Unassociated Document

S-1/A 1 v217937_s-1a.htm Unassociated Document

As Filed with the Securities and Exchange Commission on April 8, 2011

Registration No. 333- 169850

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 6

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Chisen Electric Corporation

(Name of Registrant As Specified in its Charter)

Nevada	3690	20-2190950
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer Identification No.)
Incorporation	Classification Code Number)
or Organization)

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

The People’s Republic of China

(86) 572-6267666

(Address and Telephone Number of Principal Executive Offices)

Vcorp Services, LLC

1811 Silverside Road

Wilmington, DE 19810

(888) 528-2677

(Name, Address and Telephone Number of Agent for Service)

Copies to:

Clayton E. Parker, Esq.	Richard I. Anslow, Esq.
Matthew Ogurick, Esq.	Anslow + Jaclin LLP
K&L Gates LLP	195 Route 9 South
200 South Biscayne Boulevard, Suite 3900	Manalapan, NJ 07726
Miami, Florida 33131-2399	Telephone: (732) 409-1212
Telephone: (305) 539-3306	Facsimile: (732) 577-1188
Facsimile: (305) 358-7095

Approximate Date of Proposed Sale to the Public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. ¨

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

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

(Do not check if a smaller reporting

company)

Smaller reporting company x

CALCULATION OF REGISTRATION FEE

			Proposed			Proposed
			Maximum			Maximum
			Offering			Aggregate			Amount of
Title of Each Class of	Amount To Be		Price			Offering			Registration
Securities To Be Registered	Registered		Per Share			Price			Fee
Common Stock, US$0.001 par value per share		(1)	$		(1)	$	5,000,000	(1)	$	356.50
Underwriters’ Warrants to Purchase Common Stock		(2)		N/A			N/A		$	N/A	(3)
Common Stock Underlying Underwriters’ Warrants, US$0.001 par value per share		(4)				$	577,500	(5)	$	67.05	(5)
Total Registration Fee				N/A					$	423.55	(6)

(1)

The registration fee for securities to be offered by the Registrant is based on an estimate of the Proposed Maximum Aggregate Offering Price of the securities, and such estimate is solely for the purpose of calculating the registration fee pursuant to Rule 457(o). Includes shares that the Underwriters have the option to purchase from the Registrant to cover over-allotments, if any.

(2)

Represents the maximum number of warrants, each of which will be exercisable at a percentage of the per share offering price, to purchase the Registrant’s common stock to be issued to the Underwriters in connection with the public offering.

(3)

In accordance with Rule 457(g) under the Securities Act, because the shares of the Registrant’s common stock underlying the Underwriters’ warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby.

(4)

Represents the maximum number of shares of the Registrant’s common stock issuable upon exercise of the Underwriters’ warrants.

(5)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The Registrant shall issue a warrant to the Underwriter covering a number of shares equal to 7% of the total number of shares of common stock being sold in this offering, and the Registrant estimates the aggregate offering price of 7% of the total number of shares of common stock being sold in this offering to be US$350,000. Therefore, since the warrants shall be exercisable at 165% of the public offering price, the Registrant estimates that the aggregate offering price of the underlying common stock to be US$577,500.

(6)

Previously paid.

The Registrant amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.


PRELIMINARY PROSPECTUS	SUBJECT TO COMPLETION	APRIL 8, 2011

Shares of Common Stock

Chisen Electric Corporation

This is a public offering of our common stock. We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our shares of common stock are not currently listed or quoted for trading on any national securities exchange. However our common stock is traded under the symbol “CIEC” on the OTCQB. We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol “CIEC”. There is no assurance that such application will be approved.

We are offering all of the shares of our common stock offered by this prospectus. We expect that the public offering price of our common stock will be between US$ to US$ per share.

Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in “Risk Factors” beginning on page 13 of this prospectus.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone’s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions (1)	$	$
Proceeds, before expenses, to Chisen Electric Corporation	$	$

(1) The underwriters will receive compensation in addition to the discounts and commissions as set forth under “Underwriting”.

The Underwriters have a 45-day option to purchase up to additional shares of common stock at the public offering price solely to cover over-allotments, if any (the “Over-allotment Shares”). If the Underwriters exercise this option in full, the total underwriting discounts and commissions will be US$ , and total proceeds to us, before expenses, from the over-allotment option exercise will be US$ .

The Underwriters are offering the common stock as set forth under “Underwriting.” Delivery of the shares will be made on or about , 2011.

Newbridge Securities Corporation

The Date of this Prospectus is , 2011

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TABLE OF CONTENTS

PROSPECTUS SUMMARY		4
SUMMARY FINANCIAL DATA		10
RISK FACTORS		12
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		32
USE OF PROCEEDS		33
DIVIDEND POLICY		34
CAPITALIZATION		35
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS		35
DILUTION		37
SELECTED CONSOLIDATED FINANCIAL DATA		38
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		40
DESCRIPTION OF BUSINESS		61
MANAGEMENT		85
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		94
BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		98
DESCRIPTION OF SECURITIES		100
SHARES ELIGIBLE FOR FUTURE SALE		102
UNDERWRITING		103
LEGAL MATTERS		111
EXPERTS		111
ADDITIONAL INFORMATION		111
INDEX TO FINANCIAL STATEMENTS		112
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS		114
SIGNATURES		125

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Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision.

You should rely only on information contained in this prospectus or any free writing prospectus. We have not, and the Underwriters have not, authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus or any free writing prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.

PROSPECTUS SUMMARY

Because this is only a summary, it does not contain all of the information that may be important to you. You should carefully read the more detailed information contained in this prospectus, including our financial statements and related notes. Our business involves significant risks. You should carefully consider the information under the heading “Risk Factors” beginning on page 13.

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

“China” or “PRC” refers to the People’s Republic of China. “RMB” or “Renminbi” refers to the legal currency of China and “$”, “US$” or “U.S. Dollars” refers to the legal currency of the United States.

Company Overview

We are one of the leading producers of sealed lead-acid motive batteries, also known as valve regulated lead-acid motive batteries, in China's personal transportation device market by ranking as one of the top three manufacturers in China in terms of production. Our motive battery products, sold under our own brand name “Chisen”, are predominantly used in electric bicycles and are distributed and sold in China. Among all types of batteries for electric bicycles, the lead-acid motive battery is the preferred choice of electric bicycle manufacturers in China, accounting for 95% of the market share because of its cost efficiency. Currently, we manufacture over 14,480,000 sealed lead-acid motive batteries each year, have more than 2,500 employees and are one of China's largest manufacturers of sealed lead-acid motive batteries for electric-powered bicycles (LABEBs). For each of our fiscal years ended March 31, 2010 and 2009, sales revenues were US$177,192,000 and US$109,020,000, respectively, and our net income during the same periods amounted to US$9,500,000 and US$8,880,000, respectively. For the nine months ended December 31, 2010, our sales revenue and net income were US$194,712,000 and US$9,496,000 respectively.

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China Battery Industry

Competitive Business Conditions and Market Trends

We believe that in the next several years, due to intensifying global environmental concerns, there will be increased development of the electric bicycle. At the 2009 United Nations Climate Change Conference, the Chinese Government announced that in 2020, greenhouse gas emissions will be reduced approximately 40% to 45% from 2005 levels. Due to the fact that electric bicycle usage is very much in line with the energy-saving and environmental protection policy initiated by the Chinese government, the further development of electric bicycles has garnered government support. The electric bicycle, as an environment-friendly and convenient personal transportation vehicle, bears the advantages of convenience, non-pollution, safety and lower energy consumption. In accordance with the measured data of the electric bicycle market demand in China as reported in a recent online article at www.chinanews.com.cn/cj/cj-cyzh/news/2010/03-31/2201616.shtml, a copy of which was also filed as Exhibit 99.5 to the Registration Statement of which this prospectus is made a part, it was estimated that 25,000,000 electric bicycles will have been sold in China by the end of 2010.

With respect to new product trends in the market, Europe, the United States and Japan now use primarily a lithium-ion battery. This reflects a trend not only in the electric bicycle industry, but also in the electric automobile and telecommunications industries. In contrast, 95% of all electric bicycles produced in 2009 in China were powered by lead-acid motive batteries, and less than 5% of electric bicycles produced in 2009 were powered by lithium-ion batteries. Governments in the United States, Japan, Europe and China are encouraging the development of motive battery products that are more environmentally friendly with increased power output and less weight. Although we expect the development of lithium-ion batteries to accelerate over the next few years, we do not believe that the lithium-ion battery will replace the usage of the lead-acid motive battery in the electric bicycle industry in the next 3 to 5 years unless there is significant improvement with the safety and cost of production of lithium-ion batteries.

The Company has been issued certificates from top electric bicycle manufacturers in China which evidence that the Company’s products are the preferred brand of such manufacturers, including Aima and Xinri, whereby we provide to such manufacturers our best pricing and payment terms in exchange for receiving higher priority over our competitors in terms of supplying batteries to such manufacturers. For example, it is general practice that our preferred customers generally pay 8% to 10% lower for our batteries compared with the price our other customers pay and such preferred customers are also entitled to extend the payment term for up to 2 months longer than our other customers and in return, we receive first position on such customers’ supplier lists which enables us to obtain purchase orders prior to our competitors as well as to sell larger quantities of our batteries to such customers as compared with our competitors. Xinri’s electric bicycle was utilized at the Beijing 2008 Olympic Games and at the Paralympics Games, which we believe is a great honor in China. We were also chosen as the only manufacturer to supply lead-acid motive batteries to Xinri for its electric bicycle used at the Beijing 2008 Olympic Games and Paralympics Games. We are also an alternative power source sponsor at the 2010 Shanghai World Expo, providing eco-friendly solutions to power road signage at select Expo Park locations. Based on this, in the next several years, we will strive to create an international first-class brand and become the leader in providing “green” energy in the electric bicycle marketplace. Simultaneously, through constant research and development of new chemical energy technologies, we believe the Company will provide energy-savings and highly-effective energy solutions to our customers for the purpose of improving the quality of human life and a sustainable ecological environment.

Our Market Share

According to the China Battery Industry Association (the “Association”), we are one of the top three manufacturers of LABEBs in China in terms of production as of December 31, 2009. The China Battery Industry Association is an official organization established by the PRC government comprised of members representing approximately 475 battery manufacturers in China including Mr. Xu Kecheng, our President, Chief Executive Officer and Chairman of the Board, on behalf of the Company. Mr. Xu Kecheng does not sit on the board of the China Battery Industry Association and has no influence on the operations of the Association, including, without limitation, participation in the research activities of the Association.

Our Competitive Strengths

We believe the following strengths contribute to our competitive advantages and differentiate us from our competitors:

Production capacity

Established brand awareness

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Market position

Well-established distribution channels

Our cooperative partnership with clients

Research and development

Development Strategy of the Company

We strive to create an international first-class brand and become one of the leaders in providing “green” energy in the global electric bicycle market. Our goal is to become the largest battery developer and producer with a first-class sales and service network in China. The top five lead-acid motive battery manufacturers as of March 31, 2010 accounted for over 50% of the total market share in terms of production in China. The Company was ranked third in terms of production in the industry according to data generated by the China Battery Industry Association. In order to maintain the position as one of the leaders in the industry, we actively search for acquisition targets to expand our market share and to develop our production capacity; however as of the date of this prospectus, we do not have any agreements with any targets and are not currently in any negotiations with any target companies. In addition, our development strategy is committed to the following:

Expansion of our production capacity

Expand offering of highly efficient battery products

Expand sales network and distribution channels

Build partnerships with new and existing clients

Corporate Background and Information

Prior Operations of World Trophy

Our predecessor, World Trophy Outfitters, Inc. (this prospectus uses the term “World Trophy” when we discuss the operations of the Registrant prior to November 12, 2008), was formed as a Nevada corporation on January 13, 2005, and was in the business of selling big game hunting packages to high end clients who sought to hunt with the top tier big game outfitters. During the year ended March 31, 2008, World Trophy sold its entire inventory of big game hunts, was unsuccessful in developing a profitable business and ceased its operations effective April 1, 2008. Prior to the Exchange (as defined and discussed below), World Trophy focused its efforts on seeking a business opportunity and had been in the process of locating and negotiating with business entities for the merger of a target company into World Trophy.

Reverse Merger Transaction and Our Subsidiaries

On November 12, 2008, World Trophy entered into a Share Exchange Agreement (the “Exchange”) with Fast More, Cheer Gold Development Limited, a company organized under the laws of Samoa (“Cheer Gold”) and Floster Investment Limited, a company organized under the laws of Samoa (“Floster” and together with Cheer Gold, the “Stockholders”). Immediately prior to the Exchange, World Trophy was a shell company with US$51,039 in assets and a net loss of US$27,977 for the three months ended September 30, 2008. Upon the closing of the Exchange, the Company did not have any liabilities. As a result of the Exchange, World Trophy acquired all of the issued and outstanding securities of Fast More from the Stockholders in exchange for 35,000,000 newly-issued shares of World Trophy’s common stock. Upon the closing of the Exchange, the Stockholders collectively beneficially own 70% of the voting capital stock of the Company, 65.8% of which is owned by Cheer Gold and 4.2% of which is owned by Floster. As a result of the Exchange, Fast More became a wholly-owned subsidiary of World Trophy. Effective February 2, 2009, we amended our Articles of Incorporation to change our name from “World Trophy Outfitters, Inc.” to “Chisen Electric Corporation”.

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Fast More is an investment holding company incorporated in Hong Kong on December 17, 2007 with limited liability. CCEC was founded in Huzhou, Zhejiang Province in China on February 25, 2002. On February 16, 2008, Fast More acquired the 51%, 9% and 40% equity interests in CCEC from Mr. Xu Kecheng, Mr. Xu Keyong and BEME International Co., Ltd., respectively. Upon the completion of these acquisition transactions, CCEC became the wholly-owned and chief operating subsidiary of Fast More.

On May 18, 2009, the Registrant incorporated Chisen Technology Holdings Corporation in Nevada as its wholly-owned subsidiary with the intention of potentially conducting business in the United States. Chisen Technology Holdings Corporation is authorized to do business in the State of Washington and as of the date of this prospectus, has no operations. The Company intends to dissolve this entity.

Corporate Information

Our offices are located in the Changxing Economic Development Zone at the bank of the Taihu Lake in the County of Changxing in Zhejiang Province, in close proximity to major national transportation systems, including National Highways 104 and 318, the Shanghai – Jiangsu – Zhejiang – Anhui – Hangzhou – Nanjing Expressway, the Changxing – Huzhou – Shanghai Channel, the Xuancheng – Hangzhou Railway and the Xinyi – Changxing Railway. Our corporate offices are located at Jingyi Road, Changxing Economic Development Zone, Changxing, Zhejiang Province, The People’s Republic of China. Our telephone number is (86) 572-6267666 and our corporate website in English is located at www.chisenelectric.com .

We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our shares of common stock are not currently listed or quoted for trading on any national securities exchange however our common stock currently trades under the symbol “CIEC” on the OTCQB. We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol “CIEC”.

Corporate Structure

Our corporate structure is illustrated as follows:

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Our Challenges

Our ability to achieve our objectives and execute our strategies is subject to risks and uncertainties. We believe the following are the major risks and uncertainties that may materially affect us:

We have depended on a small number of customers for the vast majority of our sales. A reduction in business from any of these customers could cause a significant decline in our sales and profitability.

A substantial portion of our assets has been comprised of trade receivables representing amounts owed by a small number of customers. If any of these customers fails to timely pay us amounts owed, we could suffer a significant decline in cash flow and liquidity which, in turn, could cause us to be unable to pay our liabilities and purchase an adequate amount of inventory to sustain or expand our sales volume.

Risk of fluctuations in the prices of raw materials could adversely affect our business.

We choose to rely on a limited number of suppliers for our raw materials and have short term supply agreements with such suppliers, and any unanticipated disruptions or slowdowns by such suppliers, shipping companies and our distribution centers could adversely affect our ability to deliver our products and services to our customers which could materially and adversely affect our relationships with our customers and our revenues.

We currently rely on short term bank loans and non-interest bearing credits granted by banks for the issuance of notes payable, however we expect that we will need additional capital to implement our current business strategy of expansion of our production facilities in Changxing County and Jiangsu Province, and we will need to find new sources of financing, which may not be available to us.

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We face a risk of non-compliance with the terms of our notes payable, bill financing and short-term bank loans, which are secured by a significant amount of our assets and could have an adverse affect on our business.

In light of recent trends in Europe and the U.S., lead-acid motive battery products may be substituted by other battery products which could have an adverse effect on our business.

Lead pollution in China is subject to more attention from the government, which may cause the Chinese government to increase the environmental compliance standards for lead-acid batteries production. As a result, our costs of environmental compliance may increase in order to meet any heightened standards.

We may be affected by changes in the policies adopted by the PRC government in relation to the electric bicycle industry and the use of electric bicycles.

Our actual losses resulting from our relocation of our production facilities in Changxing County may significantly exceed the estimated amount provided for in our relocation agreement with the Administrative Committee of Changxing Economic Development Zone, which could have an adverse effect on our business.

If the land use rights of our landlord are revoked, we would be forced to relocate operations, which could have an adverse affect on our financial condition and results of operations.

Please see "Risk Factors" and other information included in this prospectus for a detailed discussion of these risks and uncertainties.

The Offering

Common stock we are offering		shares (1)

Common stock included in the Underwriter’s option to purchase shares from us to cover over-allotments, if any		shares

Common stock outstanding after the offering		shares (2)

Offering price		US$ to US$ per share (estimate)

Use of Proceeds		We intend to use the net proceeds from this offering to construct a new production plant in Changxing County (Zhejiang Province) for the development and production of a new product, lithium-ion batteries. See “Use of Proceeds” on page 35 or more information on the use of proceeds.

Risk factors		Investing in these securities involves a high degree of risk. As an investor you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the “Risk Factors” section beginning on page 13.

NYSE Amex proposed ticker symbol		We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol “CIEC”.

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Underwriter’s Warrants		Upon the closing of this offering, we will issue to Newbridge Securities Corporation common stock purchase warrants covering a number of shares of our common stock equal to 7% of the total number of shares of common stock being sold in this offering, including the Over-allotment Shares. The Underwriter’s Warrants will be non-exercisable for 6 months after the date of the closing of this offering and will expire 5 years after such date. The Underwriter’s Warrants will be exercisable at a price equal to 165% of the public offering price, and the Underwriter’s Warrants will not be redeemable. We are registering the Underwriter’s Warrants and the shares of common stock underlying such Underwriter’s Warrants hereunder in this offering. The Underwriter’s Warrants may not be transferred, assigned, or hypothecated for a period of 6 months following the closing of this offering, except that they may be assigned, in whole or in part, to any successor, officer, manager or member of Newbridge Securities Corporation (or to officers, managers or members of any such successor or member) and to members of the underwriting syndicate or selling group. The Underwriter’s Warrants may be exercised as to all or a lesser number of underlying shares of common stock and will provide for cashless exercise and will for a period of 5 years after the closing of this offering contain provisions for one demand registration of the sale of the underlying shares of common stock at our expense, an additional demand registration at the warrant holders’ expense and unlimited “piggyback” registration rights for a period of 5 years following the closing of this offering at our expense. See “Description of Securities” on page 107 for more information.

Advisory Agreement		Upon the closing of this offering, we will enter into a corporate advisory engagement with Newbridge Securities Corporation for a period of 12 months whereby we shall pay to Newbridge Securities Corporation a monthly retainer payment as well as other customary terms to be mutually agreed upon. See “Underwriting.”

(1)	Excludes (i) up to shares of common stock underlying warrants to be received by the Underwriter in this offering and (ii) the shares of our common stock that we may issue upon the Underwriter’s over-allotment option exercise.

(2)

Based on 50,000,000 shares of common stock issued and outstanding as of the date of this prospectus and shares of common stock to be issued in the public offering, which (i) excludes the Underwriter’s warrants to purchase shares of our common stock, (ii) excludes shares of common stock underlying warrants that are exercisable at US$ per share and (iii) excludes shares of our common stock that we may issue upon the Underwriter’s over-allotment option exercise.

SUMMARY FINANCIAL DATA

The following summary financial information contains consolidated statements of income data for the nine months ended December 31, 2010 and 2009 and each of the fiscal years ended March 31, 2010 and 2009, and the consolidated balance sheet data as of December 31, 2010, March 31, 2010 and 2009. The consolidated statements of income data and balance sheet data were derived from the audited consolidated financial statements, except for data for the nine months ended December 31, 2010 and 2009. Such financial data should be read in conjunction with the consolidated financial statements and the notes to the consolidated financial statements starting on page F-1 and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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	Nine months ended December 31,				Fiscal year ended March 31,
	2010		2009		2010		2009
	US$'000		US$'000		US$'000		US$'000

Revenues		194,712		127,104		177,192		109,020
Cost of sales		170,460		107,764		153,708		88,945
Gross profit		24,252		19,340		23,484		20,075
Sales, marketing and distribution		8,111		6,630		8,696		5,459
General and administrative expenses		2,628		2,236		3,647		3,763
Operating profit		13,513		10,474		11,141		10,853
Other income, net		889		1,189		1,671		758
Loss on disposal of scrap inventories		2,307		-		-		-
Interest income		315		56		343		362
Incomes before interest and income tax expenses		12,410		11,719		13,155		11,973
Interest expenses		2,231		1,147		2,068		1,232
Income before income tax expenses		10,179		10,572		11,087		10,741
Income tax expenses		2,421		1,439		1,587		1,861
Income before extraordinary item		7,758		9,133		9,500		8,880
Extraordinary item (less applicable income tax of US$0)		1,738		-		-		-
Net income		9,496		9,133		9,500		8,880
Other comprehensive income		1,115		24		106		278
Comprehensive income		10,611		9,157		9,606		9,158
Earnings per share before extraordinary item (basic and diluted)		0.16		0.18		0.19		0.22
Earnings per share after extraordinary item (basic and diluted)		0.19		0.18		0.19		0.22

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	Period
	ended December 31,		Fiscal year ended March 31,
	2010		2010		2009
	US$'000		US$'000		US$'000
Current Assets
Cash and cash equivalents		6,237		6,019		2,620
Restricted bank balances		26,468		21,420		13,878
Other financial assets		5,950		7,438		1,314
Trade receivables, net		69,811		50,440		35,023
Other receivables		8,791		800		842
Prepayments		7,120		4,933		862
Due from related parties		4		8		474
Inventories		26,502		30,038		17,135
Assets classified as held for sale		2,558		-		-
Total Current Assets		153,441		121,096		72,148

Non-Current Assets
Available-for-sale financial assets		2,735		882		878
Long-term land lease prepayments, net		150		749		608
Property, plant and equipment, net		10,945		10,474		5,315
Deposit for acquisition of land and buildings		798		-		-
Total Assets		168,069		133,201		78,949

Current Liabilities
Trade payables		15,118		14,923		11,176
Notes payable		49,155		35,504		23,343
Accrued expenses and other accrued liabilities		6,294		5,087		3,769
Due to related parties		5,004		2,532		639
Income taxes payable		1,111		148		264
Short-term bank borrowings		50,969		46,141		20,451
Liabilities directly associated with assets classified as held for sale		886		-		-
Total Current Liabilities		128,537		104,335		59,642

Non-Current Liabilities
Government subsidies		106		139		186
Deferred tax liabilities		460		460		460
Total Non-Current Liabilities		566		599		646

Total Liabilities		129,103		104,934		60,288

Shareholders’ Equity		50		50		50
Capital reserves		144		144		144
Statutory reserves		3,430		2,239		1,103
Accumulated other comprehensive income		2,169		1,054		948
Retained earnings		33,085		24,780		16,416
Total CIEC Shareholders’ Equity		38,878		28,267		18,661

Non-controlling interests		88		-		-

Total stockholders’ equity		38,966		28,267		18,661
Total Liabilities and Shareholders’ Equity		168,069		133,201		78,949

RISK FACTORS

Any investment in our common stock involves a high degree of risk. Investors should carefully consider the risks described below and all of the information contained in this prospectus before deciding whether to purchase our common stock. Our business, financial condition or results of operations could be materially adversely affected by these risks if any of them actually occur. Our shares of common stock are not currently listed or quoted for trading on any national securities exchange, however it is currently traded under the symbol “CIEC” on the OTCQB. If and when our common stock is traded, the trading price could decline due to any of these risks, and an investor may lose all or part of his or her investment. Some of these factors have affected our financial condition and operating results in the past or are currently affecting our company. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere in this prospectus.

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RISKS RELATED TO OUR OPERATIONS

The vast majority of our sales are generated from a small number of customers. During the nine months ended December 31, 2010 and the years ended March 31, 2010 and 2009, we had three, two and one customers that each generated revenues of at least 10% of our total revenues, respectively, with our largest customer accounting for 37%, 21% and 47% of our revenues for each respective period. A total of approximately 64%, 40% and 47% of our revenues for the nine months ended December 31, 2010 and the years ended March 31, 2010 and 2009, respectively, were attributable to customers that each individually accounted for at least 10% of our sales. We believe that we may depend upon a small number of customers for a significant majority of our sales in the future, and the loss or reduction in business from any of these customers, including, without limitation, any material disruption of slowdown suffered by such customers, could cause a significant decline in our sales and profitability.

Our trade receivables represented approximately 45%, 42% and 49% of our total current assets as of December 31, 2010, March 31, 2010 and March 31, 2009, respectively. As of December 31, 2010, 87% of our trade receivables represented amounts owed by three customers, who represented over 10% of the total amount of our accounts receivable. As of March 31, 2010, 80% of our trade receivables were owed to us by two customers, each of which represented over 10% of the total amount of our trade receivables. As a result of the substantial amount and concentration of our trade receivables, if any of our major customers fails to timely pay us amounts owed, we could suffer a significant decline in cash flow and liquidity which could adversely affect our ability to pay our liabilities and to purchase inventory to sustain or expand our current sales volume.

Furthermore, working capital management, including prompt and diligent billing and collection, is an important factor in our results of operations and liquidity. In general, our average accounts settlement period is 102 days from the time we sell our products to the time we receive payment from our customers. The credit periods for some of our business partners can be longer after an evaluation of the risk of collection. We cannot assure you that system problems, industry trends or other issues will not extend our collection period and adversely impact our working capital.

In addition, we typically need to place certain deposits and advances with our suppliers on a portion of the purchase price in advance and for some suppliers we must maintain a deposit for future orders. Because our payment cycle is shorter than our receivable cycle, we may experience working capital shortages.

Risk of fluctuations in the prices of raw materials could adversely affect our business.

The raw material for our battery products consist primarily of electrolytic lead. Our success significantly depends on our ability to secure sufficient and constant supply of electrolytic lead for our production at acceptable price levels. Electrolytic lead represents our largest cost item in our lead-acid motive battery production. During each of the two fiscal years ended March 31, 2010 and March 31, 2009, the average selling price of electrolytic lead by our suppliers was approximately US$2,200 and approximately US$2,200 per ton, respectively. There were slight fluctuations on the average selling price of electrolytic lead for the fiscal year ended March 31, 2010 and the average selling price of electrolytic lead decreased by approximately 1.5% as compared to the fiscal year ended March 31, 2009. For each of the two financial years ended March 31, 2010 and March 31, 2009, costs of lead-related material accounted for approximately 80% and 80% of our total cost of sales, respectively. We do not have long-term contracts with any of our electrolytic lead suppliers, nor have we entered into any arrangement to mitigate the effect of price fluctuations of electrolytic lead. Therefore, any significant increase in the cost of electrolytic lead in the future could adversely affect our results if we cannot transfer the price increment to our customers.

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We choose to rely on a limited number of suppliers for our raw materials and have short term supply agreements with such suppliers, and any unanticipated loss, disruptions or slowdowns by such suppliers, shipping companies and our distribution centers could adversely affect our ability to deliver our products and services to our customers which could materially and adversely affect our relationships with our customers and our revenues.

Our ability to provide high quality customer service, to process and fulfill orders and to manage inventory depends on the timely and uninterrupted performance of our suppliers and shipping companies and the efficient and uninterrupted operation of our distribution centers. During the nine months ended December 31, 2010 and for the fiscal years ended March 31, 2010 and 2009, we had one, four, and four suppliers each of which accounted for at least 10% of our total raw material purchases, respectively, with our largest supplier accounting for approximately 24%, 24% and 19% of our raw material purchases for each respective period. A total of approximately 24%, 64% and 60% of our raw material purchases for the nine months ended December 31, 2010 and the years ended March 31, 2010 and 2009, respectively, were attributable to suppliers that each individually accounted for at least 10% of our raw material purchases. We choose to rely on a small number of suppliers in order to stabilize the quality of the raw materials we purchase, and we believe that we may continue to depend upon a small number of suppliers for our raw materials in the future, and the loss or reduction in business from any of these suppliers could have an adverse effect on our business. We also generally have supply agreements that are no longer than one year and we cannot guarantee that such suppliers will continue to do business with us. In the event that our suppliers stop doing business with us, or if our suppliers suffer any material disruption or slowdown including, without limitation, being forced to shut down operations as a result of a material lead pollution event, we would be forced to find replacement suppliers with comparable quality of raw materials, which could take time to locate and secure. Any material disruption or slowdown in the operations of our suppliers, or any material disruption or slowdown at our distribution centers, manufacturing facilities or with our management information systems could cause delays in our ability to receive, process and fulfill customer orders and may cause orders to be cancelled, lost or delivered late, goods to be returned or receipt of goods to be refused. As a result, our revenues and operating results could be materially and adversely affected.

We will need new sources of financing and additional capital in order to implement our current business strategy of expansion of our production facilities in Changxing County (Zhejiang Province) and in Jiangsu Province. Also the Company has short term bank loans and non-interest bearing credits granted by banks for the issuance of notes payable at our disposal, most of such short term loans and notes payable expire in the next three months, and there is no assurance that we will obtain any new loans or notes payable, or that such short term loans and notes payable will be renewed or that the terms of any renewals of such short term loans or notes payable will be on terms that are as favorable as our current instruments. As of the date of this prospectus, we had an aggregate of $108,783,000 of short-term loans outstanding. Furthermore, in January 2010, the Chinese government took steps to tighten the availability of credit including ordering banks to increase the amount of reserves they hold and to reduce or limit their lending. Such governmental actions in the PRC may make it more difficult for us to obtain additional loans from other banking institutions if we need such additional capital, in which case we will be forced to seek other sources of funding.

Assuming our sale of shares of common stock at an assumed public offering price of US$ per share of common stock, which is the mid-point of the estimated initial offering price range set forth on the cover of this prospectus, we currently intend this offering to be in an amount equal to approximately US$ . Our ability to obtain additional financing will be, however, subject to a number of factors, including market conditions, our operating performance and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive to us. We cannot assure you that we will be able to obtain any additional financing. Also, if we raise additional capital after this offering, it may dilute your ownership in us. If we are unable to obtain the financing needed to implement our business strategy, our ability to increase revenues will be impaired and we may not be able to sustain profitability.

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We have notes payable and short-term bank loans and bill financing which are collateralized by a significant amount of our assets, including 100% of our restricted bank balances, certain land lease prepayments and our buildings. Specifically, our notes payable are secured by US$26,468,000 of our restricted bank balances as of December 31, 2010, and such notes payable and our short-term bank loans are collateralized by certain land lease prepayments and buildings classified as held for sale with carrying values of US$609,000 and US$1,949,000 at December 31, 2010, respectively. Such financial instruments contain customary events of default, and upon the occurrence and during the continuation of an event of default, amounts due under such financial instruments may be accelerated by our creditors. If we are unable to comply with the terms of such financial instruments, events of default could occur. Upon the occurrence and during the continuance of an event of default under such financial instruments, our creditors have available a range of remedies customary in these circumstances, including declaring all outstanding debt, together with any accrued and unpaid interest thereon, to be due and payable, foreclosing on the aforementioned assets securing the financial instruments and/or ceasing to provide additional loans, which could have a material adverse effect on our business.

In light of recent trends in Europe and the U.S., lead-acid motive battery products may be substituted by other battery products which could have an adverse effect on our business.

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

Recently one of our former lead plate suppliers, Anqing Borui Power Co., Ltd., was found to be involved in a material lead pollution event, where more than 20 children affected by lead pollution were reported having blood lead above normal standards, and has been required to close its operations by the local government. Accordingly, blood lead pollution in China is now subject to greater scrutiny from both the press and the government. In the event that the Chinese government increases the environmental compliance standards for lead-acid batteries production as a result of these events, our costs of environmental compliance may increase in order to meet the heightened standards.

We may be affected by changes in the policies adopted by the PRC government in relation to the electric bicycle industry and the use of electric bicycles.

Our operations and financial results could be adversely affected by changes in the political, economic and social conditions in China or the relevant policies of the PRC government in respect of the use of electric bicycles. The “Law of People’s Republic of China on Road Traffic Safety” categorizes the electric bicycle as a non-motor vehicle. However, certain local governments in China may prohibit the use of electric bicycles. In the event that there is any unfavorable policy on the electric bicycle industry and the use of electric bicycles, sales of electric bicycles may decrease, and this could have a significant adverse impact on our business.

On August 20, 2010, CCEC entered into a Compensation Agreement of Corporate Relocation Acquisition with the Administrative Committee of Changxing Economic Development Zone, Zhejiang, pursuant to which CCEC agreed to transfer to the Committee the land-use rights to, and structures on, the property previously used by CCEC for office and its manufacturing facilities, and agreed to relocate the office and manufacturing facilities to a new location. The Committee requested the relocation pursuant to a general policy of the Government of Changxing County to relocate “secondary industries” from urban areas to countryside. The term “secondary industries” is defined as all manufacturing entities pursuant to National Bureau of Statistics of PRC’s classification of industries. Pursuant to the “Withdraw from Secondary Industry and Progressing to Tertiary Industry” policy of Changxing County, all entities that are classified as participants in “secondary industries” shall be relocated from the Westside of Jing’er Road to the Eastside of Jing‘er Road. The Government of Changxing’s policy is to negotiate with each entity with respect to the specific terms of relocation, including, without limitation, relevant compensation to be paid after assessment. The Company’s business has been deemed to be a “secondary industry” by the Government of Changxing. Pursuant to an assessment of the property and the compensation of the losses stated as follows, the Committee agreed to pay to CCEC RMB117,202,100 (approximately US$17,265,000) in total for the relocation. In addition to the compensation for the property, this amount also includes compensation for the value of losses associated with removing CCEC’s equipment at RMB6,939,900 (approximately US$1,022,000) and the value of losses to CCEC with respect to the suspension of its operations for two months at RMB11,748,000 (approximately US$1,731,000). However, there is no assurance that suspension of our operations will resume after two months, or that our actual losses for the suspension of our operations will not exceed RMB11,748,000 (approximately US$1,731,000). If our suspension of operations exceeds the estimated time frame or if our actual losses for such suspension significantly exceed the estimated amount, this could have an adverse effect on our business.

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Furthermore, CCEC agreed to vacate the site within one year of the signing of the Relocation Agreement and the Committee agreed to pay the RMB117,202,100 (approximately US$17,265,000) as follows: 5% of such amount to be paid within one month after the execution of the Relocation Agreement, 20% to be paid within one month of CCEC delivering appropriate land-use rights certificates and proof of cancellation of encumbrances, 25% to be paid after the commencement of the removal of CCEC’s operations from the site, and the remaining 50% to be paid upon completion of the relocation.

Competition in the motive battery industry in China could have an adverse effect on our business.

As of the date of this prospectus, we only conduct our business in one segment of the battery industry, the manufacture and sale of lead-acid motive batteries. We face competition from the domestic and foreign producers in China, which move into the motive battery industry in view of the growth potential. New entrants will continue to emerge. Any intensification in competition could dilute our market share and may lead to price reductions and increased expenses in marketing and product development. Any of these events could have an adverse impact on our profitability.

Our sales are dominated by sales in China, which could have an adverse effect on our business.

For each of the two financial years ended March 31, 2010 and 2009, and for the nine months ended December 31, 2010, all of our sales were derived from customers in China. We expect that the domestic market in China will continue to be our major market. Our business is therefore heavily dependent on the demand for motive battery products in China and the domestic market prices of these products. In the event that there is any material adverse change in the level of the demand for motive battery products in China or if there are a significant price fluctuations in China, our performance could be adversely affected.

We do not carry any business interruption insurance, products liability insurance or any other insurance policy except for property insurance. As a result, we may incur uninsured losses, increasing the possibility that you would lose your entire investment in our company.

We could be exposed to liabilities or other claims for which we would have no insurance protection. We do not currently maintain any business interruption insurance, products liability insurance, or any other comprehensive insurance policy except for property insurance policies with limited coverage. As a result, we may incur uninsured liabilities and losses as a result of the conduct of our business. There can be no guarantee that we will be able to obtain additional insurance coverage in the future, and even if we are able to obtain additional coverage, we may not carry sufficient insurance coverage to satisfy potential claims. Should uninsured losses occur, any purchasers of our common stock could lose their entire investment.

Because we do not carry products liability insurance, a failure of any of the products marketed by us may subject us to the risk of product liability claims and litigation arising from injuries allegedly caused by the improper functioning or design of our products. We cannot assure that we will have enough funds to defend or pay for liabilities arising out of a products liability claim. To the extent we incur any product liability or other litigation losses, our expenses could materially increase substantially. There can be no assurance that we will have sufficient funds to pay for such expenses, which could end our operations and you would lose your entire investment.

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If CEJC fails to commence construction and is delayed more than seven days under the Project Investment Contract and Supplemental Agreement to Project Investment Contract with the Jiangsu Xuyi Economic Development Zone Administrative Committee, the Committee could reclaim the land which could have a materially adverse effect on the Company’s business and plan of development.

On September 6, 2010, CEJC entered into a Project Investment Contract and a Supplemental Agreement to the Project Investment Contract with the Jiangsu Xuyi Economic Development Zone Administrative Committee pursuant to which CEJC shall invest, in the aggregate, approximately RMB1,200,000,000 (approximately US$177,000,000) in three stages to build the Chisen Circular Economy Industry Park to manufacture valve regulated lead-acid and lithium-ion batteries and other related products (“Plant D”) at Jing Yuan Road in the Jiangsu Xuyi Economic Development Zone. In the first stage CEJC shall invest approximately RMB422,000,000 (approximately US$62,000,000), including approximately RMB150,000,000 (approximately US$22,000,000) in fixed assets for the production of VRLA batteries only. The Company does not plan to construct lithium-ion batteries production facilities in Jiangsu Xuyi until 18 months after the date that we commence production of the first stage. CEJC shall commence construction upon the obtainment by CEJC of construction plan approval, however in the event that CEJC fails to commence construction and is delayed more than 7 days, the Committee has the right to terminate the Agreement and reclaim the land. Additionally, if the Company commences construction on the land and fails to follow the construction schedule, the Committee has the right to reclaim the land, which could also result in a loss to the Company in terms of labor and other resources spent on such construction up until the time of such reclamation. In light of the fact that construction delays are not unusual occurrences and that any delay could be attributable to a force beyond the Company’s control, the Company could face a situation where the Committee enforces its rights under the Agreement and reclaims the land, even if in the case where construction and/or improvements on the land have already commenced by the Company. Any such reclamation action could significantly delay our plan of development and the Company could be forced to renegotiate with the Committee or the Company could be forced to negotiate with new parties for alternative parcels of land on terms that are not as favorable as the terms currently in place with the Committee, and any losses associated therewith could have a material adverse effect on our business and plan of development.

Our future performance is dependent on researching and developing new products, the inability to do so could have an adverse effect on our business.

Our performance in the future is dependent on our ability to develop and launch new products. Changes in technologies may render our products obsolete and our performance in the future is thus significantly dependent on our ability to develop and launch new products. There can be no assurance that our research and development efforts will be successful or completed within the anticipated timeframe and results. Moreover, there can be no assurance that any research and development project undertaken by us will result in commercially viable products. Unsuccessful development and release of new products could adversely affect our performance and our ability to compete.

We intend to make significant investments in research and development and new products that may not be profitable.

Companies in our industry are under pressure to develop new designs and product innovations to support changing consumer tastes and regulatory requirements. We have engaged in research and development activities and we believe that substantial additional research and development activities are necessary to allow us to offer technologically-advanced products. We expect that our research and development budget will increase significantly as we attempt to create new products. However, research and development and investments in new technology are inherently speculative and commercial success depends on many factors including technological innovation, novelty, service and support, and effective sales and marketing. We may not achieve significant revenue from new product investments for a number of years, if at all. Moreover, new products and services may not be profitable, and even if they are profitable, operating margins for new products and businesses may be minimal.

Our failure to effectively manage growth could harm our business.

We have expanded the number and types of products we sell, and we will endeavor to further expand our product portfolio. We must continually introduce new products and technologies, enhance existing products, and effectively stimulate customer demand for new products and upgraded versions of our existing products in order to remain competitive.

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This expansion of our products places a significant strain on our management, operations and engineering resources. Specifically, the areas that are strained most by our growth include the following:

• New Battery Product Launch: With the growth of our product portfolio, we experience increased complexity in coordinating product development, manufacturing and shipping. As this complexity increases, it places a strain on our ability to accurately coordinate the commercial launch of our products for distribution into the marketplace with adequate supply to meet anticipated customer demand and effective marketing to stimulate demand and market acceptance. If we are unable to scale and improve our product launch coordination, we could frustrate our customers and lose retail shelf space and product sales;

• Forecasting, Planning and Supply Chain Logistics: With the growth of our product portfolio, we also experience increased complexity in forecasting customer demand, planning for production, and transportation and logistics management. If we are unable to scale and improve our forecasting, planning and logistics management, we could frustrate our customers, lose product sales or accumulate excess inventory; and

• Support Processes: To manage the growth of our operations, we will need to continue to improve our transaction processing, operational and financial systems, and procedures and controls to effectively manage the increased complexity. If we are unable to scale and improve these areas, the consequences could include delays in shipment of products, degradation in levels of customer support, lost sales, decreased cash flows, and increased inventory. These difficulties could harm or limit our ability to expand.

Our products could contain defects or they may be installed or operated incorrectly, which could result in claims against us or reduce sales of those products.

Despite quality control testing by us, errors have been found and may be found in the future in our existing or future products. This could result in, among other things, a delay in the recognition or loss of revenue, loss of market share or failure to achieve market acceptance. These defects could cause us to incur significant warranty, support and repair costs, divert the attention of our personnel from our product development efforts and harm our relationship with our customers. The occurrence of these problems could result in the delay or loss of market acceptance of our battery products and would likely harm our business. Defects, integration issues or other performance problems in our battery products could result in personal injury or financial or other damages to end-users or could damage market acceptance of our products. Our customers and end-users could also seek damages from us for their losses. A product liability claim brought against us, even if unsuccessful, would likely be time-consuming and costly to defend.

Environmental claims brought against us in connection with the production of battery products could adversely affect our business.

Solid waste, sewage and fumes are generated during the production process of battery products. We are required to comply with the environmental laws, rules and regulations promulgated by the PRC government. These laws, rules and regulations govern, among other things, the level of fees payable to the government entities providing environmental services and setting out the requirements in relation to the installation of ventilation equipment to ensure the appropriate treatment of lead dust and particles generated during production of lead-acid motive battery products. They also prescribe the standards for the discharge of solid waste, sewage and fumes. In addition, these laws, rules, and regulations empower the local PRC governments to impose sanctions on enterprises failing to comply with such laws, rules and regulations. We are also required by the laws and regulations governing health and safety at work in China to provide our employees exposed to lead dust or particles with protective clothing and accessories, such as gloves, goggles and masks. We also arrange all our employees engaging in the lead-related production process to receive medical checks at least twice a year.

Although we have adopted these preventive measures, inherent risks involved in our production activities cannot be completely eliminated. As our production may cause pollution to the environment and may affect the health of our employees and the residents nearby, we may be subject to civil claims for compensation or administrative sanctions such as fines or discontinuation of production activities. If there is any legal action initiated against us on any alleged violation of environmental protection laws and regulations, or that our production discharge results in any harmful impact on any person, our business could be materially and adversely affected. There can be no assurance that the relevant governmental authorities and other people would not take actions against us for our past, present and future business operations. We have not maintained any insurance coverage for these possible claims due to environmental related matters, as our Directors are not aware of such type of insurance to be available in China. Any environmental actions taken against us could adversely affect our business.

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If we are unable to maintain our Zhejiang Province Pollution Discharge Certificate, we may lose our ability to continue conducting our manufacturing operations.

We are subject to various federal, state, local and foreign environmental laws and regulations, including those governing the use, discharge and disposal of hazardous substances in the ordinary course of our manufacturing process. The manufacturing facilities in which we operate are subject to the PRC’s environmental laws and requirements. We are required to have and do have a valid Zhejiang Province Pollution Discharge Certificate issued by the Environment Protection Bureau of Changxing County and we are responsible for the disposal of the waste in accordance with applicable environmental regulations. If we fail to comply with the provisions of the permit and environmental laws, we could be subject to sanctions by regulators, including the suspension or termination of our Certificate, which would result in the suspension or termination of our manufacturing operations, which would have a material adverse effect on our results of operations.

We believe that mandatory and voluntary certification and compliance issues are critical to adoption of our battery product systems and for the retention of our customers, and failure to obtain such certification or compliance would harm our business.

We are required to comply with certain legal requirements governing the materials in our products. Although we are not aware of any efforts to amend any existing legal requirements or implement new legal requirements in a manner with which we cannot comply, our revenue might be materially harmed if such an amendment or implementation were to occur.

Moreover, although we are not legally required to do so, we strive to obtain a broad range of certifications (such as ISO 9001, ISO 14001 and ISO 18001) for substantially all our products which the Company believes helps make our products more saleable and which contributes to the retention of existing customers and the obtainment of future customers. The failure to obtain voluntary certifications for our products could result in a loss of current customers or could impair the marketability of our products which could result in the failure for us to obtain new customers, which could have a materially adverse effect on our business.

We may adopt an equity incentive plan under which we may grant securities to compensate employees and other services providers, which would result in increased share-based compensation expenses and, therefore, reduce net income.

We may adopt an equity incentive plan under which we may grant shares or options to qualified employees. Under current accounting rules, we would be required to recognize share-based compensation as compensation expense in our statement of income, based on the fair value of equity awards on the date of the grant, and recognize the compensation expense over the period in which the recipient is required to provide service in exchange for the equity award. We have not made any such grants in the past, and accordingly our results of operations have not contained any share-based compensation charges. The additional expenses associated with share-based compensation may reduce the attractiveness of issuing stock options under an equity incentive plan that we may adopt in the future. If we grant equity compensation to attract and retain key personnel, the expenses associated with share-based compensation may adversely affect our net income. However, if we do not grant equity compensation, we may not be able to attract and retain key personnel or be forced to expend cash or other compensation instead. Furthermore, the issuance of equity awards would dilute the shareholders’ ownership interests in our company.

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Our business may be adversely affected by the global economic downturn, in addition to the continuing uncertainties in the financial markets which could impair our ability and the ability of our customers to access capital in the current economic climate and therefore could have an adverse effect on our business.

The global economy is currently in a pronounced economic downturn. Global financial markets are continuing to experience disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. Given these uncertainties, there is no assurance that there will not be further deterioration in the global economy, the global financial markets and consumer confidence. If economic conditions deteriorate further, our business and results of operations could be materially and adversely affected.

Additionally, the inability of our customers and suppliers to access capital efficiently, or at all, may have other adverse effects on our financial condition. For example, financial difficulties experienced by our customers or suppliers could result in product delays; increase trade receivables defaults; and increase our inventory exposure. The impact of tightening credit conditions may impair our customers’ ability to effectively access capital markets. The inability of our customers to borrow money to fund construction of electric bicycles reduces the demand for our products and services and may adversely affect our results from operations and cash flow. These risks may increase if our customers and suppliers do not adequately manage their business or do not properly disclose their financial condition to us.

Although we believe we have adequate liquidity and capital resources to fund our operations internally, in light of current market conditions, our inability to access the capital markets on favorable terms, or at all, may adversely affect our financial performance. The inability to obtain adequate financing from debt or capital sources could force us to self-fund strategic initiatives or even forego certain opportunities, which in turn could potentially harm our performance.

We may not be able to effectively recruit and retain skilled employees, particularly scientific, technical and management professionals.

Our ability to compete effectively depends largely on our ability to attract and retain certain key personnel, including scientific, technical and management professionals. We anticipate that we will need to hire additional skilled personnel in all areas of our business. Industry demand for such employees, however, exceeds the number of personnel available, and the competition for attracting and retaining these employees is intense. Because of this intense competition for skilled employees, we may be unable to retain our existing personnel or attract additional qualified employees to keep up with future business needs. If this should happen, our business, operating results and financial condition could be adversely affected.

Our labor costs are likely to increase as a result of changes in Chinese labor laws.

We expect to experience an increase in our cost of labor due to recent changes in Chinese labor laws which are likely to increase costs further and impose restrictions on our relationship with our employees. In June 2007, the National People’s Congress of the PRC enacted new labor law legislation called the Labor Contract Law and more strictly enforced existing labor laws. The new law, which became effective on January 1, 2008, amended and formalized workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of labor unions. As a result of the new law, we have had to increase the salaries of our employees, provide additional benefits to our employees, and revise certain other of our labor practices. The increase in labor costs has increased our operating costs, which increase we have not always been able to pass through to our customers. In addition, under the new law, employees who either have worked for us for 10 years or more or who have had two consecutive fixed-term contracts must be given an “open-ended employment contract” that, in effect, constitutes a lifetime, permanent contract, which is terminable only in the event the employee materially breaches our rules and regulations or is in serious dereliction of his or her duties. Such non-cancelable employment contracts will substantially increase our employment related risks and limit our ability to downsize our workforce in the event of an economic downturn. No assurance can be given that we will not in the future be subject to labor strikes or that we will not have to make other payments to resolve future labor issues caused by the new laws. Furthermore, there can be no assurance that the labor laws will not change further or that their interpretation and implementation will vary, which may have a negative effect upon our business and results of operations.

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Our business could be materially adversely affected if we cannot protect our intellectual property rights or if we infringe on the intellectual property rights of others.

Our ability to compete effectively will depend on our ability to maintain and protect our proprietary rights, including patents that we use in our business and our brand name. Third parties may seek to challenge, invalidate, circumvent or render unenforceable any proprietary rights owned by or licensed to us. Our inability to protect our proprietary rights could materially adversely affect the ability to sell our products. Litigation may be necessary to:

•

enforce our intellectual property rights;

•

protect our trade secrets; and

•

determine the scope and validity of such intellectual property rights.

Any such litigation, whether or not successful, could result in substantial costs and diversion of resources and management’s attention from the operation of our business.

We may receive notice of claims of infringement of other parties’ proprietary rights. Such actions could result in litigation and we could incur significant costs and diversion of resources in defending such claims. The party making such claims could secure a judgment awarding substantial damages, as well as injunctive or other equitable relief. Such relief could effectively block our ability to make, use, sell, distribute or market our products and services in certain jurisdictions. We may also be required to seek licenses to such intellectual property. We cannot predict, however, whether such licenses would be available or, if available, could be obtained on terms that are commercially reasonable and acceptable to us. The failure to obtain the necessary licenses or other rights could delay or preclude the sale, manufacture or distribution of our products and could result in increased costs to us.

We may pursue future growth through strategic acquisitions and alliances which may not yield anticipated benefits and may adversely affect our operating results, financial condition and existing business.

We may seek to grow in the future through strategic acquisitions in order to complement and expand our business. The success of our acquisition strategy will depend on, among other things:

the availability of suitable candidates;

competition from other companies for the purchase of available candidates;

our ability to value those candidates accurately and negotiate favorable terms for those acquisitions;

the availability of funds to finance acquisitions;

the ability to establish new informational, operational and financial systems to meet the needs of our business;

the ability to achieve anticipated synergies, including with respect to complementary products or services; and

the availability of management resources to oversee the integration and operation of the acquired businesses.

If we are not successful in integrating acquired businesses and completing acquisitions in the future, we may be required to reevaluate our acquisition strategy. We also may incur substantial expenses and devote significant management time and resources in seeking to complete acquisitions. Acquired businesses may fail to meet our performance expectations. If we do not achieve the anticipated benefits of an acquisition as rapidly as expected, or at all, investors or analysts may not perceive the same benefits of the acquisition as we do. If these risks materialize, our stock price could be materially adversely affected.

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RISKS RELATED TO US DOING BUSINESS IN CHINA

If the land use rights of our landlord are revoked, we would be forced to relocate operations, which could have an adverse affect on our financial condition and results of operations.

Under Chinese law land is owned by the state or rural collective economic organizations. The state issues to the land users a land use right certificate. Land use rights shall not be revoked before the expiration of the period thereof. However, under special circumstances, land use rights can be revoked and land users forced to vacate when redevelopment of the land is in the public interest, provided that corresponding compensation is given to the land users. The public interest rationale is interpreted quite broadly and the process of land appropriation may be less than transparent. With the exception of our property at Jingyi Road, we do not have any land use rights and our manufacturing facilities rely on land use rights of our landlord, and the loss of such rights would require us to identify and relocate new manufacturing and other facilities, which could be time consuming have a material adverse effect on our financial condition and results of operations.

Substantially all of our assets are located in the PRC and a substantial portion of our revenues are derived from our operations in China, and changes in the political and economic policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition.

Our business operations may be adversely affected by the current and future political environment in the PRC. The Chinese government exerts substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations, including those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters. Under the current government leadership, the government of the PRC has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the government of the PRC will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.

Our operations are subject to PRC laws and regulations that are sometimes vague and uncertain. Any changes in such PRC laws and regulations, or the interpretations thereof, may have a material and adverse effect on our business.

The PRC’s legal system is a civil law system based on written statutes. Unlike the common law system prevalent in the United States, decided legal cases have little value as precedent in China. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to, governmental approvals required for conducting business and investments, laws and regulations governing the battery industry and battery product safety, national security-related laws and regulations, as well as commercial, antitrust, patent, product liability, environmental laws and regulations, consumer protection, and financial and business taxation laws and regulations.

The Chinese government has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters. However, because these laws and regulations are relatively new, and because of the limited volume of published cases and judicial interpretation and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties.

Our principal operating subsidiary, CCEC, is considered a foreign invested enterprise under PRC laws, and as a result is required to comply with PRC laws and regulations, including laws and regulations specifically governing the activities and conduct of foreign invested enterprises. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses. If the relevant authorities find us in violation of PRC laws or regulations, they would deal with such a violation in accordance with PRC laws and regulations, including, without limitation:

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levying fines;

revoking our business license, or other licenses;

requiring that we restructure our operations; and

requiring that we discontinue any portion or all of our business.

Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based upon U.S. laws, including the federal securities laws or other foreign laws against us or our management.

Most of our current operations, including the manufacturing and distribution of our products, are conducted in China. Moreover, all of our directors and officers are nationals and residents of China. All or substantially all of the assets of these persons are located outside the United States and in the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon these persons. In addition, uncertainty exists as to whether the courts of China would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in China against us or such persons predicated upon the securities laws of the United States or any state thereof.

The scope of our business license in China is limited, and we may not expand or continue our business without government approval and renewal, respectively.

Our principal operating subsidiary, CCEC, is a wholly foreign-owned enterprise, commonly known as a WFOE. A WFOE can only conduct business within its approved business scope, which ultimately appears on its business license. Our license permits us to produce lighting appliances, glass products for daily use, sanitary glass bath equipment, valve regulated lead-acid batteries and to sell such products, and other than production and sales of valve regulated lead-acid batteries, we have not engaged in any other business activity since the date of CCEC’s incorporation. Any amendment to the scope of our business requires further application and government approval. In order for us to expand our business beyond the scope of our license, we will be required to enter into a negotiation with the PRC authorities for the approval to expand the scope of our business. We cannot assure investors that CCEC will be able to obtain the necessary government approval for any change or expansion of its business. If we are unable to obtain the approval from the government to amend our business license to include lithium-ion batteries, this could have a materially adverse effect on our business.

We are subject to a variety of environmental laws and regulations related to our manufacturing operations. Our failure to comply with environmental laws and regulations may have a material adverse effect on our business and results of operations.

We are subject to various environmental laws and regulations in China. We cannot assure you that at all times we will be in compliance with the environmental laws and regulations or that we will not be required to expend significant funds to comply with, or discharge liabilities arising under, environmental laws and regulations. Additionally, these regulations may change in a manner that could have a material adverse effect on our business, results of operations and financial condition. We have made and will continue to make capital and other expenditures to comply with environmental requirements.

Furthermore, our failure to comply with applicable environmental laws and regulations worldwide could harm our business and results of operations. The manufacturing, assembling and testing of our products require the use of hazardous materials that are subject to a broad array of environmental, health and safety laws and regulations. Our failure to comply with any of these applicable laws or regulations could result in:

regulatory penalties, fines and legal liabilities;

suspension of production;

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alteration of our fabrication, assembly and test processes; and

curtailment of our operations or sales.

In addition, our failure to manage the use, transportation, emission, discharge, storage, recycling or disposal of hazardous materials could subject us to increased costs or future liabilities. Existing and future environmental laws and regulations could also require us to acquire pollution abatement or remediation equipment, modify our product designs or incur other expenses associated with such laws and regulations. Many new materials that we are evaluating for use in our operations may be subject to regulation under existing or future environmental laws and regulations that may restrict our use of one or more of such materials in our manufacturing, assembly and test processes or products. Any of these restrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our manufacturing processes.

Contract drafting, interpretation and enforcement in China involve significant uncertainty.

We have entered into numerous contracts governed by PRC law, which are material to our business. As compared with contracts in the United States, contracts governed by PRC law tend to contain less detail and are not as comprehensive in defining contracting parties’ rights and obligations. As a result, contracts in China are more vulnerable to disputes and legal challenges. In addition, contract interpretation and enforcement in China is not as developed as in the United States, and the result of any contract dispute is subject to significant uncertainties. Therefore, we cannot assure you that we will not be subject to disputes under our material contracts, and if such disputes arise, we cannot assure you that we will prevail.

We could be liable for damages for defects in our products pursuant to the Tort Liability Law of the PRC.

The Tort Liability Law of the People’s Republic of China, which was passed during the 12th Session of the Standing Committee of the 11th National People’s Congress on December 26, 2009, states that manufacturers are liable for damages caused by defects in their products and sellers are liable for damages attributable to their fault. If the defects are caused by the fault of third parties such as the transporter or storekeeper, manufacturers and sellers are entitled to claim for compensation from these third parties after paying the compensation amount.

Recent PRC regulations relating to acquisitions of PRC companies by foreign entities may create regulatory uncertainties that could restrict or limit our ability to operate. Our failure to obtain the prior approval of the China Securities Regulatory Commission, or the CSRC, for this offering and the listing and trading of our common stock could have a material adverse effect on our business, operating results, reputation and trading price of our common stock.

The PRC State Administration of Foreign Exchange, or “SAFE” issued a public notice effective as of November 1, 2005 known as Circular 75, concerning the use of offshore holding companies in mergers and acquisitions in China. The public notice provides that if an offshore company controlled by PRC residents intends to acquire a PRC company, such acquisition will be subject to registration with the relevant foreign exchange authorities. The public notice also suggests that registration with the relevant foreign exchange authorities is required for any sale or transfer by the PRC residents of shares in an offshore holding company that owns an onshore company. The PRC residents must each submit a registration form to the local SAFE branch with respect to their ownership interests in the offshore company, and must also file an amendment to such registration if the offshore company experiences material events, such as changes in the share capital, share transfer, mergers and acquisitions, spin-off transactions or use of assets in China to guarantee offshore obligations. If any PRC resident stockholder of an offshore holding company fails to make the required SAFE registration and amended registration, the onshore PRC subsidiaries of that offshore company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore entity. Failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

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We cannot provide any assurances that our stockholders who are resident in the PRC can obtain the above SAFE registrations required by Circular 75. Moreover, because of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies. For example, CCEC’s ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with the SAFE notice by our PRC resident beneficial holders.

In addition, such PRC residents may not always be able to complete the necessary registration procedures required by Circular 75. We also have little control over either our present or prospective direct or indirect stockholders or the outcome of such registration procedures. Failure by our PRC resident beneficial holders could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit CCEC’s ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

On August 8, 2006, the PRC Ministry of Commerce (“MOFCOM”), joined by the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and SAFE, released a substantially amended version of the Provisions for Foreign Investors to Merge with or Acquire Domestic Enterprises (the “Revised M&A Regulations”), which took effect September 8, 2006. These new rules significantly revised China’s regulatory framework governing onshore-to-offshore restructurings and foreign acquisitions of domestic enterprises. These new rules signify greater PRC government attention to cross-border merger, acquisition and other investment activities, by confirming MOFCOM as a key regulator for issues related to mergers and acquisitions in China and requiring MOFCOM approval of a broad range of merger, acquisition and investment transactions. Further, the new rules establish reporting requirements for acquisition of control by foreigners of companies in key industries, and reinforce the ability of the Chinese government to monitor and prohibit foreign control transactions in key industries.

Among other things, the revised M&A Regulations include new provisions that purport to require that an offshore special purpose vehicle, or SPV, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals must obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. However, the application of this PRC regulation remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope and applicability of the CSRC approval requirement.

If the CSRC or another PRC regulatory agency subsequently determines that CSRC approval was required, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from our proposed public offering into the PRC, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt our proposed public offering before settlement and delivery of the common stock offered thereby. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur.

Also, if later the CSRC requires that we obtain its approval, we may be unable to obtain a waiver of the CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our common stock.

It is uncertain how our business operations or future strategy will be affected by the interpretations and implementation of Circular 75 and the Revised M&A Regulations. It is anticipated that application of the new rules will be subject to significant administrative interpretation, and we will need to closely monitor how MOFCOM and other ministries apply the rules to ensure that our domestic and offshore activities continue to comply with PRC law. Given the uncertainties regarding interpretation and application of the new rules, we may need to expend significant time and resources to maintain compliance.

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We face uncertainty from China’s Circular on Strengthening the Administration of Enterprise Income Tax on Non-Resident Enterprises’ Share Transfer (“Circular 698”) that was released in December 2009 with retroactive effect from January 1, 2008.

The Chinese State Administration of Taxation (“SAT”) released a circular (Guoshuihan No. 698 – Circular 698) on December 10, 2009 that addresses the transfer of shares by nonresident companies. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Circular 698, which provides parties with a short period of time to comply its requirements, indirectly taxes foreign companies on gains derived from the indirect sale of a Chinese company. Where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction where the effective tax burden is less than 12.5% or where the offshore income of his, her, or its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the execution of the transfer contract. Moreover, where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise through an abuse of form of organization and there are no reasonable commercial purposes such that the corporate income tax liability is avoided, the PRC tax authority will have the power to re-assess the nature of the equity transfer in accordance with PRC’s “substance-over-form” principle and deny the existence of the offshore holding company that is used for tax planning purposes.

There is uncertainty as to the application of Circular 698. For example, while the term “indirectly transfer” is not defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax in the country or jurisdiction and to what extent and the process of the disclosure to the tax authority in charge of that Chinese resident enterprise. In addition, there are not any formal declarations with regard to how to decide “abuse of form of organization” and “reasonable commercial purpose,” which can be utilized by us to balance if our company complies with the Circular 698. As a result, we may become at risk of being taxed under Circular 698 and we may be required to expend valuable resources to comply with Circular 698 or to establish that we should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations.

The foreign currency exchange rate between the U.S. Dollar and Renminbi could adversely affect our financial condition.

To the extent that we need to convert U.S. Dollars into Renminbi for our operational needs, our financial position and the price of our common stock may be adversely affected should the Renminbi appreciate against the U.S. Dollar at that time. Conversely, if we decide to convert our Renminbi into U.S. Dollars for our operational needs or paying dividends on our common stock, the dollar equivalent of our earnings from our subsidiaries in China would be reduced should the dollar appreciate against the Renminbi. We currently do not hedge our exposure to fluctuations in currency exchange rates.

Until 1994, the Renminbi experienced a gradual but significant devaluation against most major currencies, including dollars, and there was a significant devaluation of the Renminbi on January 1, 1994 in connection with the replacement of the dual exchange rate system with a unified managed floating rate foreign exchange system. Since 1994, the value of the Renminbi relative to the U.S. Dollar has remained stable and has appreciated slightly against the U.S. Dollar. Countries, including the United States, have argued that the Renminbi is artificially undervalued due to China’s current monetary policies and have pressured China to allow the Renminbi to float freely in world markets. In July 2005, the PRC government changed its policy of pegging the value of the Renminbi to the dollar. Under the new policy the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of designated foreign currencies. While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in further and more significant appreciation of the Renminbi against the dollar.

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Inflation in the PRC could negatively affect our profitability and growth.

While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. According to the National Bureau of Statistics of China, the change in China’s Consumer Price Index increased to 8.5% in April 2008. If prices for our products and services rise at a rate that is insufficient to compensate for the rise in the costs of supplies such as raw materials, it may have an adverse effect on our profitability.

Furthermore, in order to control inflation in the past, the PRC government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. In January 2010, the Chinese government took steps to tighten the availability of credit including ordering banks to increase the amount of reserves they hold and to reduce or limit their lending. The implementation of such policies may impede economic growth. In October 2004, The People’s Bank of China, the PRC’s central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the Chinese economy. In April 2006, the People’s Bank of China raised the interest rate again. Repeated rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase our costs and also reduce demand for our products and services.

Because our funds are held in banks which do not provide insurance, the failure of any bank in which we deposit our funds could affect our ability to continue in business.

Banks and other financial institutions in the PRC do not provide insurance for funds held on deposit. A significant portion of our assets are in the form of cash deposited with banks in the PRC, including, without limitation, our restricted bank balances which secure certain notes payable and bill financing and in the event of a bank failure, we may not have access to our funds on deposit. Depending upon the amount of money we maintain in a bank that fails, our inability to have access to our cash could impair our operations, and, if we are not able to access funds to pay our suppliers, employees and other creditors, we may be unable to continue in business.

Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

As our ultimate holding company is a Nevada corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

If we make equity compensation grants to persons who are PRC citizens, they may be required to register with the State Administration of Foreign Exchange of the PRC, or SAFE. We may also face regulatory uncertainties that could restrict our ability to adopt an equity compensation plan for our directors and employees and other parties under PRC law.

On April 6, 2007, SAFE issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company, also known as “Circular 78.” It is not clear whether Circular 78 covers all forms of equity compensation plans or only those which provide for the granting of stock options. For any plans which are so covered and are adopted by a non-PRC listed company after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas listed company’s covered equity compensation plan prior to April 6, 2007. We intend to adopt an equity compensation plan in the future and make option grants to our officers and directors, most of whom are PRC citizens. Circular 78 may require our officers and directors who receive option grants and are PRC citizens to register with SAFE. We believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time consuming. If it is determined that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and participants of our equity incentive plan who are PRC citizens to fines and legal sanctions and prevent us from being able to grant equity compensation to our PRC employees. In that case, our ability to compensate our employees and directors through equity compensation would be hindered and our business operations may be adversely affected.

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Our operating subsidiary, CCEC, has enjoyed certain preferential tax concessions and the loss of these preferential tax concessions may cause our tax liabilities to increase and our profitability to decline.

Under the tax laws of the PRC, CCEC has had tax advantages granted by local government for enterprise income taxes commencing from 2006. CCEC has been entitled to be exempt from enterprise income tax for two years commencing from the first profitable year in 2006, followed by a 50% reduction for the next 3 years. On March 16, 2007, the National People’s Congress of China enacted a new PRC Enterprise Income Tax Law, under which foreign invested enterprises and domestic companies will be subject to enterprise income tax at a uniform rate of 25%. The new law became effective on January 1, 2008. CCEC’s income tax rate for the fiscal years ended December 31, 2008 and 2009 was 12.5%, and CCEC’s income tax rate for the current fiscal year ending December 31, 2010 is 12.5%. However, commencing on January 1, 2011, the income tax rate will increase to 25%. The expiration of the preferential tax treatment will increase our tax liabilities and reduce our profitability.

Under the New Enterprise Income Tax Law, we and Fast More may be classified as “resident enterprises” of China for tax purposes, which may subject us and Fast More to PRC income tax on taxable global income.

Under the new PRC Enterprise Income Tax Law (the “New EIT Law”) and its implementing rules, both of which became effective on January 1, 2008. Under the New EIT Law, enterprises are classified as resident enterprises and non-resident enterprises. An enterprise established outside of China with its “de facto management bodies” located within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese domestic enterprise for enterprise income tax purposes. The implementing rules of the New EIT Law define de facto management body as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. Due to the short history of the New EIT law and lack of applicable legal precedents, it remains unclear how the PRC tax authorities will determine the PRC tax resident treatment of a foreign company such as us and Fast More. Both our and Fast More’s members of management are located in China. If the PRC tax authorities determine that we or Fast More is a “resident enterprise” for PRC enterprise income tax purposes, a number of PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income, including interest income on the proceeds from this offering, as well as PRC enterprise income tax reporting obligations. Second, the New EIT Law provides that dividend paid between “qualified resident enterprises” is exempted from enterprise income tax. A recent circular issued by the State Administration of Taxation regarding the standards used to classify certain Chinese-invested enterprises controlled by Chinese enterprises or Chinese group enterprises and established outside of China as “resident enterprises” clarified that dividends and other income paid by such “resident enterprises” will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by non-PRC shareholders. It is unclear whether the dividends that we or Fast More receives from CCEC will constitute dividends between “qualified resident enterprises” and would therefore qualify for tax exemption, because the definition of qualified resident enterprises is unclear and the relevant PRC government authorities have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. We are actively monitoring the possibility of “resident enterprise” treatment for the applicable tax years and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible. As a result of the New EIT Law, our historical operating results will not be indicative of our operating results for future periods and the value of our common stock may be adversely affected.

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Downturn in the economy of the PRC may slow our growth and profitability.

All of our revenues are generated from sales in China. The growth of the Chinese economy has been uneven across geographic regions and economic sectors, in large part due to the recent downturn in the global economy, which resulted in slow growth of the China economy. While the Chinese economy has recently begun to show signs of improvement, there can be no assurance that growth of the Chinese economy will be steady or that there will not be further deterioration in the global economy as a whole or the Chinese economy in particular. If economic conditions deteriorate further, our business and results of operations could be materially and adversely affected, especially if such conditions result in a decreased use of our products or in pressure on us to lower our prices.

Because our business is located in the PRC, we currently lack sufficient in-house expertise in U.S. GAAP reporting and we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply with U.S. GAAP and securities laws, and which could cause a materially adverse impact on our financial statements, the trading of our common stock and our business.

PRC companies have historically not adopted a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and, computer, financial and other control systems. Currently, we do not have sufficient in-house expertise in U.S. GAAP reporting. Instead, we rely on the expertise and knowledge of external consultants and advisors in U.S. GAAP conversion. These external consultants assist us in the preparation and review of our consolidated financial statements. In fact, most of our middle and top management staff are not educated and trained in the Western system, and we may continue to have difficulty hiring and retaining qualified employees in the PRC with experience and expertise relating to U.S. GAAP and U.S. public-company reporting requirements. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This may result in significant deficiencies or material weaknesses in our internal controls which could impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any such deficiencies, material weaknesses or lack of compliance could result in restatements of our historical financial information, cause investors to lose confidence in our reported financial information, have an adverse impact on the trading price of our common stock, adversely affect our ability to access the capital markets and our ability to recruit personnel, lead to the delisting of our securities from the stock exchange on which they are traded, lead to litigation claims, thereby diverting management’s attention and resources, and which may lead to the payment of damages to the extent such claims are not resolved in our favor, lead to regulatory proceedings, which may result in sanctions, monetary or otherwise, and have a materially adverse effect on our reputation and business.

RISKS RELATED TO YOUR OWNERSHIP OF OUR COMMON STOCK AND THIS OFFERING

There is a limited trading market for our common stock, and there is no assurance of an established public trading market upon the completion of the offering which would adversely affect the ability of our investors to sell their securities in the public market.

Our shares of common stock are currently quoted for trading on the OTCQB under the symbol “CIEC” and we have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol “CIEC”. There currently is a limited trading market for our common stock on the OTCQB and there is no guarantee that the NYSE Amex, or any other national securities exchange or quotation system, will permit our shares to be listed and traded. If we fail to obtain a listing on the NYSE Amex, we may not complete this offering. Even if such listing is approved, there can be no assurance that any broker will be interested in trading our stock. Furthermore, our underwriter, Newbridge Securities Corporation, is not obligated to make a market and has indicated that it will not make a market in our securities.

The market price and trading volume of shares of our common stock may be volatile.

When and if a market develops for our securities, the market price of our common stock could fluctuate significantly for many reasons, including for reasons unrelated to our specific performance, such as reports by industry analysts, investor perceptions, or negative announcements by customers, competitors or suppliers regarding their own performance, as well as general economic and industry conditions. For example, to the extent that other large companies within our industry experience declines in their share price, our share price may decline as well. In addition, when the market price of a company’s shares drops significantly, shareholders could institute securities class action lawsuits against the company. A lawsuit against us could cause us to incur substantial costs and could divert the time and attention of our management and other resources.

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If you purchase securities in this offering, you will suffer immediate dilution of your investment.

Assuming our sale of shares of common stock at an assumed public offering price of US$ per share of common stock, which is the mid-point of the estimated initial offering price range set forth on the cover of this prospectus, and after deducting the underwriting discount and commissions and estimated offering expenses, our as-adjusted net tangible book value as of December 31, 2010 (unaudited) would be approximately US$ , or US$ per share of common stock outstanding. The sale of shares of common stock in this offering represents an immediate increase in net tangible book value of US$ per share of common stock to our existing stockholders and an immediate dilution of US$ per share of common stock to the new investors purchasing common stock in this offering. In addition, purchasers of common stock in this offering will have contributed approximately % of the aggregate price paid by all owners of our common stock but will own only approximately % of our common stock outstanding after this offering.

One of our Stockholders, Which is 100% Controlled By our President, Chief Executive Officer and Chairman of the Board, Exercises Significant Control Over Matters Requiring Stockholder Approval.

One of our stockholders (Cheer Gold) has voting power equal to 65.8% of our voting securities. Moreover, such stockholder is 100% controlled by Xu Kecheng, our President, Chief Executive Officer and Chairman of the Board. As a result, Xu Kecheng, through such stock ownership, can exercise control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership in Cheer Gold may also have the effect of delaying or preventing a change in control of us that may be otherwise viewed as beneficial by our other stockholders.

With the exception of our Chairman/CEO, Xu Kecheng, the members of our senior management do not directly or indirectly own shares of Common Stock and thus their interests may not be aligned with the interests of the Company's stockholders, which could be a detriment to the Company's stockholders.

While the members of our senior management have significant influence over our business, including decisions regarding operations, pursuing mergers and acquisitions, the disposition of the Company's assets, and other significant corporate actions, none of them, with the exception of Xu Kecheng, directly or indirectly own shares of Common Stock. Since they are not personally exposed to the same risk of investment loss with respect to ownership of Common Stock that the Company's shareholders face, these individuals may not share a common perspective with our shareholders regarding the benefits (or detriments) of contemplated corporate actions and they may not analyze potential corporate actions and opportunities in the same manner that they would if they were shareholders. To the extent that the Company's senior management may lack "shareholder perspective" in its decision making process, management may make decisions that ultimately do not benefit the Company's shareholders.

Our management may not use the proceeds from this offering effectively which could have a material adverse effect on our business.

We intend to use the net proceeds from this offering to construct a new production plant in Changxing County (Zhejiang Province) for the development and production of a new product, lithium-ion batteries. Our management will have discretion in the application of the net proceeds for such construction and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our securities. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price of our securities to decline. For a further description of our intended use of the proceeds of this offering, see the “Use of Proceeds” section of this prospectus.

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If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected.

We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. Any failure of these controls could also prevent us from maintaining accurate accounting records and discovering accounting errors and financial frauds. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over financial reporting, and the standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. If we cannot assess our internal control over financial reporting as effective, investor confidence and share value may be negatively impacted.

In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting, or disclosure of our public accounting firm’s report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and will divert time and attention away from revenue generating activities.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. For example, on January 30, 2009, the SEC adopted rules requiring companies to provide their financial statements in interactive data format using the eXtensible Business Reporting Language, or XBRL. We will have to comply with these rules by June 15, 2011. Our management team will need to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities which could have an adverse effect on our business.

Our common stock may be considered a “penny stock,” and thereby be subject to additional sale and trading regulations that may make it more difficult to sell.

Our common stock, which currently trades on the OTCQB, may be considered to be a “penny stock” if it does not qualify for one of the exemptions from the definition of “penny stock” under Section 3a51-1 of the Securities Exchange Act for 1934, as amended (the “Exchange Act”). Our common stock may be a “penny stock” if it meets one or more of the following conditions (i) the stock trades at a price less than US$5.00 per share; (ii) it is NOT traded on a “recognized” national exchange; (iii) it is NOT quoted on the NYSE Amex, or even if so, has a price less than US$5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets less than US$5 million.

The principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor’s account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

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If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, the price and trading volume of our common stock could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of us the trading price for our common stock and other securities would be negatively affected. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our securities, the price of our securities would likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of our securities could decrease, which could cause the price of our common stock and other securities and their trading volume to decline.

We do not foresee paying cash dividends in the foreseeable future and, as a result, our investors’ sole source of gain, if any, will depend on capital appreciation, if any.

We do not plan to declare or pay any cash dividends on our shares of common stock in the foreseeable future and currently intend to retain any future earnings for funding growth. As a result, investors should not rely on an investment in our securities if they require the investment to produce dividend income. Capital appreciation, if any, of our shares may be investors’ sole source of gain for the foreseeable future. Moreover, investors may not be able to resell their shares of our common stock at or above the price they paid for them.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this prospectus, including in the documents incorporated by reference into this prospectus, includes some statements that are not purely historical and that are “forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding our company’s and our management’s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this prospectus are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties’ control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, statements regarding future developments with respect to the following:

The ability to collect future trade receivables which may be due to us by our factory customers and distributors;

Our ability to develop and market our lithium-ion, electric motive power batteries, power storage batteries dedicated for solar and wind power and other future products in the future;

Our ability to raise additional capital to fund our expansion to produce lithium-ion batteries and other future products;

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Our ability to accurately forecast amounts of lead, lead plates and other raw materials needed to meet future customer demand of our existing products and future products;

Any developments in the market acceptance of our existing or future products;

Exposure to product liability and defect claims with respect to our battery products in the future;

Future developments regarding fluctuations in the availability of lead, lead plates and other raw materials and components needed for our products;

Future developments with respect to the protection of our trademarks, patents, domain names and other intellectual property rights;

Any changes in the laws of the PRC that may affect our operations;

Inflation and fluctuations in foreign currency exchange rates;

Our on-going ability to obtain all mandatory and voluntary government and other industry certifications, approvals, and/or licenses to conduct our business;

Continued development of a public trading market for our securities; and

The costs we may incur in the future from complying with current and future governmental regulations and the impact of any changes in the regulations on our operations.

The risks included above are not exhaustive. Other sections of this prospectus may include additional factors that could adversely impact our business and operating results. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and we cannot predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assume responsibility for the accuracy and completeness of the forward-looking statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

You should read this prospectus, and the documents that we reference in this prospectus and have filed as exhibits to this prospectus with the U.S. Securities and Exchange Commission, completely and with the understanding that our actual future results, levels of activity, performance and achievements may materially differ from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

USE OF PROCEEDS

Based on a per share offering price of US$ , which is the midpoint of our estimated offering price range, we estimate that the net proceeds from the sale of the shares of our common stock in the offering will be approximately US$5 million after deducting the estimated underwriting discounts and commissions of 8% and estimated offering expenses of approximately US$ .

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To be in line with the global trend of the development of lithium-ion batteries and to obtain a competitive advantage over our competitors in China, we intend to use 100% of the net proceeds from this offering, including over-allotment proceeds, if any, to construct a production plant on Jingsi Road in Changxing County (Zhejiang Province) for the development and production of one of our future products, the lithium-ion battery. Total investment costs at Jingsi Road will be approximately RMB300,000,000 (US$44,116,000), in which we estimate the total construction costs of such facility to be approximately RMB126,600,000 (US$19,214,000). Our target market is manufacturers of electric bicycles in China, and we estimate that our lithium-ion batteries will be launched and distributed into the marketplace within two years from the date of this prospectus. Until these products are formally launched and distributed into the marketplace, their effects on our business are uncertain (see “Description of Business – Our Products – Future Products” at pages 75 and 76).

The Underwriter has a 45-day option to purchase up to additional shares of our common stock at the public offering price solely to cover over-allotments, if any, if the Underwriter sells more than shares of common stock in this offering.

DIVIDEND POLICY

We do not expect to declare or pay any cash dividends on our common stock in the foreseeable future, and we currently intend to retain future earnings, if any, to finance the expansion of our business. The decision whether to pay cash dividends on our common stock will be made by our board of directors, in its discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant. With the exception of a dividend payment made by CCEC to its immediate holding company, Fast More, on October 16, 2010 of RMB70,000,000 (US$10,530,000) which Fast More reinvested back into CCEC in accordance with PRC regulations regarding the ratio of investment amount and registered capital of WFOEs, we did not pay cash dividends during the nine months ended December 31, 2010 or for the years ended March 31, 2010, 2009 and 2008.

Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reaches 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

Furthermore, the ability of our Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. Because substantially all of our operations are conducted in the PRC and a substantial majority of our revenues are generated in the PRC, a majority of our revenue being earned and currency received are denominated in RMB. RMB is subject to the exchange control regulation in the PRC, and, as a result, we may unable to distribute any dividends outside of the PRC due to PRC exchange control regulations that restrict our ability to convert RMB into US Dollars.

Our inability to receive dividends or other payments from our Chinese operating subsidiary could adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. CCEC’s funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations. Accordingly, if we do not receive dividends from our Chinese operating subsidiary, our liquidity, financial condition and ability to make dividend distributions to our stockholders will be materially and adversely affected.

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CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2010 (unaudited) on:

an actual basis , and

an as adjusted to give effect to reflect our receipt of estimated net proceeds of US$5 million from the sale of shares of common stock in this offering at an assumed public offering price of US$ , which is the mid-point of the estimated range of the per share offering price, and after deducting estimated underwriting discounts of 8% and commissions and estimated offering expenses of approximately US$ million.

You should read this table in conjunction with “Use of Proceeds,” “Summary Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

	December 31, 2010
	Actual		As-Adjusted
	US$’000		US$’000
Stockholders’ equity:
Preferred stock, US$0.001 par value, 10,000,000 shares authorized, none issued and outstanding		-		-
Common stock, US$0.001 par value, 100,000,000 shares authorized, 50,000,000 shares issued and outstanding on an actual basis, and issued and outstanding on an as-adjusted basis (1)		50
Additional paid-in capital		-
Accumulated other comprehensive income		2,169
Statutory reserves		3,430
Capital reserves		144
Retained earnings (unrestricted)		33,085
Total shareholders’ equity		38,878
Non-Controlling interest		88
Total capitalization		38,966

(1)

The number of our shares of common stock shown above to be outstanding after this offering is based on (i) 50,000,000 shares of common stock issued and outstanding as of December 31, 2010 and (ii) shares of common stock issued in this public offering. The number (i) excludes the shares of our common stock that we may issue upon the Underwriters’ over-allotment option exercise and (ii) excludes the shares of common stock that will be issued upon the exercise of outstanding warrants exercisable at US$ per share.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market for Common Equity

Prior to the Exchange, the Company’s common stock traded on the OTCBB under the symbol “WTRY” from October 15, 2007 to April 29, 2009 and subsequent to the Exchange, our common stock has traded on the OTCBB and then recently on the OTCQB under the symbol “CIEC”. There has been an extremely limited public market for our common stock. We have commenced the application process for the listing of our common stock on the NYSE Amex.

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When the trading price of our common stock is below US$5.00 per share, it may be considered to be a “penny stock” that may be subject to rules promulgated by the SEC (Rule 15-1 through 15g-9) under the Exchange Act. These rules impose significant requirements on brokers under these circumstances, including: (a) delivering to customers the SEC’s standardized risk disclosure document; (b) providing customers with current bid and ask prices; (c) disclosing to customers the brokers-dealer’s and sales representatives compensation; and (d) providing to customers monthly account statements. See “Risk Factors – Risks Related To Our Ownership Of Our Common Stock And This Offering – Our Common Stock May Be Considered “Penny Stock”, And Thereby Be Subject To Additional Sale And Trading Regulations That May Make It More Difficult To Sell”.

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

Closing Bid Prices	High (US$)		Low (US$)

Calendar Year Ending December 31, 2010

4 th Quarter		5.30		4.51

3 rd Quarter		5.50		5.10

2 nd Quarter		6.45		6.10

1 st Quarter		7.75		6.24

Calendar Year Ended December 31, 2009

4 th Quarter		7.51		4.10

3 rd Quarter		4.15		1.50

2 nd Quarter		4.00		1.50

1 st Quarter		1.70		0.93

Calendar Year Ended December 31, 2008

4 th Quarter		3.30		1.05

4 th Quarter (prior to 3 for 1 split)		0.10		0.10

3 rd Quarter:		0.10		0.10

2 nd Quarter:		0.10		0.10

1 st Quarter:		0.10		0.10

The high and low bid quotations for our common stock prior to December 31, 2010 were US$7.75 and US$0.10, respectively. The market quotations represent prices between dealers, do not include retail markup, markdown, or commissions and may not represent actual transactions.

Holders of Common Equity

As of March 9, 2011, we have issued Fifty Million (50,000,000) shares of our common stock to approximately 76 holders of record. The Company believes that it has more stockholders since many of its shares are held in "street" name. See also “Beneficial Ownership of Certain Beneficial Owners and Management” which sets forth each person known by us to be the beneficial owner of five (5%) percent or more of the Company’s common stock, all directors individually and all directors and officers as a group as of March 9, 2011.

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Securities Authorized for Issuance under Equity Compensation Plans

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

Transfer Agent and Registrar

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

DILUTION

If you invest in our shares of common stock, you will incur immediate, substantial dilution based on the difference between the public offering price per share you will pay in this offering and the net tangible book value per share of common stock immediately after this offering.

Our net tangible book value as of December 31, 2010 (unaudited) was approximately US$38,966,000 or US$0.78 per share, based on 50,000,000 shares of common stock outstanding on December 31, 2010. Based on the mid-range point of the per share offering price of US$ , investors will incur further dilution from the sale by us of shares of our common stock offered in this offering, and after deducting the estimated underwriting discount and commissions of 8% and estimated offering expenses of US$ , our as adjusted net tangible book value as of December 31, 2010 would have been US$ , or US$ per share, based on shares outstanding after this offering. This represents an immediate increase in net tangible book value of US$ per share to our existing stockholders and an immediate dilution of US$ per share to the new investors purchasing shares of our common stock in this offering.

The following table illustrates this per share dilution:

Assumed public offering price per share (mid-range price)			$
Per share net tangible book value per share as of December 31, 2010	$	0.78
Increase per share attributable to new public investors	$

Net tangible book value per share after this offering			$

Dilution per share to new public investors			$

The following table sets forth on an as adjusted basis as of December 31, 2010, the difference between the number of shares of our common stock purchased from us, the total cash consideration paid, the average price per share paid by our existing shareholders and the average price to be paid by new investors in this public offering before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, using an assumed public offering price of US$ per share of common stock. The shares outstanding as of December 31, 2010 on an actual basis includes:

Shares Purchased

Total Cash Consideration

Number

Percent

Amount

Percent

Average Price

Per Share

Shares issued to Floster pursuant to the Exchange

Shares issued to Cheer Gold pursuant to the Exchange

New investors in this offering

Total

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The total consideration amount for shares of our common stock held by our existing stockholders includes total cash paid for our outstanding shares of common stock, including imputed interest allocated for interest free loans that we have received from related parties, as of December 31, 2010 and excludes the value of securities that we have issued for services.

The existing shareholders which consist of Cheer Gold and Floster, both of which acquired our shares in connection with the Exchange, will account for shares of our common stock, or % of our outstanding shares after this offering. If the Underwriter’s over-allotment option of shares of common stock is exercised in full, the percentage of shares held by existing stockholders will be reduced to % of the total number of shares that will be outstanding after this offering, and the percentage of shares held by the new investors in this offering will be increased to % of the total number of shares of common stock outstanding after this offering.

The number of our shares outstanding after this offering as shown above excludes shares of our common stock that we may issue upon the Underwriter’s over-allotment option exercise. We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

SELECTED CONSOLIDATED FINANCIAL DATA

	Nine months ended December 31,				Fiscal year ended March 31,
	2010		2009		2010		2009
	US$'000		US$'000		US$'000		US$'000

Revenues		194,712		127,104		177,192		109,020
Cost of sales		170,460		107,764		153,708		88,945
Gross profit		24,252		19,340		23,484		20,075
Sales, marketing and distribution		8,111		6,630		8,696		5,459
General and administrative expenses		2,628		2,236		3,647		3,763
Operating profit		13,513		10,474		11,141		10,853
Other income, net		889		1,189		1,671		758
Loss on disposal of scrap inventories		2,307		-		-		-
Interest income		315		56		343		362
Incomes before interest and income tax expenses		12,410		11,719		13,155		11,973
Interest expenses		2,231		1,147		2,068		1,232
Income before income tax expenses		10,179		10,572		11,087		10,741
Income tax expenses		2,421		1,439		1,587		1,861
Income before extraordinary item		7,758		9,133		-		-
Extraordinary item (less applicable income taxes of US$0)		1,738		-		-		-
Net income		9,496		9,133		9,500		8,880
Other comprehensive income		1,115		24		106		278
Comprehensive income		10,611		9,157		9,606		9,158
Earnings per share before extraordinary item (basic and diluted)		0.16		0.18		0.19		0.22
Earnings per share after extraordinary item (basic and diluted)		0.19		0.18		0.19		0.22

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	Period ended December 31,		Fiscal year ended March 31,
	2010		2010		2009
	US$'000		US$'000		US$'000
Current Assets
Cash and cash equivalents		6,237		6,019		2,620
Restricted bank balances		26,468		21,420		13,878
Other financial assets		5,950		7,438		1,314
Trade receivables, net		69,811		50,440		35,023
Other receivables		8,791		800		842
Prepayments		7,120		4,933		862
Due from related parties		4		8		474
Inventories		26,502		30,038		17,135
Assets classified as held for sale		2,558		-		-
Total Current Assets		153,441		121,096		72,148

Non-Current Assets
Available-for-sale financial assets		2,735		882		878
Long-term land lease prepayments, net		150		749		608
Property, plant and equipment, net		10,945		10,474		5,315
Deposit for acquisition of land and buildings		798		-		-
Total Assets		168,069		133,201		78,949

Current Liabilities
Trade payables		15,118		14,923		11,176
Notes payable		49,155		35,504		23,343
Accrued expenses and other accrued liabilities		6,294		5,087		3,769
Due to related parties		5,004		2,532		639
Income taxes payable		1,111		148		264
Short-term bank borrowings		50,969		46,141		20,451
Liabilities directly associated with assets classified as held for sale		886		-		-
Total Current Liabilities		128,537		104,335		59,642

Non-Current Liabilities
Government subsidies		106		139		186
Deferred tax liabilities		460		460		460
Total Non-Current Liabilities		566		599		646

Total Liabilities		129,103		104,934		60,288

Shareholders’ Equity		50		50		50
Capital reserves		144		144		144
Statutory reserves		3,430		2,239		1,103
Accumulated other comprehensive income		2,169		1,054		948
Retained earnings		33,085		24,780		16,416
Total CIEC Shareholders’ Equity		38,878		28,267		18,661

Non-controlling interests		88		-		-

Total stockholders’ equity		38,966		28,267		18,661
Total Liabilities and Shareholders’ Equity		168,069		133,201		78,949

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and the other financial information included in this prospectus.

This prospectus contains forward-looking statements. The words “anticipated,” “believe,” “expect, “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may” and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management’s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, the current economic downturn adversely affecting demand for the our products; our reliance on our major customers for a large portion of our net sales; our ability to develop and market new products; our ability to raise additional capital to fund our operations; our ability to accurately forecast amounts of supplies needed to meet customer demand; market acceptance of our products; exposure to product liability and defect claims; fluctuations in the availability of raw materials and components needed for our products; protection of our intellectual property rights; changes in the laws of the PRC that affect our operations; inflation and fluctuations in foreign currency rates and various other matters, many of which are beyond our control. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this prospectus are qualified by these cautionary statements and there can be no assurance of the actual results or developments.

Company Overview and Plan of Development

We are one of the leading producers of sealed lead-acid motive batteries in China's personal transportation device market by ranking as one of the top three manufacturers in China in terms of production. Our motive battery products, sold under our own brand name “Chisen”, are predominantly used in electric bicycles and are distributed and sold in China. Among all types of batteries for electric bicycles, the lead-acid motive battery is the preferred choice of electric bicycle manufacturers in China, accounting for 95% of the market share because of its cost efficiency. Currently, we manufacture over 14,480,000 sealed lead-acid motive batteries each year, have more than 2,500 employees and are one of China's largest manufacturers of sealed lead-acid motive batteries for electric-powered bicycles (LABEBs). For each of our fiscal years ended March 31, 2010 and 2009, sales revenues were US$177,192,000 and US$109,020,000, respectively, and our net income during the same periods amounted to US$9,500,000 and US$8,880,000, respectively. For the nine months ended December 31, 2010, our sales revenue and net income were US$194,712,000 and US$9,496,000, respectively. Our development strategy is committed to the following:

Relocation and Expansion of New Production Facilities

On August 20, 2010, CCEC entered into an Investment Agreement with the Administrative Committee of Changxing Economic Development Zone whereby CCEC agreed to participate in “Land Tender, Auction and Listing” activities organized by the Changxing County Land and Resources Bureau with respect to a pre-identified parcel of land to which CCEC agreed to relocate its business from Jingyi Road to Jingsi Road. The size of the new facility (“Plant C”) at Jingsi Road in Changxing County will be approximately 50% larger than the current facility (“Plant A”) at Jingyi Road in Changxing County, at which we will commence the development and production of one of our future products, lithium-ion batteries. To be in line with the global trend of the development of lithium-ion batteries and to obtain a competitive advantage over our competitors in China, we intend to use 100% of the net proceeds from this offering to construct Plant C to begin the development and production of lithium-ion batteries (see “Description of Business – Our Products – Future Products” at pages 75 and 76). Our target market for such future product is manufacturers of electric bicycles in China, and we estimate that our lithium-ion batteries will be launched and distributed into the marketplace within two years from the date of this prospectus.

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We plan to commence our relocation procedures after obtaining the land use right from the government, which we expect to obtain in next two months, after which we anticipate that it will take us no longer than two months to fully relocate such facilities. We do not anticipate any distruption of our business since our production capacity of Lead-Acid Batteries in Plant A will be wholly absorbed by our Plant at Jing’er Road ("Plant B") in Changxing County without significant investment.

Furthermore, on September 6, 2010, CEJC entered into a Project Investment Contract and a Supplemental Agreement to the Project Investment Contract with the Jiangsu Xuyi Economic Development Zone Administrative Committee, pursuant to which CEJC shall invest, in the aggregate, approximately RMB1,200,000,000 (approximately US$177,000,000) in three stages to build the Chisen Circular Economy Industry Park (“Plant D”) to manufacture valve regulated lead-acid batteries, as well as one of the Company’s future products, lithium-ion batteries, and other related products in the Jiangsu Xuyi Economic Development Zone. In the first stage CEJC shall invest approximately RMB422,000,000 ($62,000,000), including approximately RMB150,000,000 ($22,000,000) in fixed assets for the production of VRLA batteries only. The Company does not plan to construct lithium-ion battery production facilities in Plant D until 18 months after the date that we commence production of the first stage. CEJC expects to complete all construction related to the first stage on or before December 31, 2011. We believe after the completion of the project our production capacity will be further increased.

Expand offering of highly efficient battery products

For future market development, we intend to focus on the lithium-ion battery, electric vehicle power batteries and energy storage batteries dedicated for solar and wind power. We are currently committed to investing in and constructing Plant C in Changxing County (Zhejiang Province) and Plant D in Jiangsu Province to produce such new battery products, however 100% of the net proceeds of this offering will go to constructing Plant C in Changxing County for the development and production of lithium-ion batteries (see “Use of Proceeds” at page 35). We also intend to invest more resources and effort on the research and development in these areas in order to expand our market share by offering highly efficient battery products.

Expand sales network and distribution channels

We intend to expend more resources to expand our sales and distribution networks by: (1) adding new distributors in key sales regions in the Northeast and Middle regions of China; (2) developing new marketing strategies in different channels; (3) improving communication between sales teams and distributors; and (4) improving our brand awareness and promotion efforts.

Build partnerships with new and existing clients

We intend to continue to build a close, mutually beneficial and harmonious partnership with our existing factory customers, and we aim to establish a win-win long-term partnership with all of our new customers. We intend to continue to utilize our customer relationship management to provide tailor-made management policies that focus on the needs of different customers.

Augment marketing and promotion efforts to increase brand awareness

Our corporate mission is to establish a positive image of being a responsible citizen, and we are committed to providing social welfare services to the local communities. To that end, the Company has worked and continues to work with leading national brand designing companies to establish a complete plan for scientific branding, which use cartoon image endorsements to promote its corporate image, products and brand awareness, through television and printed advertisements.

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Critical Accounting Policies, Estimates and Assumptions

The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates.

The discussion and analysis of our financial condition and results of operations is based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of inventory, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

Accounting Principles

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

Basis of Consolidation

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

Revenue recognition

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

The Company recognizes revenue when goods are delivered to customers. The Company assesses whether the selling price is fixed or determinable based on the contract and/or customer purchase order and payment terms associated with the transaction and whether the sale price is subject to refund or adjustment. The Company assesses collectability based primarily on the creditworthiness of the customer as determined by the credit analysis, as well as the customer’s payment history.

Volume-based rebates are made at the time of sales of goods and are recognized as a reduction of sales. Costs related to shipping and handling are included in selling, marketing and distribution expenses.

Retirement Plan Costs

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

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Income Taxes

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

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

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

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

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

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

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

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

Buildings	20 years
Leasehold improvements	Over the unexpired term of lease
Furniture, fixtures and office equipment	10 years
Motor vehicles	5 years
Plant and machinery	10 years

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

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

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

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Inventories

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

Trade Receivables and Allowance for Doubtful Accounts

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

Cash and Cash Equivalents

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

Foreign Currency Translation

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

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

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

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

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

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

Fair Value of Financial Instruments

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

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

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

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

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

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

Warranty

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

	Years ended March 31,
	2010			2009
	$’000			$’000

Balance as of April 1,		121			413
Exchange realignment		1			9
Accrual for warranties issued during the year		188			91
Settlement made during the year		(84	)		(392

Balance as of March 31,		226			121

Government Subsidies

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

Use of Estimates

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

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

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Related Parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence.

Recently Issued Accounting Pronouncements

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

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

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

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

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

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

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

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

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

In December 2010, FASB issued ASU No. 2010-29, Business Combinations (Topic 805) “Disclosure of supplementary Pro Forma Information for business combinations”, which specify that if a public entity presents comparative financial statements, the entity should disclosure revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year has occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, non-recurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. These amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company does not expect the adoption of this ASU will have a material impact on the Company’s consolidated financial statements.

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Results of Operations

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

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

	For The Years Ended March 31,
	2010		2009		2010			2009
	$ ’000		$’000
Revenues		177,192		109,020		100.00	%		100.00	%
Cost of sales		153,708		88,945		86.75	%		81.59	%
Gross profit		23,484		20,075		13.25	%		18.41	%
Sales, marketing and distribution		8,696		5,459		4.91	%		5.01	%
General and administrative expenses		3,647		3,763		2.06	%		3.45	%
Operating income		11,141		10,853		6.29	%		9.96	%
Other income, net		1,671		758		0.94	%		0.70	%
Interest Income		343		362		0.19	%		0.33	%
Incomes before interest and income tax expenses		13,155		11,973		7.42	%		10.98	%
Interest expenses		2,068		1,232		1.17	%		1.13	%
Income before income tax expenses		11,087		10,741		6.26	%		9.85	%
Income tax expenses		1,587		1,861		0.90	%		1.71	%
Net income		9,500		8,880		5.36	%		8.15	%
Other comprehensive income		106		278		0.06	%		0.25	%
Comprehensive income		9,606		9,158		5.42	%		8.40	%

Revenues and Cost of Sales

Revenues increased by 62.53% to US$177,192,000 for the year ended March 31, 2010 compared with US$109,020,000 for the year ended March 31, 2009. This increase was driven primarily by the combined effect of increase in sales volume by 85.64% to 14,480,000 units for the year ended March 31, 2010 compared with 7,800,000 units for the year ended March 31, 2009, and the decrease in the average net selling price. The increase in sales volume was mainly attributable to the increase in the Company’s sales to existing and new electric bicycle manufacturers following the continued rapid growth in the electric bicycle market in the PRC. During the year ended March 31, 2010, there was increase in sales of approximately 434% to a major electric bicycle manufacturer, Taimei. The Company also expanded its production facilities during the year ended March 31, 2010 in response to the significant increase in demand of the Company’s battery products. However, the Company reduced the average selling price by approximately 11% in order to maintain the market competitiveness against other competitors in China.

Cost of sales for the year ended March 31, 2010 and 2009 were US$153,708,000 and US$88,945,000, respectively. The increase in cost of sales of 72.81% was mainly due to increase in sales volume by 85.64%. The impact of increase in sales volume to cost of sales was partially offset by the decrease in unit of major material cost. Electric plates are the major raw material for our batteries, which are substantially made up of lead and which accounted for approximately 80% of our total production cost. The average cost of electric plates decreased by 10% as a result of decrease in average market lead price for the year.

The cost rate for the year ended March 31, 2010 increased by approximately 5.16% from 81.59% for the year ended March 31, 2009 to 86.75% for the year ended March 31, 2010. The increase in cost rate was mainly due to the impact on decrease in average selling price outweighed the effect of decrease in average major material cost. In addition, the Company adopted several promotion activities during the year under which it offered sales discounts and rebates to the certain customers. This resulted in the reduction of total turnover and gross margin by approximately US$2,917,000 and 1.41%, respectively.

Depreciation and Amortization

Depreciation and amortization expenses were US$646,000 and US$451,000 for the fiscal years ended March 31, 2010 and 2009, respectively. This increase of US$195,000, or 42.03%, was mainly attributable to the Company’s acquisition of new equipment and machinery during the year ended March 31, 2010 as a result of the Company’s business expansion.

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General and Administrative Expenses

General and administrative expense was US$3,647,000 and US$3,763,000 for the years ended March 31, 2010 and 2009, respectively, and mainly consisted of staff salaries and benefits, depreciation expenses, travel expenses, legal and professional fees, other taxes, entertainment expenses and vehicle expenses. This decrease of US$116,000, or 3.08%, was mainly caused by the increase of social insurance and research and development expenses of approximately US$304,000, offset by the decrease of travel, rental, entertainment and other expenses of approximately US$392,000.

Sales, Marketing and Distribution

Sales, marketing and distribution expenses were US$8,696,000 and US$5,459,000 for the years ended March 31, 2010 and 2009, respectively. This increase of US$3,237,000, or 59.30% was mainly due to the increase in transportation expenses and sales commissions related to the Company’s increased sales activities.

Other Income, Net

Net other income was US$1,671,000 and US$758,000 for the years ended March 31, 2010 and 2009, respectively. Due to economies of scale, we can purchase raw lead at a reasonable price. As a result, we purchase and then sell lead to our suppliers. Since this is not our core business, we consider this to be other income. This increase of US$913,000, or 120.45%, was mainly attributable to the net sales of lead to suppliers, which generated net other income of approximately US$1,204,000.

Incomes before Interest and Income Tax Expenses

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

Interest Expense

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

Net Income

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

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Results of Operations for the Nine Months Ended December 31, 2010 as Compared with the Nine Months Ended December 31, 2009

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

	For The Nine Months Ended December 31 (Unaudited)
	2010		2009		2010			2009
	US$ ’000		US $ ’000
Revenues	$	194,712	$	127,104		100	%		100	%
Cost of sales	$	170,460	$	107,764		87.54	%		84.78	%
Gross profit	$	24,252	$	19,340		12.46	%		15.22	%
Sales, marketing and distribution expenses	$	8,111	$	6,630		4.17	%		5.22	%
General and administrative expenses	$	2,628	$	2,236		1.35	%		1.76	%
Operating income	$	13,513	$	10,474		6.94	%		8.24	%
Other income, net	$	889	$	1,189		0.46	%		0.94	%
Loss on disposal of scrap inventories	$	2,307	$	-		1.18	%		-	%
Interest income	$	315	$	56		0.16	%		0.04	%
Incomes before interest and income tax expenses	$	12,410	$	11,719		6.37	%