes on an entity basis on income arising in or derived from the tax jurisdictions in which each entity domiciles and operates.

Hong Kong Profits Tax has not been provided as Fast More had no assessable profit for the period.

Zhejiang Chisen and Chisen Jiangsu are subject to state and local enterprise income taxes in the PRC at a standard rate of 25%. Since January 1, 2011, Zhejiang Chisen has been designated by the local tax authority as “New and High Technology Enterprises”. As a result, the effective tax rate applicable to Zhejiang Chisen was 15% commencing on January 1, 2011.

Dividends payable by a foreign invested enterprise in the PRC to its foreign investors in Hong Kong are subject to a 10% withholding tax. No deferred tax expenses on undistributed profits were charged to the statement of operations for both the three months and nine months ended December 31, 2011 and 2010.

As of December 31, 2011, the Company has estimated unused tax losses of approximately US$8,700,000 (2010: US$Nil) available for offset against future profits. Deferred tax benefits of US$689,000 (2010: US$Nil) and US$1,302,000 (2010: US$Nil) were credited to the statement of operations for the three months and nine months ended December 31, 2011.

-12-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

INCOME TAXES (CONTINUED)

(a)

Income tax (benefits) expenses are comprised of the following:

	Three months ended December 31,					Nine months ended December 31,
	2011			2010		2011			2010
	US$’000			US$’000		US$’000			US$’000

Current taxes arising in the PRC:
Corporate income tax		255			322		950			1,483
Withholding tax on dividends declared by the PRC foreign investment enterprise		-			938		-			938

		255			1,260		950			2,421

Deferred taxes arising in the PRC:
Benefit of tax loss recognized		(689	)		-		(1,302	)		-

		(434	)		1,260		(352	)		2,421

The FASB ASC Topic 740 “Income Taxes” clarifies the accounting and disclosure for uncertainty in tax positions, as defined, and prescribes the measurement process and a minimum recognition threshold for a tax position, taken or expected to be taken in a tax return, that is required to be met before being recognized in the financial statements. Under ASC 740, the Company must recognize the tax benefit from an uncertain position only if it is more-likely-than-not the tax position will be sustained on examination by the tax authority, based on the technical merits of the position. The tax benefits recognized in the financial statements attributable to such position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate resolution of the position.

Subject to the provision of ASC 740, the Company has analyzed its filing positions in all of the jurisdictions where it is required to file income tax returns. As of December 31, 2011 and March 31, 2011, the Company has identified the following jurisdictions as “major” tax jurisdictions, as defined, in which it is required to file income tax returns namely the United States, Hong Kong and the PRC. Based on the evaluations noted above, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its consolidated financial statements.

As of December 31, 2011 and March 31, 2011, the Company had no unrecognized tax benefits or accruals for the potential payment of interest and penalties. The Company’s policy is to record interest and penalties in this connection as a component of the provision for income tax expense. For both the three months and nine months ended December 31, 2011 and 2010, no interest or penalties were recorded.

-13-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

INCOME TAXES (CONTINUED)

(b)

Reconciliation from the expected income tax expenses calculated with reference to the statutory tax rate in the PRC of 25% (2010: 25%) is as follows:

	Three months ended December 31,						Nine months ended December 31,
	2011			2010			2011			2010
	US$’000			US$’000			US$’000			US$’000

Expected income tax expenses		(2,687	)		517			(3,152	)		2,545
Effect on tax incentives / holiday		446			(259	)		861			(1,273	)
Withholding tax		-			938			-			938
Non-deductible items		2,564			-			2,564			-
Non-taxable income		-			-			-			(34	)
Others		(757	)		64			(625	)		245

Income tax (benefits) expenses		(434	)		1,260			(352	)		2,421

(c)

The following is the analysis of major deferred taxation (liabilities) assets recognized by the Company and movement thereon:

	Withholding tax on undistributed earnings of a PRC subsidiary			Tax loss of a PRC subsidiary		Total
	US$’000			US$’000		US$’000

As of March 31, 2011 and 2010		(460	)		-		(460	)
Credited to consolidated statement of operations and other comprehensive income		-			1,302		1,302

As of December 31, 2011		(460	)		1,302		842

-14-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

RESTRICTED BANK BALANCES

Restricted bank balances represented time deposits with original maturity within nine months to secure banking facilities granted by various financial institutions as follows:

			As of December 31,		As of March 31,
	Note		2011		2011
			US$’000		US$’000

Notes payable		11		21,427		30,167
Bills financing		12		38,797		14,122
Short-term bank loans		12		4,723		-

				64,947		44,289

OTHER FINANCIAL ASSETS

Other financial assets represented notes receivable from customers for the settlement of trade receivable balances. As of December 31, 2011 and March 31, 2011, all notes receivable were guaranteed by established banks in the PRC and had maturities of 6 months or less from the date of issue. The fair value of the notes receivable approximated their carrying value.

INVENTORIES, NET

Inventories consisted of the following:

	As of December 31,			As of March 31,
	2011			2011
	US$’000			US$’000

Raw materials		3,621			3,669
Work-in-progress and semi-finished goods		11,790			7,473
Finished goods		12,690			14,031
		28,101			25,173
Provision for slow-moving and obsolete items		(5,486	)		-

		22,615			25,173

8.	AVAILABLE-FOR-SALE FINANCIAL ASSETS

Available-for-sale financial assets as of December 31, 2011 and March 31, 2011 represented investment in unlisted equity securities and are recorded at cost. The management has estimated that the recoverable amount of the assets exceed their carrying value.

-15-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment is summarized as follows:

	As of December 31,			As of March 31,
	2011			2011
	US$’000			US$’000

Buildings		12,994			3,001
Leasehold improvements		1,421			1,016
Plant and machinery		19,323			4,638
Motor vehicles		1,548			1,398
Furniture, fixtures and office equipment		4,233			1,743
Construction in progress		15,179			6,939

		54,698			18,735

Accumulated depreciation and impairment loss		(5,432	)		(2,102	)

		49,266			16,633

Depreciation expenses were approximately US$1,173,000 and US$267,000 for the three months ended December 31, 2011 and 2010, respectively, and US$1,412,000 and US$807,000 for the nine months ended December 31, 2011 and 2010, respectively.

During the period ended December 31, 2011, the Company was advised by the local authority in Changxing that the original production technique, external battery formation, can no longer be used after October 31, 2012. Some of the Company’s machinery and equipment cannot be used under the tightened policy. Management revised the estimated remaining useful life of those machinery and equipment to 10 months. This change of accounting estimate increased cost of sales and net losses by US$452,000 and increased the losses per share by US$0.001 for the three and nine months ended December 31, 2011.

10.

LONG-TERM LAND LEASE PREPAYMENTS, NET

	As of December 31,			As of March 31,
	2011			2011
	US$’000			US$’000

Prepaid land use rights		5,130			4,252
Accumulated amortization		(75	)		(3	)

		5,055			4,249

-16-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

10.

LONG-TERM LAND LEASE PREPAYMENTS, NET (CONTINUED)

Lease prepayment as of December 31, 2011 and March 31, 2011 represented the land use rights located in the PRC, which are amortized over the leasehold periods.

Amortization expense for the three months period ended December 31, 2011 and 2010 were US$25,000 and US$4,000, respectively, and US$71,000 and US$12,000 for the nine months ended December 31, 2011 and 2010, respectively.

11.

NOTES PAYABLE

Notes payable were issued by the Company to creditors with the banker’s acceptance payable at the maturity date for the purchase of raw materials for production exclusively. The Company has to repay the notes within nine months from date of issuance and service fees would be charged by banks for the issuance of the notes. The notes payable were collateralized by restricted bank balances and a long-term land lease prepayment with carrying amount of US$760,000 as of December 31, 2011 (as of March 31, 2011: US$Nil).

In addition, various parties have issued guarantee against these notes payable as follows:

	As of December 31,		As of March 31,
	2011		2011
	US$’000		US$’000

Corporate and personal guarantees jointly issued by related parties (Note 14(d))		3,857		17,557
Corporate guarantees issued by third parties		1,968		3,435
Corporate guarantees jointly issued by related parties and third parties (Note 14(d))		787		-

As of December 31, 2011 and March 31, 2011, the Company had unutilized banking facilities of approximately US$29,438,000 and US$4,809,000, respectively to meet the liquidity needs.

12.

SHORT-TERM BANK BORROWINGS

Short-term bank borrowings comprise of the followings:

			As of December 31,		As of March 31,
	Note		2011		2011
			US$’000		US$’000

Short-term bank loans		(i)		47,825		35,770
Bills financing		(ii)		91,687		29,389

				139,512		65,159

-17-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

12.

SHORT-TERM BANK BORROWINGS (CONTINUED)

(i)

Short-term bank loans

Short-term bank loans represent amounts due to various banks which are due within 12 months, and these loans can normally be renewed with the banks upon expiry/maturity.

The loans are collateralized by assets of the Company with carrying values as follows:

	As of December 31,		As of March 31,
	2011		2011
	US$’000		US$’000

Long-term land lease prepayments and building		17,049		-
Trade receivables		13,411		5,038
Pledged deposits		4,723		-

		35,183		5,038

Various parties have also issued guarantee against these short-term bank loans as follows:

	As of December 31,		As of March 31,
	2011		2011
	US$’000		US$’000

Corporate and personal guarantees issued by related parties (Note 14(d))		17,033		25,389
Corporate guarantees issued by third parties		4,565		5,343
Corporate guarantees jointly issued by related parties and third parties (Note 14(d))		1,417		-

The weighted average annual interest rates of the short-term bank loans were 6.39% and 5.05% as of December 31, 2011 and March 31, 2011, respectively.

(ii)

Bills financing

Bill financing represents amounts due to various banks which are repayable within nine months from the date of issue. As of December 31, 2011 and March 31, 2011, the bills are collateralized by certain restricted bank balances of the Company with carrying value of US$38,797,000 and US$14,122,000, respectively and guaranteed by certain related parties, and related parties and third parties jointly to the extent of US$28,106,000 and US$14,171,000, respectively.

The weighted average annual interest rates of the bills financing were 8.15% and 3.31% as of December 31, 2011 and March 31, 2011, respectively.

-18-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

13.

GOVERNMENT SUBSIDIES

During the year ended March 31, 2008, the Company received a government grant of approximately US$231,000 for the purpose of subsidising its acquisition of property, plant and equipment, of which approximately US$13,000 and US$12,000 were credited to the statement of operations for the three months ended December 31, 2011 and 2010, respectively, and US$38,000 and US$36,000 were credited to the statement of operations for the nine months ended December 31, 2011 and 2010, respectively.

14.

RELATED PARTY TRANSACTIONS

(a)

Names and relationship of related parties:

Name of related party		Existing relationships with the Company

Mr. Xu Kecheng		Director and controlling stockholder of Chisen Electric
Zhejiang Chisen Glass Company Limited (“Chisen Glass”)*		A company controlled by a close family member of Mr. Xu Kecheng
Mr. Xu Keyong		A close family member of Mr. Xu Kecheng
Ms. Zhou Fang Qin		Spouse of Mr. Xu Kecheng
Changxing Chisen Xinguangyuan Company Limited (“Xinguangyuan”)*		A company controlled by a close family member of Mr. Xu Kecheng
Zhejiang Ai Ge Organism Products Company Limited (“Ai Ge Organism”)*		A company controlled by Mr. Xu Kecheng
Zhejiang Changxing Nuo Wan Te Ke Glass Company Limited (“Nuo Wan Te Ke”)*		A company controlled by a close family member of Mr. Xu Kecheng
Zhejiang Changxing Ruilang Electronic Company Limited (“Ruilang Electronic”) *		A company controlled by a close family member of Mr. Xu Kecheng

These are direct translation of the name in Chinese for identification purpose only and are not the official names in English.

-19-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

14.

RELATED PARTY TRANSACTIONS (CONTINUED)

(b) Summary of balances with related parties:

	As of December 31,		As of March 31,
	2011		2011
	US$’000		US$’000
Due from a related party:
Ms. Zhou Fang Qin		5		8

Due to related parties:
Mr. Xu Keyong		2		2
Chisen Glass		1,176		1,201
Ruilang Electronic		1,863		2,616
Ai Ge Organism		314		304
Nuo Wan Te Ke		-		3
Xinguangyuan		1		-

		3,356		4,126

All amounts due from / to related parties represent unsecured advances which are interest-free and repayable on demand.

(c) Summary of related party transactions:

			Three months ended December 31,				Nine months ended December 31,
Name of related party	Nature of transactions		2011		2010		2011		2010
				US$’000		US$’000		US$’000		US$’000

Ruilang Electronic		Purchase of raw materials		2,969		2,609		3,888		6,743
Chisen Glass		Purchase of raw materials		1,453		988		1,835		2,408

-20-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

14.

RELATED PARTY TRANSACTIONS (CONTINUED)

(d) Other arrangements:

As of December 31, 2011, Chisen Glass provided guarantees, in aggregate, amounting to US$4,723,000, US$1,181,000 and US$3,542,000 to secure the short-term bank loans, notes payable and bills financing of the Company, respectively.

As of December 31, 2011, Mr. Xu Kecheng, Ms. Zhou Fang Qin and a third party provided guarantees, in aggregate, amounting to US$2,361,000 to secure the bills financing of the Company.

As of December 31, 2011, Xinguangyuan, Mr. Xu Kecheng and Ms. Zhou Fang Qin, provided guarantees, in aggregate, amounting to US$12,311,000 and US$1,574,000 to secure the short-term bank loans and notes payable of the Company, respectively.

As of December 31, 2011, Chisen Glass, Mr. Xu Kecheng, Ms. Zhou Fang Qin and Ruilang Electronic provided guarantees, in aggregate, amounting to US$1,102,000 and US$11,020,000 to secure the notes payable and bills financing of the Company, respectively.

As of December 31, 2011, Xinguangyuan provided guarantees, in aggregate, amounting to US$13,544,000 to secure the bills financing of the Company.

As of December 31, 2011, Chisen Glass and certain third parties provided guarantees, in aggregate, amounting to US$3,936,000, US$787,000 and US$2,361,000 to secure the short-term bank loans, notes payable and bills financing of the Company, respectively.

As of December 31, 2011, Chisen Glass, Xinguangyuan, and certain third parties provided guarantees, in aggregate, amounting to US$3,463,000 to secure the bills financing of the Company.

As of December 31, 2011, Mr. Xu Kecheng, Ms. Zhou Fang Qin, Xinguangyuan and certain third parties provided guarantees, in aggregate, amounting to US$5,986,000 to secure the bills financing of the Company.

-21-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

15.

COMMITMENTS AND CONTINGENCIES

(a)

Operating lease commitments

The following table summarizes the approximate future minimum rental payments under non-cancelable operating leases in effect as of December 31, 2011 and March 31, 2011:

	As of December 31,		As of March 31,
	2011		2011
	US$’000		US$’000

Within one year		450		655
One to two years		398		688
Two to three years		141		508
Three to four years		-		120

Total		989		1,971

(b)

Capital commitments

As of December 31, 2011 and March 31, 2011, the Company had outstanding capital expenditure commitments relating to various construction projects and purchase of land and machineries for an aggregate amount of approximately US$128,619,000 and US$150,448,000, respectively.

16.

PROVISION FOR WARRANTY

Estimated warranty costs are recognized at the time when the Company sells its products and are included in sale, marketing and distribution expenses. The Company uses historical failure rates and costs to repair product defects during the warranty period to estimate warranty costs while are reviewed periodically in light of actual experience. The reconciliation of the changes in the warranty obligation is as follows:

	Three months ended December 31,						Nine months ended December 31,
	2011			2010			2011			2010
	US$’000			US$’000			US$’000			US$’000

Beginning balance		322			469			301			226
Exchange realignment		-			1			8			6
Accrual for warranties issued during the period		232			282			457			836
Settlement made during the period		(363	)		(431	)		(575	)		(747	)

Closing balance		191			321			191			321

-22-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

17.

RETIREMENT PLAN COSTS

Contributions to defined contribution retirement schemes are charged to cost of sales, sales, marketing and distribution costs and general and administrative expenses in the consolidated statements of operations and other comprehensive income as and when the related employee services are provided. Retirement plan costs were US$764,000 and US$235,000 for the three months ended December 31, 2011 and 2010, respectively, and US$1,038,000 and US$650,000 for the nine months ended December 31, 2011 and 2010, respectively.

18.

SEGMENTAL INFORMATION

During the nine months ended December 31, 2011 and 2010, all revenue of the Company represented income from sales of sealed lead-acid battery and related components and therefore no financial information by business segment is presented. Furthermore, as all income is derived from the PRC, no geographical segment is presented.

19.

EXTRAORDINARY ITEMS

(a)

Extraordinary gain

During the nine months ended December 31, 2011, Zhejiang Chisen had completed the relocation of production plant in Jingyi Road. Pursuant to the Compensation Agreement on Relocation and Acquisition entered into with Zhejiang Chisen and Administrative Committee of Changxing Economic Development Zone (“ACC”), ACC shall pay Zhejiang Chisen a compensation in the amount of RMB98,514,000 (US$15,354,000) for the loss on long-term land lease prepayment and buildings located in Jingyi Road. In May 2011, the Company wrote off the long-term land lease prepayment and buildings in Jingyi Road with net book value of approximately RMB14,354,000 (US$2,237,000) and therefore net compensation income of RMB84,160,000 (US$13,117,000) was recognized during the period. As of December 31, 2011, the compensation of US$7,978,000 has not been received and was recorded as current assets in the consolidated balance sheet.

As a result, the Company recorded an extraordinary gain of US$13,117,000 in the consolidated statements of operations and other comprehensive income for the nine months ended December 31, 2011.

-23-

Chisen Electric Corporation

Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements

For the nine months ended December 31, 2011 and 2010

19.

EXTRAORDINARY ITEMS (CONTINUED)

(b)

Extraordinary loss

During the nine months ended December 31, 2011, and without advance notice to the Company, the PRC Central Government tightened its environment protection policy which applies to all lead-acid battery manufacturers. Pursuant to the newly tightened policy, a 500 meters quarantined isolated area must be maintained between production facilities, including assembly facilities, and residential areas.

The Company’s Jing’er Road plant was mainly utilized for assembly activities and it cannot comply with the tightened policy. Management had gradually scaled down the operation of Jing’er Road plant and the Company had completed the relocation of certain production facilities to the plant in Xuyi County, Jiangsu Province during the nine months ended December 31, 2011. After evaluating the plant and machinery at Jing’er Road plant, some of them cannot fit into the plant in Jiangsu Xuyi. The Company decided to impair the value of plant and machinery as well as leasehold improvement of Jing’er Road plant down to its recoverable amount. The impairment loss was recorded as follows:

	Nine months ended December 31,
	2011		2010
	US$’000		US$’000

Leasehold improvement		921		-
Plant and machinery		927		-

		1,848		-

The management considered that this government behavior is very unusual and rare to happen, and thus the relevant impairment loss of plant and machinery was classified as an extraordinary item.

-24-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward Looking Statements

As used in this report, unless otherwise indicated, the terms “we”, “our”, “us”, the “Company”, the “Registrant” and “Chisen” refer to Chisen Electric Corporation, a Nevada corporation. We conduct our business through our subsidiaries, which include our wholly-owned subsidiary, Fast More Limited, a Hong Kong investment holding company (“Fast More”), its 100% owned and chief operating subsidiary, Zhejiang Chisen Electric Co., Ltd., (f/k/a Changxing Chisen Electric Co., Ltd. and hereinafter referred to as “CCEC”) a wholly foreign owned entity (“WFOE”) organized under the laws of the PRC and CCEC’s subsidiary, Chisen Electric Jiangsu Co., Ltd. (“CEJC”). “China” or “PRC” refers to the People’s Republic of China. “RMB” or “Renminbi” refers to the legal currency of China and “$”, “US$” or “U.S. Dollars” refers to the legal currency of the United States.

The following discussion of our financial condition and results of operations of the Company is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this report. This report contains forward-looking statements. Generally, the words “believes”, “anticipates”, “may”, “will”, “should”, “expect”, “intend”, “estimate”, “continue” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the SEC from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

Company Overview

We are one of the leading producers of sealed lead-acid motive batteries, also known as valve regulated lead-acid motive batteries (“VRLA batteries”) in China's personal transportation device market. Our motive battery products, sold under our own brand name “Chisen”, are predominantly used in electric bicycles and are distributed and sold in China. Among all types of batteries for electric bicycles, the lead-acid motive battery is the preferred choice of electric bicycle manufacturers in China, accounting for 95% of the market share because of its cost efficiency. In general, we manufacture over 19,800,000 sealed lead-acid motive batteries each year, have more than 2,500 employees and are one of China's largest manufacturers of sealed lead-acid motive batteries for electric-powered bicycles (LABEBs). For the nine months ended December 31, 2011 and 2010, sales revenues were US$102,900,000 and US$194,712,000, respectively, and our net (loss) income attributable to CIEC common stockholders during the same periods amounted to US$(1,052,000) and US$9,496,000, respectively.

Corporate Information

Our offices are located in the Changxing Economic Development Zone at the bank of the Taihu Lake in the County of Changxing in Zhejiang Province, in close proximity to major national transportation systems, including National Highways 104 and 318, the Shanghai – Jiangsu – Zhejiang – Anhui – Hangzhou – Nanjing Expressway, the Changxing – Huzhou – Shanghai Channel, the Xuancheng – Hangzhou Railway and the Xinyi – Changxing Railway. Our registered office is located at No. 1188, Taihu Avenue, Economic Development Zone, Changxing County, Zhejiang Province, PRC, where the office building is under construction. Our executive office has therefore been temporarily moved to No. 559, Jing’er Road, Economic Development Zone, Changxing County, Zhejiang Province, PRC. Our telephone number is (86) 572-6267666 and our corporate website in English is located at www.chisenelectric.com.

We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our shares of common stock are not currently listed on any national securities exchange however our common stock is quoted under the symbol “CIEC” on the OTCQB.

On May 27, 2011, Chisen fully disposed of its interest in Chisen Technology Holdings Corporation, a Nevada corporation (“Chisen Technology”) for cash consideration of US$10. Chisen Technology had no operations since its date of incorporation through May 27, 2011. The disposal of Chisen Technology has had no significant impact on the value of the Company’s assets, operating cash flows or earnings per share.

-25-

Recent Developments

On November 22, 2011, the Company effected a forward split of its common stock, par value $0.001 per share (“Common Stock”) and the proportional increase in its authorized shares of Common Stock at a split ratio of 10-for-1. As a result of this corporate action, the total number of issued and outstanding shares of Common Stock increased from 50,000,000 to 500,000,000 shares, and the Company’s authorized shares of Common Stock simultaneously increased from 100,000,000 to 1,000,000,000 shares. Shares of Common Stock are payable pursuant to the 10-for-1 forward stock split upon surrender of old certificates to the Company’s transfer agent, Interwest Transfer Co., Inc., 1981 East Murray Holladay Road, Suite 100, P.O. Box 17136, Salt Lake City, Utah 84117, telephone (801) 272-9294, facsimile (801) 277-3147.

There has been no adjustment to the par value of the Common Stock and no changes have been made to the Company’s preferred stock as a result of this corporate action (as of November 22, 2011, the Company had no shares of preferred stock issued or outstanding). The Company’s Board of Directors approved this corporate action however shareholder approval was not required pursuant to Sections 78.207 and 78.209 of the Nevada Revised Statutes (“NRS”). In accordance with the NRS, the Company filed a “Certificate of Change Pursuant to Section 78.209” with the Nevada Secretary of State which became effective after the Financial Industry Regulatory Authority announced the effectiveness of the corporate action.

Development Strategy of the Company

We strive to create an international first-class brand and become the one of the leaders in providing “green” energy in the global electric bicycle market. Through our continuous researching and developing of new chemical energy technologies, we intend to provide energy-saving and highly-effective energy solutions to our customers for improving quality of life while maintaining a sustainable ecological environment. Our goal is to become the largest battery developer and producer with a first-class sales and service network in China. With one of the leading positions in the LABEB battery product market in China, our expansion plans in Changxing County (Zhejiang Province) and Jiangsu Province, our product research and development capability and our cooperative partnerships with clients, we believe that we are well positioned to capture additional business opportunities in China's personal transportation device markets. In light of the prevailing economic trends for developing alternative transportation devices that reduce the reliance on oil and produce lesser emissions, we plan to explore the motive battery market for electric-powered motorcycles and electric cars. Leveraging our experience and expertise in producing lead-acid motive battery products for electric bicycles, we plan to expand our product mix to include valve regulated lead-acid back-up batteries, the lithium-ion battery, lead-acid power storage batteries dedicated for solar and wind power and lead-acid motive batteries for electric cars.

Production Capacity

Pursuant to an Investment Agreement entered into by and between CCEC and the Administrative Committee of Changxing Economic Development Zone, we terminated our operations at Plant A at Jingyi Road in Changxing County, Zhejiang Province. We are investing in the construction of a factory in Xuyi County, Jiangsu Province and at Jingsi Road in Changxing County, Zhejiang Province.

Pursuant to a Project Investment Contract and a Supplemental Agreement to the Project Investment Contract entered into by and between CEJC and the Jiangsu Xuyi Economic Development Zone Administrative Committee on September 6, 2010, CEJC shall invest, in the aggregate, approximately RMB1,200,000,000 (approximately US$177,000,000) in three stages to build the Chisen Circular Economy Industry Park (“Plant D”) to manufacture VRLA batteries, as well as our newest product, lithium-ion batteries, and other related products in the Jiangsu Xuyi Economic Development Zone in Xuyi County, Jiangsu Province. In the first stage, CEJC will invest in the production of VRLA batteries only and shall invest approximately RMB422,000,000 (approximately US$62,000,000), including approximately RMB150,000,000 (approximately US$22,000,000) in fixed assets for the production of VRLA batteries only. The project will be operated primarily by the cash generated from our operating profit and short term bank loans.

-26-

During the three months ended June 30, 2011 and without advance notice to the Company, the PRC Central Government tightened its environmental protection policy which applies to all lead-acid battery manufacturers. Pursuant to the new policy, a 500 meter isolated area must be maintained between production facilities and residential areas. From the beginning of May, the Zhejiang Environmental Protection Bureau (the “ZEPB”) conducted an environmental sanitation investigation at our plant at Jing’er Road of Changxing County, Zhejiang Province (“Plant B”). The results showed that the sewage and exhaust complied with national standards in China, however, the Company is not maintaining the 500 meter isolated area between production facilities and residential areas.

After discussion with the Government, our battery charging activities and packing activities were permitted to keep operating until December 31, 2011, however all other production activities were forced to stop pursuant to the tightened environmental policy on or before July 15, 2011. During the nine months ended December 31, 2011, we were further advised by the local authority of Changxing County that we could continue our charging activities and packing activities in Plant B through October 31, 2012. Management believes that our production facilities could not fully comply with the adjusted environmental policy as the residential area near Plant B showed (and continues to show) no signs of slowing its expansion towards Plant B, which is out of the Company’s control. As a result, we decided to scale down our operations at Plant B and relocate such production facilities to Plant D in Xuyi County, Jiangsu Province (as described below). We ceased all production activities, apart from battery charging activities and packing activities, during the period ended September 30, 2011. We did not suffer any penalty due to this tightened environmental protection policy. However, part of our production facilities in Plant B cannot be adequately transferred and implemented into our new production facility at Plant D, and we incurred an impairment loss of such facilities of US$1,848,000 during the nine months ended December 31, 2011.

As of the date of this report, the Government preliminarily agreed to re-designate the land in Changxing County to us for redevelopment. Prior to the new plant in Changxing County being built, we mainly conduct lead-acid battery production activities in Plant D.

Expand Offering of Highly Efficient Battery Products

For future market development, we intend to focus on the lithium-ion battery, which is a new product trend in the European, US and Japanese markets, on electric vehicle power batteries and on energy storage batteries dedicated to solar and wind power. We are currently committed to investing in and constructing new production facilities in Changxing County (Zhejiang Province) and in Xuyi County (Jiangsu Province). Since the Company is experienced in producing motive batteries for powering electric bicycles, the Company intends to bring the lithium-ion battery to market by focusing first on the market for lithium-ion batteries in electric bicycles. We estimate that our lithium-ion batteries will be launched and distributed into the marketplace prior to March 31, 2013. The Company intends to cooperate with manufacturers of electric bicycles and to deliver small lots of pre-launch lithium-ion batteries to them in order to explore the market, as well as to obtain feedback from electric bicycle customers to further improve our production technology of lithium-ion batteries. We are currently monitoring and studying the market development of lithium-ion batteries including, but not limited to, technology development, market demand and relevant supporting facilities. We will continue monitor the development of our lithium-ion project in Changxing County (Zhejiang Province), and to adjust our execution plan accordingly. Until these products are formally launched and distributed into the marketplace, their effects on our business are uncertain. We do not have any specific timetable for this strategy as we consider expanding our offering of highly efficient battery products to be part of our core business, and the amounts we decide to allocate to this strategy will be funded by our operating cash flows.

Augment Marketing and Promotion Efforts to Increase Brand Awareness

The Company works with leading national brand designing companies to establish a complete plan for scientific branding, which use cartoon image endorsements to promote its corporate image, products and brand awareness, through television and printed advertisements. Furthermore, we believe CCEC has established for us a positive social image across China as the official batteries supplier for electric bicycles used in the Beijing Olympic and Paralympics Games in 2008 and the alternative power source sponsor of the 2010 Shanghai World Expo. We do not have any specific timetable for this strategy as we consider augmenting our marketing and promotional efforts to increase brand awareness to be part of our core business, and the amounts we decide to allocate to this strategy will be funded by our operating cash flows.

-27-

Expand Sales Network and Distribution Channels

We intend to put in more resources to expand our sales and distribution networks by: (1) adding new distributors in key sales regions in China; (2) developing new marketing strategies in different channels; (3) improving communication between sales teams and distributors; and (4) improving our brand awareness and promotion effort. We do not have any specific timetable for this strategy as we consider expanding our sales network and distribution channels to be part of our core business, and the amounts we decide to allocate to this strategy will be funded by our operating cash flows.

Build Partnerships with New and Existing Clients

We continue to build a close, mutually beneficial and harmonious partnership with our existing factory customers. We aim to establish a win-win long-term partnership with all of our new customers. We intend to continue to utilize our customer relationship management to provide tailor-made management policies that focus the needs of different customers. We do not have any specific timetable for this strategy as we consider building partnerships with new and existing clients to be part of our core business, and the amounts we decide to allocate to this strategy will be funded by our operating cash flows.

Vertical Integration Strategy

During the period ended December 31, 2011, we have implemented a vertical integration strategy of producing lead plates at Plant D which has enabled us to reduce processing costs. Additionally, due to the implementation of the above stated environmental policy, hundreds of our competitors that are small and medium size battery manufacturers have been forced to shut down or to stop operations. As a result, the shortage of supply of lead acid batteries has armed us with strategic bargaining power when negotiating the sales price of our products with customers.

Critical Accounting Policies, Estimates and Assumptions

For the nine months ended December 31, 2011, there were no changes in the methodology for computing critical accounting estimates, no additional accounting estimates met the standards for critical accounting policies, and there were no material changes to the important assumptions underlying the critical accounting estimates.

Recent Accounting Pronouncements

Results of Operations for the Three Months Ended December 31, 2011 Compared With the Three Months Ended December 31, 2010

The following table sets forth a summary of certain key components of our results of operations for periods indicated, in U.S. Dollars and as a percentage of revenues.

-28-

	For The Three Months ended December 31 (Unaudited)
	(in thousands)
	2011 (US$)			2010 (US$)			2011			2010
Revenues		35,160			67,670			100.00	%		100.00	%
Cost of sales		(28,073	)		(59,200	)		79.84	%		87.48	%
Gross income		7,087			8,470			20.16	%		12.52	%
Sales, marketing and distribution		(2,390	)		(2,560	)		6.80	%		3.78	%
General and administrative expenses		(2,812	)		(987	)		8.00	%		1.46	%
Operating income		1,885			4,923			5.36	%		7.28	%
Other income, net		418			276			1.19	%		0.41	%
Loss on disposal of scrap inventories		(6,092	)		(2,307	)		17.33	%		3.41	%
Provision for inventories		(5,431	)		-			15.45	%		-	%
Interest income		479			117			1.36	%		0.17	%
Net (loss) income from operations before interest and tax expenses		(8,741	)		3,009			24.86	%		4.45	%
Interest expenses		(2,009	)		(940	)		5.71	%		1.39	%
(Loss) Income before income tax expenses		(10,750	)		2,069			30.57	%		3.06	%
Income taxes benefit (expense)		434			(1,260	)		1.23	%		1.86	%
(Loss) Income before extraordinary items		(10,316	)		809			29.34	%		1.20	%
Extraordinary gain (less applicable taxes of US$0)		-			1,738			-	%		2.57	%
Net (loss) income including non-controlling interest		(10,316	)		2,547			29.34	%		3.76	%
Net (income) attributable to non-controlling interest		(53	)		-			0.15	%		-	%
Net (loss) income attributable to CIEC common shareholders		(10,369	)		2,547			29.49	%		3.76	%
Other comprehensive income		256			561			0.73	%		0.83	%
Comprehensive (loss) income		(10,113	)		3,108			28.76	%		4.59	%

Revenues and Cost of Sales

Revenue decreased by US$32,510,000, or 48.04%, to $35,160,000 for the three months ended December 31, 2011 compared with US$67,670,000 for the three months ended December 31, 2011. This decrease was mainly attributable to the decrease of production activities resulting from an unexpected tightening of an environmental protection policy enforced on all lead-acid battery manufacturers implemented by the PRC Central Government during the period ended December 31, 2011. Pursuant to the tightened policy, a 500 meter isolated area must be maintained between production facilities and residential areas. All production facilities must have complied with this policy on or before July 15, 2011. Our production facilities at Plant B at Jing’er Road are not capable of being in full compliance with the tightened environmental policy and the residential area near Plant B shows no signs of slowing its expansion towards Plant B, which is out of the Company’s control. Our management decided to gradually scale down the operations of Plant B and to relocate such production facilities to Plant D, apart from recharging and packing activities, before December 31, 2011. During the three months ended December 31, 2011, we were advised by the government that our recharging and packing activities in Plant B may continue through October 31, 2012.

Although our production capacities gradually recovered, our major competitors had temporarily eroded our market share during the reporting period. As such, our revenue decreased significantly.

Cost of sales for the three months ended December 31, 2011 and 2010 were US$28,073,000 and US$59,200,000, respectively. The decrease of cost of sales of US$31,127,000 or 52.58%, was mainly attributable to a decrease in sales volume resulting from the unexpected tightening of the environmental protection policy implanted by the PRC Central Government as stated above. The decrease of cost of sales was also attributable to a significant decrease of processing charges on lead plates, one of our major components of battery products, resulting from our vertical integration strategy of producing lead plates at Plant D commencing August 2011.

Our gross profit ratio increased by 7.64% to 20.16% for the three months ended December 31, 2011 as compared with the same period in 2010. The increase in gross profit ratio was mainly attributable to the decrease in the cost of production as a result of the implementation of vertical integration strategy by processing the lead plates at our Plant D in Jiangsu Xuyi during the period ended December 31, 2011. Since the lead plate is one of our major components to produce lead acid batteries, this strategy significantly decreased our cost of production.

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The increase in gross profit ratio was also attributable to the increase in the selling price.

During the period ended December 31, 2011, the implementation of environment policy discussed above has forced hundreds of our competitors which are small and medium sized battery manufacturers to shut down or to stop operations. As a result, there is significant shortage of battery supply and we currently have strong bargaining power over the selling price with our customers.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended December 31, 2011 and 2010 were US$1,173,000 and US$267,000, respectively. The increase of US$906,000, or 339.33%, was mainly attributable to the additional depreciation charged during the period, which amounted to US$452,000, as a result of the change of estimated useful life on certain machinery at Plant B in Changxing County. During the three months ended December 31, 2011 we were advised by the local authority that we are not allowed to produce battery products using our current production technique, external battery formation, in our production facility after October 31, 2012. Our management reviewed the machinery in Plant B and identified that certain machinery cannot be used after that date and therefore, their estimated useful life was adjusted.

In addition, in order to expand our production capacity, we have invested significantly in plant and machinery at Plant D in Jingsu Xuyi during the period ended December 31, 2011. The total cost of property, plant and equipment increased US$35,963,000 or 191.96% to US$54,698,000 as of December 31, 2011 compared with US$18,735,000 as of March 31, 2011. At the same time, the increase in depreciation expense was in line with the increase in the property, plant and equipment.

General and Administrative Expenses

General and administrative expenses were US$2,812,000 and US$987,000 for the three months ended December 31, 2011 and 2010, respectively. Such expenses mainly consisted of research and development, staff salaries and benefits, consultancy and depreciation expenses.

The increase in general and administrative expenses of US$1,825,000 or 184.90% for the three months ended December 31, 2011 as compared to the same period in 2010 was mainly attributable to: (a) an increase of US$467,000 for staff salaries and relevant benefits, such as social insurance and staff cafeteria expenses, due to the operation of a new plant in Xuyi County of Jiangsu Province where we now employ more administrative staff; (b) an increase in research and development expenses of US$464,000, which are mainly attributable to the resources invested in improving the quality of existing products as well as the development of new products and the increase in staff in our R&D department; (c) an increase of US$189,000 for the tax expense including property tax, stamp duty etc due to the establishment of Plant D; and (d) an increase of US$294,000 in other expense as a result of the establishment of Plant D.

Sales, Marketing and Distribution

Sales, marketing and distribution expenses for the three months ended December 31, 2011 and 2010 were US$2,390,000 and US$2,560,000, respectively. The decrease of US$170,000 or 6.64%, was mainly attributable to a decrease in transportation expense of US$467,000, offset by the increase in exhibition expense of US$243,000.

Loss on Disposal of Scrap Inventories and Provision for Inventories

During the three months ended December 31, 2011 we have recorded a loss on disposal of scrap inventories and made provision on obsolete inventories amounting to US$6,092,000 and US$5,431,000, respectively. Comparing with the three months ended December 31, 2010, the loss on disposal of scrap inventories increased by US$3,785,000 or 164.07%.

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The losses on disposal of scrap inventories and provision for inventories were mainly attributable to the tightened environmental policy advised by the local authority of Changxing County that our current production technique, external battery formation, in Plant B in Changxing County was not allowed to be used in our production facilities after October 31, 2012. Plant B is the only facility for repairing returned batteries which were produced under external battery formation. After analyzing the future return rate of the batteries and our existing inventory levels, management considered that our production capacity was not enough to repair all future returned batteries and existing inventories. Management decided to dispose of the obsolete inventories and made provision on the obsolete inventories to be disposed of in the future.

Interest Income

Interest income for the three months ended December 31, 2011 and 2010 was US$479,000 and US$117,000, respectively. The increase of US$362,000 or 309.40%, was mainly attributable to the increase in the average deposit interest rate as well as an increase in restricted cash pledged for notes granted by banks.

(Loss) Income before Interest and Income Tax Expenses

Loss before interest and income tax expenses for the three months ended December 31, 2011 was US$8,741,000 as compared with an income of US$3,009,000 for the three months ended December 31, 2010. The decrease of US$11,750,000 was mainly attributable to the increase in loss on the disposal of scrap inventory and provision for obsolete inventories.

Interest Expense

Interest expense for the three months ended December 31, 2011 and 2010 was US$2,009,000 and US$940,000, respectively. The increase in interest expense of US$1,069,000, or 113.72%, was mainly attributable to the increase in banking facilities utilized by the Company as well as an increase in interest rate.

Income Taxes Benefits (Expenses)

Income taxes benefits for the three months ended December 31, 2011 was US$434,000 as compared to a tax expense of US$1,260,000 for the same period in 2010. The decrease in income taxes expense of US$1,694,000 was mainly attributable to the decrease in operating profit during the period and the recognition of a deferred tax benefit on estimated unused tax losses.

Net (Loss) Income Including Non-Controlling Interest

Net loss including non-controlling interest for the three months ended December 31, 2011 was US$10,316,000 as compared with a net income including non-controlling interest of US$2,547,000 for the corresponding period in 2010. The decrease in income of US$12,863,000 was mainly attributable to the increase in loss on the disposal of scrap inventory US$3,785,000 and a provision on obsolete inventories of US$5,431,000.

Results of Operations for the Nine Months Ended December 31, 2011 Compared With the Nine Months Ended December 31, 2010

The following table sets forth a summary of certain key components of our results of operations for periods indicated, in dollars and as a percentage of revenues.

	For The Nine Months ended December 31 (Unaudited)
	(in thousands)
	2011 (US$)			2010 (US$)			2011			2010
Revenues		102,900			194,712			100.00	%		100.00	%
Cost of sales		(87,315	)		(170,460	)		84.85	%		87.54	%
Gross income		15,585			24,252			15.15	%		12.46	%
Sales, marketing and distribution		(7,031	)		(8,111	)		6.83	%		4.17	%
General and administrative expenses		(6,597	)		(2,628	)		6.41	%		1.35	%
Operating income		1,957			13,513			1.90	%		6.94	%
Other income, net		619			889			0.60	%		0.46	%
Loss on disposal of scrap inventories		(6,092	)		(2,307	)		5.92	%		1.18	%
Provision for inventories		(5,431	)		-			5.28	%		-	%
Interest income		1,184			315			1.15	%		0.16	%
Net (loss) income from operations before interest and tax expenses		(7,763	)		12,410			7.54	%		6.37	%
Interest expenses		(4,846	)		(2,231	)		4.71	%		1.15	%
(Loss) Income before income tax expenses		(12,609	)		10,179			12.25	%		5.23	%
Income taxes benefit (expense)		352			(2,421	)		0.34	%		1.24	%
(Loss) Income before extraordinary items		(12,257	)		7,758			11.91	%		3.98	%
Extraordinary gain (less applicable taxes of US$0)		13,117			1,738			12.75	%		0.89	%
Extraordinary loss (less applicable taxes of US$0)		(1,848	)		-			1.80	%		-	%
Net (loss) income including non-controlling interest		(988	)		9,496			0.96	%		4.88	%
Net (income) attributable to non-controlling interest		(64	)		-			0.06	%		-	%
Net (loss) income attributable to CIEC common shareholders		(1,052	)		9,496			1.02	%		4.88	%
Other comprehensive income		1,297			1,115			1.26	%		0.57	%
Comprehensive income		245			10,611			0.24	%		5.45	%

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Revenues and Cost of Sales

Revenues decreased by US$91,812 or 47.15%, to US$102,900,000 for the nine months ended December 31, 2011 compared with US$194,712,000 for the nine months ended December 31, 2010. This decrease was mainly attributable to the decrease of production activities resulting from an unexpected tightening of an environmental protection policy enforced on all lead-acid battery manufacturers implemented by the PRC Central Government during the period ended December 31, 2011. Pursuant to the tightened policy, a 500 meter isolated area must be maintained between production facilities and residential areas. All production facilities must have complied with this policy on or before July 15, 2011. Our production facilities at Plant B at Jing’er Road are not capable of being in full compliance with the tightened environmental policy and the residential area near Plant B shows no signs of slowing its expansion towards Plant B, which is out of the Company’s control. Our management decided to gradually scale down the operations of Plant B and to relocate such production facilities to Plant D, apart from recharging and packing activities, before December 31, 2011. During the three months ended December 31, 2011, we were advised by the government that our recharging and packing activities in Plant B may continue through October 31, 2012.

Although our production capacities gradually recovered, our major competitors had temporarily eroded our market share. As such, our revenue decreased significantly.

Cost of sales for the nine months ended December 31, 2011 and 2010 were US$87,315,000 and US$170,460,000, respectively. The decrease in cost of sales of US$83,145,000 or 48.78% was mainly attributable to the decrease in sales volume resulting from the unexpected tightening of the environmental protection policy implanted by the PRC Central Government as stated above. The decrease of cost of sales was also attributable to a significant decrease of processing charges on lead plates, one of our major components of battery products, resulting from our vertical integration strategy of producing lead plates at Plant D commencing August 2011.

Our gross profit ratio increased by 2.69% to 15.15% for the nine months ended December 31, 2011 as compared with the corresponding period in 2010. The increase was mainly attributable to the decrease in the cost of production as a result of the implementation of the vertical integration strategy by processing the lead plates at our Plant D in Jiangsu Xuyi during the period ended December 31, 2011. Since the lead plate is one of our major components to produce lead acid batteries, this strategy significantly decreased our cost of production.

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The increase in gross profit ratio was also attributable to the increase in the selling price.

During the period ended December 31, 2011, the implementation of environment policy discussed above has forced hundreds of our competitors which are small and medium sized battery manufacturers to shut down or to stop operations. As a result, there is a significant shortage of battery supply and we currently have strong bargaining power over the selling price with our customers.

Depreciation and Amortization

Depreciation and amortization expenses for the nine months ended December 31, 2011 and 2010 were US$1,412,000 and US$807,000, respectively. The increase of US$605,000 or 74.97%, was mainly attributable to the additional depreciation charged during the period which amounted to US$452,000, as a result of change of estimated useful life on certain machinery at Plant B in Changxing County. During the nine months ended December 31, 2011 we were advised by the local authority that we are not allowed to produce battery products using our current production technique, external battery formation. In our production facility after October 31, 2012. Our management reviewed the machinery in Plant B and identified that certain machinery cannot be used after that date and therefore, their estimated useful life was adjusted.

General and Administrative Expenses

General and administrative expenses were approximately US$6,597,000 and US$2,628,000 for the nine months ended December 31, 2011 and 2010, respectively. Such expenses mainly consisted of research and development, staff salaries and benefits, consultancy and depreciation expenses.

The increase in general and administrative expenses of US$3,969,000 or 151.03% for the nine months ended December 31, 2011 as compared to the corresponding period in 2010 was mainly attributable to: (a) an increase of US$1,015,000 for staff salaries and benefits, such as staff cafeteria expenses and social insurance, due to the operation of our new plant in Xuyi County of Jiangsu Province where we now employ more administrative staff; also, due to due to the relocation activities, the cafeteria at Plant A was demolished and the cafeteria at Plant D was completed in late 2011, and therefore a catering service was outsourced to third parties resulting in a significant increase in staff cafeteria costs; (b) an increase in research and development expenses of US$968,000, which are mainly attributable to the resources invested in improving the quality of existing products as well as the development of new products and the increase in staff in our R&D department; (c) an increase in audit and professional fees of US$229,000; and (d) due to the establishment of Plant D, the general expenses including tax, accident and general insurance, repair and maintenance, utilities, office expense increased by US$165,000, US$141,000 US$163,000, US$158,000 and US$240,000, respectively.

Sales, Marketing and Distribution

Sales, marketing and distribution expense were US$7,031,000 and US$8,111,000 for the nine months ended December 31, 2011 and 2010, respectively. The decrease of US$1,080,000 or 13.32% was mainly attributable to the decrease in selling activities due to the tightened environmental protection policy as discussed above. Transportation expense decreased by US$1,416,000. In order to maintain our brand image from the influence of the shortage of supply of our batteries products, we increased advertising expenses and exhibition expenses of US$225,000 and US$243,000, respectively.

Loss on Disposal of Scrap Inventories and Provision for Inventories

Loss on disposal of scrap inventories and provision on inventories for the nine months ended December 31, 2011 and 2010 were US$6,092,000 and US$5,431,000, respectively. Compared with the nine months ended December 31, 2010, the loss on disposal of scrap inventories increased by US$3,785,000 or 164.07%.

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Interest Income

Interest income was US$1,184,000 and US$315,000 for the nine months ended December 31, 2011 and 2010, respectively. The increase of US$869,000 or 275.87% was mainly attributable to the increase in the average deposit interest rate as well as an increase in restricted cash pledged for notes granted by banks.

(Loss) Income before Interest and Income Tax Expenses

Loss before interest and income tax expenses were US$7,763,000 for the nine months ended December 31, 2011 as compared with an income of US$12,410,000 for the corresponding period in 2010. The decrease of US$20,173,000 was mainly attributable to an increase of general and administrative expense of US$3,969,000, loss on disposal of inventories of US$3,785,000 and provision on obsolete inventories of US$5,431,000.

Interest Expense

Interest expense for the three months ended December 31, 2011 and 2010 was US$4,846,000 and US$2,231,000, respectively. The increase in interest expense of US$2,615,000, or 117.21%, was mainly attributable to the increase in banking facilities utilized by the Company as well as an increase in interest rate.

Income Taxes Benefits (Expenses)

Income taxes benefits for the nine months ended December 31, 2011 was US$352,000 as compared with a tax expense of US$2,421,000 for the corresponding period in 2010. The decrease in income taxes expenses of US$2,773,000 was mainly attributable to the decrease in operating profit during the period and the recognition of a deferred tax benefit of estimate unused tax loss.

Extraordinary Gain

During the nine months ended December 31, 2011, we completed the relocation of Plant A at Jingyi Road. Pursuant to the Compensation Agreement on Relocation and Acquisition entered into by CCEC and the Administrative Committee of Changxing Economic Development Zone (ACC), ACC shall pay us compensation in the amount of RMB98,514,000 (US$15,354,000) for the loss on long-term land lease prepayment and buildings located at Jingyi Road. In May 2011, the Company wrote off the long-term land lease prepayment and buildings at Jingyi Road with a net book value of approximately RMB14,354,000 (US$2,237,000) and therefore, net compensation income of RMB$84,160,000 (US$13,117,000) was recognized for the period. The transaction of relocation was considered as an involuntary conversion of a non-monetary asset into a monetary asset. According to ASC605-40-25, to the extent the cost of a nonmonetary asset differs from the amount of monetary assets received, the result of the realization of a gain from the transaction is recognized. The relocation activity is abnormal and significantly different from the ordinary and typical activities of the Company and is not expected to recur in the foreseeable future. In accordance with ASC225-20, the Company classified the gain as an extraordinary item. Pursuant to the Implementation Regulations to the EIT law of the PRC, only the portion of compensation income exceeding the reinvestment amount related to the relocation was taxable. All compensation income received by the Company would be reinvested into the fixed assets and long-term land lease prepayment of Plant C at Jingsi Road and therefore, no income tax was applicable.

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Extraordinary Loss

During the first quarter of 2011 and without advance notice to the Company, the PRC Central Government tightened its environmental protection policy which applies to all lead-acid battery manufacturers. Pursuant to the new policy, a 500 meter isolated area must be maintained between production facilities and residential areas. From the beginning of May, the Zhejiang Environmental Protection Bureau (ZEPB) conducted an environmental sanitation investigation at Plant B. The results showed that the sewage and exhaust complied with national standards in China, however, the Company is not maintaining the 500 meter isolated area between production facilities and residential areas. The ZEPB requires all production facilities at Plant B to have complied with and meet the adjusted environmental policy prior to July 15, 2011. We, however, were permitted by the government to continue to conduct our battery charging activities and packing activities during the period ended December 31, 2011. During the three months ended December 31, 2011 we were further advised by the local authority that our Plant B can continue to conduct our charging and packaging activities until October 31, 2012. As such, we did not suffer any penalty due to this tightened environmental protection policy.

As of the date of this report, the Government preliminarily agreed to re-designate the land in Changxing County to us for redevelopment. Prior to the new plant in Changxing County being built, our lead-acid battery production was relocated to Plant D.

As such, the impairment loss of some fixed assets, including plant and machinery together with a leasehold improvement of approximately US$1,848,000, were recognized as an extraordinary loss. Management considers that this Government behavior is very unusual and thus the relevant impairment loss of plant and machinery was classified as an extraordinary item.

Pursuant to the Implementation Regulations to the EIT law of the PRC, the impairment loss can only be recognized when the relevant assets were disposed. Since the actual amount of loss in the future cannot be assessed accurately, no tax benefit was recognized.

Net (Loss) Income Including Non-Controlling Interest

Net loss including non-controlling interest was US$988,000 for the nine months ended December 31, 2011 as compared with a net income including non-controlling interest of US$9,496,000 at the corresponding period in 2010. The decrease of US$10,484,000 was mainly attributable to an increase in general and administrative expense of US$3,969,000, a loss on the disposal of scrap inventory of US$3,785,000 and provision on obsolete inventory of US$5,431,000, and a decrease in an operating income of the US$11,556,000 offset by an increase in extraordinary gain of US$11,379,000.

Liquidity and Capital Resources

The Company generally finances its operations through operating activities and borrowings from banks.

During the reporting periods, the Company entered into a number of short-term bank loans to satisfy its financing needs. As of the date of this report, we have not experienced any difficulty in raising funds by bank loans, and we have not experienced any liquidity problems in settling our payables in the normal course of business and repaying our bank loans when they fall due.

The following table sets forth the summary of our cash flows, in U.S. Dollars, for the periods indicated:

	Nine Months Ended December 31,
	(in thousands)
	2011(US$)		2010(US$)
Net cash (used in) provided by operating activities		(20,327)		6,952
Net cash used in investing activities		(53,058)		(10,405)
Net cash provided by financing activities		72,695		3,491
Net (decrease) increase in cash and cash equivalents		(690)		38
Cash and cash equivalents, beginning of period		7,630		6,019
Effect on exchange rate changes		230		180
Cash and cash equivalents at end of period		7,170		6,237

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Operating Activities

Net cash used in operating activities was US$20,327,000 for the nine months ended December 31, 2011, as compared to net cash provided by operating activities of US$6,952,000 for the nine months ended December 31, 2010.

The decrease in cash inflow of US$27,279,000 was mainly attributable to the decrease in notes and trade payables by US$55,671,000 and an increase in inventories by US$6,608,000, offsetting the decrease in trade receivable by US$44,558,000 as compared with the same period in 2010.

Investing Activities

Net cash used in investing activities was US$53,058,000 and US$10,405,000 for the period ended December 31, 2011 and 2010, respectively.

The increase of US$42,653,000 net cash outflow was mainly attributable to an increase in the acquisition of property, plant and equipment of US$29,150,000, an investment in restricted bank balances of US$14,893,000 and a deposit paid for the acquisition of land and buildings of US$6,348,000, offset by the compensation received for loss on plant and machinery and leasehold improvement of US$6,658,000 and a decrease in the acquisition of available-for-sale financial assets of US$1,826,000.

Financing Activities

Net cash provided by financing activities was US$72,695,000 and US$3,491,000 for the periods ended December 31, 2011 and 2010.

The increase of US$69,204,000 was mainly attributable to the increase in proceeds from short-term bank loans of US$28,294,000 and bills financing of US$88,661,000, offset by an increase in the repayment of US$21,512,000 and bills financing of US$26,523,000.

Capital Commitment

As of December 31, 2011 and March 31, 2011, the Company had outstanding capital expenditure commitments of approximately US$128,619,000 and US$150,448,000, respectively, indicating a decrease of US$21,829,000, or 14.51%.

Off-Balance Sheet Arrangements

We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions of foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rates Risk

Our exposure to interest rate risk for changes in interest rates relates primarily to the interest-bearing bank loans and interest income generated by our bank deposits. We have not used any derivative financial instruments in our investment portfolio or for cash management purposes. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. Nevertheless, our future interest expense or interest income may expect to be decreased due to changes in interest rates in the PRC.

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Foreign Exchange Rates Risk

We do not hold any derivative instruments and do not engage in any hedging activities. Because most of our purchases and sales are made in RMB, any exchange rate change affecting the value of the RMB relative to the U.S. Dollar could have an effect on our financial results as reported in U.S. Dollars. If the RMB were to depreciate against the U.S. Dollar, amounts reported in U.S. Dollars would be correspondingly reduced. If the RMB were to appreciate against the U.S. Dollar, amounts reported in U.S. Dollars would be correspondingly increased.

Contractual Obligations

	Payments Due By Period
Contractual Obligations (US$)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Bank Indebtedness	(SEE TABLE BELOW)
Other Indebtedness		0		0		0		0		0
Capital Lease Obligations		0		0		0		0		0
Operating Lease Obligations	(SEE TABLE BELOW)
Purchase Obligations	(SEE TABLE BELOW)
Other Long-Term Liabilities Reflected on the Company’s Balance Sheet under US GAAP		0		0		0		0		0
Total:		0		0		0		0		0

Bank indebtedness (US$)	December 31, 2011		March 31, 2011
Short-term bank borrowings	US$	139,512,000	US$	65,159,000
Notes payable (within (1) year)	US$	13,224,000	US$	48,640,000
Total	US$	152,736,000	US$	113,799,000

Purchase Obligations (US$)	December 31, 2011		March 31, 2011
Construction projects and purchase of machinery	US$	128,619,000	US$	150,448,000
Total	US$	128,619,000	US$	150,448,000

Operating Lease Obligations (US$)	December 31, 2011		March 31, 2011
Within one (1) year	US$	450,000	US$	655,000
1-3 years	US$	539,000	US$	1,196,000
3-5 years	US$	-	US$	120,000
Over five (5) years	US$	-	US$	-
Total	US$	989,000	US$	1,971,000

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. Based on this evaluation, our management, including our principal executive officer and our principal financial and accounting officer, concluded that our disclosure controls and procedures were effective as of the fiscal quarter covered by this report, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act (i) is recorded, processed, summarized and reported within the time period specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our principal executive officer and our principal financial and accounting officer, as appropriate to allow appropriate decisions on a timely basis regarding required disclosure.

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Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the normal course of business, we are named as defendant in lawsuits in which claims are asserted against us. In our opinion, the liabilities, if any, which may ultimately result from such lawsuits, are not expected to have a material adverse effect on our financial position, results of operations or cash flows. As of December 31, 2011, there was no pending or outstanding material litigation with the Company.

ITEM 1A. RISK FACTORS

Not required for a “smaller reporting company”.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINING SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(a) Exhibits

EXHIBIT NO.		DESCRIPTION		LOCATION

2.1	Share Exchange Agreement, dated November 12, 2008, by and among World Trophy Outfitters, Inc., Fast More Limited, Cheer Gold Development Ltd. and Floster Investment Limited	Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

3.1	Articles of Incorporation of World Trophy Outfitters, Inc. (n/k/a Chisen Electric Corporation)	Incorporated by reference to Exhibit 3(i).1 to the Registrant’s Registration Statement on Form SB-2 as filed with the SEC on September 23, 2005

3.2	Certificate of Amendment to Articles of Incorporation of Chisen Electric Corporation (name change)	Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009

3.3	Amended and Restated Bylaws of Chisen Electric Corporation	Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009

3.4	Certificate of Incorporation of Fast More Limited, dated December 17, 2007	Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

3.5	Memorandum and Articles of Association of Fast More Limited, dated as of December 17, 2007	Incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

3.6	Certificate of Incorporation of Changxing Chisen Electric Co., Ltd.	Incorporated by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

3.7	Articles of Association of Changxing Chisen Electric Co., Ltd.	Incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

3.8	Business Registration Certificate of Changxing Chisen Electric Co., Ltd. (English Translated Version and Mandarin Version)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

3.9	Certificate of Change to Articles of Incorporation of Chisen Electric Corporation (Forward Split)	Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on November 28, 2011

10.1	Agreement on Establishment of Changxing Chisen Physical Chemistry Power Research and Development Center, dated April 30, 2008	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.2	Form of Labor Contract	Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.3	Lease Agreement, dated March 30, 2008, by and between Changxing Chisen Electric Co., Ltd. and Changxing Xiangyi Industrial Park Investment Co., Ltd.	Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.4	Contract For Loan on Guarantee, by and among Zhejiang Changxing Agricultural Cooperative Bank, Changxing Chisen Electric Co., Ltd. and Zhejiang Chisen Glass Co., Ltd.	Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.5	Renminbi Loan Contract, dated January 11, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Corporation (Changxing Branch)	Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

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10.6	Renminbi Loan Contract, dated April 11, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Corporation (Changxing Branch)	Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.7	Renminbi Loan Contract, dated March 31, 2008, by and between Changxing Chisen Electric Co., Ltd. and Bank of China (Hong Kong) Limited Shanghan Branch	Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.8	Loan Contract (Short Term), dated August 15, 2008, by and between Changxing Chisen Electric Co., Ltd. and Bank of China Changxing Branch	Incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.9	Acceptance Agreement, dated August 25, 2008, by and between Changxing Chisen Electric Co., Ltd. and Industrial Bank Co., Ltd. Hangzhou Branch	Incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.10	Acceptance Agreement of Commercial Bill, dated September 18, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Bank Co., Ltd. Changxing Branch	Incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.11	Cooperation Agreement, dated April 20, 2008, by and between Changxing Chisen Electric Co., Ltd. and Xiamen University	Included by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K as filed with the SEC on June 28, 2010

10.11	Acceptance Agreement of Commercial Bill, dated July 29, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Changxing Branch Co., Ltd.	Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.12	Acceptance Agreement of Commercial Bill, dated September 9, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Changxing Branch Co., Ltd.	Incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.13	Components Purchase Contract, effective as of January 1, 2008, by and between Changxing Chisen Electric Co., Ltd. and Jiansu Xinri Electric Bicycle Co., Ltd.	Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.14	Supply Contract, dated April 22, 2008, by and between Changxing Chisen Electric Co., Ltd. And Jiangsu Yadea Science & Technology Development Co., Ltd.	Incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.15	Sales Contract of Battery, dated November 10, 2007, by and between Changxing Chisen Electric Co., Ltd. and Hu Qinzhong, Yancheng Office	Incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

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10.16	Sales Contract of Battery, dated February 17, 2008, by and between Changxing Chisen Electric Co., Ltd. and Song Chunwei	Incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

10.17	Compensation Agreement of Corporate Relocation Acquisition, dated August 20, 2010, by and between the Company’s chief operating subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing Economic Development Zone, Zhejiang	Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on August 24, 2010.

10.18	Investment Agreement, dated August 20, 2010, by and between the Company’s chief operating subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing Economic Development Zone, Zhejiang	Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K as filed with the SEC on August 24, 2010.

10.19	Supplemental Agreement, dated August 20, 2010, by and between the Company’s chief operating subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing Economic Development Zone, Zhejiang	Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K as filed with the SEC on August 24, 2010.

10.20	Xuyi Economic Development Zone Project Investment Contract, dated September 6, 2010, by and between Chisen Electric Jiangsu Co., Ltd. and Jiangsu Xuyi Economic Development Zone Administrative Committee	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on September 13, 2010.

10.21	Xuyi Economic Development Zone Project Investment Contract Supplemental Agreement, dated September 6 2010, by and between Chisen Electric Jiangsu Co., Ltd. and Jiangsu Xuyi Economic Development Zone Administrative Committee	Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on September 13, 2010.

10.22	Electrode Purchase Contract, dated August 2, 2010, by and between Changxing Chisen Electric Co., Ltd. and Jiangsu XiangFa Electric Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.25	Sales Contract, dated August 31, 2009, by and between Changxing Chisen Electric Co., Ltd. and Anqing Burui Power Supply Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.26

Contract, dated November 24, 2009, by and between Changxing Chisen Electric Co., Ltd. and Anyang City Yubei Gold and Lead Co., Ltd. (English Translated and Mandarin Versions)

Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

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10.27		Parts Acquisition Contract, dated January 1, 2010, by and between Changxing Chisen Electric Co., Ltd. and Jiangsu Xinri E-Vehicle Co., Ltd. (English Translated and Mandarin Versions)		Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.29	Contract, dated August 1, 2010, by and between Changxing Chisen Electric Co., Ltd. and Tianjin Aima Technology Company Limited (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.30	Supplementary Agreement of Changxing Chisen Electric Co., Ltd. Relocation Project (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.31	Contract of Guaranty of Maximum Amount, dated on our about February 10, 2010, by and between Agricultural Bank of China (Changxing County Branch) and Zhejiang Chisen Glass Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.32	Guarantee Contact, dated on or about April 2, 2010, by and between China Construction Bank Corporation (Changxing Branch) and Zhejiang Chisen Glass Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.33	Contract Guarantee of Maximum Amount, dated on or about April 14, 2009, by and between Shanghai Pudong Development Bank (Huzhou Branch) and Zhejiang Changxing Chisen Xinguangyuan Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.34	Guarantee Contract, dated on or about January 12, 2010, by and between Changxing Economic Development Zone and Zhejiang Changxing Ruilang Electric Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.35	Contract of Guarantee with a Maximum Amount, dated on or about July 1, 2008, by and between Bank of China (Changxing Branch) and Mr. Xu Kecheng (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.36	Contract of Guarantee, undated, by and between CITIC Trust Co., Ltd. and Zhejiang Changxing Xinguangyuan Co., Ltd. (RMB40,000,000) (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.37	Contact of Guarantee, undated, by and between CITIC Trust Co., Ltd. and Zhejiang Changxing Chisen Xinguangyuan Co., Ltd. (RMB60,000,000) (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

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10.38	Guarantee Contract (64720012302010005), dated January 13, 2010, by and among China Construction Bank Corporation, on the one hand, and Mr. Xu Kecheng and Ms. Zho Fangqin, on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.39	Guarantee Contract (64720012302010004), dated January 13, 2010, by and among China Construction Bank Corporation, on the one hand, and Mr. Xu Kecheng and Ms. Zho Fangqin, on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.40	Contract of Guarantee of Maximum Amount (33905201000030826), undated, by and between Agricultural Bank of China Changxing County Sub-branch, on the one hand, and Zhejiang Chisen Glass Co., Ltd., on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.41	Contract of Guarantee with a Maximum Amount (BOC 130), dated October 25, 2010, by and between Xu Kecheng and Zho Fangqin, on the one hand, and Bank of China Ltd., on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.42	Contract of Guarantee (3350012010AM00077300), dated November 16, 2010, by and between Zhejiang Changxing Chisen Xinguangyuan Co., Ltd. and Bank of Communication (Huzhou Branch) (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.43	Contract of Guarantee (3350012010AM00077301), dated November 16, 2010, by and between Xu Kecheng and Zho Fangqin, on the one hand, and Bank of Communication (Huzhou Branch) on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.44

Guarantee Contract (6435009992012194), dated September 27, 2010, by and between Xu Kecheng and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English Translated and Mandarin Versions)

Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

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10.45

Guarantee Contract (64720012302010012), dated April 19, 2010, by and between Xu Kecheng and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English Translated and Mandarin Versions)

Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.46	Guarantee Contract (647200123020100201), dated October 9, 2010, by and between Xu Kecheng and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.47	Guarantee Contract (64720092302010036), dated October 18, 2010, by and between Xu Kecheng and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.48	Guarantee Contract (647200923020100381), dated November 10, 2010, by and between Xu Kecheng and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.49	Contract of Guarantee (P2009M17SZJZH0001JF14-0081-1) under Trust Loan Contract No. P2009M17SZJZH0001JF14-0081-1 , undated, by and between Xu Kecheng and CITIC Trust Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.50	Contract of Guarantee (P2009M17SZJZH0001JF14-0081-2) under Trust Loan Contract No. P2009M17SZJZH0001JF14-0081-2), undated, by and between Xu Kecheng and CITIC Trust Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.51

Contract of Guarantee (003), by and between Zhejiang Changxing Chisen Xinguangyuan Co., Ltd. and the Bank of China (English Translated and Mandarin Versions)

Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.52	Contract by and between Changxing Chisen Electric Co., Ltd. and Zhejiang Chisen Glass Co., Ltd. dated March 8, 2010 (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.53	Contract by and between Changxing Chisen Electric Co., Ltd. and Zhejiang Chisen Glass Co., Ltd., dated December 20, 2010 (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

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10.54	Contract by and between Changxing Chisen Electric Co., Ltd. and Zhejiang Changxing Ruilang Electronic Company Limited dated October 18, 2010 (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.55	Summary of Oral Loan Agreement with Ai Ge Organism Products Company Limited	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.56	Electrode Purchase Contract, dated August 2, 2010, by and between Changxing Chisen Electric Co., Ltd. and Jiangsu XiangFa Electric Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.57	Electrode Plate Supply Contract, by and between Changxing Chisen Electric Co., Ltd. and Anqing Borui Power Supply Co., Ltd., dated August 2, 2010 (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.58	Guarantee Contract (6472009992011036), dated March 31, 2011, by and between Xu Kecheng, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.59	Shanghai Pudong Development Bank Contract of Guarantee of Maximum Amount, dated March 31, 2011, by and between Shanghai Pudong Development Bank Huzhou Sub-branch and Zhejiang Chisen Glass Co., Ltd. (English Translated and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

10.60

Shanghai Pudong Development Bank Contract of Guarantee of Maximum Amount, dated March 31, 2011, by and between Shanghai Pudong Development Bank Huzhou Sub-branch and Zhejiang Changxing Chisen Xingguangyuan Co., Ltd. (English Translated and Mandarin Versions)

Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

14.1	Code of Business Conduct and Ethics	Incorporated by reference to Exhibit 14.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009

16.1	Letter to SEC from Pritchett, Siler & Hardy, P.C.	Incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K as filed with the SEC on January 21, 2009

17	Resignation of Mathew Evans, dated November 12, 2008	Incorporated by reference to Exhibit 17 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008

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21	List of Subsidiaries	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

31.1	Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Provided herewith

31.2	Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Provided herewith

32.1	Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002	Provided herewith

32.2	Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002	Provided herewith

99.1	Audit Committee Charter, dated January 15, 2009	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009

99.2	Compensation Committee Charter, dated January 15, 2009	Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009

99.3

Corporate Governance and Nominating Committee Charter, dated January 15, 2009

Incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009

99.4	China Battery Industry Association Certificate of Ranking (English Translated Version)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

99.5	China News Article entitled “Electric Bicycles are Involved in Government’s Subsidy Program” (English and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

99.6	Subsidize Policy on New Energy Vehicle (English and Mandarin Versions)	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on June 14, 2011

101.INS		XBRL Instance Document provided herewith.

101.CAL		XBRL Taxonomy Extension Calculation Linkbaset provided herewith.

101.DEF		XBRL Taxonomy Extension Definition Linkbaset provided herewith.

101.LAB		XBRL Taxonomy Extension Label Linkbaset provided herewith.

101.PRE		XBRL Taxonomy Extension Presentation Linkbaset provided herewith.

101.SCH		XBRL Taxonomy Extension Schema provided herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 14, 2012	By:	/s/ Xu Kecheng
		Name: Xu Kecheng
		Its: President, Chief Executive
		Officer and Principal Executive
		Officer

Date: February 14, 2012	By:	/s/ Liu Chuanjie
		Name: Liu Chuanjie
		Its: Chief Financial Officer, Principal Financial and Accounting Officer

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Chisen Electric Corp 10-Q