MIRA INFORM REPORT

Report Date :

18.05.2011

IDENTIFICATION DETAILS

Name :	LION BATTERY SYSTEMS (SHANGHAI) LTD.
Registered Office :	1-2/F, Bldg. 2, No. 508, Chundong Road, Xinzhuang Industrial Zone, Minhang District, Shanghai, 201108 Pr
Country :	China
Financials (as on) :	31.12.2009
Date of Incorporation :	18.03.2009
Com. Reg. No.:	310000400595272
Legal Form :	Wholly Foreign-Owned Enterprise
Line of Business :	manufacturing, processing and selling battery

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 200,000
Status :	Moderate
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – December 31, 2010

Country Name	Previous Rating (30.09.2010)	Current Rating (31.12.2010)
China	a2	a2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Bottom of Form

Company name & address

Lion Battery Systems (Shanghai) Ltd.

1-2/f, bldg. 2, no. 508, chundong road, xinzhuang industrial zone, minhang district, shanghai, 201108 PR CHINA

TEL: 86 (0) 21-54422800 FAX: 86 (0) 21-54429238

EXECUTIVE SUMMARY

INCORPORATION DATE : mar. 18, 2009

REGISTRATION NO. : 310000400595272

REGISTERED LEGAL FORM : WHOLLY FOREIGN-OWNED enterprise

CHIEF EXECUTIVE : MR. Arthur Wight Salyer (CHAIRMAN)

STAFF STRENGTH : 150

REGISTERED CAPITAL : CNY 23,500,000

BUSINESS LINE : MANUFACTURING & processing

TURNOVER : CNY 193,302,000 (AS OF DEC. 31, 2009)

EQUITIES : CNY 31,168,000 (AS OF DEC. 31, 2009)

PAYMENT : AVERAGE

RECOMM. CREDIT RANGE : UP TO USD 200,000

MARKET CONDITION : COMPETITIVE

FINANCIAL CONDITION : fairly stable

OPERATIONAL TREND : FAIRLY STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.51 = USD 1

Adopted abbreviations

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY - China Yuan Renminbi

Note: According to SC’s staff, SC’s correct address should be the heading one, while the given one – PE Division is the abbreviated name of Palladium Energy.

SC was registered as a wholly foreign-owned enterprise at local Administration for industry & commerce (AIC - the official body of issuing and renewing business license) on Mar. 18, 2009.

Company Status: Wholly foreign-owned enterprise

This form of business in PR China is defined as a legal person. It is a limited co. established within the territories of PR China with capital provided totally by the foreign investors. More than one foreign investor may jointly invest in a wholly foreign-owned enterprise. The investing party/parties solely exercise management, reap profit and bear risks and liabilities by themselves. This form of companies usually have a limited duration is extendible upon approval of Examination and Approval Authorities.

SC’s registered business scope includes designing, manufacturing and processing battery for mobile electronic equipment, back up system and other products; selling its products, wholesaling, commission agent, import and export the above products and the same classification commodities, and providing related technology consultation and services (in accordance with license).

SC is mainly engaged in manufacturing, processing and selling battery.

Mr. Arthur Wight Salyer is chairman and general manager of SC at present.

SC is known to have approx. 150 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office and factory in the industrial zone of Shanghai. The detailed information of the premise is unspecified.

SC is not known to host website of its own at present.

E-mail: echen@palladiumenergy.com

SC’s former chairman was Mr. William John Sanderson, and he was taken place by Mr. Arthur Wight Salyer.

Tax Registration Certificate No.: 310112685486102

Organization Code: 685486102

According to SC’s management, SC started its normal operation in July of 2009.

MAIN SHAREHOLDERS:

Name % of Shareholding

Lion HK Holding Company Limited 100

CR No.: 1266246

Date of Incorporation: 20-Aug-2008

Registered address: Level 28, Three Pacific Place, Queen’s Road East, Hong Kong SAR

Company Status: Private

Active Status: Live

l Chairman & General Manager:

Mr. Arthur Wight Salyer, American. He is currently responsible for the overall management of SC.

Working Experience(s):

At present Working in SC as chairman and general manager.

According to SC’s management, SC started its normal operation in July of 2009.

SC is mainly engaged in manufacturing, processing and selling battery.

SC’s products mainly include different sorts of batteries.

SC sources its materials 80% from domestic market, and 20% from overseas market. SC sells 70% of its products in domestic market, and 30% to overseas market.

The buying terms of SC include Check, T/T, L/C and Credit of 30-60 days. The payment terms of SC include Check, T/T, L/C and Credit of 30-60 days.

Note: SC’s management declined to release its customer and supplier details.

Palladium Energy Inc.

Add: 1245 East Diehl Road, Suite 307, Naperville, IL 60563 USA

P: +1 630 328 1961

Web: http://www.palladiumenergy.com

Overall payment appraisal :

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience : SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record : None in our database.

Debt collection record :No overdue amount owed by SC was placed to us for collection within the last 6 years.

Citibank China Co., Ltd. Shanghai Branch

AC# 1748041202

Relationship: Normal

Balance Sheet (as of Dec. 31, 2009)

Unit: CNY’000

Cash & bank	6,783
Inventory	9,394
Accounts receivable	79,297
Advances to suppliers	1,060
Other receivables	5,344
Other current assets	0
	------------------
Current assets	101,878
Fixed assets net value	8,960
Projects under construction	92
Long term investment	0
Other assets	4,199
	------------------
Total assets	115,129
	=============
Short loans	0
Accounts payable	65,485
Other payable	9,531
Taxes payable	3,649
Accrued payroll	3,180
Other current liabilities	2,116
	------------------
Current liabilities	83,961
Long term liabilities	0
	------------------
Total liabilities	83,961
Equities	31,168
	------------------
Total liabilities & equities	115,129
	=============

Income Statement (as of Dec. 31, 2009)

Unit: CNY’000

Turnover	193,302
Cost of goods sold	172,680
Sales expense	2,154
Management expense	11,342
Finance expense	101
Non-operating income	6,190
Profit before tax	12,623
Less: profit tax	4,954
Profits	7,669

Important Ratios

=============

	as of Dec. 31, 2009
*Current ratio	1.21
*Quick ratio	1.10
*Liabilities to assets	0.73
*Net profit margin (%)	3.97
*Return on total assets (%)	6.66
*Inventory /Turnover ×365	18 days
*Accounts receivable/Turnover ×365	150 days
*Turnover/Total assets	1.68
* Cost of goods sold/Turnover	0.89

PROFITABILITY: FAIRLY GOOD

l The turnover of SC appears fairly good in its line.

l SC’s net profit margin is average.

l SC’s return on total assets is fairly good.

l SC’s cost of goods sold is average, comparing with its turnover.

LIQUIDITY: AVERAGE

l The current ratio of SC is maintained in a normal level.

l SC’s quick ratio is maintained in a normal level.

l The inventory of SC is maintained in an average level.

l The accounts receivable of SC appears large in 2009.

l SC has no short-term loan in 2009.

l SC’s turnover is in an average level, comparing with the size of its total assets.

LEVERAGE: AVERAGE

l The debt ratio of SC is average.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fairly stable.

SC is considered medium-sized in its line with fairly stable financial conditions. The large amount of accounts receivable could be a threat to SC’s financial condition. A credit line up to USD 200,000 appears to be within SC’s capacities.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.45.07
UK Pound	1	Rs.63.57
Euro	1	Rs.72.97

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
----	NB	New Business	----

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.