China Lithium (OTC BB:CLTT)

Total revenues for the quarter ended December 31,2011were $3,719,851 as compared to total revenues of $4,268,090 for the quarter ended December 31, 2010, a decrease of $548,239 or approximately 12.85%. Our total revenues for the six months ended December 31, 2011 were $7,491,083, as compared to total revenues of $7,972,767 for the six months ended December 31, 2010, a decrease of $481,684 or approximately 6.04%. The decrease in the revenues during the periods under review was primarily due to the reduction of the sales, which typically occurs one month prior to the Chinese spring festival. Since the spring festival in 2012 started as early as January 23, 2012, it caused the slow sales in December 2011; while it was not the case in December 2010 because spring festival for the year of 2011 did not start until Mid-February 2011.

Moreover, during the three and six months ended December 31, 2011, we also adjusted slightly our product composition by shifting our efforts to market more profitable products such as battery module, power and chargers,. As a result, we reduced our sales of electric vehicle battery from $570,229 during the three months ended December 31, 2010 to $56,019 during the same quarter of 2011, a decrease of $514,210 . We also discontinued our sales of battery pack since July 1, 2011, which produced 0 revenues during the three months ended December 2011 as compared to $ 40,106 during the same quarter ended December 2010.

GeoTeam® Note: Full Year 2011 vs. 2010 Adjusted EPS was $0.12 vs. $0.12

NEW YORK and BEIJING, May 17, 2011 (GLOBE NEWSWIRE) -- China Lithium Technologies Inc. (OTCBB: CLTT),a leading lithium-ion battery module, lithium-ion battery charger and lithium-ion battery management system manufacturer and distributor, today announced financial results for the third quarter ended March 31, 2011.

Mr. Kun Liu, chief executive officer of China Lithium Technologies, commented, "We are pleased to report another strong quarter with revenue increasing 27.8% to $3.4 million and gross margins increasing 77 basis points to 38.4%. The improvement in both revenue and gross margin reflects our shift in focus to higher margin product categories, including our battery chargers and battery modules. This increase in higher margin sales was partially offset by stock-based compensation expense to attract and retain key employees, as well as an increase in our administrative expenses as a newly public company. We have established a very solid foundation and anticipate benefitting from significant operating leverage as we continue to grow."

Mr. Kun Liu continued, "Looking ahead, we are well positioned to benefit from the trend toward electric vehicles. Our battery management technology is at the forefront of the industry and seamlessly allows the replacement of lead-acid battery with lithium-ion batteries, without further modification to the vehicle. This is just one of many important differentiators for our technology, and we continue to enhance our capabilities to address rapid changes in the technology arena."

Despite net income of $905,410 for the six months ended December 31, 2010 (which was reduced by a non-cash stock-based compensation expense of $717,000), our operations provided us only $69,882 in cash. The primary reasons for the discrepancy were the increases in accounts receivable and inventory discussed above. In addition, we used $513,125 in cash to reduce our accounts and taxes payable. In other words, this low cash yield from operations was a result of management allocation of resources, and is not indicative of the liquidity of our operations. During the year ended June 30, 2010, our operations provided us $2,728,015 in cash, including $891,097 in the first half of that year. We expect that for the forseeable future, our operations will provide us significant cash yield. Our working capital is nearly double our annual operating expenses, and our operations are cash-positive. With these resources, we expect that we will be able to fund the implementation of our business plan for the forseeable future.

Investors should take note of the following statement in the company's fiscal 2010 10K:

Our business plan contemplates that we intend to increase our production capacity of lithium-ion battery module to 3,000 per day, charger to 10,000 per day, and BMS to 4,000 per day. Implementation of this plan will require significant funds. The funds are needed in order to:

• Improve and upgrade our R&D center including purchase of more advanced research equipments and hiring of key technical talents in lithium-ion industry;
• Improve and expand our manufacture facilities including purchase of new machinery and equipment and construction of new workshops; 
• Develop regional distributors for the development of our own branded products; and
• Implement an advertising and marketing program adequate to assure us of substantial market presence. 

Our plan is to sell a portion of our equity in order to obtain the necessary funds, which will dilute the equity share of our existing shareholders. To date, however, we have received no commitment from any source for funds.

We did not notice any major financing transactions since this statement, leaving us to ponder if we can really believe the company's comments that it "will be able to fund the implementation of our business plan for the forseeable future."

On January 20, 2011 the Registrant's Chief Financial Officer, pursuant to authority from the Board of Directors, concluded that the financial statements included by the Registrant in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 should not be relied upon. The determination was based on his conclusion that the Registrant had failed to properly record as an expense the fair value of the 358,500 shares of common stock that the Registrant's chief executive officer transferred on September 2, 2010 to employees of the Registrant, a member of the Registrant's board of directors, and two members of the Registrant's U.S securities law firm. The Chief Financial Officer has discussed this determination with the Registrant's independent accountant.

The Registrant will amend its Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 to correct the error. The following are Management's current estimates of the changes that will result.

GeoTeam® Note: Adjusted EPS for the December 2010 second quarter was $0.08.

On March 19, 2010, PI Services Inc. acquired all of the outstanding capital stock of Sky Achieve Holdings, Inc., a British Virgin Islands limited liability corporation, pursuant to a Share Exchange Agreement dated March 4, 2010.  Sky Achieve has exclusive control over the business of Beijing GuoQiang Global Science & Technology Development Co., Ltd. Under the relationship, Sky Achieve has the right to receive all revenues obtained by Beijing Guoqiang, but also bears the responsibility for all of the expenses incurred by Beijing Guoqiang.

Business Snapshot:

Beijing Guoqiang designs, manufactures and markets Polymer lithium-ion battery modules, lithium-ion battery chargers, lithium-ion battery management systems as well as other lithium-ion battery management devices essential to proper power utilization.

Industry Snapshot: 

• According to a leader in global research and market analysis, by 2011 the market demand for power lithium-ion battery in China is projected to reach $15.740 billion. The combination of electric automobiles, including electric passenger car and electric highway passenger car, accounts for over 96% of the total market, with the electric bicycle market accounting for 2.4% of the total.
  
• This is a cutting-edge industry with no dominant players yet. We believe our technology and low cost of research and technology will enable us to become a leading company in this industry. Also, the Company is based in China and is a leading provider of power systems for in Hybrid and Electric cars and vehicles in China.

Financial Snapshot: (Year ends in June)

• 2009 Sales: $10.9 vs. $6.8 million
• 2009 Net Income: $1.7 million vs. $1.2 million

Post Merger Share Calculation:

•   2,217,480: Pre reverse merger outstanding shares  
• 42,134,020: Newly issued shares of Common Stock

GeoTeam® best effort calculation of total post reverse merger outstanding shares assuming full conversions:  20,159,772 (Adjusted for a 1 for 2.2 reverse split)