----

| x      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   | For the Quarter Ended January 31, 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   | or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|   | For the transition period from                                      to                                       |   |

----

| Nevada(State or Other Jurisdictionof Incorporation or Organization)  |   | 88-0490890(I.R.S. EmployerIdentification No.) |
|----------------------------------------------------------------------|--------|-----------------------------------------------|
|                                                                 |   |                                          |
| 4894 Lone Mountain #168, Las Vegas, Nevada                           |   | 89130                                         |
|  (Address of Principal Executive Offices)                       |   | (Zip Code)                                    |
|                                                                 |
| (702) 425-7376(Issuer’s Telephone Number, Including Area Code) |

----

----

|                                                                                                                           | Page No. |
|--------------------------------------------------------------------------------------------------------------------------------|---------------|
|                                                                                                                           |          |
| PART I. FINANCIAL INFORMATION                                                                                                  |  3       |
|                                                                                                                           |          |
| ITEM I – Unaudited Financial Statements                                                                                  |   3      |
|                                                                                                                           |          |
| Balance Sheets as of January 31, 2011 and July 31, 2010 (Unaudited)                                                            | 4             |
|                                                                                                                           |          |
| Consolidated Statements of Operations for the Three and Six Months Ended January 31, 2011 and 2010 (Unaudited)                 | 5             |
|                                                                                                                           |          |
| Consolidated Statement of Comprehensive Income (Loss) for the Three and Six Months Ended January 31, 2011 and 2010 (Unaudited) | 6             |
|                                                                                                                           |          |
| Consolidated Statements of Cash Flows for the Six Months Ended January 31, 2011 and 2010 (Unaudited)                           | 7             |
|                                                                                                                           |          |
| Statement of Stockholders Deficiency (Unaudited)                                                                               | 8             |
|                                                                                                                           |          |
| Notes to Unaudited Consolidated Financial Statements                                                                           | 9             |
|                                                                                                                           |          |
| ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.                                | 18            |
|                                                                                                                           |          |
| ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk                                                      |   22     |
|                                                                                                                           |          |
| ITEM 4T– Controls and Procedures.                                                                                        | 23            |
|                                                                                                                           |          |
| PART II. OTHER INFORMATION                                                                                                     |   23     |
|                                                                                                                           |          |
| ITEM 6 - Exhibits                                                                                                              |   24     |

----

----

|                                                                                                                                  |   | January 31, |        |   | July 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|-------------|--------|---------------|--------|
|                                                                                                                                  |   | 2011             |        |   | 2010          |   |
| Assets                                                                                                                                |   |             |        |   |          |   |
|                                                                                                                                  |   |             |        |   |          |   |
| Current assets:                                                                                                                       |   |             |        |   |          |   |
|                                                                                                                                  |   |             |        |   |          |   |
| Cash and cash equivalents                                                                                                             |   | $                | 1,126       |   |          | $      | 2,113 |   |
| Note receivable, net of allowance for doubtful account of $836,076 and $841,207, respectively                                         |   |             | -           |   |          |   | - |   |
| Inventories                                                                                                                           |   |             | 36,103      |   |          |   | 35,000 |   |
| Employee advances                                                                                                                     |   |             | 1,344       |   |          |   | 10,000 |   |
| Other current assets                                                                                                                  |   |             | 94,189      |   |          |   | 51,000 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Total current assets                                                                                                                  |   |             | 132,762     |   |          |   | 98,113 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Property and equipment, net                                                                                                           |   |             | 1,880,834   |   |          |   | 1,919,681 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Deferred patent costs                                                                                                                 |   |             | 24,258      |   |          |   | 24,258 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Total assets                                                                                                                          |   | $                | 2,037,854   |   |          | $      | 2,042,052 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Liabilities and Stockholders' Deficiency                                                                                              |   |             |        |   |          |   |   |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Current liabilities:                                                                                                                  |   |             |        |   |          |   |   |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Bank overdrafts                                                                                                                       |   | $                | 11,770      |   |          | $      | 14,104 |   |
| Accounts payable and accrued expenses                                                                                                 |   |             | 1,032,251   |   |          |   | 1,296,734 |   |
| Current portion of long-term debt                                                                                                     |   |             | 16,480      |   |          |   | 22,444 |   |
| Customer deposits                                                                                                                     |   |             | 100,594     |   |          |   | 100,000 |   |
| Deferred revenue                                                                                                                      |   |             | 333,360     |   |          |   | 501,288 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Total current liabilities                                                                                                             |   |             | 1,494,455   |   |          |   | 1,934,570 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Long-term liabilities:                                                                                                                |   |             |        |   |          |   |   |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Long-term debt, less current portion                                                                                                  |   |             | 5,886,119   |   |          |   | 5,943,056 |   |
| Long-term deferred revenue, less current portion                                                                                      |   |             | -           |   |          |   | 83,333 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Total liabilities                                                                                                                     |   |             | 7,380,574   |   |          |   | 7,960,959 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Commitments and contingencies                                                                                                         |   |             | -           |   |          |   | - |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Stockholders' deficiency                                                                                                              |   |             |        |   |          |   |   |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Preferred stock, $.001 par value, 5,000,000 shares authorized, 0 issued and outstanding                                               |   |             | -           |   |          |   | - |   |
| Common stock, $.001 par value, 100,000,000 shares authorized, 30,047,301 issued and outstanding at Janaury 31, 2011 and July 31, 2010 |   |             | 30,047      |   |          |   | 30,047 |   |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Additional paid-in capital                                                                                                            |   |             | 56,758,511  |   |          |   | 56,758,511 |   |
| Accumulated deficit                                                                                                                   |   |             | (62,122,707 | )      |          |   | (62,699,029 | ) |
| Accumulated other comprehensive income                                                                                                |   |             | (8,571      | )      |          |   | (8,436 | ) |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Stockholders' deficiency                                                                                                              |   |             | (5,342,720  | )      |          |   | (5,918,907 | ) |
|                                                                                                                                  |   |             |        |   |          |   |   |   |
| Total liabilities and stockholders' deficiency                                                                                        |   | $                | 2,037,854   |   |          | $      | 2,042,052 |   |

----

|                                                                                         |   | For the Three Months Ended |       |   | For the Six Months Ended |   |
|----------------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|--------|----------------------------------------------|--------|
|                                                                                         |   | January 31,                               |       |   | January 31,                             |   |
|                                                                                         |   | 2011                                           |       |   | 2010                                         |   |   | 2011 |   |   | 2010 |   |
| Sales:                                                                                       |   | $                                              | 2,486      |   |                                         | $      | 999 |   |   | $ | 4,472 |   |   | $ | 125,909 |   |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                                                                          |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                                                                |   |                                           | 16,303     |   |                                         |   | - |   |   |   | 16,653 |   |   |   | 165,497 |   |
| General and administrative                                                                   |   |                                           | 517,840    |   |                                         |   | 377,204 |   |   |   | 882,370 |   |   |   | 748,526 |   |
| Research and development                                                                     |   |                                           | 547,228    |   |                                         |   | 224,334 |   |   |   | 1,029,205 |   |   |   | 656,955 |   |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Total costs and expenses                                                                     |   |                                           | 1,081,371  |   |                                         |   | 601,538 |   |   |   | 1,928,228 |   |   |   | 1,570,978 |   |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                                         |   |                                           | (1,078,885 | )      |                                         |   | (600,539 | ) |   |   | (1,923,756 | ) |   |   | (1,445,069 | ) |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Other (expenses) income:                                                                     |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                             |   |                                           | (144,883   | )      |                                         |   | (107,208 | ) |   |   | (302,721 | ) |   |   | (169,772 | ) |
| Other income                                                                                 |   |                                           | 234,508    |   |                                         |   | 70,418 |   |   |   | 2,802,799 |   |   |   | 88,043 |   |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) before provision for (benefit from) income taxes                           |   |                                           | (989,260   | )      |                                         |   | (637,329 | ) |   |   | 576,322 |   |   |   | (1,526,798 | ) |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Provision for (benefit from) income taxes                                                    |   |                                           | -          |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss)                                                                          |   |                                           | (989,260   | )      |                                         |   | (637,329 | ) |   |   | 576,322 |   |   |   | (1,526,798 | ) |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Less: Net earnings (loss) attributable to noncontrolling interest                            |   |                                           | -          |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss) attributable to Li-ion Motors Corp                                       |   | $                                              | (989,260   | )      |                                         | $      | (637,329 | ) |   | $ | 576,322 |   |   | $ | (1,526,798 | ) |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss) per share - basic and diluted:                                           |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss) per common share attributable to Li-ion Motors Corp. common shareholders |   | $                                              | (0.03      | )      |                                         | $      | (0.03 | ) |   | $ | 0.02 |   |   | $ | (0.07 | ) |
|                                                                                         |   |                                           |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding - basic and diluted                            |   |                                           | 30,047,301 |   |                                         |   | 21,599,808 |   |   |   | 30,047,301 |   |   |   | 21,288,096 |   |

----

|                                                                |   | For the Three Months Ended |     |   | For the Six Months Ended |   |
|---------------------------------------------------------------------|--------|------------------------------------------------|----------|--------|----------------------------------------------|--------|
|                                                                |   | January 31,                               |     |   | January 31,                             |   |
|                                                                |   | 2011                                           |     |   | 2010                                         |   |   | 2011 |   |   | 2010 |   |
| Net earnings (loss)                                                 |   | $                                              | (989,260 | )      |                                         | $      | (637,329 | ) |   | $ | 576,322 |   |   | $ | (1,526,798 | ) |
|                                                                |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income                                          |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Currency translation adjustment                                     |   |                                           | (535     | )      |                                         |   | - |   |   |   | (135 | ) |   |   | - |   |
|                                                                |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                         |   |                                           | (989,794 | )      |                                         |   | (637,329 | ) |   |   | 576,187 |   |   |   | (1,526,798 | ) |
|                                                                |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss) attributable to noncontrolling interest |   |                                           | -        |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
|                                                                |   |                                           |     |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss) attributable to Li-ion Motors Corp      |   | $                                              | (989,794 | )      |                                         | $      | (637,329 | ) |   | $ | 576,187 |   |   | $ | (1,526,798 | ) |

----

|                                                                                      |   | For the Six Months Ended |     |
|-------------------------------------------------------------------------------------------|--------|----------------------------------------------|----------|
|                                                                                      |   | January 31,                             |     |
|                                                                                      |   | 2011                                         |     |   | 2010 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                     |   |                                         |     |   |   |   |
| Net earnings (loss)                                                                       |   | $                                            | 576,322  |   |   | $ | (1,526,798 | ) |
| Adjustments to reconcile net earnings (loss) to net cash utilized by operating activities |   |                                         |     |   |   |   |   |   |
| Depreciation                                                                              |   |                                         | 38,847   |   |   |   | 40,774 |   |
| Provision for doubtful accounts                                                           |   |                                         | (5,131   | ) |   |   | - |   |
| Increase (decrease) in cash flows from changes in operating assets and liabilities        |   |                                         |     |   |   |   |   |   |
| Accounts receivable, net                                                                  |   |                                         | -        |   |   |   | 13,522 |   |
| Inventories                                                                               |   |                                         | (1,103   | ) |   |   | (52,915 | ) |
| Employee advances                                                                         |   |                                         | 8,656    |   |   |   | (3,547 | ) |
| Prepaid expenses and other current assets                                                 |   |                                         | (43,189  | ) |   |   | 13,657 |   |
| Bank overdraft                                                                            |   |                                         | (2,334   | ) |   |   | - |   |
| Accounts payable and accrued expenses                                                     |   |                                         | (264,483 | ) |   |   | 342,264 |   |
| Customer deposits                                                                         |   |                                         | 594      |   |   |   | 31,255 |   |
| Deferred revenue                                                                          |   |                                         | (251,262 | ) |   |   | (1,260 | ) |
| Net cash provided by (used in) operating activities                                       |   |                                         | 56,917   |   |   |   | (1,143,048 | ) |
|                                                                                      |   |                                         |     |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES :                                                    |   |                                         |     |   |   |   |   |   |
| Additions to property and equipment                                                       |   |                                         | -        |   |   |   | (4,665 | ) |
| Net cash used in investing activities                                                     |   |                                         | -        |   |   |   | (4,665 | ) |
|                                                                                      |   |                                         |     |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES :                                                    |   |                                         |     |   |   |   |   |   |
| Advances on promissory note                                                               |   |                                         | (109,279 | ) |   |   | - |   |
| Payments received on promissory note                                                      |   |                                         | 114,410  |   |   |   | - |   |
| Proceeds from issuance of debt                                                            |   |                                         | 832,755  |   |   |   | 108,060 |   |
| Payments on debt                                                                          |   |                                         | (895,655 | ) |   |   | (15,938 | ) |
| Advances from related parties                                                             |   |                                         | -        |   |   |   | 1,401,759 |   |
| Payments to related parties                                                               |   |                                         | -        |   |   |   | (332,218 | ) |
| Net cash provided by (used in) financing activities                                       |   |                                         | (57,769  | ) |   |   | 1,161,663 |   |
|                                                                                      |   |                                         |     |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                              |   |                                         | (135     | ) |   |   | (3,099 | ) |
|                                                                                      |   |                                         | -        |   |   |   |   |   |
| CHANGE IN CASH AND CASH EQUIVALENTS                                                       |   |                                         |     |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                      |   |                                         | (987     | ) |   |   | 10,851 |   |
| Cash and cash equivalents at beginning of period                                          |   |                                         | 2,113    |   |   |   | 5,182 |   |
|                                                                                      |   |                                         |     |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                |   | $                                            | 1,126    |   |   | $ | 16,033 |   |
|                                                                                      |   |                                         |     |   |   |   |   |   |
| SUPPLEMENTAL CASH FLOW DISCLOSURES                                                        |   |                                         |     |   |   |   |   |   |
| Cash paid during the period for:                                                          |   |                                         |     |   |   |   |   |   |
| Interest                                                                                  |   | $                                            | 319,724  |   |   | $ | 52,629 |   |
| Income taxes                                                                              |   | $                                            | -        |   |   | $ | - |   |
|                                                                                      |   |                                         |     |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES                                  |   |                                         |     |   |   |   |   |   |
| Shares issued for related party advances                                                  |   | $                                            | -        |   |   | $ | 615,500 |   |
| Accrued expenses transferred to long-term debt                                            |   | $                                            | -        |   |   | $ | 32,201 |   |

----

|                                 |   |               |        |   | Common Shares |   |    |                         |   |   |        |   |   | Accumulated Other |        |   |               |   |    |   |   |
|-------------------------------------------|--------|--------------------|-------------|--------|--------------------|--------|---------|------------------------------|--------|--------|-------------|--------|--------|------------------------|-------------|--------|--------------------|--------|---------|--------|--------|
|                                      |   | Number of     |        |   | $0.01              |   |    | Additional Paid in |   |   | Accumulated |   |   | Comprehensive          |        |   | Comprehensive      |   |    |   |   |
|                                      |   | Common Shares |        |   | Par Value     |   |    | Capital                      |   |   | Deficit     |   |   | Income (Loss)     |        |   | Income (Loss) |   |    | Total  |   |
|                                      |   |               |        |   |               |   |    |                         |   |   |        |   |   |                   |        |   |               |   |    |   |   |
| Balance - August 1, 2009                  |   |               | 20,884,101  |   |               |   | 20,884  |                         |   |   | 55,731,174  |   |   |                   | (58,765,425 | )      |               |   | (13,413 | )      |   |   |   |   |   | (3,026,780 | ) |
| Exercise of stock options                 |   |               | 685,000     |   |               |   | 685     |                         |   |   | 615,815     |   |   |                   | -           |   |               |   | -       |   |   |   |   |   |   | 616,500 |   |
| 1:2 Reverse stock split adjustment        |   |               | (10,779,696 | )      |               |   | (10,780 | )                            |   |   | 10,780      |   |   |                   | -           |   |               |   | -       |   |   |   |   |   |   | - |   |
| Common stock issued as collateral on loan |   |               | 3,749,999   |   |               |   | 3,750   |                         |   |   | (3,750      | )      |   |                   | -           |   |               |   | -       |   |   |   |   |   |   | - |   |
| Common stock issued as collateral on loan |   |               | 10,000,000  |   |               |   | 10,000  |                         |   |   | (10,000     | )      |   |                   | -           |   |               |   | -       |   |   |   |   |   |   | - |   |
| Exercise of stock options                 |   |               | 500,000     |   |               |   | 500     |                         |   |   | 349,500     |   |   |                   |        |   |               |   |    |   |   |   |   |   |   | 350,000 |   |
| 1:5 Forward split adjustment              |   |               | 5,007,897   |   |               |   | 5,008   |                         |   |   | (5,008      | )      |   |                   | -           |   |               |   | -       |   |   |   |   |   |   | - |   |
| Issuance of non-employee stock options    |   |               | -           |   |               |   | -       |                         |   |   | 70,000      |   |   |                   | -           |   |               |   | -       |   |   |   |   |   |   | 70,000 |   |
| Foreign currency translation              |   |               | -           |   |               |   | -       |                         |   |   | -           |   |   |                   | -           |   |               |   | 4,977   |   |   | $ | 4,977 |   |   |   | 4,977 |   |
| Net Loss                                  |   |               | -           |   |               |   | -       |                         |   |   | -           |   |   |                   | (3,933,604  | )      |               |   | -       |   |   |   | (3,933,604 | ) |   |   | (3,933,604 | ) |
| Comprehensive loss                        |   |               |        |   |               |   |    |                         |   |   |        |   |   |                   |        |   |               |   |    |   |   | $ | (3,928,627 | ) |   |   | - |   |
|                                      |   |               |        |   |               |   |    |                         |   |   |        |   |   |                   |        |   |               |   |    |   |   |   |   |   |   |   |   |   |
| Balance - July 31, 2010                   |   |               | 30,047,301  |   |               | $      | 30,047  |                         |   | $      | 56,758,511  |   |   | $                      | (62,699,029 | )      |               | $      | (8,436  | )      |   |   |   |   |   | $ | (5,918,907 | ) |
|                                      |   |               |        |   |               |   |    |                         |   |   |        |   |   |                   |        |   |               |   |    |   |   |   |   |   |   |   |   |   |
| Foreign currency translation              |   |               | -           |   |               |   | -       |                         |   |   | -           |   |   |                   | -           |   |               |   | (135    | )      |   | $ | (135 | ) |   |   | (135 | ) |
| Net earnings                              |   |               | -           |   |               |   | -       |                         |   |   | -           |   |   |                   | 576,322     |   |               |   | -       |   |   |   | 576,322 |   |   |   | 576,322 |   |
| Comprehensive loss                        |   |               |        |   |               |   |    |                         |   |   |        |   |   |                   |        |   |               |   |    |   |   | $ | 576,187 |   |   |   | - |   |
|                                      |   |               |        |   |               |   |    |                         |   |   |        |   |   |                   |        |   |               |   |    |   |   |   |   |   |   |   |   |   |
| Balance - January 31, 2011                |   |               | 30,047,301  |   |               | $      | 30,047  |                         |   | $      | 56,758,511  |   |   | $                      | (62,122,707 | )      |               | $      | (8,571  | )      |   |   |   |   |   | $ | (5,342,720 | ) |

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|           |   | January 31, |   |   | July 31, |   |
|----------------|--------|------------------|--------|--------|---------------|--------|
|           |   | 2011             |   |   | 2010          |   |
| Raw Materials  |   | $                | 1,103  |   |          | $      | - |   |
| Finished Goods |   |             | 35,000 |   |          |   | 35,000 |   |
|           |   | $                | 36,103 |   |          | $      | 35,000 |   |

|                          |   | January 31, |      |   | July 31, |   |
|-------------------------------|--------|------------------|-----------|--------|---------------|--------|
|                          |   | 2011             |      |   | 2010          |   |
| Building and Improvements     |   | $                | 1,287,001 |   |          | $      | 1,287,001 |   |
| Furniture and Fixtures        |   |             | 15,794    |   |          |   | 15,794 |   |
| Office Equipment              |   |             | 146,016   |   |          |   | 146,016 |   |
| Machinery and Equipment       |   |             | 36,971    |   |          |   | 36,971 |   |
| Vehicles                      |   |             | 66,429    |   |          |   | 66,429 |   |
| Software Costs                |   |             | 28,913    |   |          |   | 28,913 |   |
| Land                          |   |             | 700,000   |   |          |   | 700,000 |   |
|                          |   |             | 2,281,124 |   |          |   | 2,281,124 |   |
|                          |   |             |      |   |          |   |   |   |
| Less Accumulated Depreciation |   |             | (400,290  | )      |          |   | (361,443 | ) |
| Net Property and Equipment    |   | $                | 1,880,834 |   |          | $      | 1,919,681 |   |

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|                    |   | January 31, |   |   | July 31, |   |
|-------------------------|--------|------------------|--------|--------|---------------|--------|
|                    |   | 2011             |   |   | 2010          |   |
|                    |   |             |   |   |          |   |
| Retainers               |   | $                | 749    |   |          | $      | 7,500 |   |
| Deferred Warranty Asset |   |             | 13,668 |   |          |   | 25,594 |   |
| Prepaid Expenses        |   |             | 79,772 |   |          |   | 17,906 |   |
| Total                   |   | $                | 94,189 |   |          | $      | 51,000 |   |

|                                        |   | January 31, |      |   | July 31, |   |
|---------------------------------------------|--------|------------------|-----------|--------|---------------|--------|
|                                        |   | 2011             |      |   | 2010          |   |
|                                        |   |             |      |   |          |   |
| Accounts Payable                            |   | $                | 585,407   |   |          | $      | 599,518 |   |
| Accounts Payable - Related Parties          |   |             | 81,673    |   |          |   | 63,325 |   |
| Wages, Paid Leave and Payroll Related Taxes |   |             | 206,119   |   |          |   | 407,884 |   |
| Accrued Interest                            |   |             | 84,229    |   |          |   | 114,619 |   |
| Other                                       |   |             | 74,823    |   |          |   | 111,388 |   |
| Total                                       |   | $                | 1,032,251 |   |          | $      | 1,296,734 |   |

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|                                                                                                                                                                                  |   | Years Ended |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|-----------|
|                                                                                                                                                                             |   | July 31,    |      |
|                                                                                                                                                                             |   | January 31, |      |   | July 31, |   |
|                                                                                                                                                                                  |   | 2011             |      |   | 2010 |   |
| 5% Note payable to Bayview Loan Servicing, LLC, payable in monthly installments of $5,349 including interest, collateralized by real property due in full on or before March 2038 (1) |   | $                | 945,505   |   |   | $ | 953,437 |   |
|                                                                                                                                                                                  |   |             |      |   |   |   |   |   |
| 10% Note payable to Crystal Capital Ventures, payable in May 2012 collateralized by 9,000,000 shares of the Company's common stock (2)                                                |   |             | 3,000,000 |   |   |   | 3,000,000 |   |
|                                                                                                                                                                                  |   |             |      |   |   |   |   |   |
| 11.24% Note payable to Allegiance Direct Bank, payable in monthly installments of approximately $1000 and has been paid in full (3)                                                   |   |             | -         |   |   |   | 5,000 |   |
|                                                                                                                                                                                  |   |             |      |   |   |   |   |   |
| 12% Note payable to Frontline Asset Management, payable in monthly installments of interest only, due in full on March 1, 2012 (4)                                                    |   |             | 1,185,435 |   |   |   | 1,235,404 |   |
|                                                                                                                                                                                  |   |             |      |   |   |   |   |   |
| 10% Note payable to Winsor Capital Inc. due in full on April 15, 2013 collaterized by 12,000,000 shares of the Company's common stock (5)                                             |   |             | 771,659   |   |   |   | 771,659 |   |
|                                                                                                                                                                                  |   |             | 5,902,599 |   |   |   | 5,965,500 |   |
| Less Current Portion                                                                                                                                                                  |   |             | (16,480   | ) |   |   | (22,444 | ) |
|                                                                                                                                                                                  |   | $                | 5,886,119 |   |   | $ | 5,943,056 |   |

| 2011       |   | $      | 16,480    |   |
|------------|--------|--------|-----------|--------|
| 2012       |   |   | 4,202,773 |   |
| 2013       |   |   | 789,900   |   |
| 2014       |   |   | 19,191    |   |
| 2015       |   |   | 20,190    |   |
| Thereafter |   |   | 854,065   |   |
|       |   | $      | 5,902,599 |   |

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|                                                                  |   | Three Months Ended |       |   | Six Months Ended |   |
|-----------------------------------------------------------------------|--------|------------------------------|------------|--------|----------------------------|--------|
|                                                             |   | January 31,             |       |   | January 31,           |   |
|                                                                  |   | 2011                         |       |   | 2010                       |   |   | 2011 |   |   | 2010 |   |
| Basic and Diluted EPS:                                                |   |                         |       |   |                       |   |   |   |   |   |   |   |
| Net Income/(Loss) Ascribed to Common Shareholders - Basic and Diluted |   | $                            | (989,260   | )      |                       | $      | (637,329 | ) |   | $ | 576,322 |   |   | $ | (1,526,798 | ) |
| Weighted Average Shares Outstanding - Basic and Diluted               |   |                         | 30,047,301 |   |                       |   | 21,599,808 |   |   |   | 30,047,301 |   |   |   | 21,288,096 |   |
| Basic and Diluted Net Gain (Loss) Per Common Share                    |   | $                            | (0.03      | )      |                       | $      | (0.03 | ) |   | $ | 0.02 |   |   | $ | (0.07 | ) |

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| 31     | Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002, filed herewith.                                               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                               |
| 32     | Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |

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|                 | LI-ION MOTORS CORP. |                                                   |
|----------------------|---------------------|--------------------------------------------------------|
|                 |                |                                                   |   |
| Date: March 17, 2011 | By:                 | /s/ Stacey Fling                                       |   |
|                 |                | Stacey Fling                                           |   |
|                 |                | Chief Executive Officer and PrincipalFinancial Officer |   |

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