UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~November 30~~February 29, ~~2011~~2012

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

For the transition period from ______________ to ______________

Commission File Number: 333-118259

CHINA SUN GROUP HIGH-TECH CO. (Exact name of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)

Delaware	54-2142880
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1 Hutan Street, Zhongshan District

Dalian, The People’s Republic of China

(Address of principal executive offices) (Zip Code)

011 – 86- (411) 8288 9800/ 8289 2736

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ x Yes ¨□ No

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

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company þx

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes þ x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

There are presently 5556,~~962~~212,971 shares of common stock, $0.001 par value, issued and outstanding as of ~~December~~February 2829, ~~2011~~2012.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	9
Item 4.	Controls and Procedures.	9
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	10
Item 1A.	Risk Factors.	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	10
Item 3.	Defaults Upon Senior Securities.	10
Item 4.	~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~Disclosures	10
Item 5.	Other Information.	10
Item 6.	Exhibits.	10
Signatures		11

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CHINA SUN GROUP HIGH-TECH CO.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	~~Page~~	Page
Condensed Consolidated Balance Sheets as of November 30, 2011 and May 31, 2011	F-2
Condensed Consolidated Balance Sheets as of February 29, 2012 and May 31, 2011		F-2
Condensed Consolidated Statements of Operations And Comprehensive Income for the Three and Six Months ended November 30, 2011 and 2010	F-3
Condensed Consolidated Statements of Operations And Comprehensive Income for the Three and Nine Months ended February 29, 2012 and February 28, 2011		F-3
Condensed Consolidated Statements of Cash Flows for the Six Months ended November 30, 2011 and 2010	F-4
Condensed Consolidated Statements of Cash Flows for the Nine Months ended February 29, 2012 and February 28, 2011		F-4
Condensed Consolidated Statements of Stockholders’ Equity for the Six Months ended November 30, 2011	F-5
Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months ended February 29, 2012		F-5
Notes to Condensed Consolidated Financial Statements	~~F-6 – F-16~~	F-6 – F-16

F-1

CHINA SUN GROUP HIGH-TECH CO.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF ~~NOVEMBER~~FEBRUARY 3029, ~~2011~~2012 AND MAY 31, 2011

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	November 30, 2011			May 31, 2011
	February 29, 2012			May 31, 2011
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	2327,~~926~~796,~~083~~238		$	21,810,394
Accounts receivable, trade		4,~~580~~550,~~140~~321			2,465,862
Inventories		1841,~~018,117~~589			610,025
Deposits and prepayments		74,~~318~~228			1,026
Total current assets		2933,~~531~~192,~~658~~376			24,887,307
Non-current assets:
Technical know-how, net		2,~~372~~351,~~477~~772			2,420,278
Property, plant and equipment, net		2729,~~247~~659,~~063~~122			27,805,208
Construction in progress		2,590,438			-
TOTAL ASSETS	$	65,203,270		$	55,112,793
TOTAL ASSETS	$	61,741,636		$	55,112,793
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	~~536~~1,~~669~~081,287		$	-
Income tax payable		~~505~~539,~~940~~315			536,647
Other payables and accrued liabilities		1,~~428~~117,~~830~~602			1,163,324
Total liabilities		2,~~471~~738,~~439~~204			1,699,971
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 2,000,000 shares authorized; none of shares issued and outstanding		-			-
Common stock, $0.001 par value; 100,000,000 shares authorized; 55,962,971 shares issued and outstanding, respectively		55,963			55,963
Common stock, $0.001 par value; 100,000,000 shares authorized; 56,212,971 and 55,962,971 shares issued and outstanding, respectively		56,213			55,963
Additional paid-in capital		11,~~790~~858,~~789~~039			11,790,789
Accumulated other comprehensive income		67,~~497~~176,~~710~~336			5,457,233
Statutory reserve		34,~~342~~396,~~358~~344			3,342,358
Deferred compensation		(96,000	)		(96,000	)
Retained earnings		3739,~~679~~074,~~377~~134			32,862,479
Total stockholders’ equity		5962,~~270~~465,~~197~~066			53,412,822
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6165,~~741~~203,~~636~~270		$	55,112,793

See accompanying notes to condensed consolidated financial statements.

F-2

CHINA SUN GROUP HIGH-TECH CO.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE AND ~~SIX~~ NINE MONTHS ENDED ~~NOVEMBER 30~~FEBRUARY 29, ~~2011~~2012 ~~AND 2010~~

~~(Currency~~AND ~~expressed~~FEBRUARY ~~in United States Dollars (“US$”)~~28, ~~except for number of shares)~~2011

(~~Unaudited~~Currency expressed in United States Dollars (“US$”), except for number of shares)

	Three months ended November 30,						Six months ended November 30,
	2011			2010			2011			2010
Revenues, net	$	10,712,997			12,639,828		$	22,202,263		$	24,393,287
Cost of revenue (inclusive of depreciation and amortization)		7,116,356			8,568,216			14,754,207			16,614,672
Gross profit		3,596,641			4,071,612			7,448,056			7,778,615
Operating expenses:
Sales and marketing		43,840			37,447			81,039			68,773
Research and development		33,717			32,514			67,672			53,447
General and administrative		406,858			2,195,429			850,464			2,595,814
Total operating expenses		484,415			2,265,390			999,175			2,718,034
INCOME FROM OPERATIONS		3,112,226			1,806,222			6,448,881			5,060,581
Other income:
Other income		-			44,432			-			44,432
Interest income		19,988			13,212			33,561			23,851
INCOME BEFORE INCOME TAXES		3,132,214			1,863,866			6,482,442			5,128,864
Income tax expense		(800,424	)		(923,867	)		(1,665,544	)		(1,758,130	)
NET INCOME	$	2,331,790		$	939,999		$	4,816,898		$	3,370,734
Other comprehensive income:
- Foreign currency translation gain		34,688			944,317			1,040,477			1,051,560
COMPREHENSIVE INCOME	$	2,366,478		$	1,884,316		$	5,857,375		$	4,422,294
Net income per share – Basic and diluted	$	0.04		$	0.02		$	0.09		$	0.06
Weighted average common stock outstanding – Basic and diluted		55,962,971			55,017,415			55,962,971			54,220,193

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

	Three months ended February						Nine months ended February
	29, 2012			28, 2011			29, 2012			28, 2011

Revenues, net	$	11,268,804		$	13,359,930		$	33,471,067		$	37,753,217

Cost of revenue (inclusive of depreciation and amortization)		7,366,419			8,753,182			22,120,626			25,367,854

Gross profit		3,902,385			4,606,748			11,350,441			12,385,363

Operating expenses:
Sales and marketing		41,624			47,493			122,663			116,266
Research and development		33,798			33,838			101,470			87,285
General and administrative		529,005			858,580			1,379,469			3,454,394

Total operating expenses		604,427			939,911			1,603,602			3,657,945

INCOME FROM OPERATIONS		3,297,958			3,666,837			9,746,839			8,727,418

Other income:
Subsidy income		-			291			-			44,722
Interest income		20,550			14,240			54,111			38,091

INCOME BEFORE INCOME TAXES		3,318,508			3,681,368			9,800,950			8,810,231

Income tax expense		(869,765	)		(1,021,688	)		(2,535,309	)		(2,779,817	)

NET INCOME	$	2,448,743		$	2,659,680		$	7,265,641		$	6,030,414

Other comprehensive income:
- Foreign currency translation gain		678,626			650,847			1,719,103			1,702,407

COMPREHENSIVE INCOME	$	3,127,369		$	3,310,527		$	8,984,744		$	7,732,821

Net income per share – Basic and diluted	$	0.04		$	0.05		$	0.13		$	0.11

Weighted average common stock outstanding – Basic and diluted		55,998,685			55,639,638			55,974,964			54,693,341

~~F-3~~See accompanying notes to condensed consolidated financial statements.

~~CHINA SUN GROUP HIGH~~F-~~TECH CO.~~3

~~CONDENSED~~CHINA ~~CONSOLIDATED~~SUN ~~STATEMENTS~~GROUP OFHIGH-TECH ~~CASH FLOWS~~CO.

~~FOR~~CONDENSED ~~THE~~CONSOLIDATED ~~SIX~~STATEMENTS ~~MONTHS~~OF CASH ~~ENDED NOVEMBER 30 2011 AND 2010~~FLOWS

~~(Currency~~FOR ~~expressed~~THE inNINE ~~United~~MONTHS ~~States~~ENDED ~~Dollars~~FEBRUARY ~~(“US$”))~~29, 2012

~~(Unaudited)~~AND FEBRUARY 28, 2011

	Six months ended November 30,
	2011			2010
Cash flows from operating activities:
Net income	$	4,816,898		$	3,370,734
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		1,085,950			810,149
Amortization of technical know-how		92,447			87,876
Shares issued for services, non-cash		-			1,783,500
Changes in operating assets and liabilities:
Accounts receivable, trade		(2,055,044	)		(2,537,625	)
Inventories		(394,169	)		816,781
Deposits and prepayments		(6,232	)		(323,736	)
Accounts payable, trade		533,258			(1,745,030	)
Income tax payable		(40,479	)		(900,803	)
Other payables and accrued liabilities		(76,437	)		5,717
Net cash provided by operating activities		3,956,192			1,367,563
Cash flows from investing activities:
Purchase of plant and equipment		(207,988	)		(49,852	)
Payment on construction in progress		(2,059,180	)		-
Net cash used in investing activities		(2,267,168	)		(49,852	)
Effect of exchange rate changes on cash and cash equivalents		426,665			462,435
NET CHANGE IN CASH AND CASH EQUIVALENTS		2,115,689			1,780,146
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		21,810,394			18,017,266
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	23,926,083		$	19,797,412
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	1,706,022		$	2,658,933
Cash paid for interest	$	-		$	-

(Currency expressed in United States Dollars (“US$”))

~~See accompanying notes to condensed consolidated financial statements.~~(Unaudited)

F-4

	Nine months ended February
	29, 2012			28, 2011
Cash flows from operating activities:
Net income	$	7,265,641		$	6,030,414
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		1,679,459			1,223,915
Amortization of technical know-how		139,258			132,679
Shares issued for services, non-cash		67,500			2,064,125
Changes in operating assets and liabilities:
Accounts receivable, trade		(1,984,158	)		(125,965	)
Inventories		(210,471	)		586,798
Deposits and prepayments		(3,129	)		(536,805	)
Accounts payable, trade		1,067,124			(1,999,474	)
Customer deposits		-			187,520
Income tax payable		(13,254	)		(892,542	)
Other payables and accrued liabilities		(10,154	)		(54,348	)

Net cash provided by operating activities		7,997,816			6,616,317

Cash flows from investing activities:
Purchase of plant and equipment		(2,750,564	)		(52,513	)

Net cash used in investing activities		(2,750,564	)		(52,513	)

Effect of exchange rate changes on cash and cash equivalents		738,592			819,493

NET CHANGE IN CASH AND CASH EQUIVALENTS		5,985,844			7,383,297

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		21,810,394			18,017,266

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	27,796,238		$	25,400,563

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	2,548,564		$	3,742,036
Cash paid for interest	$	-		$	-

~~CHINA~~See ~~SUN~~accompanying ~~GROUP~~notes ~~HIGH-TECH~~to COcondensed consolidated financial statements.

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~F-4

~~FOR~~CHINA ~~THE~~SUN ~~SIX~~GROUP ~~MONTHS~~HIGH-TECH ~~ENDED NOVEMBER 30, 2011~~CO.

~~(Currency~~CONDENSED ~~expressed~~CONSOLIDATED inSTATEMENTS ~~United~~OF STOCKHOLDERS’ ~~States Dollars (“US$”), except for number of shares)~~EQUITY

~~(Unaudited)~~FOR THE NINE MONTHS ENDED FEBRUARY 29, 2012

	Preferred stock				Common stock				Additional		Accumulated other									Total
	No. of share		Amount		No. of share		Amount		paid-in capital		comprehensive income		Statutory reserve		Deferred compensation			Retained earnings		stockholders’ equity
Balance as of June 1, 2011		-	$	-		55,962,971	$	55,963	$	11,790,789	$	5,457,233	$	3,342,358	$	(96,000	)	$	32,862,479	$	53,412,822
Net income for the period		-		-		-		-		-		-		-		-			4,816,898		4,816,898
Foreign currency translation adjustment		-		-		-		-		-		1,040,477		-		-			-		1,040,477
Balance as of November 30, 2011		-	$	-		55,962,971	$	55,963	$	11,790,789	$	6,497,710	$	3,342,358	$	(96,000	)	$	37,679,377	$	59,270,197

(Currency expressed in United States Dollars (“US$”), except for number of shares)

~~See accompanying notes to condensed consolidated financial statements.~~(Unaudited)

F-5

	Preferred stock				Common stock				Additional		Accumulated other										Total
	No. of share		Amount		No. of share		Amount		paid-in capital		comprehensive income		Statutory reserve		Deferred compensation			Retained earnings			stockholders’ equity

Balance as of June 1, 2011		-	$	-		55,962,971	$	55,963	$	11,790,789	$	5,457,233	$	3,342,358	$	(96,000	)	$	32,862,479		$	53,412,822

Net income for the period		-		-		-		-		-		-		-		-			7,265,641			7,265,641

Stock-based compensation		-		-		250,000		250		67,250		-		-		-			-			67,500

Appropriations to statutory reserve		-		-		-		-		-		-		1,053,986					(1,053,986	)		-

Foreign currency translation adjustment		-		-		-		-		-		1,719,103		-		-			-			1,719,103

Balance as of February 29, 2012		-	$	-		56,212,971	$	56,213	$	11,858,039	$	7,176,336	$	4,396,344	$	(96,000	)	$	39,074,134		$	62,465,066

~~CHINA~~See ~~SUN~~accompanying ~~GROUP~~notes ~~HIGH-TECH~~to COcondensed consolidated financial statements.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~F-5

~~FOR~~CHINA ~~THE~~SUN ~~SIX~~GROUP ~~MONTHS~~HIGH-TECH ~~ENDED NOVEMBER 30, 2011~~CO.

~~(Currency~~NOTES ~~expressed~~TO inCONDENSED ~~United~~CONSOLIDATED ~~States Dollars (“US$”), except for number of shares)~~FINANCIAL STATEMENTS

~~(Unaudited)~~FOR THE NINE MONTHS ENDED FEBRUARY 29, 2012

~~NOTE－1~~(Currency ~~BASIS~~expressed OFin ~~PRESENTATION~~United States Dollars (“US$”), except for number of shares)

~~The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States~~ (~~“GAAP”~~Unaudited) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

InNOTE - ~~the~~1 BASIS ~~opinion~~OF of management, the consolidated balance sheet as of May 31, 2011 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended November 30, 2011 are not necessarily indicative of the results to be expected for the entire fiscal year ending May 31, 2012 or for any future periods.PRESENTATION

~~These~~The accompanying unaudited condensed consolidated financial statements ~~and~~have ~~notes~~been ~~thereto~~prepared ~~should~~by bemanagement ~~read~~ in ~~conjunction~~accordance with both accounting principles generally accepted in the ~~Management’s~~United States ~~Discussion~~(“GAAP”) and the ~~audited~~instructions ~~financial~~to ~~statements~~Form 10-Q and ~~notes~~Rule ~~thereto~~10-01 of Regulation S-X. Certain information and note disclosures normally included in ~~the~~audited ~~Annual~~financial ~~Report~~statements onprepared ~~Form~~in ~~10-K~~accordance ~~for~~with ~~the~~generally ~~year~~accepted ~~ended~~accounting ~~May~~principles 31have been condensed or omitted pursuant to those rules and regulations, ~~2011~~although the Company believes that the disclosures made are adequate to make the information not misleading.

~~NOTE－2~~In ~~ORGANIZATION~~the ~~AND~~opinion ~~BUSINESS~~of ~~BACKGROUND~~management, the consolidated balance sheet as of May 31, 2011 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended February 29, 2012 are not necessarily indicative of the results to be expected for the entire fiscal year ending May 31, 2012 or for any future periods.

~~China~~These ~~Sun~~unaudited ~~Group~~condensed ~~High-Tech~~consolidated financial ~~Co.~~statements ~~(the~~and ~~“Company”~~notes orthereto ~~“CSGH”)~~should ~~was~~be ~~organized~~read ~~under~~in ~~the~~conjunction ~~laws~~with of the ~~State~~Management’s ofDiscussion ~~North~~and ~~Carolina~~the onaudited ~~February~~financial statements 2,and ~~2004~~notes asthereto aincluded ~~subchapter S-Corporation. On August 24, 2007, the Company was reincorporated~~ in the ~~State~~Annual ofReport ~~Delaware~~on ~~and~~Form ~~changed~~10-K ~~its~~for ~~name~~the ~~from~~year ~~“Capital~~ended ~~Resource~~May ~~Funding~~31, ~~Inc~~2011.~~” to “China Sun Group High-Tech Co.”~~

~~The~~NOTE - ~~Company,~~2 ORGANIZATION ~~through~~AND ~~its~~BUSINESS operating subsidiaries in the People Republic of China (the “PRC”), mainly engages in the production and sales of cobaltosic oxide and lithium iron phosphate, both cathode materials used in lithium ion rechargeable batteries in the PRC.BACKGROUND

China Sun Group High-Tech Co. (the “Company” or “CSGH”) ~~and~~was ~~its~~organized ~~subsidiaries~~under ~~are~~the ~~hereinafter~~laws ~~referred~~of tothe State of North Carolina on February 2, 2004 as a subchapter S-Corporation. On August 24, 2007, the “Company was reincorporated in the State of Delaware and changed its name from “Capital Resource Funding, Inc.” to “China Sun Group High-Tech Co.”

~~NOTE－3~~The ~~SUMMARY~~Company, OFthrough ~~SIGNIFICANT~~its ~~ACCOUNTING~~operating ~~POLICIES~~subsidiaries in the People Republic of China (the “PRC”), mainly engages in the production and sales of cobaltosic oxide and lithium iron phosphate, both cathode materials used in lithium ion rechargeable batteries in the PRC.

~~The~~CSGH ~~accompanying~~and ~~condensed~~its ~~consolidated~~subsidiaries ~~financial~~are ~~statements~~hereinafter referred ~~reflect~~to ~~the application of certain significant accounting policies~~ as ~~described in this note and elsewhere in~~ (the ~~accompanying condensed consolidated financial statements and notes~~“Company”).

·NOTE - ~~Use~~3 SUMMARY ofOF ~~estimates~~SIGNIFICANT ACCOUNTING POLICIES

InThe ~~preparing~~accompanying ~~these~~ condensed consolidated financial statements, ~~management~~reflect ~~makes estimates and assumptions that affect~~ the ~~reported~~application ~~amounts~~ of ~~assets~~certain ~~and~~significant ~~liabilities~~accounting inpolicies ~~the~~as ~~balance~~described ~~sheets~~in ~~and~~this ~~revenues~~note and ~~expenses~~elsewhere in ~~during~~ the ~~periods~~accompanying ~~reported. Actual~~condensed ~~results~~consolidated ~~may~~financial ~~differ~~statements ~~from~~and ~~these estimates~~notes.

· ~~Basis~~Use of ~~consolidation~~estimates

~~The~~In preparing these condensed consolidated financial statements, ~~include~~management makes estimates and assumptions that affect the ~~financial~~reported ~~statements~~amounts of ~~CSGH~~assets and ~~its~~liabilities ~~subsidiaries.~~in the ~~All~~balance ~~significant~~sheets ~~inter-company~~and ~~balances~~revenues and ~~transactions~~expenses ~~within~~during the ~~Company~~periods ~~have~~reported. ~~been~~Actual ~~eliminated~~results ~~upon~~may ~~consolidation~~differ from these estimates.

~~F-6~~· Basis of consolidation

~~CHINA~~The ~~SUN~~condensed ~~GROUP~~consolidated ~~HIGH~~financial statements include the financial statements of CSGH and its subsidiaries. All significant inter-~~TECH~~company CObalances and transactions within the Company have been eliminated upon consolidation.

~~NOTES~~· TOCash ~~CONDENSED~~and ~~CONSOLIDATED~~cash ~~FINANCIAL STATEMENTS~~equivalents

~~FOR~~Cash ~~THE~~and ~~SIX~~cash ~~MONTHS~~equivalents ~~ENDED~~are ~~NOVEMBER~~carried 30at cost and represent cash on hand, ~~2011~~demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

~~(Currency expressed in United States Dollars (“US$”), except for number of shares)~~F-6

~~(Unaudited)~~CHINA SUN GROUP HIGH-TECH CO.

·NOTES ~~Cash~~TO ~~and~~CONDENSED ~~cash~~CONSOLIDATED ~~equivalents~~FINANCIAL STATEMENTS

~~Cash~~FOR ~~and~~THE ~~cash~~NINE ~~equivalents~~MONTHS ~~are~~ENDED ~~carried~~FEBRUARY ~~at cost and represent cash on hand~~29, ~~demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.~~ 2012

~~The~~(Currency ~~Company~~expressed ~~maintains cash balances at one financial institution~~ in ~~the~~United ~~PRC,~~States Dollars ~~which are insured by China Citic Bank. The Company has cash concentration risk of~~ (“US$23”),~~925,901~~ asexcept offor ~~November~~number ~~30,~~of ~~2011.~~shares)

~~· Accounts receivable~~(Unaudited)

~~Accounts receivable are recorded at the invoiced amount and do not bear interest.~~ The Company ~~extends~~maintains ~~unsecured~~cash ~~credit~~balances toat one ~~its~~financial ~~customers~~institution in the ~~ordinary~~PRC, ~~course~~which ofare ~~business~~maintained ~~but mitigates the associated risks~~ by ~~performing~~China ~~credit~~Citic ~~checks and actively pursuing past due accounts~~Bank. AnThe ~~allowance~~Company ~~for~~has ~~doubtful~~cash ~~accounts~~concentration isrisk ~~established and determined based on management’s assessment~~ of ~~known requirements~~$27,794,214 as ~~aging~~ of ~~receivables,~~February ~~payment history~~29, ~~the customers’ current credit worthiness and the economic environment~~2012.

· ~~Inventories~~Accounts receivable

~~Inventories~~Accounts ~~include~~receivable ~~material, labor and manufacturing overhead and~~ are ~~stated~~recorded at ~~lower~~the invoiced ofamount ~~cost~~and ordo ~~market~~not ~~value,~~bear ~~cost being determined on a weighted average method~~interest. The Company ~~periodically~~extends ~~reviews~~unsecured ~~historical~~credit ~~sales activity~~ to ~~determine~~its ~~excess,~~customers ~~slow~~in ~~moving~~the ~~items~~ordinary ~~and~~course ~~potentially~~of ~~obsolete~~business but ~~items~~mitigates ~~and~~the ~~also~~associated ~~evaluates~~risks ~~the~~by ~~impact~~performing ofcredit ~~any~~checks ~~anticipated~~and ~~changes~~actively inpursuing ~~future~~past ~~demand~~due accounts. ~~The~~An ~~Company~~allowance ~~provides~~for ~~inventory~~doubtful accounts ~~allowances~~is ~~based~~established ~~on excess~~ and ~~obsolete~~determined ~~inventories~~based ~~determined~~on ~~principally~~managements’ byassessment ~~customer~~of ~~demand.~~known Asrequirements, aging of ~~November 30~~receivables, ~~2011~~payment history, the ~~Company~~customers’ ~~did~~current ~~not~~credit ~~record~~worthiness anand ~~allowance~~the ~~for~~economic ~~obsolete inventories, nor have there been any write-offs~~environment.

· ~~Technical know-how~~Inventories

~~Technical~~Inventories ~~know-how~~include ~~represents~~material, ~~the~~labor ~~developed~~and manufacturing ~~product~~overhead ~~technology~~and ~~acquired~~are ~~from~~stated aat ~~third~~lower ~~party~~of ~~and~~cost isor ~~carried~~market atvalue, ~~its~~cost ~~purchase~~being ~~cost,~~determined ~~net~~on ofa ~~accumulated~~weighted ~~amortization~~average method. The Company ~~determined~~periodically ~~that~~reviews ~~the~~historical ~~estimated~~sales ~~useful~~activity ~~life~~to ofdetermine ~~the~~excess, ~~acquired~~slow ~~technology~~moving isitems 15and ~~years~~potentially obsolete items and also ~~subject~~evaluates tothe ~~amortization~~impact ~~using~~of aany ~~straight-line~~anticipated ~~basis~~changes ~~over~~in ~~the~~future ~~estimated~~demand. ~~useful~~The ~~life~~Company ~~when~~provides ~~its~~inventory ~~developed~~allowances ~~products~~based ~~are~~on ~~approved~~excess and obsolete inventories determined principally by customer demand. As of February 29, 2012, the ~~government~~Company ~~agency~~did not record an allowance for obsolete inventories, nor have there been any write-offs.

~~Amortization~~· ~~expense~~Technical ~~for the three months ended November 30, 2011 and 2010 were $46,451 and $44,275, respectively, which was recorded in cost of revenue.~~know-how

~~Amortization~~Technical ~~expense~~know-how ~~for~~represents the ~~six~~developed product ~~months~~technology ~~ended~~acquired ~~November~~from ~~30,~~a ~~2011~~third party and ~~2010~~is ~~were~~carried ~~$92,447~~at ~~and~~its ~~$87,876,~~purchase ~~respectively~~cost, ~~which~~net ~~was~~of ~~recorded~~accumulated inamortization. ~~cost~~The Company determined that the estimated useful life of ~~revenue~~the acquired technology is 15 years and subject to amortization using a straight-line basis over the estimated useful life when its developed products are approved by the government agency.

·Amortization ~~Property~~expense for the three months ended February 29, ~~plant~~2012 and ~~equipment~~February 28, 2011 were $46,811 and $44,803, respectively, which was recorded in cost of revenue.

~~Property,~~Amortization ~~plant~~expense ~~and~~for ~~equipment~~the ~~are~~nine ~~stated~~months ended atFebruary ~~cost~~29, ~~less~~2012 ~~accumulated depreciation~~ and ~~accumulated~~February ~~impairment losses~~28, if2011 ~~any.~~were ~~Depreciation~~$139,258 isand ~~calculated~~$132,679, onrespectively, ~~the straight-line basis over the following expected useful lives from the date on~~ which ~~they~~was ~~become~~recorded ~~fully~~in ~~operational~~cost ~~and~~of ~~after taking into account their estimated residual values:~~revenue.

	Expected useful lives	Residual value
Building	20-40 years		5	%
Plant and machinery	5-40 years		5	%
Office equipment	5 years		5	%
Motor vehicle	5 years		5	%

Property, plant and equipment

FProperty, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-7line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

CHINA SUN GROUP HIGH-TECH CO.

	Expected useful lives	Residual value
Building	20-40 years	5	%
Plant and machinery	5-40 years	5	%
Office equipment	5 years	5	%
Motor vehicle	5 years	5	%

~~NOTES~~Expenditure TOfor ~~CONDENSED~~repairs ~~CONSOLIDATED~~and ~~FINANCIAL~~maintenance is ~~STATEMENTS~~expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

~~FOR~~Depreciation ~~THE~~expense ~~SIX~~for ~~MONTHS~~the ~~ENDED~~three ~~NOVEMBER~~months ended 30February 29, 2012 and February 28, 2011 were $593,509 and $413,766, which included $531,486 and $277,271 in cost of revenue, respectively.

~~(Currency~~Depreciation ~~expressed~~expense infor ~~United~~the ~~States~~nine ~~Dollars~~months ended ~~(“US~~February 29, 2012 and February 28, 2011 were $”)1,679,459 ~~except~~and ~~for~~$1,223,915, ~~number~~which included $1,494,239 and $1,020,584 in cost of ~~shares)~~revenue, respectively.

~~(Unaudited)~~F-7

~~Expenditure~~CHINA ~~for~~SUN ~~repairs~~GROUP ~~and~~HIGH-TECH ~~maintenance is expensed as incurred~~CO. ~~When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.~~

~~Depreciation~~NOTES ~~expense~~TO ~~for~~CONDENSED ~~the~~CONSOLIDATED ~~three months ended November 30, 2011 and 2010 were $545,729 and $408,826, which included $483,693 and $408,313 in cost of revenue, respectively.~~FINANCIAL STATEMENTS

~~Depreciation~~FOR ~~expense~~THE ~~for~~NINE ~~the~~MONTHS ~~six~~ENDED ~~months~~FEBRUARY ~~ended November 30~~29, ~~2011 and 2010 were $1,085,950 and $810,149, which included $962,753 and $743,313 in cost of revenue, respectively.~~ 2012

·(Currency ~~Construction~~expressed in ~~progress~~United States Dollars (“US$”), except for number of shares)

Construction in progress is stated at cost, which includes cost attributable to the conversion of two production lines to the manufacture of lithium iron phosphate. Construction in progress is not depreciated until such time as the assets are completed and put into operational use. No interest was capitalized during the period of construction. The new production lines are expected to be completed and put into operational use in the third quarter of fiscal 2012.(Unaudited)

Valuation of long-lived assets

Long-lived assets primarily include technical know-how, ~~construction in progress~~ and property, plant and equipment. In accordance with Accounting Standards Codification (“ASC”) Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets,” the Company periodically reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If an impairment is indicated, the asset is written down to its estimated fair value based on a discounted cash flow analysis. Determining the fair value of long-lived assets includes significant judgment by management, and different judgments could yield different results. There has been no impairment charge for the periods presented.

Revenue recognition

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectibility is reasonably assured.

Revenue is recognized when products are delivered to customers. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures and the customer’s acceptance.

Revenue represents the invoiced value of goods, net of value-added tax (“VAT”). All of the Company's products that are sold in the PRC are subject to VAT which is levied at the rate of 17% on the invoiced value of sales. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export sales.

Comprehensive income

ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during the period from non-owner sources. Accumulated comprehensive income consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

~~F-8~~· Income taxes

~~CHINA~~The ~~SUN~~provision ~~GROUP~~for ~~HIGH-TECH~~income COtaxes is determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

~~NOTES~~ASC TO740 ~~CONDENSED~~prescribes ~~CONSOLIDATED~~a ~~FINANCIAL~~comprehensive ~~STATEMENTS~~model for how companies should recognize, measure, present, and disclose in the financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

~~FOR~~For ~~THE~~the ~~SIX~~nine ~~MONTHS~~months ~~ENDED~~ended ~~NOVEMBER~~February 3029, 2012 and February 28, 2011, the Company did not have any interest and penalties associated with tax positions. As of February 29, 2012, the Company did not have any significant unrecognized uncertain tax positions.

~~(Currency expressed in United States Dollars (“US$”), except for number of shares)~~F-8

~~(Unaudited)~~ CHINA SUN GROUP HIGH-TECH CO.

·NOTES ~~Income~~TO ~~taxes~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~The~~FOR ~~provision~~THE ~~for~~NINE ~~income~~MONTHS ~~taxes~~ENDED isFEBRUARY ~~determined in accordance with the provisions of ASC Topic 740~~29, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 2012

~~ASC~~(Currency ~~740~~expressed ~~prescribes a comprehensive model for how companies should recognize, measure, present, and disclose~~ in ~~the~~United ~~financial~~States Dollars ~~statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740~~(“US$”), ~~tax~~except ~~positions~~for ~~must~~number initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of ~~tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authorities assuming full knowledge of the position and relevant facts.~~shares)

For the six months ended November 30, 2011 and 2010, the Company did not have any interest and penalties associated with tax positions. As of November 30, 2011, the Company did not have any significant unrecognized uncertain tax positions.(Unaudited)

The Company conducts major businesses in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax ~~authorities~~authority.

Net income per share

The Company calculates net income per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the condensed consolidated statement of operations.

The reporting currency of the Company is United States Dollar ("US$"). The Company's subsidiaries in the PRC, maintain their books and records in their local currency, Renminbi Yuan ("RMB"), which is ~~the~~ functional currency as being the primary currency of the economic environment in which these entities operate.

In general, for consolidation purposes, assets and liabilities of ~~the~~its ~~Company’s~~ subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective period:

	November 30, 2011		November 30, 2010
	February 29, 2012		February 28, 2011
Period-end RMB:US$1 exchange rate		6.~~3773~~3073		6.~~6714~~5830
Average period RMB:US$1 exchange rate		6.~~4181~~3910		6.~~7519~~7079

~~F-9~~· Related parties

~~CHINA~~Parties, ~~SUN~~which ~~GROUP~~can ~~HIGH-TECH~~be COa corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

~~NOTES~~· TOSegment ~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~reporting

~~FOR~~ASC ~~THE~~Topic ~~SIX~~280, ~~MONTHS~~“Segment ~~ENDED~~Reporting” establishes ~~NOVEMBER~~standards 30for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, ~~2011~~business segments and major customers in the financial statements. For the nine months ended February 29, 2012, the Company operates one reportable business segment in the PRC.

~~(Currency~~· ~~expressed~~Stock inbased ~~United States Dollars (“US$”), except for number of shares)~~compensation

~~(Unaudited)~~For non-employee stock based compensation, the Company adopts ASC Topic 505-50, “Equity-Based Payments to Non-Employees,” stock based compensation related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable.

~~· Related parties~~F-9

~~Parties,~~CHINA ~~which~~SUN ~~can~~GROUP beHIGH-TECH a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisionsCO. ~~Companies are also considered to be related if they are subject to common control or common significant influence.~~

·NOTES ~~Segment~~TO ~~reporting~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~ASC~~FOR ~~Topic~~THE ~~280, “Segment~~NINE ~~Reporting”~~MONTHS ~~establishes~~ENDED ~~standards~~FEBRUARY ~~for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas~~29, ~~business segments and major customers in the financial statements. For the six months ended November 30, 2011, the Company operates one reportable business segment in the PRC.~~ 2012

·(Currency ~~Fair~~expressed ~~value~~in ofUnited ~~financial~~States Dollars ~~instruments~~(“US$”), except for number of shares)

Cash and cash equivalents, accounts receivable, deposits and prepayments, accounts payable, income tax payable, other payables and accrued liabilities are carried at cost which approximated fair value. Any changes in fair value of assets or liabilities carried at fair value are recognized in other comprehensive income for each period.(Unaudited)

~~The~~· ~~Company~~Fair ~~also~~value ~~follows the guidance~~ of ~~the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to~~ financial ~~assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:~~instruments

·Cash ~~Level~~and 1cash :equivalents, ~~Inputs~~accounts receivable, deposits and prepayments, accounts payable, income tax payable, other payables and accrued liabilities are ~~based~~carried ~~upon~~at ~~unadjusted~~cost ~~quoted~~which approximated ~~prices~~fair ~~for~~value. ~~identical~~Any ~~instruments~~changes ~~traded~~in fair value of assets or liabilities carried at fair value are recognized in ~~active~~other ~~markets;~~comprehensive income for each period.

·The ~~Level~~Company 2also :follows ~~Inputs~~the ~~are~~guidance ~~based~~of the ~~upon~~ASC ~~quoted~~Topic ~~prices for similar instruments in active markets~~820-10, ~~quoted~~“Fair ~~prices~~Value ~~for~~Measurements ~~identical or similar instruments in markets that are not active,~~ and ~~model-based~~Disclosures” ~~valuation techniques~~ (~~e.g.~~"ASC ~~Black~~820-~~Scholes~~10"), ~~Option-Pricing~~with ~~model)~~respect ~~for~~to ~~which~~financial assets ~~all~~and ~~significant~~liabilities ~~inputs~~that are ~~observable~~measured inat ~~the~~fair ~~market or can be corroborated by observable market data for substantially the full term of the assets or liabilities~~value. ~~Where~~ASC ~~applicable,~~820-10 ~~these~~establishes ~~models~~a ~~project~~three-tier ~~future~~fair ~~cash~~value ~~flows~~hierarchy ~~and~~that ~~discount~~ prioritizes the ~~future~~inputs ~~amounts~~used toin ameasuring ~~present~~fair value ~~using~~as ~~market-based observable inputs; and~~follows:

· Level 31 : Inputs are ~~generally~~based ~~unobservable~~upon ~~and~~unadjusted ~~typically~~quoted ~~reflect~~prices ~~management’s~~for ~~estimates~~identical ofinstruments ~~assumptions~~traded ~~that market participants would use~~ in ~~pricing~~active ~~the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.~~markets;

~~Fair~~· ~~value~~Level ~~estimates~~2 : Inputs are ~~made~~based atupon aquoted ~~specific~~prices ~~point~~for similar instruments in ~~time~~active ~~based~~markets, onquoted ~~relevant~~prices ~~market~~for ~~information~~identical ~~about~~or ~~the~~similar ~~financial~~instruments ~~instrument.~~in ~~These~~markets ~~estimates~~that are ~~subjective~~not inactive, ~~nature~~ and ~~involve~~model-based ~~uncertainties~~valuation ~~and~~techniques ~~matters~~(e.g. ofBlack-Scholes Option-Pricing model) for which all significant ~~judgment~~inputs ~~and,~~are ~~therefore,~~observable ~~cannot~~in the market or can be ~~determined~~corroborated ~~with~~by ~~precision.~~observable ~~Changes~~market indata ~~assumptions~~for ~~could~~substantially ~~significantly~~the ~~affect~~full term of the ~~estimates~~assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and

· ~~Recent~~Level ~~accounting~~3 ~~pronouncements~~: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

~~The~~Fair ~~Company~~value ~~has~~estimates ~~reviewed~~are ~~all~~made ~~recently~~at ~~issued,~~a ~~but~~specific point ~~not~~in ~~yet~~time ~~effective,~~based ~~accounting~~on ~~pronouncements~~relevant ~~and~~market ~~does~~information ~~not~~about ~~believe~~ the ~~future~~financial ~~adoption~~instrument. ofThese ~~any~~estimates ~~such~~are ~~pronouncements~~subjective ~~may~~in benature ~~expected~~and involve touncertainties ~~cause~~and amatters ~~material~~of ~~impact~~significant onjudgment ~~its~~and, ~~financial~~therefore, ~~condition~~cannot orbe ~~the~~determined ~~results~~with ofprecision. ~~its~~Changes ~~operations~~in assumptions could significantly affect the estimates.

~~F-10~~· Recent accounting pronouncements

~~CHINA~~The ~~SUN~~Company ~~GROUP~~has ~~HIGH-TECH~~reviewed COall recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

~~NOTES~~NOTE - TO4 ACCOUNTS ~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~RECEIVABLE

~~FOR~~The ~~THE~~majority ~~SIX~~of ~~MONTHS~~the ~~ENDED~~Company’s ~~NOVEMBER~~sales are 30on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required. Based upon the aforementioned criteria, the Company has determined that no allowance for doubtful accounts is required for the periods ended February 29, 2012 and February 28, 2011.

~~(Currency~~NOTE - ~~expressed~~5 OTHER inPAYABLES ~~United~~AND ~~States~~ACCRUED ~~Dollars (“US$”), except for number of shares)~~LIABILITIES

~~(Unaudited)~~Other payables and accrued liabilities consisted of:

NOTE－4 ACCOUNTS RECEIVABLE

	February 29, 2011		May 31, 2011

VAT payable	$	256,329	$	216,198
Welfare payable		451,475		438,326
Payable to equipment vendors		164,254		223,043
Accrued operating expenses		117,544		157,757
Other payable		128,000		128,000
Other payables and accrued liabilities	$	1,117,602	$	1,163,324

The majority of the Company’s sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required. Based upon the aforementioned criteria, the Company has determined that no allowance for doubtful accounts is required for the periods ended November 30, 2011 and 2010.F-10

~~NOTE－5~~CHINA ~~OTHER~~SUN ~~PAYABLES~~GROUP ~~AND~~HIGH-TECH ~~ACCRUED LIABILITIES~~CO.

~~Other~~NOTES ~~payables~~TO ~~and~~CONDENSED ~~accrued~~CONSOLIDATED ~~liabilities consisted of:~~FINANCIAL STATEMENTS

	November 30, 2011		May 31, 2011
VAT payable	$	193,197	$	216,198
Welfare payable		446,519		438,326
Payable to equipment vendors		551,017		223,043
Accrued operating expenses		110,097		157,757
Other payable		128,000		128,000
Other payables and accrued liabilities	$	1,428,830	$	1,163,324

FOR THE NINE MONTHS ENDED FEBRUARY 29, 2012

~~NOTE－6~~(Currency ~~INCOME~~expressed ~~TAXES~~in United States Dollars (“US$”), except for number of shares)

~~For the six months ended November 30, 2011 and 2010, the local~~ (~~“United States of America”~~Unaudited) ~~and foreign components of (loss) income before income taxes were comprised of the following:~~

	Six months ended November 30,
	2011			2010
Tax jurisdiction from:
– Local	$	(193,956	)	$	(1,944,811	)
– Foreign		6,676,398			7,073,675
Income before income taxes	$	6,482,442		$	5,128,864

NOTE - 6 STOCKHOLDERS’ EQUITY

~~The~~On ~~provision~~February ~~for~~15, ~~income~~2012, ~~taxes~~the ~~consisted~~Company issued an aggregate of 250,000 shares of common stock to its CEO and CFO for executive compensation pursuant to the ~~following:~~employment agreements dated November 15, 2010, at the current fair value of $0.27 per share, totaling $67,500.

	Six months ended November 30,
	2011		2010
Current tax:
– Local	$	-	$	-
– Foreign		1,665,544		1,758,130
Deferred tax:
– Local		-		-
– Foreign		-		-
Income tax expense	$	1,665,544	$	1,758,130

As of February 29, 2012, the issued and outstanding common stock of the Company is 56,212,971 shares.

FNOTE -11 7 INCOME TAXES

~~CHINA~~For ~~SUN~~the ~~GROUP~~nine ~~HIGH-TECH~~months ~~CO.~~ended February 29, 2012 and February 28, 2011, the local (“United States of America”) and foreign components of (loss) income before income taxes were comprised of the following:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Nine months ended February
	29, 2012			28, 2011
Tax jurisdiction from:
– Local	$	(334,355	)	$	(2,335,805	)
– Foreign		10,135,305			11,146,036
Income before income taxes	$	9,800,950		$	8,810,231

~~FOR~~The ~~THE~~provision ~~SIX~~for ~~MONTHS~~income ~~ENDED~~taxes ~~NOVEMBER~~consisted of ~~30,~~the ~~2011~~following:

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	Nine months ended February
	29, 2012		28, 2011
Current tax:
– Local	$	-	$	-
– Foreign		2,535,309		2,779,817

Deferred tax:
– Local		-		-
– Foreign		-		-

Income tax expense	$	2,535,309	$	2,779,817

~~(Unaudited)~~The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company operates in various countries: United States of America and the PRC that are subject to tax in the jurisdictions in which they operate, as follows:

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company operates in various countries: United States of America ~~and the PRC that are subject to tax in the jurisdictions in which they operate, as follows:~~

The Company is registered in the State of Delaware and is subject to the tax laws of the United States of America.

~~The~~As ~~Company~~of isFebruary ~~registered~~29, 2012, the operation in the ~~State~~United States of ~~Delaware~~America ~~and~~incurred is$4,032,931 ~~subject~~of cumulative operating loss carryforwards for federal tax purposes, which are available to ~~the~~offset future taxable income. The net operating loss carryforwards begin to expire in 2032, if unutilized. The Company has provided for a full valuation allowance for any future tax ~~laws~~benefits offrom the ~~United~~net ~~States~~operating ofloss ~~America~~carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

As of November 30, 2011, the operation in the United States of America incurred $3,892,532 of cumulative operating losses carryforwards for federal tax purposes, which are available to offset future taxable income. The net operating loss carryforwards begin to expire in 2030, if unutilized. The Company has provided for a full valuation allowance for any future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.F-11

~~The~~CHINA ~~PRC~~SUN GROUP HIGH-TECH CO.

~~The~~NOTES ~~Company’s~~TO ~~PRC~~CONDENSED ~~subsidiaries~~CONSOLIDATED ~~are subject to the Corporate Income Tax governed by the Income Tax Law of the People’s Republic of China, at a statutory income tax rate of 25%.~~FINANCIAL STATEMENTS

~~The~~FOR ~~reconciliation~~THE ofNINE ~~income~~MONTHS ~~tax~~ENDED ~~rate~~FEBRUARY ~~to the effective income tax rate based on income before income taxes from the operation in the PRC for the six months ended November 30~~29, ~~2011 and 2010 are as follows:~~ 2012

	Six months ended November 30,
	2011			2010
Income before income taxes	$	6,676,398		$	7,073,675
Income statutory tax rate		25	%		25	%
Income taxes calculated at statutory income tax rate		1,669,100			1,768,419
Tax effect of non-deductible items		(3,556	)		819
Tax effect on non-taxable items		-			(11,108	)
Income tax expense	$	1,665,544		$	1,758,130

(Currency expressed in United States Dollars (“US$”), except for number of shares)

~~The following table sets forth the significant components of the aggregate net deferred tax assets of the Company as of November 30, 2011 and May 31, 2011:~~(Unaudited)

	November 30, 2011			May 31, 2011
Deferred tax assets:
- Net operating loss carryforwards	$	1,323,461		$	1,257,516
Less: valuation allowance		(1,323,461	)		(1,257,516	)
Deferred tax assets	$	-		$	-

The PRC

AsThe ~~of November 30, 2011, the~~ Company’s ~~has~~PRC ~~provided~~subsidiaries ~~for~~are subject ato ~~full valuation allowance against~~ the ~~aggregate~~Corporate ~~deferred~~Income ~~tax~~Tax ~~assets~~governed ofby ~~$1,323,461 on~~ the ~~expected~~Income ~~future~~Tax ~~tax~~Law ~~benefits~~of ~~from~~ the ~~net~~People’s ~~operating~~Republic ~~losses~~of ~~carryforwards as the management believes it is more likely than not that these assets will not be realized in the future. For the six months ended November 30~~China, ~~2011,~~at ~~the~~a ~~valuation~~statutory ~~allowance~~income tax ~~increased~~rate byof ~~$65,945, primarily relating to net operating losses carryforwards from the local tax regime~~25%.

~~F-12~~The reconciliation of income tax rate to the effective income tax rate based on income before income taxes from the operation in the PRC for the nine months ended February 29, 2012 and February 28, 2011 are as follows:

CHINA SUN GROUP HIGH-TECH CO.

	Nine months ended February
	29, 2012			28, 2011

Income before income taxes	$	10,135,305		$	11,146,036
Income statutory tax rate		25	%		25	%
Income taxes calculated at statutory income tax rate		2,533,826			2,786,509

Tax effect of non-deductible items		6,839			4,489
Tax effect on non-taxable items		(5,356	)		(11,181	)

Income tax expense	$	2,535,309		$	2,779,817

~~NOTES~~The TOfollowing ~~CONDENSED~~table ~~CONSOLIDATED~~sets ~~FINANCIAL~~forth ~~STATEMENTS~~the significant components of the aggregate net deferred tax assets of the Company as of February 29, 2012 and May 31, 2011:

FOR THE SIX MONTHS ENDED NOVEMBER 30, 2011

	February 29, 2012			May 31, 2011
Deferred tax assets:
- Net operating loss carryforwards	$	1,371,196		$	1,257,516
Less: valuation allowance		(1,371,196	)		(1,257,516	)

Deferred tax assets	$	-		$	-

~~(Currency~~As ~~expressed~~of February 29, 2012, the Company has provided for a full valuation allowance against the aggregate deferred tax assets of $1,371,196 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in ~~United~~the ~~States~~future. ~~Dollars~~For ~~(“US~~the nine months ended February 29, 2012, the valuation allowance increased by $”)113,680, ~~except~~primarily ~~for~~relating ~~number~~to net ofoperating ~~shares)~~loss carryforwards from the local tax regime.

~~(Unaudited)~~NOTE - 8 SEGMENT INFORMATION BY PRODUCTS

~~NOTE－7~~The ~~SEGMENT~~Company ~~INFORMATION~~operates BYin ~~PRODUCTS~~one reportable operating segment in the production and sales of batteries material in the PRC, as defined by ASC Topic 280. Summarized financial information concerning the Company’s major products is shown in the following table for the three and nine months ended February 29, 2012 and February 28, 2011:

The Company operates in one reportable operating segment in the production and sales of batteries material in the PRC, as defined by ASC Topic 280. Summarized financial information concerning the Company’s major products is shown in the following table for the three and six months ended November 30, 2011 and 2010:

	Three months ended February
	29, 2012		28, 2011

Lithium iron phosphate	$	4,437,173	$	3,828,224
Cobaltosic oxide		6,831,631		9,531,706

	$	11,268,804	$	13,359,930

	Revenues for the three months ended November 30,
	2011		2010
Lithium iron phosphate	$	4,079,972	$	3,336,612
Cobaltosic oxide		6,633,025		9,303,216
	$	10,712,997	$	12,639,828

F-12

	Revenues for the six months ended November 30,
	2011		2010
Lithium iron phosphate	$	8,195,490	$	5,936,625
Cobaltosic oxide		14,006,773		18,456,662
	$	22,202,263	$	24,393,287

CHINA SUN GROUP HIGH-TECH CO.

~~NOTE－8~~NOTES ~~CONCENTRATIONS~~TO OFCONDENSED ~~RISK~~CONSOLIDATED FINANCIAL STATEMENTS

~~The~~FOR ~~Company~~THE isNINE ~~exposed~~MONTHS toENDED ~~the~~FEBRUARY ~~following concentrations of risk:~~29, 2012

(aCurrency expressed in United States Dollars (“US$”), ~~Major~~except ~~customers~~for number of shares)

For the three and six months ended November 30, 2011 and 2010, the customer who accounts for 10% or more of revenues of the Company and its outstanding balance at the period-end are presented as follows:(Unaudited)

	Three months ended November 30, 2011					November 30, 2011
	Nine months ended February
	Revenues		Percentage of revenues			Trade accounts receivable
	29, 2012		28, 2011
Customer A	$	2,298,784		21	%	$	898,844
Lithium iron phosphate	$	12,632,663	$	9,764,849
Customer B		1,325,075		12	%		504,909
Cobaltosic oxide		20,838,404		27,988,368
Customer C		1,285,599		12	%		448,681
	$	33,471,067	$	37,753,217
Customer D		1,277,415		12	%		460,724
Customer E		1,186,978		11	%		785,737
Total:	$	7,373,851		68	%	$	3,098,895

FNOTE -13 9 CONCENTRATIONS OF RISK

~~CHINA~~The ~~SUN~~Company ~~GROUP~~is ~~HIGH-TECH~~exposed ~~CO.~~to the following concentrations of risk:

~~NOTES~~(a) Major ~~TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~customers

~~FOR~~For ~~THE~~the ~~SIX~~three ~~MONTHS~~and ~~ENDED~~nine ~~NOVEMBER~~months 30ended February 29, 2012 and February 28, 2011, the customers who account for 10% or more of revenues of the Company and their outstanding balances at the period-end are presented as follows:

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	Three months ended February 29, 2012					February 29, 2012
	Revenues		Percentage of revenues			Trade accounts receivable

Customer A	$	2,080,837		18	%	$	571,666
Customer B		1,415,063		13	%		443,748
Customer C		1,405,161		12	%		574,224
Customer D		1,321,539		12	%		458,183
Customer E		1,309,854		12	%		401,606

Total:	$	7,532,454		67	%	$	2,449,427

(Unaudited)

	Nine months ended February 29, 2012					February 29, 2012
	Revenues		Percentage of revenues			Trade accounts receivable

Customer A	$	6,572,372		20	%	$	571,666
Customer C		4,250,226		13	%		574,224
Customer B		4,011,394		12	%		443,748
Customer D		3,836,482		11	%		458,183
Customer E		3,573,175		11	%		401,606
Customer F		3,439,982		10	%		335,828

Total:	$	25,683,631		77	%	$	2,785,255

	Six months ended November 30, 2011					November 30, 2011
	Three months ended February 28, 2011					February 28, 2011
	Revenues		Percentage of revenues			Trade accounts receivable
Customer A	$	4,491,535		20	%	$	898,844
Customer E	$	2,097,611		16	%	$	728,767
Customer B		2,845,065		13	%		504,909
Customer A		1,897,148		14	%		-
Customer E		2,596,331		12	%		785,737
Customer D		1,750,724		13	%		141,438
Customer C		21,~~514~~636,~~943~~534		1112	%		~~448~~615,~~681~~707
Customer D		2,466,284		11	%		460,724
Customer F		1,455,164		11	%		-
Customer F		2,263,321		10	%		550,390
Total:	$	8,837,181		66	%	$	1,485,912
Total:	$	17,177,479		77	%	$	3,649,285

	Three months ended November 30, 2010					November 30, 2010
	Revenues		Percentage of revenues			Trade accounts receivable
Customer B	$	1,934,364		15	%	$	447,207
Customer E		1,737,489		14	%		764,863
Customer F		1,645,173		13	%		799,331
Customer C		1,237,998		10	%		724,441
Total:	$	6,555,024		52	%	$	2,735,842

F-13

	Six months ended November 30, 2010					November 30, 2010
	Revenues		Percentage of revenues			Trade accounts receivable
Customer F	$	3,786,012		16	%	$	799,331
Customer E		3,671,154		15	%		764,863
Customer B		3,538,443		15	%		447,207
Customer C		2,659,388		11	%		724,441
Customer G		2,375,547		10	%		426,251
Total:	$	16,030,544		67	%	$	3,162,093

CHINA SUN GROUP HIGH-TECH CO.

~~All~~NOTES ofTO ~~the~~CONDENSED ~~customers~~CONSOLIDATED ~~are located in the PRC.~~FINANCIAL STATEMENTS

~~F-14~~FOR THE NINE MONTHS ENDED FEBRUARY 29, 2012

~~CHINA~~(Currency ~~SUN~~expressed ~~GROUP~~in ~~HIGH-TECH~~United ~~CO.~~States Dollars (“US$”), except for number of shares)

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~(Unaudited)

FOR THE SIX MONTHS ENDED NOVEMBER 30, 2011

	Nine months ended February 28, 2011					February 28, 2011
	Revenues		Percentage of revenues			Trade accounts receivable

Customer E	$	5,883,623		16	%	$	728,767
Customer C		5,174,977		14	%		615,707
Customer B		4,746,223		13	%		-
Customer D		4,410,112		12	%		141,438
Customer F		3,729,575		10	%		-

Total:	$	23,944,510		65	%	$	1,485,912

~~(Currency~~All ~~expressed~~of inthe ~~United~~customers ~~States~~are ~~Dollars~~located ~~(“US$”),~~in ~~except for number of shares)~~the PRC.

(~~Unaudited~~b) Major vendors

~~(b) Major~~For the three and nine months ended February 29, 2012 and February 28, 2011, the vendors who account for 10% or more of purchases of the Company and their outstanding balances at the period-end are presented as follows:

For the three and six months ended November 30, 2011 and 2010, the vendor who accounts for 10% or more of purchases of the Company and its outstanding balance at the period-end are presented as follows:

	Three months ended February 29, 2012					February 29, 2012
	Purchases		Percentage of purchases			Accounts payable

Vendor A	$	2,234,099		36	%	$	-
Vendor B		1,290,925		21	%		-
Vendor C		1,242,267		20	%		-

Total:	$	4,767,291		77	%	$	-

	Three months ended November 30, 2011					November 30, 2011
	Nine months ended February 29, 2012					February 29, 2012
	Purchases		Percentage of purchases			Accounts payable
Vendor A	$	27,~~493~~534,~~055~~622		38	%	$	-
Vendor B		13,~~360~~862,~~136~~315		2120	%		-
Vendor C		13,~~203~~681,~~820~~460		1819	%		~~163,862~~-
Total:	$	515,~~057~~078,~~011~~397		77	%	$	~~163,862~~-

	Six months ended November 30, 2011					November 30, 2011
	Three months ended February 28, 2011					February 28, 2011
	Purchases		Percentage of purchases			Accounts payable
Vendor A	$	53,~~300~~288,~~523~~297		40	%	$	-
Vendor B		2,571,390		19	%		-
Vendor C		1,810,174		22	%		-
Vendor C		2,439,193		18	%		163,862
Vendor B		1,683,052		21	%		-
Total:	$	106,~~311~~781,~~106~~523		7783	%	$	~~163,862~~-

	Three months ended November 30, 2010					November 30, 2010
	Purchases		Percentage of purchases			Accounts payable
Vendor A	$	3,086,112		40	%	$	-
Vendor C		1,727,995		23	%		412,207
Vendor B		1,700,828		22	%		-
Vendor D		939,791		12	%		-
Total:	$	7,454,726		97	%	$	412,207

F-14

	Six months ended November 30, 2010					November 30, 2010
	Purchases		Percentage of purchases			Accounts payable
Vendor A	$	5,581,911		39	%	$	-
Vendor B		3,461,269		24	%		-
Vendor C		3,117,688		22	%		412,207
Vendor D		1,743,626		12	%		-
Total:	$	13,904,494		97	%	$	412,207

CHINA SUN GROUP HIGH-TECH CO.

~~All~~NOTES ofTO ~~the~~CONDENSED ~~vendors~~CONSOLIDATED ~~are located in the PRC.~~FINANCIAL STATEMENTS

~~(c) Credit~~FOR ~~risk~~THE NINE MONTHS ENDED FEBRUARY 29, 2012

~~Financial~~(Currency ~~instruments~~expressed ~~that~~in ~~potentially~~United ~~subject~~States Dollars ~~the~~(“US$”), ~~Company~~except tofor ~~significant~~number ~~concentrations~~ of credit risk consist principally of cash and trade accounts receivable. The Company performs ongoing credit evaluations of its customers' financial condition, but does not require collateral to support such receivables.shares)

(dUnaudited) ~~Exchange rate risk~~

The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities is denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If the RMB depreciates against US$, the value of the RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.

	Nine months ended February 28, 2011					February 28, 2011
	Purchases		Percentage of purchases			Accounts payable

Vendor A	$	8,870,208		39	%	$	-
Vendor C		5,271,443		23	%		-
Vendor B		4,800,740		21	%		-

Total:	$	18,942,391		83	%	$	-

~~F-15~~All of the vendors are located in the PRC.

~~CHINA~~(c) Credit ~~SUN GROUP HIGH-TECH CO.~~risk

~~NOTES~~Financial TOinstruments ~~CONDENSED~~that ~~CONSOLIDATED~~potentially subject ~~FINANCIAL~~the ~~STATEMENTS~~Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company performs ongoing credit evaluations of its customers' financial condition, but does not require collateral to support such receivables.

~~FOR~~(d) Exchange ~~THE~~rate ~~SIX MONTHS ENDED NOVEMBER 30, 2011~~risk

~~(Currency~~The ~~expressed~~reporting incurrency ~~United~~of ~~States~~the ~~Dollars~~Company (“is US$”), ~~except~~to ~~for~~date ~~number~~the majority of ~~shares)~~the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If the RMB depreciates against US$, the value of the RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.

(~~Unaudited~~e) Economic and political risks

~~(e) Economic~~The Company's operations are conducted in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic ~~risks~~and legal environment in the PRC and by the general state of the PRC economy.

The Company's operations in the PRC are subject ~~conducted~~to special considerations and significant risks not typically associated with companies in ~~the~~North ~~PRC~~America and Western Europe. These ~~Accordingly~~include risks associated with, ~~the~~among ~~Company's~~others, ~~business~~the political, ~~financial~~economic ~~condition~~and legal environment and ~~results~~foreign ofcurrency ~~operations~~exchange. The Company's results may be ~~influenced~~adversely affected by changes in the political, ~~economic~~ and ~~legal~~social ~~environment~~conditions in the PRC, and by ~~the~~changes ~~general~~in governmental ~~state~~policies ofwith ~~the~~respect ~~PRC~~to ~~economy~~laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, antiNOTE -~~inflationary~~ ~~measures,~~10 COMMITMENTS ~~currency~~AND ~~conversion, remittances abroad, and rates and methods of taxation.~~CONTINGENCIES

~~NOTE－9 COMMITMENTS~~(a) ~~AND~~Operating ~~CONTINGENCIES~~lease commitment

The Company’s subsidiary operating in ~~the~~ PRC was committed under several non-cancelable operating leases for the terms from 5 to 10 years, with monthly rentals, due through July 2020. Costs incurred under these operating leases are recorded as rental expense and totaled approximately $69,~~232~~ 388 and $812,~~516~~050 for the ~~six~~nine months ended ~~November~~February 3029, ~~2011~~2012 and ~~2010~~February 28, 2011.

As of ~~November~~February 3029, ~~2011~~2012, the Company has the future minimum rental payments under the operating lease agreements in the next five years and thereafter, as follow:

Year ending November 30,
Year ending February 28,
2012	$	17,249
2013	$	17,440
2013		17,249
2014		17,440
2014		17,249
2015		17,440
2015		16,073
2016		15,062
2016		12,544
2017		12,684
Thereafter		4442,~~951~~279
Total:	$	~~125~~122,~~315~~345

~~NOTE－10 SUBSEQUENT EVENTS~~F-15

~~The~~CHINA ~~Company~~SUN ~~evaluated~~GROUP ~~subsequent events through the date on which the financial statements were issued and filed with this Form 10~~HIGH-Q.TECH ~~There were no subsequent events that required recognition or disclosure~~CO.

~~F-16~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Item~~FOR ~~2. Management’s~~THE ~~Discussion~~NINE ~~and~~MONTHS ~~Analysis~~ENDED ofFEBRUARY ~~Financial Condition and Results of Operations.~~29, 2012

~~We make certain forward-looking statements in this report. Statements concerning our future operations, prospects, strategies, financial condition, future economic performance~~ (~~including~~Currency ~~growth~~expressed ~~and earnings), demand for our products, and other statements of our plans, beliefs, or expectations, including the statements contained under this item as well as items elsewhere~~ in ~~this~~United ~~document,~~States Dollars are forward-looking statements. In some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” and similar expressions. We intend such forward-looking statements to be covered by the safe harbor provisions contained in Section 27A of the Securities Act of 1933, as amended (~~the~~ “~~Securities Act~~US$”) ~~and in Section 21E of the Securities Exchange Act of 1934~~, asexcept ~~amended~~for ~~(the~~number ~~“Exchange Act”). The forward-looking statements we make are not guarantees~~ of future performance and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. Indeed, it is likely that some of our assumptions will prove to be incorrect. Our actual results and financial position will vary from those projected or implied in the forward-looking statements and the variances may be material. You are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties, together with the other risks described from time to time in reports and documents that we file with the SEC should be considered in evaluating forward-looking statements.shares)

The nature of our business makes predicting the future trends of our revenues, expenses, and net income difficult. Thus, our ability to predict results or the actual effect of our future plans or strategies is inherently uncertain. The risks and uncertainties involved in our business could affect the matters referred to in any forward-looking statements and it is possible that our actual results may differ materially from the anticipated results indicated in these forward-looking statements. Important factors that could cause actual results to differ from those in the forward-looking statements include, without limitation, the factors discussed above in the section entitled “Risk Factors” and the following:(Unaudited)

·(b) ~~the~~Employment ~~effect~~contracts ~~of political, economic, and market conditions and geopolitical events;~~commitment

·Under ~~legislative~~the employment agreement dated November 15, 2010, the Company is committed to grant Mr. Guosheng Fu, the Chief Executive Officer, up to an aggregate amount of 450,000 shares of the Company’s common stock. The Company agreed to issue 150,000 shares of its common stock to him on each of December 31, 2010, 2011, and ~~regulatory~~2012, ~~changes~~each, ~~that~~an ~~affect~~award ~~our~~date, ~~business;~~subject to his continuous service on each award date.

·Under the ~~availability~~employment agreement dated November 15, 2010, the Company is also committed to grant Ms. Mingfen Liu, the Chief Financial Officer, up to an aggregate amount of ~~funds~~300,000 shares of the Company’s common stock. The Company agreed to issue 100,000 shares of its common stock to her on each of December 31, 2010, 2011, and ~~working~~2012, ~~capital;~~each, an award date, subject to her continuous service on each award date.

·On February 15, 2012, the ~~actions~~Company issued an aggregate of 250,000 shares of common stock to its CEO and ~~initiatives~~CFO, which were awarded to them on December 31, 2011 pursuant to the employment agreements dated November 15, 2010. As of ~~current~~February 29, 2012, the Company issued an aggregate 500,000 shares of common stock under these employment agreements and ~~potential~~is ~~competitors;~~committed to issue the remaining 250,000 shares of its common stock to the executive officers in the next twelve months.

·NOTE - ~~investor~~11 SUBSEQUENT ~~sentiment; and~~EVENTS

·The ~~our~~Company ~~reputation~~evaluated subsequent events through the date the financial statements were issued and filed with this Form 10-Q. There were no subsequent events that required recognition or disclosure.

~~We do not undertake any responsibility to publicly release any revisions to these forward~~F-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by any forward-looking statements.16

~~The~~Item ~~following~~2. ~~discussion~~Management’s ~~and~~Discussion ~~analysis should be read in conjunction with our consolidated financial statements~~ and ~~the~~Analysis ~~related~~of ~~notes~~Financial ~~thereto~~Condition ~~as filed with the SEC~~ and ~~other~~Results ~~financial~~of ~~information contained elsewhere in this Report on Form 10-Q~~Operations.

~~Overview~~We make certain forward-looking statements in this report. Statements concerning our future operations, prospects, strategies, financial condition, future economic performance (including growth and earnings), demand for our products, and other statements of our plans, beliefs, or expectations, including the statements contained under this item as well as items elsewhere in this document, are forward-looking statements. In some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” and similar expressions. We intend such forward-looking statements to be covered by the safe harbor provisions contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. Indeed, it is likely that some of our assumptions will prove to be incorrect. Our actual results and financial position will vary from those projected or implied in the forward-looking statements and the variances may be material. You are cautioned not to place undue reliance on such forward-looking statements. These risks and uncertainties, together with the other risks described from time to time in reports and documents that we file with the SEC should be considered in evaluating forward-looking statements.

WeThe ~~believe~~nature weof ~~are~~our ~~one~~business ofmakes predicting the ~~leading~~future ~~producers~~trends of ~~cathode~~our ~~materials~~revenues, ~~for~~expenses, ~~lithium~~and ~~ion~~net ~~batteries~~income ~~in China~~difficult. WeThus, ~~currently~~our ~~produce~~ability ~~cobaltosic~~to ~~oxide~~predict ~~and~~results ~~lithium~~or ~~iron~~the ~~phosphate~~actual effect of our future plans or strategies is inherently uncertain. ~~With~~The ~~the~~risks ~~latest~~and ~~technological~~uncertainties ~~know-how,~~involved ~~innovative~~in ~~manufacturing~~our ~~processes,~~business ~~state-of-~~could affect the matters referred to in any forward-~~art manufacturing~~looking ~~equipment~~statements and ~~substantial~~it ~~manufacturing~~is ~~capacity,~~possible wethat ~~have~~our ~~evolved~~actual ~~into~~results amay ~~market~~differ ~~leader~~materially from the anticipated results indicated in ~~China~~these ~~and~~forward-looking ~~one~~statements. ofImportant factors that could cause actual results to differ from those in the ~~most~~forward-looking ~~innovative~~statements ~~and~~include, ~~respected~~without ~~manufacturers~~limitation, ofthe ~~cathode~~factors ~~materials~~discussed ~~for~~above ~~lithium~~in ~~ion~~the ~~batteries.~~section entitled “Risk Factors” and the following:

~~Since~~· ~~2007, we have engaged in~~ the ~~manufacturing,~~effect ~~marketing and distribution~~ of ~~cobaltosic~~political, oxide. In 2008 we successfully developed proprietary processes for the manufacture of lithium iron phosphate (“LIP”). We began manufacturing LIP in quantity in the second quarter of fiscal year 2011. Since theneconomic, weand ~~have~~market ~~focused~~conditions ~~on expanding sales~~ and ~~increasing~~geopolitical ~~production~~events; of· ~~LIP.~~legislative ~~Originally, we had seven cobaltosic oxide production lines~~ and ~~five~~regulatory ~~lithium~~changes ~~cobalt~~that ~~oxide~~affect ~~production lines. By the end of fiscal year 2011, we had converted three of~~ our ~~seven cobaltosic oxide and three of our five lithium cobalt oxide production lines to LIP production lines.~~business;

2· the availability of funds and working capital; · the actions and initiatives of current and potential competitors; · the risk that we lose any of our current major customers ;

At· ~~November~~investor ~~30,~~sentiment; ~~2011 we had four cobaltosic oxide production lines, two lithium cobalt oxide production lines,~~ and ~~six~~· ~~LIP production lines along with the corollary process flow equipment. Currently,~~ our ~~total annual production capacity is 2,500 tons which includes 1,500 tons of cobaltosic oxide, 300 tons of lithium cobalt oxide, and 700 tons of LIP~~reputation. We are in the process of converting our two remaining lithium cobalt oxide production lines to the production of LIP. This conversion is expected to be completed in the third quarter of fiscal 2012. Once the conversion of these two lines is complete, will have a total of four cobaltosic oxide production lines and eight LIP production lines and our annual production capacity for LIP will increase to 1,000 tons. The increase in sales of LIP is the primary reason for our substantial increase in gross margins in this quarter and we believe that sales of LIP will continue to represent a larger portion of our gross profits and positively impact our gross margins in the future.

We ~~expect~~do ~~that~~not ~~the~~undertake ~~demand~~any ~~for~~responsibility to ~~LIP~~publicly isrelease ~~will~~any ~~continue~~revisions to ~~remain~~these ~~strong~~forward-looking ~~because:~~statements 1) the lithium ion battery industry is an integral part of the new energy sector which has experienced substantial growth, and 2) LIP is becoming the preferred cathode material for lithium ion batteries because of its high level of performance.China has a plan to ~~put~~take ~~one~~into ~~million~~account ~~electric~~events ~~cars~~or oncircumstances ~~the~~that ~~road~~occur ~~by 2015 and lithium-ion (Li) batteries are currently~~ after the ~~prevailing~~date ~~battery type for portable electronics and electric cars. In addition, we are seeing most~~ of ~~our~~this ~~existing and potential customers expanding their production of Li batteries~~report. ~~As a result~~Additionally, we ~~will~~do ~~continue~~not ~~our~~undertake ~~strategy~~any responsibility to ~~shift~~update ~~more~~you ofon ~~our production capacity to~~ the ~~production~~occurrence of ~~LIP.~~any Weunanticipated events ~~will~~which ~~also~~may ~~work~~cause toactual ~~stabilize~~results ~~our production levels of cobaltosic oxide. However, if the profit margin for cobaltosic oxide continues~~ to ~~decline,~~differ wefrom ~~may~~those ~~decide~~expressed toor ~~shift~~implied ~~even~~by ~~more~~any ~~production~~forward-looking ~~to LIP~~statements.

AsThe afollowing ~~result~~discussion ~~of our efforts to expand our production~~ and ~~sales~~analysis ofshould be ~~LIP,~~read ~~net~~in ~~revenues~~conjunction ~~from~~with ~~the~~our ~~sale~~consolidated offinancial ~~LIP~~statements ~~increased by 22% to $4 million for the three months ended November 30, 2011~~ and ~~production increased by 18% to 213 tons compared to~~ the ~~same~~related ~~period~~notes inthereto ~~fiscal~~as ~~2011,~~filed ~~while~~with ~~net revenues from~~ the ~~sale~~SEC ~~of cobaltosic oxide declined by 29% to $6.6 million~~ and ~~production~~other financial ~~declined~~information bycontained ~~22%~~elsewhere toin ~~230~~this ~~tons~~Report ~~compared~~on toForm ~~the same period in fiscal 2011~~10-Q.

In the six months ended November 30, 2011, net revenues from the sale of LIP increased by 38% to $8.2 million and production increased by 37% to 430 tons, while net revenues from the sale of cobaltosic oxide declined 24% to $14 million and production declined by 20% to 470 tons compared to the same period in fiscal 2011.We expect our production of cobaltosic oxide to be stable and our production and sales of LIP to increase.Overview

~~During~~We ~~the~~believe ~~six months ended November 30, 2011,~~ we ~~had~~are ~~six~~one ~~major~~of ~~customers:~~the ~~Henan~~leading ~~Huanyu~~producers of ~~Sai~~cathode Ermaterials ~~New~~for ~~Energy~~lithium ~~Technology~~ion ~~Co.,~~batteries ~~Ltd~~in ~~(“Huanyu”); CITIC Guo’an Mengguli Ltd~~China.; ~~Guangzhou~~We ~~Hongsen~~currently ~~Material~~produce ~~Co.,~~cobaltosic ~~Ltd.;~~oxide ~~Tianjin~~and ~~B&M~~lithium ~~Science~~iron ~~and~~phosphate ~~Technology Ltd~~(“LIP”).; With ~~Dalian~~the ~~Dahua~~latest ~~International~~technological ~~Trade Co.~~know-how, ~~Ltd.;~~innovative ~~and~~manufacturing ~~Beijing Easpring Co.~~processes, ~~Ltd. Sales to these customers totaled 77%~~ state-of ~~our sales volume of 900 tons for~~ -the-art ~~six~~manufacturing ~~months~~equipment ~~ended~~and ~~November~~substantial manufacturing 30capacity, ~~2011.~~we Wehave ~~expect~~evolved ~~that~~into ~~these~~a ~~customers~~market ~~will~~leader ~~continue~~in toChina ~~represent~~and aone ~~substantial portion~~ of ~~our~~the ~~sales~~most ininnovative ~~fiscal~~and ~~year~~respected ~~2012.~~manufacturers of Wecathode ~~are~~materials ~~working~~for ~~persistently~~lithium toion ~~increase our customer base~~batteries.

~~The~~Since ~~price~~2007, ofwe ~~raw materials did not~~ have aengaged ~~significant~~in ~~impact on our financial results during~~ the ~~three~~manufacturing, marketing and ~~six~~distribution ~~months~~of ~~ended~~cobaltosic ~~November 30, 2011~~oxide. ~~The~~ ~~major~~In ~~raw~~2008 ~~materials~~we ~~used~~successfully todeveloped ~~produce~~proprietary ~~cobaltosic~~processes ~~oxide~~for ~~are~~the ~~cobalt~~manufacture ~~salt, ferric carbonate and cobaltous oxalate~~of LIP. ~~The~~We ~~major~~began ~~raw~~manufacturing ~~materials~~LIP ~~used~~in toquantity ~~produce~~in ~~lithium~~the ~~iron~~second ~~phosphate~~quarter ~~are~~of ~~ferric~~fiscal ~~phosphate~~year ~~and lithium carbonate~~2011. ~~Our~~ ~~cost~~Since ofthen, ~~the~~we ~~raw~~have ~~materials~~focused toon ~~produce~~expanding sales ~~cobaltosic oxide did not change substantially,~~ and ~~our~~increasing ~~cost~~production ~~for~~of LIP. ~~raw materials~~Originally, ~~especially~~we ~~ferric~~had ~~phosphate,~~seven ~~declined~~cobaltosic inoxide ~~part~~production ~~because~~lines ofand ~~the~~five ~~increase~~lithium incobalt oxide production ~~of one of our suppliers~~lines. We ~~saw~~By athe ~~7.9%~~end ~~and~~of ~~5.5%~~fiscal ~~decline~~year in2011, ~~the~~we ~~average~~had ~~selling~~converted ~~price~~three of our seven cobaltosic oxide and athree ~~3.3%~~of ~~and~~our ~~0.5%~~five ~~increase~~lithium cobalt inoxide ~~the~~production ~~average~~lines ~~selling~~to ~~price of~~ LIP ~~during~~production ~~the three and six months ended November 30, 2011, respectively~~lines.

~~Results of Operations~~2

~~Comparison~~During this quarter, we completed converting our two remaining original lithium cobalt oxide production lines to the production of ~~Six~~LIP, ~~Months~~we ~~Ended~~currently ~~November~~have 30a total of four cobaltosic oxide production lines and eight LIP production lines along with the corollary process flow equipment. Currently, ~~2011~~our tototal ~~Six~~annual production ~~Months~~capacity ~~Ended~~is ~~November~~2,500 30tons which includes 1,500 ~~2010~~tons of cobaltosic oxide,and 1,000 tons of LIP. The increase in sales of LIP is the primary reason for our increase in gross margins in this quarter and we believe that sales of LIP will continue to represent a larger portion of our gross profits and positively impact our gross margins in the future.

~~Net~~We ~~Revenue~~saw a 7% and 6% decline in the average selling price of cobaltosic oxide and a 3.3% and 1.5% increase in the average selling price of LIP during the three and nine months ended February 29, 2012, respectively. We expect that the demand for LIP will continue to remain strong because: 1) the lithium ion battery industry is an integral part of the new energy sector which has experienced substantial growth, and 2) LIP is becoming the preferred cathode material for lithium ion batteries because of its high level of performance. China has a plan to put one million electric cars on the road by 2015 and lithium-ion (Li) batteries are currently the prevailing battery type for portable electronics and electric cars. In addition, we are seeing most of our existing and potential customers expanding their production of Li batteries. As a result, we will continue our strategy to increase more of our production capacity to the production of LIP. We will also work to stabilize our production levels of cobaltosic oxide. However, if the profit margin for cobaltosic oxide continues to decline, we may decide to shift even more production to LIP.

~~Net~~As ~~revenue~~a ~~was~~result ~~$22,202,263,~~of ~~compared~~our efforts to ~~$24,393,287~~expand ~~for~~our production ~~the~~and ~~prior~~sales ~~period, a decrease~~ of $2LIP,~~191,024~~ ornet ~~9%. One~~revenues ~~hundred~~from ~~percent~~the ~~(100%)~~sale of ~~the~~LIP ~~net~~increased ~~revenue~~by ~~decrease~~16% ~~was attributed~~ to ~~a decrease in sales of our older product cobaltosic oxide~~$4.44 ~~Sales~~million ~~of cobaltosic oxide~~ for the ~~six~~three months ended ~~November 30~~February 29, ~~2011~~2012 ~~totaled 470 tons~~ and ~~$14,006,773,~~production aincreased ~~decrease~~by ~~of 115 tons and $4,449,889, or 20~~12% into ~~quantity~~230 ~~and 24% in dollar value, from 585~~ tons ~~and~~compared ~~$18,456,662~~to ~~for~~ the ~~comparable~~same period in ~~2010~~fiscal 2011, while ~~sales~~net ofrevenues ~~lithium~~from ~~iron phosphate for~~ the ~~six~~sale of ~~months~~cobaltosic ~~ended~~oxide ~~November~~declined ~~30,~~by ~~2011~~28% ~~totaled~~to ~~430 tons and~~ $~~8,195,490, an increase of 117~~6.1283 ~~tons~~million and ~~$2,258,865,~~production ordeclined ~~37%~~by ~~in quantity or 38~~23% into ~~dollar~~235 ~~value, from 312.88~~ tons ~~and~~compared ~~$5,936,625~~to ~~for~~ the ~~comparable~~same period in fiscal ~~2010~~2011.

3During the nine months ended February 29, 2012, net revenues from the sale of LIP increased by 29% to $12.6 million and production increased by 27% to 660 tons, while net revenues from the sale of cobaltosic oxide declined 26% to $20.8 million and production declined by 20% to 705 tons compared to the same period in fiscal 2011.We expect our production of cobaltosic oxide to continue to decrease if the profit margin for cobaltosic oxide continues to decline and our production and sales of LIP to continue to increase.

~~Changes~~During inthe ~~Sales~~nine ~~Amount~~months ended February 29, 2012, we had six major customers: Henan Huanyu Sai Er New Energy Technology Co., Ltd (“Huanyu”); CITIC Guo’an Mengguli Ltd.; Guangzhou Hongsen Material Co., Ltd.; Tianjin B&M Science and ~~Volume~~Technology Ltd.; Dalian Dahua International Trade Co., Ltd.; and Beijing Easpring Co., Ltd. In the nine months ended February 29, 2012, sales to these customers totaled 77% of our net revenues. We expect that these customers will continue to represent a substantial portion of our sales in the rest of fiscal year 2012. We are working persistently to increase our customer base.

	Sales Amount ($)				Change
Product	Q1 & Q2 of 2012		Q1 & Q2 of 2011		$		%
Cobaltosic oxide		14,006,773		18,456,662		-4,449,889		-24	%
Lithium iron phosphate		8,195,490		5,936,625		2,258,865		38	%
Total		22,202,263		24,393,287		-2,191,024		-9	%

The price of raw materials did not have a significant impact on our financial results during the three and nine months ended February 29, 2012. The major raw materials used to produce cobaltosic oxide are cobalt salt, ferric carbonate and cobaltous oxalate. The major raw materials used to produce LIP are ferric phosphate and lithium carbonate. Our cost of the raw materials to produce cobaltosic oxide did not change substantially, and our cost for LIP raw materials, especially ferric phosphate, declined in part during the nine months ended February 29, 2012 because of the increase in production of one of our suppliers.

	Sales Volume (Ton)				Change
Product	Q1 & Q2 of 2012		Q1 & Q2 of 2011		Tons		%
Cobaltosic oxide		470		585		-115		-20	%
Lithium iron phosphate		430		312.88		117.12		37	%
Total		900		897.88		2.12		0	%

Results of Operations

~~Cost~~Comparison of ~~Revenue~~Nine Months Ended February 29, 2012 to Nine Months Ended February 28, 2011

~~Cost~~Net of revenue was $14,754,207, compared to $16,614,672 for the comparable period, a decrease of $1,860,465 or 11%. Cost of revenue decreased primarily due to the decreased production of cobaltosic oxide and increased production of LIP, which costs less to produce.Revenue

~~Gross~~Net ~~Profit~~revenue was $33,471,067, compared to $37,753,217 for the nine months ended February 28, 2011 (the “Comparable Period”), a decrease of $4,282,150 or 11%. One hundred percent (100%) of the net revenue decrease was attributed to a decrease in sales of our older product cobaltosic oxide. Sales of cobaltosic oxide for the nine months ended February 29, 2012 totaled 705 tons and $20,838,404, a decrease of 184 tons and $7,149,964, or 20% in quantity and 26% in dollar value, from 889 tons and $27,988,368 for the Comparable Period, while sales of LIP for the nine months ended February 29, 2012 totaled 660 tons and $12,632,663, an increase of 142 tons and $2,867,814, or 27% in quantity and 29% in dollar value, from 518 tons and $9,764,849 for the Comparable Period.

Gross profit was $7,448,056, a decrease of $330,559 or 4% from $7,778,615 for the comparable period. Overall gross margin was 33.5% compared to 31.9% in the comparable period, an increase of 1.65%. The gross profit margins for cobaltosic oxide and lithium iron phosphate were 23% and 52%, respectively, compared to 27% and 49%, respectively for the comparable period. The decrease in gross profit margins for cobaltosic oxide was primarily attributable to a reduction in the average selling price of cobaltosic oxide from $31,550 per ton for the comparable period to $29,801 per ton in the current period. Gross profit margins for LIP increased approximately 3%, of which approximately 0.5% was due to an increase in the average selling price of lithium iron phosphate from $18,967 per ton for the comparable period to $19,059 per ton in the current period; and approximately 2% was due to a reduction in the cost of raw materials.

Changes in Sales Amount and ~~Marketing Expenses~~Volume

Sales and marketing expenses totaled $81,039, compared to $68,773 for the comparable period, an increase of $12,266 or 18%. The increase was primarily attributable to an increase in salaries paid to our sales personnel.

	Sales Amount ($)				Change
Product	Q1 - Q3 of 2012		Q1 - Q3 of 2011		$		%
Cobaltosic oxide		20,838,404		27,988,368		-7,149,964		-26	%
Lithium iron phosphate		12,632,663		9,764,849		2,867,814		29	%
Total		33,471,067		37,753,217		-4,282,150		-11	%

General and Administrative Expenses

	Production Volume (Ton)				Change
Product	Q1 – Q3 of 2012		Q1 –Q3 of 2011		Tons		%
Cobaltosic oxide		705		889		-184		-20	%
Lithium iron phosphate		660		518		142		27	%
Total		1,365		1,407		-42		-3	%

~~General~~Cost ~~and administrative expenses were $850,464, compared to $2,595,814 for the comparable period, a decrease~~ of $1,745,350 or 67%. During the six months ended November 30, 2010, the Company recorded a stock-based consultancy fee of $1,783,500. No such expense was incurred during the six months ended November 30, 2011.Revenue

~~Research~~Cost of revenue was $22,120,626, compared to $25,367,854 for the Comparable Period, a decrease of $3,247,228 or 13%. Cost of revenue decreased primarily due to decreased production of cobaltosic oxide and ~~Development~~increased ~~Expenses~~production of LIP, which costs less to produce.

~~Research~~Gross and development expenses were $67,672, compared to $53,447 for the comparable period, an increase of $14,225 or 27%. The increase was primarily attributable to an increase in salaries and bonus paid to research and development personnel.Profit

4Gross profit was $11,350,441, a decrease of $1,034,922 or 8% from $12,385,363 for the Comparable Period. Overall gross margin was 34% compared to 32.8% in the Comparable Period, an increase of 1.2%. The gross profit margins for cobaltosic oxide and LIP were 22% and 53%, respectively, compared to 26% and 51%, respectively for the ComparablePeriod. The decrease in gross profit margins for cobaltosic oxide was primarily attributable to a reduction in the average selling price of cobaltosic oxide from $31,483 per ton for the Comparable Period to $29,558 per ton in the current period. Gross profit margins for LIP increased approximately 2%, of which approximately 0.5% was due to an increase in the average selling price of LIP from $18,855 per ton for the Comparable Period to $19,140 per ton in the current period; and approximately 1.5% was due to a reduction in the cost of raw materials.

~~Income~~Sales ~~from~~and ~~Operations~~Marketing Expenses

~~Income~~Sales ~~from~~and ~~operations~~marketing ~~was~~expenses totaled $6122,~~448~~663,~~881,~~ compared anto ~~increase of~~ $1116,~~388,300~~266 orfor ~~27%~~the Comparable Period, ~~compared~~an toincrease of $56,~~060,581~~397 ~~for~~or ~~the comparable period~~5. 5%. The increase was primarily attributable to ~~the~~an ~~decrease~~increase in ofsalaries ~~$1,745,350~~paid into ~~general~~our ~~and~~sales ~~administrative expenses~~personnel.

~~Other~~General ~~Income~~and Administrative Expenses

~~Other~~General ~~income~~and ~~was~~administrative expenses were $331,~~561~~379,469, compared to ~~other income of~~ $683,~~283~~454,394 for the ~~comparable~~Comparable ~~period~~Period, a decrease of $342,~~722~~074,925 or 5160%. InDuring ~~September 2010,~~ the ~~Company~~nine ~~received~~months aended ~~grant~~February 28, ~~from~~2011, the ~~Dalian~~Company ~~Municipal~~recorded ~~Government~~a instock-based ~~the~~consultancy ~~amount~~fee of $441,~~432~~783,500. No such ~~grants~~expense ~~were~~was ~~received~~incurred during the ~~six~~nine months ended ~~November~~February 3029, ~~2011~~2012.

~~Income~~Research ~~Taxes~~and Development Expenses

~~Provisions~~Research ~~for~~and ~~income~~development ~~tax~~ expenses were $1101,~~665~~470,~~544~~ compared to $187,~~758,130~~285 for the ~~comparable~~Comparable ~~period~~Period, aan ~~decrease~~increase of $9214,~~586~~185 or 516%. ~~The~~ ~~decrease resulted primarily from the decrease in gross profit and profit before taxation in the Company’s PRC subsidiaries.~~ The ~~Company~~increase was ~~established~~primarily ~~under the laws of the State of Delaware and is subject~~ attributable to ~~U.S.~~an ~~federal~~increase ~~income~~in ~~tax~~salaries and ~~Delaware~~bonuses ~~annual~~paid ~~reporting requirements. No provision for income taxes in the United States has been made as the Company has no income taxable in the United States. The Company’s PRC subsidiaries expect~~ to ~~use~~research ~~their retained earnings to support their PRC operations,~~ and dodevelopment ~~not expect to declare any dividends within the foreseeable future~~personnel.

~~Foreign~~Income ~~Currency~~from ~~Translation Gain~~Operations

~~The~~Income ~~foreign~~from ~~currency~~operations ~~translation gain~~ was $19,~~040~~746,~~477~~839, an aincrease ~~decrease~~ of $111,~~083~~019,421 or 111.7%, compared to $18,~~051~~727,~~560~~418 for the ~~comparable~~Comparable ~~period~~Period. ~~There~~The increase was noprimarily ~~significant~~attributable ~~fluctuation~~to the decrease of $2,074,925 in ~~foreign~~general ~~currency~~and ~~translation~~administrative ~~gain~~expenses.

~~Net Income~~4

~~Net~~Other income was $4,816,898, an increase of $1,446,164 or 43% compared to the net income of $3,370,734 for the comparable period. The increase in net income resulted primarily from the decrease in general and administrative expenses.Income

~~Comparison~~Other ofincome ~~Three~~was ~~Months~~$54,111, ~~Ended~~compared ~~November~~to 30other income of $82,813 ~~2011~~for tothe ~~Three~~Comparable ~~Months~~Period, ~~Ended~~a ~~November~~decrease 30of $28,702 or 35%. In September 2010, the Company received a grant from the Dalian Municipal Government in the amount of $44,722. No such grants were received during the nine months ended February 29, 2012.

~~Net~~Income ~~Revenue~~Taxes

~~Net~~Provisions ~~revenue~~for ~~was~~income tax expenses were $102,~~712~~535,~~997,~~309 compared to $122,~~639~~779,~~828~~817 for the ~~comparable~~Comparable ~~period~~Period, a decrease of $1244,~~926,831~~508 or ~~15%~~8. ~~One hundred percent (100~~8%~~) of the net revenue decrease was attributed to a decrease in sales of our older product cobaltosic oxide~~. ~~Sales~~The ~~of cobaltosic oxide for the three months ended November 30, 2011 totaled 230 tons and $6,633,025, a~~ decrease ofresulted ~~67.12~~primarily ~~tons and $2,670,191, or 22% in quantity and 29% in dollar value,~~ from ~~297.12 tons and $9,303,216 for~~ the ~~comparable~~decrease ~~period~~ in ~~2010.~~gross ~~Sales~~profit ~~of lithium iron phosphate for the three months ended November 30, 2011 totaled 213 tons~~ and ~~$4,079,972, an increase of 33 tons and $743,360, or 18%~~ in ~~quantity~~profit orbefore ~~22%~~taxation in ~~dollar value, from 180 tons and $3,336,612 for~~ the ~~comparable~~Company’s ~~period~~PRC ~~in 2010~~subsidiaries.

~~Changes~~The inCompany ~~Sales~~was ~~Amount~~established under the laws of the State of Delaware and ~~Volume~~is subject to U.S. federal income tax and Delaware annual reporting requirements. No provision for income taxes in the United States has been made as the Company has no income taxable in the United States. The Company’s PRC subsidiaries expect to use their retained earnings to support their PRC operations.

	Sales Amount ($)				Change
Product	Q2 of 2012		Q2 of 2011		$		%
Cobaltosic oxide		6,633,025		9,303,216		-2,670,191		-29	%
Lithium iron phosphate		4,079,972		3,336,612		743,360		22	%
Total		10,712,997		12,639,828		-1,926,831		-15	%

Foreign Currency Translation Gain

	Sales Volume (Ton)				Change
Product	Q2 of 2012		Q2 of 2011		Tons		%
Cobaltosic oxide		230		297.12		-67.12		-22	%
Lithium iron phosphate		213		180		33		18	%
Total		443		477.12		-34.12		-7	%

The foreign currency translation gain was $1,719,103, an increase of $16,696 or 0.98% compared to $1,702,407 for the Comparable Period. There was no significant fluctuation in foreign currency translation gain.

5Net Income

~~Cost~~Net income was $7,265,641, an increase of ~~Revenue~~$1,235,227 or 20% compared to net income of $6,030,414 for the Comparable Period. The increase in net income resulted primarily from the decrease in general and administrative expenses.

~~Cost~~Comparison of ~~revenue~~Three ~~was~~Months ~~$7,116,356,~~Ended ~~compared~~February ~~to $8~~29,~~568,216~~ ~~for~~2012 ~~the comparable period, a decrease of $1,451,860 or 17%. Cost of revenue decreased primarily due~~ to ~~the~~Three Months ~~decreased~~Ended ~~production~~February ~~of cobaltosic oxide and increased production of LIP~~28, ~~which costs less to produce.~~2011

~~Gross~~Net ~~Profit~~Revenue

~~Gross~~Net ~~profit~~revenue was $311,~~596~~268,~~641 a decrease of $474~~804,~~971~~ orcompared ~~12% from~~ to $413,~~071~~359,~~612~~930 for the ~~comparable~~three ~~period. Overall~~months ~~gross~~ended ~~margin~~February ~~was~~28, ~~33.6%~~2011 ~~compared to 32.2% in~~ (the ~~comparable~~“Prior ~~period~~Period”) , ana ~~increase~~decrease of ~~1.4%.~~$2,091,126 ~~The~~or ~~gross profit margins for cobaltosic oxide and LIP were 22~~16%. ~~and~~One hundred ~~53%,~~percent ~~respectively compared to 26~~(100%) ~~and~~of ~~50%, respectively for~~ the ~~comparable~~net ~~period. The~~revenue decrease ~~in gross profit margins for cobaltosic oxide~~ was ~~primarily~~ attributable to a ~~reduction~~decrease in ~~the~~sales ~~average~~of ~~selling~~our ~~price~~older ofproduct cobaltosic oxide. Sales ~~from~~of ~~$31,323~~cobaltosic ~~per~~oxide ~~ton~~ for the three months ended ~~November~~February 3029, ~~2010~~2012 tototaled ~~$28,839~~235 ~~per~~tons ~~ton~~and ~~for~~$6,831,631, ~~the~~a ~~three~~decrease ~~months~~of ~~ended~~69 ~~November~~tons 30and $2,700,075, ~~2011. The~~or ~~increase~~23% in ~~gross~~quantity ~~profit~~and ~~margins~~28% ~~for~~in ~~LIP~~dollar ~~was~~value, ~~primarily~~from ~~attributable~~304 totons anand ~~increase~~$9,531,706 infor the ~~average~~Prior ~~selling~~Period. ~~price~~Sales of LIP ~~from $18,536 per ton~~ for the three months ended ~~November~~February 3029, ~~2010~~2012 tototaled 230 tons and $194,~~155~~437,173, ~~per~~an ~~ton~~increase ~~for~~of ~~the~~25 ~~three~~tons ~~months~~and ~~ended~~$608,949, ~~November~~or 3012% in quantity and 16% in dollar value, ~~2011~~from 205 tons and $3,828,224 for the Prior Period.

Changes in Sales Amount and ~~Marketing Expenses~~Volume

Sales and marketing expenses totaled $43,840, compared to $37,447 for the comparable period, an increase of $6,393 or 17%. The increase was primarily attributable to an increase in salaries paid to sales personnel.

	Sales Amount ($)			Change
Product		Q3 of 2012	Q3 of 2011		$	%
Cobaltosic oxide		6,831,631	9,531,706		-2,700,075	-28	%
Lithium iron phosphate		4,437,173	3,828,224		608,949	16	%
Total		11,268,804	13,359,930		-2,091,126	-16	%

General and Administrative Expenses

	Production Volume (Ton)			Change
Product		Q3 of 2012	Q3 of 2011		Tons	%
Cobaltosic oxide		235	304		-69	-23	%
Lithium iron phosphate		230	205		25	12	%
Total		465	509		-44	-8.6	%

~~General~~Cost ~~and administrative expenses were $406,858, compared to $2,195,429 for the comparable period, a decrease~~ of $1,788,571 or 81%. During the three months ended November 30, 2010, the Company recorded a stock-based consultancy fee of $1,783,500. No such expense was incurred during the three months ended November 30, 2011.Revenue

~~Research~~Cost of revenue was $7,366,419, compared to $8,753,182 for the Prior Period, a decrease of $1,386,763 or 16%. Cost of revenue decreased primarily due to decreased production of cobaltosic oxide and ~~Development~~increased ~~Expenses~~production of LIP, which costs less to produce.

~~Research and development expenses were $33,717, compared to $32,514 for the comparable period, an increase of $1,203 or 4%. There was no significant fluctuation in research and development expenses.~~5

~~Income~~Gross ~~from Operations~~Profit

~~Income~~Gross ~~from~~profit ~~operations~~ was $3,~~112~~902,~~226~~385 a decrease of $704,363 anor ~~increase~~15.2% offrom $14,~~306~~606,~~004~~748 orfor 72the Prior Period. Overall gross margin was 34.6% compared to 34.5% in the Prior Period. The gross profit margins for cobaltosic oxide and LIP were 22% and 54%, respectively compared to $126% and 55%,~~806,222~~ respectively for the Prior Period. Although the ~~comparable~~gross ~~period~~margin for cobaltosic oxide decreased by 4%, the production volume of cobaltosic oxide also decreased and the volume of higher margin product LIP increased. Thus, we were still able to maintain the overall gross margin. The ~~increase~~decrease in gross profit margins for cobaltosic oxide was primarily attributable to a reduction in the ~~decrease~~average selling price of cobaltosic oxide from $131,~~745~~354 per ton for the three months ended February 28,~~350~~ 2011 to $29,071 per ton for the three months ended February 29, 2012. There were no significant fluctuations in ~~general~~gross ~~and~~profit ~~administrative~~margins ~~expenses~~for LIP for the three months ended February 29, 2012 compared with the three months ended February 28, 2011.

~~Other~~Sales ~~Income~~and Marketing Expenses

~~Other~~Sales ~~income~~and ~~was~~marketing expenses totaled $1941,~~988~~624, compared to $5747,~~644~~493 for the ~~comparable~~Prior ~~period~~Period, a decrease of $375,~~656~~869 or 6512%. InThe ~~September~~decrease ~~2010,~~was ~~the~~primarily ~~Company~~attributable ~~received~~to astricter ~~grant~~cost controls ~~from the Dalian Municipal Government~~ in the ~~amount~~Company’s ofPRC ~~$44,432~~subsidiaries. ~~No such grants were received during the three months ended November 30, 2011.~~

~~Income~~General ~~Taxes~~and Administrative Expenses

~~Provisions~~General ~~for~~and ~~income~~administrative ~~tax~~ expenses were $~~800~~529,~~424~~005, compared to $~~923~~858,~~867~~580 for the ~~comparable~~Prior ~~period~~Period, a decrease of $~~123~~329,~~443~~575 or 1338%. The decrease ~~resulted~~was ~~primarily~~mainly ~~from~~due ~~the~~to: ~~decrease~~i) a reduction in ~~gross~~stock-based ~~profit~~compensation ~~and~~to in$67,500 ~~profit~~for ~~before~~this ~~taxation~~period, incompared to $280,625 for the ~~Company’s~~Prior ~~PRC~~Period; ~~subsidiaries~~ii) the land and property tax was $118,383 for the prior comparable period, while none occurred in this period.

~~The~~Research ~~Company was established under the laws of the State of Delaware~~ and isDevelopment subject to U.S. federal income tax and Delaware annual reporting requirements. No provision for income taxes in the United States has been made as the Company has no income taxable in the United States. The Company’s PRC subsidiaries expect to use their retained earnings to support their PRC operations, and do not expect to declare any dividends within the foreseeable future.Expenses

6Research and development expenses were $33,798, compared to $33,838 for the comparable period, a decrease of $40 or 0.11%. There was no significant fluctuation in research and development expenses.

~~Foreign~~Income ~~Currency~~from ~~Translation Gain~~Operations

~~The~~Income ~~foreign~~from ~~currency~~operations ~~translation gain~~ was $343,~~688~~297, 958, a decrease of $~~909~~368,~~629~~879 or 9610%, compared to $~~944~~3,~~317~~666,837 for the ~~same~~comparable period ~~in 2010~~. The decrease ~~resulted~~was ~~from~~due ~~the~~to ~~slowing down of devaluation of US dollar during~~ the ~~three~~decrease ~~months~~in ~~ended~~gross profit ~~November~~in ~~30, 2011. The RMB: US$1 exchange rates as of November 30, 2011 and 2010 were 6.3773 and 6.6714, respectively while~~ the ~~average~~Company’s ~~RMB:~~PRC ~~US$1 exchange rates for six months ended on November 30, 2011 and 2010 were 6~~subsidiaries.~~4181 and 6.7519, respectively.~~

~~Net~~Other Income

~~Net~~Other income was $220,~~331~~550,~~790,~~ ~~an increase of $1,391,791 or 148%~~ compared to $~~939~~14,~~999~~ 531 for the comparable period~~. The~~, an increase inof ~~net~~$6,019 ~~income~~or ~~resulted~~41%. ~~primarily~~The ~~from~~increase ~~the~~was ~~decrease~~due into ~~general~~the ~~and~~increase ~~administrative~~in ~~expenses~~interest income.

~~Liquidity~~Income ~~and Capital Resources~~Taxes

~~Cash~~Provisions for income tax expenses were $869,765 compared to $1,021,688 for the comparable period, a decrease of $151,923 or 15%. The decrease resulted primarily from the decrease in gross profit and ~~Cash~~in ~~Equivalents~~profit before taxation in the Company’s PRC subsidiaries.

~~Our~~The ~~cash~~Company ~~and~~was ~~cash~~established ~~equivalents~~under ~~were $21,810,394 at~~ the ~~beginning~~ laws of the ~~six~~State ~~months~~of ~~ended~~Delaware ~~November 30, 2011~~ and ~~increased~~is subject to ~~$23,926,083~~U.S. atfederal ~~the~~income ~~end~~tax ofand ~~the~~Delaware ~~six~~annual ~~months~~reporting ~~ended~~requirements. ~~November~~No ~~30,~~provision ~~2011,~~for income antaxes ~~increase~~in ofthe ~~$2,115,689~~United orStates ~~9.7%.~~has ~~This~~been ~~increase~~made ~~represents~~as the ~~combined~~Company ~~effects~~has ofno ~~cash~~income ~~generated~~taxable ~~from operating activities~~ in the ~~total~~United ~~amount~~States. ofThe ~~$3,956,192~~Company’s PRC ~~plus~~subsidiaries ~~the~~expect ~~effect~~to ofuse ~~exchange~~their ~~rate~~retained ~~changes~~earnings ofto ~~$426,665~~support ~~offset~~their byPRC ~~cash used in investing activities in the total amount of $2,267,168~~operations.

AsForeign ofCurrency ~~November~~Translation ~~30, 2011, the majority of our cash was held in RMB denominated bank deposits in a single PRC financial institution.~~Gain

~~Our~~The ~~decision~~foreign currency translation gain was $678,626, an increase of $27,779 or 4% compared to ~~maintain~~$650,847 ~~high~~for ~~cash~~the ~~reserves~~same isperiod ~~mainly~~in ~~based~~2011. ~~upon~~The ~~(1)~~increase resulted from the ~~projected~~devaluation of ~~need~~US ~~for~~dollar ~~new~~during ~~manufacturing~~the ~~equipment~~three ~~for~~months ~~lithium~~ended ~~iron~~February ~~phosphate~~29, ~~production~~2012. inThe ~~fiscal~~RMB: US$1 exchange rates as of February 29, 2012 ~~estimated~~and toFebruary 28, be2011 ~~approximately~~were $76.443073 ~~million~~and 6.5830, ~~and~~respectively, ~~(2)~~while the ~~projected~~average ~~purchase~~RMB: ofUS$1 ~~new~~exchange ~~R&D~~rates ~~equipment~~for innine ~~the~~months ~~amount~~ended ofon ~~approximately~~February $329, 2012 ~~million~~and inFebruary ~~fiscal~~28, ~~year~~2011 ~~2012~~were 6.3910 and 6.7079, respectively.

Capital expenditures have historically been necessary to expand the production capacity of our manufacturing operations. Our prospective increase in both production lines and R&D is primarily due to the projected increased demand of our principal product lithium iron phosphate. On the basis of our current cash balances and outlook for the upcoming fiscal year, we believe we have sufficient cash resources to fund the expansion of our LIP production lines from 700 tons to 1,000 tons per annum.6

Net ~~Cash Provided by Operating Activities~~Income

Net ~~cash~~income ~~provided by our operating activities~~ was $32,~~956~~448,~~192~~743, ana ~~increase~~decrease of $2210,~~588,629~~937 or ~~189~~8% compared to $1 2,~~367~~659,~~563~~680 infor the comparable period. The decrease in ~~2010. The~~net ~~increase~~income ~~was~~resulted primarily ~~attributable~~from to the ~~increase~~decrease in ofgross ~~about~~profit ~~$2.2~~and ~~million~~ in ~~accounts~~profit ~~payable~~before intaxation ~~this period, incurred~~ in the ~~conversion~~Company’s ofPRC ~~two production lines to LIP production~~subsidiaries.

~~Net~~Liquidity ~~Cash~~and ~~Used~~Capital ~~in Investing Activities~~Resources

~~Net~~Cash ~~cash used in investing activities was $2,267,168 for the six months ended November 30, 2011. The Company purchased additional equipment in the amount of $207,988~~ and ~~expended~~Cash ~~$2,059,180 as part of total cost on the conversion of two additional production lines to the production of LIP .~~Equivalents

~~Net~~Our cash and cash equivalents were $21,810,394 at the beginning of the nine months ended February 29, 2012 and increased to $27,796,238 at the end of the nine months ended February 29, 2012, an increase of $5,985,844 or 27%. This increase represents the combined effects of cash generated from operating activities in the total amount of $7,997,816 plus the effect of exchange rate changes of $738,592 offset by cash used in ~~financing~~investing activities in the total amount of $2,750,564.

~~There~~As ~~was~~of noFebruary ~~net~~29, ~~cash~~2012, ~~generated~~the ormajority ~~used~~of our ~~for~~cash ~~financing~~was ~~activities~~held ~~for~~in ~~the~~RMB ~~six~~denominated ~~months~~bank ~~ended~~deposits ~~November~~in ~~30,~~a ~~2011~~single PRC financial institution.

~~Income~~Our ~~Taxes~~decision to maintain high cash reserves is mainly based upon (1) the projected need for new manufacturing equipment for LIP production in fiscal 2012 estimated to be approximately $7.44 million, and (2) the projected purchase of new R&D equipment in the amount of approximately $3 million in the rest of calendar year 2012.

~~Cash~~Capital ~~paid~~expenditures ~~for~~have ~~income~~historically been ~~tax~~necessary ~~expense was $1,706,022 for the six months ended November 30, 2011, compared~~ to ~~$2658,933~~expand ~~for~~ the ~~six~~production ~~months~~capacity ~~ended~~of ~~November~~our ~~30,~~manufacturing ~~2010,~~operations. aOur ~~decrease~~prospective ofincrease ~~$952,911~~in orboth ~~36%.~~production ~~The~~lines and ~~decrease~~R&D ~~was~~is primarily due to the ~~decrease~~projected inincreased ~~gross~~demand ~~profit~~of ~~and~~our ~~profit~~principal ~~before~~product ~~taxation~~lithium iniron ~~the Company’s PRC subsidiaries~~phosphate.

7Net Cash Provided by Operating Activities

~~Inflation~~Net cash provided by our operating activities was $7,997,816, an increase of $1,381,499 or 21% compared to $6,616,317 in the comparable period in 2011. The increase was primarily attributable to the increase of about $1 million in accounts payable in this period, incurred in the purchase of raw materials.

WeNet ~~believe~~Cash ~~that~~Used ~~inflation~~in ~~has~~Investing ~~not had a material or significant impact on our revenue or our results of operations.~~Activities

~~General~~Net cash used in investing activities was $2,750,564 for the nine months ended February 29, 2012. The Company purchased additional equipment in the amount of $165,683 and expended $2,584,881 to convert the two remaining lithium cobalt oxide production lines to the production of LIP.

WeNet ~~believe~~cash ~~that~~used wein currently have sufficient income generated from our operations to meet our operating and/or capital needs. However, we will continue to evaluate various sources of capital to meet our growth needs. Such sources may include debt financing, issuance of equity securities and entrance into some financing arrangements. There can be no assurance, however, that any of the financing arrangements described herein will be available and, if available, can be obtained on terms favorable to us.activities

~~Contractual~~There ~~Obligations~~was ~~and~~no ~~Commitments~~net cash generated or used for financing activities for the nine months ended February 29, 2012.

WeIncome are committed under several non-cancelable operating lease agreements, with terms from five to ten years, due through July 25, 2020. Annual lease payments are $17,249 over the next three years, $16,073 for the fourth year, $12,544 for the fifth year and $44,951 for periods thereafter. We have a minimum rental payment obligation totaling $125,315.Taxes

~~The~~Cash ~~agreement~~paid ~~dated~~for ~~November~~income ~~30,~~tax ~~2010~~expense ~~between~~was ~~Dalian Xinyang High-Tech Development Co.~~$2, ~~Ltd. (“DLXY”)~~548,564 for athe ~~wholly~~nine ~~owned~~months ~~subsidiary~~ended ofFebruary ~~China~~29, ~~Sun Group High-Tech Co.~~2012, ~~and~~compared ~~Henan~~to ~~Huanyu Sai Er New Energy Technology Co.~~$3, ~~Ltd. (“Huanyu”)~~742,036 ~~and~~for the ~~agreement~~nine ~~dated~~months ~~April~~ended 20February 28, 2011, ~~between~~a ~~DLXY~~decrease ~~and~~of $1,193,472 ~~Advanced~~or ~~Battery~~32%. ~~Technologies~~The ~~Inc.~~decrease ~~(“ABAT”)~~was ~~expired~~primarily atdue to the ~~end~~decrease ofin ~~December~~gross ~~2011~~profit and weprofit ~~have~~before notaxation ~~further~~in ~~obligations under these agreements. DLXY is currently negotiating~~ the ~~renewal~~Company’s PRC ~~of these agreements~~subsidiaries.

~~Critical Accounting Policies~~Inflation

~~Revenue~~We ~~recognition~~believe that inflation has not had a material or significant impact on our revenue or our results of operations.

In accordance with the ASC Topic 605, “Revenue Recognition,” we recognize revenue when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured.General

~~Revenue~~We isbelieve ~~recognized~~that ~~when~~we ~~products~~currently ~~are~~have ~~delivered~~sufficient income togenerated ~~customers.~~from ~~Provisions~~our ~~for~~operations ~~discounts~~to meet our operating and/or ~~rebates~~capital toneeds. ~~customers~~However, ~~estimated~~we ~~returns~~will ~~and~~continue ~~allowances,~~to ~~and~~evaluate ~~other~~various sources ~~adjustments~~of ~~are~~capital ~~provided~~to ~~for~~meet inour ~~the~~growth ~~same~~needs. ~~period~~Such ~~the~~sources ~~related~~may ~~sales~~include ~~are~~debt ~~recorded.~~financing, Inissuance ~~instances~~of ~~where~~equity ~~products~~securities ~~are~~and ~~configured~~entrance into tosome ~~customer~~financing ~~requirements,~~arrangements. ~~revenue~~There iscan ~~recorded~~be ~~upon~~no ~~the~~assurance, ~~successful~~however, ~~completion~~that any of ~~our~~the ~~final~~financing ~~test~~arrangements ~~procedures~~described herein will be available and, ~~the~~if ~~customer’s~~available, ~~acceptance~~can be obtained on terms favorable to us.

Our subsidiary, DLXY is subject to valued-added tax (“VAT”) which is levied on the majority of the products of DLXY at the rate of 17% on the invoiced value of sales sold in the People’s Republic of China. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by us in addition to the invoiced value of purchases to the extent not refunded for export sales.7

~~Accounts~~Contractual ~~receivables~~Obligations and ~~allowance for doubtful accounts~~Commitments

~~Accounts~~We ~~receivable~~ are ~~recorded~~committed atunder ~~the~~several ~~invoiced~~non-cancelable operating ~~amount~~lease ~~and~~agreements, dowith ~~not~~terms ~~bear~~from ~~interest.~~five Weto ~~extend~~ten ~~unsecured~~years, ~~credit~~due tothrough ~~our~~July ~~customers~~25, in2020. ~~the~~Annual ~~ordinary~~lease ~~course~~payments ofare ~~business~~$17,440 ~~but mitigate~~ over the ~~associated~~next ~~risks~~three byyears, ~~performing~~$15,062 ~~credit~~for ~~checks~~the ~~and~~fourth ~~actively~~year, ~~pursuing~~$12,684 ~~past due accounts. An allowance~~ for ~~doubtful~~the ~~accounts~~fifth isyear ~~established~~ and ~~determined~~$42,279 ~~based~~for onperiods ~~management’s~~thereafter. ~~assessment~~We ofhave ~~known~~a ~~requirements,~~minimum rental ~~aging of receivables,~~ payment ~~history,~~obligation ~~the~~totaling ~~customers’ current credit worthiness and the economic environment~~$122,345.

8Employment Contracts Commitment

~~Foreign~~Under ~~currencies~~the ~~translation~~employment agreements dated November 15, 2010, the Company is committed to grant Mr. Guosheng Fu, the Chief Executive Officer up to an aggregate amount of 450,000 shares of the Company’s common stock. The Company agreed to issue 150,000 shares of its common stock to him on each of December 31, 2010, 2011, and 2012, each, an award date, subject to his continuous service on each award date.

~~Transactions~~Under ~~denominated~~the inemployment ~~currencies~~agreements ~~other~~dated ~~than~~November 15, 2010, the ~~functional~~Company ~~currency~~is ~~are~~also ~~translated~~committed ~~into~~to ~~the~~grant ~~functional~~Ms. ~~currency~~Mingfen atLiu, the ~~exchange~~Chief ~~rates~~Financial ~~prevailing~~Officer atup ~~the~~to ~~dates~~an ofaggregate ~~the~~amount ~~transaction.~~of ~~Monetary~~300,000 shares ~~assets~~of ~~and~~the ~~liabilities~~Company’s ~~denominated~~common instock. ~~currencies~~The ~~other~~Company ~~than~~agreed ~~the~~to ~~functional~~issue ~~currency~~100,000 ~~are~~shares ~~translated~~of ~~into~~its ~~the~~common ~~functional~~stock ~~currency~~to ~~using~~her ~~the~~on ~~applicable~~each ~~exchange~~of ~~rates~~December 31, at2010, ~~the~~2011, ~~balance~~and ~~sheet~~2012, ~~dates.~~each, ~~The~~an ~~resulting~~award ~~exchange~~date, ~~differences~~subject ~~are~~to ~~recorded~~her incontinuous ~~the~~service ~~condensed~~on ~~consolidated~~each ~~statement~~award ~~of operations~~date.

~~The~~As ~~reporting currency~~ of ~~the~~February ~~Company~~29, is2012, the ~~United~~Company ~~States~~issued an ~~Dollar~~aggregate ~~("US$").~~500,000 ~~The~~shares ~~Company's~~of ~~subsidiaries~~common instock ~~the~~under ~~PRC~~these ~~maintain~~employment ~~their~~agreements ~~books~~ and ~~records~~is incommitted ~~their~~to ~~local~~issue ~~currency, Renminbi Yuan ("RMB"), which is~~ the ~~functional~~remaining ~~currency~~250,000 ~~being~~shares of ~~the~~its ~~primary~~common ~~currency~~stock ofto the ~~economic~~executive ~~environment~~officers in ~~which~~the ~~these~~next ~~entities~~twelve ~~operate~~months.

InCritical ~~general,~~Accounting for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$ in accordance with ASC Topic 830-30, “Translation of Financial Statement,” using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.Policies

~~New~~Revenue ~~Financial Accounting Pronouncements~~recognition

~~The~~In ~~Company~~accordance ~~has~~with ~~reviewed~~the ~~all~~ASC ~~recently~~Topic ~~issued~~605, ~~but not yet effective~~“Revenue Recognition,” ~~accounting~~we ~~pronouncements~~recognize ~~and~~revenue ~~does~~when ~~not~~the ~~believe~~following ~~the~~four ~~future~~revenue ~~adoption~~criteria ofare ~~any~~met: ~~such~~persuasive ~~pronouncements~~evidence ~~maybe~~of ~~expected~~an toarrangement exists, ~~cause~~delivery ahas ~~material~~occurred, ~~impact~~the onselling ~~its~~price ~~financial~~is ~~condition~~fixed or ~~the~~determinable, ~~result~~and ofcollectability ~~its~~is ~~operation~~reasonably assured.

~~Item~~Revenue 3is recognized when products are delivered to customers. ~~Quantitative~~ Provisions for discounts and ~~Qualitative~~rebates ~~Disclosures~~to ~~About~~customers, ~~Market~~estimated ~~Risk~~returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of our final test procedures and the customer’s acceptance.

~~Not~~Our ~~applicable~~subsidiary, DLXY is subject to valued-added tax (“VAT”) which is levied on the majority of the products of DLXY at the rate of 17% on the invoiced value of sales sold in the People’s Republic of China. Output VAT is borne by customers in addition to the invoiced value of sales and input VAT is borne by us in addition to the invoiced value of purchases to the extent not refunded for export sales.

~~Item~~Accounts ~~4. Controls~~receivables and ~~Procedures.~~allowance for doubtful accounts

~~Evaluation~~Accounts receivable are recorded at the invoiced amount and do not bear interest. We extend unsecured credit to our customers in the ordinary course of ~~Our~~business, ~~Disclosure~~but ~~Controls~~mitigate the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on management’s assessment of known requirements, aging of receivables, payment history, the customers’ current credit worthiness and the economic environment.

AsForeign ofcurrencies the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amendedtranslation

~~The~~Transactions ~~purpose~~denominated ofin ~~this~~currencies other ~~evaluation~~than ~~is to determine if, as of~~ the ~~Evaluation~~functional ~~Date,~~currency ~~our disclosure controls and procedures~~ are ~~effective~~translated ~~such~~into ~~that~~ the ~~information~~functional ~~required~~currency toat bethe ~~disclosed~~exchange inrates ~~our~~prevailing ~~SEC~~at ~~reports~~the ~~(i)~~dates isof the ~~recorded,~~transaction. ~~processed,~~Monetary ~~summarized~~assets and ~~reported~~liabilities ~~within~~denominated ~~the~~in ~~time~~currencies ~~periods~~other ~~specified~~than inthe ~~SEC~~functional ~~rules~~currency ~~and~~are ~~forms,~~translated ~~and~~into the ~~(ii)~~functional iscurrency ~~accumulated~~using ~~and~~the ~~communicated~~applicable toexchange ~~our~~rates ~~management,~~at ~~including~~the ~~our~~balance ~~Chief~~sheet ~~Executive~~dates. ~~Officer~~The ~~and~~resulting ~~Chief~~exchange ~~Financial~~differences ~~Officer,~~are recorded asin ~~appropriate~~the tocondensed ~~allow~~consolidated ~~timely~~statement ~~decisions~~of ~~regarding required disclosure~~operations.

~~Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.~~8

~~Changes~~The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiaries in ~~Internal~~the ~~Control~~PRC ~~over~~maintain ~~Financial~~their ~~Reporting~~books and records in their local currency, Renminbi Yuan ("RMB"), which is the functional currency, being the primary currency of the economic environment in which these entities operate.

~~There~~In ~~have~~general, ~~been~~for noconsolidation ~~changes~~purposes, assets inand ~~our~~liabilities ~~internal~~of ~~controls~~its ~~over~~subsidiaries ~~financial~~whose ~~reporting~~functional ~~during~~currency is not the ~~quarter~~US$ ~~ended~~are ~~November~~translated into US$ in accordance with ASC Topic 830-30, ~~2011~~“Translation of Financial Statement,” ~~that~~using ~~have~~the ~~materially~~exchange ~~affected,~~rate oron the balance sheet date. Revenues and expenses are ~~reasonably~~translated ~~likely~~at toaverage ~~materially~~rates ~~affect,~~prevailing ~~our~~during ~~internal~~the ~~controls~~period. ~~over~~The gains and losses resulting from translation of financial statements ~~reporting~~of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

~~Limitations~~New onFinancial ~~the~~Accounting ~~Effectiveness of Disclosure Controls and Procedures~~Pronouncements

~~Our~~The ~~management,~~Company ~~including~~has ~~the~~reviewed ~~CEO~~all ~~and~~recently ~~CFO~~issued, but ~~does~~ not ~~expect~~yet ~~that our Disclosure Controls will prevent all error and all fraud. A control system~~effective, noaccounting ~~matter~~pronouncements ~~how well conceived~~ and ~~operated,~~does ~~can provide only reasonable,~~ not ~~absolute,~~believe ~~assurance that~~ the ~~objectives~~future ofadoption ~~the control system are met. Further, the design~~ of aany ~~control~~such ~~system~~pronouncements ~~must~~maybe ~~reflect the fact that there are resource constraints, and the benefits of controls must be considered relative~~ expected to ~~their~~cause ~~costs.~~a ~~Because~~material ofimpact ~~the~~on ~~inherent~~its ~~limitations~~financial incondition all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or ~~mistake. The design of any system of controls also is based in part upon certain assumptions about~~ the ~~likelihood~~result of ~~future events, and there can be no assurance that any design will succeed in achieving~~ its ~~stated goals under all potential future conditions~~operation.

9Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~PART~~Not ~~II – OTHER INFORMATION~~applicable.

Item 14. ~~Legal~~ ~~Proceedings~~Controls and Procedures.

WeEvaluation ~~know~~ of noOur ~~material~~Disclosure ~~legal proceeding pending against us.~~Controls

~~Item~~As ~~1A. Risk~~of ~~Factors.~~the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended

~~Not~~The ~~applicable~~purpose of this evaluation is to determine if, as of the Evaluation Date, our disclosure controls and procedures are effective such that the information required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~Item~~Based ~~2. Unregistered~~on ~~Sales~~this ofevaluation, ~~Equity~~our ~~Securities~~Chief Executive Officer and ~~Use~~Chief Financial Officer concluded that, as of ~~Proceeds~~the Evaluation Date, our disclosure controls and procedures were effective.

~~None.~~Changes in Internal Control over Financial Reporting

~~Item~~There ~~3. Defaults~~have ~~Upon~~been ~~Senior~~no ~~Securities~~changes in our internal controls over financial reporting during the quarter ended February 29, 2012, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

~~None.~~Limitations on the Effectiveness of Disclosure Controls and Procedures

~~Item~~Our 4management, including the CEO and CFO, does not expect that our Disclosure Controls will prevent all error and all fraud. ~~(Removed~~ A control system, no matter how well conceived and ~~Reserved~~operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.) Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

~~Item 5. Other Information.~~9

~~None.~~PART II – OTHER INFORMATION

Item 61. ~~Exhibits~~ Legal Proceedings.

~~EXHIBIT~~We ~~INDEX~~know of no material legal proceeding pending against us.

Exhibit No.		Title of Document
31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Item 1A. Risk Factors.

10Henan Huanyu Sai Er New Energy Technology Co., Ltd. (“Huanyu”) and Advanced Battery Technologies Inc. (“ABAT”) were two of our main customers during the 2011 Calendar year. Our supply agreements with these two customers expired at the end of 2011. Although these customers continue to purchase products from us, we do not have long-term supply agreements with these customers and we cannot guarantee that these or any of our other customers will not cancel existing orders or continue to purchase products from us in the future. The loss of these customers or any of our other major customers, or any substantial reduction in sales to any of these customers, could have a material adverse effect on our business, financial condition and results of operations.

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

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized~~None.

	CHINA SUN GROUP HIGH-TECH CO.
Date: January 13, 2012	By:	/s/ Guosheng Fu
		Name: Guosheng Fu
		Title: Chief Executive Officer
		(Principle Executive Officer)

Item 3. Defaults Upon Senior Securities.

Date: January 13, 2012	By:	/s/ Ming Fen Liu
		Name: Ming Fen Liu
		Title: Chief Financial Officer
		(Principle Financial and Accounting Officer)

None.

11Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

EXHIBIT INDEX

Exhibit No.		Title of Document

31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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

	CHINA SUN GROUP HIGH-TECH CO.

Date: April 13, 2012	By:	/s/ Guosheng Fu
		Name: Guosheng Fu
		Title: Chief Executive Officer
		(Principle Executive Officer)

Date: April 13, 2012	By:	/s/ Ming Fen Liu
		Name: Ming Fen Liu
		Title: Chief Financial Officer
		(Principle Executive Officer)

Filing Compare · CHINA SUN GROUP HIGH-TECH CO