----

----

| [X]                  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|----------------------|------------------------------------------------------------------------------------|
|                 |  For the quarterly period ended September 30, 2010                       |
| [   ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

| Delaware                        | 22-2497491                 |
|---------------------------------|----------------------------|
| (State or Other Jurisdiction of | (I.R.S. Employer I.D. No.) |
| incorporation or organization)  |                       |

----

| ·   | add a section titled “Variable Interest Entity” to Note 2 to the Financial Statements, |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | revise the disclosure regarding shares issued to non-employee consultants in the fifth paragraph of Note 14,  “Stock-Based Compensation.” |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | revise Note 22, “Segment Information” to include segment information for the three and nine months ended September 30, 2009, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | revise Note 23, “Restatement” to replace the balance sheet information as of September 30, 2009 with balance sheet information as of December 31, 2009, and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | quantify the effect on battery sales of our acquisition of Wuxi ZQ in the fifth paragraph of Management’s Discussion and Analysis. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

----

|       |   Page No                                                                                                                                           |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| Part I     | Financial Information                                                                                                                                    |   |
|       |                                                                                                                                                     |   |
| Item 1.    | Financial Statements (unaudited):                                                                                                                        |   |
|       | Condensed Consolidated Balance Sheet (unaudited) – September 30, 2010 and December 31, 2009                                                        | 2 |
|       | Condensed Consolidated Statements of Income and Other Comprehensive Income (Unaudited) - for the Three and Nine Months Ended September 30, 2010 and 2009 | 3 |
|       | Condensed Consolidated Statements of Cash Flows (Unaudited) – for the Nine Months Ended September 30, 2010 and 2009                                | 4 |
|       | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                                         | 5 |
| Item 2.    | Management’s Discussion and Analysis of Financial Condition and  Results of Operations                                                        |   30 |
| Item 3     | Quantitative and Qualitative Disclosures about Market Risk                                                                                               | 37 |
| Item 4.    | Controls and Procedures                                                                                                                                  | 37 |
|       |                                                                                                                                                     |   |
| Part II    | Other Information                                                                                                                                        |   |
|       |                                                                                                                                                     |   |
| Item 1.    | Legal Proceedings                                                                                                                                        | 38 |
| Items 1A.  | Risk Factors                                                                                                                                             | 38 |
| Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                              | 38 |
| Item 3.    | Defaults upon Senior Securities                                                                                                                          | 38 |
| Item 4.    | Reserved                                                                                                                                                 | 38 |
| Item 5.    | Other Information                                                                                                                                        | 38 |
| Item 6.    | Exhibits                                                                                                                                                 | 38 |
| Signatures |                                                                                                                                                     | 39 |

----

| ADVANCED BATTERY TECHNOLOGIES, INC. AND SUBSIDIARIES                                         |   |
|----------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                        |   |
| (UNAUDITED)                                                                                  |   |
|                                                                                         |   |   |   |   |   |   |
| ASSETS                                                                                       |
|                                                                                         |   | September 30, |   |   | December 31, |   |
|                                                                                         |   | 2010 |   |   | 2009 |   |
|                                                                                         |   |   |   |   | (Restated) |   |
| Current assets:                                                                              |   |   |   |   |   |   |
| Cash and cash equivalents                                                                    |   | $ | 74,278,291 |   |   | $ | 52,923,358 |   |
| Accounts receivable, net                                                                     |   |   | 19,609,668 |   |   |   | 22,406,927 |   |
| Inventories, net                                                                             |   |   | 7,957,039 |   |   |   | 3,680,098 |   |
| Loan receivable                                                                              |   |   | 1,600,000 |   |   |   | 1,600,000 |   |
| Other receivables                                                                            |   |   | 342,586 |   |   |   | 107,751 |   |
| Advance to suppliers,net                                                                     |   |   | 5,921,007 |   |   |   | 7,940,129 |   |
| Total Current Assets                                                                         |   |   | 109,708,591 |   |   |   | 88,658,263 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Property, plant and equipment, net                                                           |   |   | 55,836,516 |   |   |   | 47,248,600 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Other assets:                                                                                |   |   |   |   |   |   |   |   |
| Investment in unconsolidated entity                                                          |   |   | 789,362 |   |   |   | 785,057 |   |
| Investment advance                                                                           |   |   | 1,497,571 |   |   |   | 1,457,034 |   |
| Deposit for long-term assets                                                                 |   |   | 2,130,952 |   |   |   | 2,860,882 |   |
| Intangible assets, net                                                                       |   |   | 13,924,332 |   |   |   | 14,317,502 |   |
| Goodwill                                                                                     |   |   | 2,541,094 |   |   |   | 2,472,311 |   |
| Other assets                                                                                 |   |   | 44,361 |   |   |   | 26,705 |   |
| Total other assets                                                                           |   |   | 20,927,672 |   |   |   | 21,919,491 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Total Assets                                                                                 |   | $ | 186,472,778 |   |   | $ | 157,826,354 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                         |
|                                                                                         |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                         |   |   |   |   |   |   |   |   |
| Short-term loan                                                                              |   | $ | - |   |   |   | 2,916,071 |   |
| Accounts payable                                                                             |   |   | 931,385 |   |   |   | 670,254 |   |
| Advance from Customers                                                                       |   |   | 168,311 |   |   |   | 228,871 |   |
| Accrued expenses and other payables                                                          |   |   | 1,166,173 |   |   |   | 1,389,130 |   |
| Total Current Liabilities                                                                    |   |   | 2,265,868 |   |   |   | 5,204,326 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Long term liabilities:                                                                       |   |   |   |   |   |   |   |   |
| Deferred tax liability                                                                       |   |   | 3,025,847 |   |   |   | 3,025,847 |   |
| Warrant liability                                                                            |   |   | 11,952,230 |   |   |   | 17,221,335 |   |
| Total Liabilities                                                                            |   |   | 17,243,946 |   |   |   | 25,451,508 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Commitments and contingencies                                                                |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Stockholders' Equity                                                                         |   |   |   |   |   |   |   |   |
| Preferred stock, $0.001 face value, 5,000,000 shares authorized;                             |   |   |   |   |   |   |   |   |
| 2 shares issued and 2 shares outstanding as of September 30, 2010 and December 31, 2009      |   |   |  - |   |   |   | - |   |
| Common stock, $0.001 par value, 150,000,000 shares authorized;                               |   |   |   |   |   |   |   |   |
| 69,097,220 shares issued and 68,902,639 shares outstanding as of September 30, 2010          |   |   |   |   |   |   |   |   |
| and 68,778,112 shares issued and 68,583,531 shares outstanding as of December 31, 2009       |   |   | 69,097 |   |   |   | 68,778 |   |
| Additional paid-in-capital                                                                   |   |   | 71,246,548 |   |   |   | 70,023,310 |   |
| Accumulated other comprehensive income                                                       |   |   | 9,964,555 |   |   |   | 5,496,334 |   |
| Retained earnings                                                                            |   |   | 88,448,122 |   |   |   | 57,285,914 |   |
| Less: Cost of treasury stock (194,581 shares as of September 30,2010 and December 31, 2009 ) |   |   | (499,490 | ) |   |   | (499,490 | ) |
| Total Stockholders' Equity                                                                   |   |   | 169,228,832 |   |   |   | 132,374,846 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders' Equity                                                   |   | $ | 186,472,778 |   |   | $ | 157,826,354 |   |

----

| ADVANCED BATTERY TECHNOLOGIES, INC. AND SUBSIDIARIES                       |   |
|----------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME |   |
| (UNAUDITED)                                                                |   |
|                                                                       |   | For the Three Months ended September 30, |   |   | For the Nine Months ended September 30, |   |
|                                                                       |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                                       |   |   |   |   | (Restated) |   |   |   |   |   | (Restated) |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                                   |   | $ | 25,930,885 |   |   | $ | 17,714,278 |   |   | $ | 68,315,260 |   |   |   | 42,171,598 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Goods Sold                                                         |   |   | 12,170,059 |   |   |   | 10,087,228 |   |   |   | 33,899,515 |   |   |   | 23,197,017 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                                               |   |   | 13,760,826 |   |   |   | 7,627,050 |   |   |   | 34,415,745 |   |   |   | 18,974,580 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research & Development expenses                                        |   |   | 194,420 |   |   |   | 118,764 |   |   |   | 194,420 |   |   |   | 307,236 |   |
| Selling, general and administrative                                        |   |   | 1,546,734 |   |   |   | 2,264,173 |   |   |   | 6,155,513 |   |   |   | 5,636,527 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                                           |   |   | 12,019,672 |   |   |   | 5,244,112 |   |   |   | 28,065,812 |   |   |   | 13,030,817 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income (Expenses)                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                            |   |   | 110,276 |   |   |   | 76,841 |   |   |   | 297,612 |   |   |   | 247,387 |   |
| Interest (expense)                                                         |   |   | (7,659 | ) |   |   | (120,417 | ) |   |   | (47,452 | ) |   |   | (326,636 | ) |
| Equity gain (loss) from unconsolidated entity                              |   |   | 2,429 |   |   |   | 5,190 |   |   |   | 4,305 |   |   |   | (62,470 | ) |
| Forgiveness of debt                                                        |   |   | - |   |   |   | 336,849 |   |   |   | - |   |   |   | 336,849 |   |
| Other income (expenses)                                                    |   |   | 33,412 |   |   |   | (160 | ) |   |   | 33,412 |   |   |   | 13,548 |   |
| Gain on bargain purchase                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,645,276 |   |
| Change in fair value of warrants                                           |   |   | (128,176 | ) |   |   | 269,943 |   |   |   | 5,269,104 |   |   |   | (4,241,549 | ) |
| Total other income (expenses)                                              |   |   | 10,281 |   |   |   | 568,246 |   |   |   | 5,556,980 |   |   |   | 4,612,405 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before Income Taxes                                                 |   |   | 12,029,953 |   |   |   | 5,812,358 |   |   |   | 33,622,793 |   |   |   | 17,643,222 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for Income Taxes                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax-Current                                                         |   |   | 902,558 |   |   |   | 726,337 |   |   |   | 2,460,585 |   |   |   | 2,010,030 |   |
| Income tax-Deferred                                                        |   |   | - |   |   |   | 0 |   |   |   | - |   |   |   | 3,025,847 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                 |   | $ | 11,127,394 |   |   | $ | 5,086,021 |   |   | $ | 31,162,207 |   |   |   | 12,607,345 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Income                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                    |   |   | 3,237,432 |   |   |   | (28,402 | ) |   |   | 4,468,221 |   |   |   | (57,938 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive Income                                                       |   | $ | 14,364,825 |   |   | $ | 5,057,619 |   |   | $ | 35,630,429 |   |   |   | 12,549,407 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per share                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                      |   | $ | 0.18 |   |   | $ | 0.10 |   |   | $ | 0.51 |   |   | $ | 0.25 |   |
| Diluted                                                                    |   | $ | 0.16 |   |   | $ | 0.08 |   |   | $ | 0.45 |   |   | $ | 0.22 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares outstanding                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                      |   |   | 62,587,469 |   |   |   | 52,970,305 |   |   |   | 61,558,821 |   |   |   | 49,676,366 |   |
| Diluted                                                                    |   |   | 69,723,408 |   |   |   | 61,342,040 |   |   |   | 68,694,759 |   |   |   | 57,974,862 |   |

----

| ADVANCED BATTERY TECHNOLOGIES, INC. AND SUBSIDIARIES              |   |
|-------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                   |   |
| (UNAUDITED)                                                       |   |
|                                                              |   | For the Nine Months ended September 30, |   |
|                                                              |   | 2010 |   |   | 2009 |   |
|                                                              |   |   |   |   | (Restated) |   |
| Cash Flows From Operating Activities:                             |   |   |   |   |   |   |
| Net income                                                        |   | $ | 31,162,207 |   |   | $ | 12,607,345 |   |
| Adjustments to reconcile net income to net cash                   |   |   |   |   |   |   |   |   |
| provided by (used in) operating activities:                       |   |   |   |   |   |   |   |   |
| Gain on bargain purchase                                          |   |   | - |   |   |   | (8,645,276 | ) |
| Deferred income tax                                               |   |   | - |   |   |   | 3,025,847 |   |
| Depreciation and amortization                                     |   |   | 3,024,982 |   |   |   | 1,763,076 |   |
| Amortization of deferred consulting expenses                      |   |   | 87,281 |   |   |   | 108,468 |   |
| Amortization of stock based compensation expense                  |   |   | 1,136,276 |   |   |   | 1,346,769 |   |
| Equity loss (gain) of unconsolidated entity                       |   |   | (4,305 | ) |   |   | 62,470 |   |
| Provision for doubtful accounts and inventory valuation allowance |   |   | 638,000 |   |   |   | 982,866 |   |
| Forgiveness of debt                                               |   |   | - |   |   |   | (336,849 | ) |
| Gain on disposal of fixed asset                                   |   |   | (146 | ) |   |   | - |   |
| Change in fair value of warrants                                  |   |   | (5,269,104 | ) |   |   | 4,241,549 |   |
| Changes in operating assets and liabilities:                      |   |   |   |   |   |   |   |   |
| Accounts receivable                                               |   |   | 2,805,618 |   |   |   | (6,880,935 | ) |
| Inventories                                                       |   |   | (4,092,945 | ) |   |   | (2,712,891 | ) |
| Other receivable & prepayments                                |   |   | 2,509,083 |   |   |   | (4,299,473 | ) |
| Accounts payable, accrued expenses and other payables             |   |   | (103,861 | ) |   |   | (6,376,234 | ) |
| Advances from Customer                                            |   |   | (65,649 | ) |   |   | (872,575 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) operating activities               |   |   | 31,827,437 |   |   |   | (5,985,843 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Cash Flows From Investing Activities:                             |   |   |   |   |   |   |   |   |
| Deposit for long-term assets                                      |   |   | (1,061,467 | ) |   |   | (1,360,130 | ) |
| Purchase of property, plant and equipment                         |   |   | (8,129,996 | ) |   |   | 710,261 |   |
| Cash acquried from business combination                           |   |   | - |   |   |   | 837,564 |   |
| Acquistion of Construction in process                             |   |   | - |   |   |   | (9,003,299 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Net cash used in investing activities                             |   |   | (9,186,321 | ) |   |   | (8,815,605 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Cash Flows From Financing Activities                              |   |   |   |   |   |   |   |   |
| Repayment of bank loan                                            |   |   | (2,937,943 | ) |   |   | - |   |
| Purchase of treasury stock                                        |   |   | - |   |   |   | (203,788 | ) |
| Proceeds from equity financing, net                               |   |   | - |   |   |   | 16,091,868 |   |
| Repayment of officer loan                                         |   |   | - |   |   |   | (13,143 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) financing activities               |   |   | (2,937,943 | ) |   |   | 15,874,937 |   |
|                                                              |   |   |   |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents      |   |   | 1,651,761 |   |   |   | 20,013 |   |
|                                                              |   |   |   |   |   |   |   |   |
| Increase in cash and cash equivalents                             |   |   | 21,354,934 |   |   |   | 1,093,502 |   |
|                                                              |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents - Beginning of period                   |   |   | 52,923,358 |   |   |   | 32,746,155 |   |
|                                                              |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents - End of period                         |   | $ | 74,278,291 |   |   | $ | 33,839,657 |   |
|                                                              |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL CASH FLOW INFORMATION:                               |   |   |   |   |   |   |   |   |
| During the year, cash was paid for the following:                 |   |   |   |   |   |   |   |   |
| Interest expense                                                  |   | $ | 47,452 |   |   | $ | 277,895 |   |
| Income taxes                                                      |   | $ | 2,416,310 |   |   | $ | 1,083,556 |   |
|                                                              |   |   |   |   |   |   |   |   |
| NON-CASH INVESTING AND FINANCING ACTIVITIES:                      |   |   |   |   |   |   |   |   |
| Common stock issued for stock-based compensation                  |   | $ | 1,132,795 |   |   | $ | 1,119,650 |   |
| Common stock issued for acquisition of Wuxi ZQ                    |   | $ | - |   |   | $ | 9,870,000 |   |
| Options issued to executives for service                          |   | $ | - |   |   | $ | 777,660 |   |

----

| ·   | The holders of the equity investment in Heilongjiang ZQPT lack the direct or indirect ability to make decisions about the entity’s activities that have a significant effect on the success of Heilongjiang ZQPT, having assigned their voting rights and all managerial authority to Harbin ZQPT.  (ASC 810-10-15-14(b)(1)). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The holders of the equity investment in Heilongjiang ZQPT lack the obligation to absorb the expected losses of Heilongjiang ZQPT, having assigned to Harbin ZQPT all revenue and responsibility for all payables.  (ASC 810-10-15-14(b)(2)). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The holders of the equity investment in Heilongjiang ZQPT lack the right to receive the expected residual returns of Heilongjiang ZQPT, having granted to Harbin ZQPT all revenue as well as an option to purchase the equity interests at a fixed price.  (ASC 810-10-15-14(b)(3)). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                              |   | Three Months EndedSeptember 30, 2010 |       |   | Nine Months EndedSeptember 30, 2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|------------|--------|-------------------------------------|--------|
| Opening balance                                                                                                                                                                   |   | $                                    | 11,824,055 |   |                                | $      | 17,221,335 |   |
| (Income) Loss included in earnings                                                                                                                                                |   | $                                    | 128,176    | *      |                                | $      | (5,269,104 | )* |
| Closing balance                                                                                                                                                                   |   | $                                    | 11,952,230 |   |                                | $      | 11,952,230 |   |
| _______________                                                                                                                                                                   |   |                                 |       |   |                                |   |   |   |
| *   Reported on Consolidated Statements of Income and Other Comprehensive Income:  Other Income (Expenses):  Change in Fair Value of Warrants. |

----

|   | ● | Step 1: We estimate the fair value of the reporting unit (UFV) in the manner described above and compare it with the unit’s book value (UBV), which equals the recorded amounts of assets and allocated goodwill less liabilities. When UFV is greater than UBV, there is no impairment, and the test is complete. When UFV is less than UBV, then we go to Step 2. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Step 2:  We estimate the implied fair value (GFV) of the reporting unit’s goodwill by repeating the process performed at acquisition. This requires subtracting estimated current fair values of the unit’s identifiable net assets from the unit’s estimated fair value (UFV), and comparing the difference with the carrying amount of the goodwill (GBV).  When GFV is greater than GBV, goodwill is not impaired. When GFV is less than GBV, we record an impairment write-off equal to the difference. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|            |   | As of September 30, 2010 |      |   | As of December 31, 2009 |   |
|-----------------|--------|--------------------------|-----------|--------|-------------------------|--------|
| Raw Materials   |   | $                        | 3,393,821 |   |                    | $      | 1,408,230 |   |
| Work-in-process |   |                     | 567,580   |   |                    |   | 514,905 |   |
| Finished goods  |   |                     | 4,044,327 |   |                    |   | 1,804,334 |   |
|            |   |                     | 8,005,728 |   |                    |   | 3,727,469 |   |
| Less allowance  |   |                     | (48,690   | )      |                    |   | (47,372 | ) |
|            |   | $                        | 7,957,039 |   |                    | $      | 3,680,098 |   |

----

|                                     |   | As of September 30,2010 |       |   | As of December 31,2009 |   |
|------------------------------------------|--------|-------------------------|------------|--------|------------------------|--------|
| Building and improvements                |   | $                       | 38,400,871 |   |                   | $      | 35,578,159 |   |
| Machinery and equipment                  |   |                    | 11,636,828 |   |                   |   | 11,327,396 |   |
| Motor Vehicles                           |   |                    | 683,351    |   |                   |   | 285,999 |   |
|                                     |   |                    | 50,721,050 |   |                   |   | 47,191,555 |   |
| less: Accumulated Depreciation           |   |                    | (7,353,758 | )      |                   |   | (4,854,438 | ) |
| Construction in Progress                 |   |                    | 12,469,223 |   |                   |   | 4,911,483 |   |
| Total property, plant and equipment, net |   | $                       | 55,836,516 |   |                   | $      | 47,248,600 |   |

----

----

|                         |   | Initial Book Value |       |   | Accumulated Amortization |   |      | Net BookValue |   |   | AmortizationPeriod(Years) |   |
|------------------------------|--------|--------------------|------------|--------|--------------------------|--------|-----------|---------------|--------|--------|---------------------------|--------|
| Rights to use land and power |   | $                  | 13,260,937 |   |                     | $      | 621,390   |          |   | $      | 12,639,547                |   |   |   | 48.6 |   |
| Patents                      |   |               | 1,249,838  |   |                     |   | 486,889   |          |   |   | 762,950                   |   |   |   | 9.0 |   |
| Marketing network resource   |   |               | 1,000,038  |   |                     |   | 478,202   |          |   |   | 521,835                   |   |   |   | 3.0 |   |
|                         |   |               |       |   |                     |   |      |          |   |   |                      |   |   |   |   |   |
| Total                        |   | $                  | 15,510,812 |   |                     | $      | 1,586,481 |          |   | $      | 13,924,332                |   |   |   |   |   |

|                         |   | Initial Book Value |       |   | Accumulated Amortization |   |    | Net BookValue |   |   | Amortization Period(Years) |   |
|------------------------------|--------|--------------------|------------|--------|--------------------------|--------|---------|---------------|--------|--------|----------------------------|--------|
| Rights to use land and power |   | $                  | 13,065,389 |   |                     | $      | 381,539 |          |   | $      | 12,683,850                 |   |   |   | 48.6 |   |
| Patents                      |   |               | 1,224,986  |   |                     |   | 369,040 |          |   |   | 855,946                    |   |   |   | 9.0 |   |
| Marketing network resource   |   |               | 1,000,038  |   |                     |   | 222,330 |          |   |   | 777,708                    |   |   |   | 3.0 |   |
|                         |   |               |       |   |                     |   |    |          |   |   |                       |   |   |   |   |   |
| Total                        |   | $                  | 15,290,412 |   |                     | $      | 972,909 |          |   | $      | 14,317,503                 |   |   |   |   |   |

| Balance at December 31, 2010 |   | $      | 193,448    |   |
|------------------------------|--------|--------|------------|--------|
| 2011                         |   |   | 735,861    |   |
| 2012                         |   |   | 541,307    |   |
| 2013                         |   |   | 379,497    |   |
| 2014                         |   |   | 413,303    |   |
| 2015                         |   |   | 959,307    |   |
| Thereafter                   |   |   | 10,701,608 |   |
|                         |   | $      | 13,924,332 |   |

----

----

| Unearned stock compensation as of January 1, 2010                                                                |   | $      | 1,837,934 |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
| Unearned stock compensation granted                                                                              |   |   | -         |   |
| Compensation expenses recorded on the  statement of income with a credit to additional paid-in capital |   |   | (199,320  | )      |
|                                                                                                             |   |   |      |   |
| Unearned stock compensation as of September 30, 2010                                                             |   | $      | 1,638,614 |   |

----

| Unearned stock compensation as of January 1, 2010                                                         |   | $      | 3,991,119 |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
| Unearned stock compensation granted                                                                       |   |   | 1,132,795 |   |
| Compensation expenses recorded on the statement of operations with a credit to additional paid-in capital |   |   | (936,956  | )      |
| Unearned stock compensation as of September 30, 2010                                                      |   | $      | 4,186,958 |   |

| As of September 30, |   |   |      |
|---------------------|--------|--------|-----------|
| 2011                |   | $      | 1,871,831 |   |
| 2012                |   |   | 899,463   |   |
| 2013                |   |   | 899,463   |   |
| 2014                |   |   | 516,200   |   |
|                |   | $      | 4,186,958 |   |

| (3) | Recent Stock Option Activity |
|-----|------------------------------|

----

| Expected life           | 5.0 years |
|-------------------------|-----------|
| Expected volatility     | 89.13%    |
| Risk free interest rate | 2.46%     |
| Dividend yield          | 0%        |

|                            |   | Outstanding |    |   | Exercise Price |   |   | Life in Years |   |   | Value (1) |   |
|---------------------------------|--------|-------------|---------|--------|----------------|--------|--------|---------------|--------|--------|-----------|--------|
| Outstanding, January 1, 2010    |   |        | 340,000 |   |           | $      | 2.66   |          |   |   | 4.00      |   |   | $ | 571,200 |   |
| Granted                         |   |        | -       |   |           |   | -      |          |   |   | -         |   |   |   | - |   |
| Forfeited                       |   |        | -       |   |           |   | -      |          |   |   | -         |   |   |   | - |   |
| Exercised                       |   |        | -       |   |           |   | -      |          |   |   | -         |   |   |   | - |   |
| Outstanding, September 30, 2010 |   |        | 340,000 |   |           | $      | 2.66   |          |   |   | 3.25      |   |   | $ | 744,482 |   |

|   | (1) | “Value” represents the intrinsic value of outstanding options as of the date noted. |
|--------|-----|-------------------------------------------------------------------------------------------------|

|                             |   | For the Nine Months Ended |       |
|----------------------------------|--------|---------------------------|------------|
|                             |   | September 30, 2010        |       |   | September 30, 2009 |   |
| China Pre-tax Income             |   | $                         | 31,767,498 |   |   | $ | 15,219,873 |   |
| Domestic Pre-Tax Income          |   |                      | 1,855,294  |   |   |   | 2,423,349 |   |
| Total Pre-Tax Income             |   | $                         | 33,622,793 |   |   | $ | 17,643,222 |   |
|                             |   |                      |       |   |   |   |   |   |
| China Income Tax Expense         |   | $                         | 2,460,585  |   |   | $ | 2,010,030 |   |
| Domestic Income Tax Expense      |   |                      | -          |   |   |   | - |   |
| Total Current Income Tax Expense |   | $                         | 2,460,585  |   |   | $ | 2,010,030 |   |

----

|                                                      |   | For the Nine Months |    |
|-----------------------------------------------------------|--------|---------------------|---------|
|                                                      |   | Ended September 30, |    |
|                                                      |   |                |    |   | 2009 |
|                                                      |   | 2010                |    | (Restated) |
| U.S. statutory income tax rate                            |   |                | 35.0%   |   |   | 35.0% |
| Foreign income not recognized in the U.S                  |   |                | (35.0%) |   |   | (35.0%) |
| China Statutory income tax rates                          |   |                | 25.0%   |   |   | 25.0% |
| China income tax exemption                                |   |                | (12.5%) |   |   | (12.5%) |
| Other items (a)                                           |   |                | (5.0%)  |   |   | (1.1%) |
| Effective consolidated current  income tax rate |   |                | 7.5%    |   |   | 11.4% |

----

|                                    |   | September 30, 2010  |      |   | December 31, 2009(Restated) |   |
|-----------------------------------------|--------|--------------------------|-----------|--------|-----------------------------|--------|
| Gain on bargain purchase of Wuxi ZQ     |   | $                        | 3,025,847 |   |                        | $      | 3,025,847 |   |
| Wuxi ZQ net operating loss carryforward |   |                     | 10,249    |   |                        |   | 3,074,202 |   |
|                                    |   |                     | 3,036,096 |   |                        |   | 6,100,049 |   |
|                                    |   |                     |      |   |                        |   |   |   |
| Valuation allowance                     |   |                     | 10,249    |   |                        |   | 3,074,202 |   |
| Deferred tax liability                  |   | $                        | 3,025,847 |   |                        | $      | 3,025,847 |   |

----

|                                                         |   | For the Three Months Ended |       |   | For the Nine Months Ended |   |
|--------------------------------------------------------------|--------|----------------------------|------------|--------|---------------------------|--------|
|                                                         |   | September 30,              |       |   | September 30,             |   |
|                                                         |   | 2010                       |       |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
| Basic earning per share                                      |   |                       |       |   | (Restated)                |   |   |   |   |   | (Restated) |   |
| Net Income                                                   |   | $                          | 11,127,394 |   |                      | $      | 5,086,020 |   |   | $ | 31,162,208 |   |   | $ | 12,607,345 |   |
| Weighted average number of common shares outstanding-Basic   |   |                       | 62,587,469 |   |                      |   | 52,970,305 |   |   |   | 61,558,821 |   |   |   | 49,676,366 |   |
| Earnings per share-Basic                                     |   | $                          | 0.18       |   |                      | $      | 0.10 |   |   | $ | 0.51 |   |   |   | 0.25 |   |
|                                                         |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings per share                                   |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Net Income                                                   |   | $                          | 11,127,394 |   |                      | $      | 5,086,020 |   |   | $ | 31,162,208 |   |   | $ | 12,607,345 |   |
| Weighted average number of common shares outstanding-Basic   |   |                       | 62,587,469 |   |                      |   | 52,970,305 |   |   |   | 61,558,821 |   |   |   | 49,676,366 |   |
| Effect of conversion of preferred stock                      |   |                       | 528        |   |                      |   | 131,926 |   |   |   | 528 |   |   |   | 58,688 |   |
|  Effect of exercise of options and warrants             |   |                       | 88,078     |   |                      |   | 602,309 |   |   |   | 88,078 |   |   |   | 602,309 |   |
| Effect of diluted securities-unvested shares                 |   |                       | 7,047,333  |   |                      |   | 7,637,500 |   |   |   | 7,047,333 |   |   |   | 7,637,500 |   |
| Weighted average number of common shares outstanding-Diluted |   |                       | 69,723,408 |   |                      |   | 61,342,040 |   |   |   | 68,694,759 |   |   |   | 57,974,862 |   |
|                                                         |   |                       |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per share-Diluted                                   |   | $                          | 0.16       |   |                      | $      | 0.08 |   |   | $ | 0.45 |   |   | $ | 0.22 |   |

|   | 1) | Issuance of Preferred Stock |
|--------|----|-----------------------------|

----

|   | 2) | Issuance of Common Stock |
|--------|----|--------------------------|

|   | 3) | Stock Warrants |
|--------|----|----------------|

|                            |   | Warrants    |      |   | Weighted Average |   |   | Average Remaining |   |   | Aggregate Intrinsic |   |
|---------------------------------|--------|-------------|-----------|--------|------------------|--------|--------|-------------------|--------|--------|---------------------|--------|
|                            |   | Outstanding |      |   | Exercise Price   |   |   | Life in years     |   |   |  Value         |   |
| Outstanding, January 1, 2010    |   |        | 6,825,113 |   |             | $      | 5.16   |              |   |   | 4.50                |   |   | $ | - |   |
| Granted                         |   |        | -         |   |             |   | -      |              |   |   | -                   |   |   |   | - |   |
| Forfeited                       |   |        | -         |   |             |   | -      |              |   |   | -                   |   |   |   | - |   |
| Exercised                       |   |        | -         |   |             |   | -      |              |   |   | -                   |   |   |   | - |   |
| Outstanding, September 30, 2010 |   |        | 6,825,113 |   |             | $      | 5.16   |              |   |   | 3.75                |   |   | $ | - |   |

|   | i. | any merger, sale of assets, tender or exchange offer, reclassification of the common stock or compulsory share exchange, if |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------|

|   | ii. | the transaction is either an all-cash transaction, a “going private” transaction, or a transaction in which the Company’s common stock will be exchanged for securities that are not traded on a national securities exchange. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                    | As of September 30, 2010 | As of December 31, 2009 |
|-------------------------|--------------------------|-------------------------|
| Volatility              | 81.5%                    | 90.9%                   |
| Risk free interest rate | 0.96%                    | 2.69%                   |
| Expected term           | 2.91 - 4.25 years        | 3.66 - 5.00 years       |

----

----

----

| For the Nine Months Ended September 30, 2010 |   | Batteries |        |   | Electric Vehicles |   |       | Non-operating entities |   |   | Inter-segment Elimination |   |   | Consolidated Total |         |
|----------------------------------------------|--------|-----------|-------------|--------|-------------------|--------|------------|------------------------|--------|--------|---------------------------|--------|--------|--------------------|--------------|
| Net Sales                                    |   |      | 42,568,188  |   |              |   | 35,608,015 |                   |   |   | -                         |   |   |               | (9,860,943   | ) |   |   | 68,315,260 |   |
| Interest Income (expense)                    |   |      | 131,345     |   |              |   | (18,601    | )                      |   |   | 137,414                   |   |   |               | -            |   |   |   | 250,159 |   |
| Depreciation and Amortization                |   |      | 1,072,989   |   |              |   | 1,204,956  |                   |   |   | 112,385                   |   |   |               | 634,652      |   |   |   | 3,024,982 |   |
| Segment assets                               |   |      | 122,685,681 |   |              |   | 55,962,607 |                   |   |   | 149,936,542               |   |   |               | (142,112,052 | ) |   |   | 186,472,778 |   |
| Segment net income (loss) before tax         |   |      | 19,670,331  |   |              |   | 12,255,813 |                   |   |   | (2,838,936                | )      |   |               | 4,535,584    |   |   |   | 33,622,793 |   |

| For the Three Months Ended September 30, 2010 |   | Batteries |        |   | Electric Vehicles |   |       | Non-operating entities |   |   | Inter-segment Elimination |   |   | Consolidated Total |         |
|-----------------------------------------------|--------|-----------|-------------|--------|-------------------|--------|------------|------------------------|--------|--------|---------------------------|--------|--------|--------------------|--------------|
| Net Sales                                     |   |      | 15,164,327  |   |              |   | 13,904,062 |                   |   |   | -                         |   |   |               | (3,137,504   | ) |   |   | 25,930,885 |   |
| Interest Income (expense)                     |   |      | 39,415      |   |              |   | 21,192     |                   |   |   | 42,009                    |   |   |               | -            |   |   |   | 102,616 |   |
| Depreciation and Amortization                 |   |      | 222,044     |   |              |   | 365,961    |                   |   |   | 14,019                    |   |   |               | 212,705      |   |   |   | 814,729 |   |
| Segment assets                                |   |      | 122,685,681 |   |              |   | 55,962,607 |                   |   |   | 149,936,542               |   |   |               | (142,112,052 | ) |   |   | 186,472,778 |   |
| Segment net income (loss) before tax          |   |      | 7,228,060   |   |              |   | 5,283,830  |                   |   |   | (896,294                  | )      |   |               | 414,356      |   |   |   | 12,029,953 |   |

----

| Reconciliation of segment incomes to consolidated incomes |   | For the Nine Months Ended September 30, 2010 |       |   | For the Three Months Ended September 30, 2010 |   |
|-----------------------------------------------------------|--------|----------------------------------------------|------------|--------|-----------------------------------------------|--------|
| Total segment income (Operating entities)                 |   |                                         | 31,926,144 |   |                                          |   | 12,511,890 |   |
| Total segment income (Non-operating entities)(1)          |   |                                         | (2,838,936 | )      |                                          |   | (896,294 | ) |
| Elimination of intersegment profits                       |   |                                         | (733,519   | )      |                                          |   | 542,532 |   |
| Chang in fair value of warrants                           |   |                                         | 5,269,104  |   |                                          |   | (128,176 | ) |
| Consolidated income before income taxes                   |   |                                         | 33,622,793 |   |                                          |   | 12,029,953 |   |

| Reconciliation of segment assets to consolidated assets |   | As of September 30, 2010 |         |
|---------------------------------------------------------|--------|--------------------------|--------------|
| Total segment net assets (Operating entities)           |   |                     | 178,648,288  |   |
| Total segment net assets (Non-operating entities)(2)    |   |                     | 149,936,542  |   |
| Elimination of intersegment receivables                 |   |                     | (151,245,407 | ) |
| Increased asset value not allocated to segments         |   |                     | 9,133,355    |   |
| Consolidated assets                                     |   |                     | 186,472,778  |   |

| For the Nine Months Ended September 30, 2009  |   | Batteries |       |   | Electric Vehicle |   |       | Non-operating entities |   |   | Inter-segment Elimination |   |   | Consolidated Total |        |
|-----------------------------------------------|--------|-----------|------------|--------|------------------|--------|------------|------------------------|--------|--------|---------------------------|--------|--------|--------------------|-------------|
| Net Sales                                     |   |      | 35,050,747 |   |             |   | 10,346,916 |                   |   |   | -                         |   |   |               | (3,226,065  | ) |   |   | 42,171,598 |   |
| Interest Income (expense)                     |   |      | 243,894    |   |             |   | (323,143   | )                      |   |   | -                         |   |   |               | -           |   |   |   | (79,249 | ) |
| Depreciation and Amortization                 |   |      | 659,798    |   |             |   | 718,102    |                   |   |   | 385,176                   |   |   |               | -           |   |   |   | 1,763,076 |   |
| Segment assets                                |   |      | 88,894,078 |   |             |   | 43,409,486 |                   |   |   | 65,821,376                |   |   |               | (61,030,883 | ) |   |   | 137,094,057 |   |
| Segment net income (loss) before tax          |   |      | 15,901,514 |   |             |   | (681,641   | )                      |   |   | (3,000,575                | )      |   |               | 5,423,924   |   |   |   | 17,643,222 |   |
|                                          |   |      |       |   |             |   |       |                   |   |   |                      |   |   |               |        |   |   |   |   |   |
| For the Three Months Ended September 30, 2009 |   | Batteries |       |   | Electric Vehicle |   |       | Non-operating entities |   |   | Inter-segment Elimination |   |   | Consolidated Total |        |
| Net Sales                                     |   |      | 12,807,469 |   |             |   | 6,719,619  |                   |   |   | -                         |   |   |               | (1,812,810  | ) |   |   | 17,714,278 |   |
| Interest Income (expense)                     |   |      | 80,433     |   |             |   | (124,009   | )                      |   |   | -                         |   |   |               | -           |   |   |   | (43,576 | ) |
| Depreciation and Amortization                 |   |      | 276,792    |   |             |   | 387,494    |                   |   |   | 210,788                   |   |   |               | -           |   |   |   | 875,074 |   |
| Segment assets                                |   |      | 88,894,078 |   |             |   | 43,409,486 |                   |   |   | 65,821,376                |   |   |               | (61,030,883 | ) |   |   | 137,094,057 |   |
| Segment net income (loss) before tax          |   |      | 5,805,186  |   |             |   | 1,012,067  |                   |   |   | (940,308                  | )      |   |               | (64,587     | ) |   |   | 5,812,358 |   |

----

| Reconciliation of segment incomes to consolidated incomes |   | Nine Months Ended September 30, 2009 |       | Three Months Ended September 30, 2009 |
|-----------------------------------------------------------|--------|--------------------------------------|------------|---------------------------------------|
| Total segment income (Operating entities)                 |   |                                 | 15,219,873 |                                  |   |   | 6,817,253 |   |
| Total segment income (Non-operating entities) (1)         |   |                                 | (3,000,575 | )                                     |   |   | (940,308 | ) |
| Elimination of intersegment profits                       |   |                                 | 1,020,197  |                                  |   |   | (334,530 | ) |
| Chang in fair value of warrants                           |   |                                 | (4,241,549 | )                                     |   |   | 269,943 |   |
| Gain on bargain purchase                                  |   |                                 | 8,645,276  |                                  |   |   | - |   |
| Consolidated income before income taxes                   |   |                                 | 17,643,222 |                                  |   |   | 5,812,358 |   |

| Reconciliation of segment assets to consolidated assets |   | As of September 30, 2009 |        |
|---------------------------------------------------------|--------|--------------------------|-------------|
| Total segment net assets (Operating entities)           |   |                     | 132,303,564 |   |
| Total segment net assets (Non-operating entities) (2)   |   |                     | 65,821,376  |   |
| Elimination of intersegment receivables                 |   |                     | (70,164,238 | ) |
| Increased asset value not allocated to segments         |   |                     | 9,133,355   |   |
| Consolidated assets                                     |   |                     | 137,094,057 |   |

|   | (1) | “Non-operating entities” identifies our U.S. parent corporation, Advanced Battery Technologies, Inc., and its subsidiary holding company, Cashtech Investment Limited, a British Virgin Islands corporation. “Segment income (Non-operating entities)” refers to the administrative expenses of those two entities, including the expenses attributable to our New York City office, other income/expenses arising from financing activities conducted by the parent corporation, such as “change in fair value of warrants, and other income/expenses arising from investment and acquisition activity by the parent corporation, such as “gain on bargain purchase. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | “Segment net assets (Non-operating entities”) refers to the net assets of the non-operating entities identified in the preceding note, and includes the book value of the two subsidiaries of Cashtech Investment Limited, which are our two operating companies, as well as cash accounts maintained by our parent company. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Year 2009                                                  |   | At December 31, 2009                         |        |   |                                          |   |
|------------------------------------------------------------|--------|----------------------------------------------|-------------|--------|-----------------------------------------------|--------|
|                                                       |   | As Reported                                  |        |   | As Restated                                   |   |   |   |   |   |   |   |
| Total Assets                                               |   | $                                            | 157,826,354 |   |                                          | $      | 157,826,354 |   |   |   |   |   |   |   |
| Deferred tax liability                                     |   |                                         | 3,468,262   |   |                                          |   | 3,025,847 |   |   |   |   |   |   |   |
| Warrant liability                                          |   |                                         | 17,221,335  |   |                                          |   | 17,221,354 |   |   |   |   |   |   |   |
| Additional paid-in capital                                 |   |                                         | 74,114,122  |   |                                          |   | 70,018,938 |   |   |   |   |   |   |   |
| Retained earnings                                          |   |                                         | 52,752,687  |   |                                          |   | 57,285,914 |   |   |   |   |   |   |   |
|                                                       |   |                                         |        |   |                                          |   |   |   |   |   |   |   |   |   |
|                                                       |   | For the Nine months ended September 30, 2009 |        |   | For the Three months ended September 30, 2009 |   |
|                                                       |   | As Reported                                  |        |   | As Restated                                   |   |   | As Reported |   |   | As Restated |   |
| Revenues                                                   |   |                                         | 42,171,598  |   |                                          |   | 42,171,598 |   |   |   | 17,714,278 |   |   |   | 17,714,278 |   |
| Gross profits                                              |   |                                         | 18,974,580  |   |                                          |   | 18,974,580 |   |   |   | 7,627,050 |   |   |   | 7,627,050 |   |
| Selling, General&Administrative                        |   |                                         | 6,900,571   |   |                                          |   | 5,636,527 |   |   |   | 2,264,173 |   |   |   | 2,264,173 |   |
| Operating Income                                           |   |                                         | 11,766,773  |   |                                          |   | 13,030,817 |   |   |   | 5,244,112 |   |   |   | 5,244,112 |   |
| Other income (expenses) - Change in fair value of warrants |   |                                         | -           |   |                                          |   | (4,241,549 | ) |   |   | - |   |   |   | 269,943 |   |
| Other income (expenses) - Gain on bargain purchase         |   |                                         | 9,909,320   |   |                                          |   | 8,645,276 |   |   |   | - |   |   |   | - |   |
| Net income                                                 |   |                                         | 16,406,478  |   |                                          |   | 12,607,345 |   |   |   | 4,816,077 |   |   |   | 5,086,021 |   |
|                                                       |   |                                         |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Income per share - basic                                   |   | $                                            | 0.33        |   |                                          | $      | 0.25 |   |   | $ | 0.09 |   |   | $ | 0.10 |   |
| Income per share - diluted                                 |   | $                                            | 0.28        |   |                                          | $      | 0.22 |   |   | $ | 0.08 |   |   | $ | 0.08 |   |
|                                                       |   |                                         |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding shares-basic                                   |   |                                         | 49,676,366  |   |                                          |   | 49,676,366 |   |   |   | 52,970,305 |   |   |   | 52,970,305 |   |
| Outstanding shares-diluted                                 |   |                                         | 57,974,862  |   |                                          |   | 57,974,862 |   |   |   | 61,342,040 |   |   |   | 61,342,040 |   |

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| ITEM 2 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|--------|---------------------------------------------------------------------------------------------|

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|               |   | For the Three Months Ended September 30, |       |
|--------------------|--------|------------------------------------------|------------|
|               |   |                                     |       |   |   |   |   | Change |   |
|               |   | 2010                                     |       |   | 2009 |   |   | Amount |   |   | % |   |
| Revenues           |   | $                                        | 25,930,885 |   |   | $ | 17,714,278 |   |   | $ | 8,216,607 |   |   |   | 46.4 | % |
| Cost of Goods Sold |   |                                     | 12,170,059 |   |   |   | 10,087,228 |   |   |   | 2,082,831 |   |   |   | 20.6 | % |
| Gross Profit       |   |                                     | 13,760,826 |   |   |   | 7,627,050 |   |   |   | 6,133,776 |   |   |   | 80.4 | % |
| Operating Expenses |   |                                     | 1,741,154  |   |   |   | 2,382,937 |   |   |   | (641,783 | ) |   |   | (26.9 | %) |
| Operating Income   |   |                                     | 12,019,672 |   |   |   | 5,244,112 |   |   |   | 6,775,560 |   |   |   | 129.2 | % |
| Net Income         |   | $                                        | 11,127,394 |   |   | $ | 5,086,021 |   |   | $ | 6,041,373 |   |   |   | 118.8 | % |
|               |   |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               |   |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               |   | For the Nine Months Ended September 30,  |       |
|               |   |                                     |       |   |   |   |   |   |   | Change |   |
|               |   |                                     | 2010       |   |   |   | 2009 |   |   | Amount |   |   | % |   |
| Revenues           |   | $                                        | 68,315,260 |   |   | $ | 42,171,598 |   |   | $ | 26,143,662 |   |   |   | 62.0 | % |
| Cost of Goods Sold |   |                                     | 33,899,515 |   |   |   | 23,197,017 |   |   |   | 10,702,498 |   |   |   | 46.1 | % |
| Gross Profit       |   |                                     | 34,415,744 |   |   |   | 18,974,580 |   |   |   | 15,441,164 |   |   |   | 81.4 | % |
| Operating Expenses |   |                                     | 6,349,933  |   |   |   | 5,943,763 |   |   |   | 406,170 |   |   |   | 6.8 | % |
| Operating Income   |   |                                     | 28,065,812 |   |   |   | 13,030,817 |   |   |   | 15,034,995 |   |   |   | 115.4 | % |
| Net Income         |   | $                                        | 31,162,208 |   |   | $ | 12,607,345 |   |   | $ | 18,554,862 |   |   |   | 147.2 | % |

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|                    |   | For the Three Months Ended September 30, |       |
|-------------------------|--------|------------------------------------------|------------|
|                    |   | 2010                                     |       |   | % (of total revenue) |   |   | 2009 |   |   | % (of total revenue) |   |
| Small Capacity Battery  |   | $                                        | 1,282,453  |   |   |   | 4.9 | % |   | $ | 1,085,202 |   |   |   | 6.1 | % |
| Medium Capacity Battery |   |                                     | 4,284,179  |   |   |   | 16.5 | % |   |   | 1,564,630 |   |   |   | 8.8 | % |
| Large Capacity Battery  |   |                                     | 3,702,762  |   |   |   | 14.3 | % |   |   | 3,270,765 |   |   |   | 18.5 | % |
| Miner's Lamp            |   |                                     | 2,741,261  |   |   |   | 10.6 | % |   |   | 5,074,095 |   |   |   | 28.6 | % |
| Electric Vehicle        |   |                                     | 13,920,230 |   |   |   | 53.7 | % |   |   | 6,719,586 |   |   |   | 37.9 | % |
| Total                   |   | $                                        | 25,930,885 |   |   |   | 100.0 | % |   | $ | 17,714,278 |   |   |   | 100.0 | % |
|                    |   |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    |   |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    |   | For the Nine Months Ended September 30,  |       |
|                    |   |                                     | 2010       |   |   | % (of total revenue) |   |   |   | 2009 |   |   | % (of total revenue) |   |
| Small Capacity Battery  |   | $                                        | 3,349,186  |   |   |   | 4.9 | % |   | $ | 3,323,184 |   |   |   | 7.9 | % |
| Medium Capacity Battery |   |                                     | 11,863,870 |   |   |   | 17.4 | % |   |   | 7,976,003 |   |   |   | 18.9 | % |
| Large Capacity Battery  |   |                                     | 10,290,701 |   |   |   | 15.1 | % |   |   | 10,855,478 |   |   |   | 25.7 | % |
| Miner's Lamp            |   |                                     | 7,203,109  |   |   |   | 10.5 | % |   |   | 9,670,016 |   |   |   | 22.9 | % |
| Electric Vehicle        |   |                                     | 35,608,394 |   |   |   | 52.1 | % |   |   | 10,346,916 |   |   |   | 24.5 | % |
| Total                   |   | $                                        | 68,315,260 |   |   |   | 100.0 | % |   | $ | 42,171,598 |   |   |   | 100.0 | % |

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| ● | In the case of employees, the period of amortization is based on a vesting schedule included in the employees’ contracts.  The average vesting period for the employees is 3.1 years.   |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | In the case of consultants, the period of amortization is based on the term of the consulting contracts, although amortization will be accelerated if the consulting relationship ceases                          |

----

|   | ● | In the three and nine months ended September 30, 2010, we realized $102,616 and $250,159 in net interest income.  The $47,452 interest expenses mainly related to Wuxi ZQ’s $2.9 million short-term bank loan which was offset by $120,000 in the interest income from our $1.6 million lending to a non-related company, Harbin Jinhuida Investment Consulting Limited, at an interest rate of 10% per annum, and interest income earned on our cash deposited in Chinese banks. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | For the nine months ended September 30 2010, we recognized a $4,305 investment gain from our 49% equity investment in Beyond E-Tech, Inc., a Texas corporation recently organized to engage in distributing cellular telephones in the United States.  The acquisition has been accounted for under the equity method and included as an “investment in unconsolidated entity” on our balance sheet.  In the three and nine months ended September 30 2009, we recognized $336,849 income due to the forgiveness of interest payable on our existing short-term loans. There was no income recognized in 2010. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | For the reasons described below, our acquisition of Wuxi ZQ in May 2009 resulted in a $8,645,276 gain on bargain purchase. There was no corresponding income in 2010. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | In 2008 and 2009, the Company issued warrants in conjunction with the issuance of common shares or convertible preferred stock. The warrants permit the investors to buy additional common shares at the prices specified in the warrant agreements.  Because the Company may be required to repurchase the warrants at their fair value in certain circumstances, the fair value of the warrants has been recorded as a liability on our balance sheet.  At the end of each quarter, we re-calculate the fair value of the warrants using the Black-Scholes model, and record any increase or decrease in that fair value as other income or other expense.   During the three and nine months ended September 30 2010, the changes in the fair value of warrants were $128,176 and ($5,269,104) respectively, which were recognized as other expense (income). |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Fixed assets recorded at $21,908,014.  We determined the value of fixed assets by reference to their replacement cost, based upon the market price of comparable assets with similar residual lives. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Intangible assets recorded at $13,378,643, consisting of land and power use rights valued at $12,046,892 and patents, goodwill and marketing network, valued at $1,331,751.  We determined the value of the land and power use rights by reference to the market value of comparable rights.  We determined the value of Wuxi ZQ’s patents, goodwill and marketing network by calculating the present value of the future revenue expected to be produced from use of those assets. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                   |   | Three months ended Sept. 30 |       |   | Nine months ended Sept. 30 |   |
|------------------------|--------|-----------------------------|------------|--------|----------------------------|--------|
|                   |   | 2010                        |       |   | 2009 (restated)            |   |   | 2010 |   |   | 2009(restated) |   |
| Pre-tax income - U.S.  |   | $                           | (438,506   | )      |                       | $      | (1,004,852 | ) |   | $ | 1,855,294 |   |   | $ | 2,423,349 |   |
| Pre-tax income - China |   | $                           | 12,468,459 |   |                       | $      | 6,817,210 |   |   | $ | 31,767,498 |   |   | $ | 15,219,873 |   |
| Pre-tax income - total |   | $                           | 12,029,953 |   |                       | $      | 5,812,358 |   |   | $ | 33,622,793 |   |   | $ | 17,643,222 |   |

|   | ● | Deferred tax liability of $3,025,847 attributable to the gain we realized when we acquired Wuxi ZQ in May 2009 for a price less than the fair value of its net assets; and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | “Warrant liability” of $11,952,230 attributable to the warrants that we issued in connection with the three equity financing transactions in 2008 and 2009.  Pursuant to provisions of ASC 815, the present value of the outstanding warrants is considered a liability. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                        |   |   |      |   | Less than |   |      | More than |   |
|-----------------------------|--------|--------|-----------|--------|-----------|--------|-----------|-----------|--------|
| Contractual Obligations     |   | Total  |      |   | 1 Year    |   |      | 1-3 Years |   |   | 4-5 Years |   |   | 5 Years |   |
|                        |   |   |      |   |      |   |      |      |   |   |   |   |   |   |   |
| Long-Term Debt Obligations  |   | $      | -         |   |      | $      | -         |      |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Operating Lease Obligations |   | $      | 198,460   |   |      | $      | 131,220   |      |   | $ | 67,240 |   |   |   | - |   |   |   | - |   |
| Purchase Obligations        |   |   | 6,458,742 |   |      |   | 6,458,742 |      |   |   | - |   |   |   | - |   |   |   | - |   |
|                        |   |   |      |   |      |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL                       |   | $      | 6,657,202 |   |      | $      | 6,589,962 |      |   | $ | 67,240 |   |   | $ | - |   |   | $ | - |   |

----

----

|   | (a) | Unregistered Sale of Equity Securities |
|--------|-----|----------------------------------------|

|   | (c) | Repurchase of Equity Securities |
|--------|-----|---------------------------------|

| 31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|------|--------------------------------------------------------------------------------------------------------|

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

| 32.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|-------------------------------------------------------------------------------------------------------------------------------------|

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|                               | ADVANCED BATTERY TECHNOLOGIES, INC. |
|------------------------------------|-------------------------------------|
|                               |                                |
| Date:  November 15, 2010 | By: /s/ Zhiguo Fu                   |
|                               | Name:  Zhiguo Fu          |
|                               | Title: Chief Executive Officer      |
|                               |                                |
| Date: November 15, 2010            | By: /s/ Guohua Wan                  |
|                               | Name:  Guohua Wan         |
|                               | Title: Chief Financial Officer      |

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