WEB NEWS Comments & Business Outlook
China BAK Battery, Inc. and Subsidiaries Condensed consolidated statements of operations and comprehensive (loss) income For the three and six months ended March 31, 2015 and 2016
Three months ended March 31,
Six months ended March 31,
Note
2015
2016
2015
2016
Net revenues
21
$
3,066,307
$
3,198,913
$
6,145,414
$
8,699,502
Cost of revenues
(2,717,082
)
(3,298,207
)
(5,388,990
)
(8,957,094
)
Gross profit (loss)
349,225
(99,294
)
756,424
(257,592
)
Operating expenses:
Research and development expenses
(53,912
)
(360,540
)
(105,946
)
(1,108,077
)
Sales and marketing expenses
(19,035
)
(299,084
)
(38,383
)
(469,542
)
General and administrative expenses
(538,113
)
(1,171,573
)
(1,020,476
)
(2,201,284
)
Total operating expenses
(611,060
)
(1,831,197
)
(1,164,805
)
(3,778,903
)
Operating loss
(261,835
)
(1,930,491
)
(408,381
)
(4,036,495
)
Finance income (cost), net
16,029
(37,192
)
15,970
(35,186
)
Government grant (expense) income
14
(164,909
)
-
23,215,355
-
Other (expenses) income, net
(85,041
)
7,284
(85,041
)
50,676
(Loss) profit before income tax and discontinued operations
(495,756
)
(1,960,399
)
22,737,903
(4,021,005
)
Income tax credit (expenses)
15
41,532
57,241
(5,803,534
)
(14,826
)
(Loss) profit before discontinued operations, net of tax
(454,224
)
(1,903,158
)
16,934,369
(4,035,831
)
Income from discontinued operations, net of tax
6
1,521,519
-
1,521,519
-
Net profit (loss)
$
1,067,295
$
(1,903,158
)
$
18,455,888
$
(4,035,831
)
Other comprehensive profit (loss)
– Foreign currency translation adjustment
139,907
144,655
2,235
(341,535
)
Comprehensive income (loss)
$
1,207,202
$
(1,758,503
)
$
18,458,123
$
(4,377,366
)
(Loss) earnings per share – Basic and diluted
17
– From continuing operations
$
(0.04
)
$
(0.11
)
$
1.33
$
(0.23
)
– From discontinued operations
0.12
-
0.12
-
$
0.08
$
(0.11
)
$
1.45
$
(0.23
)
Weighted average number of shares of common stock:
17
– Basic and diluted
12,719,597
17,229,432
12,719,597
17,200,536
Comments & Business Outlook
China BAK Battery, Inc. and Subsidiaries Consolidated statements of operations and comprehensive (loss) income For the years ended September 30, 2014 and 2015
Note
2014
2015
Net revenues
21
$
123,014,080
$
13,904,414
Cost of revenues
(113,454,395
)
(12,954,553
)
Gross profit
9,559,685
949,861
Operating expenses:
Research and development expenses
(3,981,163
)
(1,001,889
)
Sales and marketing expenses
(4,504,410
)
(135,468
)
General and administrative expenses
(12,357,721
)
(3,329,763
)
Recovery of (provision for) doubtful accounts
639,390
(131,745
)
Total operating expenses
(20,203,904
)
(4,598,865
)
Operating loss
(10,644,219
)
(3,649,004
)
Finance cost, net
9, 11, 12
(16,800,404
)
-
Government grant income
14
74,532
23,103,427
Other income (expenses), net
665,053
(91,219
)
(Loss) profit before income tax and discontinued operations
(26,705,038
)
19,363,204
Income tax expenses
15
(16,475
)
(5,320,515
)
(Loss) profit before discontinued operations, net of tax
(26,721,513
)
14,042,689
Income from discontinued operations, net of tax
1
64,497,429
1,831,237
Net profit
37,775,916
15,873,926
Other comprehensive income
– Release of foreign currency translation adjustment upon disposal of subsidiaries
(39,008,449
)
-
– Foreign currency translation adjustment
1,071,881
(467,227
)
(37,936,568
)
(467,227
)
Comprehensive (loss) income
$
(160,652
)
$
15,406,699
(Loss) earnings per share - Basic
17
– From continuing operations
$
(2.12
)
$
1.10
– From discontinued operations
5.11
0.14
$
2.99
$
1.25
(Loss) earnings per share - Diluted
17
– From continuing operations
$
(2.12
)
$
1.09
– From discontinued operations
5.11
0.14
$
2.99
$
1.23
Weighted average number of shares of common stock:
17
– Basic
12,619,597
12,718,388
– Diluted
12,619,597
12,881,121
Management Discussion and Analysis
Net revenues. Net revenues were $13.9 million for the year ended September 30, 2015, as compared to $123.0 million for the fiscal year of 2014, a decrease of $109.1 million, or 88.7% . The decrease was primarily attributable to the disposal of BAK International and its subsidiaries that manufactured prismatic, cylindrical and lithium polymer cells. After June 30, 2014, we only generated revenue from sales of high-power lithium battery cells.
Net profit. As a result of the foregoing, we had a net profit of $15.9 million for the year ended September 30, 2015, compared to a net profit of $37.8 million for the year ended September 30, 2014.
Deal Flow
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On September 29, 2015, China BAK Battery, Inc. (the “Company”) entered into a Debt Conversion Agreement (the “Debt Conversion Agreement”) with certain individual creditors who loaned an aggregate of approximately $9.8 million, including accrued interest to the Company (the “Debts”). Pursuant to the terms of the Debt Conversion Agreement, each of the creditors agreed to convert existing loans into an aggregate 4,376,731 shares of common stock of the Company (the “Shares”) at a conversion price of $2.25 per share. Upon receipt of the Shares, the creditors will release the Company from any claims, demands and other obligations relating to the Debts.
The Shares will be issued to the creditors, each of whom represented to the Company that he/she is not a US person (as that term is defined in Regulation S of the Securities Act of 1933, as amended), in an offshore transaction in which we rely on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
Comments & Business Outlook
China BAK Battery, Inc. and Subsidiaries Condensed consolidated statements of operations and comprehensive (loss) income For the three and nine months ended June 30, 2014 and 2015
Three months ended June 30,
Nine months ended June 30,
Note
2014
2015
2014
2015
Net revenues
$
47,994,846
$
2,452,692
$
122,039,250
$
8,598,106
Cost of revenues
(43,675,974
)
(2,226,039
)
(112,558,168
)
(7,615,029
)
Gross profit
4,318,872
226,653
9,481,082
983,077
Operating expenses:
Research and development expenses
(1,469,263
)
(620,164
)
(3,981,130
)
(726,110
)
Sales and marketing expenses
(1,807,268
)
(41,175
)
(4,504,284
)
(79,558
)
General and administrative expenses
(3,920,264
)
(779,860
)
(11,912,505
)
(1,800,336
)
(Provision for) recovery of doubtful accounts
(729,415
)
-
639,390
-
Total operating expenses
(7,926,210
)
(1,441,199
)
(19,758,529
)
(2,606,004
)
Operating loss
(3,607,338
)
(1,214,546
)
(10,277,447
)
(1,622,927
)
Finance cost, net
(6,193,187
)
(64,429
)
(16,785,103
)
(48,459
)
Government grant income (expense)
22,413
(11,242
)
74,532
23,204,113
Other income (expenses)
(51,318
)
(11,635
)
636,343
(96,676
)
(Loss) profit before income tax and discontinued operations
(9,829,430
)
(1,301,852
)
(26,351,675
)
21,436,051
Income tax credit (expenses)
13
-
32,851
(16,474
)
(5,770,683
)
(Loss) profit before discontinued operations, net of tax
(9,829,430
)
(1,269,001
)
(26,368,149
)
15,665,368
Income from discontinued operations, net of tax
46,936,251
315,061
48,928,143
1,836,580
Net (loss) profit
37,106,821
(953,940
)
22,559,994
17,501,948
Other comprehensive income
Release of foreign currency translation adjustment upon disposal of subsidiaries
(39,008,449
)
-
(39,008,449
)
-
Foreign currency translation adjustment
(182,152
)
15,787
1,102,650
18,022
(39,190,601
)
15,787
(37,905,799
)
18,022
Comprehensive income (loss)
(2,083,780
)
(938,153
)
(15,345,805
)
17,519,970
(Loss) earnings per share - Basic
15
- From continuing operations
(0.77
)
(0.10
)
(2.07
)
1.23
- From discontinued operations
3.69
0.02
3.85
0.14
2.92
(0.08
)
1.78
1.37
(Loss) earnings per share - Diluted
15
- From continuing operations
(0.77
)
(0.10
)
(2.07
)
1.23
- From discontinued operations
3.69
0.02
3.85
0.14
2.92
(0.08
)
1.78
1.37
Weighted average number of shares of common stock:
- Basic
12,714,597
12,720,229
12,709,524
12,719,808
- Diluted
12,714,597
12,720,229
12,709,524
12,722,125
Management Discussion and Analysis
Net revenues. Net revenues were $2.5 million for the three months ended June 30, 2015, as compared to $48.0 million for the same period in 2014, representing a decrease of $45.5 million, or 94.9% . The decrease was primarily attributable to the disposal of BAK International and its subsidiaries that manufactured prismatic, cylindrical and lithium polymer cells. After June 30, 2014, we generated revenue from sales of high-power lithium battery cells mainly manufactured by BAK Tianjin under our outsourcing arrangement with them.
Net (loss) profit. As a result of the foregoing, we had a net loss of $0.9 million for the three months ended June 30, 2015, compared to a net profit of $37.1 million for the three months ended June 30, 2014.
Comments & Business Outlook
China BAK Battery, Inc. and Subsidiaries Condensed consolidated statements of operations and comprehensive (loss) income (Unaudited)
Three months ended March 31,
Six months ended March 31,
Note
2014
2015
2014
2015
Net revenues
$
32,838,758
$
3,066,307
$
74,044,404
$
6,145,414
Cost of revenues
(30,322,624
)
(2,717,082
)
(68,882,194
)
(5,388,990
)
Gross profit
2,516,134
349,225
5,162,210
756,424
Operating expenses:
Research and development expenses
(1,227,421
)
(53,912
)
(2,511,867
)
(105,946
)
Sales and marketing expenses
(1,244,052
)
(19,035
)
(2,697,016
)
(38,383
)
General and administrative expenses
(3,786,061
)
(538,113
)
(7,992,240
)
(1,020,476
)
(Provision for ) recovery of doubtful accounts
(188,118
)
-
1,368,804
-
Total operating expenses
(6,445,652
)
(611,060
)
(11,832,319
)
(1,164,805
)
Operating loss
(3,929,518
)
(261,835
)
(6,670,109
)
(408,381
)
Finance costs, net
(6,698,839
)
16,029
(10,591,916
)
15,970
Government grant income (expense)
19,447
(164,909
)
52,119
23,215,355
Other income (expenses)
208,043
(85,041
)
687,661
(85,041
)
(Loss) profit before income tax and discontinued operations
(10,400,867
)
(495,756
)
(16,522,245
)
22,737,903
Income tax credit (expenses)
13
-
41,532
(16,474
)
(5,803,534
)
(Loss) profit before discontinued operations, net of tax
(10,400,867
)
(454,224
)
(16,538,719
)
16,934,369
Income from discontinued operations, net of tax
1,136,082
1,521,519
1,991,892
1,521,519
Net (loss) profit
(9,264,785
)
1,067,295
(14,546,827
)
18,455,888
Other comprehensive income
- Foreign currency translation adjustment
1,411,825
139,907
1,284,802
2,235
Comprehensive income (loss)
$
(7,852,960
)
$
1,207,202
$
(13,262,025
)
$
18,458,123
(Loss) earnings per share – Basic and diluted
15
- From continuing operations
$
(0.82
)
$
(0.04
)
$
(1.30
)
$
1.33
- From discontinued operations
0.09
0.12
0.16
0.12
$
(0.73
)
$
0.08
$
(1.14
)
$
1.45
Weighted average number of shares of common stock:
- Basic
12,709,597
12,719,597
12,707,015
12,719,597
- Diluted
12,709,597
12,719,597
12,707,015
12,719,597
Management Discussion and Analysis
Net revenues. Net revenues were $3.0 million for the three months ended March 31, 2015, as compared to $32.8 million for the same period in 2014, representing a decrease of $29.8 million, or 90.7%. The decrease was primarily attributable to the disposal of BAK International and its subsidiaries that manufactured prismatic, cylindrical and lithium polymer cells. After June 30, 2014, we generated revenue from sales of high-power lithium battery cells mainly manufactured by BAK Tianjin under our outsourcing arrangements with them.
Net profit (loss). As a result of the foregoing, we had a net profit of $1.1 million for the three months ended March 31, 2015, compared to a net loss of $9.3 million for the three months ended March 31, 2014.
Comments & Business Outlook
China BAK Battery, Inc. and Subsidiaries Condensed consolidated statements of operations and comprehensive (loss) income For the three months ended December 31, 2013 and 2014
Three months ended December 31,
Note
2013
2014
Net revenues
19
$
41,205,646
$
3,079,107
Cost of revenues
(38,559,570
)
(2,671,908
)
Gross profit
2,646,076
407,199
Operating expenses:
Research and development expenses
(1,284,446
)
(52,034
)
Sales and marketing expenses
(1,452,964
)
(19,348
)
General and administrative expenses
(4,206,179
)
(482,363
)
Recovery of doubtful accounts
1,556,922
-
Total operating expenses
(5,386,667
)
(553,745
)
Operating loss
(2,740,591
)
(146,546
)
Finance costs, net
(3,893,077
)
(59
)
Government grant income
12
32,672
23,380,264
Other income (expense), net
479,618
-
(Loss) profit before income tax and discontinued operations
(6,121,378
)
23,233,659
Income tax expenses
13
(16,474
)
(5,845,066
)
(Loss) profit before discontinued operations, net of tax
(6,137,852
)
17,388,593
Income from discontinued operations, net of tax
855,810
-
Net (loss) profit
(5,282,042
)
17,388,593
Other comprehensive income
Foreign currency translation adjustment
(127,023
)
(137,672
)
Comprehensive (loss) income
$
(5,409,065
)
$
17,250,921
(Loss) earnings per share – Basic and diluted
15
- From continuing operations
$
(0.49
)
$
1.37
- From discontinued operations
0.07
-
$
(0.42
)
$
1.37
Weighted average number of shares of common stock:
15
- Basic
12,704,597
12,719,597
- Diluted
12,704,597
12,719,597
Management Discussion and Analysis
Net revenues: Net revenues decreased by $38.1 million, or 92.5%, to $3.1 million for the three months ended December 31, 2014, from $41.2 million for the same period in 2013.
Net profit (loss) from continuing operations: Net profit from continuing operations was $17.4 million for the three months ended December 31, 2014, representing an improvement of $29.4 million from a net loss from continuing operations of $6.1 million for the same period in 2013.
Income from discontinued operations: No income was generated from our discontinued operations for the three months ended December 31, 2014, compared to a net profit of $0.9 million for the same period in 2013.
Fully diluted earnings (loss) per share: Fully diluted earnings per share was $1.37 for the three months ended December 31, 2014, as compared to fully diluted loss per share of $0.42 for the same period in 2013.
Comments & Business Outlook
China BAK Battery, Inc. and Subsidiaries
Note
2013
2014
Net revenues
21
$
185,552,560
$
123,014,080
Cost of revenues
(202,159,615
)
(113,454,395
)
Gross (loss) profit
(16,607,055
)
9,559,685
Operating expenses:
Research and development expenses
(5,367,962
)
(3,981,163
)
Sales and marketing expenses
(7,645,217
)
(4,504,410
)
General and administrative expenses
(17,490,537
)
(12,357,721
)
Recovery of doubtful accounts
8,958,428
639,390
Impairment charge on property, plant and equipment
8
(62,527,213
)
-
Total operating expenses
(84,072,501
)
(20,203,904
)
Operating loss
(100,679,556
)
(10,644,219
)
Finance costs, net
8, 11, 12
(11,522,580
)
(16,800,404
)
Government grant income
131,515
74,532
Other income (expense), net
1,763,990
665,053
Loss before income tax and discontinued operations
(110,306,631
)
(26,705,038
)
Income tax expenses
15 (a)
(6,119,964
)
(16,475
)
Net loss from continuing operations, net of tax
(116,426,595
)
(26,721,513
)
Income from discontinued operations, net of tax
397,516
64,497,429
Net (loss) profit
(116,029,079
)
37,775,916
Other comprehensive income
Release of foreign currency translation adjustment upon disposal of subsidiaries
(20,850
)
(39,008,449
)
Foreign currency translation adjustment
602,337
1,071,881
581,487
(37,936,568
)
Comprehensive loss
$
(115,447,592
)
$
(160,652
)
(Loss) earnings per share – Basic and diluted
17
- From continuing operations
$
(9.22
)
$
(2.12
)
- From discontinued operations
0.03
5.11
(Loss) earnings per share – Basic and diluted
$
(9.19
)
$
2.99
Weighted average number of shares of common stock:
17
- Basic
12,619,597
12,619,597
- Diluted
12,619,597
12,619,597
Management Discussion and Analysis
Net revenues. Net revenues were $123.0 million for the fiscal year ended September 30, 2014, as compared to $185.6 million for the fiscal year of 2013, a decrease of $62.6 million, or 33.7% . This decrease was primary attributable to the disposal of BAK International and its subsidiaries that manufactured prismatic cells, cylindrical cells and lithium polymer cells. We only realized sales from high-power lithium battery cells after the disposal of BAK International on June 30, 2014.
Net revenues from sales of aluminum-case cells decreased to $24.5 million in fiscal year 2014, from $28.8 million in the fiscal year 2013, a decrease of $4.3 million, or 14.9%, resulting from a decrease of 45.9% in sales volume offset by an increase of 57.2% in average selling price. The decrease in sales volume was because of the continuing decrease in demand for aluminum-case cells in view of the popularity of polymer smartphone batteries in this period. The increase in average selling price was because we disposed of a large quantity of obsolete and low quality products at a lower selling price in the same corresponding period of last year. In addition, we disposed of our former subsidiaries which were engaged in the sale of aluminum-case cell products in June 2014.
Net revenues from sales of battery packs, which are a crucial component of smartphones, decreased to $61.8 million in the fiscal year 2014, from $63.7 million in the fiscal year 2013, a decrease of $1.9 million, or 3.0% . This resulted from a decrease of 21.2% in sales volume offset by an increase of 23.3% in average selling price. The decrease in sales volume was because of fewer reconditioned products sold in 2014. The increase in average selling price was mainly attributable to a relatively higher percentage of sales in 2014 attributable to the sale of high value batteries used in smartphones with higher capacity and long standby time requirements sold for the nine months ended June 30, 2014 as compared to the same period last year. In addition, we disposed of our former subsidiaries which were engaged in the sale of battery packs products in June 2014.
Net revenues from sales of cylindrical cells decreased to $9.3 million in the fiscal year 2014, from $46.0 million in fiscal year 2013, a decrease of $36.7 million, or 79.8% . This resulted from a decrease of 73.9% in sales volume accompanied with a decrease of 22.6% in average selling price. The decrease in sales volume and price were attributable to the fierce competition in cylindrical cells, especially from South Korean competitors. In addition, we disposed of our former subsidiaries which were engaged in sale of cylindrical cells products in June 2014.
Net profit (loss). As a result of the foregoing, we had a net profit of $37.8 million for the year ended September 30, 2014, compared to a net loss of $116.0 million for the year ended September 30, 2013.
Auditor trail
ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
Mr. Wengwu Wang, age 32, has served as the financial controller of the Company’s PRC subsidiary, Dalian BAK Power Battery Co., Ltd. since April 2014 and was the vice financial manager of the Company’s former PRC subsidiary, Shenzhen BAK Battery Co., Ltd. (“Shenzhen BAK”) from August 2013 to June 2014. He has also served as consolidation and financial reporting manager of the Company since September 2012. From November 2010 to September 2012, he served as financial manager of the Company’s former Indian subsidiary, BAK Telecom India Private Limited. From October 2008 to November 2010, Mr. Wang was account receivable supervisor of Shenzhen BAK and consolidation and financial reporting assistant of the Company. Mr. Wang received a bachelor’s degree in Accounting from Southwest University in China.
Comments & Business Outlook
China BAK Battery, Inc. and subsidiaries
Condensed consolidated statements of operations and comprehensive loss
For the three and nine months ended June 30, 2013 and 2014
(Unaudited)
(In US$ except for number of shares)
Three months ended June 30,
Nine months ended June 30,
2013
2014
2013
2014
Net revenues
$
45,598,726
$
47,994,846
$
153,397,578
$
122,039,250
Cost of revenues
(46,986,217
)
(43,675,974
)
(162,576,588
)
(112,558,168
)
Gross (loss) profit
(1,387,491
)
4,318,872
(9,179,010
)
9,481,082
Operating expenses:
Research and development expenses
(1,135,371
)
(1,469,263
)
(3,995,011
)
(3,981,130
)
Sales and marketing expenses
(1,710,001
)
(1,807,268
)
(5,812,595
)
(4,504,284
)
General and administrative expenses
(4,654,653
)
(3,920,264
)
(13,743,951
)
(11,912,505
)
Recovery of (provision for) doubtful accounts
4,387,805
(729,415
)
5,087,650
639,390
Impairment charge on property, plant and equipment
(3,207,649
)
-
(14,603,998
)
-
Total operating expenses
(6,319,869
)
(7,926,210
)
(33,067,905
)
(19,758,529
)
Operating loss
(7,707,360
)
(3,607,338
)
(42,246,915
)
(10,277,447
)
Finance costs, net
(3,454,229
)
(6,193,187
)
(7,893,537
)
(16,785,103
)
Recovery of loss (loss) arising from loan guarantees
808,950
-
(2,002,089
)
-
Government grant income
112,796
22,413
131,073
74,532
Other income (expense)
27,167
(51,318
)
(29,063
)
636,343
Loss before income tax and continuing operations
(10,212,676
)
(9,829,430
)
(52,040,531
)
(26,351,675
)
Income tax expenses
(58,005
)
-
(6,084,277
)
(16,474
)
Net loss from continuing operations, net of tax
(10,270,681
)
(9,829,430
)
(58,124,808
)
(26,368,149
)
Income from discontinued operations, net of tax
-
46,936,251
-
48,928,143
Net (loss) profit
$
(10,270,681
)
$
37,106,821
$
(58,124,808
)
$
22,559,994
Other comprehensive income
Release of foreign currency translation adjustment upon disposal of subsidiaries
-
(39,008,449
)
-
(39,008,449
)
Foreign currency translation adjustment
871,823
(182,152
)
2,235,990
1,102,650
871,823
(39,190,601
)
2,235,990
(37,905,799
)
Comprehensive loss
$
(9,398,858
)
$
(2,083,780
)
$
(55,888,818
)
$
(15,345,805
)
(Loss) earnings per share – Basic and diluted
- From continuing operations
$
(0.81
)
$
(0.78
)
$
(4.61
)
$
(2.09
)
- From discontinued operations
-
3.72
-
3.88
(Loss) earnings per share – Basic and diluted
$
(0.81
)
$
2.94
$
(4.61
)
$
1.79
Weighted average number of shares of common stock:
- Basic
12,619,597
12,619,597
12,619,597
12,619,597
- Diluted
12,619,597
12,619,597
12,619,597
12,619,597
Management Discussion and Analysis
Net revenues. Net revenues were $48.0 million for the three months ended June 30, 2014, as compared to $45.6 million for the same period in 2013, an increase of $2.4 million, or 5.3%. This increase was primarily attributable to the increase in sales of battery packs by $13.6 million, or 88.5%, compared with the same period last year.
Net revenues from sales of aluminum-case cells decreased to $3.4 million for the three months ended June 30, 2014, from $7.6 million in the same period in 2013, a decrease of $4.2 million, or 55.6%, resulting from a decrease of 60.2% in sales volume, partially offset by a a rise of 11.9% in average selling price. The decrease in sales volume was because of the continuing decrease in demand for aluminum-case cells in view of the popularity of polymer smartphone batteries and fewer reconditioned products sold in this period. We disposed of a large quantity of obsolete and low quality products at a lower selling price in the same corresponding period of last year.
Net revenues from sales of battery packs, which are a crucial component of smartphones, increased to $29.1 million in the three months ended June 30, 2014, from $15.4 million in the same period in 2013, an increase of $13.6 million, or 88.5% . This resulted from an increase of 31.8% in sales volume as well as an increase of 42.9% in average selling price. The increase in sales volume resulted from an increase in our main customers end-market sales. The increase in average selling price was because we sold more high value, high capacity batteries used in smartphones with long standby time and fewer reconditioned batteries to customers.
Net revenues from sales of cylindrical cells decreased to $3.3 million in the three months ended June 30, 2014, from $8.5 million in the same period in 2013, a decrease of $5.1 million, or 60.6% . This resulted from a decrease of 18.7% in sales volume accompanied by a decrease of 51.6% in average selling price. The decrease in sales volume and price were attributable to the fierce competition in cylindrical cells, especially from South Korean competitors. Our sales volume was adversely impacted by such competition and we had to reduce selling prices in order to remain competitive.
Lithium polymer cells are generally used for smart phones. We sold $10.0 million in lithium polymer cells for the three months ended June 30, 2014, compared to $10.5 million in lithium polymer cells in the same period in 2013, a decrease of $0.5 million, or 5.0%, resulting from a decrease of 21.1% in sales volume offset by an increase of 21.1% in average selling price. The decrease in sales volume was attributable to the fierce competition in the battery market. The increase in average selling price was because we disposed of obsolete and low quality products at a lower selling price in the same corresponding period of last year.
We also sold approximately $2.3 million in high-power lithium battery cells for the three months ended June 30, 2014, as compared to $3.7 million in high-power lithium battery cells in the same period in 2013, a decrease of $1.4 million, or 38.1%, resulting from a decrease of 60.2% in sales volume offset by an increase of 56.3% in average selling price. The light electric vehicle market, in particular the electric bicycle market, was turning to be more competitive, and we became more selective in customers and gave up low value customers while trying to retain higher end customers.
Investor Alert
The GeoTeam issued a follow-up report on CBAK on July 29, 2014.
For 3 years, firms like GeoInvesting have been exposing misrepresentations made by U.S. listed China-based companies that have stolen billions of dollars from U.S. investors. Regardless of this fact, it looks like China-based management teams still show no fear that U.S. exchanges will quickly call their bluff even after making outrageously false claims to investors. Maybe they feel untouchable since regulators have been unable to meaningfully punish the players involved in deceitful actions. Who knows? But one thing is for certain: Investors keep getting hurt by the Exchanges’ delayed actions against patently false and misleading press releases.
This brings us to CBAK. We were shocked by the obviously false statements management made in yesterday morning’s press release, causing shares to rise around 15%.
Highlights:
CBAK made false and misleading statements in its July 28, 2014 press release;
We hope that the NASDAQ will not take CBAK management’s statements lightly;
The company has still not addressed the fact that it just lost its primary revenue-generating asset to foreclosure
Please see the rest of our article here .
Investor Alert
Yesterday, we published a premium report on CBAK, "Loan Default And Foreclosure Bring China BAK Battery’s Solvency And Viability Into Question", that was eventually made public on Seeking Alpha.
Highlights:
China BAK Battery (CBAK), together with its subsidiaries, engages in the manufacture, commercialization, and distribution of standard and customized lithium ion (Li-ion) rechargeable batteries. However, as of Q2 2014, all of China Bak’s producing assets have been repossessed by creditors. The company has one remaining facility which is still under construction. CBAK’s shares have been on a tear since the end of June reaching a 52-week high of $5.00 on July 2, 2014. However, CBAK is now essentially a start-up, which we believe should be valued on shareholder equity. Our best case scenario puts CBAK’s new book value per share at around $0.10.
Highlights:
CBAK lost a primary operating asset to foreclosure, which should result in the company reporting little to no revenue when it files its Q4 2014 September results.
Loss of asset speaks volumes. CBAK hoped to sell assets to fund future growth and repair its balance sheet sporting Q2 negative equity of $56.5M, up 16% vs. Q1.
We don’t think many investors buying CBAK are aware of recent developments since the company has not issued any formal related press releases on major news wires.
We question CBAK’s viability to continue as an operating entity unless it raises substantial capital, which the company admits has been challenging.
Please see the rest of our article here .
Investor Alert
ITEM 8.01. OTHER EVENTS.
On June 30, 2014, the Company received from Mr. Wang notice that due to Shenzhen BAK’s default under the Loans, he had foreclosed his security interest in and sold and transferred to a third party the Pledged BAK International Equity for a purchase price of RMB520 million.
As a result of the above foreclosure, the Company currently owns a Hong Kong subsidiary, China BAK Asia Holdings Limited, which in turn wholly owns two Chinese subsidiaries, Dalian BAK Trading Co., Ltd. and Dalian BAK Power Battery Co., Ltd. (“Dalian BAK Power”). Dalian BAK Power is engaged in the business of developing, manufacturing and selling new energy high power batteries, which are used in electric cars, light electric vehicles and other high power applications.
Comments & Business Outlook
China BAK Battery, Inc. and subsidiaries
Condensed consolidated statements of operations and comprehensive loss
For the three and six months ended March 31, 2013 and 2014
(Unaudited)
(In US$ except for number of shares)
Three months ended March 31,
Six months ended March 31,
2013
2014
2013
2014
Net revenues
Manufacture of batteries
$
44,066,491
$
32,838,758
$
107,798,852
$
74,044,404
Property lease and management
-
1,444,596
-
2,609,427
44,066,491
34,283,354
107,798,852
76,653,831
Cost of revenues
Manufacture of batteries
(47,619,000
)
(30,322,624
)
(115,590,371
)
(68,882,194
)
Property lease and management
(308,514
)
(617,535
)
(47,619,000
)
(30,631,138
)
(115,590,371
)
(69,499,729
)
Gross profit (loss)
(3,552,509
)
3,652,216
(7,791,519
)
7,154,102
Operating expenses:
Research and development expenses
(1,314,604
)
(1,227,421
)
(2,859,640
)
(2,511,867
)
Sales and marketing expenses
(1,914,579
)
(1,244,052
)
(4,102,594
)
(2,697,016
)
General and administrative expenses
(5,307,869
)
(3,786,061
)
(9,089,116
)
(7,992,240
)
Recovery of (provision for) bad debt provision
6,899,731
(188,118
)
699,665
1,368,804
Impairment charge on property, plant and equipment
(11,396,349
)
-
(11,396,349
)
-
Total operating expenses
(13,033,670
)
(6,445,652
)
(26,748,034
)
(11,832, 319
)
Operating loss
(16,586,179
)
(2,793,436
)
(34,539,553
)
(4,678,217
)
Finance costs, net
(1,705,189
)
(6,698,839
)
(4,439,308
)
(10,591,916
)
Reversal of loss (loss) arising from loan guarantees
4,549,667
-
(2,811,039
)
-
Government grant income
35
19,447
18,277
52,119
Other income (expenses)
47,555
208,043
(56,231
)
687,661
Loss before income taxes
(13,694,111
)
(9,264,785
)
(41,827,854
)
(14,530,353
)
Provision for income tax
(5,994,266
)
-
(6,026,273
)
(16,474
)
Net loss
$
(19,688,377
)
$
(9,264,785
)
$
(47,854,127
)
$
(14,546,827
)
Other comprehensive income
- Foreign currency translation adjustment
432,726
1,411,825
1,364,166
1,284,802
Comprehensive loss
$
(19,255,651
)
$
(7,852,960
)
$
(46,489,961
)
$
(13,262,025
)
Net loss per share:
- Basic
$
(1.56
)
$
(0.73
)
$
(3.79
)
$
(1.15
)
- Diluted
$
(1.56
)
$
(0.73
)
$
(3.79
)
$
(1.15
)
Weighted average number of shares of common stock:
- Basic
12,619,597
12,619,597
12,619,597
12,619,597
- Diluted
12,619,597
12,619,597
12,619,597
12,619,597
Management Discussion and Analysis
Net revenues
Net revenues were $34.3 million for the three months ended March 31, 2014, as compared to $44.0 million for the same period in 2013, representing a decrease of $9.7 million, or 22.2% . This decrease was primarily attributable to the reduction in our revenue from our manufacture of batteries segment with revenue decreasing from $44.0 million for the three months ended March 31, 2013 to $32.8 for the three months ended March 31, 2014, offset by an increase in our revenue from our property lease and management segment amounting $1.4 million. We leased out the Research and Development Test Centre starting from September 2013 onwards.
Net revenues from sales of aluminum-case cells decreased to $8.0 million for the three months ended March 31, 2014, from $9.0 million in the same period in 2013, a decrease of $1.0 million, or 11.0%, resulting from a rise of 52.9% in average selling price, offset by a decrease of 41.7% in sales volume. The decrease in sales volume was because of the continuing decrease in demand for aluminum-case cells in view of the popularity of polymer smartphone batteries and fewer reconditioned products sold in this period. The increase in average selling price was because we disposed of a large quantity of obsolete and low quality products at a lower selling price in the same corresponding period of last year.
Net revenues from sales of battery packs, which are a crucial component of smartphones, decreased to $15.6 million in the three months ended March 31, 2014, from $17.4 million in the same period in 2013, a decrease of $1.8 million, or 10.3% . This resulted from a decrease of 11.9% in sales volume, partially offset by a slight increase of 2.2% in average selling price. Due to our difficult cash flow conditions in this period, some of our main cell phone customers reduced their orders from us and purchased more from our competitors.
Net revenues from sales of cylindrical cells decreased to $0.5 million in the three months ended March 31, 2014, from $10.7 million in the same period in 2013, a decrease of $10.2 million, or 95.5% . This resulted from a decrease of 94.6% in sales volume accompanied by a decrease of 15.3% in average selling price. The decrease in sales volume and price were attributable to the fierce competition in cylindrical cells, especially from South Korean competitors. Our sales volume was adversely impacted by such competition and we had to reduce price in order to remain competitive.
Lithium polymer cells are generally used for smart phones. We sold $5.6 million in lithium polymer cells for the three months ended March 31, 2014, compared to $2.9 million in lithium polymer cells in the same period in 2013, an increase of $2.7 million, or 91.4%, resulting from an increase of 131.7% in sales volume partially offset by a decrease of 17.8% in average selling price. The decrease in price was attributable to the fierce competition in the battery market. Increase in sales volume was mainly because of more sales of reconditioned products in this period. We made more marketing efforts to sell our reconditioned polymer cells in order to generate quicker cash.
We also sold approximately $3.2 million in high-power lithium battery cells for the three months ended March 31, 2014, as compared to $4.1 million in high-power lithium battery cells in the same period in 2013, a decrease of $0.9 million, or 22.2%, resulting from a decrease of 55.5% in sales volume partially offset by an increase of 74.0% in average selling price. The light electric vehicle market was becoming more competitive. We intend to give up low value customers while trying to retain high-end customers.
As a result of the foregoing, we had a net loss of $9.3 million for the three months ended March 31, 2014, compared to a net loss of $19.7 million for the three months ended March 31, 2013.
Deal Flow
ITEM 2.04. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
As previously disclosed, on December 17, 2013 and January 8, 2014, Shenzhen BAK Battery Co., Ltd. (“Shenzhen BAK”), a wholly-owned subsidiary of China BAK Battery, Inc. (the “Company”) entered into two loan agreements (the “Loan Agreements”) with Mr. Jinghui Wang, pursuant to which, Shenzhen BAK borrowed from Mr. Wang an aggregate of RMB520 million (approximately $85.9 million) (the “Loans”). Pursuant to the Loan Agreements, Shenzhen BAK has the obligations to repay the principal amount of RMB520 million and any accrued interest to Mr. Wang by March 31, 2014. To secure the repayment of the Loans, the Company and the Company’s wholly-owned Hong Kong subsidiary, BAK International Limited (“BAK International”) separately entered into a corporate guarantee with Mr. Wang, under which each of the Company and BAK International irrevocably and unconditionally guaranteed to the lender timely performance by Shenzhen BAK of all its obligations under the Loan Agreements. In addition, the Company and BAK International entered into a Share Mortgage with Mr. Wang, under which, the Company pledged 100% of its equity interest in BAK International to the lender as security for the performance of Shenzhen BAK’s obligations under the Loan Agreements (the “Pledged Equity Interests”). If Shenzhen BAK defaults on its repayment obligation under or in connection with the Loan Agreements, Mr. Wang, as the pledgee, will be entitled to dispose of the Pledged Equity Interests.
On April 24, 2014, the Company received a notice from Mr. Wang (the “Default Notice”), dated April 10, 2014, that Shenzhen BAK was in default of the Loans for failure to repay the principal and accrued interest in the total sum of RMB545,263,440.86 (the “Default Amount”), of which RMB520 million is the principal and RMB25,263,440.86 is the accrued interest calculated up to March 31, 2014, to Mr. Wang. In the Default Notice, Mr. Wang stated that unless Shenzhen BAK repays the Default Amount together with any additional accrued interest up to the date of actual payment, within seven days from the date of the Default Notice, he would proceed to enforce all his rights under the Pledge Equity Interests including but not limited to selling or otherwise dispose of the Pledged Equity Interests and collect and apply the proceeds in or towards settlement or discharge of the Liabilities (as defined in the Share Mortgage) without further notice to the Company.
Prior to receipt of the Default Notice from Mr. Wang, we had been negotiating with Mr. Wang for a settlement of amounts owed by us under the Loan Agreements, and following receipt of the Default Notice, we continue to work with Mr. Wang towards a settlement. We cannot, however, give assurance that we and Mr. Wang will be able to reach a mutually satisfactory settlement agreement. If no settlement is reached, Mr. Wang may foreclose on the ownership of BAK International, which constitutes a substantial portion of the Company’s assets.
Deal Flow
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
As previously disclosed, on December 17, 2013, Shenzhen BAK Battery Co., Ltd. (“Shenzhen BAK”), a wholly-owned subsidiary of China BAK Battery, Inc. (the “Company”) entered into a loan agreement (the “Loan Agreement”), with Mr. Jinghui Wang, pursuant to which, Mr. Wang agreed to initially lend Shenzhen BAK a loan in the amount of RMB370 million (approximately $61.1 million). On January 14, 2014, the Company’s wholly-owned Hong Kong subsidiary, BAK International Limited (“BAK International) entered into a corporate guarantee with Mr. Wang, under which BAK International irrevocably and unconditionally guaranteed to the lender timely performance by Shenzhen BAK of all its obligations under the Loan Agreement. On the same date, the Company and BAK International entered into a share mortgage with Mr. Wang, under which, the Company pledged 100% of its equity interest in BAK International to the lender as security for the performance of Shenzhen BAK’s obligations under the Loan Agreement. If Shenzhen BAK defaults on its repayment obligation under or in connection with the Loan Agreement, the lender, as the pledgee, will be entitled to dispose of the pledged equity interests.
On January 8, 2014, Shenzhen BAK entered into a second loan agreement (the “Second Loan Agreement”), with Mr. Wang, pursuant to which, Mr. Wang agreed to lend Shenzhen BAK an additional RMB150 million (approximately $24.8 million) which bears an annual interest rate at 20%. As a result, Mr. Wang loaned a total of RMB520 million (approximately $85.9 million) to Shenzhen BAK. Pursuant to the Second Loan Agreement, Shenzhen BAK has the obligations to repay the principal amount of RMB520 million and any accrued interests to the lender by March 31, 2014.
On March 10, 2014, BAK International entered into a corporate guarantee with Mr. Wang (“BAK International Corporate Guarantee”), under which BAK International irrevocably and unconditionally guaranteed to the lender timely performance by Shenzhen BAK of all its obligations under the Second Loan Agreement. On the same date, the Company also entered into a similar corporate guarantee with Mr. Wang (“China BAK Corporate Guarantee”), to irrevocably and unconditionally guarantee timely performance by Shenzhen BAK of all its obligations under the Second Loan Agreement. In addition, on March 10, 2014, the Company, BAK International and Shenzhen BAK entered into a further share mortgage (the “Further Share Mortgage”) with Mr. Wang, under which, the 100% equity interest in BAK International that the Company pledged to the lender on January 14, 2014 was deemed as security for the performance of Shenzhen BAK’s obligations under the Second Loan Agreement. If Shenzhen BAK defaults on its repayment obligation under or in connection with the Second Loan Agreement, including but not limited to the repayment of the total amount of RMB520 million and any accrued interested by March 31, 2014, the lender, as the pledgee, will be entitled to dispose of all the pledged equity interests.
The foregoing description of the Second Loan Agreement, BAK International Corporate Guarantee, China BAK Corporate Guarantee and the Further Share Mortgage is qualified in its entirety by the Second Loan Agreement, BAK International Corporate Guarantee, China BAK Corporate Guarantee and the Further Share Mortgage, a copy of each document is attached as Exhibit 10.1, 10.2, 10.3 and 10.4 hereto, respectively, and are incorporated by reference herein.
Comments & Business Outlook
China BAK Battery, Inc. and subsidiaries Condensed consolidated statements of operations and comprehensive loss For the three months ended December 31, 2012 and 2013
Three months ended December 31,
Note
2012
2013
Net revenues
Manufacture of batteries
$
63,732,361
$
41,205,646
Property lease and management
-
1,164,831
19
63,732,361
42,370,477
Cost of revenues
Manufacture of batteries
(67,971,371
)
(38,559,570
)
Property lease and management
-
(309,021
)
(67,971,371
)
(38,868,591
)
Gross (loss)/ profit
19
(4,239,010
)
3,501,886
Operating expenses:
Research and development expenses
(1,545,036
)
(1,284,446
)
Sales and marketing expenses
(2,188,015
)
(1,452,964
)
General and administrative expenses
(3,767,086
)
(4,206,179
)
(Provision for) recovery of doubtful accounts
(6,200,065
)
1,556,922
Total operating expenses
(13,700,202
)
(5,386,667
)
Operating loss
(17,939,212
)
(1,884,781
)
Finance costs, net
(2,734,119
)
(3,893,077
)
Government grant income
18,242
32,672
Loss arising from loan guarantees
(7,360,706
)
-
Other (expenses) income
(117,948
)
479,618
Loss before income taxes
(28,133,743
)
(5,265,568
)
Provision for income tax
13
(32,006
)
(16,474
)
Net loss
$
(28,165,749
)
$
(5,282,042
)
Other comprehensive income
- Foreign currency translation adjustment
931,440
(127,023
)
Comprehensive loss
$
(27,234,309
)
$
(5,409,065
)
Weighted average number of ordinary shares:
15
- Basic
12,619,597
12,619,597
- Diluted
12,619,597
12,619,597
Net loss per share:
15
- Basic
$
(2.23
)
$
(0.42
)
- Diluted
$
(2.23
)
$
(0.42
)
Management Discussion and Analysis
Results of Operations Comparison of Three Months Ended December 31, 2013 and 2012
Net revenues
Net revenues were $42.4 million for the three months ended December 31, 2013, as compared to $63.7 million for the same period in 2012, a decrease of $21.4 million, or 33.5% . This decrease was primarily attributable to the reduction in our revenue from our manufacture of batteries segment with revenue decreasing from $63.7 million for the three months ended December 31, 2012 to $41.2 million for the three months ended December 31, 2013, offset by an increase in our revenue from our property lease and management segment amounting $1.2 million. We leased out the Research and Development Test Centre starting from September 2013 onwards.
Net revenues from sales of aluminum-case cells increased to $13.1 million for the three months ended December 31, 2013, from $9.3 million in the same period in 2012, an increase of $3.8 million, or 40.9%, resulting from a rise of 134% in average selling price, offset by a decrease of 39.0% in sales volume. The decrease in sales volume was because of the decrease in demand for aluminum-case cells in view of the popularity of polymer smartphone batteries and fewer reconditioned products sold in this period. The increase in average selling price was because we disposed of a large quantity of obsolete and low quality products at a lower selling price in the same period last year.
Net revenues from sales of battery packs, which is a crucial component of smartphones, decreased to $17.2 million in the three months ended December 31, 2013, from $22.4 million in the same period in 2012, a decrease of $5.2 million, or 23.2% . This resulted from a decrease of 21.2% in sales volume as well as a decrease of 3.0% in average selling price. Due to our intense cash flow conditions in this period, some of our main cell phone customers reduced their orders and purchased more from our competitors. We continued to decrease our unit price in order to retain our market share and accordingly, the unit selling price dropped in this period as compared with the corresponding period of last year.
Net revenues from sales of cylindrical cells decreased to $5.5 million in the three months ended December 31, 2013, from $19.6 million in the same period in 2012, a decrease of $14.1 million, or 71.9% . This resulted from a decrease of 70.4% in sales volume accompanied with a decrease of 5.7% in average selling price. The decrease in sales volume and price were attributable to the fierce competition in cylindrical cells, especially from South Korean competitors. Our sales volume was adversely impacted by such competition and we had to reduce price in order to maintain our market share.
Lithium polymer cells are generally used for smart phones. We sold $1.6 million in lithium polymer cells for the three months ended December 31, 2013, compared to $6.9 million in lithium polymer cells in the same period in 2012, a decrease of $5.3 million, or 76.8%, resulting from a decrease of 76.2% in sales volume accompanied by a decrease of 3% in average selling price. Decrease in sale volume was mainly because fewer sales of reconditioned products in this period.
We also sold approximately $3.9 million in high-power lithium battery cells for the three months ended December 31, 2013, as compared to $5.4 million in high-power lithium battery cells in the same period in 2012, a decrease of $1.5 million, or 27.8%, resulting from both a decrease of 12.3% in sales volume and 18.4% in average selling price, respectively. As we are trying to improve our profitability in this market, fewer sales transactions were made to customers with lower margins. We reduced our selling price in order to retain those customers which yield higher profits to us.
Net loss
As a result of the foregoing, we had a net loss of $5.3 million for the three months ended December 31, 2013, compared to a net loss of $28.2 million for the three months ended December 31, 2012.
Investor Alert
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On October 3, 2013 , Jonathan Christopher Paugh (“Mr. Paugh”) notified China BAK Battery, Inc. (the “Company”) of his decision to resign as a member of the Board of Directors of the Company and as a member of the Board’s Audit, Compensation and Nominating and Corporate Governance Committees, effective immediately. Mr. Paugh’s decision to resign is due to his personal reasons. The Company intends to elect a new independent director to fill the vacancies created by Mr. Paugh’s resignation as soon as practicable.
As a result of the resignation of Mr. Paugh, the Company is not currently in compliance with Listing Rules 5605(b)(1) and 5605(c)(2)(A) of the NASDAQ Stock Market LLC. NASDAQ Listing Rules 5605(b)(1) and 5605(c)(2)(A) require, among other things, that a majority of the Board of Directors be comprised of independent directors as defined in Rule 5605(a)(2) and the Company’s Audit Committee be comprised of at least three members. Currently the Company’s Board of Directors consists of two independent directors and two non-independent directors and the Audit Committee is comprised of two members.
The Company notified NASDAQ of its noncompliance with the NASDAQ listing rules described above on October 7, 2013. In accordance with NASDAQ Listing Rules 5605 (b)(1)(A) and 5605(c)(4)(B), the Company has a cure period in order to regain compliance until the earlier of the Company’s next annual shareholders’ meeting or October 3, 2014. If the Company’s next annual shareholders’ meeting is held no later than 180 days following the resignation of Mr. Paugh, then the Company will instead have 180 days from such event to regain compliance.
Comments & Business Outlook
China BAK Battery, Inc. Condensed consolidated statements of comprehensive income For the three and nine months ended June 30, 2012 and 2013
Three months ended June 30,
Nine months ended June 30,
2012
2013
2012
2013
Net revenues
$
46,843,965
$
45,598,726
$
151,379,855
$
153,397,578
Cost of revenues
(51,906,863
)
(46,986,217
)
(146,281,685
)
(162,576,588
)
Gross profit/(loss)
(5,062,898
)
(1,387,491
)
5,098,170
(9,179,010
)
Operating expenses:
Research and development expenses
(1,612,415
)
(1,135,371
)
(2,808,645
)
(3,995,011
)
Sales and marketing expenses
(2,256,661
)
(1,710,001
)
(5,967,227
)
(5,812,595
)
General and administrative expenses
(3,743,216
)
(4,654,653
)
(12,926,801
)
(13,743,951
)
(Provision for)/ reversal of bad debt
(8,162,458
)
4,387,805
(11,843,138
)
5,087,650
Impairment charge on property, plant and equipment
(3,616,508
)
(3,207,649
)
(6,324,194
)
(14,603,998
)
Total operating expenses
(19,391,258
)
(6,319,869
)
(39,870,005
)
(33,067,905
)
Operating loss
(24,454,156
)
(7,707,360
)
(34,771,835
)
(42,246,915
)
Finance costs, net
(2,799,237
)
(3,454,229
)
(8,316,395
)
(7,893,537
)
(Loss)/reversal of loss arising from loan guarantees
-
808,950
-
(2,002,089
)
Government grant income
21
112,796
76,932
131,073
Other income/(expenses)
(68,052
)
27,167
363,927
(29,063
)
Loss before income taxes
(27,321,424
)
(10,212,676
)
(42,647,371
)
(52,040,531
)
Income tax expenses
(274,636
)
(58,005
)
(2,396,492
)
(6,084,277
)
Net loss
$
(27,596,060
)
$
(10,270,681
)
$
(45,043,863
)
$
(58,124,808
)
Other comprehensive income
- Foreign currency translation adjustment
(1,054,313
)
871,823
804,518
2,235,990
Comprehensive loss
$
(28,650,373
)
$
(9,398,858
)
$
(44,239,345
)
$
(55,888,818
)
Net loss per share:
- Basic
$
(2.19
)
$
(0.81
)
$
(3.57
)
$
(4.61
)
- Diluted
$
(2.19
)
$
(0.81
)
$
(3.57
)
$
(4.61
)
Weighted average number of shares of common stock:
- Basic
12,619,049
12,619,597
12,619,049
12,619,597
- Diluted
12,619,049
12,619,597
12,619,049
12,619,597
Investor Alert
Item 8.01. Other Events.
On August 9, 2013, China BAK Battery, Inc. (the “Company”) received notification from the NASDAQ Listing Qualifications department that the Company has regained compliance with the independent director and audit committee requirements for continued listing set forth in NASDAQ Listing Rules 5605(b)(1) and 5605(c)(2), respectively, as Mr. Jonathan Christopher Paugh has been appointed as a member of the Company’s Board of Directors, a member of each of the Audit, Compensation and Nominating and Corporate Governance Committees. As a result, the matter of the Company's noncompliance with the independent director and audit committee requirements as set forth in NASDAQ Listing Rule 5605, as announced in the Company’s Current Report on Form 8-K, dated March 14, 2013, had been closed.
CFO Trail
On April 13, 2013 , China BAK Battery, Inc. (the “Company”) terminated the employment agreement with the Company’s Chief Financial Officer, Danny Pan, effective immediately.
While the Company is seeking a new Chief Financial Officer, the Board of Directors of the Company has appointed Mr. Xiangqian Li, the Company’s Chief Executive Officer, to serve as the Company's Interim Chief Financial Officer, Treasurer and Secretary.
Share Structure
SHENZHEN, China , October 26, 2012 /PRNewswire / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, announced today that it has filed a Certificate of Change pursuant to Section 78.209 of the Nevada Revised Statutes with the Nevada Secretary of State to effect a one (1) -for- five (5) reverse stock split of the authorized and issued and outstanding common stock, par value $0.001 per share, of the Company ("Common Stock"). The reverse stock split will be effective at the market opening on October 26, 2012 , at which time the Company's Common Stock will begin trading on the NASDAQ Stock Market on a split-adjusted basis. The Company's Common Stock will continue to trade under the symbol "CBAK" but under a new CUSIP number 16936Y209.
The Company is implementing the reverse stock split to regain compliance with NASDAQ continued listing standards. Following the reverse stock split the Company will have approximately 12.8 million shares of Common Stock issued and outstanding. In addition, the number of total authorized shares of Common Stock will be reduced to 20 million shares.
Comments & Business Outlook
SHENZHEN, China , August 23, 2012 / PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company has received a sample order to supply its lithium-ion batteries to FAW-Volkswagen Automotive Co., Ltd. ("FAW-Volkswagen"), a major passenger sedan joint-venture of FAW Group Corporation and Volkswagen AG .
China BAK plans to deliver three lithium-ion battery units to FAW-Volkswagen by the end of September 2012. FAW-Volkswagen will utilize the Company's lithium-ion battery units to power its electric cars and to test the performance and reliability of the battery units.
"FAW-Volkswagen is a leading passenger car manufacturer in China and we look forward to delivering our lithium-ion battery units to power its new electric car. Our cooperation with FAW-Volkswagen demonstrates our technological strength and market recognition. Upon successful testing, we expect to expand the scope of our cooperation and hope to receive additional orders," commented Mr. Xiangqian Li, CEO of China BAK.
Comments & Business Outlook
SHENZHEN, China , July 25, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company's Shenzhen -based subsidiary entered into a strategic cooperation program to develop electric vehicle (EV) battery modules and high-capacity battery products with input from FAWER Automotive Parts Limited Company, or FAWER, a subsidiary of China FAW Group Corporation, or FAW, one of China 's leading vehicle manufacturers.
Under the new program, China BAK and FAWER will cooperate in developing EV battery modules and high-capacity battery products. As part of the program, FAWER has placed a sample order for the Company's EV battery modules. FAWER is expected to test the batteries in certain electric vehicles under development by FAW.
"We are pleased to enter into a new strategic cooperation program with FAWER to develop EV battery modules and high-capacity battery products, which reflects the growing market recognition of our electric vehicles' battery cells and battery modules. In addition to having its obviously close relationship with FAW, FAWER is an important parts and components supplier for other well-known vehicle brands in China . Our cooperation with FAWER is expected to encourage similar cooperative programs with other automobile manufacturers," commented Mr. Xiangqian Li , CEO of China BAK. "We also believe that this joint effort to develop advanced battery modules used in EV will foster a mutually beneficial relationship in the rapidly growing EV market," added Mr. Li.
Contract Awards
SHENZHEN, China , July 18, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company has entered into a new contract to supply 0.5 million units of cylindrical battery cells to AC Propulsion, a producer of electric vehicle technology based in Shanghai and California . For more information regarding AC Propulsion, please visit http://www.acpropulsion.com/
As per the contract, China BAK will deliver 540,000 units of cylindrical battery cells to AC Propulsion by the end of 2012, which will be used to power 100 electric cars. AC Propulsion previously purchased a sample order of the Company's cylindrical battery cells for trial and testing purposes and provided positive feedback on product quality and performance of the battery cells.
"We are encouraged by the positive feedback from AC Propulsion and are pleased to expand our cooperation with them," commented Mr. Xiangqian Li , CEO of China BAK. "We expect to receive additional orders for our cylindrical battery cells used to power electric cars. We believe revenue growth from this segment will be driven by our high quality products, technical capability and growing market recognition," added Mr. Li.
Comments & Business Outlook
SHENZHEN, China , June 14, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company has agreed to supply high-power batteries to Brilliance Auto Group, one of the largest state-owned automobile manufacturers in China. For more information regarding Brilliance Auto, please visit http://en.brilliance-auto.com.
Under this arrangement, China BAK will deliver a sample order of five lithium-ion high-power battery units to Brilliance Auto by July 2012 . Brilliance Auto will utilize the high-power battery units to power its electric cars to test the performance and reliability of the battery cells.
"Brilliance Auto is one of the distinguished automobile manufacturers in China and we are excited to deliver our sample battery units to power their electric cars. Our cooperation with Brilliance Auto demonstrates our market recognition and the strong commitment of our team to expand our customer base. Upon successful testing, we expect to receive additional orders and expand the scope of our cooperation," commented Mr. Xiangqian Li , CEO of China BAK.
Investor Alert
SHENZHEN, China, May 30, 2012 /
PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK" or the "Company") (NASDAQ: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company has received a staff deficiency
notice from The NASDAQ Stock Market informing the Company that its common
stock has not met the $1.00 minimum bid price requirement for continued listing on The NASDAQ Global Market under NASDAQ Listing Rule 5450(a)(1). The Company did not meet NASDAQ's minimum bid price requirement because the closing bid price for its common stock for each trading day in the 30-business day period fromApril 13, 2012 to May 24, 2012 was less than $1.00 per share. The notification letter stated that China BAK will receive 180 calendar days, or until November 21, 2012, to regain compliance with the NASDAQ listing requirements. During this compliance period, the closing bid price for China BAK's common stock must be at least $1.00 for a minimum of ten consecutive business days for the Company to regain compliance. In the event that the Company does not regain compliance within this period, it may be eligible for additional time to regain compliance by filing a listing application to transfer its common stock to The NASDAQ Capital Market and satisfying certain other requirements. The notification letter has no effect at this time on the listing of the Company's common stock on The NASDAQ Global Market. China BAK's common stock will continue to trade on The NASDAQ Global Market under the symbol "CBAK."
Comments & Business Outlook
Second Quarter Fiscal Year 2012 Highlights
Revenue from high-power lithium-ion battery cells reached a record $2.3 million, an increase of 197.3% year-over-year
In March 2012, China BAK's polymer cells passed ZTE Corporation's certification process and will supply polymer cells to be used in smartphones
China BAK reported another quarter of positive cash flow of $9.1 million from operating activities
Net loss was $15.6 million , or diluted loss per share of $0.25 , in the second quarter of fiscal 2012 compared to net loss of $1.8 million , or diluted loss per share of $0.03 , in the previous quarter and net loss of $4.1 million , or diluted loss per share of $0.06 , in the second quarter of fiscal 2011
"Historically, our second fiscal quarter is a slow quarter partly due to the Chinese New Yearholidays, which significantly reduce overall sales volume. In addition, the continued weakness in the global economy and the slowdown in the replacement market also impacted our business. At the same time, we are pleased with the growth in revenue from our high-power lithium battery cells, which are supplied to EV customers," commented Mr. Xiangqian Li, Chairman, President and CEO of China BAK.
Business Outlook
"Over the next few quarters, we expect our earnings performance to improve as we continue to transition from the replacement market to the OEM market. We have cooperative relationships with major tier 1 OEM customers in China and anticipate our revenues will recover as we expand in the OEM market. We were pleased that our high-power lithium ion battery cells reached record quarterly revenues nearly 200% higher than in the same quarter last year, and we expect that our cooperative relationship with Chery Automobile, among others, will contribute to greater earnings in this sector. We also expect our ongoing upgrades to our polymer cell production lines will further our transition toward servicing and generating profits from China's growing smartphone and tablet computer battery cell markets," commented Mr. Xiangqian Li, Chairman, President and CEO of China BAK.
Resolution of Legal Issues
SHENZHEN, China , April 11, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK" or the "Company") (NASDAQ: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company has received a letter from The NASDAQ Stock Market Staff notifying the Company that it has regained compliance with the minimum bid price requirement for continued listing set forth in Listing Rule 5450(a)(1), as its common stock has achieved a closing bid price of $1.00 or more for 10 consecutive business days.
On October 24, 2011 , NASDAQ Staff notified the Company that its common stock was not in compliance with one of the standards for continued listing on the NASDAQ Global Market because the closing bid price of its common stock had fallen below $1.00 for 30 consecutive business days. The Staff also notified the Company that it had been granted a grace period of 180 calendar days, or until April 23, 2012 in which to regain compliance. In a letter dated April 10, 2012 , the Staff informed the Company that it had determined that the closing bid price of China BAK's common stock has been at $1.00 per share or greater for ten consecutive business days from March 26, 2012 to April 9, 2012 . Accordingly, the Company has regained compliance with NASDAQ Listing Rule 5450(a)(1) and this matter is now closed.
Comments & Business Outlook
SHENZHEN, China , April 9, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that on April 9, 2012 , the Company entered into a new contract to supply high-power batteries to Chery Automobile Co., Ltd. ("Chery").
Under the contract, China BAK will deliver 1,000 lithium-ion high-power battery units in 2012 to power Chery's Ruilin M1 electric cars. The new contract is in addition to the Company's previously-announced contract with Chery, entered into in February 2012 , to supply 100 high-power battery units to Chery, which are on schedule to be delivered by June 2012 . The Ruilin M1 is one of the five electric vehicle models that have been approved for government use since early this year.
Additionally, the Company announced that it will hold a joint press conference with Chery in mid-April in Tianjin . At the press conference, Chery and China BAK plan to announce a long-term cooperation program in the electric vehicles industry and invite an interactive discussion with the attendees.
"We believe that this additional order from Chery, and their anticipated further orders and cooperation, further underline our ability to deliver high-quality battery products and lead the development of China 's emerging electric vehicle battery market. Likewise, we continue to expect additional orders from other domestic customers for our lithium-ion high-power batteries to power electric vehicles in China in 2012," commented Mr. Xiangqian Li , CEO of China BAK.
Comments & Business Outlook
SHENZHEN, China , April 3, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company has received a $1.9 million subsidy for its battery module project from the National Development and Reform Commission (NDRC) and Ministry of Industry and Information Technology (MIIT).
China BAK's battery module is comprised of cylindrical cells that can be used in electric vehicles (EVs), electric motors, electric bicycles (e-bikes) and power storage. The government funds will be used to further develop the battery module's efficiency and environmental-friendliness.
Additionally, the Company announced that it has received new orders from its e-bike customers and expects to deliver 12,000 high-power lithium-ion battery units to its e-bike customers by the end of April 2012 .
"In recent years, we have received recognition for our battery modules used in EVs and e-bikes. The subsidy from NDRC and MIIT further demonstrates the government's continued support and recognition of our contribution to China 's EV and e-bike industry," commented Mr. Xiangqian Li , China BAK's Chairman and Chief Executive Officer. "We will utilize the grant to further improve our product quality and strengthen our market position in the EV and e-bike industry. We believe that our experience and technological expertise will enable us to increase our market share and deliver high-quality products to our customers."
Comments & Business Outlook
SHENZHEN, China , March 29, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company received a new contract to supply its high-power lithium-ion batteries to a major Korean electric motor manufacturer.
Under the contract, China BAK will deliver 300 high-power lithium-ion battery units to the Korean manufacturer by April 2012 to power its electric motors. The customer previously tested and provided feedback on a sample set of China BAK's lithium-ion high power batteries.
"We are pleased to expand the end market for our high-power lithium-ion batteries to electric motors. Our supply contract with a major Korean manufacturer marks our entry in the attractive electric motors market," commented Mr. Xiangqian Li , CEO of China BAK. "We are pleased with customer feedback on our high-power lithium-ion batteries and expect to receive additional orders in the third fiscal quarter of 2012. We will continue our attention toward engaging with the EV industry and expect to make additional progress in this direction," added Mr. Li.
Comments & Business Outlook
SHENZHEN, China , March 26, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (NASDAQ: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company achieved progress in the domestic OEM market in March 2012 .
On March 23, 2012 , ZTE Corporation notified the Company by written notice that China BAK has passed its certification process to supply battery cells It is expected that the Company will begin to supply approximately one million polymer cells every month to ZTE in the third fiscal quarter.
Also in March 2012 , the Company won a bid to supply battery cells to TCL Corporation, one of the largest consumer electronics enterprises in China with a global presence. The Company will supply 3 million prismatic cells from April through June to TCL. As the Company is a qualified battery supplier to Vodafone Group, TCL may also supply some of our battery cells to Vodafone.
"We are committed to transforming into a qualified battery supplier to the OEM market globally, and we are pleased to see the initial achievement we gained in China ," commented Mr. Xiangqian Li , president and chief executive officer of China BAK. "We will continue to focus on producing qualified batteries used in different areas to the OEM market," added Mr. Li.
Comments & Business Outlook
SHENZHEN, China , February 14, 2012 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that on February 10, 2012 , the Company's Tianjin facility received a new contract to supply high-power batteries used in electric cars, Ruilin M1, to Chery Automobile Co., Ltd. ("Chery"), one of the Company's long-term partners in China .
According to the contract, China BAK will supply 100 units of lithium-ion high-power batteries, which will be used to power Chery's electric cars in the first half of 2012. Ruilin M1 is Chery's first Lithium-ion solution EV which was officially launched at the 25th World Electric Vehicle Symposium and Exposition in November 2010 . China BAK will deliver these batteries to Chery by the end of June 2012 .
"We are pleased to expand our cooperation with Chery Automobile, one of our long-term partners in China . We enjoy good cooperation with Chery in the electric vehicles segment and our customer has been pleased with the quality and performance of all units shipped so far," commented Mr. Xiangqian Li , CEO of China BAK. "We expect to receive additional orders from Chery in the second half of 2012. We also expect additional domestic customers to place orders for electric vehicle batteries in 2012," added Mr. Li.
Comments & Business Outlook
First Quarter 2012 Results
Net revenues for the first quarter were $71.8 million , up 16.5% from $61.6 million last quarter and up 12.9% from $63.5 million for the same period in fiscal 2011.
Net loss was $1.8 million , or diluted loss per share of $0.03 , in the first quarter of fiscal 2012 compared to net loss of $9.6 million , or diluted loss per share of $0.15 , in the previous quarter and net loss of $3.7 million , or diluted loss per share of $0.06 , in the same quarter of fiscal 2011.
Business Outlook
"In fiscal 2012, our growth strategy is focused on implementing aggressive sales and marketing efforts to expand our market share and increase our OEM customer base for prismatic battery packs and high-power lithium batteries. Over the next few quarters, we also expect to be certified by additional Tier 1 customers for polymer batteries for use in ultra-thin smartphones and tablet computers," commented Mr. Xiangqian Li , Chairman, President and CEO of China BAK.
"The market demand for our high-power lithium batteries and cylindrical batteries used in EVs, E-bikes, power tools, and UPS energy storage solutions continues to grow at a robust pace and we believe we are well-positioned to capitalize on such market opportunities. We expect such growth opportunities in the EV industry to contribute to our revenue growth in fiscal 2012," added Mr. Li.
"We continue to make progress with our turnaround strategy and in the first quarter of fiscal 2012, we experienced strong revenue growth and recovery in our gross margin level. We also continue to generate positive cash flow from operations. We continue our efforts to improve our profitability," commented Ke Marcus Cui , CFO of China BAK.
Comments & Business Outlook
Fourth Quarter 2011 Results
Net revenues for the fourth quarter were $61.6 million , up 30.7% from $47.1 million last quarter and up 10.8% from $55.6 million for the same period in fiscal 2010.
Gross profit for the fourth quarter of fiscal year 2011 was $8.3 million , compared to gross profit of $3.6 million last quarter and gross profit of $5.3 million in the same quarter of last year.
Gross margin for the fourth quarter of fiscal 2011 increased to 13.4% from 9.5% in the year ago period.
Net loss was $9.6 million , or diluted loss per share of $0.15 , in the fourth quarter of fiscal 2011 compared to a net loss of $7.2 million , or diluted loss per share of $0.12 , in the last quarter and net loss of $8.6 million , or diluted loss per share of $0.14 , in the same quarter of fiscal 2010.
Business Outlook
"We reported positive operating cash flow for fiscal 2011, reflecting continued progress in our turnaround plan. We are encouraged by the rapid growth in the EV market and plan to expand the application of our products in this area. We also continue to strive to implement cost control measures to improve our margins and achieve profitability," commented Mr. Ke Marcus Cui , CFO of China BAK.
"Over the past ten years, China BAK saw tangible results from its efforts to develop into a rising supplier to China 's EV battery cell industry while maintaining its position as a leading battery cell manufacturer for China 's cellular phone market. We are confident in our ability to achieve strong revenue growth from the introduction of new products and expansion into new applications," commented Mr. Xiangqian Li , CEO of China BAK.
Investor Alert
SHENZHEN, China , October 27, 2011 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK" or the "Company") (NASDAQ: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company has received a staff deficiency notice from The NASDAQ Stock Market informing the Company that its common stock has not met the $1.00 minimum bid price requirement for continued listing on The NASDAQ Global Market under NASDAQ Listing Rule 5450(a)(1). The Company did not meet NASDAQ's minimum bid price requirement because the closing bid price for its common stock for each trading day in the 30-business day period from September 12, 2011 to October 21, 2011 was less than $1.00 per share. The notification letter stated that China BAK will receive 180 calendar days, or until April 23, 2012 , to regain compliance with the NASDAQ listing requirements. During this compliance period, the closing bid price for China BAK's common stock must be at least $1.00 for a minimum of ten consecutive business days for the Company to regain compliance. In the event that the Company does not regain compliance within this period, it may be eligible for additional time to regain compliance by filing a listing application to transfer its common stock to the NASDAQ Capital Market and satisfying certain other requirements. The notification letter has no effect at this time on the listing of the Company's common stock on the Nasdaq Global Market. China BAK's common stock will continue to trade on the Nasdaq Global Market under the symbol "CBAK."
"We recognize the importance of maintaining our listing on the NASDAQ Stock Market and will make every endeavor to regain compliance despite the challenges of the current economic environment," noted Mr. Xiangqian Li , CEO of China BAK.
"Our goal is clear and we are working out concrete plans to realize it," added Mr. Marcus Cui , CFO of China BAK.
Comments & Business Outlook
SHENZHEN, China , Sept. 21, 2011 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (NASDAQ: CBAK), a leading global manufacturer of lithium-based battery cells, today announced its business outlook for certain key areas for its fiscal year ended September 30, 2012 .
Management estimates the Company's wholly-owned subsidiary, BAK International (Tianjin ) Limited ("BAK Tianjin"), which produces high-power lithium battery cells, to account for approximately 15% of fiscal year 2012 revenue, up from approximately 5% in fiscal year 2011, while battery cell production for cell phones is expected to decrease proportionally while remaining the Company's core business. In particular, China BAK expects increased sales of battery cells for electric bicycles and electric buses to take advantage of the increasing markets for these vehicles in China . In line with this expectation, the Company expects to install at least one additional production line for electric vehicle (EV) batteries during fiscal year 2012. In fiscal year 2012, the Company expects BAK Tianjin to have average monthly output of approximately 12,500 units, up from average monthly output of approximately 6,000 units in fiscal year 2011, with further increases expected for fiscal years 2013 and 2014 to approximately 33,000 and 91,000 units monthly, respectively. The Company also plans to develop mobile phone batteries under its brand name, which is expected to be launched in phases during fiscal years 2012 and 2013. In addition, although the Company is aware that informal information was recently provided by a member of the Company's management in response to a question as to expected gross profit margin for fiscal year 2012, the Company has determined that additional time is needed before it will be in a position to confirm its outlook in this regard.
In connection with its ongoing and planned future capital expenditures and research and development, China BAK is discussing financing alternatives with certain potential strategic partners to raise capital up to $50 million by the end of calendar year 2011. The form and terms of this potential financing is under discussion. The Company's capital expenditure budget for fiscal year 2011 was approximately $35 million and the budget for fiscal year 2012 is being determined.
"Since inception, China BAK has gained a strong market reputation through delivery of high quality products utilizing its advanced manufacturing capabilities. We plan to leverage our market position to establish our own distribution channel. We also continue to strive to implement cost control measures to achieve profitability," commented Mr. Marcus Cui , CFO of China BAK.
"We are encouraged by the rapid growth in the EV market and plan to accelerate production of our high-power lithium EV cells at BAK Tianjin. The PRC government is promoting use of electric vehicles, given the environmental and energy benefits. Given the environmental benefits, we believe lithium EV batteries will enjoy a competitive edge over lead-based EV batteries, presenting an attractive growth opportunity for China BAK. We are committed to focus on the EV industry and capitalize on the expected market growth," added Dr. Huanyu Mao , CTO of China BAK. Dr. Mao further commented, "As we have noted, we do not have specific plans on the form or terms of the contemplated financing to fund our planned capital expansion and R&D activities. An offering of BAK Tianjin equity would only be one possible way that we would attain this goal. We are exploring a range of options in connection with our discussions to gain sufficient financing to expand our EV investments, and will select the one that we believe is in the best interests of our shareholders."
Joint Venture
SHENZHEN, China ,
September 1, 2011 /
PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company's
Shenzhen -based subsidiary entered into a strategic cooperation program for electric vehicle ("EV") development with Hua-chuang Automobile Information Technical Center Co., Ltd. ("HAITEC"), a subsidiary of Yulon Group,
Taiwan 's largest automaker.
Comments & Business Outlook
SHENZHEN, China, Aug. 3, 2011 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK", the "Company", or "we") (Nasdaq: CBAK), a leading global manufacturer of lithium-based battery cells, today announced its financial results for the third quarter of fiscal year 2011 ended June 30, 2011 ("Q3 2011").
Recent Achievements and Highlights
In Q3 2011, the Company successfully achieved a turnaround in its cylindrical battery cells business
During the third quarter of fiscal 2011, the Company's Tianjin subsidiary, BAK Tianjin received additional orders for high-power lithium battery cells used in e-bikes
The Company's high-power lithium battery cells revenue more than doubled in the third quarter of fiscal 2011 compared to the year ago period Financial Highlights
Net revenues for the third quarter were $47.1 million , up 0.9% from $46.7 million last quarter and down 19.5% from $58.6 million for the same period in fiscal 2010.
Revenues from prismatic products, including aluminum-case cells and battery packs, which are used in mobile phones and certain personal electronic devices, were $25.8 million , down 11.3% from $29.0 million last quarter and down 39.8% from $42.8 million for the same period in fiscal 2010. The decline in prismatic products was mainly attributable to decline in sales volume as a result of the introduction of built-in high capacity polymer batteries being adopted by domestic OEM customers.
Revenues from cylindrical cells used in notebook computers were $17.3 million , up 13.8% from $15.2 million last quarter and up 35.4% from $12.8 million for the same period in fiscal 2010.
Revenues from lithium polymer cells, used in personal electronic devices such as PDAs, MP3 players and Bluetooth devices, were $2.0 million, up 19.8% from last quarter and down 11.7% from the same period in fiscal 2010.
Revenues from high-power lithium battery cells, used in electric vehicles, electric bicycles, power tools, uninterruptible power supplies, and other applications manufactured at the Company's Tianjin facility, were $2.1 million , up 161.0% from last quarter and up 194.5% from the same period in fiscal 2010.
Gross profit for the third quarter of fiscal year 2011 was $3.6 million , compared to gross profit of $4.4 million last quarter and gross loss of $1.2 million in the same quarter of last year. The decline in gross profit from the prior quarter was mainly attributable to decline in sales volume of prismatic cell phone battery cells as a result of the decline in the shipment of replacement market cell phones in China and intense market competition.
Operating expenses totaled $8.9 million, or 18.9% of revenue, in the third quarter up 42.1% from $6.3 million , or 13.4% of revenue , in the last quarter and down 48.1% from $17.2 million, or 29.4% of revenue, in the third quarter of fiscal 2010. Research and development expenses were $1.8 million, or 3.9% of revenue , down 4.8% from $1.9 million, or 4.1% of revenue in the last quarter and down 13.7% from $2.1 million, or 3.6% of revenue in the same quarter of fiscal 2010. Sales and marketing expenses were $2.0 million, or 4.3% of revenue down 7.1% from $2.2 million , or 4.7% of revenue in the last quarter and down 21.1% from $2.6 million, or 4.4% of revenue in the same quarter of fiscal 2010. General and administrative expenses were $5.1 million, or 10.7% of revenue up 134.5% from $2.1 million, or 4.6% of revenue in the last quarter and down 32.1% from $7.4 million or 12.7% of revenue in the same quarter of fiscal 2010.
Operating loss for the third quarter was $5.3 million compared to operating loss of $1.8 million in the last quarter and operating loss of $18.4 million in the same quarter of fiscal 2010.
Net loss was $7.2 million, or diluted loss per share of $0.12 , in the third quarter of fiscal 2011 compared to net loss of $4.1 million , or diluted loss per share of $0.06 , in the last quarter and net loss of $18.3 million , or diluted loss per share of $0.29 , in the same quarter of fiscal 2010.
Comments & Business Outlook
SHENZHEN, China, June 13, 2011 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK" or the "Company") (NASDAQ: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company has successfully achieved a turnaround in its cylindrical battery cells business for the month of May 2011.
China BAK's operational results for the month of May 2011 indicate that the Company's cylindrical battery cell business is now profitable. As a result of the earthquake in Japan, the Korean and Chinese batteries are in higher in demand since April 2011. In addition, the Company raised the pricing of its cylindrical battery cells following suit with other Korean battery manufacturers, further enhancing profitability. Currently, the Company's total shipment of cylindrical battery cells have nearly doubled compared with the same period in 2010.
"Our cylindrical battery cells business is experiencing strong growth and has resumed profitability. We are pleased with the results and continue to make progress in our effort to achieve a successful turnaround in our other business segments. We believe our cylindrical battery cells business will continue to grow driven by our new products featuring high quality and lower cost raw materials," commented Mr. Xiangqian Li, CEO of China BAK Battery, Inc. "Beginning third quarter of fiscal year 2011, we plan to utilize cost-competitive alternative raw materials in the production of our cylindrical battery cells which will further reduce our costs and enhance our profitability. We expect our cylindrical battery cells business to become an increasing profit contributor in the near future."
Comments & Business Outlook
SHENZHEN, China, June 9, 2011 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK" or the "Company") (NASDAQ: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company is seeing a surge in customer demand for its e-bike battery business at its Tianjin facility due to the recent government suspension of lead-acid battery manufacturing in China.
As recently reported in the periodical Advanced Battery Weekly, there are nearly 300 lead-acid battery producers in Zhejiang Province, China, and more than a hundred people have unsafely high blood lead level in this area. Several leading lead-acid battery manufacturers in China have recently suspended production due to a government crackdown on heavy metal pollution. In addition, each of the Ministry of Public Security, the Ministry of Industry and Information Technology, State Administration for Industry & Commerce and the General Administration of Quality Supervision, Inspection and Quarantine is reportedly requiring local governments, police, regional industry and commerce offices to tighten management of e-bike manufacturing plants. Based on reports, e-bikes may weigh no more than 40 kg and may not exceed a top speed of 20 km (12.4 miles) per hour. In comparison with the traditional lead-acid battery, it has been documented that lithium-based battery cells provide a number of advantages, including lighter weight (the weight for each battery pack used in an e-bike is about 4 kg) without sacrificing capacity, or about 1/3 or 1/4 less weight than a comparable lead-based battery; longer cycle-life; and have less environmental impact due to zero use of lead. All products using China BAK battery packs can meet the above government requirements.
Concurrently with these industry developments, the Company has received an increase in the number of requests for China BAK's lithium-based battery cells from e-bike manufacturers. Similarly, the Company's major customers, XDS Shenzhen Xidesheng Bicycle Co., Ltd., Geoby Electric Vehicle Co., Ltd. and NOAHtek Electric Bicycles Company, have recently initiated discussions with the Company regarding future orders. As compared with orders received and expected to be received for the Company's quarter ended June 30, 2011, the Company's forecast quantity of orders for its quarter ended September 30, 2011 from e-bike manufacturers is expected to be approximately 88% higher, or 20,000 battery packs compared to expected sales of approximately 10,600 for the current quarter. China BAK also expects that the Company will see additional new customers from the traditional lead-acid-battery-powered bicycle manufacturers for the quarter ended September 30, 2011.
"Reuters reported that batteries for e-bikes accounted for about 20 percent of China's 3.7 million tonnes of refined lead consumption in 2010 with annual production of more than 17 million e-bikes. Due to the government's focus on heavy metal pollution, we believe even a 10% replacement in demand for the traditional lead-acid battery by lithium-ion battery to power e-bikes, would result in a substantial increase in demand for us," commented Mr. Ke Marcus Cui, Chief Financial Officer of China BAK. "The Chinese government provides strong support and encouragement to lithium-based battery development and we are well recognized for our high-quality, extensive production experience and technology in the e-bike market. We therefore expect to further increase our sales of lithium-based batteries to e-bike customers."
CFO Trail
SHENZHEN, China, May 27, 2011 /PRNewswire-Asia / -- China BAK Battery, Inc. ("China BAK" or the "Company") (NASDAQ: CBAK), a leading global manufacturer of lithium-based battery cells, today announced that the Company's board of directors promoted Mr. Ke Marcus Cui to chief financial officer, treasurer and secretary, effective immediately. Mr. Cui had been serving as the Company's interim chief financial officer since December 2010 and director of investor relations since September 2010.
Mr. Cui brings a wealth of experience in management, accounting, auditing, financial analysis and reporting. Previously, Mr. Cui served as assistant to the general manager of BAK Tianjin, transitioning to the position of marketing and sales director and most recently he served as the finance director of BAK Tianjin. He also worked in Japan for Nomura Institute of Capital Market Research as assistant researcher. Mr. Cui earned his Bachelor of Science degrees in project management and economic information management from Chiba University of Japan and Jilin University, respectively, and a Master's degree in international financial analysis from University of Newcastle England. Mr. Cui is fluent in Mandarin, English and Japanese.
Mr. Xiangqian Li, China BAK's president and chief executive officer, stated, "Mr. Cui continues to work hard to improve the Company's financial condition since his appointment as interim chief financial officer and has gained recognition from the board and senior management. We are delighted to promote Mr. Cui into the CFO position. Throughout his tenure at China BAK and BAK Tianjin, Marcus has successfully taken on roles of increasing responsibility demonstrating his commitment to achieve excellence. He has a strong understanding of our business and operations and we are confident in his ability to continue to steer China BAK through this turnaround period."
Comments & Business Outlook
Second Quarter Results :
Net revenues for the second quarter were $46.7 million, down 26.5% from $63.5 million last quarter and down 7.4% from $50.4 million for the same period in fiscal 2010
Gross profit for the second quarter of fiscal year 2011 was $4.4 million, down 55.5% from $10.0 million last quarter and down 50.6% from $9.0 million in the same quarter of last year
Net loss was $4.1 million, or diluted loss per share of $0.06 , in the second quarter of fiscal 2011 compared to net loss of $3.7 million, or diluted loss per share of $0.06 , in the last quarter and net loss of $2.5 million, or diluted loss per share of $0.04, in the same quarter of fiscal 2010
"Although we experienced seasonality due to the Chinese New Year in February, we were able to report a positive operating cash flow. The decline in average selling prices of our prismatic cells is mainly due to aggressive competition in the market and we are actively pursuing new OEM orders from brand-name cell phone manufactures to increase our OEM market share. We also continue to direct our efforts on enhancing our cost control measures to reduce expenses and improve margins. During the second quarter, we were successful in further reducing our overall debt exposure in line with the goals of our turnaround strategy ," commented Ke Marcus Cui, Interim CFO of China BAK.
Comments & Business Outlook
SHENZHEN, China, Feb. 24, 2011 /PRNewswire-Asia / -- China BAK Battery, Inc. today announced that the Company's Tianjin facility was awarded a new contract to supply lithium-ion high-power batteries to leading e-bike manufacturer, XDS Shenzhen Xidesheng Bicycle Co., Ltd. ("Xidesheng Bicycle") in China.
As per the supply contract, in calendar year 2011, China BAK will supply 20,000 units of lithium-ion high-power batteries, which will be used to power Xidesheng Bicycle's lithium-ion electric bicycles. Management expects to receive additional orders from Xidesheng Bicycle.
Comments & Business Outlook
SHENZHEN, China, Jan. 28, 2011 /PRNewswire-Asia / -- China BAK Battery, Inc. today announced its financial results for the first quarter of fiscal year 2011 ended December 31, 2010 ("Q1 2011").
Recent Achievements and Highlights
Revenue increased 26.5% year-over-year and 14.3% quarter on quarter (Q1 2011 compared to Q4 2010)
Revenues from high-power batteries more than tripled sequentially in Q1 2011 due to robust demand for batteries used in Energy Storage Solutions
Gross margin improved to 15.7% in the first quarter of fiscal 2011 from 9.5% in the previous quarter
Reported another quarter of positive cash flow of $18.4 million from operating activities, reflecting continued progress in the Company's turnaround plan
Days Sales Outstanding declined to 126 days from 134 days last quarter and Days Sales of Inventory declined to 110 days from 115 days in the previous quarter
In November 2010, Chery Automobile Co., Ltd. officially launched its first Lithium-ion solution EV, Ruilin M1, powered by China BAK's lithium-ion phosphate batteries at the 25th World Electric Vehicle Symposium and Exposition
Net loss was $3.7 million, or diluted loss per share of $0.06, in the first quarter of fiscal 2011 compared to net loss of $8.6 million, or diluted loss per share of $0.14, in the last quarter and net loss of $3.4 million, or diluted loss per share of $0.06, in the same quarter of fiscal 2010.
Excluding the impact of non-cash items, including provisions for doubtful debts, obsolete inventories and impairment charges related to strategic review of business operations, non-GAAP net loss for the first quarter of fiscal 2011 was $0.1 million, or a loss of $0.00 per diluted share, compared to non-GAAP net loss of $4.6 million in the previous quarter, or a loss of $0.08 per diluted share, and non-GAAP net income of $2.2 million, or earnings of $0.04 per diluted share in the same period a year ago.
BAK International (Tianjin) Limited ("BAK Tianjin"), the Company's wholly-owned subsidiary, received a subsidy of approximately $7.5 million for its automated high power lithium battery project in December 2010
In fiscal 2011, China BAK expects to further penetrate into the rapidly growing EV market, strengthening its existing market position. The Company also intends to be certified by additional OEM customers in the prismatic battery packs segment.
"As a result of our cost-control measures and profitability focus, we continue to experience recovery in gross margin level and increased cash flow generation, reflecting continued progress of our turnaround strategy," commented Ke Marcus Cui, Interim CFO of China BAK.
"Our aggressive sales and marketing efforts in promoting our high-power lithium batteries used in EVs, E-bikes and UPS - energy storage solution, we continue to experience significant revenue growth from this segment. We believe, in the year ahead, due to the outstanding growth opportunities in the EV industry, BAK Tianjin will become a significant revenue contributor to the Company," commented Mr. Xiangqian Li, CEO of China BAK.
Liquidity Requirements
We believe that our current cash and cash equivalents and anticipated cash flow from operations
will be sufficient to meet our anticipated cash needs , including our cash needs for working capital and capital expenditures for at least the next 12 months. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue
Comments & Business Outlook
Fourth Quarter Fiscal Year 2010 Financial Results
Net revenues for the fourth quarter were $55.6 million, down 5.1% from $58.6 million last quarter and down 3.4% from $57.6 million for the same period in fiscal 2009.
Operating loss for the fourth quarter was $7.3 million compared to $18.4 million in the last quarter and $0.9 million in the same quarter of fiscal 2009. Excluding the impact of non-cash items, including provisions for doubtful debts, obsolete inventories and impairment charges related to strategic review of business operations, non-GAAP operating loss was $3.3 million in the fourth quarter of fiscal 2010 compared to non-GAAP operating loss of $3.9 million in the last quarter and non-GAAP operating income of $3.6 million in the same period a year ago.
Net loss was $8.6 million, or diluted loss per share of $0.14, in the fourth quarter of fiscal 2010 compared to net loss of $18.3 million, or diluted loss per share of $0.29, in the last quarter and net loss of $1.4 million, or diluted loss per share of $0.02, in the same quarter of fiscal 2009. Excluding the impact of non-cash items, including provisions for doubtful debts, obsolete inventories and impairment charges related to strategic review of business operations, non-GAAP net loss for the fourth quarter of fiscal 2010 was $4.6 million, or a loss of $0.08 per diluted share, compared to non-GAAP net loss of $3.8 million in the previous quarter, or a loss of $0.06 per diluted share, and non-GAAP net income of $3.2 million, or earnings of $0.06 per diluted share in the same period a year ago.
Fiscal Year 2010 Financial Results
Business Outlook
“In the second half of fiscal 2010, we successfully moved forward with our turnaround plan to achieve positive operating cash flow and reduce our debt levels. In the fourth quarter of fiscal 2010, we reported further sequential improvement in gross margin as our management team continued to implement cost control and efficiency measures,” commented Jun Zou, Chief Financial Officer of China BAK.
“China’s EV market presents an exciting growth opportunity and we continue to advance our sales and marketing efforts to promote our high-power lithium batteries used in EVs, E-bikes and UPS - energy storage solution. Our batteries now power new EVs launched by China’s major automobile manufacturer, Chery and e-bikes manufactured by leading e-bike manufacturer, Geoby Electric. We expect a significant increase in revenue contribution in this area in fiscal 2011. In addition, our shipments of prismatic battery packs to OEM customers nearly doubled from last year, further strengthening our leading position in cellular phone market. In the year ahead, we expect to further increase our supply of battery packs to valued OEM customers,” commented Mr. Xiangqian Li, CEO of China BAK.
Comments & Business Outlook
Net loss was $18.3 million, or diluted loss per share of $0.29, in the third quarter of fiscal 2010 compared to net loss of $2.6 million, or diluted loss per share of $0.04, in the last quarter and net loss of $5.2 million, or diluted loss per share of $0.09, in the same quarter of fiscal 2009. Excluding the impact of non-cash expenses, including provisions for doubtful debts, obsolete inventories and impairment charges related to strategic review of business operations, non-GAAP net loss for the third quarter of fiscal 2010 was $3.8 million, or a loss of $0.06 per diluted share , compared to non-GAAP net loss of $686,000 in the previous quarter, or a loss of $0.01 per diluted share, and non-GAAP net loss of $1.6 million, or a loss of $0.03 in the same period a year ago.
"Over the past four years we have invested heavily in strengthening our manufacturing and R&D capacity. As a result, we now have the production lines necessary to support our future development in the electric vehicle (EV) battery market and in the consumer electronic battery market. Despite the impact of severe price competition in cylindrical battery cells for laptop computer batteries on our short-term profitability, we made good progress penetrating other high-gross margin markets, such as electric vehicle and power tool applications," commented Mr. Xiangqian Li, CEO of China BAK.
"We have already received orders from Taiwan's Yulon-motor along with increased order flow from domestic motor manufacturers and we anticipate sales of batteries used in electric buses and electric vehicles to accelerate in the next quarter. We are optimistic that we are starting to enter a growth phase and expect to see strong top line growth and improvements in bottom line in the next few quarters," Mr. Li concluded.
"We began implementing our turn around plan in late May 2010, and we have already made improvements in operating efficiency, cash flow and leverage. We continue to direct our efforts in these areas in order to return the Company to growth and profitability with lower leverage. We are confident that our gross margin will recover to a double-digit level with our cost control measures and reduced inventories," commented Jun Zou, CFO of China BAK.
Source: PR Newswire (July 28, 2010 )
Comments & Business Outlook
"Reviewing the second quarter of fiscal 2010 , we are very encouraged to see that the demand for high power cells for the E-Bike and EV market continues to grow, and we look forward to scaling our production levels in line with the development of this exciting market. We were able to achieve gradual improvement of our shipments to the OEM domestic market for branded mobile phone manufacturers through our in house pack line, which will further improve profitability of our traditional prismatic business. We are pleased with our initial relationships with major global notebook OEMs in the cylindrical segment and are focused on demonstrating that we can be a dependable, high volume, high quality partner to these companies over time," commented Mr. Xiangqian Li, CEO of China BAK.
"I am excited to join the China BAK team and aim to lead the Company's success in the quarters and years ahead through a deep commitment to both financial management and transparent communication with the investment community," commented Jun Zou, CFO of China BAK. "After careful scrutiny of our performance in first half of FY 2010 we found that the business recovery in certain segments is likely to be slower than we expected . As a result, we believe it is prudent to revise our revenue guidance to approximately $220 million for FY 2010. We expect to show positive operating income and EBITDA in the second half of the fiscal year."
Conference Call Notes
Comments & Business Outlook
'We are glad to see our Tianjin Facility has delivered samples to automakers for testing; it's a milestone of our development of new energy power cells; and we foresee a bright future for this business. In the traditional business segments, we will continue implementing aggressive measures to reduce cost and expenses,' commented Mr. Xiangqian Li, Chairman and CEO of China BAK.
Source: PR Newswire (July 23, 2009)
Comments & Business Outlook
'Throughout FY09 , prioritization of our products portfolio and aggressive cost and expense reduction will be our focus. We are delighted that a first-tier OEM notebook manufacturer determined that China BAK's cylindrical cells meet their stringent performance and reliability requirements. Also, we believe we will continue to gain market share in all products,' commented Mr. Xiangqian Li, Chairman and CEO of China BAK.
'We will continue to take appropriate action to address the downturn in the global economy as well as the challenges related to weak customer demand. We have implemented aggressive measures to reduce costs and expenses which will definitely strengthen the Company's ability to ride out the recession,' commented Mr. Tony Shen, CFO of China BAK.
The company did not address previous guidance reported on January 23, 2009 .
Source: PR Newswire (April 28, 2009 )
Investor Presentations
Comments & Business Outlook
Guidance Report
''We are pleased to see stable revenue and gross margin this quarter. Revenues from cylindrical cells remained strong, and revenues from prismatic cells continued to grow. This performance is remarkable in light of the difficult market situation. However, the crisis has affected many markets our customers serve. Looking at weakened demand from our customers, we feel it necessary to take a more cautious look at our revenue guidance for FY09 ."
Full Year Fiscal 2009 Guidance Ending September
2009 Guidance
2008 Reported
Period Change
Revenue
$270 to $300 million
$245 million
10.2% to 22.45%
Source: PR Newswire (January 23, 2009 )
