SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM 10-Q



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



For the quarterly
period ended June 30, 2012



OR



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



For the transition
period from ______ to __________



COMMISSION
FILE NUMBER: 333-128532



CHISEN ELECTRIC
CORPORATION

(Exact name
of registrant as specified in its charter)



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



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

The People’s
Republic of China

(Address
of principal executive offices)



(86) 572-6267666

(Registrant’s
Telephone Number, Including Area Code)



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



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



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



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



|Large Accelerated Filer  ̈ | Accelerated Filer  ̈ | Non-Accelerated Filer   ̈ | Smaller 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    ̈   No x



State the number of shares outstanding
of each of the issuer’s classes of common equity, as of the latest practicable date:  As of August 10, 2012, the registrant
had 500,000,000 shares of common stock, par value $0.001 per share, issued and outstanding.











TABLE OF
CONTENTS



|PART I FINANCIAL INFORMATION                                        |  | 3 
|------------------------------------------------------------------- |  | --
|                                                                    |  |   
|ITEM 1. FINANCIAL STATEMENTS                                        |  | 3 
|                                                                    |  |   
|ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION   |  | 27
|                                                                    |  |   
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  |  | 33
|                                                                    |  |   
|ITEM 4. CONTROLS AND PROCEDURES                                     |  | 34
|                                                                    |  |   
|PART II OTHER INFORMATION                                           |  | 34
|                                                                    |  |   
|ITEM 1. LEGAL PROCEEDINGS                                           |  | 34
|                                                                    |  |   
|ITEM 1A. RISK FACTORS                                               |  | 34
|                                                                    |  |   
|ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |  | 34
|                                                                    |  |   
|ITEM 3. DEFAULTS UPON SENIOR SECURITIES                             |  | 34
|                                                                    |  |   
|ITEM 4.  MINE SAFETY DISCLOSURES                                    |  | 34
|                                                                    |  |   
|ITEM 5. OTHER INFORMATION                                           |  | 34
|                                                                    |  |   
|ITEM 6. EXHIBITS                                                    |  | 35
|                                                                    |  |   
|SIGNATURES                                                          |  | 43
|                                                                    |  |   
|EXHIBIT 31.1                                                        |  |   
|                                                                    |  |   
|EXHIBIT 31.2                                                        |  |   
|                                                                    |  |   
|EXHIBIT 32.1                                                        |  |   
|                                                                    |  |   
|EXHIBIT 32.2                                                        |  |   



-2-







PART I

FINANCIAL
INFORMATION



ITEM 1. FINANCIAL STATEMENTS



Unaudited Condensed Consolidated Financial Statements
of

Chisen Electric Corporation

For the three months ended June 30, 2012



-3-







|Chisen Electric Corporation               
|------------------------------------------
|                                          
|Index to Consolidated Financial Statements
|For the three months ended June 30, 2012  



|                                                                                         | Page   
|---------------------------------------------------------------------------------------- | -------
|                                                                                         |        
|Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income | 5 – 6  
|                                                                                         |        
|Unaudited Condensed Consolidated Balance Sheets                                          | 7 – 8  
|                                                                                         |        
|Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity           | 9      
|                                                                                         |        
|Unaudited Condensed Consolidated Statements of Cash Flows                                | 10 – 11
|                                                                                         |        
|Notes to Unaudited Condensed Consolidated Financial Statements                           | 12 – 26



-4-







|Chisen Electric Corporation                                                            
|---------------------------------------------------------------------------------------
|                                                                                       
|Unaudited CondensedConsolidated Statements of Operations and
Other Comprehensive Income
|For the three months ended June 30, 2012 and 2011                                      



|                                                           |  |      |   |  | Three months ended June 30, | 
|---------------------------------------------------------- |  | ---- | - |  | --------------------------- | 
|                                                           |  |      |   |  | 2012                        | 
|                                                           |  | Note |   |  | US$’000                     | 
|                                                           |  |      |   |  |                             | 
|Operating revenues:                                        |  |      |   |  |                             | 
|Net sales to third parties                                 |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Cost of sales                                              |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Gross profit                                               |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Operating expenses:                                        |  |      |   |  |                             | 
|Sales, marketing and distribution                          |  |      |   |  |                             | 
|General and administrative                                 |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Operating loss                                             |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Other expense, net                                         |  |      |   |  |                             | 
|Interest income                                            |  |      |   |  |                             | 
|Interest expense                                           |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Loss before income taxes                                   |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Income taxes benefit                                       |  |      | 4 |  |                             | 
|                                                           |  |      |   |  |                             | 
|Loss before extraordinary items                            |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Extraordinary gain (less applicable income taxes of US$0)  |  |      |   |  |                             | 
|Extraordinary loss (less applicable income taxes of US$0)  |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Net (loss) income including non-controlling interests      |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Less: Net loss attributable to non-controlling interests   |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Net (loss) income attributable to CIEC common stockholders |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Amounts attributable to CIEC common stockholders           |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Loss before extraordinary items                            |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Extraordinary gain (less applicable income taxes of US$0)  |  |      |   |  |                             | 
|Extraordinary loss (less applicable income taxes of US$0)  |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Net (loss) income attributable to CIEC common stockholders |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Other comprehensive income                                 |  |      |   |  |                             | 
|Foreign currency translation adjustment                    |  |      |   |  |                             | 
|                                                           |  |      |   |  |                             | 
|Comprehensive (loss) income                                |  |      |   |  |                             | 





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





-5-









|Chisen Electric Corporation                                 
|------------------------------------------------------------
|                                                            
|Unaudited CondensedConsolidated Statements of Operations and
|Other Comprehensive Income                                  
|For the three months ended June 30, 2012 and 2011           





|                                                  |  |      |   |  | Three months ended  June 30, | 
|------------------------------------------------- |  | ---- | - |  | ---------------------------- | 
|                                                  |  |      |   |  | 2012                         | 
|                                                  |  | Note |   |  | US$’000                      | 
|                                                  |  |      |   |  | Shares                       | 
|(Losses) Earnings per share                       |  |      | 3 |  |                              | 
|Weight average number of common stock outstanding |  |      |   |  |                              | 
|- basic and diluted                               |  |      |   |  |                              | 



|                                                                                  |  |  |  |  |  |  | US$   |   |  |  | US$   |  
|--------------------------------------------------------------------------------- |  |  |  |  |  |  | ----- | - |  |  | ----- | -
|                                                                                  |  |  |  |  |  |  |       |   |  |  |       |  
|Net loss per share of common stock outstanding before extraordinary items         |  |  |  |  |  |  |       |   |  |  |       |  
|- basic and diluted                                                               |  |  |  |  |  |  | (0.02 | ) |  |  | (0.01 | )
|Net (loss) income per share of common stock outstanding after extraordinary items |  |  |  |  |  |  |       |   |  |  |       |  
|- basic and diluted                                                               |  |  |  |  |  |  | (0.02 | ) |  |  | 0.02  |  



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



-6-







|Chisen Electric Corporation                   
|----------------------------------------------
|                                              
|Unaudited CondensedConsolidated Balance Sheets
|As of June 30, 2012 and March 31, 2012        



|                                                                  |  |      |       |  | As of June 30, |  |         | As of March 31, | 
|----------------------------------------------------------------- |  | ---- | ----- |  | -------------- |  | ------- | --------------- | 
|                                                                  |  |      |       |  | 2012           |  |         | 2012            | 
|                                                                  |  | Note |       |  | US$’000        |  |         | US$’000         | 
|ASSETS                                                            |  |      |       |  |                |  |         |                 | 
|                                                                  |  |      |       |  |                |  |         |                 | 
|Current assets:                                                   |  |      |       |  |                |  |         |                 | 
|Cash and cash equivalents                                         |  |      |       |  |                |  | 13,777  |                 | 
|Restricted bank balances                                          |  |      | 5     |  |                |  | 77,321  |                 | 
|Other financial assets                                            |  |      | 6     |  |                |  | 6,872   |                 | 
|Trading securities                                                |  |      |       |  |                |  | 79      |                 | 
|Trade receivables, net                                            |  |      |       |  |                |  | 15,561  |                 | 
|Deposit paid for land auctions                                    |  |      | 7     |  |                |  | 12,413  |                 | 
|Other receivables                                                 |  |      |       |  |                |  | 14,094  |                 | 
|Prepayments                                                       |  |      |       |  |                |  | 1,466   |                 | 
|Due from a related party                                          |  |      | 16(b) |  |                |  | 1,378   |                 | 
|Inventories                                                       |  |      | 9     |  |                |  | 20,969  |                 | 
|Income taxes receivable                                           |  |      |       |  |                |  | 17      |                 | 
|Assets classified as held for sale                                |  |      | 8     |  |                |  | 32,206  |                 | 
|                                                                  |  |      |       |  |                |  |         |                 | 
|Total current assets                                              |  |      |       |  |                |  | 196,153 |                 | 
|                                                                  |  |      |       |  |                |  |         |                 | 
|Available-for-sale financial assets                               |  |      | 10    |  |                |  | 2,980   |                 | 
|Long-term land lease prepayments, net                             |  |      | 12    |  |                |  | 5,037   |                 | 
|Property, plant and equipment, net                                |  |      | 11    |  |                |  | 50,203  |                 | 
|Deposit for acquisition of land and property, plant and equipment |  |      |       |  |                |  | 9,554   |                 | 
|                                                                  |  |      |       |  |                |  |         |                 | 
|Total assets                                                      |  |      |       |  |                |  | 263,927 |                 | 



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



-7-









|Chisen Electric Corporation                   
|----------------------------------------------
|                                              
|Unaudited CondensedConsolidated Balance Sheets
|As of June 30, 2012 and March 31, 2012        







|                                                                  |  |      |    |     | As of June 30, |  |         | As of March 31 | 
|----------------------------------------------------------------- |  | ---- | -- | --- | -------------- |  | ------- | -------------- | 
|                                                                  |  |      |    |     | 2012           |  |         | 2012           | 
|                                                                  |  | Note |    |     | US$’000        |  |         | US$’000        | 
|LIABILITIES AND STOCKHOLDERS’ EQUITY                              |  |      |    |     |                |  |         |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Current liabilities:                                              |  |      |    |     |                |  |         |                | 
|Trade payables                                                    |  |      |    |     |                |  | 18,087  |                | 
|Notes payable                                                     |  |      | 13 |     |                |  | 7,924   |                | 
|Accrued expenses and other accrued liabilities                    |  |      |    |     |                |  | 27,490  |                | 
|Due to related parties                                            |  |      | 16 | (b) |                |  | 4,722   |                | 
|Short-term bank borrowings                                        |  |      | 14 |     |                |  | 188,779 |                | 
|Government subsidies                                              |  |      | 15 |     |                |  | 34      |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Total current liabilities                                         |  |      |    |     |                |  | 247,036 |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Deferred tax liabilities                                          |  |      | 4  | (c) |                |  | 460     |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Total non-current liabilities                                     |  |      |    |     |                |  | 460     |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Total liabilities                                                 |  |      |    |     |                |  | 247,496 |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Commitments and contingencies                                     |  |      | 17 |     |                |  | -       |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Stockholders’ equity:                                             |  |      |    |     |                |  |         |                | 
|Preferred stock, US$0.001 par value each:                         |  |      |    |     |                |  |         |                | 
|10,000,000 shares authorized and no shares issued and outstanding |  |      |    |     |                |  | -       |                | 
|Common stock, US$0.001 par value each:                            |  |      |    |     |                |  |         |                | 
|1,000,000,000 shares authorized                                   |  |      |    |     |                |  | -       |                | 
|500,000,000 shares issued and outstanding                         |  |      |    |     |                |  | 500     |                | 
|Capital reserves                                                  |  |      |    |     |                |  | 144     |                | 
|Statutory reserves                                                |  |      |    |     |                |  | 4,003   |                | 
|Accumulated other comprehensive income                            |  |      |    |     |                |  | 3,965   |                | 
|Retained earnings                                                 |  |      |    |     |                |  | 7,482   |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Total CIEC stockholders’ equity                                   |  |      |    |     |                |  | 16,094  |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Non-controlling interests                                         |  |      |    |     |                |  | 337     |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Total stockholders’ equity                                        |  |      |    |     |                |  | 16,431  |                | 
|                                                                  |  |      |    |     |                |  |         |                | 
|Total liabilities and stockholders’ equity                        |  |      |    |     |                |  | 263,927 |                | 





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







-8-







|Chisen Electric Corporation                                                  
|-----------------------------------------------------------------------------
|                                                                             
|Unaudited CondensedConsolidated Statements of Changes in Stockholders' Equity
|For the three months ended June 30, 2012                                     



|                                            |  | Common
    stock issued |             |  |         |  |     |                  |  |  | Accumulated        |  |  |                             |       |  |                   |  |       |                                     |  |  |                            |  
|------------------------------------------- |  | ----------------------- | ----------- |  | ------- |  | --- | ---------------- |  |  | ------------------ |  |  | --------------------------- | ----- |  | ----------------- |  | ----- | ----------------------------------- |  |  | -------------------------- | -
|                                            |  | Number of shares        |             |  | Amount  |  |     | Capital reserves |  |  | Statutory reserves |  |  | other comprehensive  income |       |  | Retained earnings |  |       | Total CIEC stockholders’
    equity |  |  | Non- controlling interests |  
|                                            |  |                         |             |  | US$’000 |  |     | US$’000          |  |  | US$’000            |  |  | US$’000                     |       |  | US$’000           |  |       | US$’000                             |  |  | US$’000                    |  
|                                            |  |                         |             |  |         |  |     |                  |  |  |                    |  |  |                             |       |  |                   |  |       |                                     |  |  |                            |  
|Balance as of April 1, 2012                 |  |                         | 500,000,000 |  |         |  | 500 |                  |  |  | 144                |  |  |                             | 4,003 |  |                   |  | 3,956 |                                     |  |  | 17,890                     |  
|                                            |  |                         |             |  |         |  |     |                  |  |  |                    |  |  |                             |       |  |                   |  |       |                                     |  |  |                            |  
|Net loss                                    |  |                         | -           |  |         |  | -   |                  |  |  | -                  |  |  |                             | -     |  |                   |  | -     |                                     |  |  | (10,408                    | )
|                                            |  |                         |             |  |         |  |     |                  |  |  |                    |  |  |                             |       |  |                   |  |       |                                     |  |  |                            |  
|Foreign
    currency translation adjustment |  |                         | -           |  |         |  | -   |                  |  |  | -                  |  |  |                             | -     |  |                   |  | 9     |                                     |  |  | -                          |  
|                                            |  |                         |             |  |         |  |     |                  |  |  |                    |  |  |                             |       |  |                   |  |       |                                     |  |  |                            |  
|Balance
    as of June 30, 2012             |  |                         | 500,000,000 |  |         |  | 500 |                  |  |  | 144                |  |  |                             | 4,003 |  |                   |  | 3,965 |                                     |  |  | 7,482                      |  





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





-9-







|Chisen Electric Corporation                             
|--------------------------------------------------------
|                                                        
|Unaudited CondensedConsolidated Statements of Cash Flows
|For the three months ended June 30, 2012 and 2011       



|                                                                                            |  | Three months ended June 30, |        
|------------------------------------------------------------------------------------------- |  | --------------------------- | -------
|                                                                                            |  | 2012                        |        
|                                                                                            |  | US$’000                     |        
|Cash flows from operating activities                                                        |  |                             |        
|Net (loss) income including non-controlling interests                                       |  |                             | (10,487
|Adjustments to reconcile net (loss) income to net cash provided by operating activities:    |  |                             |        
|Depreciation of property, plant and equipment                                               |  |                             | 838    
|Impairment loss on plant and machinery and leasehold improvement                            |  |                             | -      
|Net compensation gain on disposal of land use rights and buildings                          |  |                             | -      
|Amortization of long-term land lease prepayments                                            |  |                             | 26     
|Reversal of provision for inventories                                                       |  |                             | -      
|Exchange differences                                                                        |  |                             | -      
|Provision for warranty costs                                                                |  |                             | 3,524  
|Government grant recognized                                                                 |  |                             | (13    
|Deferred taxes                                                                              |  |                             | -      
|Changes in assets and liabilities:                                                          |  |                             |        
|Other financial assets                                                                      |  |                             | (6,210 
|Trade receivables, net                                                                      |  |                             | (2,850 
|Other receivables                                                                           |  |                             | 1,189  
|Prepayment                                                                                  |  |                             | 1,749  
|Due from a related party                                                                    |  |                             | (1,372 
|Inventories                                                                                 |  |                             | 1,453  
|Trade payables                                                                              |  |                             | (711   
|Notes payable                                                                               |  |                             | (10,000
|Accrued expenses and other accrued liabilities                                              |  |                             | 3,833  
|Due to related parties                                                                      |  |                             | 1,125  
|Income taxes payable                                                                        |  |                             | -      
|                                                                                            |  |                             |        
|Net cash (used in) provided by operating activities                                         |  |                             | (17,906
|                                                                                            |  |                             |        
|Cash flows from investing activities                                                        |  |                             |        
|Purchase of property, plant and equipment and construction in progress                      |  |                             | (4,905 
|Addition of long-term land lease prepayments                                                |  |                             | -      
|Compensation received for loss on disposal of plant and machinery and leasehold improvement |  |                             | 476    
|Investment in restricted bank balances, net                                                 |  |                             | 13,339 
|Deposit paid for acquisition of land and property, plant and equipment                      |  |                             | 2,593  
|Refund of deposit paid for land auctions                                                    |  |                             | 18,849 
|Acquisition of assets classified as held for sale                                           |  |                             | (32,206
|                                                                                            |  |                             |        
|Net cash used in investing activities                                                       |  |                             | (1,854 





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



-10-







|Chisen Electric Corporation                             
|--------------------------------------------------------
|                                                        
|Unaudited CondensedConsolidated Statements of Cash Flows
|For the three months ended June 30, 2012 and 2011       



|                                                 |  | Three months ended June 30, |        
|------------------------------------------------ |  | --------------------------- | -------
|                                                 |  | 2012                        |        
|                                                 |  | US$’000                     |        
|Cash flows from financing activities             |  |                             |        
|Proceeds from short-term bank loans              |  |                             | 31,933 
|Repayment of short-term bank loans               |  |                             | (12,203
|Proceeds from bills financing                    |  |                             | 55,472 
|Repayment of bills financing                     |  |                             | (55,315
|Due to a related party                           |  |                             | (154   
|Capital contributed by non-controlling interests |  |                             | -      
|                                                 |  |                             |        
|Net cash provided by financing activities        |  |                             | 19,733 
|                                                 |  |                             |        
|Net decrease in cash and cash equivalents        |  |                             | (27    
|                                                 |  |                             |        
|Cash and cash equivalents, beginning of period   |  |                             | 13,804 
|                                                 |  |                             |        
|Effect on exchange rate changes                  |  |                             | -      
|                                                 |  |                             |        
|Cash and cash equivalents, end of period         |  |                             | 13,777 
|                                                 |  |                             |        
|Supplemental disclosure of cash flow information |  |                             |        
|Interest received                                |  |                             | 585    
|Interest paid                                    |  |                             | 4,031  





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





-11-







|Chisen Electric Corporation                                   
|--------------------------------------------------------------
|                                                              
|Notes to Unaudited Condensed Consolidated Financial Statements
|For the three months ended June 30, 2012 and 2011             



| | 1. | ORGANIZATION AND PRINCIPAL ACTIVITIES
| | -- | -------------------------------------



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



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



Details of Chisen Electric’s
subsidiaries as of June 30, 2012 are as follows:





|Name                                                        |  | Place and date of establishment / incorporation                                    |  | Percentage of effective equity interest / voting right attributable to the Company |   | Principal activities                                                              
|----------------------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------- | - | ----------------------------------------------------------------------------------
|                                                            |  |                                                                                    |  |                                                                                    |   |                                                                                   
|Fast More Limited (“Fast More”)                             |  | Hong Kong
        December 17, 2007                                                |  | 100                                                                                | % | Investment holding                                                                
|                                                            |  |                                                                                    |  |                                                                                    |   |                                                                                   
|Zhejiang Chisen Electric Co., Limited * (“Zhejiang Chisen”) |  | Zhejiang,
        the People’s Republic of China (“PRC”)
        February 25, 2002 |  | 100                                                                                | % | Manufacture and sales of sealed lead-acid battery products and relevant components
|                                                            |  |                                                                                    |  |                                                                                    |   |                                                                                   
|Chisen Electric Jiangsu Co., Limited * (“Chisen Jiangsu”)   |  | Jiangsu, PRC August 23, 2010                                                       |  | 98                                                                                 | % | Manufacture and sales of sealed lead-acid battery products and relevant components





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





-12-











|Chisen Electric Corporation                                   
|--------------------------------------------------------------
|                                                              
|Notes to Unaudited Condensed Consolidated Financial Statements
|For the three months ended June 30, 2012 and 2011             



| | 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
| | -- | ------------------------------------------



Basis of presentations

The accompanying unaudited condensed
consolidated financial statements as of June 30, 2012 have been prepared based upon Securities and Exchange Commission rules that
permit reduced disclosure for interim periods and include, in the opinion of management, all adjustments (consisting of normal
recurring adjustments and reclassifications) necessary to present fairly the financial position, results of operations and cash
flows as of June 30, 2012 and for all periods presented. Information as of March 31, 2012 was derived from the audited consolidated
financial statements of the Company for the year ended March 31, 2012.



Certain information and footnote
disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the
United States of America (“USGAAP”) have been condensed or omitted. These condensed consolidated financial statements
should be read in conjunction with the audited financial statements and notes thereto included in the Chisen Electric's Form 10-K
filed on July 2, 2012 for the year ended March 31, 2012. The results of operations for the three months ended June 30, 2012 are
not necessarily indicative of the operating results to be expected for the full year ending March 31, 2013.



The Company had negative working
capital of US$50,883,000 as of June 30, 2012 and incurred loss of US$10,408,000 for the three months ended June 30, 2012. These
conditions raised substantial doubt about the Company’s ability to continue as going concern.



Continuation of the Company as
a going concern is dependent upon attaining profitable operations in the future, exercising tight cost and cash flow controls measures,
and the financial support from a controlling stockholder of Chisen Electric. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



The controlling stockholder had
undertaken to make available adequate funds to the Company as and when required to maintain the Company as a going concern. Having
taken into consideration the undertaking provided by the controlling stockholder, management believes that the Company will be
able to settle its liabilities when they become due. However, there can be no assurance that the financing from the controlling
stockholder will be continued.



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



-13-







|Chisen Electric Corporation                                   
|--------------------------------------------------------------
|                                                              
|Notes to Unaudited Condensed Consolidated Financial Statements
|For the three months ended June 30, 2012 and 2011             



| | 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
| | -- | ------------------------------------------------------



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.



Fair value measurements

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.



The Company’s trading securities
are measured at fair value on recurring basis. The trading securities are listed on a stock exchange in the PRC with quoted price
in active market (Level 1 inputs).



Recent accounting pronouncement

As of the date this quarterly
report is filed, there are no recently issued accounting pronouncements which adoption would have a material impact on the Company’s
financial statements.



| | 3. | (LOSSES) EARNINGS PER SHARE
| | -- | ---------------------------



Basic (losses) earnings per share
is computed by dividing (loss) income available to common stockholders by the weighted-average number of common stocks outstanding
during the period. Diluted (losses) earnings per share is computed similar to basic (losses) earnings per share except that the
denominator is increased to include the number of additional common stocks that would have been outstanding if the potential common
shares had been issued and if the additional common shares were dilutive. There were no potentially dilutive securities for the
three months ended June 30, 2012 and 2011. As a result of a forward stock split in November 2011, the calculation of basic and
diluted (losses) earnings per common stock for all periods presented are adjusted retrospectively.



-14-













Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 4. | INCOME TAXES
| | -- | ------------



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



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





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



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



Dividends
payable by a foreign invested enterprise in the PRC to its foreign investors in Hong Kong are subject to a 10% withholding tax.
No deferred tax expenses on undistributed profits were charged to the statement of operations for the
three months ended June 30, 2012 and 2011 as the managementconsidered that there is no change in the expected amount
of profits to be distributed in the foreseeable future.



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



|                                   |  | Three months ended June 30, |  
|---------------------------------- |  | --------------------------- | -
|                                   |  | 2012                        |  
|                                   |  | US$’000                     |  
|                                   |  |                             |  
|Current taxes arising in the PRC:  |  |                             |  
|Corporate income tax               |  |                             | -
|                                   |  |                             |  
|Deferred taxes arising in the PRC: |  |                             |  
|Benefit of tax loss recognized     |  |                             | -
|                                   |  |                             |  
|                                   |  |                             | -



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.



-15-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 4. | INCOME TAXES (CONTINUED)
| | -- | ------------------------



| | (a) | Income tax benefits (expenses) are comprised of the following (Continued):
| | --- | --------------------------------------------------------------------------



Subject to the provision of
ASC 740, the Company has analyzed its filing positions in all of the jurisdictions where it is required to file income tax returns.
As of June 30, 2012 and March 31, 2012, the Company has identified the following jurisdictions as “major” tax jurisdictions,
as defined, in which it is required to file income tax returns namely the United States, Hong Kong and the PRC. Based on the evaluations
noted above, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its consolidated
financial statements.



As of June 30, 2012 and March
31, 2012, the Company had no unrecognized tax benefits or accruals for the potential payment of interest and penalties. The Company’s
policy is to record interest and penalties in this connection as a component of the provision for income tax expense. For the three
months ended June 30, 2012 and 2011, no interest or penalties were recorded.



| | (b) | Reconciliation from the expected income tax (benefit) expenses calculated with reference to the
statutory tax rate in the PRC of 25% (2011: 25%) is as follows:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                 |  | Three months ended  June 30, |       
|------------------------------------------------ |  | ---------------------------- | ------
|                                                 |  | 2012                         |       
|                                                 |  | US$’000                      |       
|                                                 |  |                              |       
|Expected income tax expenses                     |  |                              | (2,621
|Effect on tax incentives / holiday               |  |                              | 486   
|Unrecognized tax losses and temporary difference |  |                              | 1,865 
|Non-taxable income                               |  |                              | -     
|Others                                           |  |                              | 270   
|                                                 |  |                              |       
|Income tax (benefit) expenses                    |  |                              | -     



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



|                                                              |  | As of  June 30, |     |  | As of  March 31, | 
|------------------------------------------------------------- |  | --------------- | --- |  | ---------------- | 
|                                                              |  | 2012            |     |  | 2012             | 
|                                                              |  | US$’000         |     |  | US$’000          | 
|                                                              |  |                 |     |  |                  | 
|Withholding tax on undistributed earnings of a PRC subsidiary |  |                 | 460 |  |                  | 



-16-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 4. | INCOME TAXES (CONTINUED)
| | -- | ------------------------



| | (d) | Components of deferred tax assets were as follows:
| | --- | --------------------------------------------------



|                            |  | As of  June 30, |        |   | As of  March 31, | 
|--------------------------- |  | --------------- | ------ | - | ---------------- | 
|                            |  | 2012            |        |   | 2012             | 
|                            |  | US$’000         |        |   | US$’000          | 
|                            |  |                 |        |   |                  | 
|Depreciation and impairment |  |                 | 18     |   |                  | 
|Provisions and accruals     |  |                 | 143    |   |                  | 
|Tax losses carried forward  |  |                 | 6,643  |   |                  | 
|                            |  |                 |        |   |                  | 
|                            |  |                 | 6,804  |   |                  | 
|Valuation allowance         |  |                 | (6,804 | ) |                  | 
|                            |  |                 |        |   |                  | 
|Net deferred tax assets     |  |                 | -      |   |                  | 



As it is not probable that taxable
profits will be available against which the deductible temporary differences and the used tax losses of Zhejiang Chisen and Chisen
Jiangsu can be utilized, deferred tax assets have not been recognized.



| | 5. | RESTRICTED BANK BALANCES
| | -- | ------------------------



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



|                      |  |      |  |  | As of  June 30, |        |        | As of  March 31, | 
|--------------------- |  | ---- |  |  | --------------- | ------ | ------ | ---------------- | 
|                      |  | Note |  |  | 2012            |        |        | 2012             | 
|                      |  |      |  |  | US$’000         |        |        | US$’000          | 
|                      |  |      |  |  |                 |        |        |                  | 
|Notes payable         |  | 13   |  |  |                 | 20,206 |        |                  | 
|Short-term bank loans |  | 14   |  |  |                 | 6,340  |        |                  | 
|Bills financing       |  | 14   |  |  |                 | 50,775 |        |                  | 
|                      |  |      |  |  |                 |        |        |                  | 
|                      |  |      |  |  |                 |        | 77,321 |                  | 



| | 6. | OTHER FINANCIAL ASSETS
| | -- | ----------------------



Other financial assets represented
notes receivable from customers for the settlement of trade receivable balances and trade deposits. As of June
30, 2012 and March 31, 2012, 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.



-17-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 7. | DEPOSITS PAID FOR LAND AUCTIONS
| | -- | -------------------------------



As of March 31, 2012, the Company
paid US$31,262,000 deposits to the government of Jiangsu Province, the PRC to tender for the auctions of two pieces of land. During
the three months ended June 30, 2012, the Company had successfully acquired the lands. As of June 30, 2012, the outstanding balance
of deposits was US$12,413,000, which will be refunded by the government in near future.



| | 8. | ASSETS CLASSIFIED AS HELD FOR SALE
| | -- | ----------------------------------



During the three months ended
June 30, 2012, the Company acquired two pieces of land located at Xuyi County, Jiangsu Province, PRC with an aggregate consideration
of US$32,206,000. Total size of the lands is approximately 83,658 m2. The Company intends to sell these lands in the foreseeable
future and seek to make short-term gain from the disposal of assets. The lands are carried at the lower of its carrying amount
and fair value less costs to sell.



The management, based on the
professional valuation conducted by Greater China Appraisal Limited, estimated that the fair value of the lands is higher than
its carrying amount.



| | 9. | INVENTORIES
| | -- | -----------



Inventories consisted
of the following:



|                                         |  | As of  June 30, |        |  | As of  March 31, | 
|---------------------------------------- |  | --------------- | ------ |  | ---------------- | 
|                                         |  | 2012            |        |  | 2012             | 
|                                         |  | US$’000         |        |  | US$’000          | 
|                                         |  |                 |        |  |                  | 
|Raw materials                            |  |                 | 3,231  |  |                  | 
|Work-in-progress and semi-finished goods |  |                 | 15,778 |  |                  | 
|Finished goods                           |  |                 | 1,960  |  |                  | 
|                                         |  |                 |        |  |                  | 
|                                         |  |                 | 20,969 |  |                  | 



| | 10. | AVAILABLE-FOR-SALE FINANCIAL ASSETS
| | --- | -----------------------------------



Available-for-sale financial
assets as of June 30, 2012 and March 31, 2012 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.



-18-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 11. | PROPERTY, PLANT AND EQUIPMENT, NET
| | --- | ----------------------------------



Property, plant and equipment is summarized
as follows:



|                                             |  | As of  June 30, |        |   | As of  March 31, | 
|-------------------------------------------- |  | --------------- | ------ | - | ---------------- | 
|                                             |  | 2012            |        |   | 2012             | 
|                                             |  | US$’000         |        |   | US$’000          | 
|                                             |  |                 |        |   |                  | 
|Buildings                                    |  |                 | 18,864 |   |                  | 
|Leasehold improvements                       |  |                 | 1,567  |   |                  | 
|Plant and machinery                          |  |                 | 22,221 |   |                  | 
|Motor vehicles                               |  |                 | 1,547  |   |                  | 
|Furniture, fixtures and office equipment     |  |                 | 4,427  |   |                  | 
|Construction in progress                     |  |                 | 8,482  |   |                  | 
|                                             |  |                 |        |   |                  | 
|                                             |  |                 | 57,108 |   |                  | 
|                                             |  |                 |        |   |                  | 
|Accumulated depreciation and impairment loss |  |                 | (6,905 | ) |                  | 
|                                             |  |                 |        |   |                  | 
|                                             |  |                 | 50,203 |   |                  | 



Depreciation expenses were approximately
US$838,000 and US$304,000 for the three months ended June 30, 2012 and 2011, respectively.



| | 12. | LONG-TERM LAND LEASE PREPAYMENTS, NET
| | --- | -------------------------------------



|                         |  | As of  June 30, |       |   | As of  March 31, | 
|------------------------ |  | --------------- | ----- | - | ---------------- | 
|                         |  | 2012            |       |   | 2012             | 
|                         |  | US$’000         |       |   | US$’000          | 
|                         |  |                 |       |   |                  | 
|Prepaid land use rights  |  |                 | 5,164 |   |                  | 
|Accumulated amortization |  |                 | (127  | ) |                  | 
|                         |  |                 |       |   |                  | 
|                         |  |                 | 5,037 |   |                  | 



Lease prepayment as of June 30,
2012 and March 31, 2012 represented the land use rights located in the PRC, which are amortized over the leasehold periods.



Amortization expense for the
three months period ended June 30, 2012 and 2011 were US$25,000 and US$22,000 respectively.



-19-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 13. | NOTES PAYABLE
| | --- | -------------



Notes payable were issued by
the Company to creditors with the banker’s acceptance payable at the maturity date for the purchase of raw materials for
production exclusively. The Company has to repay the notes within nine months from date of issuance and service fees would be charged
by banks for the issuance of the notes. The notes payable were collateralized by restricted bank balances as set out in Note 5
and long-term land lease prepayments with carrying amount of US$4,766,000 (as of March, 31, 2012: US$760,000) as of June
30, 2012.



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



|                                                                                      |  | As of  June 30, |       |  | As of  March 31, | 
|------------------------------------------------------------------------------------- |  | --------------- | ----- |  | ---------------- | 
|                                                                                      |  | 2012            |       |  | 2012             | 
|                                                                                      |  | US$’000         |       |  | US$’000          | 
|                                                                                      |  |                 |       |  |                  | 
|Corporate and personal guarantees issued by related parties (Note 16(d))              |  |                 | 3,566 |  |                  | 
|Corporate guarantees issued by third parties                                          |  |                 | 1,584 |  |                  | 
|Corporate guarantees jointly issued by related parties and third parties (Note 16(d)) |  |                 | 6,339 |  |                  | 



As of June 30, 2012 and March
31, 2012, the Group had unutilized banking facilities of approximately US$11,073,000 and US$17,991,000 to meet the liquidity needs.



| | 14. | SHORT-TERM BANK BORROWINGS
| | --- | --------------------------



Short-term bank borrowings comprise
of the followings:



|                      |  |      |  |  | As of  June 30, |         |         | As of  March 31, | 
|--------------------- |  | ---- |  |  | --------------- | ------- | ------- | ---------------- | 
|                      |  | Note |  |  | 2012            |         |         | 2012             | 
|                      |  |      |  |  | US$’000         |         |         | US$’000          | 
|                      |  |      |  |  |                 |         |         |                  | 
|Short-term bank loans |  | (i)  |  |  |                 | 71,839  |         |                  | 
|Bills financing       |  | (ii) |  |  |                 | 116,940 |         |                  | 
|                      |  |      |  |  |                 |         |         |                  | 
|                      |  |      |  |  |                 |         | 188,779 |                  | 



| | (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.



-20-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 14. | SHORT-TERM BANK BORROWINGS (CONTINUED)
| | --- | --------------------------------------



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



|                                               |  |      |  |  | As of  June 30, |       |        | As of  March 31, | 
|---------------------------------------------- |  | ---- |  |  | --------------- | ----- | ------ | ---------------- | 
|                                               |  | Note |  |  | 2012            |       |        | 2012             | 
|                                               |  |      |  |  | US$’000         |       |        | US$’000          | 
|                                               |  |      |  |  |                 |       |        |                  | 
|Restricted bank balances                       |  | 5    |  |  |                 | 6,340 |        |                  | 
|Long-term land lease prepayments and buildings |  |      |  |  |                 |       | 4,766  |                  | 
|Trade receivables                              |  |      |  |  |                 |       | 11,093 |                  | 
|                                               |  |      |  |  |                 |       |        |                  | 
|                                               |  |      |  |  |                 |       | 22,199 |                  | 



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



|                                                                                                     |  | As of  June 30, |        |  | As of  March 31, | 
|---------------------------------------------------------------------------------------------------- |  | --------------- | ------ |  | ---------------- | 
|                                                                                                     |  | 2012            |        |  | 2012             | 
|                                                                                                     |  | US$’000         |        |  | US$’000          | 
|                                                                                                     |  |                 |        |  |                  | 
|Corporate and personal guarantees issued by related parties (Note 16(d))                             |  |                 | 28,842 |  |                  | 
|Corporate guarantees issued by third parties                                                         |  |                 | 4,596  |  |                  | 
|Corporate and personal guarantees issued jointly by realized parties and a third party (Note 16((d)) |  |                 | 20,253 |  |                  | 



The weighted average annual interest
rates of the short-term bank loans were 6.63% and 6.01% as of June 30, 2012 and March 31, 2012 respectively.



-21-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 14. | SHORT-TERM BANK BORROWINGS (CONTINUED)
| | --- | --------------------------------------



| | (ii) | Bills financing
| | ---- | ---------------



Bill financing represents amounts
due to various banks which are repayable within nine months from the date of issue.



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



|                                    |  |      |  |  | As of  June 30, |        |        | As of  March 31, | 
|----------------------------------- |  | ---- |  |  | --------------- | ------ | ------ | ---------------- | 
|                                    |  | Note |  |  | 2012            |        |        | 2012             | 
|                                    |  |      |  |  | US$’000         |        |        | US$’000          | 
|                                    |  |      |  |  |                 |        |        |                  | 
|Restricted bank balances            |  | 5    |  |  |                 | 50,775 |        |                  | 
|Long-term land lease prepayments    |  |      |  |  |                 |        | 4,766  |                  | 
|Available-for-sale financial assets |  |      |  |  |                 |        | 2,980  |                  | 
|                                    |  |      |  |  |                 |        |        |                  | 
|                                    |  |      |  |  |                 |        | 58,521 |                  | 



Also, certain related parties
and third parties have issued guarantee against these bills financing to the extent of US$55,625,000 and US$59,414,000 as of June
30, 2012 and March 31, 2012.



The weighted average annual
interest rates of the bills financing were 4.29% and 4.29% as of June 30, 2012 and March 31, 2012, respectively.





| | 15. | GOVERNMENT SUBSIDIES
| | --- | --------------------



During
the year ended March 31, 2008, the Company received a government grant of approximately US$231,000 for the purpose of subsidising
its acquisition of property, plant and equipment, of which approximately US$13,000 and US$12,000
were credited to the statement of operations for the three months ended June 30, 2012 and 2011 respectively.



-22-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 16. | RELATED PARTY TRANSACTIONS
| | --- | --------------------------



| | (a) | Names and relationship of related parties:
| | --- | ------------------------------------------



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

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



| | (b) | Summary of balances with related parties:
| | --- | -----------------------------------------



|                          |  | As of  June 30, |       |  | As of  March 31, | 
|------------------------- |  | --------------- | ----- |  | ---------------- | 
|                          |  | 2012            |       |  | 2012             | 
|                          |  | US$’000         |       |  | US$’000          | 
|                          |  |                 |       |  |                  | 
|Due from a related party: |  |                 |       |  |                  | 
|Ms. Zhou Fang Qin         |  |                 | 1,378 |  |                  | 
|                          |  |                 |       |  |                  | 
|Due to related parties:   |  |                 |       |  |                  | 
|Ms. Zhou Fang Qin         |  |                 | 349   |  |                  | 
|Mr. Xu Keyong             |  |                 | 2     |  |                  | 
|Mr. Xu Zhaoyu             |  |                 | 317   |  |                  | 
|Chisen Glass              |  |                 | 1,660 |  |                  | 
|Ruilang Electronic        |  |                 | 2,078 |  |                  | 
|Ai Ge Organism            |  |                 | 316   |  |                  | 
|Xinguangyuan              |  |                 | -     |  |                  | 
|                          |  |                 |       |  |                  | 
|                          |  |                 | 4,722 |  |                  | 



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



-23-







Chisen Electric Corporation





|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 16. | RELATED PARTY TRANSACTIONS (CONTINUED)
| | --- | --------------------------------------



| | (c) | Summary of related party transactions:
| | --- | --------------------------------------





|                      |  |                           |  | Three months ended June 30,
|--------------------- |  | ------------------------- |  | ---------------------------
|Name of related party |  | Nature of transactions    |  | 2012                       
|                      |  |                           |  | US$’000                    
|                      |  |                           |  |                            
|Ruilang Electronic    |  | Purchase of raw materials |  |                            
|                      |  |                           |  |                            
|Chisen Glass          |  | Purchase of raw materials |  |                            





| | (d) | Other arrangements:
| | --- | -------------------



| |  ̇ | As of June 30, 2012, Chisen Glass provided guarantees, in aggregate, amounting to US$6,339,000,
US$3,169,000 and US$1,585,000 to secure the short-term bank loans, bills financing and notes payable of the Company, respectively.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Ruiling Electronic, Chisen Glass, Mr. Xu Kecheng and Ms. Zhou Fang Qin provided
guarantees, in aggregate, amounting to US$10,697,000 and US$396,000 to secure the bills financing and notes payable of the Company,
respectively.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Mr. Xu Kecheng, Ms. Zhou Fang Qin and a third party provided guarantees, in
aggregate, amounting to US$7,924,000, US$9,509,000 and US$6,339,000 to secure the short-term bank loans, bills financing and notes
payable of the Company, respectively.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Xinguangyuan, Mr. Xu Kecheng and Ms. Zhou Fang Qin, provided guarantees, in
aggregate, amounting to US$16,608,000, US$7,924,000 and US$1,585,000 to secure the short-term bank loans, bills financing and notes
payable of the Company, respectively.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Chisen Glass and a third party provided guarantees, in aggregate, amounting
to US$3,962,000 and US$1,981,000 to secure the short-term bank loans and bills financing of the Company, respectively.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Xinguangyuan provided guarantees, in aggregate, amounting to US$16,322,000
to secure the bills financing of the Company.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Xinguangyuan, Chisen Glass and a third party provided guarantees, in aggregate,
amounting to US$3,613,000 to secure the short-term bank loans of the Company.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Mr. Xu Kecheng, Ms. Zhou Fang Qin, Xinguangyuan and a third party provided
guarantees, in aggregate, amounting to US$4,754,000 to secure the short-term bank loans of the Company.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



-24-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 16. | RELATED PARTY TRANSACTIONS
(CONTINUED)
| | --- | --------------------------------------





| | (d) | Other arrangements (Continued)
| | --- | ------------------------------



| |  ̇ | As of June 30, 2012, Chisen Glass and Xinguangyuan provided guarantees, in aggregate, amounting
to US$4,438,000 to secure the bills financing of the Company.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Ruiling Electronic, Mr. Xu Kecheng and Ms. Zhou Fang Qin provided guarantees,
in aggregate, amounting to US$1,585,000 to secure the bills financing of the Company.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̇ | As of June 30, 2012, Xinguangyuan, Chisen Glass, Mr. Xu Kecheng and Ms. Zhou Fang Qin provided
guarantees, in aggregate, amounting to US$5,895,000 to secure the short-term bank loans of the Company.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 17. | COMMITMENTS AND CONTINGENCIES
| | --- | -----------------------------



| | (a) | Operating lease commitments
| | --- | ---------------------------



The following
table summarizes the approximate future minimum rental payments under non-cancelable operating leases in effect as of June 30,
2012 and March 31, 2012:



|                   |  | As of  June 30, |     |  | As of  March 31, | 
|------------------ |  | --------------- | --- |  | ---------------- | 
|                   |  | 2012            |     |  | 2012             | 
|                   |  | US$’000         |     |  | US$’000          | 
|                   |  |                 |     |  |                  | 
|Within one year    |  |                 | 361 |  |                  | 
|One to two years   |  |                 | 199 |  |                  | 
|Two to three years |  |                 | 50  |  |                  | 
|                   |  |                 |     |  |                  | 
|Total              |  |                 | 610 |  |                  | 



| | (b) | Capital commitments
| | --- | -------------------



As
of June 30, 2012 and March 31, 2012, the Company had outstanding capital expenditure commitments relating to various construction
projects and purchase of land and machineries for an aggregate amount of approximately US$119,342,000 and
US$122,845,000 respectively.



-25-







Chisen Electric Corporation



|Notes to Unaudited Condensed Consolidated Financial Statements
|--------------------------------------------------------------
|For the three months ended June 30, 2012 and 2011             



| | 18. | PROVISION FOR WARRANTY
| | --- | ----------------------



Provision for warranty is included
in accrued expenses and other accrued liabilities as of June 30, 2012 and March 31, 2012. Estimated warranty costs are recognized
at the time when the Company sells its products and are included in sale, marketing and distribution expenses. The Company uses
historical failure rates and costs to repair product defects during the warranty period to estimate warranty costs while are reviewed
periodically in light of actual experience. The reconciliation of the changes in the warranty obligation is as follows:



|                                                |  | Three months ended June 30, |       
|----------------------------------------------- |  | --------------------------- | ------
|                                                |  | 2012                        |       
|                                                |  | US$’000                     |       
|                                                |  |                             |       
|Balance as of April 1,                          |  |                             | 1,218 
|Exchange realignment                            |  |                             | -     
|Accrual for warranties issued during the period |  |                             | 3,524 
|Settlement made during the period               |  |                             | (2,367
|                                                |  |                             |       
|Balance as of June 30,                          |  |                             | 2,375 



| | 19. | 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$645,000 and US$113,000 for the three months ended June 30, 2012 and 2011 respectively.





| | 20. | SEGMENTAL INFORMATION
| | --- | ---------------------



During the three months ended
June 30, 2012 and 2011 all revenue of the Company represented income from sales of sealed lead-acid battery products and relevant
components and therefore no financial information by business segment is presented. Furthermore, as all revenue is derived from
the PRC, no geographical segment is presented.



-26-









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



Forward Looking Statements



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



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



Company Overview



We produce and
sell sealed lead-acid motive batteries, also known as valve regulated lead-acid motive batteries (VRLA batteries) in China's personal
transportation device market. Our motive battery products, sold under our own brand name “Chisen”, are predominantly
used in electric bicycles and are distributed and sold in China.  Among all types of batteries for electric bicycles, the
lead-acid motive battery is the preferred choice of electric bicycle manufacturers in China, accounting for 95% of the market
share because of its cost efficiency.



For the three
months ended June 30, 2012 and 2011, sales revenues were US$20,421,000 and US$35,399,000, respectively, and our net (loss) income
attributable to CIEC common stockholders during the same periods amounted to US$(10,408,000) and US$8,304,000, respectively. 
The Company also had negative working capital of US$38,937,000 and US$50,833,000 as of March 31, 2012 and June 30, 2012, respectively.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern.



Development Strategy of the Company



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



-27-







Production
Capacity



On September
6, 2010, CEJC entered into a Project Investment Contract and a Supplemental Agreement to the Project Investment Contract with
the Jiangsu Xuyi Economic Development Zone Administrative Committee, pursuant to which CEJC shall invest, in the aggregate, approximately
RMB1,200,000,000 (approximately US$177,000,000) to manufacture VRLA batteries, as well as our newest product, lithium-ion batteries,
and other related products in the Jiangsu Xuyi Economic Development Zone (“Plant A”). At the date of this report,
CEJC has completed all construction related to the first stage and has invested over RMB422,000,000 (approximately US$62,000,000)
in assets for the production of VRLA batteries only. Currently, the Company does not plan to construct lithium-ion battery
production facilities in Plant A.



Augment
Marketing and Promotion Efforts to Increase Brand Awareness



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



Expand
Sales Network and Distribution Channels



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



Build Partnerships
with New and Existing Clients



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



Vertical
Integration Strategy



During the period
ended June 30, 2012, we have implemented a vertical integration strategy of producing lead plates at Plant A which has enabled
us to reduce processing costs as compared to the same period in last year.



Recent Accounting Pronouncements



As of the date
of this report, there are no recently issued accounting pronouncements the adoption of which would have a material impact on the
Company’s financial statements.



Corporate Information



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



-28-







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



Critical Accounting Policies,
Estimates and Assumptions



For the three
months ended June 30, 2012 as compared to the fiscal year ended March 31, 2012, there were no changes in the methodology for computing
critical accounting estimates, no additional accounting estimates met the standards for critical accounting policies, and there
were no material changes to the important assumptions underlying the critical accounting estimates.



Results of Operations for the
Three Months Ended June 30, 2012 Compared With the Three Months Ended June 30, 2011



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



|                                                           |  | For The Three Months ended June 30 (Unaudited) |        
|---------------------------------------------------------- |  | ---------------------------------------------- | -------
|                                                           |  | (in thousands)                                 |        
|                                                           |  | 2012 (US$)                                     |        
|Revenues                                                   |  |                                                | 20,421 
|Cost of sales                                              |  |                                                | (18,846
|Gross profit                                               |  |                                                | 1,575  
|Sales, marketing and distribution                          |  |                                                | (5,767 
|General and administrative expenses                        |  |                                                | (2,429 
|Operating loss                                             |  |                                                | (6,621 
|Other expenses, net                                        |  |                                                | (975   
|Interest income                                            |  |                                                | 567    
|Net loss from operations before interest and tax expenses  |  |                                                | (7,029 
|Interest expenses                                          |  |                                                | (3,458 
|Loss before income taxes                                   |  |                                                | (10,487
|Income taxes benefits                                      |  |                                                | -      
|Loss before extraordinary items                            |  |                                                | (10,487
|Extraordinary gain (less applicable taxes of US$0)         |  |                                                | -      
|Extraordinary loss (less applicable taxes of US$0)         |  |                                                | -      
|Net (loss) income including non-controlling interest       |  |                                                | (10,487
|Net loss attributable to non-controlling interest          |  |                                                | 79     
|Net (loss) income attributable to CIEC common shareholders |  |                                                | (10,408
|Other comprehensive income                                 |  |                                                | 9      
|Comprehensive (loss) income                                |  |                                                | (10,399



Revenues and Cost of Sales



Our revenue
decreased significantly by US$14,978,000 or 42.31%, to US$20,421,000 for the three months ended June 30, 2012 compared with US$35,399,000
for the three months ended June 30, 2011. The decrease was mainly attributable to the decrease in the average selling price per
unit following the price cutting strategy adopted by other major competitors and loss of market share as a result of scale down
our production capacity in order to comply with the unexpected tightening of an environmental protection policy implemented by
the PRC Central Government enforced on all lead-acid battery manufacturers during the year ended March 31, 2012. At the date of
this report, our production capacity has recovered. However, it has taken time for us to regain market share.



-29-







Cost of sales
for the three months ended June 30, 2012 and 2011 were US$18,846,000 and US$33,464,000, respectively. The decrease in cost of
sales of US$14,618,000 or 43.68% was mainly attributable to the decrease in sales volume resulting from the loss of market share
as stated above.



The decrease
in cost of sales was also attributable to a significant decrease in processing charges on lead plates, one of the major components
of our battery products, resulting from our vertical integration of producing lead plates at Plant A which commenced in August
2011.



Our gross profit
ratio increased by 2.24% to 7.71% for the three months ended June 30, 2012 as compared with the corresponding period in 2011.
The increase was mainly attributable to the decrease in the cost of production as a result of the implementation of the
vertical integration strategy as stated above.



Depreciation and Amortization



Depreciation
and amortization expense for the three months ended June 30, 2012 and 2011 was US$838,000 and US$304,000, respectively. The increase
of US$534,000 or 175.66% was mainly attributable to the additional depreciation charges of US$242,000 incurred as a result of
the change of estimated useful life on certain machinery at our Jing’er Road Plant (“Plant B”). Last year, we
were advised by the local governmental authority that the external battery formation technique, which was used in Plant B to produce
battery products, will be prohibited after October 31, 2012. Our management reviewed the machinery in Plant B and identified that
certain machinery cannot be used after that date and therefore, their estimated useful life was adjusted accordingly.



In addition,
in order to expand our production capacity, we have invested significantly in plant and machinery at Plant A and the increase
in depreciation expense was in line with the increase in the property, plant and equipment.



General and Administrative
Expenses



General and
administrative expenses were US$2,429,000 and US$1,705,000 for the three months ended June 30, 2012 and 2011, respectively, and
mainly consisted of staff salaries and benefits, research and development, depreciation expenses, material consumption, legal
and professional fees, social insurance, repair and maintenance expenses and utility expenses.



The increase
in general and administrative expenses of US$724,000 or 42.46% for the period ended June 30, 2012 as compared to the corresponding
period in 2011 was mainly attributable to: (a) an increase of US$250,000 for staff salaries and relevant benefits, such as social
insurance and staff cafeteria expenses, due to the operation of a new plant in Xuyi County of Jiangsu Province where we now employ
more administrative staff; (b) an increase in research and development expenses of US$428,000, which are mainly attributable to
the resources invested in improving the quality of existing products as well as the development of new products and the increase
in staff in our R&D department.



Sales, Marketing and Distribution



Sales, marketing
and distribution expense increased by US$3,247,000 or 128.85% to US$5,767,000 for the three months ended June 30, 2012 as compared
to US$2,520,000 for the three months ended June 30, 2011.



For purposes
of complying with the tightened environmental protection policy discussed above, during the year ended March 31, 2012, we introduced
the internal battery formation technique into our production. However, this technique is relatively new to the Company and we
are unable to handle it as well as the external battery formation technique which we used before. Under the internal formation
technique we are unable to repair all returned defected batteries. The Company temporarily used more new batteries for providing
warranty services. As the cost of new batteries is higher than the cost of repaired batteries, the cost of warranty for the three
months ended June 30, 2012 increased significantly by US$3,385,000 to US$3,524,000 as compared with the corresponding period in
2011.



-30-







Interest Income



Interest income
was US$567,000 and US$303,000 for the three months ended June 30, 2012 and 2011, respectively. The increase of US$264,000 or 87.13%
was mainly attributable to an increase in restricted cash pledged for banking facilities granted by banks.



Other Expense, net



Other expenses,
net were US$975,000 and US$12,000 for the three months ended June 30, 2012 and 2011, respectively. The increase of US$963,000
or 8,025.00% was mainly attributable to the increase in loss on disposal of scrap materials of US$721,000 from the production
process as a result of immature production technique used in internal formation batteries.



Loss before Interest and Income
Tax Expenses



Loss before
interest and income tax expenses was US$7,029,000 and US$1,999,000 for the three months ended June 30, 2012 and 2011, respectively.
The increase of US$5,030,000 or 251.63% was mainly attributable to the increase in sales, marketing and distribution expenses
of US$3,247,000, general and administrative expenses of US$724,000 and other expenses, net of US$963,000.



Interest Expense



Interest expense
for the three months ended June 30, 2012 and 2011 was US$3,458,000 and US$1,282,000, respectively. The increase in interest expense
of US$2,176,000 or 169.73% was mainly attributable to the increase in banking facilities utilized by the Company as well as an
increase in average interest rate.



Loss before income taxes



Loss before
income tax expenses was US$10,487,000 and US$3,281,000, respectively. The increase of US$7,206,000 or 219.63% was mainly attributable
to the increase in sales, marketing and distribution, interest expenses and general and administrative expenses of US$3,247,000,
US$2,176,000 and US$724,000, respectively.



Net (Loss) Income Including
Non-Controlling Interest



Net loss including
non-controlling interest was US$10,487,000 for three months ended June 30, 2012 as compared with a net income of US$8,304,000
for the corresponding period in 2011. The decrease of US$18,791,000 was mainly attributable to an increase in sales, marketing
and distribution expenses, general and administrative expenses, other expenses, net, and interest expenses of US$ 3,247,000, US$724,000,
US$963,000, and US$2,176,000, respectively as well as decrease in net gain on extraordinary items of US$11,136,000.



Liquidity and Capital Resources



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



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



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



|                                                    |  | Three Months Ended
June 30, |        
|--------------------------------------------------- |  | --------------------------- | -------
|                                                    |  | (in thousands)              |        
|                                                    |  | 2012(US$)                   |        
|Net cash (used in) provided by operating activities |  |                             | (17,906
|Net cash used in investing activities               |  |                             | (1,854 
|Net cash provided by financing activities           |  |                             | 19,733 
|Net decrease in cash and cash equivalents           |  |                             | (27    
|Cash and cash equivalents, beginning of period      |  |                             | 13,804 
|Effect on exchange rate changes                     |  |                             | -      
|Cash and cash equivalents at end of period          |  |                             | 13,777 



-31-







Operating Activities



The
increase in net cash used in operating activities was mainly attributable to an increase in cash outflow from the other
financial assets, trade receivable, net, and notes payable of US$4,861,000, US$7,760,000 and
US$4,154,000, respectively for the three months ended June 30, 2012 as compared with the corresponding period in
2011.



Investing Activities



The decrease in net cash used in
investing activities was mainly attributable to the release of restricted bank balances of US$19,331,000 and a refund of
a deposit paid for a land auction of US$18,849,000 offset by cash used in the acquisition of lands held for sale
of US$32,206,000.



Financing Activities



Net
cash provided by financing activities was US$19,733,000 and US$6,157,000 for the three months ended June 30, 2012 and
2011 respectively. The increase in cash provided by financing activities was mainly attributable to an increase in net
proceeds received from short-term bank loans of US$15,553,000 offset by a decrease in net proceeds received from bills
financing of US$1,607,000. The increase in short-term bank borrowings was used for operating and acquisition of lands held
for sale during the period.



Working Capital



During the period
ended June 30, 2012 we had negative working capital of US$50,883,000 which, together with our decrease in sales revenues of US$14,978,000
and our net loss attributable to CIEC common stockholders of US$10,408,000, raises substantial doubt about our ability to continue
as a going concern.



The negative
working capital was mainly attributable to the significant increase in loss from operations and the increase in long term capital
investment.



During the three
months ended June 30, 2012, the Company suffered a significant loss as the result of loss of market share as discussed above.
In order to comply with the tightened environmental policy and to rebuild our production capacity, we invested significantly in
land lease prepayment and property, plant and equipment in Plant A. Although our production capacity has recovered at the date
of this report, it has taken time for us to regain market share. Together with the decrease of cash generated from operations,
it was necessary for us to increase bank borrowings to fund this project.



In order
to improve working capital, management decided to defer and/or decrease long term investment so as to maintain sufficient
short term funds. Also, the Company’s principal stockholder had undertaken to make available funds to the Company as
and when required to maintain the Company as a going concern. Notwithstanding the above, the Company has regular cash flow control
measures over the liquidity of its working capital as stated in the financial statements to strictly monitor the condition of
the working capital. Apart from the above, management believes that business is recovering and will continue to do so, which
may also help improve working capital flow.



-32-







Capital Commitment



As of June 30,
2012 and March 31, 2012, the Company had outstanding capital expenditure commitments relating to various construction projects
and purchase of machineries for an aggregate amount of approximately US$119,342,000 and US$122,845,000, respectively.



Off-Balance Sheet Arrangements



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



ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK



Interest Rates Risk



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



Foreign Exchange Rates Risk



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



Contractual Obligations



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



|Bank indebtedness (US$)         |  | June
    30, 2012 |             |  | March 31, 2012 |    
|------------------------------- |  | ----------------- | ----------- |  | -------------- | ---
|Short-term bank borrowings      |  | US$               | 188,779,000 |  |                | US$
|Notes payable (within (1) year) |  | US$               | 7,924,000   |  |                | US$
|Total                           |  | US$               | 196,703,000 |  |                | US$



|Purchase Obligations (US$)                      |  | June
    30, 2012 |             |  | March 31, 2012 |    
|----------------------------------------------- |  | ----------------- | ----------- |  | -------------- | ---
|Construction projects and purchase of machinery |  | US$               | 119,342,000 |  |                | US$
|Total                                           |  | US$               | 119,342,000 |  |                | US$



|Operating Lease Obligations (US$) |  | June
    30, 2012 |         |  | March 31, 2012 |    
|--------------------------------- |  | ----------------- | ------- |  | -------------- | ---
|Within one (1) year               |  | US$               | 361,000 |  |                | US$
|1-3 years                         |  | US$               | 249,000 |  |                | US$
|Total                             |  | US$               | 610,000 |  |                | US$



-33-







ITEM 4. CONTROLS AND PROCEDURES



Disclosure Controls and Procedures



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



Changes in Internal Control over
Financial Reporting



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



PART II

OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS



In the normal
course of business, we are named as defendant in lawsuits in which claims are asserted against us. In our opinion, the liabilities,
if any, which may ultimately result from such lawsuits, are not expected to have a material adverse effect on our financial position,
results of operations or cash flows. As of June 30, 2012, there was no pending or outstanding material litigation with the Company.



ITEM 1A. RISK FACTORS



Not required
for a “smaller reporting company”.



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



None.



ITEM 3. DEFAULTS UPON SENIOR
SECURITIES



None.



ITEM 4. MINE SAFETY DISCLOSURES



None.



ITEM 5. OTHER INFORMATION



None.



-34-







ITEM 6. EXHIBITS



(a) Exhibits



|EXHIBIT NO. |  | DESCRIPTION |  | LOCATION
|----------- |  | ----------- |  | --------
|            |  |             |  |         



|2.1 |  | Share Exchange Agreement, dated November 12, 2008, by and among World Trophy
    Outfitters, Inc., Fast More Limited, Cheer Gold Development Ltd. and Floster Investment Limited |  | Incorporated by reference to Exhibit 2.1 to the Company’s Current
    Report on Form 8-K as filed with the SEC on November 12, 2008                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                                  |  |                                                                                                                                                    
|3.1 |  | Articles of Incorporation of World Trophy Outfitters, Inc. (n/k/a Chisen Electric Corporation)                                                                                   |  | Incorporated by reference to Exhibit 3(i).1 to the Registrant’s Registration Statement
    on Form SB-2 as filed with the SEC on September 23, 2005
|    |  |                                                                                                                                                                                  |  |                                                                                                                                                    
|3.2 |  | Certificate of Amendment to Articles of Incorporation of Chisen Electric Corporation (name
    change)                                                                           |  | Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K
    as filed with the SEC on February 4, 2009                 
|    |  |                                                                                                                                                                                  |  |                                                                                                                                                    
|3.3 |  | Amended and Restated Bylaws of Chisen Electric Corporation                                                                                                                       |  | Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K
    as filed with the SEC on February 4, 2009                 



|3.4 |  | Certificate of Incorporation of Fast More Limited, dated December 17, 2007                 |  | Incorporated by reference to Exhibit 3.3 to the Company’s Current
    Report on Form 8-K as filed with the SEC on November 12, 2008
|--- |  | ------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                            |  |                                                                                                                                    
|3.5 |  | Memorandum and Articles of Association of Fast More Limited, dated as of December 17, 2007 |  | Incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008



|3.6  |  | Certificate of Incorporation of Changxing Chisen Electric Co., Ltd.                                                               |  | Incorporated by reference to Exhibit 3.5 to the Company’s Current
    Report on Form 8-K as filed with the SEC on November 12, 2008 
|---- |  | --------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                   |  |                                                                                                                                     
|3.7  |  | Articles of Association of Changxing Chisen Electric Co., Ltd.                                                                    |  | Incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008 
|     |  |                                                                                                                                   |  |                                                                                                                                     
|3.8  |  | Business Registration Certificate of Changxing Chisen Electric Co., Ltd. (English Translated
    Version and Mandarin Version)    |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011                    
|     |  |                                                                                                                                   |  |                                                                                                                                     
|3.9  |  | Certificate of Change to Articles of Incorporation of Chisen Electric Corporation (Forward
    Split)                             |  | Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the
    SEC on November 28, 2011                
|     |  |                                                                                                                                   |  |                                                                                                                                     
|10.1 |  | Agreement on Establishment of Changxing Chisen Physical Chemistry Power Research and Development
    Center, dated April 30, 2008 |  | Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008



-35-







|10.2 |  | Form of Labor Contract                                                                                                                                   |  | Incorporated by reference to Exhibit 10.2 to the Company’s Current
    Report on Form 8-K as filed with the SEC on November 12, 2008
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                          |  |                                                                                                                                     
|10.3 |  | Lease Agreement, dated March 30, 2008, by and between Changxing Chisen Electric Co., Ltd. and
    Changxing Xiangyi Industrial Park Investment Co., Ltd. |  | Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008



|10.4 |  | Contract For Loan on Guarantee, by and among Zhejiang Changxing Agricultural
    Cooperative Bank, Changxing Chisen Electric Co., Ltd. and Zhejiang Chisen Glass Co., Ltd. |  | Incorporated by reference to Exhibit 10.4 to the Company’s Current
    Report on Form 8-K as filed with the SEC on November 12, 2008
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                            |  |                                                                                                                                     
|10.5 |  | Renminbi Loan Contract, dated January 11, 2008, by and between Changxing Chisen Electric Co.,
    Ltd. and China Construction Bank Corporation (Changxing Branch)          |  | Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008
|     |  |                                                                                                                                                                            |  |                                                                                                                                     
|10.6 |  | Renminbi Loan Contract, dated April 11, 2008, by and between Changxing Chisen Electric Co.,
    Ltd. and China Construction Bank Corporation (Changxing Branch)            |  | Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008
|     |  |                                                                                                                                                                            |  |                                                                                                                                     
|10.7 |  | Renminbi Loan Contract, dated March 31, 2008, by and between Changxing Chisen Electric Co.,
    Ltd. and Bank of China (Hong Kong) Limited Shanghan Branch                 |  | Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008



|10.8  |  | Loan Contract (Short Term), dated August 15, 2008, by and between Changxing
    Chisen Electric Co., Ltd. and Bank of China Changxing Branch                        |  | Incorporated by reference to Exhibit 10.8 to the Company’s Current
    Report on Form 8-K as filed with the SEC on November 12, 2008 
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                     |  |                                                                                                                                      
|10.9  |  | Acceptance Agreement, dated August 25, 2008, by and between Changxing Chisen Electric Co.,
    Ltd. and Industrial Bank Co., Ltd. Hangzhou Branch                   |  | Incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008 
|      |  |                                                                                                                                                                     |  |                                                                                                                                      
|10.10 |  | Acceptance Agreement of Commercial Bill, dated September 18, 2008, by and between Changxing
    Chisen Electric Co., Ltd. and China Bank Co., Ltd. Changxing Branch |  | Incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008



|10.11 |  | Cooperation Agreement, dated April 20, 2008, by and between Changxing Chisen
    Electric Co., Ltd. and Xiamen University                                                       |  | Included by reference to Exhibit 10.11 to the Company’s Annual Report
    on Form 10-K as filed with the SEC on June 28, 2010        
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                 |  |                                                                                                                                      
|10.11 |  | Acceptance Agreement of Commercial Bill, dated July 29, 2008, by and between Changxing Chisen
    Electric Co., Ltd. and China Construction Bank Changxing Branch Co., Ltd.     |  | Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008
|      |  |                                                                                                                                                                                 |  |                                                                                                                                      
|10.12 |  | Acceptance Agreement of Commercial Bill, dated September 9, 2008, by and between Changxing
    Chisen Electric Co., Ltd. and China Construction Bank Changxing Branch Co., Ltd. |  | Incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008



-36-







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



|10.14 |  | Supply Contract, dated April 22, 2008, by and between Changxing Chisen Electric
    Co., Ltd. And Jiangsu Yadea Science & Technology Development Co., Ltd.                                                                                                                 |  | Incorporated by reference to Exhibit 10.14 to the Company’s Current
    Report on Form 8-K as filed with the SEC on November 12, 2008
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                            |  |                                                                                                                                      
|10.15 |  | Sales Contract of Battery, dated November 10, 2007, by and between Changxing Chisen Electric
    Co., Ltd. and Hu Qinzhong, Yancheng Office                                                                                                                                |  | Incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008
|      |  |                                                                                                                                                                                                                                                                            |  |                                                                                                                                      
|10.16 |  | Sales Contract of Battery, dated February 17, 2008, by and between Changxing Chisen Electric
    Co., Ltd. and Song Chunwei                                                                                                                                                |  | Incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K
    as filed with the SEC on November 12, 2008
|      |  |                                                                                                                                                                                                                                                                            |  |                                                                                                                                      
|10.17 |  | Compensation Agreement of Corporate Relocation Acquisition, dated August 20, 2010, by and between
    the Company’s chief operating subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing
    Economic Development Zone, Zhejiang |  | Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form
    8-K as filed with the SEC on August 24, 2010.  



|10.18 |  | Investment Agreement, dated August 20, 2010, by and between the Company’s
    chief operating subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing Economic Development
    Zone, Zhejiang   |  | Incorporated by reference to Exhibit 10.4 to the Company’s Current
    Report on Form 8-K as filed with the SEC on August 24, 2010.   
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                        |  |                                                                                                                                       
|10.19 |  | Supplemental Agreement, dated August 20, 2010, by and between the Company’s chief operating
    subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing Economic Development Zone,
    Zhejiang |  | Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K
    as filed with the SEC on August 24, 2010.   
|      |  |                                                                                                                                                                                                                                        |  |                                                                                                                                       
|10.20 |  | Xuyi Economic Development Zone Project Investment Contract, dated September 6, 2010, by and
    between Chisen Electric Jiangsu Co., Ltd. and Jiangsu Xuyi Economic Development Zone Administrative Committee                          |  | Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
    as filed with the SEC on September 13, 2010.
|      |  |                                                                                                                                                                                                                                        |  |                                                                                                                                       
|10.21 |  | Xuyi Economic Development Zone Project Investment Contract Supplemental Agreement, dated September
    6 2010, by and between Chisen Electric Jiangsu Co., Ltd. and Jiangsu Xuyi Economic Development Zone Administrative Committee    |  | Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
    as filed with the SEC on September 13, 2010.



-37-







|10.22 |  | Electrode Purchase Contract, dated August 2, 2010, by and between Changxing
    Chisen Electric Co., Ltd. and Jiangsu XiangFa Electric Co., Ltd. (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                             |  |                                                                                                                 
|10.25 |  | Sales Contract, dated August 31, 2009, by and between Changxing Chisen Electric Co., Ltd. and
    Anqing Burui Power Supply Co., Ltd. (English Translated and Mandarin Versions)            |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



|10.26 |  | Contract, dated November 24, 2009, by and between Changxing Chisen Electric
    Co., Ltd. and Anyang City Yubei Gold and Lead Co., Ltd. (English Translated and Mandarin Versions)         |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                            |  |                                                                                                                 
|10.27 |  | Parts Acquisition Contract, dated January 1, 2010, by and between Changxing Chisen Electric
    Co., Ltd. and Jiangsu Xinri E-Vehicle Co., Ltd. (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



|10.29 |  | Contract, dated August 1, 2010, by and between Changxing Chisen Electric
    Co., Ltd. and Tianjin Aima Technology Company Limited (English Translated and Mandarin Versions)                                                                   |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                 |  |                                                                                                                 
|10.30 |  | Supplementary Agreement of Changxing Chisen Electric Co., Ltd. Relocation Project (English
    Translated and Mandarin Versions)                                                                                                                |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                 |  |                                                                                                                 
|10.31 |  | Contract of Guaranty of Maximum Amount, dated on our about February 10, 2010, by and between
    Agricultural Bank of China (Changxing County Branch) and Zhejiang Chisen Glass Co., Ltd. (English Translated and Mandarin
    Versions)        |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                 |  |                                                                                                                 
|10.32 |  | Guarantee Contact, dated on or about April 2, 2010, by and between China Construction Bank
    Corporation (Changxing Branch) and Zhejiang Chisen Glass Co., Ltd. (English Translated and Mandarin Versions)                                    |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                 |  |                                                                                                                 
|10.33 |  | Contract Guarantee of Maximum Amount, dated on or about April 14, 2009, by and between Shanghai
    Pudong Development Bank (Huzhou Branch) and Zhejiang Changxing Chisen Xinguangyuan Co., Ltd. (English Translated and Mandarin
    Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



-38-







|10.34 |  | Guarantee Contract, dated on or about January 12, 2010, by and between Changxing
    Economic Development Zone and Zhejiang Changxing Ruilang Electric Co., Ltd. (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                             |  |                                                                                                                 
|10.35 |  | Contract of Guarantee with a Maximum Amount, dated on or about July 1, 2008, by and between
    Bank of China (Changxing Branch) and Mr. Xu Kecheng (English Translated and Mandarin Versions)              |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



|10.36 |  | Contract of Guarantee, undated, by and between CITIC Trust Co., Ltd. and
    Zhejiang Changxing Xinguangyuan Co., Ltd. (RMB40,000,000) (English Translated and Mandarin Versions)       |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                         |  |                                                                                                                 
|10.37 |  | Contact of Guarantee, undated, by and between CITIC Trust Co., Ltd. and Zhejiang Changxing
    Chisen Xinguangyuan Co., Ltd. (RMB60,000,000) (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



|10.38 |  | Guarantee Contract (64720012302010005), dated January 13, 2010, by and among
    China Construction Bank Corporation, on the one hand, and Mr. Xu Kecheng and Ms. Zho Fangqin, on the other hand (English Translated
    and Mandarin Versions)                          |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                          |  |                                                                                                                 
|10.39 |  | Guarantee Contract (64720012302010004), dated January 13, 2010, by and among China Construction
    Bank Corporation, on the one hand, and Mr. Xu Kecheng and Ms. Zho Fangqin, on the other hand (English Translated and Mandarin
    Versions)                          |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                                          |  |                                                                                                                 
|10.40 |  | Contract of Guarantee of Maximum Amount (33905201000030826), undated, by and between Agricultural
    Bank of China Changxing County Sub-branch, on the one hand, and Zhejiang Chisen Glass Co., Ltd., on the other hand  (English
    Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                                          |  |                                                                                                                 
|10.41 |  | Contract of Guarantee with a Maximum Amount (BOC 130), dated October 25, 2010, by and between
    Xu Kecheng and Zho Fangqin, on the one hand, and Bank of China Ltd., on the other hand (English Translated and Mandarin Versions)                                      |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                                          |  |                                                                                                                 
|10.42 |  | Contract of Guarantee (3350012010AM00077300), dated November 16, 2010, by and between Zhejiang
    Changxing Chisen Xinguangyuan Co., Ltd. and Bank of Communication (Huzhou Branch) (English Translated and Mandarin Versions)                                          |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



-39-







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



|10.44 |  | Guarantee Contract (6435009992012194), dated September 27, 2010, by and
    between Xu Kecheng and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the
    other hand (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------



|10.45 |  | Guarantee Contract (64720012302010012), dated April 19, 2010, by and between
    Xu Kecheng and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand
    (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------



|10.46 |  | Guarantee Contract (647200123020100201), dated October 9, 2010, by and between
    Xu Kecheng and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand
    (English Translated and Mandarin Versions)   |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                                   |  |                                                                                                                 
|10.47 |  | Guarantee Contract (64720092302010036), dated October 18, 2010, by and between Xu Kecheng and
    Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English Translated
    and Mandarin Versions)   |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                                   |  |                                                                                                                 
|10.48 |  | Guarantee Contract (647200923020100381), dated November 10, 2010, by and between Xu Kecheng
    and Zho Fangqin, on the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English
    Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                                   |  |                                                                                                                 
|10.49 |  | Contract of Guarantee (P2009M17SZJZH0001JF14-0081-1) under Trust Loan Contract No. P2009M17SZJZH0001JF14-0081-1
    , undated, by and between Xu Kecheng and CITIC Trust Co., Ltd. (English Translated and Mandarin Versions)                                     |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



-40-







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



|10.51 |  | Contract of Guarantee (003), by and between Zhejiang Changxing Chisen Xinguangyuan
    Co., Ltd. and the Bank of China (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------



|10.52 |  | Contract by and between Changxing Chisen Electric Co., Ltd. and Zhejiang
    Chisen Glass Co., Ltd. dated March 8, 2010 (English Translated and Mandarin Versions)                          |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                             |  |                                                                                                                 
|10.53 |  | Contract by and between Changxing Chisen Electric Co., Ltd. and Zhejiang Chisen Glass Co.,
    Ltd., dated December 20, 2010 (English Translated and Mandarin Versions)                     |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                             |  |                                                                                                                 
|10.54 |  | Contract by and between Changxing Chisen Electric Co., Ltd. and Zhejiang Changxing Ruilang
    Electronic Company Limited dated October 18, 2010 (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                             |  |                                                                                                                 
|10.55 |  | Summary of Oral Loan Agreement with Ai Ge Organism Products Company Limited                                                                                                                 |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



|10.56 |  | Electrode Purchase Contract, dated August 2, 2010, by and between Changxing
    Chisen Electric Co., Ltd. and Jiangsu XiangFa Electric Co., Ltd. (English Translated and Mandarin Versions)                                                               |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                                                                           |  |                                                                                                                 
|10.57 |  | Electrode Plate Supply Contract, by and between Changxing Chisen Electric Co., Ltd. and Anqing
    Borui Power Supply Co., Ltd., dated August 2, 2010 (English Translated and Mandarin Versions)                                                          |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                           |  |                                                                                                                 
|10.58 |  | Guarantee Contract (6472009992011036), dated March 31, 2011, by and between Xu Kecheng, on
    the one hand, and China Construction Bank Corporation (Changxing Sub-Branch) on the other hand (English Translated and Mandarin
    Versions)              |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|      |  |                                                                                                                                                                                                                                                           |  |                                                                                                                 
|10.59 |  | Shanghai Pudong Development Bank Contract of Guarantee of Maximum Amount,  dated
    March 31, 2011, by and between Shanghai Pudong Development Bank Huzhou Sub-branch and Zhejiang Chisen Glass Co., Ltd. (English
    Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



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|10.60 |  | Shanghai Pudong Development Bank Contract of Guarantee of Maximum Amount,  dated
    March 31, 2011, by and between Shanghai Pudong Development Bank Huzhou Sub-branch and Zhejiang Changxing Chisen Xingguangyuan
    Co., Ltd. (English Translated and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------



|14.1 |  | Code of Business Conduct and Ethics                                                                                        |  | Incorporated by reference to Exhibit 14.1 to the Company’s Current
    Report on Form 8-K as filed with the SEC on February 4, 2009
|---- |  | -------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                            |  |                                                                                                                                    
|16.1 |  | Letter to SEC from Pritchett, Siler & Hardy, P.C.                                                                          |  | Incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K
    as filed with the SEC on January 21, 2009
|     |  |                                                                                                                            |  |                                                                                                                                    
|17   |  | Resignation of Mathew Evans, dated November 12, 2008                                                                       |  | Incorporated by reference to Exhibit 17 to the Company’s Current Report on Form 8-K as
    filed with the SEC on November 12, 2008 
|     |  |                                                                                                                            |  |                                                                                                                                    
|21   |  | List of Subsidiaries                                                                                                       |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011                   
|     |  |                                                                                                                            |  |                                                                                                                                    
|31.1 |  | Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002                |  | Provided herewith                                                                                                                  
|     |  |                                                                                                                            |  |                                                                                                                                    
|31.2 |  | Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002                |  | Provided herewith                                                                                                                  
|     |  |                                                                                                                            |  |                                                                                                                                    
|32.1 |  | Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the
    Sarbanes-Oxley Act Of 2002 |  | Provided herewith                                                                                                                  
|     |  |                                                                                                                            |  |                                                                                                                                    
|32.2 |  | Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the
    Sarbanes-Oxley Act Of 2002 |  | Provided herewith                                                                                                                  
|     |  |                                                                                                                            |  |                                                                                                                                    
|99.1 |  | Audit Committee Charter, dated January 15, 2009                                                                            |  | Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
    as filed with the SEC on February 4, 2009
|     |  |                                                                                                                            |  |                                                                                                                                    
|99.2 |  | Compensation Committee Charter, dated January 15, 2009                                                                     |  | Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K
    as filed with the SEC on February 4, 2009



|99.3 |  | Corporate Governance and Nominating Committee Charter, dated January 15,
    2009 |  | Incorporated by reference to Exhibit 99.3 to the Company’s Current
    Report on Form 8-K as filed with the SEC on February 4, 2009
|---- |  | --------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------



|99.4 |  | China Battery Industry Association Certificate of Ranking (English Translated
    Version)                                       |  | Incorporated by reference to the Company’s Annual Report on Form 10-K
    as filed with the SEC on June 14, 2011
|---- |  | -------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                  |  |                                                                                                                 
|99.5 |  | China News Article entitled “Electric Bicycles are Involved in Government’s Subsidy
    Program” (English and Mandarin Versions) |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011
|     |  |                                                                                                                                  |  |                                                                                                                 
|99.6 |  | Subsidize Policy on New Energy Vehicle (English and Mandarin Versions)                                                           |  | Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the
    SEC on June 14, 2011



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SIGNATURES



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



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



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



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