CH Lighting International (SBTI) 10-Q 2010 Q2 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2010

OR

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

For the transition period from ______ to __________

COMMISSION FILE NUMBER: 000-32161

CH LIGHTING INTERATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	20-3828148
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

658 Hongyan Road, Economic Development Zone, Shangyu City, Zhejiang Province,

The People’s Republic of China 312300

(Address of principal executive offices)

(011)86 575 8212 7538

(Registrant’s Telephone Number, Including Area Code)

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

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

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 o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x 

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.  Yes  o No x 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:  As of May 13, 2010, the registrant had 120,000,000 shares of common stock, par value $0.001 per share, issued and outstanding.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	4
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	20
ITEM 4. CONTROLS AND PROCEDURES	20
PART II OTHER INFORMATION	22
ITEM 1. LEGAL PROCEEDINGS	22
ITEM 1A. RISK FACTORS	22
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS	22
ITEM 5. OTHER INFORMATION	22
ITEM 6. EXHIBITS	22
SIGNATURES	24

2

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

 FINANCIAL STATEMENTS

TABLE OF CONTENTS

CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2010 (UNAUDITED) AND SEPTEMBER 30, 2009	PAGE	F1-F2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)		F3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)		F4-F5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)		F6-F31

3

 CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		September 30,
	2010		2009
(In thousands except par value and number of shares)	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	3,303	$	2,792
Restricted cash		62,733		37,342
Accounts receivable, net of allowance for doubtful accounts of $2,095 and $2,167 at March 31, 2010 and September 30, 2009		20,151		18,346
Inventories, net		11,356		12,260
Other receivables		530		395
Due from employees		247		255
Prepayments		755		284
Deferred tax assets		330		454
Notes receivable from unrelated parties, current portion, net of discount of $9 at March 31, 2010		226		-
Notes receivable from related parties, current portion, net of discount of $1,433 at March 31, 2010		35,607		-
Short-term notes receivable from unrelated parties		7,839		2,118
Short-term notes receivable from related parties		-		10,573
Total Current Assets		143,077		84,819
Long-Term Assets
Property, plant and equipment, net		23,670		13,786
Construction in progress		1,505		1,500
Prepayment for equipment		1,626		1,897
Long-term notes receivable from unrelated parties, net of discount of $71 at September 30, 2009		-		1,041
Long-term notes receivable from related parties, net of discount of $2,349 at September 30, 2009		-		34,574
Land use rights, net		822		839
Total Long-Term Assets		27,623		53,637
TOTAL ASSETS		170,700		138,456
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		16,294		17,645
Short-term bank borrowings		107,296		75,085
Notes payable		15,078		16,041
Accrued expenses and other current liabilities		2,389		2,394
Customer deposits		2,287		2,038
Due to related parties		190		164
Income tax payable		292		200
Financial obligations, sale-lease back, net-current portion		1,609		2,413
Total Current Liabilities		145,435		115,980
Long-Term Liabilities
Financial obligations, sale-lease back, net-long-term portion		-		624
Deferred tax liabilities		3,867		1,304
Total Long-Term Liabilities		3,867		1,928
TOTAL LIABILITIES	$	149,302	$	117,908

See accompanying notes to the condensed consolidated financial statements.

F-1

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		September 30,
	2010		2009
(In thousands except par value and number of shares)	(Unaudited)
	$		$
COMMITMENTS AND CONTINGENCIES
EQUITY
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 share issued and outstanding		-		-
Common stock, $0.001 par value, 500,000,000 shares authorized, 120,000,000 shares issued and outstanding		120		120
Additional paid-in capital		1,707		1,500
Statutory reserves		1,238		1,168
Accumulated other comprehensive income		1,679		1,601
Retained earnings		16,588		16,093
Total Stockholders’ Equity		21,332		20,482
NON-CONTROLLING INTEREST		66		66
TOTAL EQUITY		21,398		20,548
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	170,700	$	138,456

See accompanying notes to the condensed consolidated financial statements.

F-2

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended March 31,						Six Months Ended March 31,
	2010			2009			2010			2009
(In thousands except net income per share and number of shares)
REVENUES	$	11,721		$	7,194		$	26,786		$	22,291
REVENUES FROM GOVERNMENT SUBSIDIES		261			1,191			1,870			4,283
TOTAL REVENUES		11,982			8,385			28,656			26,574
COST OF SALES		(9,073	)		(6,123	)		(22,494	)		(17,110	)
GROSS PROFIT		2,909			2,262			6,162			9,464
Selling, marketing and distribution expenses		(691	)		(619	)		(1,310	)		(2,473	)
General and administrative expenses		(970	)		(822	)		(2,643	)		(2,049	)
TOTAL OPERATION EXPENSES		(1,661	)		(1,441	)		(3,953	)		(4,522	)
INCOME FROM OPERATIONS		1,248			821			2,209			4,942
Amortization of discount on notes receivable		468			-			985			-
Interest income		147			610			413			1,853
Interest expense		(1,446	)		(1,004	)		(2,907	)		(2,092	)
Other government subsidies		29			3			63			196
Other (expenses) income		(25	)		10			(29	)		20
INCOME BEFORE INCOME TAXES		421			440			734			4,919
Income tax (expense) benefit		(94	)		36			(169	)		(532	)
NET INCOME		327			476			565			4,387
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain, net of tax		-			34			78			37
COMPREHENSIVE INCOME	$	327		$	510		$	643		$	4,424
NET INCOME PER SHARE ATTRIBUTABLE TO CONTROLLING INTEREST, BASIC AND DILUTED	$	0.003		$	0.004		$	0.005		$	0.037
WeWEIGHTED-AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		120,000,000			120,000,000			120,000,000			120,000,000

See accompanying notes to the condensed consolidated financial statements.

F-3

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended March 31,
	2010			2009
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	565		$	4,387
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		779			777
Amortization of land use rights		19			19
Amortization of financial obligations, sale-lease back		187			-
Provision for slow-moving inventories		1			-
Amortization of notes receivable discount		(985	)		-
Government subsidies		-			(6	)
Imputed interest expense		-			(1,492	)
Deferred taxes		72			466
Stock-based employee compensation expense		207			-
Gain from disposition of equipment		(2	)		-
Changes in operating assets and liabilities, net of effects of acquisition:
(Increase) Decrease in:
Accounts receivable		(1,805	)		3,689
Other receivables		(135	)		(860	)
Prepayments		(471	)		824
Inventories		903			198
Increase (Decrease) in:
Accounts payable		(1,351	)		(4,294	)
Accrued expenses and other accrued liabilities		(1,105	)		193
Customer deposits		249			(831	)
Income tax payable		92			57
Net cash (used in) provided by operating activities:		(2,780	)		3,127
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(137	)		(1,998	)
Proceeds from disposition of equipment		1,077			-
Prepayment for equipment		271			-
Payment for acquisition, net of cash acquired		(7,845	)		-
Investment in restricted bank balances, net		-			(23,223	)
Repayment of long-term notes receivable from unrelated party		879			-
Increase in principal of long-term notes receivable from related parties		-			(1,046	)
Increase in principal of short-term notes receivable from unrelated parties		(5,710	)		-
Repayment of short-term notes receivable from a related party		10,573			-
Net cash used in investing activities:	$	(892	)	$	(26,267	)

See accompanying notes to the condensed consolidated financial statements.

F-4

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended December 31,
	2009			2008
	(In thousand)
CASH FLOWS FROM FINANCING ACTIVITIES
Restricted cash	$	(25,391	)	$	-
Proceeds from related parties		33			-
Proceeds from bills financing, net		-			29,506
Proceeds from notes payable		15,056			-
Repayment of notes payable		(16,032	)		(2,953	)
Proceeds from short-term bank borrowings		77,232			21,167
Repayment of short-term bank borrowings		(45,306	)		(22,837	)
Repayment of financial obligations, sale-leaseback		(1,615	)		(1,598	)
Net cash provided by financing activities		3,977			23,285
NET DECREASE IN CASH AND CASH EQUIVALENTS		305			145
Cash and cash equivalents, at beginning of year		2,792			3,154
Effect on exchange rate changes		206			6
CASH AND CASH EQUIVALENTS, AT END OF YEAR	$	3,303		$	3,305
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest received	$	370		$	361
Interest paid	$	2,616		$	2,092
SUPPLEMENTAL NON-CASH DISCLOSURES:
Settlement of bills financing with other financial assets	$	-		$	2,918

On March 31, 2010, the Company acquired 100% of the equity interest of Min Tai for $7,860 in cash. Also see Note 14. The following are the assets acquired and liabilities assumed at the date of the acquisition:

	March 31, 2010
Equipment, net	$	11,560
Cash		15
Total assets purchased		11,575
Other payables		(1,100	)
Deferred tax payable		(2,615	)
Total liabilities assumed		(3,715	)
Total net assets		7,860
Share percentage		100	%
Net assets acquired	$	7,860
Total consideration paid	$	7,860

See accompanying notes to the condensed consolidated financial statements.

F-5

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands except number of shares and par value)

1. BASIS OF PRESENTATION

CH Lighting International Corporation (“CH Lighting”), formerly known as Sino-Biotics, Inc., was incorporated on July 6, 2005 under the laws of the State of Delaware, and adopted its existing name effective on August 25, 2008. Its common stock is currently trade on the Over-The-Counter Bulletin Board (“OTCBB”) of NASDAQ under the symbol “CHHN”.

On July 16, 2008, CH Lighting entered into a Share Exchange Agreement (the “Exchange Agreement”) with CH International and KEG International Limited (“KEG”), a company incorporated in the British Virgins Islands. Pursuant to the Share Exchange Agreement, CH Lighting acquired all of the issued and outstanding common stock of CH International from KEG in exchange for 93,000,000 newly-issued shares of CH Lighting’s common stock, par value of $0.001, representing 77.5% of CH Lighting’s common stock issued and outstanding upon completion of the share exchange (the “Share Exchange Transaction”).

During the year ended September 30, 2008, CH Lighting (i) implemented a 1 for 1,000 reverse stock split and issued 128 shares for fractional share issuance on December 13, 2007, (ii) converted a $65 convertible promissory note and all related accrued interest into 25,999,998 shares of common stock on January 28, 2008, (iii) converted a $10 convertible promissory note and all related accrued interest into 3,000,000 shares of common stock on January 31, 2008 and (iv) implemented a 6 for 1 forward stock split on March 31, 2008. There were 29,180,616 shares of CH Lighting’s common stocks issued and outstanding immediately before the completion of the Share Exchange Transaction.

Upon completion of the Share Exchange Transaction (including, but not limited to, the cancellation of the 2,180,616 shares of CH Lighting’s common stock concurrent and simultaneous with the consummation of the Share Exchange Agreement), there were 120,000,000 shares of CH Lighting’s common stock issued and outstanding.

The acquisition by CH Lighting of CH International was deemed to be a reverse acquisition in accordance with generally accepted accounting principles. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, CH Lighting (the legal acquirer) is considered the accounting acquiree and CH International (the legal acquiree) is considered the accounting acquirer. The consolidated financial statements of the consolidated entity are in substance be those of CH International, with the assets and liabilities, and revenues and expenses, of CH Lighting being included effective from the date of completion of Share Exchange Transaction. CH Lighting is deemed to be a continuation of business of CH International. The outstanding common stock of CH Lighting prior to the Share Exchange Transaction is accounted for at net book value and no goodwill was recognized.

On March 31, 2010, the Company acquired from the Min Tai Lighting Corporation (“Min Tai”) shareholders all of the issued and outstanding shares of capital stock of Min Tai.  Min Tai is a company in the lighting industry located in Zhejiang Province of the PRC. See Note 14.

The unaudited condensed consolidated financial statements of CH Lighting International Corporation and subsidiaries (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, the information included in these interim financial statements reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The condensed consolidated balance sheet information as of September 30, 2009 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K. These interim financial statements should be read in conjunction with that report.

F-6

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

1. BASIS OF PRESENTATION (CONTINUED)

On July 1, 2009, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10 (formerly Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards Codification and Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162). ASC 105-10 establishes the FASB ASC as the source of authoritative accounting principles recognized by the FASB to be applied in preparation of financial statements in conformity with generally accepted accounting principles in the United States of America. The adoption of this standard had no impact on the Company’s condensed consolidated financial statements.

Basis of Consolidation

The condensed consolidated financial statements include the accounts of CH Lighting International Corporation and its wholly-owned subsidiaries. Inter-company accounts and transactions have been eliminated in consolidation.

2. SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available at the time the estimates are made; however, actual results when ultimately realized could differ from those estimates.

Revenue Recognition

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

The Company sells products to distributors and retail customers.  Title for the products passes when all of the above conditions are met.  There is no right of return for products sold unless there is a quality problem. At March 31, 2010 and September 30, 2009 there was no accrual for sales returns because historically the Company has not encountered returns.  There were no sales returns for the six months ended March 31, 2010 and 2009.

For products sold to retailers that were included in the government grant program (also see Note 15), in certain instances, distributors provided promotional and sales assistance to the Company, and the Company paid the distributors commissions on the sales. These products were sold and shipped directly to the retailers from the Company. Sales commissions were $65 and $341 for the six months ended March 31, 2010 and 2009, respectively, and were included in selling, marketing and distribution expenses in the statements of income.

Shipping and handling costs related to sales to third parties are reported as sales, marketing and distribution expenses.

Research and Development

Research and development activities are expensed and charged to general administrative expenses as incurred. Research and development costs were $995 and $393 for the six months ended March 31, 2010 and 2009, respectively.

F-7

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands except exchange rate)

2. SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (CONTINUED)

Foreign Currency Translation

The accompanying condensed consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). The condensed consolidated financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

	March 31, 2010		September 30, 2009		March 31, 2009
	(Unaudited)				(Unaudited)
Period ended RMB: $ exchange rate		6.8161		6.8376		-
Average Period RMB: $ exchange rate		6.8267		-		6.8504

Fair Value of Financial Instruments

Fair Value of Financial Instruments - ASC 820-10 (formerly SFAS 157) establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

(II) Level 1—defined as observable inputs such as quoted prices in active markets;

(III) Level 2—defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

(IV) Level 3—defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Cash and cash equivalents consist primarily of highly rated money market funds at a variety of well-known institutions with original maturities of three months or less. The original cost of these assets approximates fair value due to their short term maturity.

The carrying amounts of cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and short-term bank borrowings approximate their fair values due to the short-term nature of these instruments.

F-8

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

2. SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (CONTINUED)

Retirement Plan Costs

Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to operations as incurred. Retirement benefits amounting to $44 and $39 were charged to operations for the six months ended March 31, 2010 and 2009, respectively. Retirement benefits amounting to $88 and $81 were charged to operations for the six months ended March 31, 2010 and 2009, respectively.

Comprehensive Income

Comprehensive income is defined to include changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. Comprehensive income includes net income and the foreign currency translation gain, net of tax.

Recently Issued Accounting Pronouncements

Effective January 1, 2009, the Company adopted ASC 805 (formerly SFAS No. 141R, Business Combinations). ASC 805 requires an acquirer to measure the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. The adoption of ASC 805 did not have any effect on the Company’s condensed consolidated financial statements as of March 31, 2010.

Effective January 1, 2009, the Company adopted ASC 810-10 (formerly SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements). This Statement establishes accounting and reporting standards that require the ownership interests in subsidiaries’ non-parent owners be clearly presented in the equity section of the balance sheet; requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income; requires that changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently; requires that when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value and the gain or loss on the deconsolidation of the subsidiary be measured using the fair value of any noncontrolling equity; requires that entities provide disclosures that clearly identify the interests of the parent and the interests of the noncontrolling owners. The adoption of ASC 810-10 did not have a significant effect on the Company’s condensed consolidated financial statements as of March 31, 2010.

Effective January 1, 2009, the Company adopted ASC 815-10 (formerly SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities ), which amends SFAS No. 133 and expands disclosures to include information about the fair value of derivatives, related credit risks and a company’s strategies and objectives for using derivatives. The adoption of ASC 815-10 did not have a material effect on the condensed consolidated financial statements as of March 31, 2010.

F-9

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

2. SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (CONTINUED)

Recently Issued Accounting Pronouncements (Continued)

Effective January 1, 2009, the Company adopted ASC 815-40 (formerly Emerging Issues Task Force (“EITF”) Issue No. 07-05, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF 07-05”). ASC 815-40 addresses the determination of whether an instrument (or an embedded feature) is indexed to an entity’s own stock, which is the first part of the scope exception in paragraph 11(a) of FASB SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”). If an instrument (or an embedded feature) that has the characteristics of a derivative instrument under paragraphs 6–9 of SFAS 133 is indexed to an entity’s own stock, it is still necessary to evaluate whether it is classified in stockholders’ equity (or would be classified in stockholders’ equity if it were a freestanding instrument). Other applicable authoritative accounting literature, including Issues EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company Own Stock, and EITF 05-2, The Meaning of “Conventional Debt Instrument” in Issue No. 00-19, provides guidance for determining whether an instrument (or an embedded feature) is classified in stockholders’ equity (or would be classified in stockholders’ equity if it were a freestanding instrument). ASC 815-40 does not address that second part of the scope exception in paragraph 11(a) of SFAS 133. The adoption of ASC 815-40 did not have a material effect on the condensed consolidated financial statements as of March 31, 2010.

On April 1, 2009, the FASB approved ASC 805 (formerly FSP FAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies ) ,  which amends Statement 141R and eliminates the distinction between contractual and non-contractual contingencies. Under ASC 805, an acquirer is required to recognize at fair value an asset acquired or liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period. If the acquisition-date fair value cannot be determined, the acquirer applies the recognition criteria in SFAS No. 5,  Accounting for Contingencies  and Interpretation 14, “Reasonable Estimation of the Amount of a Loss – and interpretation of FASB Statement No. 5,” to determine whether the contingency should be recognized as of the acquisition date or after it. The adoption of ASC 805 did not have a material effect on the condensed consolidated financial statements as of March 31, 2010.

ASC 320-10 (formerly FSP FAS 115-2 and FAS 124-2) amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. It did not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. We are required to adopt ASC 320-10 for our interim and annual reporting periods ending after June 15, 2009. ASC 320-10 does not require disclosures for periods presented for comparative purposes at initial adoption. ASC 320-10 requires comparative disclosures only for periods ending after initial adoption. The adoption of ASC 320-10 did not have a material effect on the condensed consolidated financial statements as of March 31, 2010.

On April 9, 2009, the FASB also approved ASC 825-10 (formerly FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments )   to require disclosures about fair value of financial instruments in interim period financial statements of publicly traded companies and in summarized financial information required by APB Opinion No. 28,  Interim Financial Reporting . We are required to adopt ASC 825-10 for our interim and annual reporting periods ending after June 15, 2009. ASC 825-10 does not require disclosures for periods presented for comparative purposes at initial adoption. ASC 825-10 requires comparative disclosures only for periods ending after initial adoption. The adoption of ASC 825-10 did not have a material effect on the condensed consolidated financial statements as of March 31, 2010.

F-10

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands except number of customers, suppliers and percentages)

2. SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (CONTINUED)

Recently Issued Accounting Pronouncements (Continued)

In April 2009, the FASB updated guidance related to fair-value measurements to clarify the guidance related to measuring fair-value in inactive markets, to modify the recognition and measurement of other-than-temporary impairments of debt securities, and to require public companies to disclose the fair values of financial instruments in interim periods. This updated guidance became effective for the Company beginning 1, 2009. The adoption of this guidance did not have a material effect on the condensed consolidated financial statements as of March 31, 2010.

In June 2009, the FASB issued ASC 810-10 (formerly SFAS No. 167, Amendments to FASB Interpretation No. 46(R)). ASC 810-10 requires an enterprise to perform an analysis and ongoing reassessments to determine whether the enterprises variable interest or interests give it a controlling financial interest in a variable interest entity and amends certain guidance for determining whether an entity is a variable interest entity. It also requires enhanced disclosures that will provide users of financial statements with more transparent information about an enterprises involvement in a variable interest entity.  ASC 810-10 is effective as of the beginning of each reporting entity’s first annual  reporting period that begins after November 15, 2009 and for all interim reporting periods after that.  The adoption of this guidance did not have a material effect on the condensed consolidated financial statements as of March 31, 2010.

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires disclosure of transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons and the timing of the transfers and information on purchases, sales, issuance, and settlements on a gross basis in the reconciliation of the assets and liabilities measured under Level 3 of the fair value measurement hierarchy. This guidance is effective for the Company beginning March 1, 2010. The adoption of this guidance did not have a material effect on the condensed consolidated financial statements as of March 31, 2010.

3. EARNINGS PER SHARE

Basic earnings per share are 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 the six months ended March 31, 2010 and 2009.

F-11

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

4. CONCENTRATIONS

	Three Months Ended March 31,						Six Months Ended March 31,
	(Unaudited)						(Unaudited)
	2010			2009			2010			2009
Major customers with revenues of more than 10% of the Company’s sales Company’s revenues:
Revenues from major customers	$	2,468		$	2,272		$	7,748		$	2,711
Percentage of revenues		21	%		28	%		27	%		10	%
Number		1			1			2			1
Major suppliers with purchases of more than 10% of the Company’s purchases Company’s purchases:
Purchases from major supplier	$	833 2,445		$	2,167		$	2,445		$	1,472
Percentage of purchases		11	%		18	%		13	%		12	%
Number		1			1			1			1

Accounts receivable related to the Company’s major customers comprised 21% and 18% of all accounts receivable at March 31, 2010 and September 30, 2009, respectively.

Accounts payable related to the Company’s major supplier comprised 18% and 25% of all accounts payable at March 31, 2010 and September 30, 2009, respectively.

5. RESTRICTED CASH

Restricted cash at March 31, 2010 and September 30, 2009 represents time deposits with original maturities between six and twelve months to secure banking facilities granted by various financial institutions as follows:

				March 31,		September 30,
				2010		2009
	Note			(Unaudited)
Notes payable		12		$	14,346	$	13,057
Bills financing		13	(b)		45,438		19,890
Collateral for bank acceptance notes issued by a related party					-		1,463
A short-term bank loan		13	(a)		2,934		2,925
Others					15		7
				$	62,733	$	37,342

F-12

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

6. INVENTORIES

Inventories consist of the following:

	March 31,			September 30,
	2010			2009
	(Unaudited)
Raw materials	$	1,683		$	3,068
Work-in-progress and semi-finished goods		2,568			2,463
Finished goods		7,263			6,886
		11,514			12,417
Less: Provision for slow-moving inventories		(158	)		(157	)
Inventories, net	$	11,356		$	12,260

7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

			March 31,			September 30,
			2010			2009
	Note		(Unaudited)
At cost:
Buildings			$	7,014		$	6,967
Plant and machinery				18,381			7,987
Motor vehicles				1,033			1,002
Furniture, fixtures and office equipment				1,202			1,181
Assets recorded under financial obligations, sale-leaseback		16		3,295			3,313
				30,925			20,450
Less: Accumulated depreciation
Buildings				(1,863	)		(1,683	)
Plant and machinery				(2,887	)		(2,726	)
Motor vehicles				(499	)		(453	)
Furniture, fixtures and office equipment				(831	)		(778	)
Assets recorded under financial obligations, sale-leaseback				(1,175	)		(1,024	)
				(7,255	)		(6,664	)
Property, plant and equipment, net			$	23,670		$	13,786

Depreciation expense was $779 and $777 for the six months ended March 31, 2010 and 2009, respectively.

The Company pledged certain buildings and machinery as collateral against short-term bank loans. See Note 13(a).

F-13

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

8. LAND USE RIGHTS

Land use rights consist of the following:

	March 31,			September 30,
	2010			2009
	(Unaudited)
Cost of land use rights	$	1,143		$	1,140
Less: Accumulated amortization		(321	)		(301	)
Land use rights, net	$	822		$	839

Amortization expense for the six months ended March 31, 2010 and 2009 was $19 and $19, respectively.

The Company pledged land use rights as collateral against short-term bank loans. See Note 13(a).

9. RELATED PARTY TRANSACTIONS

(a) Names and Relationship of Related Parties:

	Existing Relationships With the Company
Mr. Zhao	Director and controlling stockholder of the Company
Ms. Gan	Director of the Company and spouse of Mr. Zhao
Shangyu Chenhui Childcare Products Company Limited (“CH Childcare”) *	Under common control of Mr. Zhao
Shaoxing Umbrella Factory (“SX Umbrella”) *	Under common control of Mr. Zhao
Shangyu Hecheng Plastic and Metal Products Company Limited (“Hecheng”)*	Under common control of Mr. Zhao
Shangyu Henghui Electronic Products Manufacturing Company Limited (“Henghui”) *	Under common control of Mr. Zhao
Zhejiang Chenhui Yingbao Childcare Products Company Limited (“Yingbao Childcare”) *	Under common control of Mr. Zhao

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

F-14

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

9.  RELATED PARTY TRANSACTIONS (CONTINUED)

(b) Summary of Related Party Transactions:

				March 31,		September 30,
				2010		2009
				(Unaudited)
		Note
Mr. Zhao and Ms. Gan	Mr. Zhao and Ms. Gan provided guarantees for short-term bank loans borrowed by the Company	13	(a)	$	20,672	$	17,711
Henghui	The Company provided cash as collateral for the bank acceptance notes issued by Henghui				-		1,463
	Henghui provided a guarantee for a short-term bank loan borrowed by the Company	13	(a)		513		512
	The Company had a short-term note receivable from Henghui	9	(d)		-		10,573
	The Company had a long-term note receivable from Henghui	9	(e)		18,802		18,256
Yingbao Childcare	Yingbao Childcare provided a guarantee for the financial obligations, sale-leaseback borrowed by the Company	16			643		2,413
	The Company had a long-term notes receivable from Yingbao Childcare	9	(e)		16,805		16,318
	Yingbao Childcare provided a guarantee for the short-term bank loans borrowed by the Company	13	(a)	$	10,857	$	10,823

		Six Months Ended March 31, (Unaudited)
		2010		2009
Henghui	The Company had interest income of note receivable from Henghui	$	-	$	1,492
SX Umbrella	The Company paid a rental fee to SX Umbrella for renting a dorm	$	7	$	7

F-15

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

9.  RELATED PARTY TRANSACTIONS (CONTINUED)

(c)  Summary of Balances with Related Parties:

	March 31,		September 30,
	2010		2009
	(Unaudited)
Due from employees	$	247	$	255
	$	247	$	255

Amounts due from employees are interest-free, unsecured and have no fixed repayment terms. They primarily represent advances to sales personnel of the Company for business and travelling related expenses.

	March 31,		September 30,
	2010		2009
	(Unaudited)
Due to related parties:
Mr. Zhao	$	143	$	125
SX Umbrella		47		39
	$	190	$	164

Amounts due to related parties represent unsecured advances, which are interest-free and repayable on demand.

(d)  Short-Term Notes Receivable from Related Party

		March 31,			September 30,
		2010			2009
		(Unaudited)
Henghui, due December 31, 2009, repaid on due date	a)		$	-	$	115
Henghui, due March 31, 2010, repaid on due date	b)			-		10,458
Total			$	-	$	10,573

The interest-free and secured by Mr. Zhao notes denoted a) and b) were provided to a related company for its assistance in providing a guarantee for bank loans borrowed by the Company.

F-16

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

9.  RELATED PARTY TRANSACTIONS (CONTINUED)

(e) Long-Term Notes Receivable from Related Parties

		March 31,		September 30,
		2010		2009
		(Unaudited)
Yingbao Childcare, due December 31, 2010, net of  discount of $676 and $1,108 at March 31, 2010 and September 30, 2009, respectively	a)	$	16,805	$	16,318
Henghui, due December 31, 2010, net of discount of $757 and $1,239, at March 31, 2010 and September 30, 2009, respectively	b)		18,802		18,256
Long-term Notes Receivable From Related Parties			35,607		34,574
Less: Current portion			35,607		-
Long-term portion		$	-	$	34,574

In October 2008, $36,921 interest-free notes were provided to related companies a) and b) for their assistance in developing distribution channels and new markets for the Company. The Company recorded non-cash marketing expense and discounts on the notes receivable of $3,376 based on the present value of the notes receivable using a 5.4% rate.

The amortization of discount, relating to the notes for the six months ended March 31, 2010 and 2009 was $923 and $559, respectively.

10.  SHORT-TERM NOTES RECEIVABLE FROM UNRELATED PARTIES

The short-term notes receivable from unrelated parties consist of the following:

		March 31,		September 30,
		2010		2009
		(Unaudited)
Due December 31, 2009, repaid on due date	a)	$	-	$	731
Due August 31, 2010	b)		1,204		948
Due August 3, 2010	c)		-		439
Due November 30, 2010	d)		6,635		-
Total		$	7,839	$	2,118

The unsecured notes denoted a) and c) were provided to an unrelated company for its assistance in providing a guarantee for bank loans borrowed by the Company, and bears a 4.79% and 4.28% interest rate per annum, respectively.  Interest income was $15 and $0 for the six months ended March, 31 2010 and 2009, respectively. 

The interest-free, unsecured notes denoted b) and d) were provided to unrelated companies for their assistance in providing a guarantee for bank loans borrowed by the Company.

F-17

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

11.  LONG-TERM NOTES RECEIVABLE FROM UNRELATED PARTIES

The long-term notes receivable from unrelated parties consist of the following:

		March 31,		September 30,
		2010		2009
		(Unaudited)
Due December 31, 2010, net of discount of $1 at March 31, 2010 and September 30, 2009	a)	$	36	$	34
Due December 31, 2010, net of discount of $1 at March 31, 2010 and September 30, 2009	b)		36		34
Due December 31, 2010, net of discount of $7 at March 31, 2010 and September 30, 2009	c)		154		151
Due December 31, 2010, repaid on December 31, 2009	d)		-		822
Subtotal			226		1,041
Less: Current portion			226		-
Long-term portion		$	-	$	1,041

In October 2008, interest-free notes were provided to an unrelated company a) for its assistance in developing distribution channels and new markets for the Company. The Company recorded non-cash marketing expense and discounts on the notes receivable of $4 based on the present value of the notes receivable using a 5.4% rate.

In September 2009, interest-free notes were provided to unrelated companies b), c) and d) for their assistance in developing distribution channels and new markets for the Company. The Company recorded non-cash marketing expense and discounts on the notes receivable of $68 based on the present value of the notes receivable using a 5.4% rate. The unamortized discount on note denoted d) was $55, which was transferred to amortization of discount on notes receivable, with the settlement of the principal at March 31, 2010.

The amortization of discount, relating to the notes denoted a), b) and c) for the six months ended March 31, 2010 and 2009 was $62 and $1, respectively.

F-18

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

12.  NOTES PAYABLE

The notes payable consist of the following:

	March 31,		September 30,
	2010		2009
	(Unaudited)
Due April 10, 2010, subsequently repaid on due date	$	215	$	-
Due April 12, 2010, subsequently repaid on due date		313		-
Due May 3, 2010, subsequently repaid		576		-
Due May 20, 2010		1,467		-
Due May 25, 2010		1,467		-
Due June 3, 2010		482		-
Due June 9, 2010		1,467		-
Due June 10, 2010		1,467		-
Due June 11, 2010		1,467		-
Due June 17, 2010		1,907		-
Due June 24, 2010		734		-
Due July 12, 2010		755		-
Due July 28, 2010		1,467		-
Due August 8, 2010		698		-
Due September 8, 2010		291		-
Due September 9, 2010		158		-
Due September 17, 2010		147		-
Due before March 31, 2010, subsequently repaid on due date		-		16,041
	$	15,078	$	16,041

All the notes payable are bank acceptance notes and subject to bank charges of 0.05% of the principal amount as commission on each loan transaction. Bank charges for notes payable were $65 and $942 for the six months ended March 31, 2010 and 2009, respectively.

Notes payable are secured by $14,346 and $13,057 restricted cash at March 31, 2010 and September 30, 2009, respectively. See Note 5.

13.  SHORT-TERM BANK BORROWINGS

The short-term bank borrowings consist of the following:

			March 31,		September 30,
			2010		2009
	Note		(Unaudited)
Short-term bank loans	13	(a)	$	55,956	$	55,195
Bills financing	13	(b)		51,340		19,890
			$	107,296	$	75,085

F-19

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

13.  SHORT-TERM BANK BORROWINGS (CONTINUED)

(a) Short-Term Bank Loans

The short-term bank loans consist of the following:

			March 31,		September 30,
			2010		2009
	Note		(Unaudited)
Due April 4, 2010, subsequently repaid before due date			$	-	$	1,463
Due April 9, 2010, subsequently repaid on due date				734		731
Due April 12, 2010, subsequently repaid on due date				1,467		-
Due April 17, 2010, subsequently repaid on due date				2,934		2,925
Due April 22, 2010, subsequently repaid before due date				-		731
Due April 29, 2010, subsequently repaid on due date				161		-
Due April 30, 2010, subsequently repaid on due date				1,761		1,755
Due May 5, 2010, subsequently repaid on due date				1,467		-
Due May 18, 2010				2,201		2,194
Due May 28, 2010				1,717		761
Due June 4, 2010	9	(b)		513		-
Due June 7, 2010				734		731
Due June 10, 2010				2,201		2,194
Due June 11, 2010				1,203		-
Due June 14, 2010				440		439
Due June 25, 2010				734		731
Due June 28, 2010				3,653		3,642
Due July 14, 2010				1,467		1,463
Due July 15, 2010	9	(b)		5,868		5,850
Due August 3, 2010				1,555		1,550
Due August 4, 2010	9	(b)		4,989		4,973
Due August 19, 2010				1,467		1,463
Due August 21, 2010				1,467		1,463
Due September 1, 2010				2,876		-
Due September 3, 2010				1,761		-
Due September 10, 2010				1,467		-
Due September 25, 2010				2,934		-
Due November 9, 2010				998		-
Due December 10, 2010				2,934		-
Due January 6, 2011				1,467		-
Due January 8, 2011				1,467		-
Due January 28, 2011				587		-
Due February 1, 2011				732		-
Due before March 31, 2010, subsequently repaid on due date				-		20,136
Total			$	55,956	$	55,195

F-20

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

13.  SHORT-TERM BANK BORROWINGS (CONTINUED)

Short-term bank loans are collateralized by land use rights, property, plant and equipment and restricted cash of the Company with carrying values as follows:

		March 31,		September 30,
		2010		2009
	Note	(Unaudited)
Land use rights	8	$	822	$	839
Property, plant and equipment	7		4,384		4,371
Restricted cash	5		2,934		2,925
		$	8,140	$	8,135

Various parties have also provided guarantees against these short-term bank loans as follows:

			March 31,		September 30,
			2010		2009
	Note		(Unaudited)
Corporate guarantees provided by related parties	9	(b)	$	32,042	$	17,711
Corporate guarantees provided by unrelated parties	19		$	29,460	$	23,927

The weighted average annual interest rates of the short-term bank loans were 5.43% and 5.62% as of March 31, 2010 and September 30, 2009, respectively. Interest expense was $1,591 and $1,335 for the six months ended March 31, 2010 and 2009, respectively.

F-21

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

13.  SHORT-TERM BANK BORROWINGS (CONTINUED)

(b) Bills Financing

The bills financing consists of the following:

	March 31,		September 30,
	2010		2009
	(Unaudited)
Due April 15, 2010, subsequently repaid on due date	$	1,761	$	-
Due April 30, 2010, subsequently repaid on due date		2,934		-
Due May 12, 2010, subsequently repaid on due date		1,174		-
Due May 24, 2010		4,401		-
Due May 26, 2010		1,467		-
Due June 1, 2010		1,467		-
Due June 8, 2010		2,641		-
Due June 16, 2010		734		-
Due June 18, 2010		1,467		-
Due June 24, 2010		3,228		-
Due July 8, 2010		1,467		-
Due July 13, 2010		734		-
Due July 14, 2010		1,467		-
Due July 22, 2010		3,228		-
Due July 25, 2010		1,284		-
Due August 5, 2010		2,083		-
Due August 25, 2010		2,201		-
Due August 26, 2010		880		-
Due September 8, 2010		1,467		-
Due September 9, 2010		1,467		-
Due September 10, 2010		1,467		-
Due September 11, 2010		1,467		-
Due September 15, 2010		1,467		-
Due September 16, 2010		1,467		-
Due September 17, 2010		1,320		-
Due September 22, 2010		1,467		-
Due September 29, 2010		5,133		-
Due before March 31, 2010, subsequently repaid on due date		-		19,890
Total	$	51,340	$	19,890

The bills are secured restricted cash of the Company of $45,438 and$19,890 at March 31, 2010 and September 30, 2009, respectively. See Note 5.

The weighted average annual interest rates of the bills financing were 3.02% and 2.14% as of March 31, 2010 and September 30, 2009, respectively. Interest expense was $837 and $342 for the six months ended March 31, 2010 and 2009, respectively.

F-22

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands except net income per share)

14.  ACQUISITION

On March 31, 2010, the Company acquired from the Min Tai Lighting Corporation (“Min Tai”) shareholders all of the issued and outstanding shares of capital stock of Min Tai for $7,860 in cash.  Min Tai is a company in the lighting industry located in Zhejiang Province of the PRC.

Min Tai started operations from December 2009, and had no revenue or expenses up to March 31, 2010. Therefore Min Tai’s operation has no substantial effect on the net income of the Company for the six months ended March 31, 2010.

        The following are the assets acquired and liabilities assumed:

	March 31, 2010
Equipment	$	11,560
Cash		15
Total assets purchased		11,575
Other payable		(1,100	)
Deferred tax payable		(2,615	)
Total liabilities assumed		(3,715	)
Net assets acquired		7,860
Total consideration paid	$	7,860

The fair value of the equipment of $11,560 was determined by the management with reliance on a valuation report prepared by an independent appraisal firm named Greater China Appraisal Limited.

F-23

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

15. GOVERNMENT SUBSIDIES

Since 2008 the central government of the PRC agreed to grant the Company subsidies for selling energy - saving lighting products at a discount price on a condition that the products are sold to retail customers. Revenues of $1,870 and $4,283 were recorded as revenue derived from government subsidies for the six months ended March 31, 2010 and 2009. Of the total, $1,525 of the government subsidies revenue recognized in the six months ended March 31, 2009 was associated with the sales for the year ended September 30, 2008. As the Company sold their products to distributors rather than retail customers for the year ended September 30, 2008, they were not able to make an appropriate estimate for the amount of the government subsidies receivable then. Therefore, such amount was recorded as revenue derived from government subsidies upon receipt for the six months ended March 31, 2009. The remaining $1,870 and $2,758 of the government subsidies revenue was associated with the sales made during the six months ended March 31, 2010 and 2009, respectively. Since the Company changed their selling strategy and sold products directly to retail customers, they were able to make an appropriate estimate for the amount of government subsidies receivable, and therefore, such amount was recorded as revenue derived from government subsidies for the six months ended March 31, 2010. The government subsidies receivable of $1,870 is included in the accounts receivable balance at March 31, 2010.

For the six months ended March 31, 2010 and 2009 the Company was granted and received unconditional government subsidies of $63 and $196 for its achievement in developing new technology, which were recorded as other income. The Company recognized such government subsidies as income upon receipt because these subsidies are unconditional and for the Company’s past achievement.

F-24

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

16. FINANCIAL OBLIGATIONS, SALE-LEASEBACK

In September 2007, the Company refinanced its machinery under a sale-leaseback arrangement. Under the sale-leaseback agreement, the facility was sold for RMB 30,000 ($4,376) and concurrently, the Company leased the facility back for an amount aggregating RMB 30,000 ($4,376) with a weighted average interest rate of 8.16%, payable in periodic installments through September 2010. Among the selling price of RMB 30,000 ($4,376), RMB 20,000 ($2,917) was received in cash, and the remaining balance of RMB 10,000 ($1,459) was treated as an interest bearing security deposit to be applied to future lease payments. The transaction was accounted for as a financing arrangement, wherein the property remains on the Company’s books and will continue to be depreciated. A financial obligation in the amount of RMB 20,000 ($2,917), representing the net proceeds of the sale, was presented as “Financial obligations, sale-leaseback” in the Company’s Balance Sheets, and is being reduced by lease payments under the financial obligation. The Company has an option to purchase the facility for RMB 300 ($44) at the expiration of the lease. The financial obligation is guaranteed by Yinbao Childcare, a related party of the Company. See Note 9(b).

In June 2008, the Company refinanced its machinery under a sale-leaseback arrangement. Under the sale-leaseback agreement, the facility was sold for RMB 40,000 ($5,835) and concurrently, the Company leased the facility back for an amount aggregating RMB 40,000 ($5,835) with a weighted average interest rate of 8.16%, payable in periodic installments through June 2011. Among the selling price of RMB 40,000 ($5,835), RMB 26,666 ($3,889) was received in cash, and the remaining balance of RMB 13,334 ($1,946) was treated as an interest bearing security deposit to be applied to future lease payments. The transaction was accounted for as a financing arrangement, wherein the property remains on the Company’s books and will continue to be depreciated. A financial obligation in the amount of RMB 26,666 ($3,889), representing the net proceeds of the sale, was presented as “Financial obligations, sale-leaseback” in the Company’s Balance Sheets, and is being reduced by lease payments under the financial obligation. The Company has an option to purchase the facility for RMB 400 ($58) at the expiration of the lease.

	March 31,			September 30,
	2010			2009
	(Unaudited)
Financial obligations, sale-leaseback	$	6,847		$	6,825
Less: Accumulated amortization		(5,238	)		(3,788	)
Financial obligations, sale-leaseback, net		1,609			3,037
Less: Current portion		1,609			2,413
Long-term portion	$	-		$	624

As of March 31, 2010, future minimum payments required under non-cancellable sale-leaseback are:

Year Ended March 31,	Amount
	(Unaudited)
2011	$	1,887
Total minimum lease payments		1,887
Less: Amount representing interest		278
Present value of net minimum lease payments	$	1,609

Amortization of the financial obligations for the six months ended March 31, 2010 and 2009 was $187 and $274, respectively.

F-25

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

17. INCOME TAXES

(a) Corporation Income Tax (“CIT”)

At March 31, 2010, the Company had US federal net operating loss carryforward of approximately $266 expiring beginning in 2009 in varying amounts through 2028.

FASB ASC 740 (formerly SFAS No. 109 Accounting for Income Taxes) requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. The Company estimates they will not have net operating income in the United States.  As such, the Company recorded a 100% valuation allowance against its net deferred tax asset associated with net operating loss carry forward as of March 31, 2010.

The People’s Republic of China

On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “new CIT Law”), which was effective on January 1, 2008.  Under the new CIT Law, the corporate income tax rate applicable to the Company starting from January 1, 2008 is 25%. The new CIT Law has an impact on the deferred tax assets and liabilities of the Company. The Company adjusted deferred tax balances as of September 30, 2009 based on their best estimates and will continue to assess the impact of such new law in the future. The effects arising from the enforcement of the new CIT law have been reflected in the accounts.

The Company uses FASB ASC 740 (formerly FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”)). – AN INTERPRETATION OF FASB STATEMENT NO. 109, ACCOUNTING FOR INCOME TAXES. The Interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of March 31, 2010, the Company did not have a liability for unrecognized tax benefits. 

CH Technology received official designation by the local tax authority as a foreign-invested enterprise engaged in manufacturing activities, and it exempts from enterprise income tax for two years commencing from the first profitable year in 2007, followed by a 50% reduction for the next three years.

CH Lighting PRC received official designation by the local tax authority as a High and New-Tech Enterprise, and the applicable income tax is 15% from January 1, 2008 to December 31, 2010.

Dividends payable by a foreign invested enterprise to its foreign investors are subject to a 10% withholding tax, unless any foreign investor’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement.

F-26

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

17. INCOME TAXES (CONTINUED)

Income tax (expense) benefit consist of the following:

	Three Months Ended March 31, (Unaudited)						Six Months Ended March 31, (Unaudited)
	2010			2009			2010			2009
Current	$	(31	)	$	168		$	(97	)	$	(66	)
Deferred		(37	)		(132	)		2			(466	)
Withholding tax		(26	)		-			(74	)		-
Income tax (expense) benefit	$	(94	)	$	36		$	(169	)	$	(532	)

Reconciliation from the expected income tax expenses calculated with reference to the statutory tax rate in the PRC of 25%is as follows:

	Three Months Ended March 31, (Unaudited)						Six Months Ended March 31, (Unaudited)
	2010			2009			2010			2009
Computed “expected” income tax expense	$	(105	)	$	(109	)	$	(183	)	$	(1,229	)
Effect on tax incentives / holiday		37			91			102			281
Permanent differences		-			208			(14	)		915
Withholding tax		(26	)		(154	)		(74	)		(499	)
Income tax (expense) benefit	$	(94	)	$	36		$	(169	)	$	(532	)

Components of net deferred tax liabilities are as follows:

	March 31,			September 30,
	2010			2009
	(Unaudited)
Deferred tax assets (liabilities):
Current portion:
Provision of doubtful accounts	$	412		$	438
Provision and accruals		97			57
Discount of notes receivable		220			356
Sales cut off		(399	)		(397	)
Subtotal		330			454
Non-current portion:
Depreciation		105			110
Min Tai acquisition		(2,615	)		-
Other comprehensive income		(534	)		(534	)
Net operating loss carry forward		325			168
Less: Valuation allowance		(191	)		(168	)
Withholding tax		(957	)		(880	)
Subtotal		(3,867	)		(1,304	)
Net deferred tax liabilities	$	(3,537	)	$	(850	)

F-27

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands except net income per share)

17. INCOME TAXES (CONTINUED)

(b) Value Added Tax (“VAT”)

Enterprises or individuals, who sell commodities, engage in repair and maintenance or import or export goods in the PRC are subject to a value added tax in accordance with Chinese Laws. The VAT standard rate is 17% of the gross sale price. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished products can be used to offset the VAT due on the sales of the finished products.

On January 1, 2002, the export policy of VAT "Exemption, Credit and Refund" began to apply to all exports by manufacture-based enterprises. In accordance with this policy, exported goods are exempted from output VAT and the input VAT charged for purchases of the raw materials, components and power consumed for the production of the exported goods may be refunded. Beginning July 1, 2008, the refund rates of lighting source products applicable to Zhejiang CH and CH Technology were ranging from 17% to 13%.

The refundable VAT of $334 and $390 at March 31, 2010 and September 30, 2009, respectively, are included in other receivables in the accompanying condensed consolidated balance sheets.

(c) Tax Holiday

Income before income tax expenses was $734 and $4,919 for the six months ended March 31, 2010 and 2009, which was mainly attributed to subsidiaries with operations in China. Income tax expense related to China income for the six months ended March 31, 2010 and 2009 was $169 and $532, respectively. The combined unaudited pro forma effects of the income tax expense exemption and reduction available to us are as follows:

	Three Months Ended March 31, (Unaudited)				Six Months Ended March 31, (Unaudited)
	2010		2009		2010		2009
Effect on tax incentives / holiday	$	37	$	91	$	102	$	281
Basic net income per share exclude tax holiday effect	$	0.00	$	0.00	$	0.00	$	0.00

18. DISTRIBUTION OF INCOME

As stipulated by the relevant laws and regulations for sino-foreign joint enterprises in the PRC, the PRC Subsidiaries are required to maintain certain statutory reserves, which include a general reserve fund, an enterprise expansion fund and staff welfare and incentive bonus fund. The statutory reserves are to be appropriated from statutory net income as stipulated by statute or by the board of directors of respective subsidiaries and recorded as a component of stockholders' equity.

All PRC subsidiaries are required by relevant laws and regulation to transfer at least 10% of their after tax profit determined in accordance with the PRC accounting rules and regulations to a statutory surplus reserve until such reserve balance reaches 50% of the PRC Subsidiaries’ registered capital.

For the six months ended March 31, 2010 and 2009, the Company transferred $70 and $131 to the statutory surplus reserve respectively.

The statutory surplus reserve can only be utilized to offset prior years' losses or for capitalization as paid-in capital. No distribution of the remaining reserves shall be made other than upon liquidation of the PRC Subsidiaries.

F-28

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

 (UNAUDITED)

(In thousands)

19. COMMITMENTS AND CONTINGENCIES

(a) Operating Lease Commitments

As of March 31, 2010, the Company entered into an operating lease agreement for its office and is required to pay the remainder of the rental fee of $26 within one year.

(b) Capital Commitments

The Company entered into an unconditional purchase commitment for construction projects of $8,737 payable within one year as of March 31, 2010.

(c) Contingencies

As of March 31, 2010, the Company provided corporate guarantees for bank loans borrowed by an unrelated company incorporated in the PRC (“Company A”). Associated with the corporate guarantee, Company A also provided a cross guarantee for the bank loans of $29,460 borrowed by the Company. See Note 13(a).  If Company A defaults on the repayment of its bank loans when they fall due, the Company is required to repay the outstanding balance. As of March 31, 2010, the guarantee provided for the bank loans borrowed by Company A was approximately $3,668, which consists of the following:

	March 31, 2010
	(Unaudited)
Due May 26, 2010	$	1,174
Due May 26, 2010		293
Due June 10, 2010		734
Due December 1, 2010		924
Due December 28, 2010		543
Total	$	3,668

A default by Company A is considered remote by the management. Based on the information available to the management, the fair values of the guarantees granted by the Company are considered not material and therefore no liability for the guarantor's obligation under the guarantee was recognized as of March 31, 2010.

F-29

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousand except number of shares and years)

20.  GEOGRAPHICAL SALES AND SEGMENTS

Information for the Company’s sales by geographical area for the three and six months ended March 31, 2010 and 2009 are as following:

	Three Months Ended March 31, (Unaudited)				Six Months Ended March 31, (Unaudited)
	2010		2009		2010		2009
China, including Hong Kong	$	4,371	$	3,932	$	12,763	$	13,319
Middle East		1,553		762		3,799		4,265
Korea		808		734		2,957		1,569
Europe		4,262		2,041		7,289		4,395
United States		270		61		711		137
Africa		35		83		155		83
South America		-		-		35		-
Others		683		772		947		2,806
Total	$	11,982	$	8,385	$	28,656	$	26,574

The Company operates one business segment for the three and six months ended March 31, 2010 and 2009.

21. STOCK-BASED EMPLOYEE COMPENSATION ARRANGEMENT

On June 15, 2008, Mr. Zhao and certain key management personnel of CH Lighting (the “Employees”) entered into stock-based employee compensation agreements, which enable those key management personnel to acquire 470 shares (4.7%) of the issued and outstanding common stocks of KEG (the “Award Stocks”) from Mr. Zhao. Pursuant to the stock-based employee compensation agreements, 125 shares of Award Stocks were fully vested immediately and the remaining 345 shares of Award Stocks will be vested on each anniversary date of the original grant on a pro rata basis over 5 years until all awards are vested (the “Vesting Period”). If the Employees are unable to remain in office during the Vesting Period, Mr. Zhao is entitled to re-purchase the unvested Award Stocks.

The Company adopted FASB ASC 718 (formerly SFAS No. 123R, Share-based payment) to recognize an expense for unvested share-based compensation that has been issued or will be issued after that date. The Company adopted FASB ASC 718 on a prospective basis.

Compensation expense attributed to the stock-based employee compensation agreements is based on the fair value of the Award Stocks on the grant date. Compensation expense is recognized between the grant date and the vesting date on a straight-line basis for each individual award stock. Fair value of stock awards is determined using a Direct Comparison Method under Market Approach which assumes sale of the awarded stock in its existing state with the benefit of immediate availability and by making reference to comparable sale transactions as available in the relevant markets. This valuation method was used because at the time of grant the fair value was not determinable by the market price because KEG is a private company. The fair value of the Award Stocks of $8 per award stock was determined by the management with reliance on a valuation report prepared by an independent firm of qualified professional valuation consultants not connected to the Company which has appropriate qualifications and recent experience in the valuation of similar instruments.

As of March 31, 2010, 216 shares of Award Stocks were outstanding and unvested.

F-30

CH LIGHTING INTERNATIONAL CORPORATION

(FORMERLY SINO-BIOTICS, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(In thousands)

21. STOCK-BASED EMPLOYEE COMPENSATION ARRANGEMENT (CONTINUED)

The fair value of the stock-based compensation expense for the six months ended March 31, 2010 and 2009 was $207 and $0, respectively. The intrinsic value of the remaining 216 shares at March 31, 2010 is approximately $1,663.

F-31

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

Forward Looking Statements

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

Prior Operations of the Company

The Company’s predecessor, Innovative Coatings, a Georgia corporation, ceased operations in June 2003.  On August 1, 2003, ICC Holdings Corp. was formed as a wholly-owned subsidiary of Innovative Coatings.  Also on August 1, 2003, Instachem Systems was formed as a wholly-owned subsidiary of ICC Holdings Corp. and ICC Merger Corp. was formed as a wholly-owned subsidiary of Instachem Systems.  On August 11, 2003, ICC Holdings Corp. merged with its parent company, Innovative Coatings, to change its U.S. state of incorporation from Georgia to Oklahoma.  On August 12, 2003, ICC Merger Corp. bought ICC Holdings Corp. A new corporation with ownership unrelated to the above, Sino-Biotics, Inc. was formed in Delaware on July 6, 2005.  On July 18, 2005, Instachem Systems sold ICC Merger Corp. to an individual for $500.  On July 19, 2005, Sino-Biotics, Inc. bought Instachem Systems. As a result of the above, the pre-existing creditors of the original operating entity, Innovative Coatings, were spun off through the sale of ICC Merger in July 2005.

The Share Exchange Transaction

On July 16, 2008 (the “Closing Date”), Sino-Biotics, Inc. entered into a Share Exchange Agreement (the “Exchange Agreement”) with CH International Holdings Limited, a British Virgin Islands investment holding company (“CH International”) and KEG International Limited, a British Virgin Islands company and the sole stockholder of CH International (the “Stockholder”). As a result of the share exchange, Sino-Biotics, Inc. acquired all of the issued and outstanding securities of CH International from the Stockholder in exchange for Ninety-Three Million (93,000,000) newly-issued shares of Sino-Biotics, Inc.’s common stock, par value $0.001 per share (“Common Stock”), representing seventy-seven and one half percent (77.5%) of the issued and outstanding Common Stock as of the Closing Date (the “Exchange”).  As a result of the Exchange, CH International became a wholly-owned subsidiary of Sino-Biotics, Inc.

            From its inception through the closing of the Exchange, the Company has not had any operations. Prior to the Exchange, the Company was considered a “blank check” company with US$500 in assets and with a net loss of approximately US$80,227 for the fiscal year ending September 30, 2007.  As of March 31, 2008, the Company had approximately US$21,900 in liabilities. As of July 16, 2008, the Company did not have any liabilities.

CH International, the wholly-owned and chief operating subsidiary of the Company, is an international investment holding company founded in the British Virgin Islands on April 30, 2004.  CH International’s wholly-owned operating subsidiaries are as follows: (a) Zhejiang Shaoxing CH Lamps Manufacturing Company (“CH Lamps”), a company organized under the People’s Republic of China (the “PRC”) on December 13, 1999; (b) Zhejiang CH Lighting Company Limited (“CH Lighting PRC”), a company organized under the laws of the PRC on September 27, 2000; (c) CH Lighting (Hong Kong) Limited, a company organized under the laws of Hong Kong on November 10, 2000 and a wholly-owned subsidiary of CH Lighting PRC (“CH Hong Kong”); and (d) Zhejiang CH Lighting Technology Company Limited, a company organized under the laws of the PRC on March 31, 2003 (“CH Technology”).

4

CH International also owns ninety percent (90%) of Shangyu CH Laboratory Testing Company Limited, a company organized under the laws of the PRC on January 7, 2008 (“CH Lab”, and together with CH International, CH Lamps, CH Lighting PRC, CH Hong Kong and CH Technology, the “Group”).

Our Common Stock is currently traded on the Over-The-Counter Bulletin Board (“OTCBB”) and on the Pink Sheets under the symbol “CHHN.OB”.

Current Operations of the Company (General Development of Business)

Introduction

CH Lamps manufactures and sells fluorescent lamp tubes, bulbs, luminaries and other decorative products. CH Lighting PRC currently manufactures and sells lighting products and luminaries (light fitting parts).  In order to increase our sales volume in the international market and upon approval by the PRC’s Ministry of Commerce in November 2005, CH Lighting PRC purchased CH Hong Kong, which is mainly engaged in the export trade and information technology services.  CH Technology manufactures and sells sterilized electronic appliances, lighting equipment and luminaries.  CH Lab was established on January 7, 2008 in the PRC and currently provides laboratory testing services for lighting sources and electronic products.

On March 31, 2010, the Company acquired from the Min Tai Lighting Corporation (“Min Tai”) shareholders all of the issued and outstanding shares of capital stock of Min Tai.  Min Tai is a company in the lighting industry located in Zhejiang Province of the PRC.

Summary of Current Business of the Company

The Company is dedicated to developing, manufacturing and selling healthy, energy-efficient, environmentally-friendly (green) and innovative high-end products and relevant services in the fluorescent lighting field. The Company offers ten (10) series and over 1,000 types of products, including “special light” sources, “general light” sources and luminaries for the home and for businesses (office buildings), and lighting electronics. The Company is one of the leading producers in China’s “special light” market, including product innovation, specification and sales. Currently, the Company has the product series most collected in the “Government Purchasing List of Energy-Saving Products” in China (a list of compulsory purchase items by which the Chinese government enforces the procurement of energy-efficient products by governmentaldepartments and local authorities).

The Company has three (3) major production facilities: CH Lighting PRC, CH Lamps and CH Technology, collectively covering 62,000m2, with floor area of 70,000m2, having fifteen (15) automatic light source production lines, capable of producing 120 million light sources and 17 million sets of  luminaries annually.

The Company also established a Special Light Source Research Center in 2003 and a Light Source and Fitting Inspection and Development Laboratory in January 2008, of which the latter has been declared a state-accredited laboratory. Furthermore, the Company employs an external consulting team composed of over 21 professors and experts in the industry. The Company has 132 patents (including 25 patents pending) and is a participant as well as contributor to various China Lighting Industry Standards.

The Company has 32 established offices in China and has cooperative agreements with over 480 distributors in the Chinese market and over 300 foreign customers in the international market. The Company has established agents in Saudi Arabia and Belgium that distribute self-owned brands in the Middle East and in the European markets.  The Company is currently in the process of establishing agents in the United States.

5

Description of Company Business Segments

The Company is dedicated to developing, manufacturing and selling healthy, energy-saving, green and innovative high-end products and relevant services in the fluorescent lighting field. The Company sets very high and strict quality and environmental standards for all of our products.  Our revenues are mostly generated from the sales of our products in China and abroad.  For the most part, our sales are seasonal, with the first calendar quarter being the low season, in light of the Chinese New Year festivities, and the fourth calendar quarter being our peak season.

We are not required to carry significant amounts of inventory to meet rapid delivery requirements of our foreign customers as most of our foreign sales are “made to order” products. However, we are required to carry significantamounts of inventory to meet rapid delivery requirements of our domestic (Chinese) customers.  We have not experienced serious problems with the quality of our products, therefore we do not provide extra warranties or guarantees to our customers unless they return the goods because of issues with quality.  The Company has standard payment terms and for the most part, it does not provide payment extensions to customers.

Our revenues from the sale of our products were US$14,047,000 for fiscal year 2005 (100% of all revenues), US$15,225,000 for fiscal year 2006 (100% of all revenues), US$32,379,000 for fiscal year 2007 (100% of all revenues), US$90,864,000 for fiscal year 2008 (100% of all revenues) and US$57,459,000 for fiscal year 2009 (100% of all revenues). A list of our products and services can be found in our Annual Report on Form 10-K as filed with the SEC on December 29, 2009 and on our website at http://chlighting.com.

Enterprise Marketing Strategy and Methods of Distribution

Domestic Marketing Strategy

The Company owns patents for special lighting lamps and currently holds a leading position in the Chinese domestic market. The Company’s sale of products has yielded positive results since 2006 when it entered the Chinese market. Set forth below are some key features of the Company’s domestic marketing strategy:

· Effective and Professional Sales Team. The Company is aware of the importance of effective and professional sales teams.  As a result, we recruit dynamic and enthusiastic personnel.  We offer a very competitive package and we provide full-scale trainings to continuously enhance our personnel’s performance. In addition to day-to-day sales training, the Company’s domestic marketing center holds Marketing Training Camp, hiring renowned teachers from Beijing and other places throughout the country to provide training courses designed to build a cohesive, creative, strong team with effective marketing skills.

· Expansion of Sales Network. The Company aims to continue to expand its domestic market share and improve points of sales. At present, it has 32 offices and has relationships with more than 480 distributors.

· Energy Savings and Emission Reduction.The Company intends to participate actively in government projects involving replacement and procurement of green lighting, group procurement of enterprises and institutions and bidding for major projects. The Company plans to establish contacts with provincial and municipal governments to promote its energy-saving products. Through the Company’s implementation of a corresponding discount policy, the Company plans to increase the intensity of cultivation in the market, making the design and concepts of its products fully recognized by channel partners, consumer groups and lighting designers. At the same time, consistent with national policies of energy-savings and emissions reduction, the Company intends to fully utilize its advantage in advanced lighting technology to enhance development with innovative lighting design, to provide complimentary products and to accelerate the upgrading of products. The Company plans to continue to maintain extensive cooperation with key branded enterprises to ensure increasing orders from old customers and to develop new customers.

· Strengthen Brand Promotion. In order to continuously enhance our customers’ awareness, the Company intends to continue to collaborate with various media sources to promote its brand. It has established strategic cooperation with CCTV2 (China Television) and with the print media as well as purchased large-scale outdoor advertising on the Shanghai-Hangzhou and Hangzhou - Ningbo Expressways. The Company also plans to continue to maintain its professional website (http://chlighting.com), search engines and exhibitions in China and abroad to develop new customer groups. Furthermore, the Company plans to continue to employ the top products planning corporation in China (Guangzhou Zhonghe Jiuding Planning Company) as the Company’s products promotion planning consultant.

6

International Marketing Strategy

· Participating in International Lighting Fair. The Company currently participates in more than 10 exhibitions abroad annually, such as international lighting fairs in Hong Kong, Frankfurt, Nuremberg, New York, Las Vegas and Italy and plans to continue to do so. The Company continues to improve its influence and to expand its sales in the international market. The purpose of participation in the exhibitions is not only to contact new customers but also to exhibit the strength of the Company and its brand image.

· International Market District Management. The global market of the Company is divided into several regions, including Europe, America, Asia and the Middle East. There is a sales team responsible for the promotion of our products and negotiation of the business arrangements in each regional market. The Company plans to adopt specific strategies and practices for each of the regional markets.

· Brand Enterprise (Manufacturer) Cooperation. There are two (2) methods employed with respect to the manufacturing of our products. The first is “ODM”, whereby the structure, appearance and technical aspects of our products are developed and designed by the Company.  However after the completion of their development and production, such products are sold with trademarks of certain clients. These products are usually mass produced in accordance with the placement of orders by such clients. The other method is “OEM”, whereby our products are made in cooperation with certain third party enterprises such as GE Lighting, Sylvania, and other large multinational groups. For example, our plant growth lamp co-developed by the Company and Huazhong Agricultural University is sold in Europe, the United States and Australia. We have established cooperation with a number of large enterprises such as Interpet, Arcardia of Britain, Croci SpA of Italy, PENN-PLAX and SUNPARK of United States, AVK LIGHTING of Australia and Narva of Germany to develop the global market for plant growth lamps.

Product Sales Strategy (Domestic and International Sales)

Domestic Sales through Distributors

The Company entered the high-tech domestic Chinese lighting market in 2006. Currently, 32 offices exist in China, forming a three-level sales network in counties, cities and provinces, with point-of-sale locations across the country.  These contribute toward an efficient marketing system. Each office is responsible for providing professional services to its local dealers and consumers. The Company has implemented a regional distribution system in the Chinese domestic market, establishing long-term cooperative relationships with approximately 450 distributors. The Company builds up composite-end sales channels including franchise stores, lighting centers and counters to increase its market competitiveness.

International Sales through Distributors

The Company also implements its distribution system in the international market. In the Middle East, the Company has a regional agent in Saudi Arabia that is solely responsible for the product in the local Middle East market.  In the European market, the Company has a regional agent in Belgium who is in charge of regional marketing. The Group has also set up a branch in Hong Kong responsible for marketing the businesses to the Asia-Pacific region.

7

Domestic Replacement Market

In 2007, the size of China's domestic for the T8 halogen powder lamp was 1 billion lamps. Currently, as a result of the requirements for energy savings and emissions reduction policies, According to [                     ], T8 halogen powder lamps are one of the main products which should be replaced. The total replacement market for T8 halogen powder lamps, which have an average useful life of about 2 years, is estimated to be not less than 2 billion sets per year. If 10% of the lamps are to be replaced, the replacement market would be at least 200 million per year. Users that are pressing for replacement of such lamps in China include manufacturing enterprises, large-scale commercial enterprises (especially supermarket chains and large stores), colleges and universities, primary and secondary schools and other educational institutions, hospitals, railway stations, airports, libraries and other public buildings and facilities, government agencies, institutions and office buildings.

Our T5-integrated conversion stand product (also known as the “Power-Saving Treasure”) is most suitable to replace the T8 halogen powder lamp and ballast without changing the original lamps, and can provide significant energy-saving benefits to users. It can be used as the energy-saving replacement for units, enterprises, schools, stores, supermarkets and hospitals.

Since the Company offers energy-saving lighting products such as the “Power-Saving Treasure”, we believe that we have the competitive edge in the replacement market and the marketing model of “contract energy management” (as described below). We believe that participation and engagement of the Company in energy-saving lighting rebuilding (and replacement) projects is an important growth point for the development of the Company. The Company has already begun to provide replacement services for users.  This has given us positive evaluations and a good reputation in the field of energy-saving lighting since 2005. Typical users include the following:

· Government Offices. In October 2007, the Company was the first domestic enterprise appointed by Zhongnanhai (General Office of the State Council) to rebuild energy-saving lighting systems at the central and state agencies held by the Government Offices Administration of the State Council. The first group of users included: Zhongnanhai (General Office of the State Council), the Ministry of Finance, Ministry of Commerce, Ministry of Information Industry, State General Administration of Quality Supervision and Inspection, State Administration of Work Safety Supervision, Ministry of Supervision, the State Tourism Administration, the State Meteorological Administration, the Chinese Academy of Sciences, the Chinese Academy of Social Sciences, the Legal Affairs Office of the State Council, the State Bureau for Letters and Calls and the China Law Society.

· Green Lighting Procurement Projects. Recently, the Ministry of Finance and the State Development and Reform Commission jointly held the "National Project to Promote Efficient Lighting Products Tender" whereby more than 30 well-known enterprises bid for projects.  The Company won several bids for projects, including the Green Lighting Procurement Project of Central Government Departments under the CPC Central Committee.

· Primary and Secondary Schools. In 2006, the Company’s products achieved the top integrated score among the three most successful enterprises (the Company, Philips and Matsushita) involved in an energy-saving lighting rebuilding project of Beijing’s primary and secondary schools organized by the Beijing Municipal Development and Reform Commission. The Company’s products were used in the implementation of energy-saving lighting rebuilding in more than 300 primary and secondary schools in the Changping, Huairou, Shunyi and Mentougou Districts of Beijing.In September 2008, the Company was named as the designated supplier of Shanghai Primary and Secondary School Classrooms Light Environment Improvement Projects.  The first phase of delivery and installation for the project was completed in November 2008.

· Colleges, Universities and other Well-known Enterprises. In August 2008, the Company was named as the sole supplier of Tianjin Vocational College New Campus Lighting Purchasing Project for which a dozen of lighting manufacturers in China submitted bids. In addition, the Company also successfully won the energy-saving lighting products replacement purchasing projects of Visual Arts College of Fudan University, the Ningbo Wanli International Aristocratic School, the Chengdu Institute of Technology, Foxconn (Suzhou) Co., Ltd. and Suning Appliance Chain Store (Suzhou) Co., Ltd.

8

Domestic Direct Sales

The Company is one of the key lighting products suppliers to the Chinese government.  The government procurement market is an important part the Company's business development, and the Company has been very successful in such endeavors. For example, the Company is the only enterprise in the Chinese lighting industry that was awarded the China Energy-Saving Contribution Award for two (2) consecutive years. It has the highest number of series of products on the Chinese government’s procurement list of energy-saving products out of all lighting enterprises.  The Company is the leading company participating in the national efficient lighting products promotion project. In addition, the Company’s products were given the status of “State Inspection-free Qualification” in China.

The Company has a leading position in product technology, product quality, product variety, energy saving and environmental protection. The Company has won national key projects of government procurement of rebuilding energy-saving lighting systems.  Additionally, it has won bids for major national projects, including:

· Beijing Olympic Project. The Olympic Park National Conference Center was the main press centre and international broadcast centre of 2008 Beijing Olympic Games. In November 2007, when the Olympic Park National Conference Center invited lighting brands in China and abroad to tender bids, the Company won the first place.

· Olympic Fire Command Center. The Company won the bid for Beijing lighting systems at the Olympic Fire Command Center.

· Construction of Infrastructure Projects. The Company has also won projects in public infrastructure such as the lighting system project of Beijing Subway Line 5, the lighting systems project of the People's Square in Shanghai’s subway system. At the same time, the Company has also won projects for offices, hotels, hospitals and other projects to provide lighting products and services.

· Chinese Government Procurement of Green Lighting Project. In March 2008, the Company successfully won the bid for the Chinese Government Procurement of Green Lighting Project as a result of which, the Company’s energy-saving lighting systems were installed in various governmental departments and agencies, including: the Organization Department of the Chinese Government, the Chinese Government Commission for Discipline Inspection, the National Federation of Trade Unions, International Liaison Department of the Chinese Government, and the People's Daily, among others. In addition, the Company also became the designated supplier of the energy-saving lighting systems replacement projects of State Administration for Industry and Commerce and State Administration of Taxation.

· Eleventh National Games Competition Venues and Training Facilities Procurement Project. On July 12, 2008, the Company successfully became a designated brand of the Eleventh National Games Competition Venues and Training Facilities Procurement Project.

· Guangzhou 2010 Asian Games Venue Construction Projects. In October 2008, the Company successfully became a qualified supplier for the Guangzhou Asian Games Venue Construction Projects.  The Company ranked number one of all the major lighting products qualified vendors.

· Hangzhou Civic Center Lighting Project. In September 2008, the Company successfully won the Hangzhou Civic Center Lighting Project.  The Company was required to deliver and complete the project within one month.  The Hangzhou Civic Center opened in October 2008 as the largest municipal building in the Zhejiang Province.

9

International Direct Sales

Through ten (10) years of hard work, the Company’s products have obtained critical certifications in a number of countries (such as the EU's CE, TUV and GS, UL in the United States, South Korea’s KS and Saudi Arabia’s SASO) which have enabled the Company to create opportunities for ODM and OEM production for many large companies in the international market. Through ODM and OEM, the Company's products are sold to major multinational lighting enterprises. The Company plans to use the influence of its brand for self-owned brand sales in the international market and to increase sales for end-users.

Critical Accounting Policies and Estimates

This section should be read together with the Summary of Significant Accounting Policies included as Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for fiscal year ended September 30, 2009 filed with the SEC.

Estimates Affecting Accounts Receivable and Inventories

The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect our reporting of assets and liabilities (and contingent assets and liabilities). These estimates are particularly significant where they affect the reported net realizable value of the Company’s accounts receivable and inventories.

At March 31, 2010, the Company provided a $2,095 reserve against accounts receivable. Management’s estimate of the appropriate reserve on accounts receivable at March 31, 2010 was based on the aged nature of these accounts receivable. In making its judgment, management assessed its customers’ ability to continue to pay their outstanding invoices on a timely basis, and whether their financial position might deteriorate significantly in the future, which would result in their inability to pay their debts to the Company.

At March 31, 2010, the Company provided an allowance against its inventories amounting to $158. Management’s determination of this allowance is based on potential impairments to the current carrying value of the inventories due to slow moving of aged inventories.  In making its estimate, management considered the probable demand for our products in the future and historical trends in the turnover of our inventories.

While the Company currently believes that there is little likelihood that actual results will differ materially from these current estimates, if customer demand for our products decreases significantly in the near future, or if the financial condition of our customers deteriorates in the near future, the Company could realize significant write downs for slow-moving inventories or uncollectible accounts receivable.

Estimates Affecting Fair Value of Stock Based Compensation

Compensation expense attributed to the stock-based employee compensation agreements is based on the fair value of the Award Stocks on the grant date. Compensation expense is recognized between the grant date and the vesting date on a straight-line basis for each individual award stock. Fair value of stock awards is determined using a Direct Comparison Method under Market Approach which assumes sale of the awarded stock in its existing state with the benefit of immediate availability and by making reference to comparable sale transactions as available in the relevant markets. This valuation method was used because at the time of grant the fair value was not determinable by the market price because KEG is a private company. The fair value of the Award Stocks of $8 per stock award was determined by the management with reliance on a valuation report prepared by an independent firm of qualified professional valuation consultants not connected to the Company which has appropriate qualifications and recent experience in the valuation of similar instruments.

As of March 31, 2010, 216 shares of Award Stocks were outstanding and unvested. The fair value of the stock-based compensation expense for the six months ended March 31, 2010 and 2009 was $207 and $0, respectively. The intrinsic value of the remaining 216 shares at March 31, 2010 is approximately $1,663.

10

Policy Affecting Recognition of Revenue

Among the most important accounting policies affecting our consolidated financial statements is our policy of recognizing revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-10. Under this policy, all of the following criteria must be met in order for us to recognize revenue:

1. Persuasive evidence of an arrangement exists;

2. Delivery has occurred or services have been rendered;

3. The seller’s price to the buyer is fixed or determinable;

4. Collectability is reasonably assured.

The majority of the Company’s revenue results from sales contracts with distributors and revenue is recorded upon the shipment of goods. Management conducts credit background checks for new customers as a means to reduce the subjectivity of assuring collectability. Based on these factors, the Company believes that it can apply the provisions of FASB ASC 605-10 with minimal subjectivity.

Recently Issued Accounting Pronouncement

A description of recent accounting pronouncements is set forth under “New Accounting Standards” in Note 2 of the Notes to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q, and such description is incorporated herein by reference. Such description contains all of the information required with respect thereto.

11

 (In thousands for dollar amounts except net income per share)

Results of Operations

Results of Operations for the Three (3) Months Ended March 31, 2010 Compared To the Three (3) Months Ended March 31, 2009

The following table sets forth a summary of certain key components of our results of operations for the periods indicated, in thousands for dollar amounts except net income per share and as a percentage of revenues.

	Three Months Ended March 31,						Three  Months Ended March 31,
	2010			2009			2010			2009
Revenues	$	11,721		$	7,194			97.82	%		85.80	%
Revenues from government subsidies		261			1,191			2.18	%		14.20	%
TOTAL REVENUES		11,982			8,385			100	%		100	%
COST OF SALES		(9,073	)		(6,123	)		(75.72	)%		(73.02	)%
GROSS PROFIT		2,909			2,262			24.28	%		26.98	%
Selling, marketing and distribution expenses		(691	)		(619	)		(5.77	)%		(7.38	)%
General and administrative expenses		(970	)		(822	)		(8.10	)%		(9.80	)%
INCOME FROM OPERATIONS		1,248			821			10.42	%		9.79	%
Amortization of discount on notes receivable		468			-			3.91	%		-
Interest income		147			610			1.23	%		7.27	%
Interest expense		(1,446	)		(1,004	)		(12.07	)%		(11.97	)%
Other government subsidies		29			3			0.24	%		0.04	%
Other (expenses) income		(25	)		10			(0.21	)%		0.12	%
INCOME BEFORE INCOME TAXES		421			440			3.51	%		5.25	%
Income tax (expense) benefit		(94	)		36			(0.78	)%		0.43	%
NET INCOME	$	327		$	476			2.73	%		5.68	%
NET INCOME PER SHARE, BASIC AND DILUTED	$	0.003		$	0.004

Revenues

	Three Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Domestic revenue	$	4,110	$	2,741	$	1,369			49.95	%
Government subsidies		261		1,191		(930	)		(78.09	)%
Overseas revenue		7,611		4,453		3,158			70.92	%
Total Revenues	$	11,982	$	8,385	$	3,597			42.90	%

Revenues increased by 42.90% for the three months ended March 31, 2010 compared to the three months ended March 31, 2009.  The increase was primarily due to revenues from overseas sales which increased $3,158 due to the economic recovery.

The central government of the PRC has agreed to grant the Company subsidies for selling energy - saving lighting products at a discounted price on the condition that the products are sold to retail customers.  The decrease in governmental subsidies was primarily due to the fact that there were two government purchasing projects for the three months ended March 31, 2009, while there was only one government purchasing project for the three months ended March 31, 2010.

12

(In thousands for dollar amounts)

Cost of Sales

	Three Months Ended March 31,						Increase /			Increase /
	2010			2009			(Decrease)			(Decrease)
Revenues	$	11,982		$	8,385		$	3,597			42.90	%
Cost of sales		9,073			6,123			2,950			48.18	%
Gross Profit	$	2,909		$	2,262		$	647			28.60	%
Gross Profit Rate		24.28	%		26.98	%		(2.7	)%		(10.01	)%

Cost of goods sold increased by 48.18% for the three months ended March 31, 2010 as compared with the three months ended March 31, 2009.  The increase is attributable to the higher price of raw materials for our major product power-saving lamp and the 42.90% increase in revenues.

Gross profit increased by $647, or 28.60%, for the three months ended March 31, 2010 as compared with the three months ended March 31, 2009.  This increase is attributable to higher sales.  Gross profit as a percentage of revenues decreased from 26.98% in the prior period to 24.28% in the same period of 2010 due to the fact that in 2009 the Company sold energy - saving lighting products in connection with a government purchasing project with a higher margin and also due to the higher price of raw materials.

Selling, Marketing and Distribution Expenses

	Three Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Transportation fee	$	300	$	239	$	61			25.52	%
Traveling  fee		181		99		82			82.83	%
Payroll		62		83		(21	)		(25.30	)%
Office expense		47		31		16			51.61	%
Advertising fee		20		9		11			122.22	%
Sales commissions		12		140		(128	)		(91.43	)%
Others		69		18		51			283.33	%
Total	$	691	$	619	$	72			11.63	%

Selling, marketing and distribution expenses for the three months ended March 31, 2010 increased by $72, or 11.6%, to $691 as compared to $619 for the three months ended March 31, 2009.  The increase in selling, marketing and distribution expenses was primarily due to the following factors: (1) The Company assigned agents to perform sales promotions and supporting activities in connection with a government purchasing project and paid them promotion fees based on their actual sales numbers.  Sales commissions also decreased following the conclusion of a government purchasing project for Power-Saving Treasure on March 31, 2009.  (2) Transportation fees and traveling fees increased by $143 for the three months ended March 31, 2010 as compared with the three months ended March 31, 2009.  This increase was due to the increase in sales volume and management’s efforts to expand into new markets.

13

(In thousands for dollar amounts)

General and Administrative Expenses

	Three Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Payroll	$	335	$	256	$	79			30.86	%
Research and development		177		124		53			42.74	%
Stock-based employee compensation		104		-		104			100	%
Depreciation		87		93		(6	)		(6.45	)%
Office		62		79		(17	)		(21.52	)%
Others		205		270		(65	)		(24.07	)%
Total	$	970	$	822	$	148			18.00	%

General and administrative expenses for the three months ended March 31, 2010 increased by $148, or 18%, to $970 as compared to $822 for the three months ended March 31, 2009.  Our increase in general and administrative expenses was primarily due to the following factors: (1) A payroll increase of $79 for the three months ended March 31, 2010 as compared with the three months ended March 31, 2009.  This increase was due to the increase in the average salary of our administrative employees because they worked 6 days in the three months ended March 31, 2010, while they worked 5 days in the prior period; and (2) an increase in research and development expenses of $53 for the three months ended March 31, 2010 as compared with the three months ended March 31, 2009.  This increase was due to the Company’s new product plans in 2010 as we spent more to develop new products for the three months ended March 31, 2010 than in the prior period.

Amortization of Discount on Notes Receivable

Amortization of discounts on notes receivable was $468 for the three months ended March 31, 2010 compared to $0 for the three months ended March 31, 2009.  This increase was attributable to the amortization of a $3,448 discount on notes receivable for the three months ended March 31, 2010.  There was no such discount on notes receivable for the three months ended March 31, 2009.

Interest Income

	Three Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Interest income from bank	$	145	$	118	$	27			22.88	%
Interest income from related parties		-		492		(492	)		(100	)%
Interest income from unrelated parties		2		-		2			100	%
Total	$	147	$	610	$	(463	)		(75.90	)%

Interest income for the three months ended March 31, 2010 and 2009 were $147 and $610, respectively.  The decrease relates to the interest income from related parties of $492 for the three months ended March 31, 2009.  No such income was reported in the corresponding period in 2010 as the relevant interest was recorded as amortization of discount on notes receivable.

14

(In thousands for dollar amounts except net income per share)

Interest Expense

	Three Months Ended March 31,				Increase /		Increase /
	2010		2009		(Decrease)		(Decrease)
Short-term bank loans	$	794	$	770	$	24		3.12	%
Bills financing		477		145		332		228.97	%
Financial obligations, sale-leaseback		88		68		20		29.41	%
Others		87		21		66		314.29	%
Total	$	1,446	$	1,004	$	442		44.02	%

Our increase in interest expense of $442 or 44.02% from $1,004 during the three months ended March 31, 2009 to $1,446 during the three months ended March 31, 2010 was primarily due to the increase in the average balance of short-term bank borrowings of $22M for the three months ended March 31, 2010 as compared with the three months ended March 31, 2009.

Income Tax (Expense) Benefit

Income tax (expense) benefit for the three months ended March 31, 2010 was $ (94) as compared to $36 for the three months ended March 31, 2009.  The fluctuation was due to the decrease in pre-tax losses of one subsidiary-CH Lighting PRC, which caused the decrease in income tax benefit.

 Results of Operations for the Six (6) Months Ended March 31, 2010 Compared To the Six (6) Months Ended March 31, 2009

The following table sets forth a summary of certain key components of our results of operations for the periods indicated, in thousands for dollar amounts except net income per share and as a percentage of revenues.

	Six Months Ended March 31,						Six Months Ended March 31,
	2010			2009			2010			2009
Revenues	$	26,786		$	22,291			93.47	%		83.88	%
Revenues from government subsidies		1,870			4,283			6.53	%		16.12	%
TOTAL REVENUES		28,656			26,574			100	%		100	%
COST OF SALES		(22,494	)		(17,110	)		(78.50	)%		(64.39	)%
GROSS PROFIT		6,162			9,464			21.50	%		35.61	%
Selling, marketing and distribution expenses		(1,310	)		(2,473	)		(4.57	)%		(9.31	)%
General and administrative expenses		(2,643	)		(2,049	)		(9.22	)%		(7.71	)%
INCOME FROM OPERATIONS		2,209			4,942			7.71	%		18.60	%
Amortization of discount on notes receivable		985			-			3.44	%		-
Interest income		413			1,853			1.44	%		6.97	%
Interest expense		(2,907	)		(2,092	)		(10.14	)%		(7.87	)%
Other government subsidies		63			196			0.22	%		0.74	%
Other (expenses) income		(29	)		20			(0.10	)%		0.08	%
INCOME BEFORE INCOME TAXES		734			4,919			2.56	%		18.51	%
Income tax expense		(169	)		(532	)		(0.59	)%		(2.00	)%
NET INCOME	$	565		$	4,387			1.97	%		16.51	%
NET INCOME PER SHARE, BASIC AND DILUTED	$	0.005		$	0.037

15

(In thousands for dollar amounts)

Revenues

	Six Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Domestic revenue	$	10,893	$	9,036	$	1,857			20.55	%
Government subsidies		1,870		4,283		(2,413	)		(56.34	)%
Overseas revenue		15,893		13,255		2,638			19.90	%
Total Revenues	$	28,656	$	26,574	$	2,082			7.83	%

Revenues increased by $2,082 or 7.83% for the six months ended March 31, 2010 compared to $26,574 for the six months ended March 31, 2009.  The increase was primarily due to revenues from overseas sales which increased $2,638 due to the favorable impact caused by the economic recovery.

The central government of the PRC has agreed to grant the Company subsidies for selling energy - saving lighting products at a discounted price on the condition that the products are sold to retail customers.  The decrease was primarily due to the fact that there were two government purchasing projects for the six months ended March 31, 2009, while there was only one government purchasing project for the six months ended March 31, 2010.

Cost of Sales

	Six Months Ended March 31,						Increase /			Increase /
	2010			2009			(Decrease)			(Decrease)
Revenues	$	28,656		$	26,574		$	2,082			7.83	%
Cost of sales		22,494			17,110			5,384			31.47	%
Gross Profit	$	6,162		$	9,464		$	(3,302	)		(34.89	)%
Gross Profit Rate		21.50	%		35.61	%		(14.11	)%		(39.62	)%

Cost of goods sold increased by $5,384 or 31.47% to $22,494 for the six months ended March 31, 2010 as compared with $17,110 for the six months ended March 31, 2009.  The increase is attributable to the higher price of raw materialsfor our major product power-saving lamp.

Gross profit decreased by $3,302, or 34.89%, to $6,162 for the six months ended March 31, 2010 as compared with $9,464 for the six months ended March 31, 2009.  This decrease is attributable to the higher cost of sales.  Gross profit as a percentage of revenues decreased from 35.61% in the prior period to 21.50% in the same period of 2010 due to the fact that in 2009 the Company sold energy - saving lighting products in connection with a government purchasing project with a higher margin and also due to the higher price of raw materials.

16

(In thousands for dollar amounts)

Selling, Marketing and Distribution Expenses

	Six Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Transportation fee	$	501	$	556	$	(55	)		(9.89	)%
Traveling  fee		336		454		(118	)		(25.99	)%
Payroll		139		272		(133	)		(48.90	)%
Office expense		93		239		(146	)		(61.09	)%
Sales commissions		65		341		(276	)		(80.94	)%
Advertising fee		50		199		(149	)		(74.87	)%
Others		126		412		(286	)		(69.42	)%
Total	$	1,310	$	2,473	$	(1,163	)		(47.03	)%

Selling, marketing and distribution expenses for the six months ended March 31, 2010 decreased $1,163 or 47% to $1,310 from $2,473 for the six months ended March 31, 2009.  The decrease in selling, marketing and distribution expenses was primarily due to the following factors: (1) The Company assigned agents to perform sales promotions and supporting activities in connection with a government purchasing project and paid them promotion fees based on their actual sales numbers.  Sales commissions also decreased following the conclusion of a government purchasing project for Power-Saving Treasure on March 31, 2009.  (2) Payroll and miscellaneous expenses decreased by $990 for the six months ended March 31, 2010 as compared with six months ended March 31, 2009.  This decrease was due to management’s efforts to decrease expenses.

General and Administrative Expenses

	Six Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Research and development	$	995	$	393	$	602			153.18	%
Payroll		602		552		50			9.06	%
Stock-based employee compensation		208		134		74			55.22	%
Office		195		222		(27	)		(12.16	)%
Depreciation		176		200		(24	)		(12	)%
Others		467		548		(81	)		(14.78	)%
Total	$	2,643	$	2,049	$	594			28.99	%

General and administrative expenses for the six months ended March 31, 2010 increased $594 or 28.9% to $2,643 from $2,049 for the six months ended March 31, 2010.  The increase in general and administrative expenses for was primarily due to the following factors: (1) Research and development expenses increased $602 for the six months ended March 31, 2010 as compared with the six months ended March 31, 2009.  This increase was due to the Company’s new product plans in 2010, the Company spent more to develop new products for the six months ended March 31, 2010 than in the prior period.  (2) A payroll increase of $50 for the six months ended March 31, 2010 as compared with the six months ended March 31, 2009.  This increase was due to the increase in the average salary of our administrative employees because they worked 6 days in the six months ended March 31, 2010, while they worked 5 days in the prior period.

Amortization of Discount on Notes Receivable

Amortization of discounts on notes receivable was $985 for the six months ended March 31, 2010 compared to $0 for the six months ended March 31, 2009.  This increase was attributable to the amortization of a $3,448 discount on notes receivable for the six months ended March 31, 2010. There was no such discount on notes receivable for the six months ended March 31, 2009.

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(In thousands for dollar amounts)

Interest Income

	Six Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Interest income from bank	$	398	$	361	$	37			10.25	%
Interest income from related parties		-		1,492		(1,492	)		(100	)%
Interest income from unrelated parties		15		-		15			100	%
Total	$	413	$	1,853	$	(1,440	)		(71.71	)%

Interest income for the six months ended March 31, 2010 and 2009 were $413 and $1,853, respectively.  The decrease relates to the interest income from related parties of $1,492 for the six months ended March 31, 2009.  No such income was reported in the corresponding period in 2010 as the relevant interest was recorded as amortization of discount on notes receivable.

Interest Expense

	Six Months Ended March 31,				Increase /			Increase /
	2010		2009		(Decrease)			(Decrease)
Short-term bank loans	$	1,591	$	1,335	$	256			19.18	%
Bills financing		837		342		495			144.74	%
Financial obligations, sale-leaseback		187		274		(87	)		(31.75	)%
Others		292		141		151			107.09	%
Total	$	2,907	$	2,092	$	815			38.96	%

Our increase in interest expense of $815 or 38.96% from $2,092 during the six months ended March 31, 2009 to $2,907 during the six months ended March 31, 2010 was primarily due to the average balance of short-tem bank borrowings which increased by $32M for the six months ended March 31, 2010 as compared with the six months ended March 31, 2009.

Income Tax Expense

Income tax expense for the six months ended March 31, 2010 was $169 as compared to $532 for the six months ended March 31, 2009.  The fluctuation was due to the decrease in income before tax.

Liquidity and Capital Resources

We generally finance our operations through our operating profits and borrowings from banks.

During the reporting periods, 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 through 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.

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(In thousands for dollar amounts)

Cash

Our cash balance at March 31, 2010 was $3,303, representing an increase of $511, or 18.3%, compared with our cash balance of $2,792 at September 30, 2009.  The increase was mainly attributable to the net cash used in operating activities of $2,780, used in investing activities of $892 and net cash provided in financing activities of $3,977.

Cash Flow

Cash flow used in operations for the six months ended March 31, 2010 amounted to $2,780, representing a decrease of approximately 188.90% compared with cash flow provided by operations of $3,127 for the six months ended March 31, 2009.  This decrease in cash flow was primarily due to the decrease in our net income by 87.12%, to $565 for the six months ended March 31, 2010, compared with operating income of $4,387 for the six months ended March 31, 2009. The decrease was also primarily due to the increase in our accounts receivable of $1,805 since we provided longer credit terms to major customers for sales promotion, and the decrease in accounts payable and accrued expenses and other accrued liabilities by $2,456.

Our cash flow used in investing activities amounted to $892 for the six months ended March 31, 2010.  During that period, we provided $5,710 short-term notes receivable to unrelated parties for their assistance in providing guarantees for bank loans.  We received a $10,573 repayment of short-term notes receivable from a related party during the six months ended March 31, 2010.  We also paid $7,845 for the acquisition of Min Tai during this period.  On March 31, 2010, the Company acquired from the Min Tai Lighting Corporation (“Min Tai”) shareholders all of the issued and outstanding shares of capital stock of Min Tai for $7,860 in cash.  Min Tai is a company in the lighting industry located in Zhejiang Province of the PRC.

Our cash flows provided by financing activities amounted to $3,977 for the six months ended March 31, 2010.  During that period, we repaid $45,306 in short-term bank borrowings and received $77,232 from short-term bank borrowings.

We may determine from time to time to raise capital through private debt or equity financing to strengthen the Company’s financial position, to expand our facilities and to provide us with additional flexibility to take advantage of business opportunities.   No assurances can be given that we will be successful in raising such additional capital on terms acceptable to us.

Working Capital

We had a working capital deficiency of $2,358 at March 31, 2010 as compared to a working capital deficiency of $31,161 at September 30, 2009, a decrease of $28,803.  The decrease is primarily due to the increase in notes receivable from related parties, the current portion of which is $35,607, short-term notes receivable from unrelated parties of $5,721, restricted cash of $25,391, accounts receivable of $1,805 and a decrease in accounts payable of $1,351.  The decrease was partly offset by a decrease in short-term notes receivable from related parties of $10,573, an inventory of $904, and an increase in short-term bank borrowings of $32,211. The increase in restricted cash represented our pledge deposit for the issuance of notes payable.  The increase in notes receivable from related parties, current portion represent the relevant principals transferred from long term to short term, which will come to maturity during the coming year.

The increase in short-term notes receivable from unrelated parties represented the increase in relevant principals, which will come to maturity during the coming year.

We currently generate our cash flow through operations.  We believe that our cash flow generated from operations will be sufficient to sustain operations for at least the next twelve months.  From time to time, we may identify new expansion opportunities for which there will be a need for use of cash.

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(In thousands for dollar amounts)

Contingencies

As of March 31, 2010, the Company provided corporate guarantees for bank loans borrowed by an unrelated company incorporated in the PRC (“Company A”).  Associated with the corporate guarantees, Company A also provided a cross guarantee for the bank loans of $29,460 borrowed by the Company.  See Note 13(a) of the Notes to the Condensed Consolidated Financial Statements contained herein. If Company A defaults on the repayment of its bank loans when they fall due, the Company is required to repay the outstanding balance.  As of March 31, 2010, the amount of the guarantee for the bank loans borrowed by Company A was approximately $3,668, which consists of the following:

	March 31, 2010
	(Unaudited)
Due May 26, 2010	$	1,174
Due May 26, 2010		293
Due June 10, 2010		734
Due December 1, 2010		924
Due December 28, 2010		543
Total	$	3,668

A default by Company A is considered remote by our management.  Based on the information available to our management, the fair values of the guarantees granted by the Company are considered not material and therefore no liability for the guarantor's obligation under the guarantee was recognized as of March 31, 2010.

Financial Obligations, Sale-leaseback

As of March 31, 2010, future minimum payments required under non-cancelable sale-leasebacks are:

Year Ended March 31	Amount
2011		1,887
Total minimum lease payments		1,887
Less: Amount representing interest		278
Present value of net minimum lease payments	$	1,609

The amortization of our financial obligations for the six months ended March 31, 2010 and 2009 was $187 and $274, respectively.

Capital Commitments

The Company entered into unconditional purchase commitment for construction projects of $8,737 within one year as of March 31, 2010.

Operating Lease Commitments

As of March 31, 2010, the Company had entered into an operating lease agreement for its office space and is required to pay the remainder of the rental fee of $26 within one year.

Off-Balance Sheet Arrangements

None.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

RMB Appreciation

The Company believes that inflation has not had a material effect on its operations to date.  However, continued appreciation of the RMB against the U.S. Dollar and its effect on the Company's export business, could have a material adverse effect on the Company.  In the even of a material adverse effect on the Company, our strategy would be to reduce our reliance on exports and to increase domestic sales.And we have use forward exchange transactions to compensate the possible losses.

Non-Tariff Technical Trade Barriers Could Have a Materially Adverse Effect on our Exporting Business

Non-tariff technical trade barriers imposed by governments such as the European Union’s EuP Directive, could adversely affect our export business.  In response to the EuP Directive, the Company has launched a project to evaluate the impact of our products on the environment during each stage of a product’s life, from design, material procurement and manufacture, to maintenance, recovery and treatment.  This project conforms with the trend of reducing resource consumption and pollution as laid out in the EuP Directive.    Our major products have the qualification under the European Union’s EuP Directive.

The Development of High-Tech Products Takes a Long Time and There Are Many Uncertainties in the Process

The special light source products developed by the Company are an innovation in the industry.  As a result there might be unpredictable or presently unavoidable technical flaws in the products, or the new products may not fit into the market demand.  Either way, the new products might not be able to enter mass production and be sold in the markets.  To avert such a risk, the Company has set up a new products decision committee and has hired senior experts in China to better oversee and grasp the developmental tendencies of the industry.  Prior to the development and trial of new products, we plan on conducting systematic and in-depth research to find market space and identify technical problems and key targets for breakthrough.

 Theft of our Key Technologies Could Have a Material Adverse Effect on the Company’s Business and Development

To avert the risk of theft of our technologies, the Company uses management measures, such as performance bonuses and other project rewards, to maintain the stability of its technical team.  The Company (and its subsidiaries) also has in place confidentiality agreements with certain technical employees to prevent leakage of core technologies.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in the Company’s filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

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Changes In Internal Controls

There was no change in the Company’s internal controls over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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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 March 31, 2010 and the date hereof, there was and is no pending or outstanding material litigation with the Company or with the Group.

ITEM 1A. RISK FACTORS

Not required for a "smaller reporting company".

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

During the quarter ended March 31, 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	Agreement and Plan of Reorganization regarding the merger of Innovative Coatings Corporation with and into ICC Holdings Corp.	Incorporated by reference to Instachem Systems, Inc.’s Current Report as filed with the SEC on August 29, 2003
2.2	Stock Purchase Agreement, by and between David Lennox and Instachem Systems, Inc.	Incorporated by reference to Exhibit 2.2 to the Company’s Annual Report on Form 10-KSB as filed with the SEC on January 20, 2006
2.3	Agreement and Plan of Merger between Instachem Systems, Inc. and Sino-Biotics, Inc.	Incorporated by reference to Exhibit 2.3 to the Company’s Annual Report on Form 10-KSB as filed with the SEC on January 20, 2006
2.4	Share Exchange Agreement, dated July 16, 2008, by and among Sino-Biotics, Inc., KEG International Limited and CH International Holdings Limited	Incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K as filed with the SEC on July 16, 2008
3.1	Certificate of Incorporation of Sino-Biotics, Inc.	Incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-KSB as filed with the SEC on January 20, 2006
3.2	Certificate of Amendment to Certificate of Incorporation of Sino-Biotics, Inc.	Incorporated by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-KSB as filed with the SEC on January 20, 2006
3.3	Restated Certificate of Incorporation of Sino-Biotics, Inc.	Incorporated by reference to Exhibit 3.6 to the Company’s Annual Report on Form 10-KSB as filed with the SEC on January 20, 2006

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3.4	Certificate of Amendment to Certificate of Incorporation of Sino-Biotics, Inc. dated December 13, 2008 (increase of authorized shares).	Incorporated by reference to Exhibit 3.5 to the Company’s Current Report on Form 8-K as filed with the SEC on July 16, 2008
3.5	Memorandum and Articles of Associationof CH International Holdings Limited	Incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-K as filed with the SEC on July 16, 2008
3.6	Amended and Restated Bylaws of CH Lighting International Corporation, effective as of August 25, 2008	Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the SEC on August 26, 2008
14.1	Code of Ethics	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on December 29, 2008
16.1	Auditor Letter, dated August 25, 2008	Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on December 29, 2008
21	List of Subsidiaries of CH Lighting International Corporation	Incorporated by reference to Exhibit 21 to the Company’s Current Report on Form 8-K as filed with the SEC on July 16, 2008
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	Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K as filed with the SEC on August 26, 2008
99.2	Compensation Committee Charter	Incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K as filed with the SEC on August 26, 2008
99.3	Corporate Governance and Nominating Committee Charter	Incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K as filed with the SEC on August 26, 2008

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SIGNATURES

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

Date:               May 14, 2010	By:	/s/ Zhao Guosong
		Name: Zhao Guosong
		Its: President, Chief Executive Officer and Principal Executive Officer

Date:               May 14, 2010	By:	/s/ Huang Hsiao-I
		Name: Huang Hsiao-I
		Its: Chief Financial Officer, Corporate Secretary, Principal Financial and Accounting Officer

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