Short-Term Loans. The Company has incurred the debt primarily to support construction of its new infrastructure and manufacturing capacity at BAK Industrial Park. The table below outlines these borrowings. Management believes that the maturities of these notes can be extended, and will be rolled into longer term facilities upon completion of construction. ----------------------------- ------------- ------------------- ---------------- Amount Institution ($mm) Interest Rate Maturity Date ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 2.42 4.59% 4/10/2005 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 2.18 4.59% 4/8/2005 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 1.82 4.54% 12/7/2004 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 0.60 4.54% 11/28/2004 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 1.21 4.54% 12/2/2004 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 1.34 4.59% 3/29/2005 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 2.54 4.59% 3/30/2005 ----------------------------- ------------- ------------------- ---------------- Shenzhen Development Bank $ 12.10 5.84% 4/1/2005 ----------------------------- ------------- ------------------- ---------------- Xingye Bank $ 2.42 5.31% 3/11/2005 ----------------------------- ------------- ------------------- ---------------- Mingsheng Bank $ 2.54 5.84% 1/14/2005 ----------------------------- ------------- ------------------- ---------------- Total $ 29.16 ----------------------------- ------------- ------------------- ---------------- Notes Payable. These are numerous smaller notes totaling $20.80 million at 9/30/04 and are from China Agriculture Bank and Shenzhen Development Bank. Income Statement ($) ------------------------------------------- ------------ ------------ ---------- Item FY 2004 FY 2003 FY 2002 ------------------------------------------- ------------ ------------ ---------- Revenues 64,088,286 20,266,590 3,050,158 ------------------------------------------- ------------ ------------ ---------- less: cost of goods sold 49,630,238 14,571,849 2,513,633 ------------------------------------------- ------------ ------------ ---------- Gross Income 14,458,048 5,694,741 536,525 ------------------------------------------- ------------ ------------ ---------- plus: other income - - 411,570 ------------------------------------------- ------------ ------------ ---------- less: selling expense 1,871,987 442,753 15,984 ------------------------------------------- ------------ ------------ ---------- general and administrative expense 3,957,232 1,362,443 214,097 ------------------------------------------- ------------ ------------ ---------- interest expense 1,007,516 122,976 -637 ------------------------------------------- ------------ ------------ ---------- Operating profit 7,621,313 3,766,569 718,651 ------------------------------------------- ------------ ------------ ---------- plus: investment income - - - ------------------------------------------- ------------ ------------ ---------- other income - - 1,281 ------------------------------------------- ------------ ------------ ---------- less: other expenses 2,919 1,318 220 ------------------------------------------- ------------ ------------ ---------- Pretax Income 7,618,394 3,765,252 719,712 ------------------------------------------- ------------ ------------ ---------- less: income tax 391,965 - - ------------------------------------------- ------------ ------------ ---------- Net Income 7,226,429 3,765,252 719,712 ------------------------------------------- ------------ ------------ ---------- Income Statement (%) ------------------------------------------- ----------- ----------- ------------ Item FY 2004 FY 2003 FY 2002 ------------------------------------------- ----------- ----------- ------------ Revenues 100.0% 100.0% 100.0% ------------------------------------------- ----------- ----------- ------------ less: cost of goods sold 77.4% 71.9% 82.4% ------------------------------------------- ----------- ----------- ------------ Gross Income 22.6% 28.1% 17.6% ------------------------------------------- ----------- ----------- ------------ plus: other income 13.5% ------------------------------------------- ----------- ----------- ------------ less: selling expense 2.9% 2.2% 0.5% ------------------------------------------- ----------- ----------- ------------ general and administrative expense 6.2% 6.7% 7.0% ------------------------------------------- ----------- ----------- ------------ interest expense 1.6% 0.6% 0.0% ------------------------------------------- ----------- ----------- ------------ Operating profit 11.9% 18.6% 23.6% ------------------------------------------- ----------- ----------- ------------ plus: investment income ------------------------------------------- ----------- ----------- ------------ other income 0.0% ------------------------------------------- ----------- ----------- ------------ less: other expenses 0.0% 0.0% 0.0% ------------------------------------------- ----------- ----------- ------------ Pretax Income 11.9% 18.6% 23.6% ------------------------------------------- ----------- ----------- ------------ less: income tax 0.6% ------------------------------------------- ----------- ----------- ------------ Net Income 11.3% 18.6% 23.6% ------------------------------------------- ----------- ----------- ------------ Balance Sheet -------------------------------------- ---------- ----------- ------------ Assets 9/30/2002 9/30/2003 9/30/2004 -------------------------------------- ---------- ----------- ------------ Current Assets: -------------------------------------- ---------- ----------- ------------ Cash on hand & in bank 93,148 1,493,800 11,527,192 -------------------------------------- ---------- ----------- ------------ Short term investment -------------------------------------- ---------- ----------- ------------ Notes receivable 18,149 -------------------------------------- ---------- ----------- ------------ Interest receivable -------------------------------------- ---------- ----------- ------------ Accounts receivable 1,346,747 6,960,192 20,291,847 -------------------------------------- ---------- ----------- ------------ Other receivable 405,166 -------------------------------------- ---------- ----------- ------------ Prepaid Expenses 211,359 725,906 1,332,593 -------------------------------------- ---------- ----------- ------------ Inventory 1,087,288 8,057,998 30,295,414 -------------------------------------- ---------- ----------- ------------ Total current assets 3,143,708 17,237,896 63,465,194 -------------------------------------- ---------- ----------- ------------ -------------------------------------- ---------- ----------- ------------ Fixed assets: -------------------------------------- ---------- ----------- ------------ Original cost of the fixed assets 874,017 4,834,088 19,904,680 -------------------------------------- ---------- ----------- ------------ minus: Accumulated depreciation 265,129 644,558 2,374,245 -------------------------------------- ---------- ----------- ------------ Net Fixed Assets 608,888 4,189,530 17,530,436 -------------------------------------- ---------- ----------- ------------ -------------------------------------- ---------- ----------- ------------ Construction in process - 556,207 17,612,372 -------------------------------------- ---------- ----------- ------------ Disposal of fixed assets -------------------------------------- ---------- ----------- ------------ Total fixed assets 608,888 4,745,737 35,142,808 -------------------------------------- ---------- ----------- ------------ Intangible and other assets: -------------------------------------- ---------- ----------- ------------ Intangible assets - 16,650 3,050,545 -------------------------------------- ---------- ----------- ------------ Deposits - 141,923 -------------------------------------- ---------- ----------- ------------ Other long term assets 26,104 -------------------------------------- ---------- ----------- ------------ Accounts Receivable--Related Party 866,693 1,509,712 -------------------------------------- ---------- ----------- ------------ Total intangible and other assets 26,104 1,025,266 4,560,257 -------------------------------------- ---------- ----------- ------------ Total assets 3,778,700 23,008,899 103,168,259 -------------------------------------- ---------- ----------- ------------ -------------------------------------- ---------- ----------- ------------ Liabilities and shareholders' equity 9/30/2002 9/30/2003 9/30/2004 -------------------------------------- ---------- ----------- ------------ Current Liabilities -------------------------------------- ---------- ----------- ------------ Short term loan 362,976 3,484,574 29,159,105 -------------------------------------- ---------- ----------- ------------ Notes payable 6,107,418 20,802,970 -------------------------------------- ---------- ----------- ------------ Accounts payable 418,360 5,172,150 23,604,590 -------------------------------------- ---------- ----------- ------------ Salary payable -------------------------------------- ---------- ----------- ------------ Welfare payable -------------------------------------- ---------- ----------- ------------ Accrued expenses 1,067,731 1,785,362 5,252,400 -------------------------------------- ---------- ----------- ------------ Customer Deposits 656,350 369,931 -------------------------------------- ---------- ----------- ------------ Other fee -------------------------------------- ---------- ----------- ------------ Other current liabilities -------------------------------------- ---------- ----------- ------------ Total current liabilities 1,849,067 17,205,854 79,188,997 -------------------------------------- ---------- ----------- ------------ Long term liabilities: -------------------------------------- ---------- ----------- ------------ Long term accounts payable -------------------------------------- ---------- ----------- ------------ Notes payable, due after 1 year 120,992 181,488 -------------------------------------- ---------- ----------- ------------ Other long term liability -------------------------------------- ---------- ----------- ------------ Total long term liability 120,992 181,488 -------------------------------------- ---------- ----------- ------------ Deferred tax: -------------------------------------- ---------- ----------- ------------ Debit balance of deferred tax -------------------------------------- ---------- ----------- ------------ Total liabilities 1,849,067 17,326,846 79,370,485 -------------------------------------- ---------- ----------- ------------ -------------------------------------- ---------- ----------- ------------ Shareholders' equity: -------------------------------------- ---------- ----------- ------------ Capital stock 1,209,921 1,209,921 12,099,214 -------------------------------------- ---------- ----------- ------------ Paid in capital -------------------------------------- ---------- ----------- ------------ Retained earnings 719,712 4,472,132 11,698,560 -------------------------------------- ---------- ----------- ------------ Total shareholders' equity 1,929,633 5,682,053 23,797,774 -------------------------------------- ---------- ----------- ------------ Liabilities and 3,778,700 23,008,899 103,168,259 shareholders' equity -------------------------------------- ---------- ----------- ------------
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Samples: Subscription Agreement (China Bak Battery Inc), Subscription Agreement (China Bak Battery Inc), Subscription Agreement (China Bak Battery Inc)
Short-Term Loans. The Company has incurred the debt primarily to support construction of its new infrastructure and manufacturing capacity at BAK Industrial Park. The table below outlines these borrowings. Management believes that the maturities of these notes can be extended, and will be rolled into longer term facilities upon completion of construction. ----------------------------- ------------- ------------------- ---------------- Amount Institution ($mm) Interest Rate Maturity Date ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 2.42 4.59% 4/10/2005 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 2.18 4.59% 4/8/2005 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 1.82 4.54% 12/7/2004 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 0.60 4.54% 11/28/2004 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 1.21 4.54% 12/2/2004 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 1.34 4.59% 3/29/2005 ----------------------------- ------------- ------------------- ---------------- China Agriculture Bank $ 2.54 4.59% 3/30/2005 ----------------------------- ------------- ------------------- ---------------- Shenzhen Development Bank $ 12.10 5.84% 4/1/2005 ----------------------------- ------------- ------------------- ---------------- Xingye Bank $ 2.42 5.31% 3/11/2005 ----------------------------- ------------- ------------------- ---------------- Mingsheng Bank $ 2.54 5.84% 1/14/2005 ----------------------------- ------------- ------------------- ---------------- Total $ 29.16 ----------------------------- ------------- ------------------- ---------------- Notes Payable. These are numerous smaller notes totaling $20.80 million at 9/30/04 and are from China Agriculture Bank and Shenzhen Development Bank. Income Statement ($) ------------------------------------------- ------------ ------------ ---------- Item FY 2004 FY 2003 FY 2002 ------------------------------------------- ------------ ------------ ---------- Revenues 64,088,286 20,266,590 3,050,158 ------------------------------------------- ------------ ------------ ---------- less: cost of goods sold 49,630,238 14,571,849 2,513,633 ------------------------------------------- ------------ ------------ ---------- Gross Income 14,458,048 5,694,741 536,525 ------------------------------------------- ------------ ------------ ---------- plus: other income - - 411,570 ------------------------------------------- ------------ ------------ ---------- less: selling expense 1,871,987 442,753 15,984 ------------------------------------------- ------------ ------------ ---------- general and administrative expense 3,957,232 1,362,443 214,097 ------------------------------------------- ------------ ------------ ---------- interest expense 1,007,516 122,976 -637 ------------------------------------------- ------------ ------------ ---------- Operating profit 7,621,313 3,766,569 718,651 ------------------------------------------- ------------ ------------ ---------- plus: investment income - - - ------------------------------------------- ------------ ------------ ---------- other income - - 1,281 ------------------------------------------- ------------ ------------ ---------- less: other expenses 2,919 1,318 220 ------------------------------------------- ------------ ------------ ---------- Pretax Income 7,618,394 3,765,252 719,712 ------------------------------------------- ------------ ------------ ---------- less: income tax 391,965 - - ------------------------------------------- ------------ ------------ ---------- Net Income 7,226,429 3,765,252 719,712 ------------------------------------------- ------------ ------------ ---------- Income Statement (%) ------------------------------------------- ----------- ----------- ------------ Item FY 2004 FY 2003 FY 2002 ------------------------------------------- ----------- ----------- ------------ Revenues 100.0% 100.0% 100.0% ------------------------------------------- ----------- ----------- ------------ less: cost of goods sold 77.4% 71.9% 82.4% ------------------------------------------- ----------- ----------- ------------ Gross Income 22.6% 28.1% 17.6% ------------------------------------------- ----------- ----------- ------------ plus: other income 13.5% ------------------------------------------- ----------- ----------- ------------ less: selling expense 2.9% 2.2% 0.5% ------------------------------------------- ----------- ----------- ------------ general and administrative expense 6.2% 6.7% 7.0% ------------------------------------------- ----------- ----------- ------------ interest expense 1.6% 0.6% 0.0% ------------------------------------------- ----------- ----------- ------------ Operating profit 11.9% 18.6% 23.6% ------------------------------------------- ----------- ----------- ------------ plus: investment income ------------------------------------------- ----------- ----------- ------------ other income 0.0% ------------------------------------------- ----------- ----------- ------------ less: other expenses 0.0% 0.0% 0.0% ------------------------------------------- ----------- ----------- ------------ Pretax Income 11.9% 18.6% 23.6% ------------------------------------------- ----------- ----------- ------------ less: income tax 0.6% ------------------------------------------- ----------- ----------- ------------ Net Income 11.3% 18.6% 23.6% ------------------------------------------- ----------- ----------- ------------ Balance Sheet -------------------------------------- ---------- ----------- ------------ Assets 9/30/2002 9/30/2003 9/30/2004 -------------------------------------- ---------- ----------- ------------ Current Assets: -------------------------------------- ---------- ----------- ------------ Cash on hand & in bank 93,148 1,493,800 11,527,192 -------------------------------------- ---------- ----------- ------------ Short term investment -------------------------------------- ---------- ----------- ------------ Notes receivable 18,149 -------------------------------------- ---------- ----------- ------------ Interest receivable -------------------------------------- ---------- ----------- ------------ Accounts receivable 1,346,747 6,960,192 20,291,847 -------------------------------------- ---------- ----------- ------------ Other receivable 405,166 -------------------------------------- ---------- ----------- ------------ Prepaid Expenses 211,359 725,906 1,332,593 -------------------------------------- ---------- ----------- ------------ Inventory 1,087,288 8,057,998 30,295,414 -------------------------------------- ---------- ----------- ------------ Total current assets 3,143,708 17,237,896 63,465,194 -------------------------------------- ---------- ----------- ------------ -------------------------------------- ---------- ----------- ------------ Fixed assets: -------------------------------------- ---------- ----------- ------------ Original cost of the fixed assets 874,017 4,834,088 19,904,680 -------------------------------------- ---------- ----------- ------------ minus: Accumulated depreciation 265,129 644,558 2,374,245 -------------------------------------- ---------- ----------- ------------ Net Fixed Assets 608,888 4,189,530 17,530,436 -------------------------------------- ---------- ----------- ------------ -------------------------------------- ---------- ----------- ------------ Construction in process - 556,207 17,612,372 -------------------------------------- ---------- ----------- ------------ Disposal of fixed assets -------------------------------------- ---------- ----------- ------------ Total fixed assets 608,888 4,745,737 35,142,808 -------------------------------------- ---------- ----------- ------------ Intangible and other assets: -------------------------------------- ---------- ----------- ------------ Intangible assets - 16,650 3,050,545 -------------------------------------- ---------- ----------- ------------ Deposits - 141,923 -------------------------------------- ---------- ----------- ------------ Other long term assets 26,104 -------------------------------------- ---------- ----------- ------------ Accounts Receivable--Related Party 866,693 1,509,712 -------------------------------------- ---------- ----------- ------------ Total intangible and other assets 26,104 1,025,266 4,560,257 -------------------------------------- ---------- ----------- ------------ Total assets 3,778,700 23,008,899 103,168,259 -------------------------------------- ---------- ----------- ------------ -------------------------------------- ---------- ----------- ------------ Liabilities and shareholders' equity 9/30/2002 9/30/2003 9/30/2004 -------------------------------------- ---------- ----------- ------------ Current Liabilities -------------------------------------- ---------- ----------- ------------ Short term loan 362,976 3,484,574 29,159,105 -------------------------------------- ---------- ----------- ------------ Notes payable 6,107,418 20,802,970 -------------------------------------- ---------- ----------- ------------ Accounts payable 418,360 5,172,150 23,604,590 -------------------------------------- ---------- ----------- ------------ Salary payable -------------------------------------- ---------- ----------- ------------ Welfare payable -------------------------------------- ---------- ----------- ------------ Accrued expenses 1,067,731 1,785,362 5,252,400 -------------------------------------- ---------- ----------- ------------ Customer Deposits 656,350 369,931 -------------------------------------- ---------- ----------- ------------ Other fee -------------------------------------- ---------- ----------- ------------ Other current liabilities -------------------------------------- ---------- ----------- ------------ Total current liabilities 1,849,067 17,205,854 79,188,997 -------------------------------------- ---------- ----------- ------------ Long term liabilities: -------------------------------------- ---------- ----------- ------------ Long term accounts payable -------------------------------------- ---------- ----------- ------------ Notes payable, due after 1 year 120,992 181,488 -------------------------------------- ---------- ----------- ------------ Other long term liability -------------------------------------- ---------- ----------- ------------ Total long term liability 120,992 181,488 -------------------------------------- ---------- ----------- ------------ Deferred tax: -------------------------------------- ---------- ----------- ------------ Debit balance of deferred tax -------------------------------------- ---------- ----------- ------------ Total liabilities 1,849,067 17,326,846 79,370,485 -------------------------------------- ---------- ----------- ------------ -------------------------------------- ---------- ----------- ------------ Shareholders' equity: -------------------------------------- ---------- ----------- ------------ Capital stock 1,209,921 1,209,921 12,099,214 -------------------------------------- ---------- ----------- ------------ Paid in capital -------------------------------------- ---------- ----------- ------------ Retained earnings 719,712 4,472,132 11,698,560 -------------------------------------- ---------- ----------- ------------ Total shareholders' equity 1,929,633 5,682,053 23,797,774 -------------------------------------- ---------- ----------- ------------ Liabilities and 3,778,700 23,008,899 103,168,259 shareholders' equity -------------------------------------- ---------- ----------- ------------
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