UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





ANNUAL
REPORT


ON
FORM 10-K





ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For
the Fiscal Year Ended March 31, 2010





Commission
File Number 333-128532





CHISEN
ELECTRIC CORPORATION


(Exact
name of registrant as specified in its charter)





Nevada
              
              20-2190950(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)





Jingyi
Road, Changxing Economic Development Zone, Changxing, Zhejiang
Province,


The
People’s Republic of China





(Address,
including zip code, of principal executive offices)





(86)
572-6267666


(Registrants’
telephone number, including area code)





Securities
Registered Under Section 12(b) of the Exchange
Act:  None.


Securities
Registered Under Section 12(g) of the Exchange Act:  Common Stock, par
value $0.001 per share





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o    No
x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act.    Yes o    No
x




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 and (2) has been subject to such filing
requirements for the past 90 days.    Yes x     No
o




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




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o




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




Large
accelerated filer o    Accelerated
filer o         Non-accelerated
filer oSmaller Reporting Company x




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




Aggregate
market value of the voting stock held by non-affiliates of the registrant based
upon the closing price as of September 30, 2009 was approximately
$70,110,000.




The
number of outstanding shares of the registrant’s common stock on June 28, 2010
was 50,000,000.








CHISEN
ELECTRIC CORPORATION


ANNUAL
REPORT ON FORM 10-K


FOR
THE YEAR ENDED MARCH 31, 2010





Index





TABLE OF
CONTENTS





PART
      I
                    
                    
                    3ITEM
      1.
                    Business
                    
                    3ITEM
      1A
                    Risk
      Factors
                    
                    17ITEM
      1B.
                    Unresolved
      Staff Comments
                    
                    17ITEM
      2.
                    Properties
                    
                    17ITEM
      3.
                    Legal
      Proceedings
                    
                    19ITEM
      4.
                    Submission
      of Matters to a Vote of Security Holders
                    
                    19PART
      II
                    
                    
                    19ITEM
      5.
                    Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                    
                    19ITEM
      6.
                    Selected
      Financial Data
                    
                    21ITEM
      7.
                    Management‘s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    
                    21ITEM
      7A.
                    Quantitative
      and Qualitative Disclosures about Market Risk.
                    
                    29ITEM
      8.
                    Financial
      Statements and Supplementary Data
                    
                    29ITEM
      9.
                    Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosures
                    
                    29ITEM
      9A(T).
                    Controls
      and Procedures
                    
                    29ITEM
      9B.
                    Other
      Information
                    
                    30PART
      III
                    
                    
                    30ITEM
      10.
                    Directors,
      Executive Officers, and Corporate Governance
                    
                    30ITEM
      11.
                    Executive
      Compensation
                    
                    36ITEM
      12.
                    Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                    
                    38ITEM
      13.
                    Certain
      Relationships and Related Transactions, and Director
      Independence
                    
                    39ITEM
      14.
                    Principal
      Accountant Fees and Services
                    
                    40PART
      IV
                    
                    
                    41ITEM
      15.
                    Exhibits
      and Financial Statement Schedules
                    
                    41SIGNATURES
                    
                    
                    45


- 2
-





PART
I




ITEM
1.               Business




Forward
Looking Statements




The
following discussion of our financial condition and results of operations of
Chisen Electric Corporation (formerly known as World Trophy Outfitters, Inc.,
and the term “World
Trophy” is used when discussing the operations of the Company prior to
November 12, 2008 and the “Registrant” when
discussing its operations after November 12, 2008) is based upon and should be
read in conjunction with our consolidated financial statements and their related
notes included in this report. This report contains forward-looking statements.
Generally, the words “believes”, “anticipates”, “may”, “will”, “should”,
“expect”, “intend”, “estimate”, “continue” and similar expressions or the
negative thereof or comparable terminology are intended to identify
forward-looking statements. Such statements are subject to certain risks and
uncertainties, including the matters set forth in this report or other reports
or documents we file with the SEC from time to time, which could cause actual
results or outcomes to differ materially from those projected. Undue reliance
should not be placed on these forward-looking statements which speak only as of
the date hereof. We undertake no obligation to update these forward-looking
statements.





Exchange
Agreement





On
November 12, 2008 (the “Closing Date”), World
Trophy entered into a Share Exchange Agreement (the “Exchange Agreement”)
with Fast More Limited, a Hong Kong investment holding company (“Fast More”), Cheer
Gold Development Limited, a company organized under the laws of Samoa (“Cheer Gold”) and
Floster Investment Limited, a company organized under the laws of Samoa (“Floster” and together
with Cheer Gold, the “Stockholders”). As a
result of the share exchange, the World Trophy acquired all of the issued and
outstanding securities of Fast More from the Stockholders in exchange for
Thirty-Five Million (35,000,000) newly-issued shares of the World Trophy’s
common stock, par value $0.001 per share (“Common Stock”), of
which Thirty-Two Million Nine Hundred Thousand (32,900,000) shares were issued
to Cheer Gold and Two Million One Hundred Thousand (2,100,000) shares were
issued to Floster. As of the Closing Date, the Stockholders collectively
beneficially own seventy percent (70%) of the voting capital stock of the
Company, 65.8% of which is owned by Cheer Gold and 4.2% of which is owned by
Floster. As a result of the Exchange, Fast More became a wholly-owned subsidiary
of World Trophy.





Effective
February 2, 2009, the Registrant amended its Articles of Incorporation to change
its name from “World Trophy Outfitters, Inc.” to “Chisen Electric Corporation”.
The following is disclosure regarding the Registrant, Fast More and Fast More’s
wholly-owned and chief operating subsidiary, Changxing Chisen Electric Co., Ltd.
(hereinafter referred to as “CCEC”, and together
with Fast More and the Registrant, the “Company”), the
principal business activities of which consist of the manufacture and sale of
sealed lead-acid battery products primarily in the electric bicycle
market.


- 3
-





Prior
Operations of World Trophy





World
Trophy was formed as a Nevada corporation on January 13, 2005, and had been in
the business of selling big game hunting packages to high end clients who sought
to hunt with the top tier big game outfitters.  Its main product sold was
hunting trips, which included the hunting license and guide fees.  World
Trophy purchased and resold several hunting trips, selling them at a profit or
for a mark-up. World Trophy also provided incidental advisory services to
purchasers of hunting trips by helping these clients select an appropriate hunt,
with no additional fees charged for these services.





During
the year ended March 31, 2008, World Trophy sold its entire inventory of big
game hunts, but was unsuccessful in developing a profitable business.
 World Trophy ceased its operations and became a development stage company
effective April 1, 2008. Prior to the Exchange, World Trophy focused its efforts
on seeking a business opportunity and had been in the process of locating and
negotiating with business entities for the merger of a target company into World
Trophy.




The
Registrant’s Common Stock is currently traded on the Over-The-Counter Bulletin
Board under the symbol “CIEC”. Immediately prior to the Exchange, World Trophy
was considered a “blank check” development stage company with US$51,039 in
assets and a net loss of US$(27,977) for the three (3) months ended September
30, 2008.  On the Closing Date, the Registrant did not have any
liabilities.





Current
Operations of the Company




Fast More
is an investment holding company incorporated in Hong Kong on December 17, 2007
with limited liability. CCEC was founded in Huzhou, Zhejiang Province in China
in 2002. On February 16, 2008, Fast More acquired the 51%, 9% and 40% equity
interests in CCEC from Mr. Xu Kecheng, Mr. Xu Keyong and BEME International Co.,
Ltd., respectively, for RMB6,502,500 (approximately US$926,000), RMB1,147,500
(approximately US$164,000) and RMB 5,100,000 (approximately US$726,000),
respectively. Upon the completion of these acquisition transactions, CCEC became
the wholly-owned and chief operating subsidiary of Fast More.  Since
the ultimate beneficial owner of Fast More was, at all times, the substantial
stockholder of CCEC (Mr. Xu Kecheng), the ownership transfer transaction was
accounted for as a transfer of entities under common control in accordance with
the FASB Accounting Standards Codification (“ASC”) Topic 805.




On May
18, 2009, the Registrant incorporated Chisen Technology Holdings Corporation in
Nevada as its wholly-owned subsidiary.  Chisen Technology Holdings
Corporation is authorized to do business in the State of Washington and up to
the date of filing, this entity has no operations.





Summary
of the Company’s Current Business




The
Company is a leading lead-acid motive battery producer in China's personal
transportation device market. Our motive battery products are sold under our own
brand name and are predominantly used in electric bicycles and distributed and
sold in China. Electric bicycles become increasingly popular. Among all types of
batteries for electric bicycles, the lead-acid motive battery is the preferred
choice for electric bicycle manufacturers in China because of its cost
efficiency.


- 4
-





Today,
the Company manufactures over 14,480,000 batteries each year, has more than
2,500 employees and is one of China's largest manufacturers of lead-acid
batteries for electric-powered bicycles (LABEBs). For each of the Company’s
fiscal years ended March 31, 2010 and 2009, sales revenues were US$177,192,000
and US$109,020,000, respectively, and our net income during the same periods
amounted to US$9,500,000 and US$8,880,000,
respectively.





The
Company is located at Changxing Economic Development Zone at the bank of the
Taihu Lake in Zhejiang Province, in close proximity to major national
transportation systems, including National Highways 104 and 318, the Shanghai –
Jiangsu – Zhejiang – Anhui – Hangzhou – Nanjing Expressway, the Changxing –
Huzhou – Shanghai Channel, the Xuancheng – Hangzhou Railway and the Xinyi –
Changxing Railway. The Company’s corporate offices are located at Jingyi Road,
Changxing Economic Development Zone, Changxing, Zhejiang Province, The People’s
Republic of China.




The
Company’s Products




Description
of our Lead-Acid Motive Batteries




The key
components of a lead-acid motive battery include electrode plates and fiberglass
dividing plates. The electrode plates are coated with oxidized lead and alloy
lead. Pairs of positively charged electrode plates and negatively charged
electrode plates each separated by a fiberglass dividing plate are bound
together by metal strip and installed into the plastic casing of a lead-acid
motive battery. The battery is then filled with sulfuric acid and charged with
electricity. The number and the size of electrode plates required to be
installed in a lead-acid motive battery will depend on the required level of its
storage capacity and the power output.




We
produce and offer ten (10) models of lead-acid motive battery products for sale
and are mainly engaged in the production of the following models of lead-acid
motive battery products for electric bicycles:





Product
                  
                  Dimentions (LxWxH)
                  
                  Weight
                    (kg)
                  
                  
                  Power
                    Output
                    (w)
                  
                  
                  Estimated
                    Hours
                    Required
                    Per
                    Charging
                    (1)
                  
                  
                  Estimated
                    Minutes
                    of Use
                    Per
                    Charging
                    (min)(2)
                  
                  
                  Estimated
                    Travel
                    Distance Per
                    Charging (km)6-DZM-10Ah
                  
                  151×99×98
                  
                  
                  4.2
                  
                  
                  
                  60
                  
                  
                  
                  10
                  h
                  
                  
                  135-145
                  
                  
                  
                  45-506-DZM-12Ah
                  
                  151×99×102
                  
                  
                  4.3
                  
                  
                  
                  72
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  45-506-DZM-16Ah
                  
                  151×99×118
                  
                  
                  5.6
                  
                  
                  
                  96
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  50-606-DZM-17Ah
                  
                  181×76×166
                  
                  
                  6.3
                  
                  
                  
                  102
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  50-606-DZM-20Ah
                  
                  181×76×170
                  
                  
                  7.0
                  
                  
                  
                  120
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  60-708-DZM-16Ah
                  
                  200×100×118
                  
                  
                  7.4
                  
                  
                  
                  128
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  60-708-DZM-18Ah
                  
                  250×100×128
                  
                  
                  9.0
                  
                  
                  
                  144
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  60-708-DZM-20Ah
                  
                  250×100×128
                  
                  
                  9.05
                  
                  
                  
                  160
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  60-706-DZM-24Ah
                  
                  175×165×125
                  
                  
                  9.5
                  
                  
                  
                  144
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  70-806-DZM-25Ah
                  
                  250×78×118
                  
                  
                  8.85
                  
                  
                  
                  150
                  
                  
                  
                  10
                  h
                  
                  
                  120-130
                  
                  
                  
                  70-80




- 5
-




(1)
Estimated hours required per charging refers to the estimated number of hours
required for charging the battery from nil to full storage
capacity.




(2)
Estimated hours of use per charging refer to the estimated maximum number of
hours for which the battery is able to be used on each occasion when it is
charged to its full storage capacity.





All the
lead-acid motive battery products produced by us are re-chargeable and can be
recharged approximately 500 times. They are standardized and can be used in
electric bicycles, electric motorcycles and electric cars produced by different
manufacturers.





Pictures
of Our Products




6-DZM-10AH
              
              6-DZM-12AH





6-DZM-16AH
              
              6-DZM-17AH




6-DZM-20AH
              
              8-DZM-18AH/8-DZM-20AH


- 6
-





6-DZM-24AH
              
              6-DZM-25AH8-DZM-16AH




Distribution
Methods




We sell
our lead-acid motive battery products principally to manufacturers of electric
bicycles. However, with the growing retail market for replacement of battery
products, i.e. our secondary market, we have also strengthened our efforts in
the sales of battery products to sales representatives and exclusive
distributors which are strategically located in 27 provinces, autonomous regions
and directly-administered municipalities in China.  The Company
currently has exclusive sales agreements with distributors at the provincial and
county level, and employs sales representatives in each province across China to
help distributors to further distribute products from counties to
towns.  We have established and maintained long-term relationships
with distributors who we believe have local business experience and established
regional sales networks.




Our
largest distributors are located in the cities of Yancheng and Haimen in Jiangsu
Province and in the city of Tangshan in Hebei Province.





Market Share




Zhejiang
is the main province of producing LABEBs, the output of which accounted for
approximately half of the total domestic output of LABEBs in China. According to
the China Battery Industry Association, in 2009, total output of the top five
(5) enterprises operating in Zhejiang accounted for approximately 35 million
LABEBs of the approximate 100 million sold across China in the personal
transportation market.





According
to market research results of China Battery Industry Association, for the year
ended March 31, 2010, our sales of lead-acid battery products in China
represented approximately 11.84% of the total market size (in terms of sales
revenue) of the lead-acid motive battery products for electric bicycles in
China.


- 7
-





The table
below shows the three top manufacturers of LABEBs in China, and their revenues
during fiscal year ended March 31, 2010:




Battery Manufacturer
                    
                    Production Location
                    
                    Revenues in 2010
                      (approximate)
                      US$(Million)
                    
                    
                    Market ShareZhejiang
      Chaowei Power Co., Ltd.
                    
                    Changxing,
      Zhejiang
                    
                    
                    338.31
                    
                    
                    
                    22.6
                    %Tianneng Power
      International
                    
                    Changxing,
      Zhejiang
                    
                    
                    330.83
                    
                    
                    
                    22.1
                    %Changxing
      Chisen Electric Co., Ltd.
                    
                    Changxing,
      Zhejiang
                    
                    
                    177.19
                    
                    
                    
                    11.84
                    %





Revenues
generated by the Company in China accounted for 100% of the Company’s revenues
in the fiscal years ended March 31, 2010 and 2009.





The
Company’s battery production reached 14.48 million units and 7.8 million units,
respectively for the fiscal years ended March 31, 2010 and 2009.





Competitive
Business Conditions and Market Trends




At the
United Nations Climate Change Conference 2009, the Chinese Government announced
that in 2020 greenhouse gas emissions will be reduced approximately 40% to 45%
from 2005’s basis. We believe that in the next several years, due to
intensifying global environmental concerns, there will be increased development
of the electric bicycle. At present, due to the fact that the use of electric
bicycles is very much in line with the energy-saving and environmental
protection policy initiated by the Chinese government, the development of
electric vehicles won its support. The electric bicycle, as an
environment-friendly and convenient personal transportation vehicle, bears the
advantages of convenience, non-pollution, safety and less energy consumption.
According to market research results of Adfaith Consulting Co., Ltd., during the
five years from 2004 to 2008, the market sales of electric vehicles in China
tripled, with the number of electric vehicles totalling approximately
100,000,000 units in 2009. In accordance with the measured data of the electric
vehicle market demand in China, it is estimated that the market demand of the
electric vehicle will exceed 120,000,000 units in 2010.





With
respect to new product trends in the market, Europe, the United States and Japan
use primarily a lithium battery.  It is a general market trend for
companies to develop motive battery products that are more environmentally
friendly with increased power output and less weight. There can be no assurance
that manufacturers of electric bikes will continue to use lead-acid motive
battery products as the principal source of motive power for electric bikes. In
the event that the market prefers to use other forms of battery products (for
example, lithium batteries), and if we are not able to develop new motive
battery products to meet the future demand, our business could be adversely
affected.


- 8
-


In 2009,
the top electric bicycle brand in terms of production was Taimei, followed by
Xinri and Yadea. Each of these companies is a relatively small enterprise. We
believe that continued industrial integration and brand concentration will
continue to increase and that these famous brands will rapidly increase their
market share.  We also believe that brands will become more
diversified by an increasing influence of well-known brands on the market. The
Company has established long-term strategic relationships with important
electric bicycle manufacturers, including Xinri, Yadea, Taimei, Supaiqi. Xinri’s
electric bicycle was utilized at the Beijing 2008 Olympic Games and at the
Paralympic Games, which is a great honor in China, and the Company was chosen as
the only manufacturer to supply environmentally friendly batteries to Xinri for
its electric bicycle. The Company is also an alternative power source sponsor at
the 2010 Shanghai World Expo, providing an eco-friendly solution to power the
road signage at select Expo Park locations.Based on this, in the next
several years, we will strive to create an international first-class brand and
become the leader in providing “green” energy in the electric bicycle
marketplace. Simultaneously, through constant research and development of new
chemical energy technologies, we believe the Company will provide energy-savings
and highly-effective energy solutions to our customers for the purpose of
improving the quality of human life and a sustainable ecological
environment.




Competition




Our chief
competitors are Tianneng Power International Ltd. (“Tianneng”) and
Zhejiang Chaowei Power Co., Ltd. (“Chaowei”). These
companies were the first companies to enter the battery industry in China. For
example, Chaowei and Tianneng are the leading companies in terms of production
and sales volume.  Chaowei has a lot of after-sales service stores and
takes an advantage in the secondary market by its continued business expansion.
Tiannneng’s capital stock is listed on The Hong Kong Stock
Exchange.





However,
Chaowei and Tianneng do not have close cooperation with any of the top electric
bicycle manufacturers in China. Although the Company entered into its battery
industry later than some of its competitors, the Company has achieved success in
establishing long-term strategic cooperation with many famous electric bicycle
manufacturers in China, such as Xinri, Yadea, Taimei, Xinkelin and
Lvyuan.




Cooperative
Partnership




In April
2008, CCEC set up the Zhejiang Changxing Chisen Physical-Chemical Power Supply
Research and Development Center at the College of Chemistry and Chemical
Engineering at Xiamen University in order to research and develop new products.
Xiamen University is a first class comprehensive University in China with 9
graduate schools, 120 research institutions and cooperative inter-university
ties to over 100 institutions worldwide. A copy of the Company’s Agreement with
Xiamen University is attached hereto as Exhibit 10.11.





The
Company has also established long-term strategic relationships with important
electric bicycle manufacturers, including Xinri, Yadea, Taimei,
Supaiqi.  The Company also established strategic cooperation
partnership with suppliers and vendors by means of supply chain integration to
control procurement cost and quality. Moreover, a supplier’s assessment system
has been set up to ensure the quality stability of direct
materials.





Development
Strategy of the Company




With a
leading position in the LABEB battery product market in China, our product
research and development capability and our cooperative partnership, we believe
we are well positioned to capture additional business opportunities in China's
personal transportation device market. In light of those prevailing economic
trends of developing alternative transportation devices, aiming to reduce the
reliance on oil and gas and producing lesser emissions, we intend to explore the
motive battery market for electric-powered motorcycles and electric cars.
Leveraging our experience and expertise in producing lead-acid motive battery
products for electric bicycles, our product mix has been expanded to include
lead-acid back-up batteries, lithium iron motive batteries, lithium iron back-up
battery products and complementary electrical equipment, such as chargers,
controllers and motors, for different types of personal transportation devices.
It is our goal to become the largest battery developer and producer with a
first-class sales and service network in China.


- 9
-





The top
five lead-acid motive battery manufacturers in 2009 accounted for over 50% of
the total market share with the Company, representing approximately 11.84% of
the total market share, ranking third in the industry.  The Company
has taken the following measures to set up its position as one of the leaders in
the industry: (1) the Company invested in an automatic production line with the
maximum daily production capacity increasing by 120% compared with that in
2008; (2) the Company is actively seeking an acquisition target to expand
its market share and develop its production capacity.





Research
and Development (R&D)




R&D
Summary




During
the fiscal year ended March 31, 2010, the Company doubled its
Company-sponsored research and development activities expenses to US$244,000
from US$117,000 for the fiscal year ended March 31, 2009 in order to
further enhance the competitiveness of the Company’s products by the improvement
of production technique and the release of new lead-acid battery
products.





The
Company plans to spend US$320,000 during fiscal year ending March 31, 2011,
US$410,000 during fiscal year ending March 31, 2012 and US$538,000 during fiscal
year ending March 31, 2013 on Company-sponsored research and development
activities.





In order
to further enhance the competitiveness of our products, the Company has expended
vast resources on R&D and technology innovation. The Company desires to
increase its ompetitiveness through the improvement of lead-acid battery
production techniques and the launch of new-model power battery.





On the
development of new products lines, the Company has conducted research on ultra
lead –acid motive batteries, wind and solar energy storage batteries, VRLA
batteries applied for telecommunication and uninterruptible power supply (UPS),
lithium-ion (Li-ion) power batteries, anode material for Li-ion batteries and
Li-ion ultra capacitors.  The ultra lead-acid motive battery, which
was released in March 2009, is over 8% greater than other products of same type
on performance indicators.    In February 2009, the Company
developed lead-acid batteries for electric road vehicles, which have occupied
some market share in the domestic market.





The
Company has finished small lot production on VRLA batteries applied for
telecommunication and UPS, which have generated positive customer feedback in
the testing market in Southeast Asia and Europe.  With the release of the
plan for the revitalization of China’s new energy and the vigorous promotion of
the Chinese government to new energy motors, we believe such products will
occupy a significant market share. Li-ion ultra capacitors and anode
material for Li-ion batteries have passed the trial production phase and both
are deemed to be state-of– the art techniques. The products have entered into
the alpha test phase. The lithium iron phosphate battery, which the Company has
been researching for the past two years, has finished small lot production with
stable technical parameters. The Company also commenced receiving sales orders
from different areas in China for such product.


- 10
-





Sources
and Availability of Raw Materials from Suppliers




The
Company purchases the raw materials used in the manufacturing of its products
from numerous sources. The Company believes that all necessary raw materials for
its products are readily available and will continue to be so in the foreseeable
future. The Company has never had, nor does it anticipate experiencing, any
shortages of such materials.




The raw
material for our battery products consist primarily of electrolytic lead. Our
success significantly depends on our ability to secure sufficient and constant
supply of electrolytic lead for our production at acceptable price levels.
Electrolytic lead represents our largest cost item in our lead-acid motive
battery production. During each of the two fiscal years ended March 31, 2010 and
March 31, 2009, the average selling price of electrolytic lead by our suppliers
was approximately RMB15,000 (approximately US$2,200) and RMB15,000
(approximately US$2,200) per ton, respectively. There were silght fluctuations
on the average selling price of electrolytic lead for the fiscal year ended
March 31, 2010 and the average selling price of electrolytic lead decreased by
1.57% as compared to the fiscal year ended March 31, 2009. For each of the
two financial years ended March 31, 2010 and March 31, 2009, costs of
lead-related material accounted for approximately 80% and 80% of our total cost
of sales, respectively. We do not have long-term contracts with any of our
electrolytic lead suppliers, nor have we entered into any arrangement to
mitigate the effect of price fluctuations of electrolytic lead. Therefore, any
significant increase in the cost of electrolytic lead in the future could
adversely affect our results if we cannot transfer the price increment to our
customers.





We
believe the Company generally maintains sufficient quantities of inventories of
its products to meet customer demand.




The
Company has entered into written contracts with several suppliers and vendors.
The Company has major suppliers who accounted for the following percentage of
total purchases and total trade payables in the fiscal years ended March 31,
2010 and 2009:





Purchases
                          
                          
                          Trade PayablesMajor Suppliers
                          
                          Fiscal year ended
                            March 31, 2010
                          
                          
                          Fiscal year ended
                            March 31, 2009
                          
                          
                          Fiscal year ended
                            March 31, 2010
                          
                          
                          Fiscal year ended
                            March 31, 2009Company
      A
                          
                          
                          23.96
                          %
                          
                          
                          17.46
                          %
                          
                          US$
                          0
                          
                          
                          US$
                          0Company
      B
                          
                          
                          15.71
                          %
                          
                          
                          6.12
                          %
                          
                          US$
                          1,061,000
                          
                          
                          US$
                          394,000Company
      C
                          
                          
                          12.69
                          %
                          
                          
                          19.44
                          %
                          
                          US$
                          1,971,000
                          
                          
                          US$
                          1,539,000Company
      D
                          
                          
                          8.78
                          %
                          
                          
                          5.47
                          %
                          
                          US$
                          0
                          
                          
                          US$
                          415,000Company
      E
                          
                          
                          6.92
                          %
                          
                          
                          0
                          %
                          
                          US$
                          0
                          
                          
                          US$
                          0




- 11
-





Key
Customers





Trade
receivables related to the Company’s major customers for the years ended March
31, 2010 and 2009 comprised 80% and 85% of all trade receivables as of March 31,
2010 and 2009, respectively.  Trade payables related to the Company’s
major suppliers for the years ended March 31, 2010 and 2009 comprised 20% and
24% of all trade payables as of March 31, 2010 and 2009, respectively. The
Company’s major customers for the fiscal years ended March 31, 2010 and 2009
accounted for the following percentages of total revenue and trade
receivables:




Sales
                            
                            
                            Trade ReceivablesMajor Customers
                            
                            Fiscal year ended
                              March 31, 2010
                            
                            
                            Fiscal year ended
                              March 31, 2009
                            
                            
                            Fiscal year ended
                              March 31, 2010
                            
                            
                            Fiscal year ended
                              March 31, 2009Company
      X
                            
                            
                            21.08
                            %
                            
                            
                            47.40
                            %
                            
                            US$
                            26,283,000
                            
                            
                            US$
                            29,598,000Company
      Y
                            
                            
                            19.08
                            %
                            
                            
                            6.34
                            %
                            
                            US$
                            14,005,000
                            
                            
                            US$
                            1,609,000Company
      Z
                            
                            
                            6.77
                            %
                            
                            
                            0.47
                            %
                            
                            US$
                            2,747,000
                            
                            
                            US$
                            109,000




Employees





As of the
date of this Annual Report, the Company had 2,566 full-time
employees.





Intellectual
Property




The
Company submitted the trademark “” to be registered
in Class 20 in China in July, 1999.


On
November 21, 2000, the protection of which was granted by State Trademark Bureau
from November 21, 2000 to November 20, 2010. On March 21, 2009, the trademark
was transferred from Changxing Chisen Co., Ltd. to Changxing Chisen Electric
Co., Ltd., which was verified by State Trademark Bureau.





The
Company submitted the trademark “” to be registered
in Class 12 in China in July, 1999.


On
December 28, 2000, the protection of which was granted by State Trademark Bureau
from December 28, 2000, to December 27, 2010. On March 21, 2009, the trademark
was transferred from Changxing Chisen Co., Ltd. to Changxing Chisen Electric
Co., Ltd., which was verified by State Trademark Bureau.





The
Company submitted the trademark “” to be registered
in China in Class 9, December 2002. The valid period of which lasts from April
21, 2004 to April 20, 2014 after the Company received approval from State
Trademark Bureau on April 21, 2004. On December 28, 2006, the trademark was
transferred from Changxing Chisen Co., Ltd. to Changxing Chisen Electric Co.,
Ltd., which was verified by State Trademark Bureau.


- 12
-





The
Company submitted the trademark “” to be registered
in Class 9 in China in March, 2004.


On March
28, 2006, the protection of which was granted by State Trademark Bureau from
March 28, 2006 to March 27, 2016. On December 28, 2006, the trademark was
transferred from Changxing Chisen Co., Ltd. to Changxing Chisen Electric Co.,
Ltd., which was verified by State Trademark Bureau.





The
Company submitted the trademark “” to be registered
in China in Class 9, November 2005. On November 21, 2008, State Trademark Bureau
granted the protection of which from November 21, 2008 to November 20,
2018.





The
Company submitted the trademark “” to be registered
in China in Class 9, in April 2006. On April 28, 2009, the protection of which
is granted by State Trademark Bureau from April 28, 2009 to April 27,
2019.




The
Company submitted the trademark“” to be registered
in China in Class 9, April 2006. On April 28, 2009, the protection of which is
granted by State Trademark Bureau from April 28, 2009 to April 27,
2019.




The
Company submitted the trademark “” to be registered
in Benelux, Egypt, Germany, France, Hungary, Italy, Russian Federation, Vietnam,
United Kingdom, Greek, Australia, America in Class 9, August 2007. Protection
was granted in Benelux from August 8, 2008 to January 21, 2018, in Australia
from September 11, 2008 to January 21, 2018, in United Kingdom from January 21,
2008 to January 21, 2018 and in the United States from January 21, 2008 to
January 21, 2018 .




The
Company submitted the trademark “” to be registered
in Class 6 in China in September 2007.




The
Company submitted the trademark “” to be registered
in Class 12 in China in September 2007.





The
Company submitted the trademark “” to be registered
in China in Class 9, January 2008.




The
Company submitted the trademark “” to be registered
in Class 9 in China, in April 2008.





The
Company submitted the trademark “” to be registered
in Class9 in China on May 4, 2008.


- 13
-





The
Company submitted the trademark “” to be registered
in Class9 in China, in May 2008.




The
Company submitted the trademark “” to be registered
in China from Class 1 to Class 45 in May 2008.





The
Company submitted the trademark “” to be registered
in other 36 classes in China, in June 2008





The
Company submitted the trademark “” to be registered
in Class 9 in Cambodia, Thailand, Malaysia, Indonesia and India, in August 2008,
of which, the registration application in Cambodia was rejected and a second
application has been submitted by the Company.




The
Company submitted the trademark “” to be registered
in Class 9 in China in August 2008.




The
Company submitted the trademark “”to be registered
in Class9 in China, in December 2009.





The
Company currently holds 25 patents in total. Others are still
pending.





The
Company currently has one domain name, http://www.chisenpower.com.
This domain name is in good standing.




Honors
and Certificates Company’s Qualification and Honors





·
            China Foundation of Consumer
      Protection High Quality Product
  Certification





·
            China Famous
      Trademark





·
            Huzhou Municipal Government High
      Quality Enterprise
Certificate





·
            Zhejiang Famous Product
      Certification (December
2007)





·
            Zhejiang Clean Production
      Enterprise Certificate





·
            Zhejiang Patent Demonstration
      Enterprise





·
            Zhejiang Advanced Information
      Management Enterprise





·
            Zhejiang Top 100 Most Innovative
      Enterprise





·
            Zhejiang Famous Trademark
      Enterprise Certificate (February
2009)





·
            “AAA”
      Credit Enterprise


- 14
-





·
            Customer
      Satisfaction “AAA” Enterprise of National Electric
  Industry





·
            The
      “AAA” Trust-worthy Enterprise of Zhejiang
  Province





·
            Best
      New Product of  Northern China International Bicycle Fair in
      2010





·
            Best
      New Technology of  Northern China International Bicycle Fair in
      2009





Compliance
with Environmental Regulations and Other Laws




We are
subject to the national and local environmental laws and regulations in China on
environmental matters, such as the discharge of waste water, exhaust fumes and
solid waste. The main pollutants generated by us are lead dust or particles and
waste water which contain lead and sulfuric acid. During the operation of our
production, we did not release any toxic element other than those that are
permitted under the relevant laws and regulations.




Lead is
the key raw material used in our production of lead-acid motive battery
products. An excessive intake of lead dust or particles, whether through
inhaling or skin contact, could have harmful effect on health. Lead poisoning
may also result from occupations that involve close and frequent contact with or
exposure to lead dust or particles.




Lead dust
and particles are generated during our production process. Our workers are
exposed to electrode plates during different stages of our production
process.




Pursuant
to the applicable environmental laws and regulations in China, we are obliged to
install environmental protection equipment to ensure effective removal of lead
dust and particles generated during our production process. We have installed
such equipment at each of our production plants.





Our
production process generates waste water containing lead and sulfuric acid. Such
waste water will be neutralized and treated to remove lead contents in
accordance with the applicable environmental standards in China. We have
installed such waste water treatment facilities at all our production plants.
Waste water generated at our production process, after the required treatment,
will either be collected and reused for our production requirements or
discharged to the municipal waste water collection systems for further treatment
and discharge to the environment.




We are
also required by the laws and regulations governing health and safety at work in
China to provide our employees exposed to lead dust or particles with protective
clothing and accessories, such as gloves, goggles and masks. We also arrange all
our employees engaging in the lead-related production process to receive medical
checks at least once a year. The medical checks include measurement of blood
lead level.


- 15
-





Business
Qualification and Licenses




General
Business License




According
to certain corporate laws of the PRC, in order to be a lawfully established
company in China, the relevant corporate registration authority shall issue a
business license, the date of which shall be the date of the establishment of
the company. The company business license shall state the name, domicile,
registered capital, actually paid capital, business scope and the name of the
legal representative of such company. If any of the items as stated in the
business license is changed, the company shall modify the company’s
registration, and the company registration authority shall issue a new business
license.




CCEC
obtained its business license on February 25, 2002, which such license was
issued by the Huzhou Administration for Industry and Commerce. According to the
Industrial Product Production License Control Regulation of the PRC, enterprises
which manufacture lead-acid batteries are permitted to engage in said production
if the company obtains a production license.





On
January 13, 2005 the Administration of Quality Supervision, Inspection and
Quarantine of the PRC issued a Production License to CCEC (the license number
XK06-044-00223).  On August 17, 2007, due to the fact that the Company
added new product lines, an updated Production License with the same license
number was reissued to CCEC.





Environmental
Reports, Certifications and Licenses





According
to certain environmental laws and regulations in China, the Department of
Environmental Protection Administration under the State Council shall, in
accordance with the national standards for environment quality and China’s
economic and technological conditions, establish the national standards for the
discharge of pollutants. The People's Governments of Provinces, Autonomous
Regions and Municipalities directly under the Central Government may establish
their local standards for the discharge of pollutants for items not specified in
the national standards. With regard to items already specified in the national
standards, they may set local standards, which are more stringent than the
national standards, and report the local ones to the Department of Environmental
Protection Administration under the State Council for the record. Units that
discharge pollutants in areas where the local standards for the discharge of
pollutants have been established shall observe such local
standards.





On
September 5, 2008, the Changxing Environmental Protection Bureau issued the
Notice of Examination Opinion approving the Company’s Environment Effect Report
on its Relocation and Extension of the Company’s 1500 unit-per-year Lead-acid
Battery Production Project.





On
October 11, 2007, the Beijing TIRT Quality Certification Center for the
Environment issued the ISO14001 Certificate (number 04807E20059R0M) to the
Company and signed-off on the environmental management system applied in the
Company’s production and management activities.




On July
31, 2007, the Beijing TIRT Quality Certification Center for the Environment
issued the ISO9001 Certificate to the Company (number 04807Q10708R0M) agreeing
that the quality management system applied in the Company’s production and
management activities.


- 16
-





On
September 20, 2008, the Changxing Environmental Protection Bureau issued the
Pollutant Discharge License to the Company (license number HuChang080042).





On June
22, 2010, the China Quality Mark Certification Group issued OHSAS18001
Certificate (number CQM-33-2004-0036-0001) to the Company after the Company
passed its evaluation on Occupational Health and Safety Assessment
Series.





ITEM
1A             Risk Factors




Not
required for a "smaller reporting company".




ITEM
1B.            Unresolved Staff
Comments




None.





ITEM
2.               Properties




All land
in China is owned by the State. Individuals and companies are permitted to
acquire rights to use land or land use rights for specific purposes. In the case
of land used for industrial purposes, the land use rights are granted for a
period of fifty (50) years. This period may be renewed at the expiration of the
initial and any subsequent terms. Granted land use rights are transferable and
may be used as security for borrowings and other obligations.





The
Company maintains leases with Changxing Xiangyi Industrial Park Investment Co.
for the purpose of the production of its battery products at Xiangyi Industrial
Park, Jing’er Road, Changxing Economic Development Zone, Zhejiang, The People’s
Republic of China. Those leases are described in the table below:




Address
                      
                      Lessor
                      
                      Area
                        (Square
                        meters)
                      
                      Rental
                        Amount
                        Per year
                        (US$)
                      
                      Commencement
                        Date
                      
                      Termination
                        Date
                      
                      NoteNo.8
      Factory Building, Xiangyi Industrial Park, Economic Development Zone,
      Changxing, Zhejiang, China
                      
                      Changxing
      Xiangyi Industrial Park Investment Co.
                      
                      6,200
                      
                      68,867
                      
                      August
      1, 2008
                      
                      July
      31, 2013
                      
                      The
      annual rent will increase by 5% yearly from August 1,
2009.No.4
      Factory Building, Xiangyi Industrial Park, Economic Development Zone,
      Changxing, Zhejiang, China
                      
                      Changxing
      Xiangyi Industrial Park Investment Co.
                      
                      6,200
                      
                      68,867
                      
                      August
      1, 2008
                      
                      July
      31, 2013
                      
                      The
      annual rent will increase by 5% yearly from August 1,
2009.The
      North Part of the No. 6 Factory Building, Xiangyi Industrial Park,
      Economic Development Zone, Changxing, Zhejiang, China
                      
                      Changxing
      Xiangyi Industrial Park Investment Co.
                      
                      3,100
                      
                      34,434
                      
                      August
      1, 2008
                      
                      July
      31, 2013
                      
                      The
      annual rent will increase by 5% yearly from August 1,
2009.


- 17
-





No.1 Factory Building, Xiangyi Industrial Park,
      Economic Development Zone, Changxing, Zhejiang,
    China
                                    
                                    Changxing Xiangyi Industrial Park Investment
      Co.
                                    
                                    6,200
                                    
                                    70,386
                                    
                                    January 1, 2009
                                    
                                    December 31, 2013
                                    
                                    The annual rent will increase by 5% yearly from
      January 1, 2010.The
      North Part of the No. 2 Factory Building, Xiangyi Industrial Park,
      Economic Development Zone, Changxing, Zhejiang, China
                                    
                                    Changxing
      Xiangyi Industrial Park Investment Co.
                                    
                                    3,100
                                    
                                    35,193
                                    
                                    February
      8, 2009
                                    
                                    February
      7, 2014
                                    
                                    The
      annual rent will increase by 5% yearly from February 8,
    2010.The
      South Part of the No. 2 Factory Building, Xiangyi Industrial Park,
      Economic Development Zone, Changxing, Zhejiang, China
                                    
                                    Changxing
      Xiangyi Industrial Park Investment Co.
                                    
                                    3,100
                                    
                                    35,193
                                    
                                    February
      1, 2009
                                    
                                    January 31,
      2014
                                    
                                    The
      annual rent will increase by 5% yearly from February 1,
    2010.The
      South Part of the No. 5 Factory Building, Xiangyi Industrial Park,
      Economic Development Zone, Changxing, Zhejiang, China
                                    
                                    Changxing
      Xiangyi Industrial Park Investment Co.
                                    
                                    3,100
                                    
                                    35,193
                                    
                                    February
      16, 2009
                                    
                                    February
      15, 2014
                                    
                                    The
      annual rent will increase by 5% yearly from February 16,
    2010.No.7
      Factory Building, Xiangyi Industrial Park, Economic Development Zone,
      Changxing, Zhejiang, China
                                    
                                    Changxing
      Xiangyi Industrial Park Investment Co.
                                    
                                    6,200
                                    
                                    70,386
                                    
                                    February
      16, 2009
                                    
                                    February
      15, 2014
                                    
                                    The
      annual rent will increase by 5% yearly from February 16,
    2010.The
      South Part of the No. 6 Factory Building, Xiangyi Industrial Park,
      Economic Development Zone, Changxing, Zhejiang, China
                                    
                                    Changxing
      Xiangyi Industrial Park Investment Co.
                                    
                                    3,100
                                    
                                    35,475
                                    
                                    October
      16, 2009
                                    
                                    October
      15, 2014
                                    
                                    The
      annual rent will increase by 5% yearly from October 16,
    2010.The  North
      Part of the No. 5 Factory Building, Xiangyi Industrial Park, Economic
      Development Zone, Changxing, Zhejiang, China
                                    
                                    Changxing
      Xiangyi Industrial Park Investment Co.
                                    
                                    3,100
                                    
                                    35,475
                                    
                                    October
      16, 2009
                                    
                                    October
      15, 2014
                                    
                                    The
      annual rent will increase by 5% yearly from October 16,
    2010.No.3
      Factory Building, Xiangyi Industrial Park, Economic Development Zone,
      Changxing, Zhejiang, China
                                    
                                    Changxing
      Xiangyi Industrial Park Investment Co.
                                    
                                    6,200
                                    
                                    70,950
                                    
                                    January
      18, 2010
                                    
                                    January
      17, 2015
                                    
                                    The
      annual rent will increase by 5% yearly from January 18,
    2010.


- 18
-





In
addition to the leases set forth above, the Company’s office space at Jingyi
Road is a fixed asset of the Company. In 2004, CCEC purchased from the Chinese
government land use rights to use such land for 50 years for RMB4,470,000
(approximately US$650,598) and the building and other facilities thereon were
contributed by the Company.  The land area and the covered area are
53,974.42 square meters and 33,145.79 square meters, respectively.





ITEM 3.
            Legal
      Proceedings




In the
normal course of business, we are named as defendant in lawsuits in which claims
are asserted against us. In our opinion, the liabilities, if any, which may
ultimately result from such lawsuits, are not expected to have a material
adverse effect on our financial position, results of operations or cash flows.
As of March 31, 2010 and as of the date of this Annual Report, there was no
pending or outstanding material litigation with the Company.





ITEM 4.
            Submission of Matters to a Vote
      of Security Holders




On
November 13, 2009, the Company held its annual meeting of the stockholders for
the fiscal year ended March 31, 2009.  At the annual meeting the
stockholders of the Company of record as of the close of business on October 7,
2009 voted in favor of re-electing Xu Kecheng, Liu Chuanjie, Gong Xiaoyan, He
Zhiwei, Dong Quanfeng, Yun Hon Man and Jiang Yanfu to serve as the Company’s
directors and ratified the appointment of Mazars CPA Limited to serve as the
Company’s independent registered public accounting firm for the fiscal year
ended March 31, 2010.





PART
II




ITEM 5.
            Market for Registrant’s Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity
      Securities




Market
for Common Equity




Our
Common Stock formerly traded on the OTCBB under the symbol “WTRY” from October
15, 2007 to February 2, 2009 and has traded (and continues to trade) under the
symbol “CIEC” since February 2, 2009. There has been an extremely limited public
market for our Common Stock.  As of the date hereof, 50,000,000 shares of
Common Stock were issued and outstanding.





When the
trading price of our Common Stock is below US$5.00 per share, the Common Stock
is considered to be a “penny stock” that is subject to rules promulgated by the
SEC (Rule 15-1 through 15g-9) under the Exchange Act. These rules impose
significant requirements on brokers under these circumstances, including:
(a) delivering to customers the SEC’s standardized risk disclosure
document; (b) providing customers with current bid and ask prices;
(c) disclosing to customers the brokers-dealer’s and sales representatives
compensation; and (d) providing to customers monthly account
statements.


- 19
-




The
following table sets forth on a per share basis for the periods shown, the high
and low closing bid prices of our Common Stock. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.




Closing Bid Prices
                      
                      High (US$)
                      
                      
                      Low (US$)Calendar Year Ended December 31,
      20094th
      Quarter
                      
                      
                      7.51
                      
                      
                      
                      4.103rd
      Quarter
                      
                      
                      4.15
                      
                      
                      
                      1.502nd
      Quarter
                      
                      
                      4.00
                      
                      
                      
                      1.501st
      Quarter
                      
                      
                      1.70
                      
                      
                      
                      0.93Calendar Year Ended December 31,
      20084th
      Quarter
                      
                      
                      3.30
                      
                      
                      
                      1.054th
      Quarter (prior to 3 for 1 split)
                      
                      
                      0.10
                      
                      
                      
                      0.103rd
      Quarter:
                      
                      
                      0.10
                      
                      
                      
                      0.102nd
      Quarter:
                      
                      
                      0.10
                      
                      
                      
                      0.101st
      Quarter:
                      
                      
                      0.10
                      
                      
                      
                      0.10





The high
and low bid quotations for the Common Stock as of March 31, 2010 were $7.75 and
$6.24, respectively.  The market quotations represent prices between
dealers, do not include retail markup, markdown, or commissions and may not
represent actual transactions.





Dividends




Dividends,
if any, will be contingent upon our revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will be
within the discretion of the Board. We presently intend to retain all earnings,
if any, for use in our business operations and accordingly, the Board does not
anticipate declaring any cash dividends for the foreseeable future. We have not
paid any cash dividends on our Common Stock.




Holders
of Common Equity




As of
June 22, 2010, we have issued Fifty Million (50,000,000) shares of our Common
Stock to 87 holders of record.


- 20
-





The
Company believes that it has more stockholders since many of its shares are held
in "street" name. See also the “Security Ownership of Certain Beneficial Owners
and Management” above for a table setting forth (a) each person known by us to
be the beneficial owner of five percent (5%) or more of our Common Stock and (b)
all directors and officers individually and all directors and officers as a
group as of the date of this Annual Report, after giving effect to the Exchange.
The Exchange occurred simultaneously with the cancellation of 18,658,200 shares
of Common Stock held by Mr. Mathew Evans, World Trophy’s sole officer and
director and World Trophy’s majority stockholder immediately prior to the
Exchange.





Securities
Authorized for Issuance under Equity Compensation Plans




As of the
date of this Annual Report, we have no compensation plans (including individual
compensation arrangements) under which the Registrant’s equity securities are
authorized for issuance.





Performance
Graph




Not
required for a “smaller reporting company”.




Options and
Warrants





As of
March 31, 2010 and as of the date of this Annual Report, the Registrant had no
outstanding options or warrants.





Transfer
Agent and Registrar




Interwest
Transfer Company, Inc., 1981 East Murray Holladay Road, Suite 100, P.O. Box
17136, Salt Lake City, Utah 84117, telephone (801) 272-9294, facsimile (801)
277-3147, currently acts as the Registrant’s transfer agent and
registrar.





ITEM
6.               Selected Financial
Data




Not
required for a “smaller reporting company”.





ITEM
7 Management’s Discussion and Analysis of Financial Condition and Results of
Operations





Forward
Looking Statements





The
following is management’s discussion and analysis of certain significant factors
which have affected our financial position and operating results during the
periods included in the accompanying consolidated financial statements, as well
as information relating to the plans of our current management. This Annual
Report includes forward-looking statements. Generally, the words “believes ”,
“anticipates”, “ may ”, “ will ”, “ should ”, “ expect ”, “ intend ”,
“estimate”, “continue” and similar expressions or the negative thereof or
comparable terminology are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, including the matters
set forth in this Annual Report or other reports or documents we file with the
SEC from time to time, which could cause actual results or outcomes to differ
materially from those projected. Undue reliance should not be place on these
forward-looking statements which speak only as of the date hereof. We undertake
no obligation to update these forward-looking statements.





The
following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes thereto and other
financial information contained elsewhere in this Annual
Report.


- 21
-





Summary
of Significant Accounting Policies





Accounting
Principles





The
consolidated financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles in the United States of
America (“US GAAP”).





Basis
of Consolidation





The
consolidated financial statements include the financial information of the
Registrant and its subsidiaries. All significant inter-company accounts and
transactions have been eliminated upon consolidation.





Revenue
Recognition





Operating
revenue represents sale of goods at invoiced value to customers, net of returns,
discounts and value-added tax (“VAT”), and is recognized when goods are
delivered to customers, the significant risks and rewards of ownership of goods
have been transferred to customers, the sales price to the customers is fixed or
determinable and the collectability of consideration is reasonably
assured.





Costs
related to shipping and handling are included in selling, marketing and
distribution expenses.





Retirement
Plan Costs





Contributions
to defined contribution retirement schemes are charged to cost of sales, sales,
marketing and distribution costs and general and administrative expenses in the
consolidated statements of operations and other comprehensive income as and when
the related employee services are provided. Retirement plan costs were
US$502,000 and US$130,000 for the years ended March 31, 2010 and 2009,
respectively.





Income
Taxes





The
Company provides for income taxes using the liability method. Under the
liability method, current income tax expense or benefit is the amount of income
taxes expected to be payable or refundable for the current period.





A
deferred income tax asset or liability is computed for the expected future
impact of differences between the financial reporting and tax bases of assets
and liabilities and for the expected future tax benefit to be derived from tax
credits. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.





Tax rate
changes are reflected in the computation of the income tax provision during the
period such changes are enacted.





Under the
provision of ASC 740 Income Taxes, tax position is recognized as a benefit only
if it is “more likely than not” that the tax position would be sustained in a
tax examination, with a tax examination being presumed to occur. The amount
recognized is the largest amount of tax benefit that is greater than 50% of
being realized on examination by the tax authority. For tax positions not
meeting the “more likely than not” test, no tax benefit is
recorded.




Property,
Plant and Equipment (“PPE”) and Long-Term Land Lease Prepayments





PPE are
stated at cost less accumulated depreciation, and include expenditure that
substantially increases the useful lives of existing assets.





The cost
of an asset comprises its purchase price and any directly attributable costs of
bringing the asset to its present working condition and location for its
intended use. Expenditures incurred after the assets have been put into
operation, such as repairs and maintenance, overhaul and minor renewals and
betterments, are normally charged to operating expenses in the period in which
they are incurred.  In situations where it can be clearly demonstrated
that the expenditure has resulted in an increase in the future economic benefits
expected to be obtained from the use of the assets, the expenditure is
capitalized.


- 22
-





Depreciation
is provided, on a straight-line basis, to write off the cost less accumulated
depreciation of each PPE item at rates based on their estimated useful lives
from the date on which they become fully operational and after taking into
account their estimated residual values as follows:





Buildings
                  20
      yearsLeasehold
      improvements
                  Over
      the unexpired term of leaseFurniture,
      fixtures and office equipment
                  10
      yearsMotor
      vehicles
                  5
      yearsPlant
      and machinery
                  10
      years





When
assets are sold or retired, their costs and accumulated depreciation are
eliminated from the consolidated financial statements and any gain or loss
resulting from their disposal is recognized in the period of disposition as an
element of other income.





Construction-in-progress
consists of factories and office buildings under construction and machinery
pending installation and includes the costs of construction, machinery and
equipment, and any interest charges arising from borrowings used to finance
these assets during the period of construction or installation. No provision for
depreciation is made on construction-in-progress until such time the relevant
assets are completed and ready for their intended use.





Long-term
land lease prepayments are amortized on a straight-line basis over the term of
lease.





Inventories





Inventories
are stated at the lower of cost and net realizable value. Cost, which comprises
all costs of purchase and, where applicable, costs of conversion and other costs
that have been incurred in bringing the inventories to their present location
and condition, is calculated using the weighted average costing method. The
Company estimates the market price of its inventories with reference to the net
realizable value based upon current market conditions and historical experience.
Estimated losses on inventories represent reserves for obsolescence, excess
quantities, irregulars and slow moving inventory, and which are charged to cost
of sales.





Trade
Receivables and Allowance for Doubtful Accounts





The
allowance for the risk of non-collection of trade receivables takes into account
credit-risk concentration. Collective debt risk is assessed based on average
historical losses and specific circumstances such as serious adverse economic
conditions. The Company’s estimate is based on a variety of factors, including
historical collection experience, existing economic conditions and a review of
the current status of the receivables. Trade receivables are presented net of an
allowance for doubtful accounts of US$6,000 and US$6,000 as of March 31, 2010
and 2009, respectively.





Cash
and Cash Equivalents





Cash
represents cash on hand and deposits with financial institutions which are
repayable on demand. Cash equivalents represent short-term, highly liquid
investments purchased with an original maturity of three months or less, which
are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.





Foreign
Currency Translation





Items
included in the financial statements of the Company’s subsidiary are measured
using Renminbi (“RMB”), the currency
of the primary economic environment in which the entity operates (“functional
currency”). The consolidated financial statements are presented in United States
Dollars (“US$”), which is the
Company’s presentation currency.





Foreign
currency transactions are translated into the functional currency using the
exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the income
statement.





On
consolidation, the results and financial position of all the group entities that
have a functional currency different from the presentation currency are
translated as follows:





(a)
assets and liabilities for each balance sheet presented are translated at the
closing rate at the date of that balance sheet;


(b)
income and expenses for each statement of operations are translated at average
exchange rates;


- 23
-





(c) all
resulting exchange differences are recognized as a separate component of
equity.





Fair
Value of Financial Instruments





The ASC
Topic 825, “Disclosures about Fair Value of Financial Instruments”, requires
that the Company discloses estimated fair value of financial instruments. The
carrying amounts reported in the balance sheets for current assets and current
liabilities qualifying as financial instruments are a reasonable estimate of
fair value.





The
Company adopted ASC Topic 820 – Fair Value Measurements and Disclosures (“ASC
820”).  The adoption of ASC 820 did not have a material impact on our
consolidated financial statements. ASC 820 establishes a three-tier fair value
hierarchy to prioritize the inputs used in measuring fair value.  The
hierarchy gives the highest priority to quoted prices in active markets (Level
1) and the lowest priority to unobservable inputs (Level 3).  The
three levels are defined as follows:





Level
1: Observable inputs, such as unadjusted quoted market prices in active
markets for the identical asset or liabilities.





Level
2: Inputs that are observable for the asset or liability, either directly
or indirectly through market corroboration, for substantially the full term of
the financial instrument.





Level
3: Unobservable inputs reflecting the entity’s own assumptions in measuring
the asset or liability at fair value.





The
Company’s financial instruments consist principally of cash and cash
equivalents, restricted bank balances, other financial assets, accounts
receivable and payable, deposits, prepayment and other receivables, notes
payable, accrued expenses and other liabilities, amount due from/to related
parties and short-term borrowings which are carried at amounts that generally
approximate their fair values because of  the short-term maturity of
these instruments.





Warranty





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





YearsendedMarch31,2010
                    
                    
                    2009US$’000
                    
                    
                    US$’000Balance
      as of April 1,
                    
                    
                    121
                    
                    
                    
                    413Exchange
      realignment
                    
                    
                    1
                    
                    
                    
                    9Accrual
      for warranties issued during the year
                    
                    
                    188
                    
                    
                    
                    91Settlement
      made during the year
                    
                    
                    (84
                    )
                    
                    
                    (392
                    )Balance
      as of March 31,
                    
                    
                    226
                    
                    
                    
                    121





Government
Subsidies





Government
subsidies are recognized as income over the periods necessary to match them with
the related costs. Subsidies related to expense items are recognized in the same
period as those expenses are charged in the consolidated statements of
operations and other comprehensive income and are reported separately as other
income.





Use
of Estimates





The
preparation of the consolidated financial statements in conformity with US GAAP
requires the management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of financial statements and the reported amounts of
revenues and expenses during the reported periods. The management evaluates
these estimates and judgments on an ongoing basis and bases their estimates on
experience, current and expected future conditions, third-party evaluations and
various other assumptions that they believe are reasonable under the
circumstances. The results of these estimates form the basis for making
judgments about the carrying values of assets and liabilities as well as
identifying and assessing the accounting treatment with respect to commitments
and contingencies.


- 24
-





Actual
amounts could differ from those estimates. Estimates are used for, but not
limited to, the accounting for certain items such as allowance for doubtful
accounts, depreciation and amortization, inventory allowance, taxes and
contingencies.





Related
Parties





Parties
are considered to be related if one party 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. Parties are also
considered to be related if they are subject to common control or common
significant influence.


- 25
-


Results
of Operations




Results
of Operations for the Fiscal Year Ended March 31, 2010 Compared To the Fiscal
Year Ended March 31, 2009





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




For The Years Ended March 31,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009US$’000
                      
                      
                      US$’000Revenues
                      
                      
                      177,192
                      
                      
                      
                      109,020
                      
                      
                      
                      100.00
                      %
                      
                      
                      100.00
                      %Cost
      of sales
                      
                      
                      153,708
                      
                      
                      
                      88,823
                      
                      
                      
                      86.74
                      %
                      
                      
                      81.47
                      %Gross
      profit
                      
                      
                      23,484
                      
                      
                      
                      20,197
                      
                      
                      
                      13.25
                      %
                      
                      
                      18.52
                      %Sales,
      marketing and distribution
                      
                      
                      8,696
                      
                      
                      
                      5,337
                      
                      
                      
                      4.91
                      %
                      
                      
                      4.90
                      %General
      and administrative expenses
                      
                      
                      3,647
                      
                      
                      
                      4,007
                      
                      
                      
                      2.06
                      %
                      
                      
                      3.68
                      %Operating
      profit
                      
                      
                      11,141
                      
                      
                      
                      10,853
                      
                      
                      
                      6.29
                      %
                      
                      
                      9.95
                      %Other
      income, net
                      
                      
                      1,671
                      
                      
                      
                      758
                      
                      
                      
                      0.94
                      %
                      
                      
                      0.70
                      %Interest
      Income
                      
                      
                      343
                      
                      
                      
                      362
                      
                      
                      
                      0.19
                      %
                      
                      
                      0.33
                      %Net
      Income from Operations before Interest and Tax Expenses
                      
                      
                      13,155
                      
                      
                      
                      11,973
                      
                      
                      
                      7.42
                      %
                      
                      
                      10.98
                      %Interest
      expenses
                      
                      
                      2,068
                      
                      
                      
                      1,232
                      
                      
                      
                      1.17
                      %
                      
                      
                      1.13
                      %Income
      before income taxes
                      
                      
                      11,087
                      
                      
                      
                      10,741
                      
                      
                      
                      6.26
                      %
                      
                      
                      9.85
                      %Income
      taxes expenses
                      
                      
                      1,587
                      
                      
                      
                      1,861
                      
                      
                      
                      0.90
                      %
                      
                      
                      1.71
                      %Net
      income
                      
                      
                      9,500
                      
                      
                      
                      8,880
                      
                      
                      
                      5.36
                      %
                      
                      
                      8.14
                      %Other
      comprehensive income
                      
                      
                      106
                      
                      
                      
                      278
                      
                      
                      
                      0.06
                      %
                      
                      
                      0.25
                      %Comprehensive
      income
                      
                      
                      9,606
                      
                      
                      
                      9,158
                      
                      
                      
                      5.42
                      %
                      
                      
                      8.40
                      %





Revenues
and Cost of Sales





During
the year ended March 31, 2010, the Company’s sales volume increased by
approximately 85.64% to 14,480,000 units for the year ended March 31, 2010
compared with 7,800,000 units for the year ended March 31, 2009. Revenues
increased by approximately 62.53% to US$177,192,000 for the year ended March 31,
2010 compared with US$109,020,000 for the year ended March 31, 2009. The
increase was driven by the rapid growth in the electric bicycle market in the
PRC, which also resulted in an increase in the Company’s sales to existing and
new electric bicycle manufacturers.  The increase was mainly
attributable to an increase in sales of approximately 434% to a major electric
bicycle manufacturer, Taimei, during the year ended March 31,
2010.  The Company expanded its production facilities during the year
ended March 31, 2010 in response to the significant increase in demand of the
Company’s battery products.





In
addition to the Company’s promotional activities, the Company offered sales
discounts, rebates and also reduced the selling price of its products in order
to maintain its competitiveness in the market.  The cost rate for the
year ended March 31, 2010 increased by approximately 5.28% from 81.47%
for the year ended March 31, 2009 to 86.75% for the year ended March 31,
2010. Cost of sales for the years ended March 31, 2010 and 2009 were
US$153,708,000 and US$88,823,000, respectively.




Depreciation
and Amortization





Depreciation
and amortization expenses were US$659,000 and US$464,000 for the fiscal
years ended March 31, 2010 and 2009, respectively. This increase of US$195,000,
or 42.03%, was mainly attributable to the Company’s acquisition of new plants
and machinery during the year ended March 31, 2010 as a result of the Company’s
business expansion.


- 26
-





General
and Administrative Expenses





General
and administrative expense was US$3,647,000 and US$4,007,000 for the years ended
March 31, 2010 and 2009, respectively, and mainly consisted of staff salaries
and benefits, depreciation expenses, travel expenses, legal and
professional fees, other taxes, entertainment expenses and vehicle expenses.
This decrease of US$360,000, or 8.98%, was mainly due to the reclassification of
certain expenses to cost of sales, and sales, marketing and distribution in
order to more accurately reflect its true nature.





Sales,
Marketing and Distribution





Sales,
marketing and distribution expenses were US$8,696,000 and US$5,337,000 for the
years ended March 31, 2010 and 2009, respectively. This increase of
US$3,359,000, or 62.94% was mainly due to the increase in transportation
expenses and sales commissions related to the Company’s increased sales
activities.





Other
Income, Net





Net other
income was US$1,671,000 and US$758,000for the years ended
March 31, 2010 and 2009, respectively. This increase of US$913,000, or 120.45%,
was mainly attributable to the net sales of lead to suppliers, which generated
net other income of approximately US$1,204,000.





Net
Income from Operations before Interest and Tax Expenses





Net
income from operations before interest and tax expenses increased from
US$11,973,000 for the year ended March 31, 2009 to US$13,155,000 for the year
ended March 31, 2010. This increase of US$1,182,000, or approximately 9.87%, was
mainly driven by the Company’s increased selling activities and the Company’s
sales of raw materials during the year ended March 31, 2010.





Interest
Expense





Interest
expense was US$2,068,000 and US$1,232,000 for the years ended March 31,
2010 and 2009, respectively. Interest expense increased by US$836,000, or
67.86%, due to the increase in average short-term bank borrowing balances for
the year ended March 31, 2010 compared to the year ended March 31,
2009.





Net
Income





Net
Income was US$9,500,000 and US$8,880,000for the years ended
March 31, 2010 and 2009, respectively. The increase of net income was mainly
driven by the continued increase in the sales of the Company’s battery products
and the Company’s sales of its raw materials during the year ended March
31, 2010.





Liquidity
and Capital Resources





The
Company generally finances its operations through profits generated from its
operations and through borrowings from banks.




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





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


- 27
-





Fiscal Years Ended March 312010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Net
      cash (used in) provided by operating activities
                  
                  
                  (9,163
                  )
                  
                  
                  12,089Net
      cash used in investing activities
                  
                  
                  (13,050
                  )
                  
                  
                  (8,933
                  )Net
      cash provided by (used in) financing activities
                  
                  
                  25,601
                  
                  
                  
                  (1,461
                  )Net
      increase in cash and cash equivalents
                  
                  
                  3,388
                  
                  
                  
                  1,695Effect
      of exchange rate changes on cash
                  
                  
                  11
                  
                  
                  
                  139Cash
      and cash equivalents at beginning of year
                  
                  
                  2,620
                  
                  
                  
                  786Cash
      and cash equivalents at end of year
                  
                  
                  6,019
                  
                  
                  
                  2,620




Operating
Activities





Net cash
used in operating activities was approximately US$9,163,000 for the year ended
March 31, 2010, as compared to net cash provided by operating activities of
US$12,089,000 for the year ended March 31, 2009. This decrease of cash flow was
mainly attributable to an increase in inventories as a result of the expansion
of the Company’s production capacity and the increase of trade receivables
related to the Company’s increase in selling activities, offset by an increase
in notes payable.





Investing
Activities





Net cash
used in investing activities was approximately US$13,050,000 for the year ended
March 31, 2010, as compared to approximately US$8,933,000 for the year ended
March 31, 2009. This increase of net cash outflow was mainly due to the
acquisition by the Company of new plants and machinery and investments in
restricted bank balances.




Financing
Activities





Net cash
provided by financing activities was approximately US$25,601,000 for the year
ended March 31, 2010, as compared to net cash used in financing activities of
approximately US$1,461,000 for the year ended March 31, 2009. The increase of
cash flow was mainly due to the Company’s new short-term bank borrowings and
bills financing and the decrease in repayment of short-term bank
loans.




Working
Capital





Our
working capital increased by approximately US$4,255,000 to approximately
US$16,761,000 as compared to working capital of approximately US$12,506,000 as
of March 31, 2009.  This increase is primarily due to the increase in
our cash and cash equivalents, restricted bank balances, other financial assets,
trade receivables, prepayment and inventories of approximately US$49,456,000 in
the aggregate, offset by the increase in our trade and notes payables, accrued
expenses and other accrued liabilities, amounts due to related parties, and
short-term bank borrowings of approximately US$44,809,000 in the
aggregate. The
increase in trade receivables was the result of the increase of sales volume.
Inventory carrying levels have been increased for raw materials, semi-finishedgoods and replacement batteries. This has been done to meet the projected
demand in the first quarter of 2010/11.
The increase in short-term bank loans and notes payables was the result of our
financing arrangement.





Off-Balance
Sheet Arrangements





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


- 28
-





ITEM
7A.            Quantitative and Qualitative
Disclosures about Market Risk.




Not
required for a “smaller reporting company”.





ITEM
8.             
    Financial
Statements and Supplementary Data




Reference
is made to the “F” pages herein comprising a portion of this Annual Report
on Form 10-K.




ITEM
9.               Changes in and Disagreements with
Accountants on Accounting and Financial Disclosures




On
November 13, 2009, the Company held its annual meeting of the stockholders for
the fiscal year ended March 31, 2009.  At the annual meeting the
stockholders of the Company of record as of the close of business on October 7,
2009 ratified the appointment of Mazars CPA Limited to serve as the Company’s
independent registered public accounting firm for the fiscal year ended March
31, 2010.




There
were no changes in and disagreements with accounts on accounting and financial
disclosure for the fiscal year ended March 31, 2010.





ITEM
9A(T).       Controlsand
Procedures




Evaluation
of Disclosure Controls and Procedures




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




Management’s
Annual Report on Internal Control over Financial Reporting




Management
is responsible for establishing and maintaining adequate internal control
structure and procedures over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f)) under the Exchange Act. Our management
conducted an assessment of the effectiveness of our internal control over
financial reporting as of March 31, 2010 based on the framework set forth in
Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission.




Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal
control over financial reporting is a process that involves human diligence and
compliance and is subject to lapses in judgment and breakdowns resulting from
human failures. Because of such limitations, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.




Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our internal control over financial reporting as of March 31,
2010 was effective.





This
Annual Report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this Annual Report.


- 29
-





Changes
in Internal Control over Financial Reporting




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




ITEM
9B.            Other Information




Effective
April 30, 2009, the Registrant’s common stock began trading under a new ticker
symbol, “CIEC” on the Over-The-Counter Bulletin Board. The Registrant changed
its ticker symbol from “WTRY” to “CIEC” as a result of the Registrant’s name
change from “World Trophy Outfitters, Inc.” to “Chisen Electric Corporation”,
which such name change became effective as of February 2, 2009.




On June
3, 2009, the Board of Directors of the Registrant appointed Mr. Zhu Zhongli as
the Registrant’s Vice President of Sales.  Mr. Zhu is assuming one of
the roles previously occupied by Mr. Xu Kecheng, the Registrant’s current Chief
Executive Officer, the Chairman of the Board and Acting Vice President of Sales,
effective immediately.  As Vice President of Sales for the Registrant, Mr.
Zhu is in charge of overall sales and marketing management. Mr. Zhu previously
served as the Assistant General Manager of the Company since August 2006.
 Prior to joining the Company, Mr. Zhu served as the General Manager of
Changxing Lida Wear-Resisting Material Co., Ltd., a manufacturing company in
China, since March 1999.  Mr. Zhu has extensive experience in the local
Chinese market and has achieved outstanding success in sales of storage
batteries in China.





On June
15, 2010, the board of directors of the Registrant approved the removal of Mr.
He Zhiwei from the position of Chief Financial Officer of the Registrant,
effective as of June 15, 2010.  On the same day, the Board approved
the appointment of Mr. Liu Chuanjie as CFO. Mr. Liu is 33 years old. Mr. Liu is
currently a director of the Registrant, a one-year appointment until the next
annual general meeting of the Registrant’s stockholders. He has served in such
capacity since November 24, 2008. Mr. Liu is also the Registrant’s treasurer,
serving in such capacity since November 12, 2008, and he will continue to serve
as treasurer until removed from the position by the Board. There were no
pre-existing arrangements pursuant to which Mr. Liu was appointed CFO. Mr. Liu
does not have a family relationship with any other director or executive officer
of the Company.





Since May
2004, Mr. Liu has served as Controller, Director of Finance, and as a director
of Changxing Chisen Electric Co., Ltd., the chief operating subsidiary of the
Company. Mr. Liu has expertise in accounting systems and national accounting
policies, fund raising and investing.





Mr. Liu
has not had a direct or indirect material interest in any transaction (occurring
since the beginning of the Company’s last fiscal year, or currently proposed) in
which the Company was a participant and the amount involved exceeded
US$120,000.





In
connection with Mr. Liu’s appointment as CFO, material terms of such appointment
are undetermined as of the date of this Annual Report.




PART
III




ITEM
10.             Directors, Executive Officers, and
Corporate Governance




Set forth
below are the names of the Registrant’s current directors, officers and
significant employees, their business experience during the last five (5) years,
their ages and all positions and offices that they currently hold with the
Registrant.




Name
              
              Age
              
              Position(s)Xu
      Kecheng
              
              48
              
              Chairman
      of the Board, Chief Executive Officer & PresidentLiu
      Chuanjie
              
              33
              
              Chief
      Financial Officer, Treasurer and DirectorFei
      Wenmei
              
              48
              
              Corporate
      SecretaryZhu
      Zhongli
              
              47
              
              Vice-President
      of SalesLou
      Shourong
              
              46
              
              Vice-PresidentDong
      Quanfeng
              
              46
              
              Independent
      DirectorJiang
      Yanfu
              
              67
              
              Independent
      DirectorGong
      Xiaoyan
              
              64
              
              Independent
      DirectorYun
      Hon Man
              
              42
              
              Independent
      DirectorHe
      Zhiwei
              
              44
              
              DirectorGui
      Changqing
              
              72
              
              Significant
      EmployeeWang
      Huanxiang
              
              34
              
              Significant
      EmployeeLin
      Zugeng
              
              76
              
              Significant
      Employee


- 30
-





Family
Relationships




There are
no family relationships by and between or among the members of the Board or
other executives. None of our directors and officers are directors or executive
officers of any company that files reports with the SEC except as set forth in
the Biographies section below.





Term
of Office




Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our stockholders or until removed from office in accordance
with our Bylaws. Our officers are appointed by the Board and hold office until
removed by the Board.




Biographies
of Officers and Directors




Xu
Kecheng.Mr. Xu
has served as President, Chief Executive Officer and a Director of the
Registrant since the closing date of the Exchange. Mr. Xu founded Chisen in 2003
and has served as CCEC’s President and Chairman of the Board since its
inception. Besides successfully establishing and running CCEC, Mr. Xu also
acquired Ai Ge Organism Products Co., Ltd., a biological & pharmaceutical
company in China in November 2006 where he serves as Chairman of the Board and
Executive Director. In 2002, he was involved in the formulation of coated
tempered glass panel standards used for home gas kitchen ranges, which was put
on the list of the National Building Materials Industry Standard. Mr. Xu
graduated from Hangzhou University in 1997 with the major in economic
management. In addition to serving as senior economist to the Company, Mr. Xu is
a member of China Battery Industry Association, a member of Huzhou CPPCC, a
member of the Standing Committee of Changxing People’s Congress and he has been
honored with the title of “Integrity Entrepreneur” by the Changxing Government.
Mr. Xu also finished a course of study at the class of advanced training at the
Party School of the CPC Central Committee.





Liu
Chuanjie.Mr. Liu
has served as Chief Financial Officer of the Registrant since June 15, 2010, as
Treasurer of the Registrant since the closing date of the Exchange and has
served as a Director of the Registrant since November 24, 2008. Mr. Liu also
serves as Controller, Director of Finance and as a Director of Chisen since May
2004. Mr. Liu has expertise in accounting systems and national accounting
policies, fund raising and investing. Prior to joining Chisen, Mr. Liu served as
the head of the financial department of Changxing Chisen Xinguangyuan Co., Ltd.,
a manufacturing company in China, from October 2000 to April 2004. Mr. Liu is a
graduate of the Institute of Jiaxing.




Fei
Wenmei.Ms. Fei
has served as Corporate Secretary of the Registrant since the closing date of
the Exchange. In March 2005, Ms. Fei joined CCEC as Chief Administrative Manager
in charge of corporate brand building, intellectual property and project
application. Ms. Fei currently serves CCEC as an assistant economist and clean
production management controller. From March 1991 to February 2005, Ms. Fei
served as Chief Administrative Manager of the Huaneng Changxing Power Plant
Industry & Trading Company and prior to that she served as Chief of Staff at
the Changxing Land Administration Bureau from March 1987 to February 1991. Ms.
Fei has been engaged in administrative management for many years and has vast
experience in corporate administrative management. Ms. Fei graduated from
Zhejiang Radio and Television University with a degree in Chinese
Language.





Zhu
Zhongli.  Mr. Zhu has served as Vice-President of Sales of the
Registrant since June 3, 2009.   Mr. Zhu replaces Xu Kecheng, who
had temporarily replaced Wang Yajun effective March 3,
2009.   Mr. Zhu is in charge of overall sales and marketing
management. Mr. Zhu previously served as the Assistant General Manager of the
Company since August 2006.  Prior to joining the Company, Mr. Zhu served as
the General Manager of Changxing Lida Wear-Resisting Material Co., Ltd., a
manufacturing company in China, since March 1999.  Mr. Zhu has extensive
experience in the local Chinese market and has achieved outstanding success in
sales of storage batteries in China.


- 31
-





Lou
Sourong. Mr. Lou
has served as a Vice President of the Registrant since the closing date of the
Exchange. From October 2007 to present, Mr. Lou has served as a Deputy General
Manager of CCEC, a manufacturing company in China. From April 2006 to September
2007, Mr. Lou served as Executive Deputy General Manager for Changxing Nuo Wan
Te Ke Co., Ltd., a manufacturing company in China. Prior to that, Mr. Lou served
as the factory director and marketing manager in Changxing Chisen Glass Co.,
Ltd., a manufacturing company in China from June 1996 to March 2006. Mr. Lou has
extensive experience in materials supply, procurement and production plan
management.




Dong
Quanfeng.Professor Dong has served as a Director of the Registrant since November
24, 2008. Professor Dong has served as a Chemistry professor and doctorial tutor
at the Department of Chemistry of Xiamen University since March 2006. Professor
Dong concurrently acts as a visiting research fellow at the National Hi-Tech
Green Material Development Center, is a Member of the Editorial Board of the
industry magazine “Battery”, is a Member of the Chinese Institute of Electrics
Chemical and Physical Power Committee, a Member of ISE, a Member of the American
ECS and is the Vice Director of the Changxing Chisen Physical Chemistry Battery
Research Center. Professor Dong is engaged in the research of new chemical
electric power sources and related energy storage material and has finished
several national and provincial-municipal scientific research projects. In 1997,
Professor Dong won the provincial second prize of the Development of Science and
Technology. In 1999, Professor Dong won the technology innovation prize of Hubei
province. In 2004, Professor Dong won third prize of the Development of Science
and Technology of Xiamen. In 2006, he won the title of “Technology Innovation
Advanced Individual” by the National Information Industry. Professor Dong has
issued over 80 papers on internationally significant academic journals and has
applied for several patents. Prior to his employment as a full time professor at
Xiamen University, Professor Dong served as an associate professor at Xiamen
University since January 2001. Mr. Dong graduated from Wuhan University with a
Ph D degree in Chemistry and performed postdoctoral research at Israel Technical
Institute.




Jiang
Yanfu. Professor Jiang has served as a Director of the Registrant since
November 24, 2008. Professor Jiang has served as a professor and doctorial tutor
of business administration at Tsinghua University since December 1993. Professor
Jiang has served as Dean of the Entrepreneurial Research Center since April 2000
and has served as academic director-general and co-founded of Trinity Innovation
since December 2003, a consulting company in China.  Professor Jiang
has expertise in entrepreneurial management, corporate governance and
institutional economics. He has undertaken many important research programs such
as the “Theoretical Study on Chinese Technology Innovation”. He served as a
director of and as an advisor to many companies. Professor Jiang’s main research
fields include risk investment and entrepreneurial management, corporate
governance and cyber economy. The major courses he has instructed includeEntrepreneurial Management,
Technology and Institution Innovation, and Analysis of Institutional
Economics.




Gong Xiaoyan.Ms. Gong has served as a Director of the Registrant since November 24,
2008. Ms. Gong currently serves as Chairman of Tianjin Bicycle Industrial
Association, a non-governmental organization in China since June 2006. Prior to
that, Ms. Gong served as Secretary-general of Tianjin Bicycle Industrial
Association, a non-govermental organization in China since September 1998. She
has been honored with the titles “China Top-Hundred Female Entrepreneurs”, “Most
Influential Enterprises Leader of China” and “Tianjin Female Entrepreneur”
issued by Tianjin Municipal Government.





Yun Hon
Man. Mr. Yun has served as a director of the Registrant since November
24, 2008. Mr. Yun has served and continues to serve as a Corporate Consultant
with Smart Pine Investment Limited since September 2007, a consulting firm
organized under the laws of Hong Kong. Mr. Yun also serves as a Director of CH
Lighting International Corporation (OTCBB: CHHN) since July 28, 2008 and as a
Director of Xinde Technology Company (OTCBB: WTFS) since January
2010.   Mr. Yun also served as Chief Operating Officer of China
INSOnline Corp. (NASDAQ: CHIO) from January 2008 through April 2010. Prior to
that, Mr. Yun served as Corporate Controller of Hi-Tech Wealth Inc. (n/k/a China
Mobile Media Technology, Inc.)(OTCBB: CHMO) from January 2007 through August
2007. From January 2003 through December 2006, Mr Yun served as Corporate
Controller of General Components, Inc. (n/k/a China Mobile Media Technology,
Inc.)(OTCBB: CHMO). Mr. Yun
is a Chartered Accountant having memberships with the Institute of Chartered
Accountants in England and Wales. He is also a Fellow Member of the Chartered
Association of Certified Accountants. He is a
member of the Hong Kong Institute of Certified Public Accountants, the
Association of International Accountants, the Society of Registered Financial
Planners, the Institute of Financial Accountants and the Institute of Crisis and
Risk Management. Mr. Yun received his MBA at the University of Western Sydney in
2007.


- 32
-





He
Zhiwei.Mr. He
has served as the Director of the Registrant since the closing date of the
Exchange. From 2006 to 2008, Mr. He built, organized and led the private-label
consumer electronics global sourcing group of Amazon.com, Inc. (NasdaqGS: AMZN)
and Circuit City Stores, Inc. (NYSE: CC).  Mr. He previously served as
Chief Financial Officer of the Company from the closing date of the Exchange to
June 15, 2010.  Prior to that, Mr. He held the FP&A leadership
role at the Capital One Financial Corporation (NYSE: COF), where he was
responsible for the financial analysis and planning of technology operations
group.  From 1999 to 2004, Mr. He held various management positions in
worldwide operations, global supply chain, IT development and operations at Dell
Inc. (NasdaqGS: DELL) and Capital One Financial Corporation (NYSE:
COF).  Mr. He is a graduate of Shanghai Jiao Tong University (1988) in
China with a BS Degree in Electrical Engineering, and an MBA from the McCombs
School of Business at the University of Texas at Austin (1999).





Significant
Employees




Gui
Changqing.Mr.
Gui has served and continues to serve as Chief Scientist at the Zhejiang
Changxing Chisen Physical-Chemical Power Supply Research and Development Center
since June 2007 and as counselor of the 712 Institute since January 2005.
Prior to that, Mr. Gui served as expert team member of the 712 Institute from
January 2001 to December 2004. Early in his career Mr. Gui was engaged in the
R&D of the powered lead-acid battery for the national military in China
serving as General Engineer and Researcher. The product won a scientific and
technical award from the State Commission of Science and Technology. Mr. Gui has
published more than 100 papers of international significance and has trained 24
postgraduates. Mr. Gui is extremely well respected by his peers in the storage
battery industry. In 1992, he won the special government allowance from the
State Council, has served as Director of the Association of Chinese Chemical
Physics Power Industry and as a Director of the Wuhan Power Supply Society. Mr.
Gui earned his doctorate degree in electrochemistry from Shanghai Fudan
University.




Wang
Huanxiang.Mr.
Wang has served as Technical Controller of CCEC since May 2008. Prior to that,
Mr. Wang was a career researcher of the storage battery and served as Deputy
General Manager of Zhejiang Chaowei Power Co., Ltd. from May 2004 to March 2008.
Prior to that, Mr. Wang served as Chief of Technical Department of Zhejiang
Wolong Technology Corp. from March 2001 to May 2004. He has several patents
and has issued several papers, including “Research of SnSO4 Applied to
Electric Bicycles” and “Drying and Changing Technical Research for Long Cycle
Life Lead Acid Electrical Bicycle Battery” in various academic journals,
including the International Battery. Mr. Wang is a graduate of Zhengzhou
University with a degree in electrochemistry.




Lin
Zugeng.Professor
Lin currently works as a scientist at the Zhejiang Changxing Chisen
Physical-Chemical Power Supply Research and Development Center. Professor Lin
has been working with the Department of Chemistry at Xiamen University since
1956. Professor Lin is an expert in physical chemistry and electrochemistry and
is one of the founders of the electrochemical curricula at Xiamen University.
From July 1982 to September 1984, Professor Lin worked as a visiting scholar at
the Chemical Energy Center of London’s Metropolitan University. From July 1990
to April 1999, Professor Lin served as the President of Xiamen University.
Concurrently, he served as a member of an evaluation group of the Academic
Degrees Committee of the State Council for the subject of chemistry, a director
of the Chinese Chemical Society, Chief Commissary of the Electrochemistry
Committee of Chinese Chemical Society, Deputy Chief Commissary of the
Professional Committee of Chemical and Physical Power at the Chinese Institute
of Electronics and Deputy Editor-in-Chief of the Chemical Journal of Chinese
Universities. Professor Lin has many significant achievements in electrochemical
experimental technology, electrode material of chemical power, electrode
processes of chemical power and spectral electrochemistry, and has undertaken
many national key projects, including the 863 Plan and the National Natural
Science Foundation. Professor Lin has published more than 100 papers in domestic
and foreign academic journals, has been awarded 3 times the national scientific
prize and 3 times the provincial scientific prize. In 1988, Professor Lin was
acknowledged as an expert with outstanding achievement. Now Prof. Lin works as
scientist of Chisen Technical Development Center.


- 33
-





Legal
Proceedings Involving Officers and Directors





Unless
otherwise indicated, to the knowledge of the Company after reasonable inquiry,
no current director or executive officer of the Company during the past ten
years, has (i) been convicted in a criminal proceeding (excluding traffic
violations or other minor offenses), (ii) been a party to any judicial or
administrative proceeding (except for any matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, U.S. federal or state securities laws, or a finding of any violation
of U.S. federal or state securities laws, (iii) filed a petition under
federal bankruptcy laws or any state insolvency laws or has had a receiver
appointed for the person’s property or (iv) been subject to any judgment,
decree or final order enjoining, suspending or otherwise limiting for more than
60 days, the person from engaging in any type of business practice , acting
as a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker
or dealer in securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance company, or
engaging in or continuing any conduct or practice in connection with such
activity or engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of Federal or
State securities laws or Federal commodities laws, (v) been found by a
court of competent jurisdiction in a civil action or by the Commission to have
violated any Federal or State securities law, and the judgment in such civil
action or finding by the Commission has not been subsequently reversed,
suspended, or vacated, (vi) been found by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such civil action or
finding by the Commodity Futures Trading Commission has not been subsequently
reversed, suspended or vacated, (vii) been the subject of, or a party to,
any Federal or State judicial or administrative order, judgment, decree, or
finding, not subsequently reversed, suspended or vacated, relating to an alleged
violation of: (a) any Federal or State securities or commodities law or
regulation, (b) any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or
temporary or permanent cease-and-desist order, or removal or prohibition order,
or (c) any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity, or (viii) been the subject of, or a
party to, any sanction or order, not subsequently reversed, suspended or
vacated, of any self-regulatory organization (as defined in
Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any
registered entity (as defined in Section 1(a)(29) of the Commodity Exchange
Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons
associated with a member.





There are
no material pending legal proceedings to which any of the individuals listed
above is party adverse to the Company or any of its subsidiaries or has a
material interest adverse to the Company or any of its subsidiaries. There are
no family relationships between directors and executive officers of the
Company.




Compliance
with Section 16(A) of the Exchange Act




Section
16(a) of the Exchange Act requires a company's officers and directors, and
persons who own more than ten percent (10%) of a registered class of the
Registrant’s equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors, and greater than ten percent (10%)
stockholders are required by SEC regulation to furnish the Registrant with
copies of all Section 16(a) forms they file.




To the
Registrant’s knowledge, based solely on a review of the copies of such reports
furnished to the Registrant, all reports under Section 16(a) required to be
filed by its officers and directors and greater than ten percent (10%)
beneficial owners were timely filed as of the date of this filing with the
exeception of the followings;  (a) He Zhiwei failed to file a Form 4
in connection with his dismissal as the Company’s Chief Financial Officer and
Director on June 15, 2010 and (b) Liu Chuanjie failed to file a Form 4 in
connection with his appointment as the Company’s new Chief Financial Officer on
June 15, 2010.





Committees
of our Board of Directors




As of
January 15, 2009, our Board of Directors has an Audit Committee, a Compensation
Committee and a Corporate Governance and Nominating Committee established in
accordance with the Exchange Act and NASDAQ rules.  Prior to January
15, 2009, we did not have an Audit Committee, a Compensation Committee or a
Corporate Governance and Nominating Committee.  Since January 15,
2009, the Audit Committee met six (6) times, the Compensation Committee met two
(2) times and the Corporate Governance and Nominating Committee met two (2)
times.  A brief description of each committee is set forth
below.


- 34
-




·
            Audit
      Committee– The
      purpose of the Audit Committee is to provide assistance to our Board of
      Directors in fulfilling their oversight responsibilities relating to our
      consolidated financial statements and financial reporting process and
      internal controls in consultation with our independent registered public
      accountants and internal auditors. The Audit Committee is also responsible
      for ensuring that the independent registered public accountants submit a
      formal written statement to us regarding relationships and services which
      may affect the auditor’s objectivity and independence.  The
      Board appointed Yun Hon Man, Gong Xiaoyan, Dong Quanfeng and Jiang Yanfu
      to serve as members of the Audit Committee, with Yun Hon Man serving as
      Chairman, commencing on January 15, 2009.  Our Audit Committee
      financial expert is Yun Hon Man, an independent
      director.





·
            Compensation
      Committee– The
      purpose of the Compensation Committee is to review and make
      recommendations to our Board of Directors regarding all forms of
      compensation to be provided to our executive officers and directors,
      including stock compensation and loans, and all bonus and stock
      compensation to all employees.  The Board appointed Jiang Yanfu,
      Dong Quanfeng, Yun Hon Man and Gong Xiaoyan to serve as members of the
      Compensation Committee, with Jiang Yanfu serving as Chairman, commencing
      on January 15, 2009.





·
            Corporate
      Governance and Nominating Committee– The purpose of the
      Nominating Committee is to review the composition and evaluate the
      performance of the Board, recommend persons for election to the Board and
      evaluate director compensation.  The Nominating Committee is
      also responsible for reviewing the composition of committees of the Board
      and recommending persons to be members of such committees, and maintaining
      compliance of committee membership with applicable regulatory
      requirements.The Company does not have a formal diversity
      policy. Although the Board does not currently have formal specific minimum
      criteria for nominees, substantial relevant and diverse business and
      industry experience would generally be considered important qualifying
      criteria,as would the ability to attend and
      prepare for Board and shareholder meetings.We have not adopted
      procedures by which security holders may recommend nominees to our Board
      of Directors.  The Board appointed Gong Xiaoyan, Dong Quanfeng,
      Yun Hon Man and Jiang Yanfu to serve as members of the Corporate
      Governance and Nominating Committee, with Gong Xiaoyan serving as
      Chairman, commencing on January 15,
2009.





·
            Strategy
      and Steering Committee– Xu Kecheng and Wang Chunyan
      served as members of the Strategy and Steering Committee, with Xu Kecheng
      serving as Chairman, during the fiscal year ended March 31,
      2010.




Committee
Charters





On
January 15, 2009, the Board approved Charters for each of the Audit Committee,
Compensation Committee and the Corporate Governance and Nominating Committee.
Copies of the Audit Committee Charter, the Compensation Committee Charter and
the Corporate Governance and Nominating Committee Charter are referenced hereto
as Exhibits 99.1, 99.2 and 99.3, respectively.





Director
Qualifications and Experience





The
following table identifies some of the experience, qualifications, attributes
and skills that the Board considered in making its decision to appoint and
nominate directors to the Board. This information supplements the biographical
information provided above. The vertical axis displays the primary factors
reviewed by the Board in evaluating a board candidate.





Experience, Qualification,
                    Skill or Attribute
                  
                  Xu
                    Kecheng
                  
                  Liu
                    Chuanjie
                  
                  Dong
                    Quanfeng
                  
                  Jiang
                    Yanfu
                  
                  Gong
                    Xiaoyan
                  
                  Yun Hon
                    Man
                  
                  He
                    ZhiweiProfessional
      standing in chosen field
                  
                  x
                  
                  x
                  
                  x
                  
                  x
                  
                  x
                  
                  x
                  
                  xExpertise
      in energy or related industry:
                  
                  x
                  
                  
                  
                  x
                  
                  
                  
                  xAudit
      Committee Financial Expert (actual or potential)
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  xCivic
      and community involvement:
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  xOther
      public company experience:
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  x
                  
                  xDiversity
      by race, gender or culture:
                  
                  x
                  
                  x
                  
                  x
                  
                  x
                  
                  x
                  
                  x
                  
                  xSpecific
      skills/knowledge:Corporate
      governance
                  
                  x
                  
                  
                  
                  
                  
                  x
                  
                  
                  
                  x


- 35
-




Board Leadership
Structure




The Board
believes that the Company’s Chief Executive Officer is best situated to serve as
Chairman of the Board because he is ultimately responsible for the day-to-day
operation of the Company and is the director most familiar with the Company’s
business and industry and most capable of effectively identifying strategic
priorities and leading the discussion and execution of strategy. Independent
directors and management have different perspectives and roles in strategy
development. Our independent directors bring experience, oversight and expertise
from outside the Company and industry, while the Chief Executive Officer brings
company-specific experience and expertise. The Board believes that the combined
role of Chairman and Chief Executive Officer promotes strategy development and
execution, and facilitates information flow between management and the Board,
which are essential to effective governance.





One of
the key responsibilities of the Board is to develop strategic direction and hold
management accountable for the execution of strategy once it is developed. The
Board believes the combined role of Chairman and Chief Executive Officer,
together with the presence of four independent directors on the Board, is in the
best interest of shareholders because it provides the appropriate balance
between strategy development and independent oversight of management. The Board
retains the authority to modify this structure to best address the Company’s
unique circumstances, and so advance the best interests of all shareholders, as
and when appropriate.





The Board’s Role in Risk
Oversight




The Board
oversees our shareholders’ interest in the long-term health and the overall
success of the Company and its financial strengths. The full Board is actively
involved in overseeing risk management for the Company. It does so in part
through discussion and review of our business, financial and corporate
governance practices and procedures. The
Board, as a whole, reviews the risks confronted by the Company with respect to
its operations and financial condition, establishes limits of risk tolerance
with respect to the Company’s activities and ensures adequate property and
liability insurance coverage.




Because of the role of the
Board in the risk oversight of the Company, the Board believes that any
leadership structure that it adopts must allow it to effectively oversee the
management of the risks relating to the Company’s operations. The Board
recognizes that there are different leadership structures that could allow it to
effectively oversee the management of the risks relating to the Company’s
operations, and while the Board believes its current leadership structure
enables it to effectively manage such risks, it was not the primary reason the
Board selected its current leadership structure over other potential
alternatives. See the discussion under the heading “— Board Leadership
Structure” above for a discussion of why the Board has determined that its
current leadership structure is appropriate.





ITEM
11.             Executive
Compensation





Compensation
Discussion and Analysis




Not
required for a “smaller reporting company”.


- 36
-





Summary
Compensation Table





The
following table sets forth compensation information for services rendered by our
named executive officers in all capacities during the last 2 completed fiscal
years (ended March 31, 2010 and March 31, 2009). The compensation listed below
was paid to our current officers by SkyAce. The following information includes
the U.S. dollar value of base salaries, bonus awards, the number of stock
options granted and certain other compensation, if any, whether paid or
deferred.





Summary Compensation
Table





Name And Principal Function
                              (a)
                            
                            Year
                              (b)
                            
                            Salary
                              (US$)
                              (c)
                            
                            Bonus
                              (US$)
                              (d)
                            
                            Stock
                              Awards
                              (US$)
                              (e)
                            
                            Option
                              Awards
                              (US$)
                              (f)
                            
                            Non-
                              Equity
                              Incentive
                              Plan
                              Compen-
                              sation
                              (US$)
                              (g)
                            
                            Non-
                              qualified
                              Deferred
                              Compen-
                              sation
                              Earnings
                              (US$)
                              (h)
                            
                            All Other
                              Compensation
                              (US$)
                              (i)
                            
                            Total
                              (US$)
                              (j)Xu
      Kecheng, President &
                            
                            2010
                            
                            
                            11,728
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            11,728CEO
      (1)
                            
                            2009
                            
                            
                            9,356
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            9,356He
      Zhiwei, Former
                            
                            2010
                            
                            
                            117,369
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            117,369Chief
      Financial Officer (2)
                            
                            2009
                            
                            
                            80,051
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            80,051Lou
      Shourong, Vice-
                            
                            2010
                            
                            
                            10,958
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            10,958President
      (3)
                            
                            2009
                            
                            
                            8,257
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            8,257Liu
      Chuanjie, Chief Financial
                            
                            2010
                            
                            
                            10,861
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            10,861Officer
      and Treasurer (4)
                            
                            2009
                            
                            
                            7,900
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            -0-
                            
                            
                            -0-
                            
                            7,900




(1)
            Xu Kecheng has served as the
      Registrant’s Chief Executive Officer and President effective as of the
      closing date of the Exchange.  Mr. Xu also served (and continues
      to serve) as President of CCEC during the fiscal years ended March 31,
      2010 and 2009.  Mr. Xu’s compensation for the years ended March
      31, 2010 and 2009 reflects his services as CEO and President of the
      Registrant and President of CCEC,
  combined.





(2)
            He Zhiwei served as the
      Registrant’s Chief Financial Officer effective as of the closing date of
      the Exchange until June 15, 2010.  Mr. He’s compensation for the
      years ended March 31, 2010 and 2009 reflects his services as CFO of the
      Registrant during such time
periods.




(3)
            Lou Shourong has served as the
      Registrant’s Vice-President effective as of the closing date of the
      Exchange.  Mr. Lou also served (and continues to serve) as a
      Deputy General Manager of CCEC during the fiscal years ended March 31,
      2010 and 2009.  Mr. Lou’s compensation for the years ended March
      31, 2010 and 2009 reflects his services as Vice-President of the
      Registrant and Deputy General Manager of CCEC,
      combined.





(4)
            Liu
      Chuanjie has served as the Registrant’s Treasurer effective as of the
      closing date of the Exchange.  Mr. Liu also served (and
      continues to serve) as Controller and Director of Finance of CCEC during
      the fiscal years ended March 31, 2010 and 2009.  Mr. Liu’s
      compensation for the years ended March 31, 2010 and 2009 reflects his
      services as Treasurer of the Registrant and Controller and Director of
      CCEC, combined. Mr. Liu has served as Chief Financial Officer of the
      Registrant since June 15,
2010.





As of
March 31, 2010, the Registrant did not have any “Grants of Plan-Based Awards”,
“Outstanding Equity Awards”, “Option Exercises and Stock Vested”, “Pension
Benefits”, “Nonqualified Defined Contribution and Other Nonqualified Deferred
Compensation Plans” or “Potential Payments Upon Termination or Change in
Control” to report.





Furthermore,
the Company does not have any bonuses, stock awards, option awards,
non-executive incentive plan compensation or non-qualified deferred compensation
earnings to report.


- 37
-





Narrative
Disclosure to Summary Compensation Table





The
Company has no other compensation plans other than basic salary and
benefits.





Director
Compensation





We did
not provide any compensation to our Directors during the fiscal year ended March
31, 2010. We may establish certain compensation plans (e.g. options, cash for
attending meetings, etc.) with respect to Directors in the future.





Additional
Narrative Disclosure





Employment Agreements




There are
currently no employment agreements by and between the Registrant and its
employees. CCEC has a labor contract with each employee as required by law in
the PRC. The labor contract mainly includes working content, contract period,
working time, payment and other terms. A form of such labor contract is
referenced hereto as Exhibit 10.2.





Benefit Plans




The
Registrant has no stock option, retirement, pension or profit-sharing programs
for the benefit of its directors, officers or other employees; however our Board
may recommend the adoption of one or more such programs in the
future.





In
accordance with Chinese law, CCEC offers a welfare program pursuant to which it
pays pension, accident, medical, birth, job and house allowance payments for all
contract employees of CCEC.





ITEM 12.
            Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters




The
following table sets forth each person known by us to be the beneficial owner of
five (5%) percent or more of our Common Stock, all directors individually and
all directors and officers as a group as of June 28, 2010. Each person named
below has sole voting and investment power with respect to the shares shown
unless otherwise indicated.




Name and Address of Beneficial Owner(1)
                                  
                                  Amount of
                                    Direct
                                    Ownership
                                    After
                                    Exchange
                                  
                                  Amount of
                                    Indirect
                                    Ownership
                                    After Exchange
                                  
                                  Total Beneficial
                                    Ownership
                                    After Exchange
                                  
                                  Percentage
                                    of Class(2)Xu
      Kecheng, Chairman of the Board, Chief ExecutiveOfficer
      & President
                                  
                                  
                                  0
                                  
                                  32,900,000
                                  (3)
                                  32,900,000
                                  (3)
                                  65.8
                                  %Liu
      Chuanjie, Chief Financial Officer , Treasurer and Director
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %Fei
      Wenmei, Corporate Secretary
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %Zhu
      Zhongli, Vice-President of Sales
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %Lou
      Shourong, Vice President
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %Dong
      Quanfeng, Director
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %Jiang
      Yanfu, Director
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %Gong
      Xiaoyan, Director
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %Yun
      Hon Man, Director
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %He
      Zhiwei, Director
                                  
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  
                                  0
                                  %ALL
      DIRECTORS AND OFFICERS AS A GROUP (10 PERSONS):
                                  
                                  
                                  0
                                  
                                  32,900,000
                                  
                                  32,900,000
                                  
                                  65.8
                                  %Cheer
      Gold Development Limited
                                    Level
      5 Development Bank of Samoa Building
                                    Beach
      Road, Apia, Samoa
                                  
                                  
                                  32,900,000
                                  
                                  0
                                  
                                  32,900,000
                                  
                                  65.8
                                  %


- 38
-





(1)
            Unless otherwise noted, each
      beneficial owner has the same address as the
      Registrant.


(2)
            Applicable percentage of
      ownership is based on 50,000,000 shares of our Common Stock outstanding as
      of June 28, 2010, together with securities exercisable or convertible into
      shares of Common Stock within sixty (60) days of June 28, 2010 for each
      stockholder. Beneficial ownership is determined in accordance with the
      rules of the SEC and generally includes voting or investment power with
      respect to securities. Shares of Common Stock are deemed to be
      beneficially owned by the person holding such securities for the purpose
      of computing the percentage of ownership of such person, but are not
      treated as outstanding for the purpose of computing the percentage
      ownership of any other person. Note that affiliates are subject to Rule
      144 and Insider trading regulations - percentage computation is for form
      purposes only.


(3)
            Xu
      Kecheng may be considered to beneficially own 32,900,000 shares by virtue
      of his 100% ownership in Wisejoin Group Limited, which owns and controls
      100% of Cheer Gold, which directly beneficially owns 32,900,000 shares of
      Common Stock.




ITEM
13.             Certain Relationships and Related
Transactions, and Director Independence




Related
Party Transactions





During
the fiscal year ended March 31, 2010, the Company owed US$2,852,000 and
US$3,799,000 to Zhejiang Changxing Ruilang Electronic Company Limited, a company
which is controlled by a close family member of Mr. Xu Kecheng (“RuilangElectronic”) for the
acquisition of land and buildings and the purchase of certain raw materials,
respectively.  As of March 31, 2010, the balance oustanding was
US$2,102,000 for the purpose of purchasing certain raw materials.





On April
20, 2007, the Company borrowed US$292,000 from Zhejiang Ai Ge Organism Products
Company Limited, a company controlled by Mr.Xu Kecheng, to help the Company
settle liquidity shortages.  As of March 31, 2010, the amount
outstanding was US$292,000.  It is an unsecured advance which is
interest-free and repayable on demand.





As of
March 31, 2010, Zhejing Chisen Glass Company Limited (“Chisen Glass”) provided
guarantees, in aggregate, of US$5,868,000, US$440,000 and US$440,000 to secure
the short-term bank loans, notes payable and bill financing of the Company,
respectively.





As of
March 31, 2010, US$5,868,000 of the Company’s short-term bank loans was
collateralized by land use rights owned by Ruilang Electronic and
guaranteed by Mr.Xu Kecheng and Ms.Zhou Fang Qin, the spouse of Xu
Kecheng.





As of
March 31, 2010, Changxing Chisen Xinguangyuan Company Limited (“Xinguangyuan”),
Mr.Xu Kecheng and a third party provided guarantees, in aggregate, amounting to
US$8,802,000 to secure the short-term bank loans of the Company.





As of
March 31, 2010, Xinguangyuan and Mr.Xu Kecheng provided guarantees, in
aggregate, of US$11,737,000 and US$5,868,000 to secure the short-term bank loans
and notes payable of the Company, respectively.


- 39
-





As of
March 31, 2010, Chisen Glass, Mr.Xu Kecheng and Ms.Zhou Fang Qin, the spouse of
Mr. Xu Kecheng, provided guarantees, in the aggregate, amounting to
US$2,714,000, US$4,401,000 and US$1,467,000 to secure the short-term bank loans,
notes payable and bills financing of the Company, respectively.





As of
March 31, 2010, Xinguangyuan provided guarantees, in aggregate, amounting to
US$3,667,000 to secure the notes payable of the Company.





As of
March 31, 2010, US$4,402,000 of the Company’s short-term bank loans was
collateralized by a guarantee provided by Mr.Xu Kecheng.





Policies
and Procedures for Related-Party Transactions




The
Company did not have any policies or procedures for related party transactions
for the fiscal year ended March 31, 2010.




Promoters
and Certain Control Persons




None.




Director
Independence





The
following directors are independent: Dong Quanfeng, Jiang Yanfu, Gong Xiaoyan
and Yun Hon Man. The following directors are not independent: Xu Kecheng, Liu
Chuanjie and He Zhiwei.




ITEM
14.             Principal Accountant Fees and
Services




Effective
as of January 14, 2009, the Board of Directors of the Registrant dismissed
Pritchett, Siler & Hardy, P.C. (“PS&H”) as the
independent registered public accounting firm of the Registrant.  The
firm of Mazars CPA Limited (“Mazars”) acts as our
independent registered public accounting firm effective as of January 14,
2009.  The following is a summary of fees incurred for services
rendered.




Audit
Fees




During
the year ended March 31, 2010, the fees for our current principal accountant,
Mazars, were US$165,000 for the audit of our consolidated financial statements
included in this Annual Report and reviews of Form 10-Q.




Audit-Related
Fees





During
the year ended March 31, 2010, our current principal accountant, Mazars, did not
render assurance and related services reasonably related to the performance of
the audit or review of financial statements.




Tax
Fees





During
the year ended March 31, 2010, our current principal accountant, Mazars, did not
render assurance and related services reasonably related to the performance of
the audit or review of financial statements.




All
Other Fees





During
the year ended March 31, 2010, there were no fees billed for products and
services provided by the current principal accountant, Mazars, other than those
set forth above.




Audit
Committee Pre-Approval




The
policy of the Audit Committee is to pre-approve all audit and non-audit services
provided by the independent accountants. These services may include audit
services, audit-related services, tax fees, and other services. Pre-approval is
generally provided for up to one year and any pre-approval is detailed as to the
particular service or category of services. The Audit Committee has delegated
pre-approval authority to certain committee members when expedition of services
is necessary. The independent accountants and management are required to
periodically report to the full Audit Committee regarding the extent of services
provided by the independent accountants in accordance with this pre-approval
delegation, and the fees for the services performed to date. All of the services
described above in this Item 14 were approved in advance by the Board of
Directors during the fiscal year ended March 31, 2010, which, at the time of
such approval, performed all of the functions of an Audit Committee in light of
the subsequent formal creation of the Company’s existing Audit Committee and
adoption of the Audit Committee’s Charter in January 2009.


- 40
-





PART
IV




ITEM
15.        
    Exhibits
and Financial Statement Schedules




(a)           Financial
Statements and Schedules




The
financial statements are set forth under Item 8 of this Annual Report.
Financial statement schedules have been omitted since they are either not
required, not applicable, or the information is otherwise included.




(b)           Exhibits




EXHIBIT NO.
              
              DESCRIPTION
              
              LOCATION2.1
              
              Share
      Exchange Agreement, dated November 12, 2008, by and among World Trophy
      Outfitters, Inc., Fast More Limited, Cheer Gold Development Ltd. and
      Floster Investment Limited
              
              Incorporated
      by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K as
      filed with the SEC on November 12, 20083.1
              
              Articles
      of Incorporation of World Trophy Outfitters, Inc.
              
              Incorporated
      by reference to Exhibit 3(i).1 to the Registrant’s Registration Statement
      on Form SB-2 as filed with the SEC on September 23,
20053.2
              
              Certificate
      of Amendment to Articles of Incorporation of Chisen Electric Corporation
      (name change)
              
              Incorporated
      by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as
      filed with the SEC on February 4, 20093.3
              
              Amended
      and Restated Bylaws of Chisen Electric Corporation
              
              Incorporated
      by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K as
      filed with the SEC on February 4, 20093.4
              
              Certificate
      of Incorporation of Fast More Limited, dated December 17,
    2007
              
              Incorporated
      by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K as
      filed with the SEC on November 12, 20083.5
              
              Memorandum
      and Articles of Association of Fast More Limited, dated as of December 17,
      2007
              
              Incorporated
      by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K as
      filed with the SEC on November 12, 20083.6
              
              Certificate
      of Incorporation of Changxing Chisen Electric Co., Ltd.
              
              Incorporated
      by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K as
      filed with the SEC on November 12,
2008


- 41
-





3.7
              
              Articles
      of Associations of Changxing Chisen Electric Co., Ltd.
              
              Incorporated
      by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K as
      filed with the SEC on November 12, 200810.1
              
              Agreement
      on Establishment of Changxing Chisen Physical Chemistry Power Research and
      Development Center, dated April 30, 2008
              
              Incorporated
      by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.2
              
              Form
      of Labor Contract
              
              Incorporated
      by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.3
              
              Lease
      Agreement, dated March 30, 2008, by and between Changxing Chisen Electric
      Co., Ltd. and Changxing Xiangyi Industrial Park Investment Co.,
      Ltd.
              
              Incorporated
      by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.4
              
              Contract
      For Loan on Guarantee, by and among Zhejiang Changxing Agricultural
      Cooperative Bank, Changxing Chisen Electric Co., Ltd. and Zhejiang Chisen
      Glass Co., Ltd.
              
              Incorporated
      by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.5
              
              Renminbi
      Loan Contract, dated January 11, 2008, by and between Changxing Chisen
      Electric Co., Ltd. and China Construction Bank Corporation (Changxing
      Branch)
              
              Incorporated
      by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.6
              
              Renminbi
      Loan Contract, dated April 11, 2008, by and between Changxing Chisen
      Electric Co., Ltd. and China Construction Bank Corporation (Changxing
      Branch)
              
              Incorporated
      by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.7
              
              Renminbi
      Loan Contract, dated March 31, 2008, by and between Changxing Chisen
      Electric Co., Ltd. and Bank of China (Hong Kong) Limited Shanghan
      Branch
              
              Incorporated
      by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.8
              
              Loan
      Contract (Short Term), dated August 15, 2008, by and between Changxing
      Chisen Electric Co., Ltd. and Bank of China Changxing
    Branch
              
              Incorporated
      by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.9
              
              Acceptance
      Agreement, dated August 25, 2008, by and between Changxing Chisen Electric
      Co., Ltd. and Industrial Bank Co., Ltd. Hangzhou Branch
              
              Incorporated
      by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.10
              
              Acceptance
      Agreement of Commercial Bill, dated September 18, 2008, by and between
      Changxing Chisen Electric Co., Ltd. and China Bank Co., Ltd. Changxing
      Branch
              
              Incorporated
      by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12,
2008


- 42
-





10.11
              
              Cooperation
      Agreement, dated April 20, 2008, by and between Changxing Chisen Electric
      Co., Ltd. and Xiamen University
              
              Provided
      herewith10.11
              
              Acceptance
      Agreement of Commercial Bill, dated July 29, 2008, by and between
      Changxing Chisen Electric Co., Ltd. and China Construction Bank Changxing
      Branch Co., Ltd.
              
              Incorporated
      by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.12
              
              Acceptance
      Agreement of Commercial Bill, dated September 9, 2008, by and between
      Changxing Chisen Electric Co., Ltd. and China Construction Bank Changxing
      Branch Co., Ltd.
              
              Incorporated
      by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.13
              
              Components
      Purchase Contract, effective as of January 1, 2008, by and between
      Changxing Chisen Electric Co., Ltd. and Jiansu Xinri Electric Bicycle Co.,
      Ltd.
              
              Incorporated
      by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.14
              
              Supply
      Contract, dated April 22, 2008, by and between Changxing Chisen Electric
      Co., Ltd. and Jiangsu Yadea Science & Technology Development Co.,
      Ltd.
              
              Incorporated
      by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.15
              
              Sales
      Contract of Battery, dated November 10, 2007, by and between Changxing
      Chisen Electric Co., Ltd. and Hu Qinzhong, Yancheng Office
              
              Incorporated
      by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200810.16
              
              Sales
      Contract of Battery, dated February 17, 2008, by and between Changxing
      Chisen Electric Co., Ltd. and Song Chunwei
              
              Incorporated
      by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200814.1
              
              Code
      of Ethics
              
              Incorporated
      by reference to Exhibit 14.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on February 4, 200917
              
              Resignation
      of Mathew Evans, dated November 12, 2008
              
              Incorporated
      by reference to Exhibit 17 to the Company’s Current Report on Form 8-K as
      filed with the SEC on November 12, 200821
              
              List
      of Subsidiaries
              
              Provided
      herewith31.1
              
              Certifications
      of the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              Provided
      herewith31.2
              
              Certifications
      of the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
              
              Provided
      herewith32.1
              
              Certification
      Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
      the Sarbanes-Oxley Act Of 2002
              
              Provided
      herewith


- 43
-





32.2
                  
                  Certification
      Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of
      the Sarbanes-Oxley Act Of 2002
                  
                  Provided
      herewith99.1
                  
                  Audited
      Consolidated Financial Statements of Fast More Limited and its Subsidiary
      for the Fiscal Years Ended March 31, 2008 and 2007
                  
                  Incorporated
      by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200899.2
                  
                  Unaudited
      Condensed and Consolidated Financial Statements of Fast More Limited and
      its Subsidiary for the Three (3) Months Ended June 30, 2008 and
      2007
                  
                  Incorporated
      by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200899.3
                  
                  Unaudited
      Pro Forma Financial Statements of Fast More Limited for the three (3)
      month period ended June 30, 2008 and the two years ended March 31,
      2008.
                  
                  Incorporated
      by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K
      as filed with the SEC on November 12, 200899.4
                  
                  Audit
      Committee Charter, dated January 15, 2009
                  
                  Incorporated
      by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
      as filed with the SEC on February 4, 200999.5
                  
                  Compensation
      Committee Charter, dated January 15, 2009
                  
                  Incorporated
      by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K
      as filed with the SEC on February 4, 200999.6
                  
                  Corporate
      Governance and Nominating Committee Charter, dated January 15,
      2009
                  
                  Incorporated
      by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K
      as filed with the SEC on February 4,
2009


- 44
-


SIGNATURES




In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this Annual Report to be signed on our behalf by the
undersigned, thereunto duly authorized.




CHISEN
      ELECTRIC CORPORATIONDate:
      June 28, 2010By:
                /s/
      Xu KechengName:
                Xu
      KechengTitles:
                Chairman
      of the Board, Chief Executive Officer, President, Principal
                  Executive
      Officer/s/
      Liu ChuanjieName:
                Liu
      ChuanjieTitles:
                Chief
      Financial Officer and Principal Financial and Accounting
                  Officer




In
accordance with the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the dates indicated.




Signatures
                                      
                                      Title
                                      
                                      Date/s/
      Xu Kecheng
                                      
                                      Chairman
      of the Board, Chief ExecutiveOfficer,Name:
      Xu Kecheng
                                      
                                      President,
      Principal Executive Officer
                                      
                                      June 28,
      2010/s/
      Liu Chuanjie
                                      
                                      Chief
      Financial Officer, Principal AccountingandName:
      Liu Chuanjie
                                      
                                      Chief
      Financial Officer, Treasurer and Director
                                      
                                      June 28,
      2010/s/
      Dong QuanfengName:
      Dong Quanfeng
                                      
                                      Director
                                      
                                      June 28,
      2010/s/
      Jiang YanfuName:
      Jiang Yanfu
                                      
                                      Director
                                      
                                      June 28,
      2010/s/
      Gong XiaoyanName:
      Gong Xiaoyan
                                      
                                      Director
                                      
                                      June 28,
      2010/s/
      Yun Hon ManName:
      Yun Hon Man
                                      
                                      Director
                                      
                                      June 28,
      2010Name:
      He Zhiwei
                                      
                                      Director






- 45
-


Audited
Consolidated Financial Statements of


Chisen
Electric Corporation
  For
the years ended March 31, 2010 and 2009


Index
to Consolidated Financial Statements
 For the
years ended March 31, 2010 and 2009





PageReport
      of Independent Registered Public Accounting Firm
                              
                              F-1Consolidated
      Statements of Operations and Other Comprehensive Income
                              
                              F-2Consolidated
      Balance Sheets
                              
                              F-3 - F-4Consolidated
      Statements of Changes in Shareholders’ Equity
                              
                              F-5Consolidated
      Statements of Cash Flows
                              
                              F-6 - F-7Notes
      to and Forming Part of Consolidated Financial Statements
                              
                              F-8 - F-29





Report
of Independent Registered Public Accounting Firm





To the
Board of Directors and stockholders of:


Chisen
Electric Corporation




We have
audited the accompanying consolidated balance sheets of Chisen Electric
Corporation ( “Chisen Electric”) and its subsidiaries (collectively referred to
as the “Company”) as of March 31, 2010 and 2009, and the related consolidated
statements of operations and other comprehensive income, changes in
stockholders' equity and cash flows for each of the years then
ended.  These consolidated financial statements are the responsibility
of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audits included
consideration of internal control over financial reporting as a basis for
designing auditing procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.  Our audits also included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of March 31,
2010 and 2009, and the results of its operations and its cash flows for each of
the years then ended in conformity with accounting principles generally accepted
in the United States of America.





Mazars
CPA Limited


Certified
Public Accountants


Hong
Kong


Date:
June 28, 2010


F-1


Chisen
Electric Corporation





Consolidated
Statements of Operations and Other Comprehensive Income
 For the
years ended March 31, 2010 and 2009







Years ended March 31,2010
                                            
                                            
                                            2009Note
                                            
                                            US$’000
                                            
                                            
                                            US$’000Operating
      revenues:Net
      sales to third parties
                                            
                                            
                                            
                                            177,192
                                            
                                            
                                            
                                            109,020Cost
      of sales
                                            
                                            
                                            
                                            (153,708
                                            )
                                            
                                            
                                            (88,823
                                            )Gross
      income
                                            
                                            
                                            
                                            23,484
                                            
                                            
                                            
                                            20,197Operating
      expenses:Sales,
      marketing and distribution
                                            
                                            
                                            
                                            (8,696
                                            )
                                            
                                            
                                            (5,337
                                            )General
      and administrative
                                            
                                            
                                            
                                            (3,647
                                            )
                                            
                                            
                                            (4,007
                                            )Operating
      income
                                            
                                            
                                            
                                            11,141
                                            
                                            
                                            
                                            10,853Other
      income, net
                                            
                                            
                                            
                                            1,671
                                            
                                            
                                            
                                            758Interest
      income
                                            
                                            
                                            
                                            343
                                            
                                            
                                            
                                            362Interest
      expense
                                            
                                            
                                            
                                            (2,068
                                            )
                                            
                                            
                                            (1,232
                                            )Income
      before income taxes
                                            
                                            
                                            
                                            11,087
                                            
                                            
                                            
                                            10,741Income
      taxes expenses
                                            4
                                            
                                            
                                            (1,587
                                            )
                                            
                                            
                                            (1,861
                                            )Net
      income
                                            
                                            
                                            
                                            9,500
                                            
                                            
                                            
                                            8,880Other
      comprehensive incomeForeign
      currency translation adjustment
                                            
                                            
                                            
                                            106
                                            
                                            
                                            
                                            278Comprehensive
      income
                                            
                                            
                                            
                                            9,606
                                            
                                            
                                            
                                            9,158Shares
                                            
                                            
                                            SharesEarnings
      per share
                                            2Weight
      average number of common stock outstanding-
      basic and diluted
                                            
                                            
                                            
                                            50,000,000
                                            
                                            
                                            
                                            50,000,000US$
                                            
                                            
                                            US$Net
      income per share of common stock-
      basic and diluted
                                            
                                            
                                            
                                            0.19
                                            
                                            
                                            
                                            0.18





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


F-2


Chisen
Electric Corporation





Consolidated
Balance Sheets
 As of
March 31, 2010 and 2009







As
      of March 31,2010
                            
                            
                            2009ASSETS
                            Note
                            
                            US$’000
                            
                            
                            US$’000Current
      assets:Cash
      and cash equivalents
                            
                            
                            
                            6,019
                            
                            
                            
                            2,620Restricted
      bank balances
                            5
                            
                            
                            21,420
                            
                            
                            
                            13,878Other
      financial assets
                            6
                            
                            
                            7,438
                            
                            
                            
                            1,314Trade receivables,
      net
                            
                            
                            
                            50,440
                            
                            
                            
                            35,023Other
      receivables
                            
                            
                            
                            800
                            
                            
                            
                            842Prepayments
                            
                            
                            
                            4,933
                            
                            
                            
                            862Due
      from related parties
                            14(b)
                            
                            
                            8
                            
                            
                            
                            474Inventories
                            7
                            
                            
                            30,038
                            
                            
                            
                            17,135Total
      current assets
                            
                            
                            
                            121,096
                            
                            
                            
                            72,148Available-for-sale
      financial assets
                            8
                            
                            
                            882
                            
                            
                            
                            878Long-term
      land lease prepayments, net
                            
                            
                            
                            749
                            
                            
                            
                            608Property,
      plant and equipment, net
                            9
                            
                            
                            10,474
                            
                            
                            
                            5,315Total
      assets
                            
                            
                            
                            133,201
                            
                            
                            
                            78,949





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


F-3





Chisen
Electric Corporation





Consolidated
Balance Sheets
 As of
March 31, 2010 and 2009


As of March 31,2010
                  
                  
                  2009Note
                  
                  US$’000
                  
                  
                  US$’000LIABILITIES
      AND SHAREHOLDERS’ EQUITYCurrent
      liabilities:Trade
      payables
                  
                  
                  
                  14,923
                  
                  
                  
                  11,176Notes
      payable
                  10
                  
                  
                  35,504
                  
                  
                  
                  23,343Accrued
      expenses and other accrued liabilities
                  
                  
                  
                  5,087
                  
                  
                  
                  3,769Due
      to related parties
                  14(b)
                  
                  
                  2,532
                  
                  
                  
                  639Income
      taxes payable
                  
                  
                  
                  148
                  
                  
                  
                  264Short-term
      bank borrowings
                  11
                  
                  
                  46,141
                  
                  
                  
                  20,451Total
      current liabilities
                  
                  
                  
                  104,335
                  
                  
                  
                  59,642Government
      subsidies
                  12
                  
                  
                  139
                  
                  
                  
                  186Deferred
      tax liabilities
                  4(c)
                  
                  
                  460
                  
                  
                  
                  460Total
      non-current liabilities
                  
                  
                  
                  599
                  
                  
                  
                  646Total
      liabilities
                  
                  
                  
                  104,934
                  
                  
                  
                  60,288Commitments
      and contingencies
                  15
                  
                  
                  -
                  
                  
                  
                  -Shareholders’
      equity:Preferred
      stock, US$0.001 par value each:10,000,000
      shares authorized and no shares issued and outstanding
                  
                  
                  
                  -
                  
                  
                  
                  -Common
      stock, US$0.001 par value each:100,000,000
      shares authorized50,000,000
      shares issued and outstanding
                  
                  
                  
                  50
                  
                  
                  
                  50Capital
      reserves
                  
                  
                  
                  144
                  
                  
                  
                  144Statutory
      reserves
                  13
                  
                  
                  2,239
                  
                  
                  
                  1,103Accumulated
      other comprehensive income
                  
                  
                  
                  1,054
                  
                  
                  
                  948Retained
      earnings
                  
                  
                  
                  24,780
                  
                  
                  
                  16,416Total
      shareholders’ equity
                  
                  
                  
                  28,267
                  
                  
                  
                  18,661Total
      liabilities and shareholders’ equity
                  
                  
                  
                  133,201
                  
                  
                  
                  78,949





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


F-4


Chisen
Electric Corporation





Consolidated
Statements of Changes in Shareholders' Equity
 For the
years ended March 31, 2010 and 2009







Common
      stock issuedNumber
                  of
      shares
                
                
                Amount
                
                
                Capital
                  reserves
                
                
                Statutory
                  reserves
                
                
                Retained
                  earnings
                
                
                Accumulated
                  other
                  comprehensive
                  income
                
                
                TotalUS$’000
                
                
                US$’000
                
                
                US$’000
                
                
                US$’000
                
                
                US$’000
                
                
                US$’000Balance
      as of April 1, 2008
                
                
                50,000,000
                
                
                
                50
                
                
                
                144
                
                
                
                71
                
                
                
                8,568
                
                
                
                670
                
                
                
                9,503Net
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                8,880
                
                
                
                -
                
                
                
                8,880Transfer
      to statutory reserves
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,032
                
                
                
                (1,032
                )
                
                
                -
                
                
                
                -Foreign
      currency translation adjustment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                278
                
                
                
                278Balance
      as of March 31, 2009
                
                
                50,000,000
                
                
                
                50
                
                
                
                144
                
                
                
                1,103
                
                
                
                16,416
                
                
                
                948
                
                
                
                18,661Balance
      as of April 1, 2009
                
                
                50,000,000
                
                
                
                50
                
                
                
                144
                
                
                
                1,103
                
                
                
                16,416
                
                
                
                948
                
                
                
                18,661Net
      income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                9,500
                
                
                
                -
                
                
                
                9,500Transfer
      to statutory reserves
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,136
                
                
                
                (1,136
                )
                
                
                -
                
                
                
                -Foreign
      currency translation adjustment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                106
                
                
                
                106Balance
      as of March 31, 2010
                
                
                50,000,000
                
                
                
                50
                
                
                
                144
                
                
                
                2,239
                
                
                
                24,780
                
                
                
                1,054
                
                
                
                28,267





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


F-5


Chisen
Electric Corporation





Consolidated
Statements of Cash Flows
 For the
years ended March 31, 2010 and 2009







Years ended March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Cash
      flows from operating activitiesNet
      income
                  
                  
                  9,500
                  
                  
                  
                  8,880Adjustments
      to reconcile net income to net cash (used in) provided by operating
      activities:Depreciation
      of property, plant and equipment
                  
                  
                  646
                  
                  
                  
                  451Written-off
      of property, plant and equipment
                  
                  
                  6
                  
                  
                  
                  44Amortization
      of long-term land lease prepayments
                  
                  
                  13
                  
                  
                  
                  13Exchange
      differences
                  
                  
                  22
                  
                  
                  
                  (84
                  )Provision
      for warranty costs
                  
                  
                  197
                  
                  
                  
                  (302
                  )Government
      grant recognized
                  
                  
                  (47
                  )
                  
                  
                  (47
                  )Investment
      income from available-for-sale financial assets
                  
                  
                  -
                  
                  
                  
                  (131
                  )Deferred
      taxation
                  
                  
                  -
                  
                  
                  
                  460Changes
      in assets and liabilities:Other
      financial assets
                  
                  
                  (6,118
                  )
                  
                  
                  3,851Trade
      receivables, net
                  
                  
                  (15,265
                  )
                  
                  
                  (19,148
                  )Other
      receivables
                  
                  
                  46
                  
                  
                  
                  (377
                  )Prepayment
                  
                  
                  (4,067
                  )
                  
                  
                  (520
                  )Due
      from related parties
                  
                  
                  468
                  
                  
                  
                  800Inventories
                  
                  
                  (12,830
                  )
                  
                  
                  (4,524
                  )Trade
      payables
                  
                  
                  3,699
                  
                  
                  
                  4,949Notes
      payable
                  
                  
                  12,060
                  
                  
                  
                  23,343Accrued
      expenses and other accrued liabilities
                  
                  
                  732
                  
                  
                  
                  637Due
      to related parties
                  
                  
                  1,891
                  
                  
                  
                  (6,348
                  )Income
      taxes payable
                  
                  
                  (116
                  )
                  
                  
                  142Net
      cash (used in) provided by operating activities
                  
                  
                  (9,163
                  )
                  
                  
                  12,089Cash
      flows from investing activitiesPurchase
      of property, plant and equipment
                  
                  
                  (5,417
                  )
                  
                  
                  (1,647
                  )Additions
      of long-term land lease prepayments
                  
                  
                  (151
                  )
                  
                  
                  (113
                  )Investment
      in restricted bank balances, net
                  
                  
                  (7,482
                  )
                  
                  
                  (7,304
                  )Dividend
      received from available-for-sale financial assets
                  
                  
                  -
                  
                  
                  
                  131Net
      cash used in investing activities
                  
                  
                  (13,050
                  )
                  
                  
                  (8,933
                  )




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


F-6




Chisen
Electric Corporation





Consolidated
Statements of Cash Flows
 For the
years ended March 31, 2010 and 2009


Years ended March 31,2010
                
                
                2009US$’000
                
                
                US$’000Cash
      flows from financing activitiesProceeds
      from bills financing
                
                
                3,668
                
                
                
                -Proceeds
      from short-term bank loans
                
                
                41,666
                
                
                
                20,451Repayment
      of short-term bank loans
                
                
                (19,733
                )
                
                
                (21,912
                )Net
      cash provided by (used in) financing activities
                
                
                25,601
                
                
                
                (1,461
                )Net
      increase in cash and cash equivalents
                
                
                3,388
                
                
                
                1,695Cash
      and cash equivalents, beginning of year
                
                
                2,620
                
                
                
                786Effect
      on exchange rate changes
                
                
                11
                
                
                
                139Cash
      and cash equivalents, end of year
                
                
                6,019
                
                
                
                2,620Supplemental
      disclosure of cash flow informationInterest
      received
                
                
                343
                
                
                
                261Interest
      paid
                
                
                1,981
                
                
                
                1,160Tax
      paid
                
                
                1,635
                
                
                
                1,264





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


F-7


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009





1.
            ORGANIZATION
      AND PRINCIPAL ACTIVITIES





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





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





Details
of Chisen Electric’s subsidiaries as of March 31, 2010 are as
follows:





Name
                      
                      Place and
                        date of
                        establishment /
                        incorporation
                      
                      Percentage of
                        effective equity
                        interest / voting
                        right attributable
                        to the Company
                      
                      Principal activitiesFast
      More Limited (“Fast More”)
                      
                      Hong
      Kong
                        December
      17, 2007
                      
                      100
                      %
                      Investment
      holdingChangxing Chisen Battery Co.,
      Limited (“Changxing Chisen”) *
                      
                      Zhejiang,
                        the
      People’s
                        Republic
      of China
                        (“PRC”)
                        February
      25, 2002
                      
                      100
                      %
                      Manufacture
      and sales of sealed lead-acid battery productsChisen
      Technology Holdings Corporation (“Chisen Technology”)
                      
                      Nevada,
                        United
      States
                        May
      18, 2009
                      
                      100
                      %
                      Inactive





*
            This is a direct translation
      of the name in Chinese for identification purpose only and is not the
      official name in English.





On
November 12, 2008, Chisen Electric entered into a Share Exchange Agreement
(“Exchange”) with Fast More, Cheer Gold Development Limited (“Cheer Gold”) and
Floster Investment Limited (Floster Investment Limited and together with Cheer
Gold, the “Stockholders”) whereby Chisen Electric acquired all of the issued and
outstanding common stock of Fast More from the Stockholders in exchange for the
issuance by Chisen Electric to the Stockholders of an aggregate 35,000,000
newly-issued shares of Chisen Electric’s common stock, par value of US$0.001
each, representing 70% of Chisen Electric’s common stock issued and outstanding
upon completion of the share exchange (the “Share Exchange
Transaction”).





Prior to
the closing of the Share Exchange Transaction, Chisen Electric implemented a 3
for 1 forward stock split, resulting to the increase of Chisen Electric’s common
stock issued and outstanding from 11,219,400 shares to 33,658,200 shares,
immediately before the completion of the Share Exchange
Transaction.


F-8


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009




1.
            ORGANIZATION
      AND PRINCIPAL ACTIVITIES
(CONTINUED)





Upon the
completion of the Share Exchange Transaction (including, but not limited to, the
cancellation of the 18,658,200 shares of Chisen Electric’s common stock
concurrent and simultaneous with the consummation of the Share Exchange
Transaction) on November 12, 2008, there were 50,000,000 shares of Chisen
Electric’s common stock issued and outstanding.





The
acquisition by Chisen Electric of Fast More is deemed to be a reverse
acquisition in accordance with generally accepted accounting principles. In
accordance with the Accounting and Financial Reporting Interpretations and
Guidance prepared by the staff of the U.S. Securities and Exchange Commission,
Chisen Electric (the legal acquirer) is considered the accounting acquiree and
Fast More (the legal acquiree) is considered the accounting acquirer. The
consolidated financial statements of the consolidated entity will in substance
be those of Fast More, with the assets and liabilities, and revenues and
expenses, of Chisen Electric being included effective from the date of
completion of Share Exchange Transaction. Chisen Electric is deemed to be a
continuation of the business of Fast More. The outstanding common stock of
Chisen Electric prior to the Share Exchange Transaction will be accounted for at
their net book value and no goodwill will be recognized.





In order
to rationalize the corporate structure and prepare for the Share Exchange
Transaction, Fast More and Changxing Chisen (collectively referred to as “the
Fast More Group”) underwent a reorganization (“Reorganization”) prior to the
consummation of the Share Exchange Transaction. On February 16, 2008, Fast More
acquired the 51%, 9% and 40% equity interest in Changxing Chisen from Mr. Xu Ke
Cheng, Mr. Xu Ke Yong and BEME International Co., Limited at a consideration of
RMB6,502,500 (equivalent to USD926,000), RMB1,147,500 (equivalent to USD164,000)
and RMB5,100,000 (equivalent to USD726,000) respectively. Upon completion of the
transactions, Changxing Chisen has become a wholly-owned subsidiary of Fast
More.





Since the
ultimate beneficial owner of the companies now comprising the Fast More Group
was, all the time prior to the completion of the Reorganization, Mr. Xu Ke
Cheng, the ownership transfer transaction was accounted for as a transfer of
entities under common control in accordance with the FASB Accounting Standards
Codification (“ASC”) Topic 805, “Business Combinations”. Hence, the
consolidation has been accounted for at historical cost and prepared on the
basis as if the Reorganization had become effective as of the beginning of the
first period presented in the accompanying consolidated financial
statements.




2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Accounting
principles


The
consolidated financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles in the United States of
America (“USGAAP”).





Basis
of consolidation


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


F-9


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009




2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)





Revenue
recognition


Operating
revenue represents sale of goods at invoiced value to customers, net of returns,
discounts and value-added tax (“VAT”), and is recognized when goods are
delivered to customers, the significant risks and rewards of ownership of goods
have been transferred to customers, the sales price to the customers is fixed or
determinable and the collectability of consideration is reasonably
assured.





Costs
related to shipping and handling are included in selling, marketing and
distribution expenses.





Segmental
information


During
the years ended March 31, 2010 and 2009, all revenue of the Company represented
income from sales of sealed lead-acid batteries and therefore no financial
information by business segment is presented. Furthermore, as all income is
derived from the PRC, no geographical segment information is
presented.





Research
and development costs


All costs
of research and development activities are generally expensed as incurred.
Research and development costs were US$244,000 and US$117,000 for the years
ended March 31, 2010 and 2009, respectively.





Advertising
and promotion costs


Advertising
and promotion costs are expensed as sales, marketing and distribution costs
as incurred. Advertising costs were US$681,000 and US$389,000 for the years
ended March 31, 2010 and 2009, respectively.





Shipping
and handling costs


Shipping
and handling costs are expensed as sales, marketing and distribution costs
as incurred. Shipping costs were US$3,597,000 and US$2,776,000 for the years
ended March 31, 2010 and 2009, respectively.





Retirement
plan costs


Contributions
to defined contribution retirement schemes are charged to cost of sales, sales,
marketing and distribution costs and general and administrative expenses in the
consolidated statements of operations and other comprehensive income as and when
the related employee services are provided. Retirement plan costs were
US$502,000 and US$130,000 for the years ended March 31, 2010 and 2009,
respectively.





Income
taxes


The
Company provides for income taxes using the liability method. Under the
liability method, current income tax expense or benefit is the amount of income
taxes expected to be payable or refundable for the current
period.


F-10


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)





Income
taxes (Continued)


A
deferred income tax asset or liability is computed for the expected future
impact of differences between the financial reporting and tax bases of assets
and liabilities and for the expected future tax benefit to be derived from tax
credits. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.





Tax rate
changes are reflected in the computation of the income tax provision during the
period such changes are enacted.





Under the
provision of ASC 740 Income
Taxes, tax position is recognized as a benefit only if it is “more likely
than not” that the tax position would be sustained in a tax examination, with a
tax examination being presumed to occur. The amount recognized is the largest
amount of tax benefit that is greater than 50% of being realized on examination
by the tax authority. For tax positions not meeting the “more likely than not”
test, no tax benefit is recorded.





Comprehensive
income


ASC Topic
220, "Reporting Comprehensive Income", requires the presentation of
comprehensive income, in addition to the existing statements of operations.
Comprehensive income is defined as the change in equity during the year from
transactions and other events, excluding the changes resulting from investments
by owners and distributions to owners, and is not included in the computation of
income tax expense or benefit. Accumulated comprehensive income consists of
changes in unrealized gains and losses on foreign currency
translation.





Available-for-sale
financial assets


The
Company’s available-for-sale financial assets consist of investment in unlisted
equity securities and are recorded at cost.





The
Company periodically assesses whether its investment in non-marketable equity
securities are impaired and if any impairment is other than temporary. Factors
considered in assessing whether an impairment is other than temporary include
the credit quality of the investment, the duration of the impairment, the
Company’s ability and intent to hold the investment until recovery and overall
economic conditions. A decline in value of these securities below cost that is
deemed to be other than temporary results in an impairment charge to earnings
that reduces the carrying amount of the securities to fair value establishing a
new cost basis.





Property,
plant and equipment (“PPE”) and long-term land lease prepayments


PPE are
stated at cost less accumulated depreciation, and include expenditure that
substantially increases the useful lives of existing assets.





The cost
of an asset comprises its purchase price and any directly attributable costs of
bringing the asset to its present working condition and location for its
intended use. Expenditures incurred after the assets have been put into
operation, such as repairs and maintenance, overhaul and minor renewals and
betterments, are normally charged to operating expenses in the period in which
they are incurred.  In situations where it can be clearly demonstrated
that the expenditure has resulted in an increase in the future economic benefits
expected to be obtained from the use of the assets, the expenditure is
capitalized.


F-11


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)




Property,
plant and equipment (“PPE”) and long-term land lease prepayments
(Continued)


Depreciation
is provided, on a straight-line basis, to write off the cost less accumulated
depreciation of each PPE item at rates based on their estimated useful lives
from the date on which they become fully operational and after taking into
account their estimated residual values as follows:





Buildings
            
            20 yearsLeasehold improvements
            
            Over the unexpired term of leaseFurniture, fixtures and office equipment
            
            10 yearsMotor vehicles
            
            5 yearsPlant and machinery
            
            10 years





When
assets are sold or retired, their costs and accumulated depreciation are
eliminated from the consolidated financial statements and any gain or loss
resulting from their disposal is recognized in the period of disposition as an
element of other income.





Construction-in-progress
consists of factories and office buildings under construction and machinery
pending installation and includes the costs of construction, machinery and
equipment, and any interest charges arising from borrowings used to finance
these assets during the period of construction or installation. No provision for
depreciation is made on construction-in-progress until such time the relevant
assets are completed and ready for their intended use.





Long-term
land lease prepayments are amortized on a straight-line basis over the term of
lease.





Impairment
of long-lived assets


Long-lived
assets are reviewed at least annually for impairment whenever events or changes
in circumstances indicate that the carrying amount of assets may not be
recoverable. It is reasonably possible that these assets could become impaired
as a result of technology or other industry changes. Determination of
recoverability of assets to be held and used is by comparing the carrying amount
of an asset to future net undiscounted cash flows to be generated by the assets.
If such assets are considered to be impaired, impairment is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the
assets and recorded as a reduction of original costs. Assets to be disposed of
are reported at the lower of the carrying amount or fair value less costs to
sell.





Inventories


Inventories
are stated at the lower of cost and net realizable value. Cost, which comprises
all costs of purchase and, where applicable, costs of conversion and other costs
that have been incurred in bringing the inventories to their present location
and condition, is calculated using the weighted average costing method. The
Company estimates the market price of its inventories with reference to the net
realizable value based upon current market conditions and historical experience.
Estimated losses on inventories represent reserves for obsolescence, excess
quantities, irregulars and slow moving inventory, and which are charged to cost
of sales.


F-12


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)





Trade
receivables and allowance for doubtful accounts


The
allowance for the risk of non-collection of trade receivables takes into account
credit-risk concentration. Collective debt risk is assessed based on average
historical losses and specific circumstances such as serious adverse economic
conditions. The Company’s estimate is based on a variety of factors, including
historical collection experience, existing economic conditions and a review of
the current status of the receivables. Trade receivables are presented net of an
allowance for doubtful accounts of US$6,000 and US$6,000 as of March 31, 2010
and 2009, respectively.





Cash
and cash equivalents


Cash
represents cash on hand and deposits with financial institutions which are
repayable on demand. Cash equivalents represent short-term, highly liquid
investments purchased with an original maturity of three months or less, which
are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.





Foreign
currency translation


Items
included in the financial statements of the Company’s subsidiary are measured
using Renminbi (“RMB”), the currency of the primary economic environment in
which the entity operates (“functional currency”). The consolidated financial
statements are presented in United States Dollars (“US$”), which is the
Company’s presentation currency.





Foreign
currency transactions are translated into the functional currency using the
exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the income
statement.





On
consolidation, the results and financial position of all the group entities that
have a functional currency different from the presentation currency are
translated as follows:





(a)
            assets
      and liabilities for each balance sheet presented are translated at the
      closing rate at the date of that balance
sheet;


(b)
            income
      and expenses for each statement of operations are translated at average
      exchange rates;


(c)
            all
      resulting exchange differences are recognized as a separate component of
      equity.





Fair
value of financial instruments


The ASC
Topic 825, “Disclosures about Fair Value of Financial Instruments”, requires
that the Company discloses estimated fair value of financial instruments. The
carrying amounts reported in the balance sheets for current assets and current
liabilities qualifying as financial instruments are a reasonable estimate of
fair value.


F-13


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)





Fair
value measurements


The
Company adopted ASC Topic 820 – Fair Value Measurements and
Disclosures (“ASC 820”). The adoption of ASC 820 did not have a material
impact on our consolidated financial statements. ASC 820 establishes a
three-tier fair value hierarchy to prioritize the inputs used in measuring fair
value.  The hierarchy gives the highest priority to quoted prices in
active markets (Level 1) and the lowest priority to unobservable inputs (Level
3).  The three levels are defined as follows:





Level
1:
            Observable
      inputs, such as unadjusted quoted market prices in active markets for the
      identical asset or liabilities.





Level
2:
            Inputs
      that are observable for the asset or liability, either directly or
      indirectly through market corroboration, for substantially the full term
      of the financial instrument.





Level
3:
            Unobservable
      inputs reflecting the entity’s own assumptions in measuring the asset or
      liability at fair value.





The
Company’s financial instruments consist principally of cash and cash
equivalents, restricted bank balances, other financial assets, trade receivables
and payables, deposits, prepayment and other receivables, notes payable, accrued
expenses and other liabilities, amount due from/to related parties and
short-term borrowings which are carried at amounts that generally approximate
their fair values because of the short-term maturity of these
instruments.




Warranty


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





Years ended March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Balance
      as of April 1,
                  
                  
                  121
                  
                  
                  
                  413Exchange
      realignment
                  
                  
                  1
                  
                  
                  
                  9Accrual
      for warranties issued during the year
                  
                  
                  188
                  
                  
                  
                  91Settlement
      made during the year
                  
                  
                  (84
                  )
                  
                  
                  (392
                  )Balance
      as of March 31,
                  
                  
                  226
                  
                  
                  
                  121


F-14


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)




Government
subsidies


Government
subsidies are recognized as income over the periods necessary to match them with
the related costs. Subsidies related to expense items are recognized in the same
period as those expenses are charged in the consolidated statements of
operations and other comprehensive income and are reported separately as other
income.




Operating
leases


Leases
where substantially all the rewards and risks of ownership of assets remain with
the leasing company are accounted for as operating leases. Rental payables under
operating leases are recognized as expenses on the straight-line basis over the
lease term.




Use
of estimates


The
preparation of the consolidated financial statements in conformity with
US GAAP requires the management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of financial statements and the
reported amounts of revenues and expenses during the reported periods. The
management evaluates these estimates and judgments on an ongoing basis and bases
their estimates on experience, current and expected future conditions,
third-party evaluations and various other assumptions that they believe are
reasonable under the circumstances. The results of these estimates form the
basis for making judgments about the carrying values of assets and liabilities
as well as identifying and assessing the accounting treatment with respect to
commitments and contingencies.




Actual
amounts could differ from those estimates. Estimates are used for, but not
limited to, the accounting for certain items such as allowance for doubtful
accounts, depreciation and amortization, inventory allowance, taxes and
contingencies.





Related
parties


Parties
are considered to be related if one party 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. Parties are also
considered to be related if they are subject to common control or common
significant influence.





Earnings
per share


Basic
earnings per share is computed by dividing income available to common
stockholders by the weighted-average number of common stocks outstanding during
the year. Diluted earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common stocks that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
Since there were no potentially dilutive securities for the years ended March
31, 2010 and 2009, basic and diluted earnings per share are the same for both
years.





Upon the
completion of the Share Exchange Transaction, the number of Chisen Electric’s
common stock issued and outstanding, taken into account of the 3 for 1 forward
split as detailed in Note 1 was increased to 50,000,000 shares and was applied
retrospectively for the calculation of earnings per share.


F-15


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)





Recent
accounting pronouncements


In May
2009, FASB issued ASC 855, Subsequent Events, which establishes general
standards for the evaluation, recognition and disclosure of events and
transactions that occur after the balance sheet date. Although there is new
terminology, the standard is based on the same principles as those that
currently exist in the auditing standards. The standard, which includes a new
required disclosure of the date through which an entity has evaluated subsequent
events, is effective for interim or annual periods ending after June 15, 2009.
The adoption of ASC 855 did not have a material effect on the Company’s
consolidated financial statements.





In June
2009, the FASB issued ASC Topic 860, Accounting for Transfers of Financial
Assets – an amendment of FASB Statement No.140.  ASC Topic 860
requires entities to provide more information about sales of securitized
financial assets and similar transactions, particularly if the seller retains
some risk to the assets.  The statement eliminates the concept of a
qualifying special-purpose entity, changes the requirements for the
de-recognition of financial assets, and calls upon sellers of the assets to make
additional disclosures about them.  ASC Topic 860 is effective as for
an entity’s first annual reporting period that begins after November 15,
2009.  The Company does not expect the adoption of ASC Topic 860 will
have a material impact on the Company’s consolidated financial
statements.





In June
2009, the FASB issued ASC Topic 810, Amendments to FASB Interpretation No.
46(R).  ASC Topic 810 amends Interpretation No.46(R) to require
enhanced disclosures that will provide users of financial statements with more
transparent information about an enterprise’s involvement in a variable interest
entity.  ASC Topic 810 is effective for an entity’s first fiscal
period that begins after November 15, 2009.  The Company does not
expect the adoption of ASC Topic 810 will have a material impact on the
Company’s consolidated financial statements.





In June
2009, the FASB issued ASC Topic 105, “the FASB Accounting Standards
Codification” (“ASC”). ASC would become the source of authoritative US GAAP
recognized by the FASB to be applied by nongovernmental entities. Once the ASC
is in effect, all of its content would carry the same level of authority. The
ASC becomes effective for interim and annual periods ending on or after
September 15, 2009. The Company adopted the ASC in the second quarter of fiscal
2010. The adoption of the ASC did not have an effect on the Company’s financial
position and results of operations. However, because the ASC completely replaces
existing standards, it affects the way US GAAP is referenced within the
consolidated financial statements.





In August
2009, the FASB issued Accounting Standards Updates (“ASU”) 2009-05, Fair Value
Measurements and Disclosures (ASC Topic 820): Measuring Liabilities at Fair
Value, effective for the first reporting period after issuance. This Update
provides clarification that in circumstances in which a quoted price in an
active market for the identical liability is not available, a reporting entity
is required to measure fair value using the quoted price of the identical
liability or similar liabilities when traded as an asset or another valuation
technique that is consistent with the principles of ASC Topic 820. The adoption
of Update 2009-05 did not have any affect on the Company’s consolidated
financial statements.


F-16


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)





Recent
accounting pronouncements (Continued)


In
January 2010, FASB issued ASU No. 2010-02 regarding accounting and reporting for
decreases in ownership of a subsidiary. Under this guidance, an
entity is required to deconsolidate a subsidiary when the entity ceases to have
a controlling financial interest in the subsidiary.  Upon deconsolidation
of a subsidiary, an entity recognizes a gain or loss on the transaction and
measures any retained investment in the subsidiary at fair value.  In
contrast, an entity is required to account for a decrease in its ownership
interest of a subsidiary that does not result in a change of control of the
subsidiary as an equity transaction.  This ASU clarifies the scope of the
decrease in ownership provisions, and expands the disclosures about the
deconsolidation of a subsidiary or de-recognition of a group of assets.
 This ASU is effective for the first interim or annual reporting period
ending on or after December 31, 2009. The Company does not expect the
adoption of this ASU to have a material impact on its consolidated financial
statements.





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


F-17


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)





Recent
accounting pronouncements (Continued)


In
January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair
Value Measurements. This update provides amendments to Subtopic 820-10
that requires new disclosure as follows: 1) Transfers in and out of Levels
1 and 2. A reporting entity should disclose separately the amounts of
significant transfers in and out of Level 1 and Level 2 fair value measurements
and describe the reasons for the transfers.  2)  Activity in Level 3
fair value measurements.  In the reconciliation for fair value measurements
using significant unobservable inputs (Level 3), a reporting entity should
present separately information about purchases, sales, issuances, and
settlements (that is, on a gross basis rather than as one net
number).  This update provides amendments to Subtopic 820-10 that
clarify existing disclosures as follows: 1) Level of disaggregation. A
reporting entity should provide fair value measurement disclosures for each
class of assets and liabilities. A class is often a subset of assets or
liabilities within a line item in the statement of financial position. A
reporting entity needs to use judgment in determining the appropriate classes of
assets and liabilities. 2) Disclosures about inputs and valuation
techniques. A reporting entity should provide disclosures about the valuation
techniques and inputs used to measure fair value for both recurring and
nonrecurring fair value measurements. Those disclosures are required for fair
value measurements that fall in either Level 2 or Level 3.  The new
disclosures and clarifications of existing disclosures are effective for interim
and annual reporting periods beginning after December 15, 2009, except for the
disclosures about purchases, sales, issuances, and settlements in the roll
forward of activity in Level 3 fair value measurements. Those disclosures are
effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years. The Company is currently evaluating the
impact of Update 2010-06 will have on its consolidated financial
statements.





ASC Topic
855, “Subsequent
Events,” was
amended in February 2010. Under the amended guidance, SEC filers are no longer
required to disclose the date through which subsequent events have been
evaluated in originally issued and revised financial statements. This guidance
was effective immediately and the Company adopted these new requirements for the
year ended March 31, 2010.


F-18


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


3.
            OPERATING
      RISKS





(a)
            Concentration
      of major customers and suppliers


Years
      ended March 31,2010
                                            
                                            
                                            2009Major
      customers with revenues of more than 10% of the Company’s
      salesSales
      to major customers
                                            
                                            US$
                                            71,161,000
                                            
                                            
                                            US$
                                            51,676,000Percentage
      of sales
                                            
                                            
                                            40
                                            %
                                            
                                            
                                            47
                                            %Number
                                            
                                            
                                            2
                                            
                                            
                                            
                                            1Major
      suppliers with purchases of more than 10% of the Company’s
      purchasesPurchases
      from major suppliers
                                            
                                            US$
                                            100,982,000
                                            
                                            
                                            US$
                                            47,415,000Percentage
      of purchases
                                            
                                            
                                            64
                                            %
                                            
                                            
                                            60
                                            %Number
                                            
                                            
                                            4
                                            
                                            
                                            
                                            4





Trade
receivables related to the Company’s major customers comprised 80% and 85% of
all account receivables as of March 31, 2010 and 2009,
respectively.





Trade
payables related to the Company’s major suppliers comprised 20% and 24% of all
account payables as of March 31, 2010 and 2009, respectively.





Credit
risk represents the accounting loss that would be recognized at the reporting
date if counter parties failed to perform as contracted. Concentrations of
credit risk (whether on or off balance sheet) that arisen from financial
economic characteristics that would cause their ability to meet contractual
obligations to be similarly affected by changes in economic or other conditions.
The major concentrations of credit risk arise from the Company’s accounts
receivable. Even though the Company has major concentrations, it does not
consider itself exposed to significant risk with regards to the related
receivables.





(b)
              Country
      risks




The
Company’s major subsidiary has operation conducted in the PRC. Accordingly, its
business, financial condition and result of operation maybe influenced by the
political, economic and legal environments in the PRC, and by the general state
of the PRC economy.




The
operation in the PRC is subject to special considerations and significant risks
not typically associated with companies in the United States. These include
risks associated with, among others, the political, economic and legal
environment and foreign currency exchange and remittance restrictions. The
Company’s results maybe 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, anti-inflationary measures, currency
conversion, remittances abroad, and rates and methods of taxation, inter alia.
The management does not believe these risks to be significant. There can be no
assurance, however, those changes in political and other conditions will not
result in any adverse impact.


F-19


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


3.
            OPERATING
      RISKS (CONTINUED)





(c)
            Cash
      and time deposits





The
Company mainly maintains its cash balances with various banks located in the
PRC. In common with local practice, such amounts are not insured or otherwise
protected should the financial institutions be unable to meet their liabilities.
There has been no history of credit losses. There are neither material
commitment fees nor compensating balance requirements for any outstanding loans
of the Company.





4.
            INCOME
      TAXES





Chisen
Electric had a net operating loss carry-forward for income tax reporting
purposes that might be offset against future taxable income. These net operating
loss carry-forwards are severely limited when Chisen Electric experiences a
change in control.  Therefore, following the Exchange as mentioned in
Note 1 in November 2008, the amount available to offset future taxable income is
limited. No tax benefit has been reported in the financial statements, because
Chisen Electric believes that it is more likely than not that the carry-forwards
will finally expire and therefore cannot be used.  Accordingly, the
potential tax benefits of the loss carry-forwards are offset by a valuation
allowance of the same amount.





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





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





Changxing
Chisen is subject to state and local enterprise income taxes in the PRC at a
standard rate of 25%. Changxing Chisen received official designation by the
local tax authority as a foreign invested enterprise engaged in manufacturing
activities and is confirmed by the local tax authority that it is exempted from
enterprise income tax for two years commencing from the first profitable year in
2006, followed by a 50% reduction for the next three years.





Dividends
payable by a foreign invested enterprise in the PRC to its foreign investors in
Hong Kong are subject to a 5% withholding tax and deferred tax expenses of
US$Nil and US$460,000 were charged to the statement of operations for the years
ended March 31, 2010 and 2009, respectively.


F-20


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


4.
            INCOME
      TAXES (CONTINUED)





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





Years ended March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Current
      taxes arising in the PRC:For
      the year
                  
                  
                  1,587
                  
                  
                  
                  1,401Deferred
      taxes arising in the PRC:For
      the year
                  
                  
                  -
                  
                  
                  
                  4601,587
                  
                  
                  
                  1,861




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




Subject
to the provision of ASC 740, the Company has analyzed its filing positions in
all of the domestic and foreign jurisdictions where it is required to file
income tax returns. As of March 31, 2010 and 2009, the Company has identified
the following jurisdictions as “major” tax jurisdictions, as defined, in which
it is required to file income tax returns in United States, Hong Kong and the
PRC. Based on the evaluations noted above, the Company has concluded that there
are no significant uncertain tax positions requiring recognition in its
consolidated financial statements.




As of
March 31, 2010 and 2009, the Company had no unrecognized tax benefits or
accruals for the potential payment of interest and penalties. The Company’s
policy is to record interest and penalties in this connection as a component of
the provision for income tax expense. For the years ended March 31, 2010 and
2009, no interest or penalties were recorded.


F-21


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


4.
            INCOME
      TAXES (CONTINUED)





(b)
            Reconciliation
      from the expected income tax expenses calculated with reference to the
      statutory tax rate in the PRC of 25% (2009: 25%) is as
      follows:





Years ended March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Expected
      income tax expenses
                  
                  
                  2,772
                  
                  
                  
                  2,693Effect
      on tax incentives / holiday
                  
                  
                  (1,389
                  )
                  
                  
                  (1,319
                  )Non-deductible
      items
                  
                  
                  6
                  
                  
                  
                  217Withholding
      tax
                  
                  
                  -
                  
                  
                  
                  481Others
                  
                  
                  198
                  
                  
                  
                  (211
                  )Income
      tax expenses
                  
                  
                  1,587
                  
                  
                  
                  1,861





(c)
            Components
      of net deferred tax liabilities were as
follows:


As of March 31,2010
                      
                      
                      2009US$’000
                      
                      
                      US$’000Withholding
      tax on undistributed earnings of a PRC subsidiary
                      
                      
                      460
                      
                      
                      
                      460





5.
            RESTRICTED
      BANK BALANCES





Restricted
bank balances represented time deposits with original maturity between three and
twelve months to secure banking facilities granted by various financial
instruments as follows:





As of March 31,2010
                  
                  
                  2009Note
                  
                  US$’000
                  
                  
                  US$’000Notes
      payable
                  10
                  
                  
                  19,659
                  
                  
                  
                  13,878Bills
      financing
                  11
                  
                  
                  1,761
                  
                  
                  
                  -21,420
                  
                  
                  
                  13,878





6.
            OTHER
      FINANCIAL ASSETS





Other
financial assets represented notes receivable from customers for the settlement
of accounts receivable balances. As of March 31, 2010 and 2009, all notes
receivable were guaranteed by established banks in the PRC and had maturities of
6 months or less from the date of issue. The fair value of the notes
receivable approximated their carrying value.


F-22


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


7.
            INVENTORIES




Inventories consisted of the
following:


As of March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Raw
      materials
                  
                  
                  7,186
                  
                  
                  
                  4,269Work-in-progress
      and semi-finished goods
                  
                  
                  13,482
                  
                  
                  
                  9,370Finished
      goods
                  
                  
                  9,370
                  
                  
                  
                  3,49630,038
                  
                  
                  
                  17,135





8.
            AVAILABLE-FOR-SALE
      FINANCIAL ASSETS





Available-for-sale
      financial assets as of March 31, 2010 and March 31, 2009 represented
      investment in unlisted equity securities and are recorded at cost. The
      management has estimated that the recoverable amount of the assets exceed
      their carrying value.





9.
            PROPERTY,
      PLANT AND EQUIPMENT, NET





Property, plant and equipment is
summarized as follows:





As of March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Buildings
                  
                  
                  5,468
                  
                  
                  
                  2,632Leasehold
      improvements
                  
                  
                  495
                  
                  
                  
                  -Plant
      and machinery
                  
                  
                  4,071
                  
                  
                  
                  2,386Motor
      vehicles
                  
                  
                  974
                  
                  
                  
                  807Furniture,
      fixtures and office equipment
                  
                  
                  1,419
                  
                  
                  
                  427Construction-in-progress
                  
                  
                  -
                  
                  
                  
                  36512,427
                  
                  
                  
                  6,617Accumulated
      depreciation
                  
                  
                  (1,953
                  )
                  
                  
                  (1,302
                  )10,474
                  
                  
                  
                  5,315





Depreciation
expenses were approximately US$646,000 and US$451,000 for the years ended
March 31, 2010 and 2009, respectively.





The
Company has pledged certain buildings as collaterals against general banking
facilities granted to Changxing Chisen. Details of which are disclosed in Note
11.


F-23


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


10.
            NOTES
      PAYABLE




All notes
payable issued by the Company were interest-free, guaranteed by banks, repayable
within six months from date of issue and collateralized by restricted bank
balances as set out in Note 5 and certain land lease prepayments and buildings
as set out in Note 11(i) below.




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





As of March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Corporate
      and personal guarantees issued by related parties (Note
    14(d))
                  
                  
                  14,377
                  
                  
                  
                  8,034Corporate
      guarantees issued by third parties
                  
                  
                  1,467
                  
                  
                  
                  2,922




11.
            SHORT-TERM
      BANK BORROWINGS




Short-term
bank borrowings comprise of the followings:





As
      of March 31,Note
                      
                      2010
                      
                      
                      2009US$’000
                      
                      
                      US$’000Short-term
      bank loans
                      (i)
                      
                      
                      42,473
                      
                      
                      
                      20,451Bills
      financing
                      (ii)
                      
                      
                      3,668
                      
                      
                      
                      -46,141
                      
                      
                      
                      20,451




(i)
            Short-term
      bank loans




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




The loans
and the notes payables as set out in Note 10 are collateralized by land lease
prepayments and buildings of the Company with carrying values as
follows:





As of March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Land
      lease prepayments
                  
                  
                  598
                  
                  
                  
                  608Buildings
                  
                  
                  2,018
                  
                  
                  
                  2,0692,616
                  
                  
                  
                  2,677


F-24


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


11.
            SHORT-TERM
      BANK BORROWINGS (CONTINUED)




(i)
            Short-term
      bank loans (continued)




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





As of March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Corporate
      and personal guarantees issued by related parties (Note
    14(d))
                  
                  
                  30,589
                  
                  
                  
                  16,069Corporate
      guarantees issued by third parties
                  
                  
                  1,467
                  
                  
                  
                  4,381Corporate
      and personal guarantees issued by related parties and a third party
      jointly (Note 14(d))
                  
                  
                  8,802
                  
                  
                  
                  -




The
weighted average annual interest rates of the short-term bank loans were 5.40%
and 6.55% as of March 31, 2010 and 2009 respectively.




(ii)
            Bills
      financing





Bill
financing represents amounts due to various banks which are repayable within six
months from the date of issue. At March 31, 2010, the bills are secured by
certain restricted bank balances of the Company with carrying value of
US$1,761,000 and guaranteed by certain related parties to the extent of
US$1,907,000.





The
weighted average annual interest rates of the bills financing were 3.96% as of
March 31, 2010.





12.
            GOVERNMENT
      SUBSIDIES





During
the year ended March 31, 2008, the Company received a government grant of
approximately US$231,000 for the purpose of subsidising its acquisition of
property, plant and equipment, of which approximately US$47,000 was credited to
the statement of operations for the year ended March 31, 2010.


F-25


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


13.
            DISTRIBUTION
      OF INCOME




Upon
completion of the Reorganization as detailed in Note 1, Changxing Chisen became
wholly foreign owned enterprises when all of their equity interest have been
acquired by the Company and are required by relevant laws and regulation to
transfer at least 10% of their after-tax profit determined in accordance with
the PRC accounting rules and regulations to a statutory surplus reserve until
such reserve balance reaches 50% of Changxing Chisen’s registered
capital.




The
Company transferred US$1,136,000 and US$1,032,000 out of the after-tax income to
the statutory reserve for the years ended March 31, 2010 and 2009,
respectively.




The
statutory surplus reserve can only be utilized to offset prior years' losses or
for capitalization as paid-in capital. No distribution of the remaining reserves
shall be made other than upon liquidation of Changxing Chisen.





14.
            RELATED
      PARTY TRANSACTIONS




(a)
            Names
      and relationship of related
parties:


Name of related party
                              
                              Existing relationships with the
      CompanyMr.
      Xu Kecheng
                              
                              Director
      and controlling stockholder of Chisen ElectricZhejiang
      Chisen Glass Company Limited (“Chisen Glass”)*
                              
                              A
      company controlled by a close family member of Mr. Xu
    KechengMr.
      Xu Keyong
                              
                              A
      close family member of Mr. Xu KechengMs.
      Zhou Fang Qin
                              
                              Spouse
      of Mr. Xu KechengChangxing
      Chisen Xinguangyuan Company Limited (“Xinguangyuan”)*
                              
                              A
      company controlled by a close family member of Mr. Xu
    KechengZhejiang
      Ai Ge Organism Products Company Limited (“Ai Ge
Organism”)*
                              
                              A
      company controlled by Mr. Xu KechengZhejiang
      Changxing Nuo Wan Te Ke Glass Company Limited (“Nuo Wan Te
      Ke”)*
                              
                              A
      company controlled by a close family member of Mr. Xu
    KechengZhejiang
      Changxing Ruilang Electronic Company Limited (“Ruilang
      Electronic”)
                              
                              A
      company controlled by a close family member of Mr. Xu
    Kecheng




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


F-26


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


14.
            RELATED
      PARTY TRANSACTIONS (CONTINUED)




(b)
            Summary
      of balances with related parties:


As of March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Due
      from related parties:Ms.
      Zhou Fang Qin
                  
                  
                  8
                  
                  
                  
                  195Chisen
      Glass
                  
                  
                  -
                  
                  
                  
                  278Xinguangyuan
                  
                  
                  -
                  
                  
                  
                  18
                  
                  
                  
                  474Due
      to related parties:Mr.
      Xu Keyong
                  
                  
                  25
                  
                  
                  
                  24Chisen
      Glass
                  
                  
                  110
                  
                  
                  
                  -Ruilang
      Electronic
                  
                  
                  2,102
                  
                  
                  
                  -Ai
      Ge Organism
                  
                  
                  292
                  
                  
                  
                  602Nuo
      Wan Te Ke
                  
                  
                  3
                  
                  
                  
                  132,532
                  
                  
                  
                  639




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





(c)
            Summary
      of related party transactions:





Name of related
                      party
                    
                    Nature of transactions
                    
                    Years ended March 31,2010
                    
                    
                    2009US$’000
                    
                    
                    US$’000Chisen
      Glass
                    
                    Purchase
      of raw materials
                    
                    
                    106
                    
                    
                    
                    -Acquisition
      of motor vehicle
                    
                    
                    -
                    
                    
                    
                    160Ruilang
      Electronic
                    
                    Purchase
      of raw materials
                    
                    
                    3,799
                    
                    
                    
                    -Acquisition
      of land use right and buildings
                    
                    
                    2,859
                    
                    
                    
                    -


F-27


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


14.
            RELATED
      PARTY TRANSACTIONS (CONTINUED)




(d)
            Other
      arrangements:





●
              As
      of March 31, 2010, Chisen Glass provided guarantees, in aggregate,
      amounting to US$5,868,000, US$440,000 and US$440,000 to secure the
      short-term bank loans, notes payable and bill financing of the Company,
      respectively.





●
            As
      of March 31, 2010, US$5,868,000 of the Company’s short-term bank loans was
      collateralized by land use rights owned by Ruilang Electronic and
      guaranteed by Mr. Xu Kecheng and Ms. Zhou Fang
    Qin.





●
            As
      of March 31, 2010,  Xinguangyuan, Mr. Xu Kecheng and a third
      party provided guarantees, in aggregate, amounting to US$8,802,000 to
      secure the short-term bank loans of the
  Company.





●
            As
      of March 31, 2010, Xinguangyuan and Mr. Xu Kecheng provided
      guarantees, in aggregate, amounting to US$11,737,000 and US$5,868,000 to
      secure the short-term bank loans and notes payable of the Company,
      respectively.





●
            As
      of March 31, 2010, Chisen Glass, Mr. Xu Kecheng and Ms. Zhou Fang Qin
      provided guarantees, in the aggregate, amounting to US$2,714,000,
      US$4,401,000 and US$1,467,000 to secure the short-term bank
      loans, notes payable and bills financing of the Company,
      respectively.





●
            As
      of March 31, 2010, Xinguangyuan provided guarantees, in aggregate,
      amounting to US$3,667,000 to secure the notes payable of the
      Company.





●
            As
      of March 31, 2010, US$4,402,000 of the Company’s short-term bank loans was
      collateralized by a guarantee provided by Mr. Xu
      Kecheng.


F-28


Chisen
      Electric CorporationNotes
      to and Forming Part of Consolidated Financial
StatementsFor the years ended March 31, 2010 and
      2009


15.
            COMMITMENTS
      AND CONTINGENCIES





(a)
            Operating
      lease commitments





The
Company leases certain office premises under non-cancelable operating
leases.  Rental expenses under operating leases for the years ended
March 31, 2010 and 2009 were US$474,000 and US$206,000,
respectively.





The
following table summarizes the approximate future minimum rental payments under
non-cancelable operating leases in effect as of March 31, 2010 and
2009:





As of March 31,2010
                  
                  
                  2009US$’000
                  
                  
                  US$’000Within
      one year
                  
                  
                  599
                  
                  
                  
                  185One
      to two years
                  
                  
                  630
                  
                  
                  
                  205Two
      to three years
                  
                  
                  661
                  
                  
                  
                  202Three
      to four years
                  
                  
                  489
                  
                  
                  
                  212Four
      to five years
                  
                  
                  115
                  
                  
                  
                  54Total
                  
                  
                  2,494
                  
                  
                  
                  858





(b)
            Capital
      commitments





As of
March 31, 2010 and 2009, the Company had capital expenditure commitments for
construction projects and purchase of machineries for an aggregate amount of
approximately US$84,000 and US$423,000, respectively.





16.
            SUBSEQUENT
      EVENTS





In
      preparing the consolidated financial statements, the Company has evaluated
      all subsequent events and transactions for potential recognition or
      disclosure through the date the consolidated financial statements were
      issued, and determined there were no subsequent events to report as of
      that date.


F-29