Attached files
file | filename |
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EX-32.1 - Chisen Electric Corp | v212898_ex32-1.htm |
EX-31.2 - Chisen Electric Corp | v212898_ex31-2.htm |
EX-31.1 - Chisen Electric Corp | v212898_ex31-1.htm |
EX-32.2 - Chisen Electric Corp | v212898_ex32-2.htm |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-Q
o
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2010
OR
For the transition period from ______ to __________
COMMISSION FILE NUMBER: 333-128532
CHISEN ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
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20-2190950
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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Jingyi Road, Changxing Economic Development Zone, Changxing County, Zhejiang Province,
The People’s Republic of China
(Address of principal executive offices)
(011) 0572-6267666
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes o No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large Accelerated Filer ¨
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Accelerated Filer ¨
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Non-Accelerated Filer ¨
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Smaller Reporting Company o
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Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.
Yes ¨ No o
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 12, 2010, the registrant had 50,000,000 shares of common stock, par value $0.001 per share, issued and outstanding.
EXPLANATORY NOTE
We are filing this Amendment No. 1 to our Quarterly Report on Form 10-Q to revise our Cost of Sales, Gross Income and Operating Expenses figures in our Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income section of our financial statements and corresponding sections in the notes to our financial statements and in our MD&A, as well as certain disclosures in Item 2 in order to conform to our disclosures made in our Registration Statement on Form S-1 (File No. 333-169850),
including the Sections entitled “Company Overview”. All other Items in this Amendment No. 1 remain materially unchanged.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
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3
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ITEM 1. FINANCIAL STATEMENTS
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3
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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4
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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11
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ITEM 4. CONTROLS AND PROCEDURES
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12
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PART II OTHER INFORMATION
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13
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ITEM 1. LEGAL PROCEEDINGS
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13
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ITEM 1A. RISK FACTORS
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13
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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13
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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13
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
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13
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ITEM 5. OTHER INFORMATION
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13
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ITEM 6. EXHIBITS
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13
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SIGNATURES
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17
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EXHIBIT 31.1
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EXHIBIT 31.2
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EXHIBIT 32.1
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EXHIBIT 32.2
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2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page
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Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income
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F-2
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Unaudited Condensed Consolidated Balance Sheets
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F3-4
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Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
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F-5
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Unaudited Condensed Consolidated Statements of Cash Flows
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F6-7
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Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
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F8-20
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3
Unaudited Condensed Consolidated Financial Statements of
Chisen Electric Corporation
For the six months ended September 30, 2010
Chisen Electric Corporation
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Index to Unaudited Condensed Consolidated Financial Statements
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For the six months ended September 30, 2010
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Page
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||
Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income
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F-2
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Unaudited Condensed Consolidated Balance Sheets
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F-3 – F-4
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Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
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F-5
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Unaudited Condensed Consolidated Statements of Cash Flows
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F-6 - F-7
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Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
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F-8 – F-20
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F-1
Chisen Electric Corporation
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Unaudited Condensed Consolidated Statements of Operations and
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Other Comprehensive Income
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For the six months ended September 30, 2010 and 2009
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Three months ended
September 30
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Six months ended
September 30
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||||||||||||||||
2010
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2009
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2010
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2009
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||||||||||||||
As restated
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As restated
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||||||||||||||||
Note
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US$’000
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US$’000
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US$’000
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US$’000
|
|||||||||||||
Operating revenues:
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|||||||||||||||||
Net sales to third parties
|
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76,613 | 50,392 | 127,042 | 79,867 | ||||||||||||
Cost of sales
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(65,869 | ) | (42,016 | ) | (111,260 | ) | (66,366 | ) | |||||||||
Gross income
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10,744 | 8,376 | 15,782 | 13,501 | |||||||||||||
Operating expenses:
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|||||||||||||||||
Sales, marketing and distribution
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(3,040 | ) | (2,167 | ) | (5,551 | ) | (3,953 | ) | |||||||||
General and administrative
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(956 | ) | (722 | ) | (1,641 | ) | (1,533 | ) | |||||||||
Operating income
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6,748 | 5,487 | 8,590 | 8,015 | |||||||||||||
Other income, net
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110 | 578 | 613 | 725 | |||||||||||||
Interest income
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102 | - | 198 | 55 | |||||||||||||
Interest expense
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(606 | ) | (378 | ) | (1,291 | ) | (747 | ) | |||||||||
Income before income taxes
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6,354 | 5,687 | 8,110 | 8,048 | |||||||||||||
Income taxes expense
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4
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(912 | ) | (770 | ) | (1,161 | ) | (1,125 | ) | ||||||||
Net income attributable to CIEC common stockholders
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5,442 | 4,917 | 6,949 | 6,923 | |||||||||||||
Other comprehensive income
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|||||||||||||||||
Foreign currency translation adjustment
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433 | 24 | 554 | 24 | |||||||||||||
Comprehensive income
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5,875 | 4,941 | 7,503 | 6,947 | |||||||||||||
Shares
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Shares
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Shares
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Shares
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||||||||||||||
Earnings per share
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3
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||||||||||||||||
Weight average number of common stock outstanding
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|||||||||||||||||
- basic and diluted
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50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | |||||||||||||
US$
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US$
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US$
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US$
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||||||||||||||
Net income per share of common stock outstanding
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|||||||||||||||||
- basic and diluted
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0.11 | 0.10 | 0.14 | 0.14 |
The financial statements should be read in conjunction with the accompanying notes.
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F-2
Chisen Electric Corporation
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Unaudited Condensed Consolidated Balance Sheets
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As of September 30, 2010 and March 31, 2010
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As of
September 30,
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As of
March 31,
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||||||||
2010
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2010
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||||||||
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Note
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US$’000
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US$’000
|
||||||
ASSETS
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|||||||||
Current assets:
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|||||||||
Cash and cash equivalents
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8,612 | 6,019 | |||||||
Restricted bank balances
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5
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21,638 | 21,420 | ||||||
Other financial assets
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6
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3,122 | 7,438 | ||||||
Trade receivables, net
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68,875 | 50,440 | |||||||
Other receivables
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1,858 | 800 | |||||||
Prepayments
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2,192 | 4,933 | |||||||
Due from related parties
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14(b)
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5 | 8 | ||||||
Inventories
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7
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24,575 | 30,038 | ||||||
Assets classified as held for sale
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19(a)
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2,524 | - | ||||||
Total current assets
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133,401 | 121,096 | |||||||
Available-for-sale financial assets
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8
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2,699 | 882 | ||||||
Long-term land lease prepayments, net
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152 | 749 | |||||||
Property, plant and equipment, net
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9
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9,402 | 10,474 | ||||||
Deposit for acquisition of land and buildings
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788 | - | |||||||
Total assets
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146,442 | 133,201 |
The financial statements should be read in conjunction with the accompanying notes.
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F-3
Chisen Electric Corporation
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Unaudited Condensed Consolidated Balance Sheets
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As of September 30, 2010 and March 31, 2010
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As of
September
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As of March
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||||||||
30, 2010 | 31, 2010 | ||||||||
Note
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US$’000
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US$’000
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|||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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|||||||||
Current liabilities:
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|||||||||
Trade payables
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14,971 | 14,923 | |||||||
Notes payable
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10
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41,038 | 35,504 | ||||||
Accrued expenses and other accrued liabilities
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6,742 | 5,087 | |||||||
Due to related parties
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14(b)
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4,127 | 2,532 | ||||||
Income taxes payable
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919 | 148 | |||||||
Short-term bank borrowings
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11
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41,336 | 46,141 | ||||||
Liabilities directly associated with assets classified as held for sale
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19(b)
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874 | - | ||||||
Total current liabilities
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110,007 | 104,335 | |||||||
Government subsidies
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12
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117 | 139 | ||||||
Deferred tax liabilities
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4(c)
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460 | 460 | ||||||
Total non-current liabilities
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577 | 599 | |||||||
Total liabilities
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110,584 | 104,934 | |||||||
Commitments and contingencies
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15
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- | - | ||||||
Stockholders’ equity:
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|||||||||
Preferred stock, US$0.001 par value each:
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|||||||||
10,000,000 shares authorized and no shares issued and outstanding
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- | - | |||||||
Common stock, US$0.001 par value each:
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|||||||||
100,000,000 shares authorized
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|||||||||
50,000,000 shares issued and outstanding
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50 | 50 | |||||||
Capital reserves
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144 | 144 | |||||||
Statutory reserves
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3,184 | 2,239 | |||||||
Accumulated other comprehensive income
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1,608 | 1,054 | |||||||
Retained earnings
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30,784 | 24,780 | |||||||
Total CIEC stockholders’ equity
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35,770 | 28,267 | |||||||
Non-controlling interests
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88 | - | |||||||
Total stockholders’ equity
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35,858 | 28,267 | |||||||
Total liabilities and stockholders’ equity
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146,442 | 133,201 |
The financial statements should be read in conjunction with the accompanying notes.
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F-4
Chisen Electric Corporation
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Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity
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For the six months ended September 30, 2010
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Common stock issued
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Accumulated
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|||||||||||||||||||||||||||||||||||
Number
of shares
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Amount
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Capital
reserves
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Statutory
reserves
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Retained
earnings
|
other
comprehensive
income
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Total CIEC
stockholders’
equity
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Non-
controlling
interest
|
Total
stockholders’
equity
|
||||||||||||||||||||||||||||
US$’000
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US$’000
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US$’000
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US$’000
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US$’000
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US$’000
|
US$’000
|
US$’000
|
|||||||||||||||||||||||||||||
Balance as of April 1, 2010
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50,000,000 | 50 | 144 | 2,239 | 24,780 | 1,054 | 28,267 | - | 28,267 | |||||||||||||||||||||||||||
Net income
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- | - | - | - | 6,949 | - | 6,949 | - | 6,949 | |||||||||||||||||||||||||||
Transfer to statutory reserves
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- | - | - | 945 | (945 | ) | - | - | - | - | ||||||||||||||||||||||||||
Foreign currency translation adjustment
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- | - | - | - | - | 554 | 554 | - | 554 | |||||||||||||||||||||||||||
Capital contributed by non-controlling interests
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- | - | - | - | - | - | - | 88 | 88 | |||||||||||||||||||||||||||
Balance as of September 30, 2010
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50,000,000 | 50 | 144 | 3,184 | 30,784 | 1,608 | 35,770 | 88 | 35,858 |
The financial statements should be read in conjunction with the accompanying notes.
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F-5
Chisen Electric Corporation
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Unaudited Condensed Consolidated Statements of Cash Flows
|
For the six months ended September 30, 2010 and 2009
|
Six months ended
September 30,
|
||||||||
2010
|
2009
|
|||||||
US$’000
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US$’000
|
|||||||
Cash flows from operating activities
|
||||||||
Net income
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6,949 | 6,923 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation of property, plant and equipment
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540 | 270 | ||||||
Written-off of property, plant and equipment
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- | 6 | ||||||
Loss on disposal of property, plant and equipment
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18 | - | ||||||
Amortization of long-term land lease prepayments
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8 | 6 | ||||||
Exchange differences
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68 | 147 | ||||||
Provision for warranty costs
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549 | 44 | ||||||
Government grant recognized
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(24 | ) | (24 | ) | ||||
Changes in assets and liabilities:
|
||||||||
Other financial assets
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4,443 | (3,761 | ) | |||||
Trade receivables, net
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(17,570 | ) | (13,386 | ) | ||||
Other receivables
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(171 | ) | (281 | ) | ||||
Prepayment
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2,826 | (1,281 | ) | |||||
Due from related parties
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3 | 299 | ||||||
Inventories
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5,979 | (4,518 | ) | |||||
Trade payables
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(208 | ) | 5,020 | |||||
Notes payable
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4,925 | 12,314 | ||||||
Accrued expenses and other accrued liabilities
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1,467 | 1,732 | ||||||
Due to related parties
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1,551 | (321 | ) | |||||
Income taxes payable
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771 | 507 | ||||||
Net cash provided by operating activities
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12,124 | 3,696 | ||||||
Cash flows from investing activities
|
||||||||
Purchase of property, plant and equipment
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(1,685 | ) | (657 | ) | ||||
Proceeds on disposal of property, plant and equipment
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1 | - | ||||||
Investment in restricted bank balances, net
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149 | (9,798 | ) | |||||
Deposit paid for acquisition of land and buildings
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(788 | ) | (1,463 | ) | ||||
Acquisition of available-for-sale financial assets
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(1,802 | ) | - | |||||
Net cash used in investing activities
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(4,125 | ) | (11,918 | ) |
The financial statements should be read in conjunction with the accompanying notes.
|
F-6
Chisen Electric Corporation
|
Unaudited Condensed Consolidated Statements of Cash Flows
|
For the six months ended September 30, 2010 and 2009
|
Six months ended
September 30,
|
||||||||
2010
|
2009
|
|||||||
US$’000
|
US$’000
|
|||||||
Cash flows from financing activities
|
||||||||
Proceeds from short-term bank loans
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6,417 | 23,839 | ||||||
Repayment of short-term bank loans
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(8,282 | ) | (10,676 | ) | ||||
Repayment of bills financing
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(3,731 | ) | - | |||||
Capital contributed by non-controlling interest
|
88 | - | ||||||
Net cash (used in) provided by financing activities
|
(5,508 | ) | 13,163 | |||||
Net increase in cash and cash equivalents
|
2,491 | 4,941 | ||||||
Cash and cash equivalents, beginning of period
|
6,019 | 2,620 | ||||||
Effect on exchange rate changes
|
102 | (143 | ) | |||||
Cash and cash equivalents, end of period
|
8,612 | 7,418 | ||||||
Supplemental disclosure of cash flow information
|
||||||||
Interest received
|
198 | - | ||||||
Interest paid
|
1,268 | 704 | ||||||
Tax paid
|
400 | 550 |
The financial statements should be read in conjunction with the accompanying notes.
|
F-7
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES
|
Chisen Electric Corporation (“Chisen Electric”), formerly known as World Trophy Oufitters, Inc., was formed as a Nevada corporation on January 13, 2005. Its common stocks are currently trading on the Over-The-Counter Bulletin Board under the symbol “CIEC.OB”.
Chisen Electric is an investment holding company with no operations. The principal activities of its subsidiaries (together with Chisen Electric, collectively referred as “the Company”) are the manufacture and sales of sealed lead-acid battery products and investment holding.
Details of Chisen Electric’s subsidiaries as of September 30, 2010 are as follows:
Name
|
Place and date of
establishment /
incorporation
|
Percentage of
effective equity
interest / voting
right attributable
to the Company
|
Principal activities
|
|||
Fast More Limited (“Fast More”)
|
Hong Kong
December 17, 2007
|
100%
|
Investment holding
|
|||
Changxing Chisen Battery Co., Limited (“Changxing Chisen”)*
|
Zhejiang,
the People’s Republic of China (“PRC”)
February 25, 2002
|
100%
|
Manufacture and sales of sealed lead-acid battery products
|
|||
Chisen Technology Holdings Corporation (“Chisen Technology”)
|
Nevada,
United States
May 18, 2009
|
100%
|
Inactive
|
|||
Chisen Electric Jiangsu Co., Limited (“Chisen Jiangsu”)*
|
|
Jiangsu,
PRC
August 23, 2010
|
|
98%
|
|
Inactive
|
|
*
|
These are direct translation of the name in Chinese for identification purpose only and are not the official name in English.
|
F-8
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial
|
Statements
|
For the six months ended September 30, 2010 and 2009
|
2.
|
PREPRATION OF INTERIM FINANCIAL STATEMENTS
|
Basis of presentations
The accompanying unaudited condensed consolidated financial statements as of September 30, 2010 have been prepared based upon Securities and Exchange Commission rules that permit reduced disclosure for interim periods and include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the financial position, results of operations and cash flows as of September 30, 2010 and for all periods presented. Information as of March 31, 2010 was derived from the audited consolidated financial statements of the Company for the year ended March 31, 2010.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“USGAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Chisen Electric's Form 10-K filed on June 28, 2010 for the year ended March 31, 2010. The results of operations for both the three months and six months ended September 30, 2010 and 2009 are not necessarily indicative of the operating results to be expected for the full year.
The condensed consolidated financial statements and accompanying notes are presented in United States dollars and prepared in conformity with USGAAP which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basis of consolidation
The consolidated financial statements include the financial information of Chisen Electric and its subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation.
Recent accounting pronouncements
In July 2010, FASB issued ASU No. 2010-20 “Disclosures about the credit quality of financing receivables and the allowance for credit losses”, which requires expanded disclosures about the credit quality of an entity’s financing receivables and its allowance for credit loss on a disaggregated basis. This ASU is effective for annual reporting periods ending on or after December 15, 2011. The Company does not expect the adoption of this ASU will have a material impact on the Company’s consolidated financial statements.
3.
|
EARNINGS PER SHARE
|
Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common stocks outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common stocks that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no potentially dilutive securities for
both the three months and six months ended September 30, 2010 and 2009.
F-9
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
4.
|
INCOME TAXES
|
Chisen Electric had a net operating loss carry-forward for income tax reporting purposes that might be offset against future taxable income. No tax benefit has been reported in the financial statements, because Chisen Electric believes that it is more likely than not that the carry-forwards will finally expire and therefore cannot be used. Accordingly, the potential tax benefits of the loss carry-forwards are offset by a valuation allowance of the same amount.
Chisen Electric’s subsidiaries are subject to income taxes on an entity basis on income arising in or derived from the tax jurisdictions in which each entity domiciles and operates.
Hong Kong Profits Tax has not been provided as Fast More had no assessable profit for the period.
Changxing Chisen is subject to state and local enterprise income taxes in the PRC at a standard rate of 25%. Changxing Chisen received official designation by the local tax authority as a foreign invested enterprise engaged in manufacturing activities and is confirmed by the local tax authority that it is exempted from enterprise income tax for two years commencing from the first profitable year in 2006, followed by a 50% reduction for the next three years.
Dividends payable by a foreign invested enterprise in the PRC to its foreign investors in Hong Kong are subject to a 5% withholding tax. No deferred tax expenses were charged to the statement of operations for both the three months and six months ended September 30, 2010 and 2009.
|
(a)
|
Income tax expenses are comprised of the following:
|
Three months ended
September 30
|
Six months ended
September 30
|
||||||
2010
|
2009
|
2010
|
2009
|
||||
US$’000
|
US$’000
|
US$’000
|
US$’000
|
||||
Current taxes arising in the PRC:
|
|||||||
For the period
|
912
|
770
|
1,161
|
1,125
|
The FASB ASC Topic 740 “Income Taxes” clarifies the accounting and disclosure for uncertainty in tax positions, as defined, and prescribes the measurement process and a minimum recognition threshold for a tax position, taken or expected to be taken in a tax return, that is required to be met before being recognized in the financial statements. Under ASC 740, the Company must recognize the tax benefit from an uncertain position only if it is more-likely-than-not the tax position will be sustained on examination by the tax authority, based on the technical merits of the position. The tax benefits recognized in the financial statements attributable to such position are measured based on the largest
benefit that has a greater than 50% likelihood of being realized upon the ultimate resolution of the position.
F-10
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
4.
|
INCOME TAXES (CONTINUED)
|
|
(a)
|
(Continued)
|
Subject to the provision of ASC 740, the Company has analyzed its filing positions in all of the jurisdictions where it is required to file income tax returns. As of September 30, 2010 and March 31, 2010, the Company has identified the following jurisdictions as “major” tax jurisdictions, as defined, in which it is required to file income tax returns namely the United States, Hong Kong and the PRC. Based on the evaluations noted above, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its unaudited condensed consolidated financial statements.
As of September 30, 2010 and March 31, 2010, the Company had no unrecognized tax benefits or accruals for the potential payment of interest and penalties. The Company’s policy is to record interest and penalties in this connection as a component of the provision for income tax expense. For the six months ended September 30, 2010 and 2009, no interest or penalties were recorded.
|
(b)
|
Reconciliation from the expected income tax expenses calculated with reference to the statutory tax rate in the PRC of 25% (2009: 25%) is as follows:
|
Three months ended
September 30
|
Six months ended
September 30
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
US$’000
|
US$’000
|
US$’000
|
US$’000
|
|||||||||||||
Expected income tax expenses
|
1,588 | 1,422 | 2,027 | 2,012 | ||||||||||||
Effect on tax incentives / holiday
|
(794 | ) | (761 | ) | (996 | ) | (1,092 | ) | ||||||||
Non-deductible items
|
- | 99 | - | 172 | ||||||||||||
Non-taxable income
|
- | - | (34 | ) | - | |||||||||||
Others
|
118 | 10 | 164 | 33 | ||||||||||||
Income tax expenses
|
912 | 770 | 1,161 | 1,125 |
|
(c)
|
Components of net deferred tax liabilities were as follows:
|
As of
September 30,
|
As of
March 31,
|
|||||||
2010
|
2010
|
|||||||
US$’000
|
US$’000
|
|||||||
Withholding tax on undistributed earnings of a PRC subsidiary
|
460 | 460 |
F-11
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
5.
|
RESTRICTED BANK BALANCES
|
Restricted bank balances as of September 30, 2010 and March 31, 2010 represented time deposits with original maturity for six months. As of September 30, 2010 and March 31, 2010, all restricted bank balances were pledged for the issue of notes payable as disclosed in Note 10 below.
6.
|
OTHER FINANCIAL ASSETS
|
Other financial assets represented notes receivable from customers for the settlement of accounts receivable balances. As of September 30, 2010
and March 31, 2010, all notes receivable were guaranteed by established banks in the PRC and had maturities of six months or less from the date of issue. The fair value of the notes receivable approximated their carrying value.
7.
|
INVENTORIES
|
Inventories consisted of the following:
As of
September 30,
|
As of
March 31,
|
|||||||
2010
|
2010
|
|||||||
US$’000
|
US$’000
|
|||||||
Raw materials
|
1,742 | 7,186 | ||||||
Work-in-progress and semi-finished goods
|
6,442 | 13,482 | ||||||
Finished goods
|
16,391 | 9,370 | ||||||
24,575 | 30,038 |
8.
|
AVAILABLE-FOR-SALE FINANCIAL ASSETS
|
|
Available-for-sale financial assets as of September 30, 2010 and March 31, 2010 represented investment in unlisted equity securities and are recorded at cost. The management has estimated that the recoverable amount of the assets exceed their carrying value.
|
F-12
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
9.
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
Property, plant and equipment is summarized as follows:
As of
September 30,
|
As of
March 31,
|
|||||||
2010
|
2010
|
|||||||
US$’000
|
US$’000
|
|||||||
Buildings
|
2,933 | 5,468 | ||||||
Leasehold improvements
|
787 | 495 | ||||||
Plant and machinery
|
4,849 | 4,071 | ||||||
Motor vehicles
|
991 | 974 | ||||||
Furniture, fixtures and office equipment
|
1,619 | 1,419 | ||||||
11,179 | 12,427 | |||||||
Accumulated depreciation
|
(1,777 | ) | (1,953 | ) | ||||
9,402 | 10,474 |
Depreciation expenses were approximately US$288,000 and US$138,000 for the three months ended September 30, 2010 and 2009, respectively, and US$540,000 and US$270,000 for the six months ended September 30, 2010 and 2009, respectively.
The Company has pledged certain buildings as collaterals against general banking facilities granted to the Company. Details of which are disclosed in Note 11.
10.
|
NOTES PAYABLE
|
Notes payable were issued by the Company to creditors with the banker’s acceptance payable at the maturity date for the purpose of raw materials for production exclusively. The Company has to repay the notes within six months from date of issuance and service fees would be charged by banks for the issuance for the notes. The notes payable were collateralized by restricted bank balances as set out in Note 5 and certain land lease prepayments and buildings as set out in Note 11(i) below.
In addition, various parties have issued guarantee against these notes payable as follows:
As of
September 30,
|
As of
March 31,
|
|||||||
2010
|
2010
|
|||||||
US$’000
|
US$’000
|
|||||||
Corporate and personal guarantees issued by related parties (Note 14(d))
|
17,908 | 14,377 | ||||||
Corporate guarantees issued by third parties
|
1,492 | 1,467 |
F-13
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
11.
|
SHORT-TERM BANK BORROWINGS
|
Short-term bank borrowings comprise of the followings:
As of
September 30,
|
As of
March 31,
|
||||||||
Note
|
2010
|
2010
|
|||||||
US$’000
|
US$’000
|
||||||||
Short-term bank loans
|
(i)
|
41,336 | 42,473 | ||||||
Bills financing
|
(ii)
|
- | 3,668 | ||||||
41,336 | 46,141 |
|
(i)
|
Short-term bank loans
|
Short-term bank loans represent amounts due to various banks which are due within 12 months, and these loans can normally be renewed with the banks upon expiry/maturity.
The loans and the notes payables as set out in Note 10 are collateralized by assets of the Company with carrying values as follows:
As of
September 30,
|
As of
March 31,
|
|||||||
2010
|
2010
|
|||||||
US$’000
|
US$’000
|
|||||||
Land lease prepayments
|
- | 598 | ||||||
Buildings
|
- | 2,018 | ||||||
Land lease prepayments classified as held for sale
|
601 | - | ||||||
Buildings classified as held for sale
|
1,923 | - | ||||||
2,524 | 2,616 |
Various parties have also issued guarantee against these short-term bank loans as follows:
As of
September 30,
|
As of
March 31,
|
|||||||
2010
|
2009
|
|||||||
US$’000
|
US$’000
|
|||||||
Corporate and personal guarantees issued by related parties (Note 14(d))
|
24,771 | 30,589 | ||||||
Corporate guarantees issued by third parties
|
1,492 | 1,467 | ||||||
Corporate and personal guarantees issued by related parties and a third party jointly (Note 14(d))
|
8,954 | 8,802 |
The weighted average annual interest rates of the short-term bank loans were 5.41% and 5.40% as of September 30, 2010 and March 31, 2010 respectively.
F-14
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
11.
|
SHORT-TERM BANK BORROWINGS (CONTINUED)
|
|
(ii)
|
Bills financing
|
Bills financing represents amounts due to various banks which are repayable within six months from the date of issue.
12.
|
GOVERNMENT SUBSIDIES
|
During the year ended March 31, 2008, the Company received a government grant of approximately US$231,000 for the purpose of subsidising its acquisition of property, plant and equipment, of which approximately US$12,000 and US$12,000 was credited to the statement of operations for the three months ended September 30, 2010 and 2009, respectively, and US$24,000 and US$24,000 were credited to the statement of operations for the six months ended September 30, 2010 and 2009 respectively.
13.
|
FAIR VALUE MEASUREMENT
|
The Company adopted ASC Topic 820 – Fair Value Measurements and Disclosures (“ASC 820”). The adoption of ASC 820 did not have a material impact on our consolidated financial statements. ASC 820 establishes a three-tier fair value hierarchy to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows:
|
Level 1:
|
Observable inputs, such as unadjusted quoted market prices in active markets for the identical asset or liabilities.
|
|
Level 2:
|
Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
|
|
Level 3:
|
Unobservable inputs reflecting the entity’s own assumptions in measuring the asset or liability at fair value.
|
The Company’s financial instruments consist principally of cash and cash equivalents, restricted bank balances, other financial assets, trade receivables and payables, 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.
F-15
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
14.
|
RELATED PARTY TRANSACTIONS
|
(a)
|
Names and relationship of related parties:
|
Name of related party
|
Existing relationships with the Company
|
|
Mr. Xu Kecheng
|
Director and controlling stockholder of Chisen Electric
|
|
Zhejiang Chisen Glass Company Limited (“Chisen Glass”)*
|
A company controlled by a close family member of Mr. Xu Kecheng
|
|
Mr. Xu Keyong
|
A close family member of Mr. Xu Kecheng
|
|
Ms. Zhou Fang Qin
|
Spouse of Mr. Xu Kecheng
|
|
Changxing Chisen Xinguangyuan Company Limited (“Xinguangyuan”)*
|
A company controlled by a close family member of Mr. Xu Kecheng
|
|
Zhejiang Ai Ge Organism Products Company Limited (“Ai Ge Organism”)*
|
A company controlled by Mr. Xu Kecheng
|
|
Zhejiang Changxing Nuo Wan Te Ke Glass Company Limited (“Nuo Wan Te Ke”)*
|
A company controlled by a close family member of Mr. Xu Kecheng
|
|
Zhejiang Changxing Ruilang Electronic Company Limited (“Ruilang Electronic”)*
|
|
A company controlled by a close family member of Mr. Xu Kecheng
|
|
*
|
These are direct translation of the name in Chinese for identification purpose only and are not the official names in English.
|
(b)
|
Summary of balances with related parties:
|
As of
September 30,
|
As of
March 31,
|
|||||||
2010
|
2010
|
|||||||
US$’000
|
US$’000
|
|||||||
Due from related parties:
|
||||||||
Ms. Zhou Fang Qin
|
5 | 8 | ||||||
Due to related parties:
|
||||||||
Mr. Xu Keyong
|
25 | 25 | ||||||
Chisen Glass
|
1,105 | 110 | ||||||
Ruilang Electronic
|
2,670 | 2,102 | ||||||
Ai Ge Organism
|
297 | 292 | ||||||
Nuo Wan Te Ke
|
3 | 3 | ||||||
Xinguangyuan
|
27 | - | ||||||
4,127 | 2,532 |
All amounts due from / to related parties represent unsecured advances which are interest-free and repayable on demand.
F-16
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
14.
|
RELATED PARTY TRANSACTIONS (CONTINUED)
|
(c)
|
Summary of related party transactions:
|
Name of
|
Nature of
|
Three months ended
September 30
|
Six months ended
September 30
|
||||||||||||||
related party
|
transactions
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
US$’000
|
US$’000
|
US$’000
|
US$’000
|
||||||||||||||
Ruilang Electronic
|
Purchase of raw materials
|
2,201 | - | 4,134 | - | ||||||||||||
Deposit paid for acquisition of land and building
|
- | 1,462 | - | 1,462 | |||||||||||||
Chisen Glass
|
Purchase of raw materials
|
760 | - | 1,420 | - |
(d)
|
Other arrangements:
|
|
˙
|
As of September 30, 2010, Chisen Glass provided guarantees, in aggregate, amounting to US$5,969,000 and US$3,731,000 to secure the short-term bank loans and notes payable of the Company, respectively.
|
|
˙
|
As of September 30, 2010, US$3,432,000 of the Company’s short-term bank loans was collateralized by land use rights owned by Ruilang Electronic and guaranteed by Mr. Xu Kecheng and Ms. Zhou Fang Qin.
|
|
˙
|
As of September 30, 2010, Xinguangyuan, Mr. Xu Kecheng and a third party provided guarantees, in aggregate, amounting to US$8,954,000 to secure the short-term bank loans of the Company.
|
|
˙
|
As of September 30, 2010, Xinguangyuan and Mr. Xu Kecheng provided guarantees, in aggregate, amounting to US$11,938,000 and US$5,969,000 to secure the short-term bank loans and notes payable of the Company, respectively.
|
|
˙
|
As of September 30, 2010, Chisen Glass, Mr. Xu Kecheng and Ms. Zhou Fang Qin provided guarantees, in the aggregate, amounting to US$3,432,000 and US$4,477,000 to secure the short-term bank loans and notes payable of the Company, respectively.
|
|
˙
|
As of September 30, 2010, Xinguangyuan provided guarantees, in aggregate, amounting to US$3,731,000 to secure the notes payable of the Company.
|
F-17
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
15.
|
COMMITMENTS AND CONTINGENCIES
|
|
(a)
|
Operating lease commitments
|
The following table summarizes the approximate future minimum rental payments under non-cancelable operating leases in effect as of September 30, 2010 and March 31, 2010:
As of
September 30,
|
As of
March 31,
|
|||||||
2010
|
2010
|
|||||||
US$’000
|
US$’000
|
|||||||
Within one year
|
625 | 599 | ||||||
One to two years
|
656 | 630 | ||||||
Two to three years
|
651 | 661 | ||||||
Three to four years
|
275 | 489 | ||||||
Four to five years
|
29 | 115 | ||||||
Total
|
2,236 | 2,494 |
|
(b)
|
Capital commitments
|
As of September 30, 2010 and March 31, 2010, the Company had outstanding capital expenditure commitments relating to various construction projects and purchase of land and machineries for an aggregate amount of approximately US$160,187,000 and US$84,000 respectively.
16.
|
PROVISION FOR WARRANTY
|
Estimated warranty costs are recognized at the time when the Company sells its products and are included in sale, marketing and distribution expenses. The Company uses historical failure rates and costs to repair product defects during the warranty period to estimate warranty costs while are reviewed periodically in light of actual experience. The reconciliation of the changes in the warranty obligation is as follows:
Three months ended
September 30
|
Six months ended
September 30
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
US$’000
|
US$’000
|
US$’000
|
US$’000
|
|||||||||||||
Beginning balance
|
283 | 147 | 226 | 121 | ||||||||||||
Exchange realignment
|
4 | - | 5 | 1 | ||||||||||||
Accrual for warranties issued during the period
|
230 | 65 | 554 | 105 | ||||||||||||
Settlement made during the period
|
(48 | ) | (20 | ) | (316 | ) | (35 | ) | ||||||||
Closing balance
|
469 | 192 | 469 | 192 |
F-18
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
17.
|
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$286,000 and US$66,000 for the three months ended September 30, 2010 and 2009 respectively, and US$415,000 and US$238,000 for the six months ended September 30, 2010 and 2009 respectively.
18.
|
SEGMENTAL INFORMATION
|
During the six months ended September 30, 2010 and year ended March 31, 2010, all revenue of the Company represented income from sales of sealed lead-acid battery and therefore no financial information by business segment is presented. Furthermore, as all income is derived from the PRC, no geographical segment is presented.
19.
|
ASSETS CLASSIFIED AS HELD FOR SALE
|
As of
September 30,
|
As of
March 31,
|
||||||||
2010
|
2010
|
||||||||
Note
|
US$’000
|
US$’000
|
|||||||
Long-term land lease prepayments
|
601 | - | |||||||
Buildings
|
1,923 | - | |||||||
(a)
|
2,524 | - | |||||||
Liabilities directly associated with assets classified as held for sale
|
(b)
|
874 | - |
|
(a)
|
On August 20, 2010, the Company’s wholly owned subsidiary, Changxing Chisen, entered into an investment agreement with the Administrative Committee of Changxing Economic Development Zone (“ACC”). Changxing Chisen agreed to relocate its business and production plant to a new location within one year from the date of the investment agreement. As a result, ACC will buy back the long-term land lease prepayments and buildings located in the existing plant of Jingyi Road, Changxing Economic Development Zone. All the related assets were reclassified at their carrying amounts from property, plant and equipment and long-term land lease prepayments to assets held for sale on the date of the investment agreement.
|
|
(b)
|
As of September 30, 2010 and March 31, 2010, the Company had deferred compensation income from ACC of approximately US$874,000 (equivalent to 5% of total compensation) and US$Nil respectively.
|
F-19
Chisen Electric Corporation
|
Notes to and Forming Part of Unaudited Condensed Consolidated Financial Statements
|
For the six months ended September 30, 2010 and 2009
|
20.
|
SUBSEQUENT EVENTS
|
On October 8, 2010, the Company filed with the SEC a registration statement on Form S-1 relating to the proposed public offering of its common stock. The Company intends to use the net proceeds from the offering to construct new production facilities in Changxing County (Zhejiang Province) and Jiangsu Province for the development and production of a new product, lithium-ion batteries. The registration statement is reviewing by SEC and has not yet effective as of the filing date of these financial statements.
21.
|
RESTATEMENT OF FINANCIAL STATEMENTS
|
Certain comparative figures in the 2009 consolidated statement of operations and other comprehensive income have been restated by the Company to conform to the current period’s presentation of financial statements. The table below shows the effect of restatements:
Three months ended
September 30, 2009
|
||||||||
As previously
reported
|
As
restated
|
|||||||
US$’000
|
US$’000
|
|||||||
Cost of sales
|
41,708 | 42,016 | ||||||
Gross income
|
8,684 | 8,376 | ||||||
General and administrative
|
(1,030 | ) | (722 | ) |
Six months ended
September 30, 2009
|
||||||||
As previously
reported
|
As
restated
|
|||||||
US$’000
|
US$’000
|
|||||||
Cost of sales
|
65,813 | 66,366 | ||||||
Gross income
|
14,054 | 13,501 | ||||||
General and administrative
|
2,086 | 1,533 |
F-20
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-Looking Statements
The following discussion of our financial condition and results of operations of Chisen Electric Corporation and its subsidiaries should be read in conjunction with our financial statements and the related notes, and the other financial information included in this report.
As used in this report, unless otherwise indicated, the terms “we,” “our,” “us,” 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, its 100% owned and chief operating subsidiary, Changxing Chisen Electric Co., Ltd., a wholly foreign owned entity ("WFOE") organized under the laws of the PRC (“CCEC”) and CCEC’s subsidiary, Chisen Electric Jiangsu Co., Ltd. (collectively, the “Company”).
This report 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 report are qualified by these cautionary statements and there can be no assurance of the actual results or developments.
Company Overview
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. Electric bicycles have become increasingly popular in China. In accordance with the measured data of the electric bicycle market demand in China as reported in a recent article at www.chinanews.com.cn/cj/cj-cyzh/news/2010/03-31/2201616.shtml, 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.
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 $177,192,000 and $109,020,000, respectively, and our net income during the same periods amounted to $9,500,000 and $8,880,000, respectively. For the three months ended September 30, 2010, our sales revenue and net income were $76,613,000 and $5,442,000, respectively.
We strive to create an international first-class brand and become one of the leaders in providing “green” energy in the global electric bicycle market. Through our continuous researching and developing of new chemical energy technologies, we intend to provide energy-saving and highly-effective energy solutions to our customers for improving the quality of life while maintaining a sustainable ecological environment. Our goal is to become the largest battery developer and producer with a first-class sales and service network in China. With one of the leading positions in the LABEB battery product market in China, our expansion plans in Changxing County (Zhejiang
Province) and Jiangsu Province, our product research and development capability and our cooperative partnerships with clients, we believe that we are well positioned to capture additional business opportunities in China's personal transportation device markets. In light of the prevailing economic trends for developing alternative transportation devices that reduce the reliance on oil and produce lesser emissions, we plan to explore the motive battery market for electric-powered motorcycles and electric cars. Leveraging our experience and expertise in producing lead-acid motive battery products for electric bicycles, our product mix will be expanded to include lead-acid back-up batteries, lithium-ion motive batteries and lithium-ion back-up battery products.
4
Results of Operations for the Six(6) Months Ended September 30, 2010 as Compared with the Six(6) Months Ended September 30, 2009
The following table sets forth a summary of certain key components of our results of operations for periods indicated, in dollars and as a percentage of revenues.
For The Six months Ended September 30 (Unaudited)
|
||||||||||||||||
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
||||
US$ ’000
|
US $ ’000
|
|||||||||||||||
Revenues
|
$
|
127,042
|
$
|
79,867
|
100.00
|
%
|
100.00
|
%
|
||||||||
Cost of sales
|
$
|
111,260
|
$
|
66,366
|
87.58
|
%
|
83.10
|
%
|
||||||||
Gross profit
|
$
|
15,782
|
$
|
13,501
|
12.42
|
%
|
16.90
|
%
|
||||||||
Sales, marketing and distribution expenses
|
$
|
5,551
|
$
|
3,953
|
4.37
|
%
|
4.95
|
%
|
||||||||
General and administrative expenses
|
$
|
1,641
|
$
|
1,533
|
1.29
|
%
|
1.92
|
%
|
||||||||
Operating income
|
$
|
8,590
|
$
|
8,015
|
6.76
|
%
|
10.04
|
%
|
||||||||
Other income, net
|
$
|
613
|
$
|
725
|
0.48
|
%
|
0.91
|
%
|
||||||||
Interest income
|
$
|
198
|
$
|
55
|
0.16
|
%
|
0.07
|
%
|
||||||||
Incomes before interest and income tax expenses
|
$
|
9,401
|
$
|
8,795
|
7.40
|
%
|
11.01
|
%
|
||||||||
Interest expense
|
$
|
1,291
|
$
|
747
|
1.02
|
%
|
0.94
|
%
|
||||||||
Income before income tax expenses
|
$
|
8,110
|
$
|
8,048
|
6.38
|
%
|
10.08
|
%
|
||||||||
Income tax expenses
|
$
|
1,161
|
$
|
1,125
|
0.91
|
%
|
1.41
|
%
|
||||||||
Net income
|
$
|
6,949
|
$
|
6,923
|
5.47
|
%
|
8.67
|
%
|
||||||||
Other comprehensive income
|
$
|
554
|
$
|
24
|
0.44
|
%
|
0.03
|
%
|
||||||||
Comprehensive income
|
$
|
7,503
|
$
|
6,947
|
5.91
|
%
|
8.70
|
%
|
Revenues
During the six (6) months ended September 30, 2010, we kept strong growth in our sales. The Company successfully expanded the customer base and also enhanced our existing customers’ relationship. Revenues for the six (6) months ended September 30, 2010 and 2009 were approximately US$127,042,000 and US$79,867,000, respectively. The increase in revenues of 59% was mainly attributable to the continuing strong sales of our battery products in existing and new customers, which resulted in an increase in sales volume of 42% to 9,537,000 units for the six (6) months ended September 30, 2010 compared with 6,702,000 units for the six (6) months ended September 30, 2009.
5
The strong sales was mainly attributable to the continued growth in the electric bicycle market in the PRC together with the launch of promotion activities from January 2010 to September 2010 which bring positive effect on sales. Our sales to one of the existing major electric bicycle manufacturing customer were increased by 94% for the period when compared to the same period in last year. Meanwhile, Company developed 97 new distributors for the six (6) months ended September 30, 2010, which increased the total sales to the distributors by 29 %.
The increase of revenues was also caused by an average increase of 11% in the battery unit selling price in response to the increase in the average costs of our major raw materials.
Cost of Sales
Cost of sales for the six months ended September 30, 2010 and 2009 was approximately US$111,260,000 and US$66,366,000, respectively, and cost rates were 88% and 83%, respectively. The increase of cost rate was mainly due to the average purchase price of major raw material for the six months ended September 30, 2010 which increased by 16% as compared to the corresponding period of last year, however the battery average selling price only increased by 11% which allowed us to maintain our competitiveness in the market.
Depreciation and Amortization
Depreciation expense was approximately US$540,000 and US$270,000 for the six (6) months ended September 30, 2010 and 2009, respectively. The increase in depreciation expense was mainly attributable to the new machines, equipments and dormitories acquired during the twelve (12) months period from October 1, 2009 to September 30, 2010 made in connection with the Company’s business expansion efforts.
Sales, Marketing and Distribution Expenses
Sales, marketing and distribution expenses were approximately US$5,551,000 and US$3,953,000 for the six (6) months ended September 30, 2010 and 2009, respectively. The increase of US$1,598,000 or 40% was mainly driven by the increases in transportation expense, after-sale related expenses and warranty costs provision by US$909,000, US$223,000 and US$443,000 respectively.
General and Administrative Expenses
General and administrative expenses were approximately US$1,641,000 and US$1,533,000 for the six months ended September 30, 2010 and 2009, respectively, and mainly consisted of staff salaries, depreciation expenses, research and development expenses, legal and professional fees, other taxes and promotion and advertising expenses. The increase of US$108,000, or 7%, was mainly caused by the increase of research and development expenses.
Other Income, Net
Net other income was approximately US$613,000 and US$725,000 for the six (6) months ended September 30, 2010 and 2009, respectively. The decrease of US$112,000 or 15% was mainly attributable to the decrease in net sales of lead to electric plate suppliers by US$228,000, offset by the addition of dividend income from available-for-sale financial assets of
US$135,000.
Net Income from Operations before Interest and Tax Expenses
Net income from operations before interest and tax expense was approximately US$9,401,000 and US$8,795,000, for the six (6) months ended September 30, 2010 and 2009, respectively. The increase of US$606,000 or 7% was mainly attributable to the increase in sales volume, thus resulting in an increase in the gross income for the six (6) months ended September 30, 2010.
6
Interest Expense, Net
Net interest expense was approximately US$1,093,000 and US$692,000 for the six (6) months ended September 30, 2010 and 2009, respectively. Net interest expense increased by US$401,000 or 58%, comparing with six (6) months ended September 30, 2009 was mainly due to the increase in average short-term bank loans for the six (6) months ended September 30, 2010, compared to the six (6) months ended September 30, 2009. The increase in average short-term bank loans was mainly due to the increasing demand of fund in response to the business expansion.
7
Net Income
Net income was US$6,949,000 and US$6,923,000 for the six (6) months ended September 30, 2010 and 2009, respectively. Our net income was increased only for 0.4% comparing with the six months ended September 30, 2010. It mainly due to the positive effect of increase in sales volume for the period was substantially offset by the increase of cost rate per unit of sales, and the increase in sales, marketing and distribution expenses.
Results of Operations for the Three(3) Months Ended September 30, 2010 as Compared with the Three(3) Months Ended September 30, 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 Three Months Ended September 30 (Unaudited)
|
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
US $ ’000
|
US$ ’000
|
|||||||||||||||
Revenues
|
$
|
76,613
|
$
|
50,392
|
100.00
|
%
|
100.00
|
%
|
||||||||
Cost of sales
|
$
|
65,869
|
$
|
42,016
|
85.98
|
%
|
83.38
|
%
|
||||||||
Gross profit
|
$
|
10,744
|
$
|
8,376
|
14.02
|
%
|
16.62
|
%
|
||||||||
Sales, marketing and distribution expenses
|
$
|
3,040
|
$
|
2,167
|
3.97
|
%
|
4.30
|
%
|
||||||||
General and administrative expenses
|
$
|
956
|
$
|
722
|
1.25
|
%
|
1.43
|
%
|
||||||||
Operating income
|
$
|
6,748
|
$
|
5,487
|
8.81
|
%
|
10.89
|
%
|
||||||||
Other income, net
|
$
|
110
|
$
|
578
|
0.14
|
%
|
1.15
|
%
|
||||||||
Interest income
|
$
|
102
|
$
|
-
|
0.13
|
%
|
-
|
|||||||||
Income before interest and income tax expenses
|
$
|
6,960
|
$
|
6,065
|
9.08
|
%
|
12.04
|
%
|
||||||||
Interest expense
|
$
|
606
|
$
|
378
|
0.79
|
%
|
0.75
|
%
|
||||||||
Income before income tax expenses
|
$
|
6,354
|
$
|
5,687
|
8.29
|
%
|
11.29
|
%
|
||||||||
Income tax expenses
|
$
|
912
|
$
|
770
|
1.19
|
%
|
1.53
|
%
|
||||||||
Net income
|
$
|
5,442
|
$
|
4,917
|
7.10
|
%
|
9.76
|
%
|
||||||||
Other comprehensive income
|
$
|
433
|
$
|
24
|
0.57
|
%
|
0.05
|
%
|
||||||||
Comprehensive income
|
$
|
5,875
|
$
|
4,941
|
7.67
|
%
|
9.81
|
%
|
8
Revenues
During the three (3) months ended September 30, 2010, we had a strong growth in our sales. We successfully expanded our customer base and also enhanced the existing customers’ relationship. Revenues for the three (3) months ended September 30, 2010 and 2009 were approximately US$76,613,000 and US$50,392,000, respectively. The increase in revenues of 52% was mainly attributable to the continuing strong sales of our battery products in existing and new customers, which resulted in an increase of 31% to 5,520,000 units for the three (3) months ended September 30, 2010 compared with 4,200,000 units for the three (3) months ended September 30, 2009.
The strong sales was mainly attributable to the continued growth in the electric bicycle market in the PRC together with the launch of promotion activities from January 2010 to September 2010 which bring positive effect on sales. Our sales to one of the existing major electric bicycle manufacturing customer were increased 93% for the period when compared to the same period in last year. Meanwhile, Company developed 44 new distributors for the three (3) months ended 2010, which increased the total sales to the distributors by 23%.
The increase of revenues was also caused by an average increase of 13% in the battery unit selling price in response to the increase in the average costs of our major raw materials.
Cost of Sales
Cost of sales for the three months ended September 30, 2010 and 2009 was approximately US$65,869,000 and US$42,016,000, respectively, and cost rates were 86% and 83%, respectively. The increase of cost rate was mainly due to the fact that the average purchase price of major raw material for the three months ended September 30, 2010 increased 13% as compared to the same period in last year.
Depreciation and Amortization
Depreciation expense was approximately US$288,000 and US$138,000 for the three (3) months ended September 30, 2010 and 2009, respectively. The increase in depreciation expense was mainly attributable to the new machines, equipments and dormitories acquired during the twelve (12) months from October 1, 2009 to September 30, 2010 made in connection with the Company’s business expansion efforts.
Sales, Marketing and Distribution Expenses
Sales, marketing and distribution expenses were approximately US$3,040,000 and US$2,167,000 for the three (3) months ended September 30, 2010 and 2009, respectively. The increase of US$873,000 or 40% was mainly driven by the increases in transportation expense, after-sale related expenses and warranty costs provision by US$446,000, US$172,000 and US$63,000 respectively. The increase was mainly attributable to the continuing strong sales of our battery products.
General and Administrative Expenses
General and administrative expenses were approximately US$956,000 and US$722,000 for the three months ended September 30, 2010 and 2009, respectively, and mainly consisted of staff salaries, depreciation expenses, research and development expenses, legal and professional fees, other taxes and promotion and advertising expenses. The increase of US$234,000, or 32%, in general and administrative expenses was mainly caused by the increase of research and development expenses.
Other Income, Net
Net other income was approximately US$110,000 and US$578,000 for the three (3) months ended September 30, 2010 and 2009, respectively. The decrease of US$468,000 or 81% was mainly due to the decrease in net sales of lead to electric plate suppliers.
Net Income from Operations before Interest and Tax Expenses
Net income from operations before interest and tax expense was approximately US$6,960,000 and US$6,065,000, for the three (3) months ended September 30, 2010 and 2009, respectively. The increase of US$895,000 or 15% was mainly attributable to the increase in sales volume and average selling price, thus resulting in an increase in the gross income for the three (3) months ended September 30, 2010.
9
Interest Expense, Net
Net interest expense was approximately US$504,000 and US$378,000 for the three (3) months ended September 30, 2010 and 2009, respectively. Net interest expense increased by US$126,000 or 33% comparing with three (3) months ended September 30, 2009 due to the increase in average short-term bank loans for the three (3) months ended September 30, 2010, compared to the three (3) months ended September 30, 2009. The increase in average short-term bank loans was mainly due to the increasing demand of fund in response to the business expansion.
Net Income
Net income was US$5,442,000 and US$4,917,000 for the three (3) months ended September 30, 2010 and 2009, respectively. The increase in net income of US$525,000 or 11% was mainly caused by the continuing strong sales of our battery products.
Liquidity and Capital Resources
We generally finance our operations through operating profit and borrowings from banks. During the reporting period, we arranged a number of bank loans to satisfy our financing needs. As of the date of this report, we have not experienced any difficulty in raising funds by bank loans, and we have not experienced any liquidity problems in settling our payables in the normal course of business and repaying our bank loans when they fall due.
The following table sets forth the summary of our cash flows, in dollar, for the periods indicated:
Six (6) Months Ended
September 30
(Unaudited)
|
||||||||
2010
|
2009
|
|||||||
Net cash provided by operating activities
|
$ | 12,124,000 | $ | 3,696,000 | ||||
Net cash used in investing activities
|
$ | (4,125,000 | ) | $ | (11,918,000 | ) | ||
Net cash (used in) provided by financing activities
|
$ | (5,508,000 | ) | $ | 13,163,000 | |||
Net increase in cash and cash equivalents
|
$ | 2,491,000 | $ | 4,941,000 | ||||
Effect of exchange rate changes on cash
|
$ | 102,000 | $ | (143,000 | ) | |||
Cash and cash equivalents at beginning of period
|
$ | 6,019,000 | $ | 2,620,000 | ||||
Cash and cash equivalents at end of period
|
$ | 8,612,000 | $ | 7,418,000 |
Operating Activities
Net cash provided by operating activities was approximately US$12,124,000 for the six (6) months ended September 30, 2010, as compared to net cash provided by operating activities of approximately US$3,696,000 for the six (6) month ended September 30, 2009. This increase of US$8,428,000 was mainly due to the combined result of decrease in inventories, prepayments and other financial assets offset by the increase in trade receivables as well as lowering the magnitude of increase in notes payable.
10
Investing Activities
Net cash used in investing activities were approximately US$4,125,000 for the six (6) months ended September 30, 2010, as compared to approximately US$11,918,000 for the six (6) months ended September 30, 2009. The decrease of US$7,793,000 was mainly due to the decrease in restricted bank balance following the new issuance of notes payable was mainly secured by corporate and personal guarantee provided by related parties during the period.
Financing Activities
Net cash used in financing activities was approximately US$5,508,000 for the six (6) month ended September 30, 2010, as compared to net cash provided by financing activities of approximately US$13,163,000 for the six (6) month ended September 30, 2009. The decrease was mainly due to the fact that the bank borrowings and loans at the beginning of the year 2010 could meet the Company’s operation demands, which resulted in the decrease in the net cash provided by financing activities for the six (6) months ended September 30, 2010.
Working Capital
Our working capital increased by approximately US$6,633,000 to approximately US$23,394,000 as of September 30, 2010, as compared to the working capital of approximately US$16,761,000 as of March 31,2010. This increase is mainly attributed by our strong sales during the period.
Off-Balance Sheet Arrangements
We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions of foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.
Critical Accounting Policies, Estimates and Assumptions
For the three (3) and six (6) month periods ended September 30, 2010, there were no changes in the methodology for computing critical accounting estimates, no additional accounting estimates met the standards for critical accounting policies, and there were no material changes to the important assumptions underlying the critical accounting estimates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rates Risk
Our exposure to interest rate risk for changes in interest rates relates primarily to the interest-bearing bank loans and interest income generated by the bank deposits. We have not used any derivative financial instruments in our investment portfolio or for cash management purposes. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. Nevertheless, our future interest expense or interest income may expect to be decreased due to changes in interest rates in the PRC.
Foreign Exchange Rates Risk
We do not hold any derivative instruments and do not engage in any hedging activities. Because most of our purchases and sales are made in RMB, any exchange rate change affecting the value of the RMB relative to the U.S. dollar could have an effect on our financial results as reported in U.S. dollars. If the RMB were to depreciate against the U.S. dollar, amounts reported in U.S. dollars would be correspondingly reduced. If the RMB were to appreciate against the U.S. dollar, amounts reported in U.S. dollars would be correspondingly increased.
Country Risk
Substantially all of our assets and operations are located and conducted in China. While the PRC economy has experienced significant growth in the past twenty years, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall economy of China, but may also have a negative effect on us. For example, our operating results and financial condition may be adversely affected by government control over capital investments or changes in tax regulations applicable to us. If there are any changes in any policies by the Chinese
government and our business is negatively affected as a result, then our financial results, including our ability to generate revenues and profits, will also be negatively affected.
11
Contractual Obligations
|
Payments Due By Period
|
|||||||||||||||||||
Contractual Obligations (US$)
|
Total
|
Less than
1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
|||||||||||||||
Bank Indebtedness
|
(SEE TABLE BELOW)
|
|||||||||||||||||||
Other Indebtedness
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||
Capital Lease Obligations
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||
Operating Lease Obligations
|
(SEE TABLE BELOW)
|
|||||||||||||||||||
Purchase Obligations
|
(SEE TABLE BELOW)
|
|||||||||||||||||||
Other Long-Term Liabilities Reflected on the Company’s Balance Sheet under US GAAP
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||
Total:
|
0
|
0
|
0
|
0
|
0
|
Bank indebtedness (US$)
|
September 30, 2010
|
March 31, 2010
|
||||||
Short-term bank borrowings
|
US$ | 41,336,000 | US$ | 46,141,000 | ||||
Notes payable (within (1) year)
|
US$ | 41,038,000 | US$ | 35,504,000 | ||||
Total
|
US$ | 82,374,000 | US$ | 81,645,000 |
Purchase Obligations (US$)
|
September 30, 2010
|
March 31, 2010
|
||||||
Construction Projects and Purchase of Land and Machineries
|
US$ | 160,187,000 | US$ | 84,000 | ||||
Total
|
US$ | 160,187,000 | US$ | 84,000 |
Operating Lease Obligations (US$)
|
September 30, 2010
|
March 31, 2010
|
||||||
Within one (1) year
|
US$ | 625,000 | US$ | 599,000 | ||||
1-3 years
|
US$ | 1,307,000 | US$ | 1,291,000 | ||||
3-5 years
|
US$ | 304,000 | US$ | 604,000 | ||||
Over five (5) years
|
US$ | 0 | US$ | 0 | ||||
Total
|
US$ | 2,236,000 | US$ | 2,494,000 |
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. Based on this evaluation, our management, including our principal executive officer and our principal financial officer, concluded that our disclosure controls and procedures were effective as of September 30, 2010, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act (i) is recorded, processed, summarized and reported
within the time period specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow appropriate decisions on a timely basis regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting that was identified in connection with such evaluation that occurred during the period ended September 30, 2010 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
12
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, we are named as defendant in lawsuits in which claims are asserted against us. In our opinion, the liabilities, if any, which may ultimately result from such lawsuits, are not expected to have a material adverse effect on our financial position, results of operations or cash flows. As of September 30, 2010, there was no pending or outstanding material litigation with the Company.
ITEM 1A. RISK FACTORS
Not required for a "smaller reporting company".
ITEM 2. UREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the period ended September 30, 2010, the Company had no unregistered sales of equity securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
(a) Exhibits
EXHIBIT NO.
|
DESCRIPTION
|
LOCATION
|
||
2.1
|
Share Exchange Agreement, dated November 12, 2008, by and among World Trophy Outfitters, Inc., Fast More Limited, Cheer Gold Development Ltd. and Floster Investment Limited
|
Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
3.1
|
Articles of Incorporation of World Trophy Outfitters, Inc. (n/k/a Chisen Electric Corporation)
|
Incorporated by reference to Exhibit 3(i).1 to the Registrant’s Registration Statement on Form SB-2 as filed with the SEC on September 23, 2005
|
||
3.2
|
Certificate of Amendment to Articles of Incorporation of Chisen Electric Corporation (name change)
|
Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
3.3
|
Amended and Restated Bylaws of Chisen Electric Corporation
|
Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
3.4
|
Certificate of Incorporation of Fast More Limited, dated December 17, 2007
|
Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
13
3.5
|
Memorandum and Articles of Association of Fast More Limited, dated as of December 17, 2007
|
Incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
3.6
|
Certificate of Incorporation of Changxing Chisen Electric Co., Ltd.
|
Incorporated by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
3.7
|
Articles of Association of Changxing Chisen Electric Co., Ltd.
|
Incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.1
|
Agreement on Establishment of Changxing Chisen Physical Chemistry Power Research and Development Center, dated April 30, 2008
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.2
|
Form of Labor Contract
|
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.3
|
Lease Agreement, dated March 30, 2008, by and between Changxing Chisen Electric Co., Ltd. and Changxing Xiangyi Industrial Park Investment Co., Ltd.
|
Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.4
|
Contract For Loan on Guarantee, by and among Zhejiang Changxing Agricultural Cooperative Bank, Changxing Chisen Electric Co., Ltd. and Zhejiang Chisen Glass Co., Ltd.
|
Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.5
|
Renminbi Loan Contract, dated January 11, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Corporation (Changxing Branch)
|
Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.6
|
Renminbi Loan Contract, dated April 11, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Corporation (Changxing Branch)
|
Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
10.7
|
Renminbi Loan Contract, dated March 31, 2008, by and between Changxing Chisen Electric Co., Ltd. and Bank of China (Hong Kong) Limited Shanghan Branch
|
Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.8
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Loan Contract (Short Term), dated August 15, 2008, by and between Changxing Chisen Electric Co., Ltd. and Bank of China Changxing Branch
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Incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.9
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Acceptance Agreement, dated August 25, 2008, by and between Changxing Chisen Electric Co., Ltd. and Industrial Bank Co., Ltd. Hangzhou Branch
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Incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.10
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Acceptance Agreement of Commercial Bill, dated September 18, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Bank Co., Ltd. Changxing Branch
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Incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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14
10.11
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Cooperation Agreement, dated April 20, 2008, by and between Changxing Chisen Electric Co., Ltd. and Xiamen University
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Included by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K as filed with the SEC on June 28, 2010
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10.11
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Acceptance Agreement of Commercial Bill, dated July 29, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Changxing Branch Co., Ltd.
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Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.12
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Acceptance Agreement of Commercial Bill, dated September 9, 2008, by and between Changxing Chisen Electric Co., Ltd. and China Construction Bank Changxing Branch Co., Ltd.
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Incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.13
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Components Purchase Contract, effective as of January 1, 2008, by and between Changxing Chisen Electric Co., Ltd. and Jiangsu Xinri Electric Bicycle Co., Ltd.
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Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.14
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Supply Contract, dated April 22, 2008, by and between Changxing Chisen Electric Co., Ltd. and Jiangsu Yadea Science & Technology Development Co., Ltd.
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Incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.15
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Sales Contract of Battery, dated November 10, 2007, by and between Changxing Chisen Electric Co., Ltd. and Hu Qinzhong, Yancheng Office
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Incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
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10.16
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Sales Contract of Battery, dated February 17, 2008, by and between Changxing Chisen Electric Co., Ltd. and Song Chunwei
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Incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
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10.17
|
Compensation Agreement of Corporate Relocation Acquisition, dated August 20, 2010, by and between the Company’s chief operating subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing Economic Development Zone, Zhejiang
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Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on August 24, 2010.
|
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10.18
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Investment Agreement, dated August 20, 2010, by and between the Company’s chief operating subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing Economic Development Zone, Zhejiang
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Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K as filed with the SEC on August 24, 2010.
|
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10.19
|
Supplemental Agreement, dated August 20, 2010, by and between the Company’s chief operating subsidiary, Changxing Chisen Electric Co., Ltd., and the Administrative Committee of Changxing Economic Development Zone, Zhejiang
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Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K as filed with the SEC on August 24, 2010.
|
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10.20
|
Xuyi Economic Development Zone Project Investment Contract, dated September 6, 2010, by and between Chisen Electric Jiangsu Co., Ltd. and Jiangsu Xuyi Economic Development Zone Administrative Committee
|
Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on September 13, 2010.
|
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10.21
|
Xuyi Economic Development Zone Project Investment Contract Supplemental Agreement, dated September 6 2010, by and between Chisen Electric Jiangsu Co., Ltd. and Jiangsu Xuyi Economic Development Zone Administrative Committee
|
Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K as filed with the SEC on September 13, 2010.
|
15
14.1
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Code of Business Conduct and Ethics
|
Incorporated by reference to Exhibit 14.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
16.1
|
Letter to SEC from Pritchett, Siler & Hardy, P.C.
|
Incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K as filed with the SEC on January 21, 2009
|
||
17
|
Resignation of Mathew Evans, dated November 12, 2008
|
Incorporated by reference to Exhibit 17 to the Company’s Current Report on Form 8-K as filed with the SEC on November 12, 2008
|
||
21
|
List of Subsidiaries
|
Included by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K as filed with the SEC on June 28, 2010
|
||
31.1
|
Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Provided herewith
|
||
31.2
|
Certifications of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Provided herewith
|
||
32.1
|
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
|
Provided herewith
|
||
32.2
|
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
|
Provided herewith
|
||
99.1
|
Audit Committee Charter, dated January 15, 2009
|
Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
99.2
|
Compensation Committee Charter, dated January 15, 2009
|
Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
||
99.3
|
Corporate Governance and Nominating Committee Charter, dated January 15, 2009
|
Incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K as filed with the SEC on February 4, 2009
|
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Amendment No. 1 to the Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 28, 2011
|
By:
|
/s/ Xu Kecheng
|
|
Name: Xu Kecheng
|
|||
Its: President, Chief Executive Officer and
Principal Executive Officer
|
|||
Date: February 28, 2011
|
By:
|
/s/ Liu Chuanjie
|
|
Name: Liu Chuanjie
|
|||
Its: Chief Financial Officer, Principal
Financial and Accounting Officer
|
17