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<SEC-DOCUMENT>0001204459-10-001020.txt : 20100510
<SEC-HEADER>0001204459-10-001020.hdr.sgml : 20100510
<ACCEPTANCE-DATETIME>20100510151103
ACCESSION NUMBER:		0001204459-10-001020
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		23
CONFORMED PERIOD OF REPORT:	20100331
FILED AS OF DATE:		20100510
DATE AS OF CHANGE:		20100510

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHINA BAK BATTERY INC
		CENTRAL INDEX KEY:			0001117171
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690]
		IRS NUMBER:				880442833
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32898
		FILM NUMBER:		10815826

	BUSINESS ADDRESS:	
		STREET 1:		BAK INDUSTRIAL PARK, NO. 1 BAK STREET
		STREET 2:		KUICHONG TOWN, LONGGANG DISTRICT
		CITY:			SHENZHEN PEOPLE
		STATE:			F4
		ZIP:			518119
		BUSINESS PHONE:		86-755-8977-0093

	MAIL ADDRESS:	
		STREET 1:		BAK INDUSTRIAL PARK, NO. 1 BAK STREET
		STREET 2:		KUICHONG TOWN, LONGGANG DISTRICT
		CITY:			SHENZHEN PEOPLE
		STATE:			F4
		ZIP:			518119

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MEDINA COFFEE INC
		DATE OF NAME CHANGE:	20000626
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>f10q.htm
<DESCRIPTION>FORM 10-Q
<TEXT>


<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Form 10-Q - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">
<A name=page_1></A>
<P align=center><B><FONT size=5>UNITED STATES <BR>SECURITIES AND EXCHANGE COMMISSION </FONT><BR></B><B>Washington, D.C.
20549 </B></P>
<P align=center><B><FONT size=5>FORM 10&#150;Q </FONT></B></P>
<P align=center>(Mark One) </P>
<P align=center><B>[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></P>
<P align=center>For the quarterly period ended: March 31, 2010 </P>
<P align=center><B>[&nbsp;&nbsp; ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B></P>
<P align=center>For the transition period from ____________ to _____________</P>
<P align=center>Commission File Number: 001-32898 </P>
<P align=center><B><U><FONT size=6>CHINA BAK BATTERY, INC.</FONT></U><font size="6">
<BR></font></B>(Exact name of registrant as specified in its charter) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=center><B><U>Nevada </U></B></TD>
    <TD align=center width="50%"><B><U>88-0442833 </U></B></TD></TR>
  <TR vAlign=top>
    <TD align=center>(State or other jurisdiction of incorporation </TD>
    <TD align=center width="50%">(I.R.S. Employer Identification No.) </TD></TR>
  <TR vAlign=top>
    <TD align=center>or organization) </TD>
    <TD align=left width="50%">&nbsp; </TD></TR></TABLE>
<P align=center><B>BAK Industrial Park <BR>No. 1 BAK Street <BR>Kuichong Town,
Longgang District <BR>Shenzhen 518119 <BR>People&#146;s Republic of China
<BR></B>(Address of principal executive offices, Zip Code) </P>
<P align=center><B><U>(86-755) 8977-0093</U></B><B> <BR></B>(Registrant&#146;s
telephone number, including area code) </P>
<P align=center>_____________________________________________________<BR>(Former
name, former address and former fiscal year, if changed since last report) </P>
<P align=justify>Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [&nbsp;&nbsp; ]&nbsp;</P>
<P align=justify>Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (&#167; 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes [&nbsp;&nbsp; ] No [&nbsp;&nbsp; ]</P>
<P align=justify>Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of &#147;large accelerated filer,&#148;
&#147;accelerated filer&#148; and &#147;smaller reporting company&#148; in Rule 12b-2 of the
Exchange Act. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Large accelerated filer [&nbsp;&nbsp; ]</TD>
    <TD align=left width="50%">Accelerated filer [X]</TD></TR>
  <TR vAlign=top>
    <TD align=left>Non-accelerated filer [&nbsp;&nbsp; ] (Do not check if a
      smaller reporting company) </TD>
    <TD align=left width="50%">Smaller reporting company [&nbsp;&nbsp;
  ]</TD></TR></TABLE>
<P align=justify>Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes [&nbsp;&nbsp; ] No
[X]</P>
<P align=justify>The number of shares outstanding of each of the issuer&#146;s
classes of common stock, as of May 7, 2010 is as follows: </P>
<DIV align=center>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="60%" border=0>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center>Class of
      Securities </TD>
    <TD noWrap align=center width="5%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="47%">Shares Outstanding </TD></TR>
  <TR vAlign=top>
    <TD noWrap align=center>Common Stock, $0.001 par value </TD>
    <TD noWrap align=center width="5%"  >&nbsp;</TD>
    <TD noWrap align=center width="47%"><font style="background-color: #FFFFFF">
    63,608,776</font></TD></TR></TABLE></DIV><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_2></A>
<P align=center><IMG
src="f10qx2x1.jpg"
border=0 width="186" height="66">&nbsp;<BR><B><FONT size=3>CHINA BAK BATTERY, INC.</FONT></B></P>
<P align=center><B><I>Quarterly Report on FORM 10-Q <BR></I></B><B><I>Three and
Six Months Ended March 31, 2010 </I></B></P>
<P align=center><B>TABLE OF CONTENTS</B></P>
<P align=center><B>PART I <BR></B><B>FINANCIAL INFORMATION </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee >Item 1. </TD>
    <TD align=left width="85%" bgColor=#eeeeee>Financial Statements </TD>
    <TD align=right width="5%" bgColor=#eeeeee >2 </TD></TR>
  <TR vAlign=top>
    <TD align=left >Item 2. </TD>
    <TD align=left width="85%">Management&#146;s Discussion and Analysis of
      Financial Condition and Results of Operations </TD>
    <TD align=right width="5%" >35</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee >Item 3. </TD>
    <TD align=left width="85%" bgColor=#eeeeee>Quantitative and Qualitative
      Disclosures About Market Risk </TD>
    <TD align=right width="5%" bgColor=#eeeeee >54</TD></TR>
  <TR vAlign=top>
    <TD align=left >Item 4. </TD>
    <TD align=left width="85%">Controls and Procedures </TD>
    <TD align=right width="5%" >54</TD></TR></TABLE>
<P align=center><B>PART II <BR></B><B>OTHER INFORMATION </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee >Item 1. </TD>
    <TD align=left width="85%" bgColor=#eeeeee>Legal Proceedings </TD>
    <TD align=right width="5%" bgColor=#eeeeee >56</TD></TR>
  <TR vAlign=top>
    <TD align=left >Item 1A. </TD>
    <TD align=left width="85%">Risk Factors </TD>
    <TD align=right width="5%" >56</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee >Item 2. </TD>
    <TD align=left width="85%" bgColor=#eeeeee>Unregistered Sales of Equity
      Securities and Use of Proceeds </TD>
    <TD align=right width="5%" bgColor=#eeeeee >56</TD></TR>
  <TR vAlign=top>
    <TD align=left >Item 3. </TD>
    <TD align=left width="85%">Defaults Upon Senior Securities </TD>
    <TD align=right width="5%" >56</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee >Item 4. </TD>
    <TD align=left width="85%" bgColor=#eeeeee>(Removed and Reserved) </TD>
    <TD align=right width="5%" bgColor=#eeeeee >56</TD></TR>
  <TR vAlign=top>
    <TD align=left >Item 5. </TD>
    <TD align=left width="85%">Other Information </TD>
    <TD align=right width="5%" >56</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee >Item 6. </TD>
    <TD align=left width="85%" bgColor=#eeeeee>Exhibits </TD>
    <TD align=right width="5%" bgColor=#eeeeee >56</TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_3></A>
<P align=center><B>PART I <BR></B><B><U>FINANCIAL INFORMATION</U></B><B>
</B></P>
<P align=justify><B>ITEM 1. FINANCIAL STATEMENTS. </B></P>
<P align=center><B>CHINA BAK BATTERY, INC. AND SUBSIDIARIES <BR>CONDENSED
INTERIM CONSOLIDATED FINANCIAL STATEMENTS <BR></B><B>FOR THE THREE AND SIX
MONTHS ENDED MARCH 31, 2010 <BR>&nbsp;</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left><B>Contents</B>
</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="5%"
    ><B>Page</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Condensed Interim Consolidated Balance
      Sheets as of September 30, 2009 and March 31, 2010 (unaudited) </TD>
    <TD align=center width="5%" bgColor=#eeeeee >3 </TD></TR>
  <TR vAlign=top>
    <TD align=left>Condensed Interim Consolidated Statements of Operations and
      Comprehensive Loss for the three months ended March 31, 2009 and 2010
      (unaudited) </TD>
    <TD align=center width="5%" >5</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Condensed Interim Consolidated Statements
      of Operations and Comprehensive Loss for the six months ended March 31,
      2009 and 2010 (unaudited) </TD>
    <TD align=center width="5%" bgColor=#eeeeee >6</TD></TR>
  <TR vAlign=top>
    <TD align=left>Condensed Interim Consolidated Statements of Shareholders&#146;
      Equity for the six months ended March 31, 2009 and 2010 (unaudited) </TD>
    <TD align=center width="5%" >7</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Condensed Interim Consolidated Statements
      of Cash Flows for the three months ended March 31, 2009 and 2010
      (unaudited) </TD>
    <TD align=center width="5%" bgColor=#eeeeee >8</TD></TR>
  <TR vAlign=top>
    <TD align=left>Condensed Interim Consolidated Statements of Cash Flows for
      the six months ended March 31, 2009 and 2010 (unaudited) </TD>
    <TD align=center width="5%" >10</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee>Notes to the Condensed Consolidated
      Financial Statements (unaudited) </TD>
    <TD align=center width="5%" bgColor=#eeeeee >12</TD></TR></TABLE>
<P align=center>2 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_4></A>
<P align=center><B>PART I <BR></B><B><U>FINANCIAL INFORMATION</U></B><B>
</B></P>
<P align=justify><B>Item 1. Financial Statements. </B></P>
<P align=center>&nbsp;<B>China BAK Battery, Inc. and subsidiaries <BR>Condensed
interim consolidated balance sheets <BR>As of September 30, 2009 and March 31,
2010 <br>
</B>(In US$) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="10%" nowrap><I>September 30,</I> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="10%" nowrap><I>March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><I>Note</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" nowrap
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%" nowrap><I>2009</I> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" nowrap
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%" nowrap><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%" align="center">&nbsp; </TD>
    <TD width="2%" align="center" >&nbsp;</TD>
    <TD width="1%" align="center" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; <EM>(Unaudited)</EM></TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Assets</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><I>Current assets</I> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Cash and cash equivalents </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;30,678,352 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;39,644,408 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Pledged deposits </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">2 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">31,115,109 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">18,025,480 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Trade accounts receivable, net </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>3 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>83,291,698 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>83,572,378 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Inventories </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">4 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">65,535,384 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">75,794,995 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Prepayments and other receivables </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>5 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4,632,424 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>8,063,481 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Assets held for sale </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">803,648 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">795,030 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Deferred tax assets </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>3,894,703 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>5,241,265 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Total current
      assets </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>219,951,318 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>231,137,037 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Property, plant and equipment, net </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>6 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>219,684,994 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>218,088,800 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Lease prepayments, net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">32,165,629 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">31,570,045 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Intangible assets, net </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>239,487 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>208,051 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Deferred tax assets </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">42,911 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">59,561 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;472,084,339 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;481,063,494 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>See accompanying notes to the condensed interim consolidated
financial statements. </P>
<p align="center">3</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_5></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Condensed
interim consolidated balance sheets <BR>As of September 30, 2009 and March 31,
2010 (continued) <BR></B>(In US$) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;</TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; <EM>September 30,</EM></TD>
    <TD width="2%" align="center" ></TD>
    <TD width="1%" align="center" >&nbsp;</TD>
    <TD align=center width="10%"><EM>March 31,</EM></TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><I>Note</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"><I>(Unaudited)</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Liabilities</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><I>Current liabilities</I> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Short-term bank loans </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>7 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;139,159,380 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;157,270,064 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Current maturities of long-term bank loans </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">8 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">16,114,146 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">11,720,066 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Accounts and bills payable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>92,571,516 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>80,557,812 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Accrued expenses and other payables </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">18,425,271 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">19,503,604 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Total current liabilities </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">266,270,313 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">269,051,546 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Long-term bank loans, less current maturities </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">8 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">39,552,906 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">29,300,166 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Deferred revenue </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>7,441,806 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>7,325,041 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Other long-term payables </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">1,940,217 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">3,092,192 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Deferred tax liabilities </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>278,227 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>346,458 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Total
      liabilities </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>315,483,469 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>309,115,403 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Commitments and contingencies </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>12 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Shareholders&#146; equity</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Shares of common stock US$ 0.001 par value; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>
    <p style="margin-left: 15pt">100,000,000
      authorized; 57,737,481 and 63,605,026 issued and outstanding as
      of&nbsp;September 30, 2009 and March 31, 2010
      respectively </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>57,738 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>63,605 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Donated shares </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">14,101,689 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">14,101,689 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Additional paid-in capital </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>101,161,455 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>122,716,553 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Statutory reserves </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">7,227,195 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">7,314,565 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Retained earnings </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>13,328,115 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>7,298,607 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Accumulated other comprehensive income </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">24,791,288 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">24,519,682 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>160,667,480 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>176,014,701 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Less: Treasury shares </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">(4,066,610</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">(4,066,610</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Total shareholders&#146; equity </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">156,600,870 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">171,948,091 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=center width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total liabilities and shareholders&#146; equity </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">472,084,339 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">481,063,494&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>See accompanying notes to the condensed interim consolidated
financial statements. </P>
<p align="center">4</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_6></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR></B><B>Condensed
interim consolidated statements of operations and comprehensive loss <BR>For the
three months ended March 31, 2009 and 2010 <BR></B>(Unaudited) <BR>(In US$) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><I>Three months ended March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net revenues </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;40,814,661 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;50,423,715 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cost of revenues </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(37,792,979</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(41,420,960</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Gross profit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>3,021,682 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>9,002,755 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Operating expenses: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Research and
      development expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(1,124,666</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(1,625,378</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Sales and marketing expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(1,154,067</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(1,705,649</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;General and
      administrative expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(4,115,684</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(4,818,460</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Total operating expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(6,394,417</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(8,149,487</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Operating (loss) / income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(3,372,735</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>853,268 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Finance costs, net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(2,364,431</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(2,190,607</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Government grant income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>68,641 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>78,970 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Other income / (expense) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">157,800 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(145,024</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Loss before income taxes </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(5,510,725</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(1,403,393</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Income tax expense </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(211,208</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(1,146,418</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(5,721,933</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(2,549,811</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Other comprehensive loss </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;- Foreign
      currency translation adjustment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(261,268</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(164,260</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Comprehensive loss </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(5,983,201</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(2,714,071</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net loss per share: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;- Basic </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(0.10</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(0.04</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;- Diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(0.10</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(0.04</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Weighted average number of shares of common stock: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;- Basic </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>56,960,409 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>62,881,663 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;- Diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">56,960,409 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">62,881,663 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>See accompanying notes to the condensed interim consolidated
financial statements. </P>
<p align="center">5</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_8></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR></B><B>Condensed
interim consolidated statements of operations and comprehensive loss <BR>For the
six months ended March 31, 2009 and 2010 <BR></B>(Unaudited) <BR>(In US$) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><I>Six months ended March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net revenues </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;108,904,398 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;100,651,267 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cost of revenues </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(95,289,498</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(82,088,632</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Gross profit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>13,614,900 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>18,562,635 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Operating expenses: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Research and
      development expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(2,542,206</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(3,393,485</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Sales and marketing expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(2,753,719</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(3,733,619</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;General and
      administrative expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(10,875,360</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(13,455,800</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Total operating expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(16,171,285</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(20,582,904</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Operating loss </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(2,556,385</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(2,020,269</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Finance costs, net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(5,203,992</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(4,343,733</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Government grant income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>170,586 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>434,274 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Other income / (expenses) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">164,157 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(138,308</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Loss before income taxes </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(7,425,634</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(6,068,036</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Income tax (expense) / benefit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(35,047</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">125,898 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(7,460,681</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(5,942,138</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Other comprehensive loss </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;- Foreign
      currency translation adjustment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(101,156</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(271,606</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Comprehensive loss </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(7,561,837</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(6,213,744</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net loss per share: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;- Basic </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(0.13</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(0.10</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;- Diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(0.13</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(0.10</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Weighted average number of shares of common stock: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;- Basic </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>56,959,386 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>61,984,941 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;- Diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">56,959,386 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">61,984,941 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>See accompanying notes to the condensed interim consolidated
financial statements. </P>
<p align="center">6</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_10></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR></B><B>Condensed
interim consolidated statements of shareholders&#146; equity <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 8pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15; margin-left: 15">&nbsp; </TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">Accumulated </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15; margin-left: 15">&nbsp; </TD>
    <TD noWrap align=center width="1%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</TD>
    <TD noWrap align=center width="15%" colSpan=4 style="border-bottom-style: solid; border-bottom-width: 1">Shares of common stock </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">Additional </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">other </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="15%" colSpan=4>Treasury shares </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">Total </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15; margin-left: 15">&nbsp; </TD>
    <TD noWrap align=center width="1%" style="border-top-style: solid; border-top-width: 1">&nbsp;</TD>
    <TD noWrap align=center width="6%" style="border-top-style: solid; border-top-width: 1">Number of </TD>
    <TD noWrap align=center width="2%" style="border-top-style: solid; border-top-width: 1">&nbsp;</TD>
    <TD noWrap align=center width="1%" style="border-top-style: solid; border-top-width: 1">&nbsp;</TD>
    <TD noWrap align=center width="6%" style="border-top-style: solid; border-top-width: 1">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">Donated </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">paid-in </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">Statutory </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">Retained </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">comprehensive </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">Number of </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">&nbsp; </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD noWrap align=center width="1%">&nbsp;</TD>
    <TD noWrap align=center width="6%">shareholders&#146; </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>
    <p style="text-indent: -15; margin-left: 15">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">shares </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">Amount </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">shares </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">capital </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">reserves </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">earnings </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">income </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">shares </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">Amount </TD>
    <TD noWrap align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" noWrap align=center
      width="6%">equity </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#E6EFFF>
    <p style="text-indent: -15; margin-left: 15">Balance as of October 1, 2008 </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>57,676,481 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>&nbsp;57,677 </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>&nbsp;14,101,689
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>&nbsp;97,286,286
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>&nbsp;6,917,943
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>&nbsp;27,628,860
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>&nbsp;25,146,155
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>(721,030</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD vAlign=bottom align=right width="6%"
    bgColor=#E6EFFF>&nbsp;(4,066,610</TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>) </TD>
    <TD vAlign=bottom align=left width="1%" bgColor=#E6EFFF>$</TD>
    <TD vAlign=bottom align=right width="6%" bgColor=#E6EFFF>&nbsp;167,072,000
    </TD>
    <TD vAlign=bottom align=left width="2%" bgColor=#E6EFFF>&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">Net loss </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">(7,460,681</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">(7,460,681</TD>
    <TD vAlign=bottom align=left width="2%">) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">
    <p style="text-indent: -15; margin-left: 15">Share-based compensation for employee stock awards </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">1,548,475 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">1,548,475 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">Issuance of common stock to non- employee directors
</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">7,500 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">7 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">(7</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">
    <p style="text-indent: -15; margin-left: 15">Appropriation to statutory reserves </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">309,252 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">(309,252</TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">) </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">Foreign currency translation adjustment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">(101,156</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%">(101,156</TD>
    <TD vAlign=bottom align=left width="2%">) </TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">
    <p style="text-indent: -15; margin-left: 15">Balance as of March 31, 2009 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">57,683,981 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">&nbsp;57,684 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">&nbsp;14,101,689 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">&nbsp;98,834,754 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">&nbsp;7,227,195 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">&nbsp;19,858,927 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">&nbsp;25,044,999 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">(721,030</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">&nbsp;(4,066,610</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">&nbsp;161,058,638 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">Balance as of October 1, 2009 </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">57,737,481 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="6%">&nbsp;57,738 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="6%">&nbsp;14,101,689
    </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="6%">&nbsp;101,161,455
    </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="6%">&nbsp;7,227,195
    </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="6%">&nbsp;13,328,115
    </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="6%">&nbsp;24,791,288
    </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">(721,030</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="6%">&nbsp;(4,066,610</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">$</TD>
    <TD vAlign=bottom align=right width="6%">&nbsp;156,600,870
    </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">
    <p style="text-indent: -15; margin-left: 15">Net loss </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">(5,942,138</TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">) </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">(5,942,138</TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">) </TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">Share-based compensation for employee stock awards </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">1,944,885 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">1,944,885 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">
    <p style="text-indent: -15; margin-left: 15">Exercise of stock options awards </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">70,045 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">70 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">226,526 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">226,596 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">Issuance of common stock to non- employee directors
</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">7,500 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">7 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">(7</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">
    <p style="text-indent: -15; margin-left: 15">Issuance of new common stock </TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">5,790,000 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">5,790 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">19,383,694 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">- </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%" bgcolor="#E6EFFF">19,389,484 </TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">&nbsp;</TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">Appropriation to statutory reserves </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">87,370 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">(87,370</TD>
    <TD vAlign=bottom align=left width="2%">) </TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%">&nbsp;</TD>
    <TD vAlign=bottom align=right width="6%">- </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD bgcolor="#E6EFFF">
    <p style="text-indent: -15; margin-left: 15">Foreign currency translation adjustment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">(271,606</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">- </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="2%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=left
    width="1%" bgcolor="#E6EFFF">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=bottom align=right
    width="6%" bgcolor="#E6EFFF">(271,606</TD>
    <TD vAlign=bottom align=left width="2%" bgcolor="#E6EFFF">) </TD></TR>
  <TR>
    <TD>
    <p style="text-indent: -15; margin-left: 15">Balance as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">63,605,026 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">&nbsp;63,605 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">&nbsp;14,101,689 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">&nbsp;122,716,553 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">&nbsp;7,314,565 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">&nbsp;7,298,607 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">&nbsp;24,519,682 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">(721,030</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">&nbsp;(4,066,610</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=left
    width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" vAlign=bottom align=right
    width="6%">&nbsp;171,948,091 </TD>
    <TD vAlign=bottom align=left width="2%">&nbsp;</TD></TR></TABLE><BR>
See accompanying notes to the condensed interim consolidated
financial statements.
<p align="center">7</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_12></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Condensed
interim consolidated statements of cash flows <BR>For the three months ended
March 31, 2009 and 2010 <BR></B>(Unaudited) <BR>(In US$) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" nowrap
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4 nowrap><I>Three months ended March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash flow from operating activities</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net loss </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;(5,721,933</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;(2,549,811</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Adjustments to reconcile net loss to net
      cash provided by / (used in) operating activities: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Depreciation and amortization
</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">3,893,924 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">4,600,067 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Provision for
      doubtful debts </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>975,390 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>921,213 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;(Recovery of) / provision for
      obsolete inventories </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(6,585</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">142,130 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Share-based
      compensation </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>730,947 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>799,675 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Deferred income taxes </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(19,393</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">200,170 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Deferred revenue
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(58,512</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(58,587</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Exchange loss </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">51,453 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">416,069 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Changes in operating assets and liabilities: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Trade accounts
      receivable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>6,150,583 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(10,399,402</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF>&nbsp; &nbsp; &nbsp; &nbsp;Inventories </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>9,015,891 </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>3,475,403 </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">&nbsp; &nbsp; &nbsp; &nbsp;Prepayments and other
      receivables </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">(396,399</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">4,754,453 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF>&nbsp; &nbsp; &nbsp; &nbsp;Accounts and
      bills payable </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>(7,319,289</TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>) </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>(7,593,860</TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">&nbsp; &nbsp; &nbsp; &nbsp;Accrued expenses and other
      payables </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">(1,022,127</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">3,774,284 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Net cash provided by / (used in) operating activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">6,273,950 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">(1,518,196</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD></TR>
  <TR>
    <TD bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF"><B>Cash flow from investing activities</B> </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="12%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="12%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Purchases of property, plant and equipment </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">(12,329,590</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">(3,803,885</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF>Payment of lease prepayments </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>(610,919</TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>) </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>- </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Purchases of intangible assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">(20,664</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%" bgcolor="#E6EFFF">(135</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD></TR>
  <TR>
    <TD bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Net cash used in investing activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">&nbsp;(12,961,173</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">&nbsp;(3,804,020</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD></TR></TABLE>
<P align=justify>See accompanying notes to the condensed interim consolidated
financial statements. </P>
<p align="center">8</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_13></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Condensed
interim consolidated statements of cash flows <BR>For the three months ended
March 31, 2009 and 2010 (continued) <BR></B>(Unaudited) <BR>(In US$) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4 nowrap><I>Three months ended March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash flow from financing activities</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Proceeds from borrowings </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;50,473,188 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;100,894,215 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Repayment of borrowings </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(49,741,496</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(74,554,760</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>(Increase) / decrease in pledged deposits </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(5,832,756</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">1,017,887 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net cash (used in) / provided by financing
      activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(5,101,064</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>27,357,342 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Effect of exchange rate changes on cash and cash
      equivalents</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%"><B>(46,389</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%"><B>(693,641</B></TD>
    <TD align=left width="2%" ><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Net (decrease) / increase in cash and
      cash equivalents</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff><B>(11,834,676</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff><B>21,341,485</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Cash and cash equivalents at the beginning of period</B>
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%"><B>37,209,174</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%"><B>18,302,923</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash and cash equivalents at the end of
      period</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff><B>&nbsp;25,374,498</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff><B>&nbsp;39,644,408</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Supplemental disclosure of cash flow information:</B>
</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Cash received during the period for: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Bills receivable discounted to
      banks </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;7,037,518 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Cash paid during the period for: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Income taxes </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;94,933 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Interest, net of
      amounts capitalized </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;2,378,306 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;1,819,958 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>See accompanying notes to the condensed interim consolidated
financial statements. </P>
<p align="center">9</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_14></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Condensed
interim consolidated statements of cash flows <BR>For the six months ended March
31, 2009 and 2010 <BR></B>(Unaudited) <BR>(In US$) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><I>Six months ended March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash flow from operating activities</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net loss </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;(7,460,681</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;(5,942,138</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Adjustments to reconcile net loss to net
      cash provided by / (used in) operating activities: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Depreciation and amortization
</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">7,520,804 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">8,792,802 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Provision for
      doubtful debts </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>3,322,465 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>5,657,549 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Recovery of obsolete inventories
    </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(556,719</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(138,125</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Share-based
      compensation </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,548,475 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,944,885 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Deferred income taxes </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(290,468</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(1,294,485</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Deferred revenue
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(117,000</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(117,174</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Exchange loss </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">755,423 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">153,511 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Changes in operating assets and liabilities: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Trade accounts
      receivable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>5,194,609 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(5,924,142</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF>&nbsp; &nbsp; &nbsp; &nbsp;Inventories </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>10,294,454 </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>(10,097,219</TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#E6EFFF>&nbsp; &nbsp; &nbsp; &nbsp;Prepayments and
      other receivables </TD>
    <TD align=left width="1%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#E6EFFF>(8,255,685</TD>
    <TD align=left width="2%"  bgColor=#E6EFFF>) </TD>
    <TD align=left width="1%"  bgColor=#E6EFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#E6EFFF>(3,442,801</TD>
    <TD align=left width="2%"  bgColor=#E6EFFF>) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#FFFFFF">&nbsp; &nbsp; &nbsp; &nbsp;Accounts and bills payable </TD>
    <TD align=left width="1%" bgcolor="#FFFFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#FFFFFF">12,855,759 </TD>
    <TD align=left width="2%" bgcolor="#FFFFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#FFFFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#FFFFFF">(12,388,975</TD>
    <TD align=left width="2%" bgcolor="#FFFFFF" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">&nbsp; &nbsp; &nbsp; &nbsp;Accrued expenses and other
      payables </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">2,640,486 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">3,905,219 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Net cash provided by / (used in) operating activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">27,451,922 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">(18,891,093</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF"><B>Cash flow from investing activities</B> </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="12%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="12%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Purchases of property, plant and equipment </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">(31,857,915</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">(7,708,534</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF>Payment of lease prepayments </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>(1,076,777</TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>) </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#FFFFFF>- </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Purchases of intangible assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">(78,664</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%" bgcolor="#E6EFFF">(1,638</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD></TR>
  <TR>
    <TD bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD width="12%" bgColor=#FFFFFF>&nbsp; </TD>
    <TD width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Net cash used in investing activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">&nbsp;(33,013,356</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" bgcolor="#E6EFFF">&nbsp;(7,710,172</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD></TR></TABLE>
<P align=justify>See accompanying notes to the condensed interim consolidated
financial statements. </P>
<p align="center">10</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_15></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Condensed
interim consolidated statements of cash flows <BR>For the six months ended March
31, 2009 and 2010 (continued) <BR></B>(Unaudited) <BR>(In US$) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><I>Six months ended March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash flow from financing activities</B>
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Proceeds from borrowings </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;134,550,135 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;141,832,103 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Repayment of borrowings </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(131,625,132</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(138,268,619</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>(Increase) / decrease in pledged deposits </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(7,496,044</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">13,088,683 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Proceeds from issuance of capital stock,
      net </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>19,616,080 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net cash (used in) / provided by financing activities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(4,571,041</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">36,268,247 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Effect of exchange rate changes on cash
      and cash equivalents</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>(199,861</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff><B>)</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>(700,926</B></TD>
    <TD align=left width="2%"  bgColor=#e6efff><B>)</B> </TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Net (decrease) / increase in cash and cash
      equivalents</B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%"><B>(10,332,336</B></TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%"><B>8,966,056</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Cash and cash equivalents at the
      beginning of period</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>35,706,834</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff><B>30,678,352</B> </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Cash and cash equivalents at the end of period</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"><B>&nbsp;25,374,498</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    ><B>$</B></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%"><B>&nbsp;39,644,408</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff><B>Supplemental disclosure of cash flow
      information:</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cash received during the period for: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Bills receivable
      discounted to banks </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;8,276,507 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;585,969 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cash paid during the period for: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Income taxes </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;94,933 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;222,339 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Interest, net of amounts
      capitalized </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;5,140,604 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;3,642,153 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>See accompanying notes to the condensed interim consolidated
financial statements. </P>
<p align="center">11</p>
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<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR></B><B>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>1. Principal Activities, Basis of Presentation and
Organization </B></P>
<P align=justify><I>Principal Activities </I></P>
<P align=justify>China BAK Battery, Inc. (&#147;China BAK&#148;) is a corporation formed
in the State of Nevada on October 4, 1999 as Medina Copy, Inc. The Company
changed its name to Medina Coffee, Inc. on October 6, 1999 and subsequently
changed its name to China BAK Battery, Inc. on February 14, 2005. China BAK and
its subsidiaries (hereinafter, collectively referred to as the &#147;Company&#148;) are
principally engaged in the manufacture, commercialization and distribution of a
wide variety of standard and customized lithium-ion (known as "Li-ion" or
"Li-ion cell") rechargeable batteries for use in cellular telephones, as well as
various other portable electronic applications, including high-power handset
telephones, laptop computers, power tools, digital cameras, video camcorders,
MP3 players, electric bicycles, electric motors, and general industrial
applications. </P>
<P align=justify>The shares of the Company traded in the over-the-counter market
through the Over-the-Counter Bulletin Board from 2005 until May 31, 2006, when
the Company obtained approval to list its common stock on The NASDAQ Global
Market, and trading commenced that same date under the symbol "CBAK". </P>
<P align=justify><I>Basis of Presentation and Organization </I></P>
<P align=justify>As of March 31, 2010, the Company&#146;s subsidiaries consisted of:
i) BAK International Limited (&#147;BAK International&#148;), a wholly owned limited
liability company incorporated in Hong Kong on December 29, 2003 as BATCO
International Limited, which changed its name to BAK International Limited on
November 3, 2004; ii) Shenzhen BAK Battery Co., Ltd. (&#147;Shenzhen BAK&#148;), a wholly
owned limited liability company established on August 3, 2001 in the People&#146;s
Republic of China (&#147;PRC&#148;); iii) BAK Electronics (Shenzhen) Co., Ltd. (&#147;BAK
Electronics&#148;), a wholly owned limited liability company established on August
15, 2005 in the PRC; iv) BAK International (Tianjin) Ltd. (&#147;BAK Tianjin&#148;), a
wholly owned limited liability company established on December 12, 2006 in the
PRC; v) BAK Battery Canada Ltd. (&#147;BAK Canada&#148;), a wholly owned limited liability
company established on December 20, 2006 in Canada as BAK Canada Battery Ltd.,
which changed its name to BAK Battery Canada Ltd. on December 22, 2006; vi) BAK
Europe GmbH (&#147;BAK Europe&#148;), a wholly owned limited liability company established
in Germany on November 28, 2007; and vii) BAK Telecom India Private Limited
(&#147;BAK India&#148;), a wholly owned limited liability company established in India on
August 14, 2008. BAK International beneficially owns 100% of BAK India partly
through a nominee agreement with one of its employees. </P>
<P align=justify>BAK Tianjin was established in Tianjin Technology Industrial
District on December 12, 2006 as a wholly owned subsidiary of BAK International
with registered capital of US$99,990,000. Pursuant to BAK Tianjin&#146;s articles of
association and relevant PRC regulations, BAK International was required to
contribute US$20,000,000 to BAK Tianjin as capital (representing 20% of BAK
Tianjin&#146;s registered capital) before March 11, 2007. An extension from the
Business Administration Bureau of Beichen District, Tianjin, was obtained to
make this contribution no later than December 11, 2007. On November 16, 2007,
BAK International contributed approximately US$20,000,000 capital to BAK
Tianjin. The remaining US$79,990,000 was originally required to be fully
contributed no later than December 11, 2008 and an extension from the Business
Administration Bureau of Beichen District, Tianjin, was obtained to make this
contribution no later than December 11, 2009. On November 16, 2009, BAK
International contributed approximately US$9,000,000 capital to BAK Tianjin and
as of November 16, 2009, the total contribution from BAK International was
US$29,000,000. The Company is discussing with the authorities to further extend
the deadline of making the capital contribution and no action has been taken by
the authorities. BAK Tianjin is principally engaged in the manufacturing of
high power lithium-ion batteries for use in cordless power tools, electric
vehicles and other
applications. </P>
<P align=justify>Pursuant to Shenzhen BAK&#146;s articles of association and relevant
PRC regulations, BAK International was required to contribute about US$5.72
million to Shenzhen BAK as capital (representing 7% of Shenzhen BAK&#146;s registered
capital) no later than October 2008. On May 5, 2009, an approval from Shenzhen
Bureau of Trade and Industry was obtained to reduce the required registered
capital to US$76,877,480, which had been fully paid up, and on June 22, 2009, an
updated business license of Shenzhen BAK from the Business Administration Bureau
of Shenzhen was obtained. On December 25, 2009, BAK International contributed approximately
US$10,122,520 capital to Shenzhen BAK and as of March 31, 2010, the total
contribution from BAK International and Shenzhen BAK&#146;s registered capital was
US$87,000,000. </P>
<p align="center">12</p>
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<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>1. Principal Activities, Basis of Presentation and
Organization (continued) </B></P>
<P align=justify><I>Basis of Presentation and Organization (continued) </I></P>
<P align=justify>On November 6, 2004, BAK International, a non-operating holding
company that had substantially the same shareholders as Shenzhen BAK, entered
into a share swap transaction with the shareholders of Shenzhen BAK for the
purpose of the subsequent reverse acquisition of the Company as described below.
Pursuant to the terms of the share swap transaction, BAK International acquired
all of the outstanding shares of Shenzhen BAK for US$11.5 million in cash, while
the shareholders of Shenzhen BAK acquired substantially all of the outstanding
shares of BAK International for US$11.5 million in cash. As a result, Shenzhen
BAK became a wholly-owned subsidiary of BAK International. After the share swap
transaction was completed, there were 31,225,642 shares of BAK International
stock outstanding, exactly the same as the number of shares of capital stock of
Shenzhen BAK that had been outstanding immediately prior to the share swap, and
the shareholders of BAK International were substantially the same as the
shareholders of Shenzhen BAK prior to the share swap. Consequently, the share
swap transaction between BAK International and the shareholders of Shenzhen BAK
was accounted for as a reverse acquisition of Shenzhen BAK with no adjustment to
the historical basis of the assets and liabilities of Shenzhen BAK. </P>
<P align=justify>On January 20, 2005, the Company completed a share swap
transaction with the shareholders of BAK International. The share swap
transaction, also referred to as the &#147;reverse acquisition&#148; of the Company, was
consummated under Nevada law pursuant to the terms of a Securities Exchange
Agreement entered by and among China BAK, BAK International and the shareholders
of BAK International on January 20, 2005. Pursuant to the Securities Exchange
Agreement, the Company issued 39,826,075 shares of common stock, par value
US$0.001 per share, to the shareholders of BAK International (including
31,225,642 shares to the original shareholders and 8,600,433 shares to new
investors who had purchased shares in the private placement described below),
representing approximately 97.2% of the Company&#146;s post-exchange issued and
outstanding common stock, in exchange for 100% of the outstanding capital stock
of BAK International. </P>
<P align=justify>The share swap transaction has been accounted for as a
capital-raising transaction of the Company whereby the historical financial
statements and operations of Shenzhen BAK are consolidated using historical
carrying amounts. The 1,152,458 shares of China BAK outstanding prior to the
stock exchange transaction were accounted for at the net book value at the time
of the transaction, which was a deficit of US$1,672. </P>
<P align=justify>Also on January 20, 2005, immediately prior to consummating the
share swap transaction, BAK International executed a private placement of its
common stock with unrelated investors whereby it issued an aggregate of
8,600,433 shares of common stock for gross proceeds of US$17,000,000. In
conjunction with this financing, Mr. Xiangqian Li, the Chairman and Chief
Executive Officer of the Company, agreed to place 2,179,550 shares of the
Company's common stock owned by him into an escrow account pursuant to an Escrow
Agreement dated January 20, 2005 (the &#147;Escrow Agreement&#148;). Pursuant to the
Escrow Agreement, 50% of the escrowed shares were to be released to the
investors in the private placement if audited net income of the Company for the
fiscal year ended September 30, 2005 was not at least US$12,000,000, and the
remaining 50% were to be released to investors in the private placement if
audited net income of the Company for the fiscal year ended September 30, 2006
was not at least US$27,000,000. If the audited net income of the Company for the
fiscal years ended September 30, 2005 and 2006 reached the above-mentioned
targets, the 2,179,550 shares would be released to Mr. Xiangqian Li in the
amount of 50% upon reaching the 2005 target and the remaining 50% upon reaching
the 2006 target. </P>
<P align=justify>Under accounting principles generally accepted in the United
States of America (&#147;US GAAP&#148;), escrow agreements such as the one established by
Mr. Xiangqian Li generally constitute compensation if, following attainment of a
performance threshold, shares are returned to a company officer. The Company
determined that without consideration of the compensation charge, the
performance thresholds for the year ended September 30, 2005 would be achieved.
However, after consideration of a related compensation charge, the Company
determined that such thresholds would not have been achieved. The Company also
determined that, even without consideration of a compensation charge, the
performance thresholds for the year ended September 30, 2006 would not be
achieved. No compensation charge was recorded by the Company for the years ended
September 30, 2005 and 2006. </P>
<p align="center">13</p>
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<!--$$/page=--><A name=page_20></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>1. Principal Activities, Basis of Presentation and
Organization (continued) </B></P>
<P align=justify><I>Basis of Presentation and Organization (continued) </I></P>
<P align=justify>While the 1,089,775 escrow shares relating to the 2005
performance threshold were previously released to Mr. Xiangqian Li, Mr.
Xiangqian Li executed a further undertaking on August 21, 2006 to return those
shares to the escrow agent for the distribution to the relevant investors.
However, such shares were not returned to the escrow agent, but, pursuant to a
Delivery of Make Good Shares, Settlement and Release Agreement between the
Company, BAK International and Mr. Li entered into on October 22, 2007 (the &#147;Li
Settlement Agreement&#148;), such shares were ultimately delivered to the Company as
described below. Because the Company failed to satisfy the performance threshold
for the fiscal year ended September 30, 2006, the remaining 1,089,775 escrow
shares relating to the fiscal year 2006 performance threshold were released to
the relevant investors. As Mr. Li has not retained any of the shares placed into
escrow, and as the investors party to the Escrow Agreement are only shareholders
of the Company and do not have and are not expected to have any other
relationship to the Company, the Company has not recorded a compensation charge
for the years ended September 30, 2005 and 2006. </P>
<P align=justify>At the time the escrow shares relating to the 2006 performance
threshold were transferred to the investors in fiscal year 2007, the Company
should have recognized a credit to donated shares and a debit to additional
paid-in capital, both of which are elements of shareholders&#146; equity. This entry
is not material because total shares of common stock issued and outstanding,
total shareholders&#146; equity and total assets do not change; nor is there any
impact on income or earnings per share. Therefore, previously filed consolidated
financial statements for the fiscal year ended September 30, 2007 have not been
restated. </P>
<P align=justify>In November 2007, Mr. Xiangqian Li delivered the 1,089,775
shares related to the 2005 performance threshold to BAK International pursuant
to the Li Settlement Agreement; BAK International in turn delivered the shares
to the Company. Such shares (other than those issued to investors pursuant to
the 2008 Settlement Agreements, as described below) are now held by the Company.
Upon receipt of these shares, the Company and BAK International released all
claims and causes of action against Mr. Xiangqian Li regarding the shares, and
Mr. Xiangqian Li released all claims and causes of action against the Company
and BAK International regarding the shares. Under the terms of the Li Settlement
Agreement, the Company commenced negotiations with the investors who
participated in the Company&#146;s January 2005 private placement in order to achieve
a complete settlement of BAK International&#146;s obligations (and the Company&#146;s
obligations to the extent it has any) under the applicable agreements with such
investors. </P>
<P align=justify>Beginning on March 13, 2008, the Company has entered into
settlement agreements (the &#147;2008 Settlement Agreements&#148;) with certain investors
in the January 2005 private placement. </P>
<P align=justify>Pursuant to the 2008 Settlement Agreements, the Company and the
settling investors have agreed, without any admission of liability, to a
settlement and mutual release from all claims relating to the January 2005
private placement, including all claims relating to the escrow shares related to
the 2005 performance threshold that had been placed into escrow by Mr. Xiangqian
Li, as well as all claims, including claims for liquidated damages relating to
registration rights granted in connection with the January 2005 private
placement. Under the 2008 Settlement Agreement, the Company has made settlement
payments to each of the settling investors of the number of shares of the
Company&#146;s common stock equivalent to 50% of the number of the escrow shares
related to the 2005 performance threshold these investors had claimed; aggregate
settlement payments as of March 31, 2010 amounted to 368,745 shares. Share
payments to date have been made in reliance upon the exemptions from
registration provided by Section 4(2) and/or other applicable provisions of the
Securities Act of 1933, as amended. In accordance with the 2008 Settlement
Agreements, the Company filed a registration statement covering the resale of
such shares which was declared effective by the SEC on June 26, 2008. </P>
<P align=justify>The Company&#146;s condensed interim consolidated financial
statements have been prepared in accordance with US GAAP. </P>
<p align="center">14</p>
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<!--$$/page=--><A name=page_22></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>1. Principal Activities, Basis of Presentation and
Organization (continued) </B></P>
<P align=justify><I>Basis of Presentation and Organization (continued) </I></P>
<P align=justify>The interim results of operations are not necessarily
indicative of the results to be expected for the fiscal year ending September
30, 2010. The Company&#146;s consolidated balance sheet as of September 30, 2009 has
been taken from the Company&#146;s audited consolidated balance sheet as of that
date. All other financial statements contained herein are unaudited and, in the
opinion of management, contain all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of financial position,
results of operations and cash flows for the periods presented. The Company&#146;s
accounting policies and certain other disclosure are set forth in the notes to
the consolidated financial statements contained in the Company&#146;s Annual Report
on Form 10-K for the year ended September 30, 2009. These financial statements
should be read in conjunction with the Company&#146;s audited consolidated financial
statements and notes thereto. </P>
<P align=justify>The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could
differ from those estimates. This basis of accounting differs in certain
material respects from that used for the preparation of the books of account of
the Company&#146;s principal subsidiaries, which are prepared in accordance with the
accounting principles and the relevant financial regulations applicable to
enterprises with limited liabilities established in the PRC, Hong Kong, India,
Canada or Germany, the accounting standards used in the places of their
domicile. The accompanying condensed interim consolidated financial statements
reflect necessary adjustments not recorded in the books of account of the
Company's subsidiaries to present them in conformity with US GAAP. </P>
<P align=justify><B><I>Recently Issued Accounting Standards </I></B></P>
<P align=justify>In June 2009, the FASB issued ASC Topic 860, &#147;Transfers and
Servicing,&#148; which improves the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial performance, and cash flows; and a
transferor&#146;s continuing involvement, if any, in transferred financial assets.
ASC Topic 860 is effective as of the beginning of each reporting entity&#146;s first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period and for interim and annual reporting
periods thereafter. The adoption of ASC Topic 860 is not expected to have a
material impact on the Company&#146;s financial statements. </P>
<P align=justify>In June 2009, the FASB issued ASC Topic 810, &#147;Consolidation,&#148;
which amends FASB Interpretation No. 46 (revised December 2003) to address the
elimination of the concept of a qualifying special purpose entity. ASC Topic 810
also replaces the quantitative-based risks and rewards calculation for
determining which enterprise has a controlling financial interest in a variable
interest entity with an approach focused on identifying which enterprise has the
power to direct the activities of a variable interest entity and the obligation
to absorb losses of the entity or the right to receive benefits from the entity.
Additionally, ASC Topic 810 provides more timely and useful information about an
enterprise&#146;s involvement with a variable interest entity. ASC Topic 810 shall be
effective as of the beginning of each reporting entity&#146;s first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. The adoption of ASC Topic 810 is
not expected to have a material impact on the Company&#146;s financial statements.
</P>
<p align="center">15</p>
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<!--$$/page=--><A name=page_23></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>1. Principal Activities, Basis of Presentation and
Organization (continued) </B></P>
<P align=justify><I>Recently Issued Accounting Standards (continued) </I></P>
<P align=justify>In October 2009, the FASB issued ASU 2009-13, &#147;Revenue
Recognition (Topic 605) &#150; Multiple-Deliverable Revenue Arrangements,&#148; or ASU
2009-13. ASU 2009-13 requires companies to allocate revenue in multiple-element
arrangements based on an element&#146;s estimated selling price if vendor-specific or
other third party evidence of value is not available. ASU 2009-13 is to be
applied on a prospective basis for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010, with
earlier application permitted. The Company is currently evaluating the impact of
the adoption of ASU 2009-13 on its financial statements. </P>
<P align=justify>In January 2010, the FASB issued ASU 2010-06, &#147;Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements&#148;, or ASU 2010-06 that expands the required disclosures about fair
value measurements. This guidance provides for new disclosures requiring the
Company to (i) disclose separately the amounts of significant transfers in and
out of Level 1 and Level 2 fair value measurements and describe the reasons for
the transfers and (ii) present separately information about purchases, sales,
issuances and settlements in the reconciliation of Level 3 fair value
measurements. This guidance also provides clarification of existing disclosures
requiring the Company to (i) determine each class of assets and liabilities
based on the nature and risks of the investments rather than by major security
type and (ii) for each class of assets and liabilities, disclose the valuation
techniques and inputs used to measure fair value for both Level 2 and Level 3
fair value measurements. ASU 2010-06 is effective for interim and annual
reporting periods beginning after December 15, 2009, except for the disclosures
about purchases, sales, issuances, and settlements in the roll forward of
activity in Level 3 fair value measurements. Those disclosures are effective for
fiscal years beginning after December 15, 2010, and for interim periods within
those fiscal years. Early application is permitted. The adoption of ASU 2010-06
has no material impact on the Company&#146;s financial statements. </P>
<P align=justify>In February 2010, the FASB issued ASU 2010-09, Subsequent
Events&#151;Amendments to Certain Recognition and Disclosure Requirements or ASU
2010-09. The ASU amends the guidance on subsequent events in the FASB Accounting
Standards Codification to (1) eliminate the requirement for an SEC filer to
disclose the date through which it has evaluated subsequent events, (2) clarify
the period through which conduit bond obligors must evaluate subsequent events,
and (3) refine the scope of the disclosure requirements for reissued financial
statements. All of the amendments in ASU 2010-09 were effective upon issuance on
February 24, 2010, except for the use of the issued date for conduit debt
obligors. That amendment is effective for interim or annual periods ending after
June 15, 2010. The adoption of ASU 2009-09 has no material impact on the
Company&#146;s financial statements. </P>
<p align="center">16</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_24></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>2 Pledged Deposits </B></P>
<P align=justify>Pledged deposits as of September 30, 2009 and March 31, 2010
consisted of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>September 30,</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Pledged deposits with banks for: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Construction
      payable </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;893,603 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;688,554 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp;Short-term bank loans (Note 7) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>7,137,307 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>7,783,237 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Bills payable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">23,084,199 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">9,553,689 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;31,115,109 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;18,025,480 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>Deposits pledged for construction payable are generally
released when the relevant construction projects are completed. </P>
<P align=justify><B>3 Trade Accounts Receivable, net </B></P>
<P align=justify>Trade accounts receivable as of September 30, 2009 and March
31, 2010 consisted of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>September 30,</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Trade accounts receivable </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;84,133,865 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;86,745,161 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Less: Allowance for doubtful accounts </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(13,081,331</TD>
    <TD align=left width="2%" ><U>)</U> </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(18,732,117</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>71,052,534 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>68,013,044 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Bills receivable </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">12,239,164 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">15,559,334 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;83,291,698 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;83,572,378 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<p align="center">17</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>3 Trade Accounts Receivable, net (continued) </B></P>
<P align=justify>An analysis of the allowance for doubtful accounts for the six
months ended March 31, 2009 and 2010 is as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><I>Six months ended March 31,</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Balance at beginning of period </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;5,351,244 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;13,081,331 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Addition of bad debt expense, net </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">3,324,909 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">5,648,694 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Foreign exchange adjustment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(10,035</TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>2,092 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Balance at end of period </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;8,666,118 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;18,732,117 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify><B>4 Inventories </B></P>
<P align=justify>Inventories as of September 30, 2009 and March 31, 2010
consisted of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="12%"><I>September 30,</I> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="12%"><I>March 31,</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Raw materials </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;18,476,929 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;23,138,431 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Work-in-progress </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">10,488,114 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">8,299,487 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Finished goods </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>40,217,837 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>47,866,634 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">69,182,880 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">79,304,552 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>Provision for obsolete inventories </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(3,647,496</TD>
    <TD align=left width="2%">) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">(3,509,557</TD>
    <TD align=left width="2%">) </TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%">&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;65,535,384 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%">$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;75,794,995 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR></TABLE>
<P align=justify>Part of the Company&#146;s inventories with carrying value of
US$21,973,836 and US$21,975,124 as of September 30, 2009 and March 31, 2010,
respectively, was pledged as collateral under certain loan agreements (see Note
7). </P>
<P align=justify><B>5 Prepayments and Other Receivables </B></P>
<P align=justify>Prepayments and other receivables as of September 30, 2009 and
March 31, 2010 consisted of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="12%"><I>September 30,</I> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="12%"><I>March 31,</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Prepayments for raw materials and others
</TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;1,437,115 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;2,329,977 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Other receivables </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">3,202,149 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="12%">5,749,131 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Less: Allowance for doubtful accounts </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(6,840</TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(15,627</TD>
    <TD align=left width="2%" bgColor=#e6efff>) </TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD>&nbsp; </TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;4,632,424 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;8,063,481 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<p align="center">18</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<!--$$/page=--><A name=page_27></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>6 Property, Plant and Equipment, net </B></P>
<P align=justify>Property, plant and equipment as of September 30, 2009 and
March 31, 2010 consisted of the following: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>September 30,</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Buildings </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;100,280,425 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;102,562,809 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Machinery and equipment </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">123,796,485 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">129,109,671 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Office equipment </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,802,825 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>2,000,474 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Motor vehicles </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">1,168,575 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">1,181,685 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>227,048,310 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>234,854,639 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Accumulated depreciation </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(42,709,026</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(50,878,255</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Construction in progress </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>27,959,855 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>30,953,007 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Prepayment for acquisition of property, plant and equipment
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">7,385,855 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">3,159,409 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;219,684,994 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;218,088,800 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top><I>(i)</I> <I>Depreciation expense for the six months ended
      March 31, 2009 and 2010 is included in the condensed interim consolidated
      statements of operations and comprehensive loss as
  follows:</I></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><I>Six months ended March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Cost of revenues </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;5,655,545 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;6,499,739 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Research and development expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">258,877 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">282,843 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Sales and marketing expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>240,507 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>195,494 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>General and administrative expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">992,114 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">1,019,415 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;7,147,043 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;7,997,491 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify><I>(ii) Construction in Progress </I></P>
<P align=justify>Construction in progress mainly comprises capital expenditures
for construction of the Company&#146;s new corporate campus, including offices,
factories and staff dormitories. </P>
<P align=justify>For the six months ended March 31, 2009 and 2010, the Company
capitalized interest of US$366,539 and US$548,798 to the cost of construction in
progress. </P>
<P align=justify><I>(iii) Pledged Property, Plant and Equipment </I></P>
<P align=justify>As of September 30, 2009 and March 31, 2010, machinery and
equipment with net book value of US$67,873,955 and US$62,408,750 of the Company
were pledged as collateral under certain loan arrangements (see Notes 7 and 8).
</P>
<p align="center">19</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_28></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>7 Short-term Bank Loans </B></P>
<P align=justify>The Company obtained several short-term loan facilities from
financial institutions in the PRC. In addition to the pledge of land use rights
certificates by Shenzhen BAK as disclosed below, these facilities were secured
by the Company&#146;s assets with the following carrying values: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%"  >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>September 30,</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Pledged deposits (Note 2) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;7,137,307 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;7,783,237 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Inventories (Note 4) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">21,973,836 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">21,975,124 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left bgColor=#e6efff>Machinery and equipment, net (Note 6) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>33,174,263 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>29,564,266 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;62,285,406 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;59,322,627 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>As of September 30, 2009 and March 31, 2010, the Company had
several short-term bank loans with aggregate outstanding balances of
US$139,159,380 and US$157,270,064, respectively. The loans were primarily
obtained for general working capital, carried interest rates ranging from 0.30%
to 5.31% per annum, and had maturity dates ranging from 6 to 12 months. Each
loan is guaranteed by Mr. Xiangqian Li, who did not receive any compensation for
acting as guarantor. </P>
<P align=justify>As of March 31, 2010, the Company had pledged the land use
rights certificate in relation to the land on which Shenzhen BAK&#146;s corporate
campus had been constructed for short-term bank loans amounting to US$58,600,331
borrowed from Shenzhen Eastern Branch, Agricultural Bank of China. As of March
31, 2010, the aggregate net book value of the buildings and land use rights in
relation to the land use rights certificate was US$105,875,161. </P>
<P align=justify><B>8 Long-term Bank Loans </B></P>
<P align=justify>As of September 30, 2009 and March 31, 2010, the Company had
long-term bank loans of US$55,667,052 and US$41,020,232, respectively. As of
March 31, 2010, US$7,325,042 was borrowed under a four-year long-term loan
credit facility from China Development Bank, bearing interest at the benchmark
rate of the People&#146;s Bank of China (&#147;PBOC&#148;) for three-year to five-year
long-term loans, which is currently 5.94% per annum. This long-term bank loan is
repayable on February 28, 2016. </P>
<P align=justify>Two other long-term loans totaled an aggregate borrowed amount
of US$14,650,083 as of March 31, 2010. These loans were borrowed under a
five-year long-term loan credit facility from Shenzhen Eastern Branch,
Agricultural Bank of China, and carry interest at 90% of the benchmark rate of
the PBOC for three-year to five-year long-term loans. The first loan of
US$5,860,033 currently carries interest at 5.184% per annum and is repayable on
January 25, 2012. The second loan of US$8,790,050 currently carries annual
interest of 5.184% and is repayable in two installments of US$7,325,041 on
January 25, 2011 and US$1,465,009 on January 25, 2012, respectively.</P>
<P align=justify>Another loan of US$19,045,107 as of March 31, 2010 was borrowed
under a four-year long-term loan credit facility from Tianjin Branch,
Agricultural Bank of China and carries interest at the benchmark rate of the
PBOC for three-year to five-year long-term loans, which is currently 5.76% per
annum. This loan is repayable in three installments of US$4,395,025 on December
26, 2010, US$7,325,041 on December 26, 2011, and US$7,325,041 on May 26, 2012.
</P>
<P align=justify>The long-term bank loan with China Development Bank is: (i)
guaranteed by Mr. Xiangqian Li; (ii) secured by certain shares of the Company
owned by Mr. Xiangqian Li; and (iii) to be secured by the property ownership and
land use rights certificate relating to the land on which the Company&#146;s Research
and Development Test Centre is to be constructed and the facilities to be
constructed thereon. As of March 31, 2010, the Company had obtained the relevant
land use rights certificate and was in the process of negotiating with the
relevant government bureau for the requisite approval to pledge it as described.
</P>
<p align="center">20</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<!--$$/page=--><A name=page_30></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>8 Long-term Bank Loans (continued) </B></P>
<P align=justify>The long-term bank loan with Shenzhen Eastern Branch,
Agricultural Bank of China is: (i) guaranteed by Mr. Xiangqian Li; (ii) secured
by the Company&#146;s machinery and equipment with carrying values of US$32,844,484
as of March 31, 2010 (see Note 6); and (iii) secured by the property ownership
certificate and land use rights certificate in relation to the land on which
Shenzhen BAK&#146;s corporate campus had been constructed and any machinery and
equipment purchased and used in the campus subsequent to such construction. </P>
<P align=justify>The long-term bank loan with Tianjin Branch, Agricultural Bank
of China is secured by the machinery and equipment purchased for the automated
high-power lithium battery cells production line in Tianjin. As of March 31,
2010, construction of the automated high-power lithium battery cells production
line was in progress. </P>
<P align=justify>Mr. Xiangqian Li did not receive any compensation for pledging
his shares in the Company or acting as guarantor for the above long-term bank
loans. </P>
<P align=justify>The aggregate maturities of long-term bank loans as of March
31, 2010 are as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Fiscal years ending on March 31, </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;2011 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;11,720,066 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;2012 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">14,650,083 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;
      &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;2013 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>14,650,083 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;41,020,232 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify><B>9 Share-based Compensation </B></P>
<P align=justify>The Company grants share options to officers and employees and
restricted shares of common stock to its non-employee directors as rewards for
their services. </P>
<P align=justify><B>Stock Option Plan </B></P>
<P align=justify>In May 2005, the Board of Directors adopted the China BAK
Battery, Inc. 2005 Stock Option Plan (the &#147;Plan&#148;). The Plan originally
authorized the issuance of up to 4,000,000 shares of the Company&#146;s common stock,
pursuant to stock options granted under the Plan, or as grants of restricted
stock. The exercise price of options granted pursuant to the Plan must be at
least equal to the fair market value of the Company&#146;s common stock at the date
of the grant. Fair market value is determined at the discretion of the
designated committee on the basis of reported sales prices for the Company&#146;s
common stock over a ten business day period ending on the grant date. The Plan
will terminate on May 16, 2055. On July 28, 2008, the Company&#146;s stockholders
approved certain amendments to the Plan, including an amendment increasing the
total number of shares available for issuance under the Plan to 8,000,000. </P>
<P align=justify>Pursuant to the Plan, the Company granted options to purchase
2,000,000 shares of common stock with an exercise price of US$6.25 per share on
May 16, 2005. In accordance with the vesting provisions of the grants, the
options became vested and exercisable under the following schedule: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="33%">Percentage of </TD>
    <TD align=center width="33%">Initial </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center>Number of Shares
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="33%">Options Issued </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="33%">Vesting Date </TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#e6efff>800,000 </TD>
    <TD align=center width="33%" bgColor=#e6efff>40% </TD>
    <TD align=center width="33%" bgColor=#e6efff>July 1, 2007 </TD></TR>
  <TR vAlign=top>
    <TD align=center>600,000 </TD>
    <TD align=center width="33%">30% </TD>
    <TD align=center width="33%">January 1, 2008 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      bgColor=#e6efff>600,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="33%"
    bgColor=#e6efff>30% </TD>
    <TD align=center width="33%" bgColor=#e6efff>July 1, 2008 </TD></TR>
  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=center>2,000,000 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=center
      width="33%">100% </TD>
    <TD align=left width="33%">&nbsp; </TD></TR></TABLE>
<p align="center"><BR>
21</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_32></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>9 Share-based Compensation (continued) </B></P>
<P align=justify>Subsequent to the grant date, options to purchase 200,000
shares of common stock were forfeited because the optionees terminated their
employment with the Company. In addition, on September 28, 2006, options to
purchase a total of 1,400,000 shares of common stock were cancelled pursuant to
the Termination and Release Agreements signed on that day. </P>
<P align=justify>A summary of share option plan activity for these options
during the six months ended March 31, 2010 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">exercise </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">remaining </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;Aggregate </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Number of </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">price </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">contractual </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">intrinsic </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">shares </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">per
      share </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">term
    </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">value (1) </TD>
    <TD align=center width="2%" ></TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Outstanding as of October 1, 2009 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>200,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;6.25 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercised </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Forfeited </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cancelled </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Outstanding as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">200,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;6.25 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">1.0
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercisable as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">200,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;6.25 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">1.0
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>(1) Aggregate intrinsic value represents the value of the
Company&#146;s closing stock price on March 31, 2010 (US$2.41) in excess of the
exercise price multiplied by the number of options outstanding or exercisable.
</P>
<P align=justify>The weighted-average grant-date fair value of options granted
during 2005 was US$3.67 per share. No non-cash share-based compensation expense
was recognized in respect of these share options for the six months ended March
31, 2009 and 2010. </P>
<P align=justify>The fair value of the above option awards was estimated on the
date of grant using the Black-Scholes Option Valuation Model together with the
following assumptions: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected volatility </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>59.85 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>%</TD></TR>
  <TR vAlign=top>
    <TD align=left>Expected dividends </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">Nil </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected life </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>6 years </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk-free interest rate </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">4.13 </TD>
    <TD align=left width="2%" >%</TD></TR></TABLE>
<P align=justify>As of March 31, 2010, there were no unrecognized compensation
costs related to non-vested share options. </P>
<P align=justify>Pursuant to the Plan, the Company also granted options to
purchase 1,501,500 shares of the Company&#146;s common stock with a weighted-average
exercise price of US$3.28 per share on June 25, 2007. In accordance with the
vesting provisions of the grants, the options will become vested and exercisable
during the period from June 30, 2007 to February 9, 2012 according to each
employee&#146;s respective agreement. </P>
<p align="center">22</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_33></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>9 Share-based Compensation (continued) </B></P>
<P align=justify>A summary of share option plan activity for these options
during the six months ended March 31, 2010 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;average&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">remaining </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Aggregate </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Number of </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;exercise </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">contractual </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;intrinsic&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">Shares </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">price per share </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">term
    </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">value (1) </TD>
    <TD align=center width="2%" ></TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Outstanding as of October 1, 2009 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>1,070,500 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;3.29 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercised </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">65,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">3.27 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Forfeited </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cancelled </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Outstanding as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">1,005,500 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;3.29 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">3.3
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercisable as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">665,500 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;3.29 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">2.7
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>(1) Aggregate intrinsic value represents the value of the
Company&#146;s closing stock price on March 31, 2010 (US$2.41) in excess of the
exercise price multiplied by the number of options outstanding or exercisable.
</P>
<P align=justify>The weighted-average grant-date fair value of options granted
during 2007 was US$2.15 per share. The Company recorded non-cash share-based
compensation expense of US$422,277 and US$114,742 for the six months ended March
31, 2009 and 2010 respectively, in respect of share options granted on June 25,
2007, which was allocated to cost of revenues, sales and marketing expenses,
general and administrative expenses and research and development expenses
respectively. </P>
<P align=justify>The fair value of the above option awards granted on June 25,
2007 was estimated on the date of grant using the Black-Scholes Option Valuation
Model that uses the following assumptions: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected volatility </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>69.44 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>%</TD></TR>
  <TR vAlign=top>
    <TD align=left>Expected dividends </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">Nil </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected life </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>4 - 10 years </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk-free interest rate </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">5.09 </TD>
    <TD align=left width="2%" >%</TD></TR></TABLE>
<P align=justify>As of March 31, 2010, there were unrecognized compensation
costs of US$156,081 related to the above non-vested share options. These costs
are expected to be recognized over a weighted average period of 1.0 years. </P>
<P align=justify>Pursuant to the Plan, the Company also granted options to
purchase 360,000 shares of common stock with an exercise price of US$4.30 per
share on January 28, 2008. In accordance with the vesting provisions of the
grants, the options will become vested and exercisable during the period from
April 28, 2008 to January 28, 2011 according to each employee&#146;s respective
agreement. </P>
<p align="center">23</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_34></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>9 Share-based Compensation (continued) </B></P>
<P align=justify>A summary of share option plan activity for these options
during the six months ended March 31, 2010 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">remaining </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Aggregate</TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;Number of </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">exercise </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">contractual </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">intrinsic </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">Shares </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">price per share </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">term
    </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">value (1) </TD>
    <TD align=center width="2%" ></TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Outstanding as of October 1, 2009 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>360,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;4.30 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercised </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Forfeited </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cancelled </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Outstanding as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">360,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;4.30 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">2.7
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercisable as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">240,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;4.30 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">2.7
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>(1) Aggregate intrinsic value represents the value of the
Company&#146;s closing stock price on March 31, 2010 (US$2.41) in excess of the
exercise price multiplied by the number of options outstanding or exercisable.
</P>
<P align=justify>The weighted average grant-date fair value of options granted
on January 28, 2008 was US$3.59 per share. The Company recorded non-cash
share-based compensation expense of US$265,697 and US$105,291 for the six months
ended March 31, 2009 and 2010, respectively, in respect of share options granted
on January 28, 2008, which was allocated to general and administrative expenses
and research and development expenses respectively. </P>
<P align=justify>The fair value of the above option awards granted on January
28, 2008 was estimated on the date of grant using the Black-Scholes Option
Valuation Model that uses the following assumptions. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected volatility </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>120.23</TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Expected dividends </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">Nil </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected life </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>5 years </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk-free interest rate </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">3.59</TD>
    <TD align=left width="2%" >% </TD></TR></TABLE>
<P align=justify>As of March 31, 2010, there were unrecognized compensation
costs of US$70,213 related to the above non-vested share options. These costs
are expected to be recognized over a weighted average period of 0.3 years. </P>
<P align=justify>On May 29, 2008, the Compensation Committee of the Company&#146;s
Board of Directors recommended and approved the grant of options to purchase
1,080,000 shares of the Company&#146;s common stock to Mr. Xiangqian Li and options
to purchase 170,000 shares to five other employees, with an exercise price of
US$4.18 per share. In accordance with the vesting provisions of the grants, the
options will become vested and exercisable during the period from September 30,
2008 to May 29, 2012 according to each employee&#146;s respective agreement. </P>
<p align="center">24</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_35></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>9 Share-based Compensation (continued) </B></P>
<P align=justify>A summary of share option plan activity for these options
during the six months ended March 31, 2010 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;</TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">exercise </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">remaining&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Aggregate&nbsp;</TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Number of </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">price </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">contractual </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">intrinsic </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">shares </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">per
      share </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">term
    </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">value (1) </TD>
    <TD align=center width="2%" ></TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Outstanding as of October 1, 2009 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>1,250,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;4.18 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercised </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Forfeited </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cancelled </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Outstanding as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">1,250,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;4.18 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;2.8 years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercisable as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">672,500 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;4.18 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">2.8
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>(1) Aggregate intrinsic value represents the value of the
Company&#146;s closing stock price on March 31, 2010 (US$2.41) in excess of the
exercise price multiplied by the number of options outstanding or exercisable.
</P>
<P align=justify>The weighted average grant-date fair value of options granted
on May 29, 2008 was US$2.36 per share. The Company recorded non-cash share-based
compensation expense of US$827,335 and US$353,080 for the six months ended March
31, 2009 and 2010 respectively, in respect of share options granted on May 29,
2008, which was allocated to general and administrative expenses and research
and development expenses respectively. </P>
<P align=justify>The fair value of the above option awards granted on May 29,
2008 was estimated on the date of grant using the Black-Scholes Option Valuation
Model that uses the following assumptions. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected volatility </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>59.48</TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Expected dividends </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">Nil </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected life </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>5 years </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk-free interest rate </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">4.01</TD>
    <TD align=left width="2%" >% </TD></TR></TABLE>
<P align=justify>As of March 31, 2010, there were unrecognized compensation
costs of US$393,491 related to the above non-vested share options. These costs
are expected to be recognized over a weighted average period of 0.9 years. </P>
<P align=justify>On June 22, 2009, the Compensation Committee of the Company&#146;s
Board of Directors recommended and approved the grant of options to purchase
1,928,200 shares of the Company&#146;s common stock to certain key employees,
officers and consultants with an exercise price of US$2.81 per share. In
accordance with the vesting provisions of the grants, the options will become
vested and exercisable over five years in twenty equal quarterly installments on
the first day of each fiscal quarter beginning on October 1, 2009. </P>
<p align="center">25</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_36></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>9 Share-based Compensation (continued) </B></P>
<P align=justify>A summary of share option plan activity for these options
during the six months ended March 31, 2010 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp;</TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">remaining </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Aggregate </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Number of</TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">exercise </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">contractual </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">intrinsic </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Shares </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">price per share </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">term </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">value (1) </TD>
    <TD align=left width="2%" ></TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Outstanding as of October 1, 2009 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>1,928,200 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;2.81 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercised </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">5,045 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">2.81 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Forfeited </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>35,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>2.81 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cancelled </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Outstanding as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">1,888,155 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;2.81 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">6.2
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercisable as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">90,715 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;2.81 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">6.2
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>(1) Aggregate intrinsic value represents the value of the
Company&#146;s closing stock price on March 31, 2010 (US$2.41) in excess of the
exercise price multiplied by the number of options outstanding or exercisable.
</P>
<P align=justify>The weighted average grant-date fair value of options granted
on June 22, 2009 was US$2.46 per share. The Company recorded non-cash
share-based compensation expense of US$983,568 for the six months ended March
31, 2010 in respect of share options granted on June 22, 2009, which was
allocated to general and administrative expenses and research and development
expenses respectively. </P>
<P align=justify>The fair value of the above option awards granted on June 22,
2009 was estimated on the date of grant using the Black-Scholes Option Valuation
Model that uses the following assumptions. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected volatility </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>111.03</TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Expected dividends </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">Nil </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected life </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>7 years </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk-free interest rate </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">3.69</TD>
    <TD align=left width="2%" >% </TD></TR></TABLE>
<P align=justify>As of March 31, 2010, there were unrecognized compensation
costs of US$2,860,162 related to the above non-vested share options. These costs
are expected to be recognized over a weighted average period of 2.3 years. </P>
<P align=justify>On June 26, 2009, the Compensation Committee of the Company&#146;s
Board of Directors recommended and approved the grant of options to purchase
75,000 shares of the Company&#146;s common stock to certain key management with an
exercise price of US$3.24 per share. In accordance with the vesting provisions
of the grants, the options will become vested and exercisable over five years in
twenty equal quarterly installments on the first day of each fiscal quarter
beginning on October 1, 2009. </P>
<p align="center">26</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_37></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>9 Share-based Compensation (continued) </B></P>
<P align=justify>A summary of share option plan activity for these options
during the six months ended March 31, 2010 is presented below: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Weighted </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%"></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">average </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">remaining </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Aggregate </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">Number of </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">exercise</TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">contractual </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">intrinsic </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">Shares </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">price per share </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">term
    </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">value (1) </TD>
    <TD align=center width="2%" ></TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Outstanding as of October 1, 2009 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>75,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;3.24 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercised </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Forfeited </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cancelled </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Outstanding as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">75,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;3.24 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">6.2
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Exercisable as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">7,500 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;3.24 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%">6.2
      years </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;- </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify>(1) Aggregate intrinsic value represents the value of the
Company&#146;s closing stock price on March 31, 2010 (US$2.41) in excess of the
exercise price multiplied by the number of options outstanding or exercisable.
</P>
<P align=justify>The weighted average grant-date fair value of options granted
on June 26, 2009 was US$2.86 per share. The Company recorded non-cash
share-based compensation expense of US$48,884 for the six months ended March 31,
2010 in respect of share options granted on June 26, 2009, which was allocated
to research and development expenses. </P>
<P align=justify>The fair value of the above option awards granted on June 26,
2009 was estimated on the date of grant using the Black-Scholes Option Valuation
Model that uses the following assumptions. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected volatility </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>111.58</TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Expected dividends </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">Nil </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected life </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>7 years </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk-free interest rate </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">3.51</TD>
    <TD align=left width="2%" >% </TD></TR></TABLE>
<P align=justify>As of March 31, 2010, there were unrecognized compensation
costs of US$126,316 related to the above non-vested share options. These costs
are expected to be recognized over a weighted average period of 2.3 years. </P>
<P align=justify>On March 11, 2010, the Compensation Committee of the Company&#146;s
Board of Directors recommended and approved the grant of options to purchase
50,000 shares of the Company&#146;s common stock to certain key management with an
exercise price of US$2.58 per share. In accordance with the vesting provisions
of the grants, the options will become vested and exercisable over two years in
two equal installments beginning on each anniversary of the grant day on March
11, 2010. </P>
<P align=justify>A summary of share option plan activity for these options
during the six months ended March 31, 2010 is presented below: </P>
<p align="center">27<BR>
</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) <BR>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%" valign="bottom">Number of Shares
    </TD>
    <TD align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%" valign="bottom">Weighted average exercise price per share
    </TD>
    <TD align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%" valign="bottom">Weighted average remaining contractual term
    </TD>
    <TD align=center width="2%" valign="bottom" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" valign="bottom"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%" valign="bottom">Aggregate intrinsic value (1)</TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Outstanding as of October 1, 2009 </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Granted on March 11, 2010 </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">50,000 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">2.58 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Exercised </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Forfeited </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Cancelled </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="10%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Outstanding as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>50,000 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>&nbsp;2.58 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>4.0 years </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="10%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Exercisable as of March 31, 2010 </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>&nbsp;- </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>(1) Aggregate intrinsic value represents the value of the
Company&#146;s closing stock price on March 31, 2010 (US$2.41) in excess of the
exercise price multiplied by the number of options outstanding or exercisable.
</P>
<P align=justify>The weighted average grant-date fair value of options granted
on March 11, 2010 was US$1.51 per share. The Company recorded non-cash
share-based compensation expense of US$3,100 for the six months ended March 31,
2010 in respect of share options granted on March 11, 2010, which was allocated
to general and administrative expenses. </P>
<P align=justify>The fair value of the above option awards granted on March 11,
2010 was estimated on the date of grant using the Black-Scholes Option Valuation
Model that uses the following assumptions. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected volatility </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>76.32</TD>
    <TD align=left width="2%"  bgColor=#e6efff>% </TD></TR>
  <TR vAlign=top>
    <TD align=left>Expected dividends </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">Nil </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Expected life </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>4 years </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Risk-free interest rate </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">3.72</TD>
    <TD align=left width="2%" >% </TD></TR></TABLE>
<P align=justify>As of March 31, 2010, there were unrecognized compensation
costs of US$72,352 related to the above non-vested share options. These costs
are expected to be recognized over a weighted average period of 2.0 years. </P>
<P align=justify>Pursuant to the Plan and in accordance with the China BAK
Battery, Inc. Compensation Plan for Non-Employee Directors, the Company granted
5,000 restricted shares to each of the existing elected independent directors
with a fair value of US$4.56 per share on August 6, 2008. The eligible directors
shall vest in their rights under the restricted shares according to the
following schedule: </P>
<P align=justify>(i) 25% of the restricted shares granted will immediately vest
on the grant date; and </P>
<P align=justify>(ii) The remaining 75% of the restricted shares will vest in
three equal quarterly installments on the last day of each subsequent quarter or
in three equal quarterly installments on the last day of each calendar quarter
beginning on the last day of the first full calendar quarter after the grant
date. </P>
<p align="center">28</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_39></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>9 Share-based Compensation (continued) </B></P>
<P align=justify>The Company recorded non-cash share-based compensation expense
of US$33,166 for the six months ended March 31, 2009 in respect of the
restricted shares granted on August 6, 2008, which was allocated to general and
administrative expenses. No non-cash share-based compensation expense was
recognized for the six months ended March 31, 2010. </P>
<P align=justify>As of March 31, 2010, there were no unrecognized stock-based
compensation costs associated with these restricted shares granted to
non-employee directors. All of the restricted shares were issued as fully paid
shares of common stock to the Company&#146;s three independent directors on August 6,
2008, October 20, 2008, March 2, 2009 and April 2, 2009, respectively. </P>
<P align=justify>Pursuant to the Plan, the Compensation Committee of the
Company&#146;s Board of Directors recommended and approved the grant of 500,000
restricted shares to Chief Executive Officer, Mr. Xiangqian Li with a fair value
of US$2.81 per share on June 22, 2009. In accordance with the vesting schedule
of the grant, the restricted shares will vest in twenty equal quarterly
installments on the first day of each fiscal quarter beginning on October 1,
2009. </P>
<P align=justify>The Company recorded non-cash share-based compensation expense
of US$322,424 for the six months ended March 31, 2010 in respect of the
restricted shares granted on June 22, 2009, which was allocated to general and
administrative expenses. </P>
<P align=justify>As of March 31, 2010, there were unrecognized stock-based
compensation costs of US$818,376 associated with these restricted shares granted
to Mr. Xiangqian Li. These costs are expected to be recognized over a
weighted-average period of 2.3 years. </P>
<P align=justify>Pursuant to the Plan and in accordance with the China BAK
Battery, Inc. Compensation Plan for Non-Employee Directors, the Company granted
5,000 restricted shares to each of the existing elected independent directors
with a fair value of US$3.24 per share on June 26, 2009. The eligible directors
shall vest in their rights under the restricted shares according to the
following schedule: </P>
<P align=justify>(i) 25% of the restricted shares granted will immediately vest
on the grant date; and </P>
<P align=justify>(ii) The remaining 75% of the restricted shares will vest in
three equal quarterly installments on the last day of each subsequent quarter or
in three equal quarterly installments on the last day of each calendar quarter
beginning on the last day of the first full calendar quarter after the grant
date. </P>
<P align=justify>The Company recorded non-cash share-based compensation expense
of US$13,796 for the six months ended March 31, 2010 in respect of the
restricted shares granted on June 26, 2009, which was allocated to general and
administrative expenses. </P>
<P align=justify>As of March 31, 2010, there were unrecognized stock-based
compensation costs of US$44 associated with these restricted shares granted to
non-employee directors. The first, second and third 25% of the restricted shares
were already issued as fully paid shares of common stock to the Company&#146;s three
independent directors on July 24, 2009, November 16, 2009 and February 25, 2010,
respectively. </P>
<P align=justify>As the Company itself is an investment holding company which is
not expected to generate operating profits to realize the tax benefits arising
from its net operating loss carried forward, no income tax benefits were
recognized for such stock-based compensation cost under the Stock Option Plan
for the six months ended March 31, 2009 and 2010. </P>
<p align="center">29</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_40></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>10 Net Loss per Share </B></P>
<P align=justify>The calculation of basic net loss per share is based on the net
loss for the six months ended March 31, 2010 attributable to equity shareholders
of $5,942,138 (Six months ended March 31, 2009: $7,460,681) and the weighted
average number of shares of common stock of 61,984,941 issued and outstanding
during the six months ended March 31, 2010 (Six months ended March 31, 2009:
56,959,386). </P>
<P align=justify>The effects of 3,000,000 shares of stock options, 3,750 shares
of restricted stock and 4,102,564 warrants outstanding during the six months
ended or as of March 31, 2009 were all anti-dilutive and the effects of
4,488,655 shares of stock options, 503,750 shares of restricted stock and
1,447,500 warrants outstanding during the six months ended or as of March 31,
2010 were all anti-dilutive. As such, basic and diluted net loss per share for
the six months ended March 31, 2009 and 2010 are the same.</P>
<P align=justify><B>11 Fair Value of Financial Instruments </B></P>
<P align=justify>The fair value of a financial instrument is the amount at which
the instrument could be exchanged in a current transaction between willing
parties. The carrying amounts of financial assets and liabilities, such as cash
and cash equivalents, pledged deposits, trade accounts receivable, other
receivables, assets held for sale, short-term bank loans, long-term bank loans,
accounts and bills payable and other payables, approximate their fair values
because of the short maturity of these instruments and market rates of interest.
</P>
<P align=justify><B>12 Commitments and Contingencies </B></P>
<P align=justify><I>(i) Capital Commitments </I></P>
<P align=justify>As of September 30, 2009 and March 31, 2010, the Company had
the following contracted capital commitments: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>September 30,</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="12%"><I>March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2009</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>For construction of buildings </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;5,950,310 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;2,468,429 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>For purchases of equipment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">3,590,812 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%">6,080,549 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff>&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;9,541,122 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;8,548,978 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<P align=justify><I>(ii) Property ownership and land use rights certificates
</I></P>
<P align=justify>According to the relevant PRC laws and regulations, a land use
rights certificate, along with government approvals for land planning, project
planning and construction, needs to be obtained before construction of a
building is commenced. A property ownership certificate shall be granted by the
government upon application under the condition that the aforementioned
certificate and government approvals have been obtained. </P>
<P align=justify>The Company did not obtain the land use right certificate and
approvals for project-planning and construction relating to the premises
occupied by the Company, BAK Industrial Park, before construction of the
buildings was commenced. On July 3, 2009, the Company had obtained the approval
for project-planning and construction from the local government of Shenzhen. As
of March 31, 2010, the Company has obtained the aforementioned land use rights
certificate and government approvals and was in the process of negotiating with
the relevant government for the application and acquisition of the appropriate
property ownership certificate. </P>
<P align=justify>Management believes that the Company will ultimately be granted
a property ownership certificate, and that there should be no legal barriers for
the Company to obtain a property ownership certificate for the premises
presently occupied by the Company in BAK Industrial Park. However, in the event
that the Company fails to obtain the property ownership certificate relating to BAK Industrial Park, there is a risk
that the building constructed will need to be vacated as illegitimate
constructions and the Company might be subject to penalties and fines. However,
management believes that this possibility, while present, is remote. </P>
<p align="center">30</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_42></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>12 Commitments and Contingencies (continued) </B></P>
<P align=justify><I>(ii) Property ownership and land use rights certificates
(continued) </I></P>
<P align=justify>Pursuant to the land use rights certificate relating to the
Company&#146;s Tianjin facility, the Tianjin government had requested that the
Company complete the construction of the Tianjin facility before September 30,
2008. As of March 31, 2010, the Company was in the process of negotiating with
the relevant government bureau for the extension of the completion date. If the
Company fails to obtain the approval for the extension of the completion date
from the relevant government bureau, there is a risk that the land use rights
certificate relating to the Company&#146;s Tianjin facility will become invalid.
However, management believes that this possibility, while present, is remote.
</P>
<P align=justify>Pursuant to the land use rights certificate that the Company
obtained relating to the Research and Development Test Centre to be constructed
in Shenzhen, the Company must complete at least 25% of the construction of the
Research and Development Test Centre by September 30, 2008. On November 11, 2008
and May 27, 2009, the Company has signed two supplement agreements with Shenzhen
government to increase the dimensions of the Research and Development Test
Centre. According to the supplement agreements, the Company is required to
complete the construction by May 6, 2011. According to the property ownership
and land use rights certificate, such rights may not be pledged without the
approval of the relevant government office. The Company is required to pledge
its property ownership and land use rights certificate in relation to the
Research and Development Test Centre to China Development Bank according to the
loan agreement entered into with it. As of March 31, 2010, the Company was in
the process of negotiating with the relevant government for the requisite
approval. </P>
<P align=justify>The Company is not able to insure its manufacturing facilities
since it has not yet received its property ownership certificates for these
facilities. The Company intends to procure such insurance once it has received
the certificates. </P>
<P align=justify>On December 15, 2008, the Company purchased insurance for its
manufacturing facilities at BAK Industrial Park in Shenzhen, China. Under the
insurance policy entered into with Ping An Property &amp; Casualty Insurance
Company of China, Ltd, the insured amount for our manufacturing facilities at
BAK Industrial Park is RMB585,373,070 (approximately $85.8 million) for the
period from November 26, 2008 to August 25, 2010. </P>
<P align=justify>The Company is not able to insure its Research and Development
Test Centre to be constructed in Shenzhen, China, until it receives the required
property ownership certificate. Upon receipt of such certificate, the Company
intends to procure such insurance. As discussed above, the Company has obtained
the land use rights certificate to the land relating to these facilities. The
application for a property ownership certificate is in process with respect to
the Company&#146;s facilities in Tianjin. </P>
<p align="center">31</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_43></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>12 Commitments and Contingencies (continued) </B></P>
<P align=justify><I>(iii) Guarantees </I></P>
<P align=justify>In order to secure the supplies of certain raw materials and
equipment and upon the request of suppliers, the Company has given guarantees to
certain suppliers which are summarized as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><I>September 30,</I> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="11%"><I>March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="11%"><I>2009</I></TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="11%"><I>2010</I></TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD bgColor=#e6efff><BR>Guaranteed for Shenzhen Tongli Hi-tech Co. Ltd. -
      a non-related party </TD>
    <TD width="1%"  bgColor=#e6efff><BR>$</TD>
    <TD align=right width="11%" bgColor=#e6efff><BR>2,197,384 </TD>
    <TD width="2%"  bgColor=#e6efff><BR></TD>
    <TD width="1%"  bgColor=#e6efff><BR>$</TD>
    <TD align=right width="11%" bgColor=#e6efff><BR>2,197,512 </TD>
    <TD width="2%"  bgColor=#e6efff><BR></TD></TR>
  <TR>
    <TD><BR>Guaranteed for Hunan Reshine New Material Ltd. - a non-related
      party </TD>
    <TD width="1%" ><BR></TD>
    <TD align=right width="11%"><BR>5,859,690 </TD>
    <TD width="2%" ><BR></TD>
    <TD width="1%" ><BR></TD>
    <TD align=right width="11%"><BR>5,860,033 </TD>
    <TD width="2%" ><BR></TD></TR>
  <TR>
    <TD bgColor=#e6efff><BR>Guaranteed for Nanjing Special Metal Equipment Co.
      Ltd. - a non-related party </TD>
    <TD width="1%"  bgColor=#e6efff><BR></TD>
    <TD align=right width="11%" bgColor=#e6efff><BR>7,324,612 </TD>
    <TD width="2%"  bgColor=#e6efff><BR></TD>
    <TD width="1%"  bgColor=#e6efff><BR></TD>
    <TD align=right width="11%" bgColor=#e6efff><BR>7,325,042 </TD>
    <TD width="2%"  bgColor=#e6efff><BR></TD></TR>
  <TR>
    <TD><BR>Guaranteed for Siping Juyuan Hanyang Plate Heat Exchanger Co. Ltd.
      - a non- related party </TD>
    <TD width="1%" ><BR></TD>
    <TD align=right width="11%"><BR>4,394,767 </TD>
    <TD width="2%" ><BR></TD>
    <TD width="1%" ><BR></TD>
    <TD align=right width="11%"><BR>4,395,025 </TD>
    <TD width="2%" ><BR></TD></TR>
  <TR>
    <TD bgColor=#e6efff><BR>Guaranteed for Beijing Triolion Technology Co.
      Ltd. &#150; a non-related party </TD>
    <TD width="1%"  bgColor=#e6efff><BR></TD>
    <TD align=right width="11%" bgColor=#e6efff><BR>- </TD>
    <TD width="2%"  bgColor=#e6efff><BR></TD>
    <TD width="1%"  bgColor=#e6efff><BR></TD>
    <TD align=right width="11%" bgColor=#e6efff><BR>586,003 </TD>
    <TD width="2%"  bgColor=#e6efff><BR></TD></TR>
  <TR>
    <TD><BR>Guaranteed for Shenzhen B&amp;G Technology Development Co. Ltd. -
      a non-related party </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    ><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%"><BR>8,789,535 </TD>
    <TD width="2%" ><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" width="1%"
    ><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="11%"><BR>8,790,050 </TD>
    <TD width="2%" ><BR></TD></TR>
  <TR>
    <TD bgColor=#e6efff><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="1%"
    bgColor=#e6efff><BR>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="11%"
    bgColor=#e6efff><BR>28,565,988 </TD>
    <TD width="2%"  bgColor=#e6efff><BR></TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" width="1%"
    bgColor=#e6efff><BR>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="11%"
    bgColor=#e6efff><BR>29,153,665 </TD>
    <TD width="2%"  bgColor=#e6efff><BR></TD></TR></TABLE>
<P align=justify>Management has assessed the fair value of the obligation
arising from the above financial guarantees and considered it immaterial to the
condensed interim consolidated financial statements. Therefore, no obligations
in respect of the above guarantees were recognized as of March 31, 2010. </P>
<P align=justify><I>(iv) Outstanding Discounted Bills and Transferred Bills
</I></P>
<P align=justify>From time to time, the Company factors bills receivable to
banks and endorses the bank acceptance bills received to its suppliers, vendors
or other parties for settlement of its liabilities to these creditors. At the
time of the factoring and transfer, all rights and privileges of holding the
receivables are transferred to the banks and the creditors. The Company removes
the assets from its books and records a corresponding expense for the amount of
the discount. The Company remains contingently liable on the amount outstanding
in the event the bill issuer defaults. </P>
<P align=justify>The Company's outstanding discounted and transferred bills as
of September 30, 2009 and March 31, 2010 are summarized as follows: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="12%" nowrap><I>September 30,</I> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD align=center width="1%" nowrap >&nbsp;</TD>
    <TD align=center width="12%" nowrap><I>March 31,</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" nowrap
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%" nowrap><I>2009</I> </TD>
    <TD align=center width="2%" nowrap >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" nowrap
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%" nowrap><I>2010</I> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Commercial bills </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">&nbsp;439,477 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >$</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">&nbsp;- </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR>
    <TD align=left >Bank acceptance
      bills </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    >13,469,235 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    >12,795,417 </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR>
    <TD align=left bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF"
    >$ </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%" bgcolor="#E6EFFF"
    >13,908,712 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=center width="1%" bgcolor="#E6EFFF"
    >
    <p align="left">$ </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%" bgcolor="#E6EFFF"
    >12,795,417 </TD>
    <TD align=center width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR></TABLE><BR>
<!--$$/page=-->
<p align="center">32</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_45></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>12 Commitments and Contingencies (continued) </B></P>
<P align=justify><I>(v) Litigation and claims </I></P>
<P align=justify>On September 12, 2006, Hydro-Quebec, a Canadian company, and
the Board of Regents of the University of Texas System brought a federal patent
infringement suit in the United States District Court for the Northern District
of Texas against the Company. The plaintiffs alleged that by manufacturing
rechargeable lithium cells for A123Systems for use in DeWalt 36-volt cordless
power tools manufactured by Black &amp; Decker, the Company has infringed two
U.S. patents owned by and exclusively licensed to the plaintiffs. The plaintiffs
seek injunctive relief and damages in an unspecified amount. A123Systems, Black
&amp; Decker Corporation and Black &amp; Decker (U.S.) Inc. have also been named
as co-defendants in this lawsuit. The court has not ruled on this lawsuit. The
Company understands that this lawsuit is a countersuit against A123Systems,
which filed a claim against Hydro-Quebec in the United States District Court of
Massachusetts in April 2006. In that suit, A123Systems sought declaratory relief
that the two said U.S. patents are invalid and that A123Systems is not
infringing either of these two patents. </P>
<P align=justify>Following the filing of the lawsuit, the United States Patent
and Trademark Office reexamined the patents. The patents were re-issued with
substantial modification of the patent claims. The plaintiffs have advised that,
in their view, the lawsuit continues to be viable against the defendants,
including China BAK. The plaintiffs' position has not been tested. Currently
pending is the plaintiffs&#146; motion to amend their complaint to take the USPTO
action into account. </P>
<P align=justify>If the court were to issue an adverse decision, the Company
could face a substantial monetary damages award. While such an adverse decision
could also prohibit the Company from future production of rechargeable lithium
cells manufactured for A123Systems or may require the Company to pay royalties
to engage in any such production, the Company has no plans to pursue production
of batteries for A123. The court has not issued any substantive decisions in the
litigation and there has been no substantive pretrial discovery. As a result, at
this time, the Company is unable to express a view on the extent of any possible
award of damages that might be rendered in the litigation. </P>
<P align=justify><B>13 Significant Concentrations </B></P>
<P align=justify><I>(a) Customers and Credit Concentrations </I></P>
<P align=justify>No customer individually comprised 10% or more of net revenue
for the six months ended March 31, 2009 and 2010. </P>
<P align=justify><I>(b) Credit Risk </I></P>
<P align=justify>Financial instruments that potentially subject the Company to a
significant concentration of credit risk consist primarily of cash and cash
equivalents and pledged deposits. As of September 30, 2009 and March 31, 2010,
substantially all of the Company&#146;s cash and cash equivalents and pledged
deposits were held by major financial institutions located in the PRC, which
management believes are of high credit quality. </P>
<p align="center">33</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_46></A>
<P align=center><B>China BAK Battery, Inc. and subsidiaries <BR>Notes to
the condensed interim consolidated financial statements <BR>For the six months
ended March 31, 2009 and 2010 <BR></B>(Unaudited) </P>
<P align=justify><B>14 Segment Information </B></P>
<P align=justify>The Company currently engages in the manufacture,
commercialization and distribution of a wide variety of standard and customized
lithium ion rechargeable batteries for use in a wide array of applications.
During the six months ended March 31, 2010, the Company manufactured five types
of Li-ion rechargeable batteries: aluminum-case cell, battery pack, cylindrical
cell, polymer cell and high-power lithium-phosphate cell. The Company's products
are sold to packing plants operated by third parties primarily for use in mobile
phones and other electronic devices. Net revenues for the six months ended March
31, 2009 and 2010 were as follows: </P>
<P align=justify><I>Net revenues by product: </I></P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="49%"
    colSpan=10><I>Six months ended March 31,</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><I>2009</I> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><I>2010</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">%
</TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">%
</TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Aluminum-case cell </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;60,598,884 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>55.64 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;52,443,541 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>52.10 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Battery pack </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">10,119,732 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">9.29 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">21,305,633 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">21.17 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Steel-case cell </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4,558,719 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4.19 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>- </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cylindrical cells </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">27,606,747 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">25.35 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">21,499,654 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">21.36 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Lithium polymer cells </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>5,990,365 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>5.50 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4,886,728 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4.86 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>High-power lithium battery cells </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">29,951 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">0.03
    </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">515,711 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">0.51
    </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>&nbsp;108,904,398 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>100.00 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>&nbsp;100,651,267 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="10%"
    bgColor=#e6efff>100.00 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE></DIV>
<P align=justify><I>Net revenues by geographic area: </I></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="49%"
    colSpan=10><I>Six months ended March 31,</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="24%"
    colSpan=5><I>2009</I> </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><I>2010</I> </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%"></TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%">&nbsp; % </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD align=center width="1%">&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">%
</TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>PRC Mainland </TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;71,348,163 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>65.51 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;69,032,783 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>68.59 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>PRC Taiwan </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">22,154,698 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">20.34 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">15,045,833 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">14.95 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>India </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4,509,774 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4.14 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>2,524,113 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>2.51 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>North America </TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">358,930 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">0.33 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">531,923 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD align=left width="1%">&nbsp;</TD>
    <TD align=right width="10%">0.53 </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Hong Kong, China </TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>9,025,465 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>8.29 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>12,548,381 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>12.46 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Others </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">1,507,368 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">1.39
    </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">968,234 </TD>
    <TD align=left width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left
    width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">0.96
    </TD>
    <TD align=left width="2%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="1%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">$</TD>
    <TD align=right width="10%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">&nbsp;108,904,398 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">100.00 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">$</TD>
    <TD align=right width="10%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">&nbsp;100,651,267 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">100.00 </TD>
    <TD align=left width="2%" bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>Substantially all of the Company&#146;s long-lived assets are
located in the PRC. </P>
<P align=justify><B>15 Subsequent Events </B></P>
<!--$$/page=--><A name=page_47></A>
<P align=justify>On April 8, 2010, the Compensation Committee of the Company&#146;s
Board of Directors recommended and approved the grant of options to purchase
100,000 shares of the Company&#146;s common stock to certain key management with an
exercise price of US$2.43 per share. In accordance with the vesting provisions
of the grants, the options will become vested and exercisable in eight equal
installments beginning on each quarter after September 30, 2010. </P>
<P align=justify>Apart from the aforementioned, the Company has evaluated its
other activities subsequent to March 31, 2010 and determined that there were no
subsequent events or transactions that required recognition or disclosure in the
interim consolidated financial statements. </P>
<p align="center">34</p>
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noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left ><B>ITEM 2.</B> <B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS</B> <B>OF OPERATIONS.</B> </TD>
    </TR></TABLE>
<P align=justify><B>Special Note Regarding Forward Looking Statements</B> </P>
<P align=justify>Statements contained in this Report include &#147;forward-looking
statements&#148; within the meaning of such term in Section 27A of the Securities Act
of 1933, as amended, or the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
which could cause actual financial or operating results, performances or
achievements expressed or implied by such forward-looking statements not to
occur or be realized. Forward-looking statements made in this Report generally
are based on our best estimates of future results, performances or achievements,
predicated upon current conditions and the most recent results of the companies
involved and their respective industries. Forward-looking statements may be
identified by the use of forward-looking terminology such as &#147;may,&#148; &#147;will,&#148;
&#147;could,&#148; &#147;should,&#148; &#147;project,&#148; &#147;expect,&#148; &#147;believe,&#148; &#147;estimate,&#148; &#147;anticipate,&#148;
&#147;intend,&#148; &#147;continue,&#148; &#147;potential,&#148; &#147;opportunity&#148; or similar terms, variations of
those terms or the negative of those terms or other variations of those terms or
comparable words or expressions. Potential risks and uncertainties include,
among other things, such factors as:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-bottom: 11.5pt">our anticipated growth strategies and our ability to manage the expansion
  of our business operations effectively;
  <LI>
  <p style="margin-bottom: 11.5pt">our limited operating history in developing, manufacturing and selling of
  lithium-based rechargeable battery cells;
  <LI>
  <p style="margin-bottom: 11.5pt">general economic conditions, including the current global recession and
  recent financial crisis;
  <LI>
  <p style="margin-bottom: 11.5pt">our future business development, results of operations and financial
  condition; our ability to diversify our product offering and capture new
  market opportunities;
  <LI>
  <p style="margin-bottom: 11.5pt">our dependence on the growth in demand for the portable electronic devices
  that are powered by our products;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to maintain or increase our market share in the competitive
  markets in which we do business;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to keep up with rapidly changing technologies and evolving
  industry standards, including our ability to achieve technological advances;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to obtain original equipment manufacturer, or OEM,
  qualifications from brand names;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to maintain an efficient cost structure;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to remediate any material weaknesses in our internal control
  over financial reporting;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to secure raw materials in the future and to manage the costs
  of raw materials or to secure alternative or substitute raw materials;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to source our needs for skilled labor, machinery and raw
  materials economically;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to maintain our land use rights and acquire property ownership
  rights to our PRC-based facilities;
  <LI>
  <p style="margin-bottom: 11.5pt">our ability to fund our operations and manage our substantial short-term
  indebtedness;
  <LI>
  <p style="margin-bottom: 11.5pt">uncertainties with respect to the PRC legal and regulatory environment;
  and
  <LI>
  <p style="margin-bottom: 11.5pt">other risks identified in this Report and in our other reports filed with
  the U.S. Securities and Exchange Commission, or SEC. </LI></UL>
<P align=justify>Additional disclosures regarding factors that could cause our
results and performance to differ from results or performance anticipated by
this Report are discussed in other reports that we file with the SEC, including
without limitation our Annual Report on Form 10-K for the fiscal year ended
September 30, 2009, or the 2009 Form 10-K. Readers are urged to carefully review
and consider the various disclosures made by us in this Report and our other
filings with the SEC. These reports attempt to advise interested parties of the
risks and factors that may affect our business, financial condition and results
of operations and prospects. The forward-looking statements made in this Report
speak only as of the date hereof and we disclaim any obligation to provide
updates, revisions or amendments to any forward-looking statements to reflect
changes in our expectations or future events. </P>
<P align=center>35</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<!--$$/page=--><A name=page_49></A>
<P align=justify><B>Use of Terms</B> </P>
<P align=justify>Except as otherwise indicated by the context, all references in
this Report to: (i) &#147;we,&#148; &#147;us,&#148; &#147;our&#148; and &#147;our company&#148; are to the combined
business of China BAK Battery, Inc. and its consolidated subsidiaries; (ii) &#147;BAK
International&#148; are to our Hong Kong subsidiary, BAK International Limited; (iii)
&#147;BAK Tianjin&#148; are to our PRC subsidiary, BAK International (Tianjin) Ltd.; (iv)
&#147;Shenzhen BAK&#148; refers to our PRC subsidiary, Shenzhen BAK Battery Co., Ltd.; (v)
&#147;BAK Electronics&#148; are to our PRC subsidiary, BAK Electronics (Shenzhen) Co.,
Ltd.; (vi) &#147;BAK Canada&#148; are to our Canadian subsidiary, BAK Battery Canada Ltd.;
(vii) &#147;BAK Europe&#148; are to our German subsidiary, BAK Europe GmbH; (viii) &#147;BAK
India&#148; are to our Indian subsidiary, BAK Telecom India Private Limited; (ix)
&#147;Securities Act&#148; are to the Securities Act of 1933, as amended; (x) &#147;Exchange
Act&#148; are to the Securities Exchange Act of 1934, as amended; (xi) &#147;China,&#148;
&#147;Chinese&#148; and &#147;PRC&#148; are to the People&#146;s Republic of China, excluding for the
purposes of this Report only, Taiwan, Hong Kong and Macau; (xii) &#147;RMB&#148; are to
Renminbi, the legal currency of China; and (xiii) &#147;U.S. dollar,&#148; &#147;$&#148; and &#147;US$&#148;
are to the legal currency of the United States of America.</P>
<P align=justify><B>Overview</B></P>
<P align=justify>We are a leading global manufacturer of lithium based battery
cells. We produce battery cells
that are the principal component of rechargeable batteries commonly used to
power the following applications:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-bottom: 11.5pt">cellular phones&#151;customer segments include OEM customers and replacement
  battery manufacturers;
  <LI>
  <p style="margin-bottom: 11.5pt">notebook computers;
  <LI>
  <p style="margin-bottom: 11.5pt">portable consumer electronics, such as digital cameras, portable media
  players, portable gaming devices, and personal digital assistants, or PDAs;
  and
  <LI>
  <p style="margin-bottom: 11.5pt">other applications, such as cordless power tools, mining lamps, light
  electric vehicles, uninterruptible power supplies, and electric
  vehicles. </LI></UL>
<P align=justify>Historically, we have primarily manufactured prismatic
lithium-ion cells for the cellular phone replacement battery market and the OEM
market. We conduct all of our operations in China, in close proximity to China&#146;s
electronics manufacturing base and its rapidly growing market, and have
distribution offices in Taiwan, India, Germany, and the United States where our
sales representatives market and sell our products and also provide after-sale
service. Our products are packed into batteries by third-party battery pack
manufacturers in accordance with the specifications of manufacturers of portable
electronic applications. At the request of our customers that order prismatic
battery packs, we also engage battery pack manufacturers to assemble our
prismatic cells into batteries for a fee and then sell battery packs to these
customers both for the replacement and OEM markets.</P>
<P align=justify><B>Second Fiscal Quarter Financial Performance
Highlights</B></P>
<P align=justify>Although the business climate in China is recovering, the
global economic environment still remains weak. During the second quarter of
fiscal year of 2010, we generated $50.4 million in net revenues, an increase of
0.4% from $50.2 million in the first quarter 2010 despite the global economic
environment and the traditional slowdown during the Chinese New Year, and up 23.5% from $40.8 million
in the second quarter of 2009. Overall average selling prices of our products
increased almost 6.0% compared with the last quarter.</P>
<P align=justify>We continued to improve our operating results during the second
fiscal quarter of 2010 and experienced a modest operating profit and $6.2
million in earnings before share-based compensation costs, interest, taxes, depreciation and amortization
(&#147;EBITDA&#148;). Revenues from cylindrical cells used in notebook computers
increased
65.0% to $13.4 million and were up 45.1% from the same quarter of last year. We
now supply products to three out of the six largest notebook OEM makers in the world.
Revenues from high power batteries doubled in the second quarter of 2010,
compared with the first quarter of 2010, due to
the increased market demand for electric bicycles and electric vehicles. As a
result, EBITDA increased 318.9% year over year to $6.2 million, and we achieved
approximately $0.9 million in operating income in this quarter. We are very encouraged to see
considerable growth in the demand for high power batteries in the electric bicycles and
electric
vehicles market.</P>
<P align=justify>We caution readers that EBITDA is a non-GAAP measure and does not purport to be an
alternative to operating income as a measure of operating performance.
Management believes that this measure is useful to investors and other users of
our financial information in evaluating operating profitability on a more
variable cost basis, as it excludes the share-based compensation costs, depreciation
and amortization expenses related primarily to capital expenditures and
acquisitions that occurred, and we believe it is useful to investors in evaluating operating performance in relation to our competitors. EBITDA is
calculated by adding back share-based compensation costs, depreciation and
amortization expense to net income (or loss). It is management&#146;s intent to
provide non-GAAP financial information to enhance understanding of our GAAP
financial statements and it should be considered by the reader in addition to,
but not instead of, the financial statements prepared in accordance with GAAP. A
table reconciling this non-GAAP measure to the appropriate GAAP measure is
included in Item 2, &#147;Management&#146;s Discussion and Analysis of Financial Condition
and Results of Operations&#148; included in this report so as not to imply that more
emphasis should be placed on the non-GAAP measure. The non-GAAP financial
information presented may be determined or calculated differently by other
companies. </P>
<P align=center>36</P>
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<P align=justify>We achieved gradual improvement of our shipments to the OEM
domestic market for branded mobile phone manufacturers through our in-house pack
line, which we expect to further improve profitability of our traditional
prismatic business. In addition, we hired a new Chief Financial Officer, Mr. Jun
Zou, who has more than 16 years of financial management and capital market
experience globally. We believe Mr. Jun Zou&#146;s leadership will contribute greatly
to the Company&#146;s success in the years ahead through his deep commitment to both
financial management and transparent communication with the investment
community. </P>
<P align=justify>We have access to $240.6 million in short-term credit
facilities and $55.7 million in long-term credit facilities. As of March 31,
2010, the principal outstanding amounts on these facilities included short-term
bank loans of $157.3 million, long-term bank loans of $11.7 million maturing
within one year and long-term bank loans of $29.3 million maturing after one
year. At the same time our bills payable, which is a subset of accounts and
bills payable, totaled $42.5 million, leaving $70.2
million of funds available for additional cash needs. In addition, on July 10,
2008, our $60 million shelf registration statement was declared effective by the
SEC, pursuant to which we have raised $36.6 million in gross proceeds from sales
of common stock and issued common stock warrants exercisable for up to $21.6
million in additional gross proceeds. As $16 million of these warrants were not
exercised before their expiration, we may raise up to an additional $17.8
million in gross proceeds from future equity financings under this shelf
registration statement. </P>
<P align=justify><B>Financial Statement Presentation</B></P>
<P align=justify><B><I>Net revenues</I></B>. Our net revenues represent the
invoiced value of our products sold, net of value added taxes, or VAT, sales
returns, trade discounts and allowances. We are subject to VAT, which is levied
on most of our products at the rate of 17% on the invoiced value of our
products. Provision for sales returns are recorded as a reduction of revenue in
the same period that revenue is recognized. The provision for sales returns
represents our best estimate of the amount of goods that will be returned from
our customers based on historical sales returns data.</P>
<P align=justify><B><I>Cost of Revenues</I></B>. Cost of revenues consists
primarily of material costs, employee remuneration for staff engaged in
production activity, equity-based compensation, depreciation and related
expenses that are directly attributable to the production of products. Cost of
revenues also includes write-downs of inventory to lower of cost or market. Cost
of revenues from the sales of battery packs includes the fees we pay to pack
manufacturers for assembling our prismatic cells into battery packs. </P>
<P align=justify><B><I>Research and Development Expenses</I></B>. Research and
development expenses are primarily comprised of remuneration for R&amp;D staff,
equity-based compensation, depreciation and maintenance expenses relating to
R&amp;D equipment, and R&amp;D material costs.</P>
<P align=justify><B><I>Sales and Marketing Expense</I></B><I>s</I>. Sales and
marketing expenses consist primarily of remuneration for staff involved in
selling and marketing efforts, including staff engaged in the packaging of goods
for shipment, advertising cost, depreciation, equity-based compensation and
travel and entertainment expenses. We do not pay slotting fees to retail
companies for displaying our products, engage in cooperative advertising
programs, participate in buy-down programs or similar arrangements. No material
estimates are required by management to determine our actual marketing or
advertising costs for any period.</P>
<P align=justify><B><I>General and Administrative Expenses</I></B>. General and
administrative expenses consist primarily of employee remuneration, equity-based
compensation, professional fees, insurance, benefits, general office expenses,
depreciation, liquidated damages, and bad debt expenses.</P>
<P align=justify><B><I>Finance Costs, Net</I></B>. Finance costs consist
primarily of interest income, interest on bank loans, net of capitalized
interest, and bank charges.</P>
<P align=center>37</P>
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<P align=justify><B><I>Government Grant Income / (Other Income) / Other
Expenses</I></B>. Income from government grants consisted primarily of grant
funds awarded to Shenzhen BAK as consideration for its contributions to the
Shenzhen area&#146;s economy and as subsidies for land-use rights at BAK Industrial
Park. No present or future obligations arise from the receipt of these
funds.</P>
<P align=justify><B><I>Income Taxes</I></B>. Under PRC income tax laws and
regulations, before January 1, 2008, a foreign-invested enterprise, or FIE, was
generally subject to an enterprise income tax rate of 33.0%, which included a
30.0% state income tax and a 3.0% local income tax. However, from at least
calendar year 2002 through calendar year 2007, an enterprise recognized as a
&#147;Manufacturing Enterprise Located in Special Economic Zone&#148; under PRC tax laws
was entitled to a preferential income tax rate of 15%. Moreover, a
foreign-invested manufacturing enterprise, starting from its first profitable
calendar year after offset of accumulated tax losses, was entitled to a two-year
exemption from enterprise income tax followed by a three-year 50% reduction in
its enterprise income tax rate, also referred to herein as the &#147;tax holiday.&#148; An
enterprise qualified for such treatment may receive a further tax rate reduction
related to the size of qualified capital contributions received. In addition,
from at least calendar year 2002 through calendar year 2007, an enterprise
qualified as an &#147;advanced technology enterprise&#148; under PRC tax law was also
entitled to a 50% reduction of income taxes.</P>
<P align=justify>On March 16, 2007, the National People&#146;s Congress of the PRC
determined to adopt the new corporate income tax law, or the New CIT Law. The
New CIT Law unifies the application scope, tax rate, tax deduction and
preferential policy for both domestic enterprises and FIEs. The New CIT Law
became effective on January 1, 2008. According to the New CIT Law, the
applicable income tax rate for Shenzhen BAK, BAK Electronics and BAK Tianjin
will be 25% after their preferential tax holidays and the transition period have
ended. During the transition period, tax rates for subject entities was 18% and
20% for the calendar years 2008 and 2009, respectively, and is expected to be
22% and 24% for the calendar years 2010 and 2011, respectively, before the
application of applicable tax holidays or other tax preferences.</P>
<P align=justify>Shenzhen BAK and BAK Electronics are both registered and
operate in Shenzhen, the PRC, and are each recognized as &#147;Manufacturing
Enterprise Located in Special Economic Zone.&#148; As a result, they have been
entitled to a preferential enterprise income tax rate of 15%. In accordance with
the relevant income tax laws, the profits of Shenzhen BAK and BAK Electronics
were fully exempted from income tax for two years from the first profitable
calendar year of operations after offset of accumulated taxable losses, followed
by a 50% exemption for the immediate next three calendar years.</P>
<P align=justify>The tax holiday of Shenzhen BAK commenced in 2002, the first
calendar year in which Shenzhen BAK had assessable profit, and ended on December
31, 2006. In addition, due to additional capital contributed by BAK
International to Shenzhen BAK in both 2005 and 2006 and Shenzhen BAK&#146;s
qualification as an advanced technology enterprise in 2007 and 2008, Shenzhen
BAK was granted a preferential income tax rate of 7.5%, 11.8% and 12.6% for
calendar years 2007, 2008 and 2009, respectively. In accordance with the
transition period of the New CIT Law and before considering the above-mentioned
tax concessions, Shenzhen BAK&#146;s income tax rate for calendar years 2010 and 2011
are expected to be 22% and 24%, respectively, and starting in calendar year
2012, it is expected to be subject to an income tax rate of 25%. Therefore,
Shenzhen BAK&#146;s income tax rates after consideration of its tax concessions are
expected to be 15% for both calendar years 2010 and 2011and starting in calendar
year 2012, it is expected to be subject to an income tax rate of 25%.</P>
<P align=justify>For BAK Electronics, established in August 2005, the same tax
holiday was in effect for calendar years 2006 and 2007, making BAK Electronics
fully exempt from any enterprise income tax. Following the tax holiday, a
three-year 50% reduction in BAK Electronics&#146; enterprise income tax rate
commenced. Pursuant to the transition period of the New CIT Law, BAK
Electronics&#146; income tax rates for calendar years 2010 and 2011 were expected to
be 22% and 24%, respectively, and starting in calendar year 2012 it was expected
to be subject to an income tax rate of 25%. Taking the 50% reduction into
account, BAK Electronics&#146; income tax rates are now expected to be 11% and 24%
for calendar years 2010 and 2011, respectively, with no change in its expected
2012 tax rate of 25%. BAK Electronics did not incur any enterprise income tax
for the calendar year 2009 due to the current tax losses carried forward from
calendar year 2008.</P>
<P align=justify>Shenzhen BAK and BAK Electronics received in aggregate a tax
benefit of $9,000 pursuant to their tax holiday and preferential tax rate for
the six months ended March 31, 2010, or $0.0001 per basic share. </P>
<P align=justify>BAK Tianjin is currently paying no enterprise income tax due to
cumulative tax losses. </P>
<P align=justify>Our Canadian, German, Indian, and Hong Kong subsidiaries&#151;BAK
Canada, BAK Europe, BAK India, and BAK International&#151;are subject to profits
taxes in their respective countries at rates of 38%, 25%, 30%, and 16.5%
respectively. However, because they do not have any assessable income derived
from or arising in those countries, they have not paid any such tax.</P>
<P align=center>38</P>
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<P align=justify>Our effective tax expense rate was 2.1% for the six months
ended March 31, 2010 and our effective tax expense rate was 0.5% for the six
months ended March 31, 2009.</P>
<P align=justify>Pursuant to the Provisional Regulation of China on Value Added
Tax and its implementing rules, all entities and individuals that are engaged in
the sale of goods, the provision of repairs and replacement services and the
importation of goods in China are generally required to pay VAT at a rate of
17.0% of the gross sales proceeds received, less any deductible VAT already paid
or borne by the taxpayer. Further, when exporting goods, the exporter is
entitled to some or all of the refund of VAT that it has already paid or borne.
Our imported raw materials that are used for manufacturing export products and
are deposited in bonded warehouses are exempt from import VAT.</P>
<P align=justify><B>Results of Operations </B></P>
<P align=justify><B><U>Comparison of Three Months Ended March 31, 2010 and March
31, 2009</U> </B></P>
<P align=justify>The following table sets forth key components of our results of
operations for the periods indicated. All amounts, other than percentages, are
in thousands of U.S. dollars.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><B>Three Months Ended</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><B>March 31,</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>2010</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>2009</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    ><B></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>$&nbsp;Change</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%"><B>%
      Change</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net revenues </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;50,423 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;40,814 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;9,609 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>23.5 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Cost of revenues </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">41,421 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">37,792 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">
    <p dir="ltr">3,629
    </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">9.6
    </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Gross profit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>9,002 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>3,022 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>5,980 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>197.9 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Operating expenses: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Research and
      development expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>1,625 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>1,125 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>501 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>44.5 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Sales and marketing expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">1,705 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">1,154 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">552 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">47.8 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;General and
      administrative expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>4,819 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>4,115 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>703 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>17.1 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total operating expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">8,149
    </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">6,394
    </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">1,755
    </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">27.4
    </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Operating income / (loss) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>853 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(3,372</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>4,225 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(125.3</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Finance costs, net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(2,190</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(2,364</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">174</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(7.4</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Government grant income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>79 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>68 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>11 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>15.0 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Other (expenses) / income </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(145</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">157 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(302</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(191.9</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Income tax expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>(1,146</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>(211</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>(935</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>442.8 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;(2,549</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;(5,722</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;3,173 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
    width="10%">(54.6</TD>
    <TD align=left width="2%" >) </TD></TR></TABLE>
<P align=justify><B><I>Net Revenues</I></B>. Net revenues increased to $50.4
million for the three months ended March 31, 2010 as compared to $40.8 million
for the same period of the prior year, an increase of $9.6 million or 23.5%.
The following table sets forth the breakdown of our net revenues by battery cell type
for the periods indicated. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>Three Months Ended</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><B>March 31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2010</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2009</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>(in thousands)</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Prismatic cells </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Aluminum-case cells </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;24,581 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;23,317 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp;Battery packs </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>10,386 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>4,712 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Steel-case cells </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">1,466 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Cylindrical cells </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>13,386 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>9,223 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Lithium polymer cells </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">1,718 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">2,066 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>High-power lithium battery cells </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>352 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>30 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Total</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;50,423 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;40,814 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE><br>
<p align="center">39</p>
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noShade SIZE=5>
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<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-bottom: 11.5pt">Net revenues from sales of aluminum-case cells increased to $24.6 million
  in the three months ended March 31, 2010, from $23.3 million in the same
  period in fiscal year 2009, an increase of $1.2 million or 5.0%, resulting
  from an increase in sales volume of 11.0% driven by increased sales volume to the OEM
  market in the PRC and offset by a decrease in our average selling price of
  4.7%. </LI>
  <LI>
  <p style="margin-bottom: 11.5pt">Net revenues from sales of battery packs increased to $10.4 million in the
  three months ended March 31, 2010, from $4.7 million in the same period in
  fiscal year 2009, an increase of $5.6 million or 116.0%. This resulted from an
  increase in sales volume of 150.5% due to increased export sales, offset by a
  13.8% decrease in average selling price.
  <LI>
  <p style="margin-bottom: 11.5pt">We sold $1.5 million in steel-case cells for the three months ended March
  31, 2009 as compared to no sales for the three months ended March 31, 2010.
  This change was primarily attributable to our long-term decision to reduce
  and suspend  steel-case cell production in January 2009 which was
  designed to increase our production capacity of aluminum-case cells for sale
  to the OEM market and to take advantage of the greater sales prospects and
  lower costs of aluminum-case cells.
  <LI>
  <p style="margin-bottom: 11.5pt">Net revenues from sales of cylindrical cells increased to $13.4 million in
  the three months ended March 31, 2010, from $9.2 million in the same period in
  fiscal year 2009, an increase of $4.2 million or 45.1%, due to an increase in
  sales volume of 59.4% driven by increased sales to laptop manufacturers and
  offset by a decrease in our average selling prices of 9.0% which was driven by
  strong market competition on price.
  <LI>
  <p style="margin-bottom: 11.5pt">We sold $1.7 million in lithium polymer cells in the three months ended
  March 31, 2010, compared to $2.1 million in lithium polymer cells in the same
  period in fiscal year 2009, a decrease of $348,000 or 16.8%, resulting from a
  decrease of 38.1% in sales volume and offset by an increase of 40.9% in our
  average selling price. The decrease in sales volume was primary due to a
  slowdown in orders from new customers and because some current clients postponed
  launching new products.
  <LI>
  <p style="margin-bottom: 11.5pt">We also sold approximately $352,000 in high-power lithium battery cells in
  the three months ended March 31, 2010, as compared to $30,000 in high-power
  lithium battery cells in the same period of fiscal year 2009, due to our sale
  of sample products used in electric bicycles, power tools, uninterruptible
  power supplies, and other applications from our Tianjin facility. </LI></UL>
<P align=justify><B><I>Cost of Revenues</I></B>. Cost of revenues increased to
$41.4 million for the three months ended March 31, 2010, as compared to $37.8
million for the same period in fiscal year 2009, an increase of $3.6 million or
9.6%. The increase in cost of revenues correlates to an increase in sales
volume over the three months ended March 31, 2010.</P>
<P align=justify><i><b>Gross Profit</b></i>. As a result, gross profit for the three months ended March 31,
2010 was $9.0 million, or 17.9% of net revenues, as compared to gross profit of
$3.0 million, or 7.4% of net revenues, for the same period in fiscal year 2009.
The increase in our gross profit as a percentage of net revenues was primarily
due to sales of higher-margin products, including prismatic and cylindrical
cells, increasing in proportion to overall sales during the three months ended
March 31, 2010, from their proportion of overall sales during the same period
last year. </P>
<P align=justify><B><I>Research and Development Costs</I></B>. Research and
development costs increased to $1.6 million for the three months ended March 31,
2010, as compared to $1.1 million for the same period in fiscal year 2009, an
increase of $501,000 or 44.5%. Salaries related to R&amp;D staff increased by
$363,000 because of we hired more research staff and increased basic salaries
during the three months ended March 31, 2010.</P>
<P align=justify><B><I>Sales and Marketing Expenses</I></B>. Sales and marketing
expenses increased to $1.7 million for the three months ended March 31, 2010, as
compared to $1.2 million for the same period in fiscal year 2009, an increase of
$552,000, or 47.8%, primarily due to increased salaries of $154,000 and packing
expenses of $150,000 in line with increased sales. As a percentage of revenues,
sales and marketing expenses have increased to 3.3% for the three months ended
March 31, 2010 from 2.8% for the same period in 2009, due to an increase in
salaries and packing expenses during the three months ended March 31, 2010.</P>
<P align=justify><B><I>General and Administrative Expenses</I></B>. General and
administrative expenses increased to $4.8 million, or 9.6% of revenues, for the
three months ended March 31, 2010, as compared to $4.1 million, or 10.1% of
revenues, for the same period in fiscal year 2009, an increase of $703,000, or
17.1%. We recognized exchange gain of $416,000 for the three months ended March
31, 2010, compared with exchange loss of $771,000 for the same period in fiscal
year 2009. </P>
<P align=justify dir="ltr"><B><I>Operating Income / (Loss)</I></B>. As a result of the above,
operating income totaled $853,000 for the three months ended March 31, 2010, as
compared to an operating loss of $3.4 million for the same period of the prior
year. </P>
<P align=center>40</P>
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noShade SIZE=5>
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<P align=justify><B><I>Finance Costs, Net</I></B>. Finance costs, net, decreased
to $2.2 million for the three months ended March 31, 2010, as compared to
approximately $2.4
million for the same period of the prior fiscal year, a decrease of $174,000 or
7.4%. We have $157.3 million in short-term bank loans maturing in less than one
year, $11.7 million in long-term bank loans maturing within one year, and $29.3
million in other long-term bank loans maturing in more than one year,
outstanding as of March 31, 2010, as compared to $117.1 million in short-term
bank loans maturing in less than one year, $16.1 million in long-term bank loans
maturing within one year, and $39.5 million in other long-term bank loans
maturing in more than one year, outstanding as of March 31, 2009. The decrease
in net finance costs is mainly attributable to a significant decrease in the
average bank loan interest rates on both our short-term and long-term bank
loans. </P>
<P align=justify><B><I>Government Grant Income / Other Income / (Other
Expenses)</I></B>.<B><I> </I></B>We had deferred revenue from government grant
income of $79,000<B> </B>and other expense of $145,000<B> </B>for the
three-month period ended March 31, 2010, as compared to government grant income
of $68,000 and other income of $157,000 for the same period of the prior fiscal
year. The government grant income for the three months ended March 31, 2010
mainly consisted of subsidies to pay for the land use rights to our corporate
campus at BAK Industrial Park and government grant funds to subsidize a new
high-technology project. Government grant income for the three months ended
March 31, 2009 mainly consisted of subsidies to pay for the land use rights to
our corporate campus at BAK Industrial Park. No present or future obligation
will arise from the receipt of such income. </P>
<P align=justify><B><I>Income Tax Expense</I></B>. Income tax expenses were $1.1
million for the three months ended March 31, 2010, as compared to income tax
expenses of $211,000 for the same period of 2009. The change was the result of
an increase in our income tax provision for Shenzhen BAK during the quarter
ended March 31, 2010 and an increase in our operating income.</P>
<P align=justify><B><I>Net Loss</I></B>. As a result of the foregoing, we had a
net loss of $2.5 million for the three months ended March 31, 2010 compared to
$5.7 million for the same period of 2009. </P>
<P align=justify><B><U>Comparison of Six Months Ended March 31, 2010 and March
31, 2009</U></B><B> </B></P>
<P align=justify>The following table sets forth key components of our results of
operations for the periods indicated. All amounts, other than percentages, are
in thousands of U.S. dollars.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="23%" colSpan=4><B>Six Months Ended</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="23%"
    colSpan=4><B>March 31,</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>2010</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>2009</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    ><B></B></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="10%"><B>$&nbsp;Change</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%"><B>%
      Change</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net revenues </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;100,651 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;108,904 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="10%" bgColor=#e6efff>&nbsp;(8,253</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(7.6</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Cost of revenues </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">82,089 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">95,289 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">(13,200</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="10%">(13.9</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Gross profit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>18,562 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>13,615 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>4,947 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>36.3 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Operating expenses: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;Research and
      development expenses </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>3,393 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>2,542 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>851 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>33.5 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Sales and marketing expenses </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">3,734 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">2,754 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">980 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">35.6 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>&nbsp; &nbsp; &nbsp; &nbsp;General and
      administrative expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>13,456 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>10,875 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>2,581 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>23.7 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Total operating expenses </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">20,583 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="10%">16,171 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">4,412
    </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%">27.3
    </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Operating loss </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(2,021</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(2,556</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>535 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(21.0</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Finance costs, net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(4,344</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(5,204</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">860</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(16.5</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Government grant income </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>434 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>171 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>263 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>154.6 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Other income / (expenses) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(138</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">164 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(302</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">(184.3</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Income tax benefit / (expense) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>126 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>(35</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>161 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="10%"
    bgColor=#e6efff>(459.2</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Net loss </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;(5,943</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;(7,460</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="10%">&nbsp;1,517 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
    width="10%">(20.4</TD>
    <TD align=left width="2%" >) </TD></TR></TABLE>
<P align=justify><B><I>Net Revenues</I></B>. Net revenues decreased to $100.6
million for the six months ended March 31, 2010 as compared to $108.9 million
for the same period of the prior year, a decrease of $8.3 million or 7.6%. The
following table sets forth the breakdown of our net revenues by battery cell type for
the periods indicated. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>Six Months Ended</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" style="border-bottom-style: solid; border-bottom-width: 1" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4 style="border-bottom-style: solid; border-bottom-width: 1"><B>March 31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" >&nbsp;</TD>
    <TD align=center width="12%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><B>2010</B> </TD>
    <TD align=center width="2%" style="border-top-style: solid; border-top-width: 1" >&nbsp;</TD>
    <TD align=center width="1%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" >&nbsp;</TD>
    <TD align=center width="12%" style="border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1"><B>2009</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" style="border-top-style: solid; border-top-width: 1" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>(in thousands)</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Prismatic cells </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="12%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="12%" bgcolor="#E6EFFF">&nbsp; </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Aluminum-case cells </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;52,444 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="12%">&nbsp;60,599 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">&nbsp; &nbsp;Battery packs </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">21,306 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">10,120 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp;Steel-case cells </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">4,558 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Cylindrical cells </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">21,500 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="12%" bgcolor="#E6EFFF">27,607 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Lithium polymer cells </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">4,886 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">5,990 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">High-power lithium battery cells </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%" bgcolor="#E6EFFF">515
    </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%" bgcolor="#E6EFFF">30
</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left><B>Total</B> </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;100,651 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;108,904 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR></TABLE>
<BR>
<p align="center">41</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<UL style="TEXT-ALIGN: justify">
  <LI>
  <p style="margin-bottom: 11.5pt">Net revenues from sales of aluminum-case cells decreased to $52.4 million
  in the six months ended March 31, 2010, from $60.6 million in the same period
  in fiscal year 2009, a decrease of $8.2 million or 13.5%, resulting from a
  decrease in our average selling price of 12.1% and sales volume of 3.8% driven
  by decreased sales to the OEM market in the PRC.
  <LI>
  <p style="margin-bottom: 11.5pt">Net revenues from sales of battery packs increased to $21.3 million in the
  six months ended March 31, 2010, from $10.1 million in the same period in
  fiscal year 2009, an increase of $11.2 million or 110.5%. This resulted from
  an increase in sales volume of 139.5% due to increased export sales, offset by
  a 12.1% decrease in average selling price.
  <LI>
  <p style="margin-bottom: 11.5pt">We sold $4.6 million in steel-case cells for the six months ended March
  31, 2009 as compared to no sales for the six months ended March 31, 2010. This
  change was primarily attributable to our long-term strategic decision to
  reduce and
  suspend  steel-case cell production in January 2009 which was designed to
  increase our production capacity of aluminum-case cells for sale to the OEM
  market and to take advantage of the greater sales prospects and lower costs of
  aluminum-case cells.
  <LI>
  <p style="margin-bottom: 11.5pt">Net revenues from sales of cylindrical cells decreased to $21.5 million in
  the six months ended March 31, 2010, from $27.6 million in the same period in
  fiscal year 2009, a decrease of $6.1 million or 22.1%, due to a decrease in
  our average selling prices of 20.1% driven by fierce market competition on
  price and a decrease in sales volume of 2.5% driven by decreased sales to laptop
  manufacturers.
  <LI>
  <p style="margin-bottom: 11.5pt">We sold $4.9 million in lithium polymer cells in the six months ended
  March 31, 2010, compared to $6.0 million in lithium polymer cells in the same
  period in fiscal year 2009, a decrease of $1.1 million or 18.4%, resulting
  from decreases of 22.4% in sales volume and an offsetting increase of 5.2% in
  our average selling price.
  <LI>
  <p style="margin-bottom: 11.5pt">We also sold approximately $515,000 in high-power lithium battery cells in
  the six months ended March 31, 2010, as compared to $30,000 in high-power
  lithium battery cells in the same period of fiscal year 2009, due to our sale
  of sample products used in electric bicycles, power tools, uninterruptible
  power supplies, and other applications from our Tianjin facility. </LI></UL>
<P align=justify><B><I>Cost of Revenues</I></B>. Cost of revenues decreased to
$82.1 million for the six months ended March 31, 2010, as compared to $95.3
million for the same period in fiscal year 2009, a decrease of $13.2 million or
13.9%. The decrease in cost of revenues correlates to a decrease in sales
volume over the six months ended March 31, 2010.</P>
<P align=justify>As a result, gross profit for the six months ended March 31,
2010 was $18.6 million, or 18.4% of net revenues, as compared to gross profit of
$13.6 million, or 12.5% of net revenues, for the same period in fiscal year
2009. Our increase in gross profit as a percentage of net revenues was primarily
due to the greater proportion of sales of battery packs and cylindrical cells
with higher gross margin during the six months ended March 31, 2010. </P>
<P align=justify><B><I>Research and Development Costs</I></B>. Research and
development costs increased to $3.4 million for the six months ended March 31,
2010, as compared to $2.5 million for the same period in fiscal year 2009, an
increase of $851,000 or 33.5%, due to salaries related to R&amp;D staff
increased by $617,000 primarily due to hiring more research staffs and increased
basic salaries during the six months ended March 31, 2010.</P>
<P align=justify><B><I>Sales and Marketing Expenses</I></B>. Sales and marketing
expenses increased to $3.7 million for the six months ended March 31, 2010, as
compared to $2.8 million for the same period in fiscal year 2009, an increase of
$980,000, or 35.6%, primarily due to increased salaries and welfare of $320,000,
packaging expenses of $187,000 and transportation expenses of $150,000, due to
more intensive sales effort during the six months ended March 31, 2010 compared
with the same quarter of last year. Equity-based compensation included in sales
and marketing expenses increased by $206,000 due to compensation charges applied
to the grant of stock options to employees in our sales department. As a
percentage of revenues, sales and marketing expenses have increased to 3.7% for the six months
ended March 31, 2010 from 2.5% for the same period in 2009, due to the
significant decrease in revenues from sales.</P>
<P align=center>42</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_56></A>
<P align=justify><B><I>General and Administrative Expenses</I></B>. General and
administrative expenses increased to $13.5 million, or 13.4% of revenues, for
the six months ended March 31, 2010, as compared to $10.9 million, or 10.0% of
revenues, for the same period in fiscal year 2009, an increase of $2.6 million,
or 23.7%. Bad debt expenses increased by $2.3 million due to the provision
charged after we had assessed the collection of accounts receivables from
customers during the six months ended March 31, 2010. </P>
<P align=justify><B><I>Operating Loss</I></B>. As a result of the above,
operating loss totaled $2.0 million for the six months ended March 31, 2010, as
compared to $2.6 million for the same period of the prior year, a decrease in
operating loss of
$536,000, or 21.0%. </P>
<P align=justify><B><I>Finance Costs, Net</I></B>. Finance costs, net, decreased
to $4.3 million for the six months ended March 31, 2010, as compared to $5.2
million for the same period of the prior fiscal year, a decrease of $860,000 or
16.5%. We have $157.3 million in short-term bank loans maturing in less than
one year, $11.7 million in long-term bank loans maturing within one year, and
$29.3 million in other long-term bank loans maturing in more than one year,
outstanding as of March 31, 2010, as compared to $117.1 million in short-term
bank loans maturing in less than one year, $16.1 million in long-term bank loans
maturing within one year, and $39.5 million in other long-term bank loans
maturing in more than one year, outstanding as of March 31, 2009. The decrease
in net finance costs is mainly attributable to a significant decrease in the
average bank loan interest rates on both our short-term and long-term bank
loans. </P>
<P align=justify><B><I>Government Grant Income / Other Income / (Other
Expenses)</I></B>.<B><I> </I></B>We had deferred revenue from government grant
income of $434,000<B> </B>and other expenses of $138,000<B> </B>for the six
months ended March 31, 2010, as compared to government grant income of $171,000
and other income of $164,000 for the same period of the prior fiscal year. The
government grant income for the six months ended March 31, 2010 mainly consisted
of subsidies to pay for the land use rights to our corporate campus at BAK
Industrial Park and government grant funds to subsidize a new high-technology
project. Government grant income for the six months ended March 31, 2009 mainly
consisted of government grant funds which subsidized our interest expenses in
prior years for research and development activities and to refund the
value-added tax paid by Shenzhen BAK in prior years in light of Shenzhen BAK&#146;s
qualification as a new and high-technology enterprise. </P>
<P align=justify><B><I>Income Tax Benefits/(Expense)</I></B>. Income tax
benefits were $126,000 for the six months ended March 31, 2010, as compared to
income tax expenses of $35,000 for the same period of 2009. The change was the
result of an increase in our income tax provision for Shenzhen BAK during the six months ended March 31, 2010. </P>
<P align=justify><B><I>Net Loss</I></B>. As a result of the foregoing, we had a
net loss of $5.9 million for the six months ended March 31, 2010 compared to
a net loss of $7.5 million for the same period of 2009. </P>
<P align=justify><B>Reconciliation of Net Loss to EBITDA</B></P>
<P align=justify>The following table sets forth a summary of our reconciliation
of net loss to EBITDA for the periods indicated: </P>
<P align=center><B>Reconciliation of Net Loss to EBITDA <BR></B>(All amounts in
thousands of U.S. dollars) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="36%" colSpan=7>Three Months Ended </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">March 31, </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="11%" colspan="2" nowrap >December 31, </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="10%">March 31, </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">2010
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">2009
    </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="2%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="10%">2009
    </TD>
    <TD align=center width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net Loss from Statement of Operations </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(2,550</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(3,392</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#e6efff>(5,722</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Share-based compensation costs </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">800 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">1,145 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="10%">730 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Income Tax expense / (benefit) </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF">1,146 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF">(1,272</TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >) </TD>
    <TD align=left width="1%" bgcolor="#E6EFFF" >&nbsp;</TD>
    <TD align=right width="10%" bgcolor="#E6EFFF">211 </TD>
    <TD align=left width="2%" bgcolor="#E6EFFF" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF>Interest </TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#FFFFFF>2,191 </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#FFFFFF>2,153 </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#FFFFFF>&nbsp;</TD>
    <TD align=right width="10%" bgColor=#FFFFFF>2,364 </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#E6EFFF bordercolor="#000000">Depreciation and Amortization </TD>
    <TD align=left width="1%"  bgColor=#E6EFFF style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#E6EFFF style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">4,600</TD>
    <TD align=left width="2%"  bgColor=#E6EFFF bordercolor="#000000">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#E6EFFF style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#E6EFFF style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">4,193</TD>
    <TD align=left width="2%"  bgColor=#E6EFFF bordercolor="#000000">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#E6EFFF style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#E6EFFF style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000">
    3,894</TD>
    <TD align=left width="2%"  bgColor=#E6EFFF bordercolor="#000000">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#FFFFFF bordercolor="#000000">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#FFFFFF style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#FFFFFF style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">6,187 </TD>
    <TD align=left width="2%"  bgColor=#FFFFFF bordercolor="#000000">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#FFFFFF style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#FFFFFF style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">2,827</TD>
    <TD align=left width="2%"  bgColor=#FFFFFF bordercolor="#000000">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#FFFFFF style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">&nbsp;</TD>
    <TD align=right width="10%" bgColor=#FFFFFF style="border-bottom-style: double; border-bottom-width: 3" bordercolor="#000000">1,477</TD>
    <TD align=left width="2%"  bgColor=#FFFFFF bordercolor="#000000">&nbsp;</TD></TR>
  </TABLE>
<BR>
<p align="center">43</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<p align="justify">Note: This report includes the use of EBITDA, a financial
measure that is not defined by US GAAP. For purposes of Regulation G, a non&#150;GAAP
financial measure is a numerical measure of a registrant's historical or future
financial performance, financial position or cash flows that excludes amounts,
or is subject to adjustments that have the effect of excluding amounts, that are
included in the most directly comparable measure calculated and presented in
accordance with GAAP in the statement of income, balance sheet, or statement of
cash flows (or equivalent statements) of the issuer; or includes amounts, or is
subject to adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so calculated and presented.
In this regard, GAAP refers to generally accepted accounting principles in the
United States. Pursuant to the requirements of Regulation G, we have provided
the table above which includes a reconciliation of EBITDA to net income, the
most directly comparable GAAP financial measure. EBITDA was derived by
calculating earnings before share-based compensation costs, interest, taxes,
depreciation, and amortization. Our management believes that the presentation of
EBITDA provides useful information regarding our results of operations because
it assists in analyzing and benchmarking the performance and value of our
business. Our calculation of EBITDA may not be consistent with similarly titled
measures of other companies.</p>
<P align=justify><B>Liquidity and Capital Resources </B></P>
<P align=justify>We have historically financed our liquidity requirements from a
variety of sources, including short-term bank loans, long-term bank loans and
bills payable under bank credit agreements, sale of bills receivable and
issuance of capital stock. As of March 31, 2010, we had cash and cash
equivalents of $39.6 million, as compared to $30.7 million as of September 30,
2009 and 25.4 million as of the six months ended March 31, 2009. In addition, we had pledged deposits amounting to $18.0 million and $31.1
million as of March 31, 2010 and September 30, 2009, respectively. Typically,
our banks require their borrowers to maintain deposits of approximately 10% to
100% of the outstanding loan balances and bills payable. The individual bank
loans have maturities ranging from six to twelve months which coincides with the
periods the cash remains pledged to the banks. </P>
<P align=justify>We had access to $240.6 million in short-term credit facilities
and $55.7 million in long-term credit facilities as of March 31, 2010. As of
March 31, 2010, the principal outstanding amounts included short-term bank loans
of $157.3 million, long-term bank loans of $11.7 million maturing within one
year, and long-term bank loans of $29.3 million maturing in over one year, and
bills payable of $42.5 million, leaving $70.2 million of short-term funds
available for additional cash needs. In addition, on July 10, 2008, our $60.0
million shelf registration statement was declared effective by the SEC, pursuant
to which we have raised $36.6 million in gross revenue from common stock
purchases and issued common stock warrants exercisable for up to $21.6 million
in additional gross proceeds. As $16.0 million of these warrants were not
exercised before their expiration, we may raise up to an additional $17.8
million in gross proceeds from future equity financings under this shelf
registration statement. </P>
<P align=justify>The following table sets forth a summary of our cash flows for
the periods indicated: </P>
<P align=center><B>Cash Flow</B> <BR>(All amounts in thousands of U.S. dollars)
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>Six Months Ended</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><B>March 31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2010</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2009</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net cash provided by / (used in) operating
      activities </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;(18,891</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;27,451 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Net cash provided by / (used in) investing activities </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(7,710</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(33,012</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net cash provided by / (used in) financing
      activities </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>36,268 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(4,571</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Effect of exchange rate on cash and cash equivalents </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(701</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(200</TD>
    <TD align=left width="2%" >) </TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Net increase / (decrease) in cash and cash
      equivalents </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>8,966 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(10,332</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD></TR>
  <TR vAlign=top>
    <TD align=left>Cash and cash equivalents at beginning of the period </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">30,678 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">35,706 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Cash and cash equivalents at end of period
    </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>39,644 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>25,374 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify><B><I>Operating Activities</I></B></P>
<P align=justify>Net cash used in operating activities was $18.9 million<B>
</B>in the six months ended March 31, 2010, compared to $27.5 million of net
cash provided by operating activities in the same period in fiscal year 2009.
The  $46.3 million change in cash provided by / used in&nbsp; operating activities was mainly attributable to an increase in
prepayments to our lithium cobalt dioxide suppliers. We purchased more lithium
cobalt dioxide, the main raw material in our products, in anticipation of the
higher future cost of lithium cobalt dioxide. We also increased our inventory of
aluminum-case cells and cylindrical cells as of March 31, 2010 in the
expectation of increased sales in the coming months.</P>
<P align=center>44</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_58></A>
<P align=justify><B><I>Investing Activities</I></B></P>
<P align=justify>Net cash used in investing activities was $7.7 million<B>
</B>in the six months ended March 31, 2010, compared to $33.0 million of net
cash used in investing activities in the same period in fiscal year 2009. The
change in net cash used in investing activities during the period ended March 31, 2010 was
mainly used for procurement of machinery and equipment for cylindrical cell line
and prismatic cell production line.</P>
<P align=justify><B><I>Financing Activities</I></B></P>
<P align=justify>Net cash provided by financing activities was $36.3 million<B>
</B>in the six months ended March 31, 2010, compared to $4.6 million net cash
used in financing activities in the same period in 2009. This was mainly
attributable to: (i) a $19.7 million increase in net proceeds from our issuance
of capital stock in the six months ended March 31, 2010; (ii) a $20.6 million
decrease in cash deposits at banks as collateral in the six months ended March
31, 2010; and (iii) increased borrowings, net of repayments, of $3.6 million in
the six months ended March 31, 2010. </P>
<P align=justify>As of March 31, 2010, the principal amounts outstanding under
our credit facilities and lines of credit were as follows:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 height="528">

  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15"><B>Amount</B> </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15"><B>Borrowed</B> </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15">&nbsp; </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15"><B>(includes</B> </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15"><B>Maximum</B> </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15"><B>bank loans</B> </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15"><B>Amount</B> </TD>
    <TD align=center width="2%" height="15" ></TD>
    <TD align=center width="1%" height="15" ></TD>
    <TD align=center width="12%" height="15"><B>and bills</B> </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="16">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%" height="16"><B>Available</B> </TD>
    <TD align=center width="2%" height="16" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%" height="16"><B>payable)</B> </TD>
    <TD align=left width="2%" height="16" ></TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">&nbsp; </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=center width="27%" colSpan=4 height="15"><B>(in thousands)</B> </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15"><B>Short-term credit facilities:</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Agricultural Bank of China </TD>
    <TD align=left width="1%" height="15" >$</TD>
    <TD align=right width="12%" height="15">&nbsp;58,600 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" >$</TD>
    <TD align=right width="12%" height="15">&nbsp;58,600 </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Shenzhen Development Bank </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">29,300 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">21,975 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">China CITIC Bank </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">21,975 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">15,744 </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Bank of China </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">65,926 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">58,184 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">China Everbright Bank </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">14,650 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">4,393 </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Bank of Communications </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">29,300 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">7,325 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Tianjin Branch, Bank of Dalian </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">5,860 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">3,297 </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Industrial Bank </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">9,157 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">7,325 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="16">Tianjin Branch, China Bohai Bank </TD>
    <TD align=left width="1%" style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" height="16" ></TD>
    <TD align=right width="12%" style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" height="16">5,860 </TD>
    <TD align=left width="2%" height="16" ></TD>
    <TD align=left width="1%" style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" height="16" ></TD>
    <TD align=right width="12%" style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" height="16">5,860 </TD>
    <TD align=left width="2%" height="16" ></TD></TR>
  <TR>
    <TD bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="16">Subtotal&#151;Short-term credit facilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" height="16"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" height="16">&nbsp;240,628 </TD>
    <TD align=left width="2%" height="16" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" height="16"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" height="16">&nbsp;182,703 </TD>
    <TD align=left width="2%" height="16" ></TD></TR>
  <TR>
    <TD bgColor=#e6efff height="15">&nbsp; </TD>
    <TD style="BORDER-BOTTOM: medium none #000000; " width="1%"
    bgColor=#e6efff height="15">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: medium none #000000; " width="12%"
      bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff style="border-bottom-style: none; border-bottom-width: medium" height="15">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: medium none #000000; " width="1%"
    bgColor=#e6efff height="15">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: medium none #000000; " width="12%"
      bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff style="border-bottom-style: none; border-bottom-width: medium" height="15">&nbsp;</TD></TR>
  <TR>
    <TD height="15">&nbsp; </TD>
    <TD width="1%" style="border-top-style: none; border-top-width: medium" height="15" ></TD>
    <TD width="12%" style="border-top-style: none; border-top-width: medium" height="15">&nbsp; </TD>
    <TD width="2%" style="border-top-style: none; border-top-width: medium" height="15" ></TD>
    <TD width="1%" style="border-top-style: none; border-top-width: medium" height="15" ></TD>
    <TD width="12%" style="border-top-style: none; border-top-width: medium" height="15">&nbsp; </TD>
    <TD width="2%" style="border-top-style: none; border-top-width: medium" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15"><B>Long-term credit facilities:</B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Agricultural Bank of China </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">14,650 </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">14,650 </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">China Development Bank </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">21,975 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">7,325 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="16">Agricultural Bank of China, Tianjin Jinxin Branch </TD>
    <TD align=left width="1%" style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" height="16" ></TD>
    <TD align=right width="12%" style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" height="16">19,045 </TD>
    <TD align=left width="2%" height="16" ></TD>
    <TD align=left width="1%" style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" height="16" ></TD>
    <TD align=right width="12%" style="border-bottom-style: solid; border-bottom-width: 1" bordercolor="#000000" height="16">19,045 </TD>
    <TD align=left width="2%" height="16" ></TD></TR>
  <TR>
    <TD bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="16">Subtotal&#151;Long-term credit facilities </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" height="16"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" height="16">&nbsp;55,670 </TD>
    <TD align=left width="2%" height="16" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" height="16"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" height="16">&nbsp;41,020 </TD>
    <TD align=left width="2%" height="16" ></TD></TR>
  <TR>
    <TD bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15"><B>Lines of Credit:</B> </TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="12%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="12%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Agricultural Bank of China </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">4,288 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="15">Shanghai Pudong Development Bank, Tianjin Pucheng Branch
</TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=left width="12%" height="15">&nbsp; </TD>
    <TD align=left width="2%" height="15" ></TD>
    <TD align=left width="1%" height="15" ></TD>
    <TD align=right width="12%" height="15">2,628 </TD>
    <TD align=left width="2%" height="15" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff height="15">Bank of China </TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff height="15">9,844 </TD>
    <TD align=left width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="12">Bank of China, Tianjin Branch </TD>
    <TD align=left width="1%" height="12" ></TD>
    <TD align=left width="12%" height="12">&nbsp; </TD>
    <TD align=left width="2%" height="12" ></TD>
    <TD align=left width="1%" style="border-bottom-style: solid; border-bottom-width: 1" height="12" bordercolor="#000000" ></TD>
    <TD align=right width="12%" style="border-bottom-style: solid; border-bottom-width: 1" height="12" bordercolor="#000000">311 </TD>
    <TD align=left width="2%" height="12" ></TD></TR>
  <TR>
    <TD bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff height="15">&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff height="15">&nbsp; </TD>
    <TD width="2%"  bgColor=#e6efff height="15">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left height="16">Subtotal&#151;Lines of credit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" height="16"
    ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%" height="16"></TD>
    <TD align=left width="2%" height="16" ></TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%" height="16"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
      width="12%" height="16">&nbsp;17,071 </TD>
    <TD align=left width="2%" height="16" ></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left bgcolor="#E6EFFF">Total Principal Outstanding </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%" bgcolor="#E6EFFF">&nbsp;296,298 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%" bgcolor="#E6EFFF"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%" bgcolor="#E6EFFF"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%" bgcolor="#E6EFFF">&nbsp;240,794 </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="2%" bgcolor="#E6EFFF"
    >&nbsp;</TD></TR></TABLE>
<p align="center">45</p>
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<P align=justify>The above principal outstanding amounts under credit facilities
and lines of credit included short-term bank loans of $157.3 million, long-term
bank loans of $11.7 million maturing within one year and long-term bank loans of
$29.3<B> </B>million maturing in over one year, and bills payable of $42.5
million. </P>
<P align=justify>For the purpose of presentation, the effect of increases in
bills payable balances is included in operating activities in the statements of
cash flows.</P>
<P align=justify>During the three months ended March 31, 2010, we entered into a
new comprehensive credit facility agreement for a maximum loan amount of $5.9
million with Tianjin Branch, China Bohai Bank, repaid nine loans totaling $74.6
million, and entered into eight new short-term bank loan agreements totaling
$100.9 million. The material financing terms of these loans are described
below.</P>
<P align=justify>As of March 31, 2010, we had six outstanding short-term loans
under the comprehensive credit facility with Agricultural Bank &#150; Shenzhen Branch
totaling approximately $58.6 million, carrying annual interest at 4.86%, 4.617%
and 5.31%, adjusted quarterly. The first loan, of approximately $11.0 million,
currently carries annual interest of 5.31% and is due on January 6, 2011. The
second loan, of approximately $7.3 million, currently carries annual interest at
5.31% and is due on January 21, 2011. The third loan, of approximately $7.3
million, currently carries annual interest at 5.31% and is due on January 22,
2011. The fourth loan, of approximately $13.2 million, currently carries annual
interest at 4.86% and is due on May 17, 2010. The fifth loan, of approximately
$8.8 million, currently carries annual interest at 4.86% and is due on May 19,
2010. The sixth loan, of approximately $11.0 million, currently carries annual
interest at 4.86% and is due on May 21, 2010. Each of the loan agreements
specifically provides for acceleration of repayment of the loan under certain
conditions, as well as other penalties and remedies. We also had three
short-term loans and $1.8 million of notes payable separate from our credit
agreement with Agricultural Bank &#150; Shenzhen Bank totaling $4.0 million, carrying
annual interest at 0.29643% and 0.34786%. The first loan, of approximately
$0.32 million, carries annual interest of 0.29643% and is repayable on May 26,
2010. The second loan, of approximately $0.68 million, carries annual interest
of 0.41286% and is repayable on June 21, 2010. The third loan, of approximately
$3.0 million, carries annual interest of 0.34786% and is repayable on June 25,
2010.</P>
<P align=justify>As of March 31, 2010, we also had two five-year term loans
totaling approximately $14.7 million under the Agricultural Bank &#150; Shenzhen
Branch comprehensive credit facility carrying interest at 90% of the benchmark
rate of the PBOC for three-year to five-year long-term loans. The first loan, of
approximately $5.9 million, currently carries annual interest of 5.184% and is
due on January 25, 2012. The second loan, of approximately $8.8 million,
currently carries annual interest of 5.184% and is due in two installments of
approximately $7.3 million on January 25, 2011, and approximately $1.5 million
on January 25, 2012, respectively. These five-year term loans are specifically:
(i) guaranteed by Mr. Xiangqian Li; (ii) secured by Shenzhen BAK&#146;s machinery and
equipment with carrying values of approximately $32.8 million as of March 31,
2010; and (iii) secured by the property ownership and land use rights
certificates with an aggregate net book value of $105.9 million as of March 31,
2010 in relation to the land on which Shenzhen BAK&#146;s corporate campus had been
constructed and any machinery and equipment purchased and used at the campus
subsequent to such construction.</P>
<P align=justify>As of March 31, 2010, we had also borrowed $0.3 million of
notes payable outside any credit facility in Bank of China, Tianjin Branch.</P>
<P align=justify>On March 8, 2010, we renewed our credit facility agreement with
Bank of China to provide a maximum loan amount of RMB 450 million (approximately
$65.9 million). This credit facility was guaranteed by BAK International and Mr.
Xiangqian Li, and is also secured by machinery and equipment with carrying
values of approximately $28.2 million as of March 31, 2010. As of March 31,
2010, we had borrowed $29.3 million under two loans carrying annual interest at
5.31% and 4.779%, and $28.9 million of notes payable under this credit facility
agreement. The first loan, of approximately $22.0 million, carries annual
interest of 5.31% and is repayable on March 11, 2011. The second loan, of
approximately $7.3 million, carries annual interest of 4.779% and is repayable
on June 2, 2010. We had also borrowed $3.8 million of short-term bank loans and
$6.0 million of notes payable separate from the credit facility. </P>
<P align=justify>On January 19, 2010, we entered into a comprehensive credit
facility agreement with Tianjin Branch, China Bohai Bank to provide a maximum
loan amount of RMB 40 million (approximately $5.9 million). This credit facility
agreement is guaranteed by Shenzhen BAK Battery Co., Ltd. Under the terms of the
agreement, loans may be drawn at any time from January 19, 2010 to January 19,
2011. As of March 31, 2010, we had borrowed approximately $5.9<B> </B>million<B>
</B>under the loan agreement which bears a floating interest rate equal to the
benchmark rate of the People&#146;s Bank of China, or PBOC, on the date of the loan
agreement and adjusted annually, and which is repayable on January 18, 2011. </P>
<P align=center>46</P>
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<P align=justify>On December 31, 2009, we renewed our comprehensive credit
facility agreement with Shenzhen Development Bank, Longgang Branch, or Shenzhen
Development Bank, to provide a maximum loan amount of RMB 200 million
(approximately $29.3 million). Loans may be drawn at any time over the one-year
period beginning December 31, 2009 and will be due based on each loan agreement.
This credit facility agreement is guaranteed by BAK International, BAK Tianjin
and Mr. Xiangqian Li, and is also secured by $22.0 million of inventory and $5.0
million of machinery and equipment. As of March 31, 2010, we had three
outstanding short-term loans under the comprehensive credit facility with
Shenzhen Development Bank totaling approximately $22.0 million. The first loan
was approximately $2.9 million, is dated December 31, 2009, bears a floating
interest rate equal to 95% of the benchmark rate of the People&#146;s Bank of China,
or PBOC, on the date of the loan agreement and adjusted quarterly, and is
repayable on December 31, 2010. The second loan was approximately $8.8 million,
is dated January 4, 2010, bears a floating interest rate equal to 95% of the
benchmark rate of the People&#146;s Bank of China, or PBOC, on the date of the loan
agreement and adjusted quarterly, and is repayable on January 4, 2011. The third
loan was approximately $10.3 million, is dated February 3, 2010, bears a
floating interest rate equal to 90% of the benchmark rate of the People&#146;s Bank
of China, or PBOC, on the date of the loan agreement and adjusted quarterly, and
is repayable on February 3, 2011.</P>
<P align=justify>On December 30, 2009, we entered into a six-year long-term loan
agreement of RMB 150 million (approximately $22.0 million) with Shenzhen Branch,
China Development Bank, or China Development Bank. The long-term loan is secured
by Shenzhen BAK&#146;s pledge of its land use rights certificates, property ownership
and equipment built-up by use of this long-term loan pursuant to the loan
agreement. According to the property ownership and land use rights certificate
that we obtained in relation to this facility, such land may not be pledged
without the approval of the relevant government office. As of March 31, 2010, we
had not obtained the requisite approval, and were in the process of negotiating
with the relevant government bureau for such approval. For further discussion
regarding the status of property ownership rights relating to this facility,
please see &#147;Management&#146;s Discussion and Analysis of Financial Condition and
Results of Operations &#150; Capital Expenditures.&#148; The obligations of Shenzhen BAK
under this loan agreement are guaranteed by Mr. Xiangqian Li. We had borrowed
approximately $7.3<B> </B>million under a loan agreement dated March 1, 2010,
bearing annual interest of 5.90%, adjusted monthly, and which is repayable
within 72 months.</P>
<P align=justify>On December 25, 2009, we entered into a comprehensive credit
facility agreement with Shenzhen Hi-Tech District Branch, Industrial Bank, or
Industrial Bank, for a maximum loan amount of RMB 62.5 million (approximately
$9.2 million). This credit facility agreement is guaranteed by BAK
International, BAK Tianjin and Mr. Xiangqian Li. Loans may be drawn at any time
from March 31, 2010 to December 31, 2010. As of March 31, 2010, we had borrowed
approximately $7.3<B> </B>million under a loan agreement dated January 6, 2010
bearing fixed interest of 4.779%, and which is repayable on December 31, 2010
under this credit facility agreement. </P>
<P align=justify>On November 27, 2009, we entered into a comprehensive credit
facility agreement with Tianjin Branch, Bank of Dalian, or Bank of Dalian, for a
maximum loan amount of RMB 40 million (approximately $5.9 million). If we
increase paid-up capital by $20 million, then an additional RMB 10 million of
credit facilities would be available. If we pay up 50% of our total registered
capital, then another additional RMB 10 million of credit facilities would be
available. If we pay up all our registered capital, the total amount of
available credit under this facility would be RMB 80 million (approximately
$11.8 million). This credit facility agreement is guaranteed by Shenzhen BAK and
Mr. Xiangqian Li. Loans may be drawn at any time from November 27, 2009 to
November 26, 2010. As of March 31, 2010, we had borrowed approximately $2.9<B>
</B>million under a loan agreement dated November 27, 2009 bearing annual
interest of 5.31%, adjusted monthly, and which is repayable on November 26,
2010. In addition, $0.4 million of notes payable was issued under this credit
facility agreement.</P>
<P align=justify>On November 26, 2009, we renewed our comprehensive credit
facility agreement with Agricultural Bank of China, Shenzhen Eastern Branch, or
Agricultural Bank &#150; Shenzhen Branch, to provide a maximum loan amount of RMB 550
million (approximately $80.6 million), including RMB 400 million (approximately
$58.6 million) of one-year term credit facilities and RMB 150 million
(approximately $22.0 million) of five-year term credit facilities. This
comprehensive credit facility agreement renewed a predecessor credit facility
agreement between Shenzhen BAK and Agricultural Bank &#150; Shenzhen Branch dated
November 27, 2008 and governs all loans that were subject to the predecessor
agreement at the time of the renewal. New loans may be drawn under this credit
facility from November 26, 2009 through November 22, 2010, with the term of the
loan established at the time each new loan is drawn, except as to funds borrowed
under a loan agreement between Shenzhen BAK and Agricultural Bank &#150; Shenzhen
Branch dated November 23, 2006 and effective December 18, 2006, or under the
2006 Loan Agreement, which may be drawn at any time within five years of
December
18, 2006, and which will mature five years after such funds are drawn. Pursuant to the comprehensive credit facility, Shenzhen BAK must obtain prior approval from Agricultural Bank &#150; Shenzhen Branch to renew long-term loans that are subject to
this credit facility. In addition, Shenzhen BAK undertook to ensure that the percentage of certain business conducted with Agricultural Bank &#150; Shenzhen Branch relative to such business it conducts with all financial institutions combined be at
least equal to the percentage of its indebtedness to Agricultural Bank &#150; Shenzhen Branch relative to its indebtedness to all financial institutions combined (referred to as the &#147;Percentages Undertaking&#148;). The &#147;business&#148;
referred to in the preceding sentence refers to the volume of transactional payments that are drawn from Shenzhen BAK&#146;s accounts with Agricultural Bank &#150; Shenzhen Branch or applicable financial institutions and the amount of foreign
currencies deposited with Agricultural Bank &#150; Shenzhen Branch or applicable financial institutions. Shenzhen BAK also undertook not to issue any dividends without the written consent of Agricultural Bank &#150; Shenzhen Branch prior to the
expiration of all loans under this credit facility (this undertaking and the Percentages Undertaking are collectively referred to as the &#147;Undertakings&#148;). The obligations of Shenzhen BAK under this comprehensive credit facility are
guaranteed by Mr. Xiangqian Li, BAK Tianjin, and BAK International. Shenzhen BAK&#146;s obligations under this credit facility agreement are also guaranteed by Shenzhen BAK&#146;s pledge of the property ownership and land use rights certificates
relating to its manufacturing and other facilities in Shenzhen, PRC, known as BAK Industrial Park. In the event that Shenzhen BAK breaches any of the Undertakings or any guaranteed party breaches any of its guaranty obligations, Agricultural Bank
&#150; Shenzhen Branch may, in addition to exercising any other applicable remedies under the applicable agreements, accelerate repayment of all loan amounts governed by this credit facility. </P>
<P align=center>47</P>
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<A name="page_61"></A>

<P align="justify">
On September 28, 2009, we entered into a guaranty contract with Shanghai Pudong Development Bank to provide guaranty for the loans drawn from September 28, 2009 to August 31, 2010, and the maximum amount for all loans will be less than RMB 30
million (approximately &#36;4.4 million). As of March 31, 2010, we had borrowed approximately &#36;1.5 million under a loan agreement dated October 9, 2009 bearing fixed interest of 5.31%, which is repayable on October 8, 2010, and &#36;1.1 million
of notes payable outside any credit facility.</P>
<P align="justify">
On April 26, 2009, we entered into a comprehensive credit facility agreement with Bank of Communications to provide a maximum loan amount of RMB 200 million (approximately &#36;29.3 million). This credit facility agreement is guaranteed by BAK
Tianjin and Mr. Xiangqian Li. Loans may be drawn at any time from March 25, 2009 to March 25, 2010. As of March 31, 2010, we had borrowed approximately &#36;7.3<B> </B>million<B> </B>under a loan agreement dated June 23, 2009, bearing fixed interest
of 4.779%, and which is repayable on June 23, 2010. </P>
<P align="justify">
On February 13, 2009, we renewed a credit facility with China CITIC Bank. This credit facility was guaranteed by BAK International and Mr. Xiangqian Li. We were permitted to borrow up to RMB 150 million (&#36;22.0 million) under this credit
facility, which matures on February 12, 2010. As of March 31, 2010, we had borrowed &#36;14.6 million under two loans at floating interest rate of 4.374% and 4.86%, rate adjustment in line with benchmark interest rate adjustment of The People&#146;s
Bank of China, and &#36;1.1 million of notes payable under this credit facility totaling approximately &#36;15.7 million. The first loan, of approximately &#36;7.3 million, carried floating interest of 4.374% and is repayable on May 2, 2010. The
second loan, of approximately &#36;7.3 million, carried floating interest of 4.86% and is repayable on May 4, 2010. </P>
<P align="justify">
On January 21, 2009, we entered into a comprehensive credit facility agreement with Shenzhen Nanshan Branch, China Everbright Bank, or China Everbright Bank, to provide a maximum loan amount of RMB 100 million (approximately &#36;14.6 million).
Loans may be drawn at any time from March 30, 2009 to March 30, 2010. As of March 31, 2010, we had borrowed &#36;4.4 million of notes payable under this facility. </P>
<P align="justify">
On May 26, 2008, we entered into a four-year, long-term loan agreement of RMB 160 million (approximately &#36;23.4 million) with Agricultural Bank of China, Tianjin Branch, or Agricultural Bank &#150; Tianjin Branch. This loan agreement is secured
by the machinery and equipment purchased for the automated high-power lithium battery cells production line at our Tianjin facility. As of March 31, 2010, we had borrowed &#36;19.0 million under this loan agreement, payable in four installments: (i)
RMB 30 million (approximately &#36;4.4 million) on December 26, 2010; (ii) RMB 50 million (approximately &#36;7.3 million) on December 26, 2011; and (iii) RMB 50 million (approximately &#36;7.3 million) on May 26, 2012.</P>
<P align="justify">
We had negative working capital of &#36;37.9 million as of March 31, 2010, as compared to negative working capital of &#36;46.3 million as of September 30, 2009.
Current assets as of March 31, 2010 were $231.1 million compared with $220.0
million as of September 30, 2009, an increase of $11.1 million.&nbsp; Current
liabilities as of March 31, 2010 were $269.1 million compared with $266.3
million as of September 30, 2009, an increase of $2.8 million.&nbsp; We had short-term
bank loans maturing in less than one year of &#36;157.3 million and long-term bank loans maturing within one year of &#36;11.7 million as of March 31, 2010, or a total of &#36;169.0 million of loans maturing within one year, as compared to a total
of &#36;133.2 million<B> </B>of such loans as of March 31, 2009, an increase of &#36;35.8 million. We had long-term bank loans maturing in over one year of &#36;29.3 million as of March 31, 2010, as compared to &#36;39.6 million of such loans as of
September 30, 2009, a decrease of &#36;10.3 million. </P>

<P align="center">
48</P>

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<P align=justify>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.
If our existing cash and amount available under existing credit facilities is
insufficient to meet our requirements, we may seek to sell additional equity
securities, debt securities or borrow from lending institutions. We can make no
assurances that financing will be available in the amounts we need or on terms
acceptable to us, if at all. The sale of additional equity securities, including
convertible debt securities, would dilute the interests of our current
shareholders. The incurrence of debt would divert cash for working capital and
capital expenditures to service debt obligations and could result in operating
and financial covenants that restrict our operations and our ability to pay
dividends to our shareholders. If we are unable to obtain additional equity or
debt financing as required, our business operations and prospects may suffer.
</P>
<P align=justify><B><I>Capital Expenditures </I></B></P>
<P align=justify>We made capital expenditures of $7.7 million and 33.0 million
in the six months ended March 31, 2010 and 2009, respectively. Our capital
expenditures were used primarily to purchase plant and equipment to expand our
production capacity. </P>
<P align=justify>The following table sets forth the breakdown of our capital
expenditures by use for the periods indicated. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>Six Months Ended</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><B>March 31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2010</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2009</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD align=center width="27%" colSpan=4><B>(in thousands)</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Construction costs </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;884 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;5,283 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Lease payments </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">1,077 </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Purchase of equipment </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>6,824 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>26,653 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp; </TD>
    <TD width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Total capital expenditures </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;7,708 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;33,013 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE>
<P align=justify>We estimate that our total capital expenditures in fiscal year
2010 will reach approximately $40.0 million, to purchase manufacturing equipment
for the expansion of our production lines and for the construction of our
Research and Development Test Centre at our Shenzhen facility.</P>
<P align=justify>We have completed the construction and put into use facilities
measuring 218,178 square meters comprised of manufacturing facilities,
warehousing and packaging facilities, dormitory space, dining halls and
administrative offices at the BAK Industrial Park in Shenzhen. Of that space,
approximately 81,411 square meters are manufacturing facilities. We have also
completed the construction and put into use facilities measuring 65,127 square
meters comprised of manufacturing facilities, dormitory space, dining halls and
other facilities in Tianjin. Of that space, approximately 44,129 square meters
are manufacturing facilities. The primary reasons for our continuing investments
in the facilities in Tianjin are to realize the benefits of our prior investment
in these facilities, to position the Company to capitalize on our knowledge of
and experience with established markets for lithium-phosphate technology, such
as electric bicycles, cordless power tools, mining lamps, and electric vehicles,
and to penetrate
emerging consuming markets for this technology, such as light electric vehicles
and electric buses. The first trial shipment of its lithium-phosphate
cells was used in electric bicycles, cordless power tools, uninterruptible power
supplies, mining lamps, and electrical vehicles. We have also entered into
commercial contracts with vehicle manufactures operating in China to supply
batteries for electric buses. We have received positive market feedback to these
samples. We expect interest in light electric vehicles and electric
vehicles to increase demand for our rechargeable lithium-based batteries
substantially. We have been engaged in the research and development of
lithium-phosphate cells specifically for use in light electric vehicles and
electric vehicles. As indicated above, our Tianjin facility is the nexus
for all such research and development.</P>
<P align=justify>According to the relevant PRC laws and regulations, a land use
right certificate, along with government approvals for land planning, project
planning, and construction must be obtained before the construction of any
building is commenced. An ownership certificate will be granted by the
government upon application under the condition that the aforementioned
certificate and government approvals are obtained. We recently obtained the land
use right to the tract of property on which we have constructed and on which we
plan further construction of our manufacturing facilities and other related
facilities in Shenzhen. While we have been constructing and have completed a
substantial part of the construction of our facilities with the approval of the
local government of Kuichong Township of Longgang District of Shenzhen, we
understand it did not have the authority to grant us the land use rights certificate.
However, the Company obtained approval for project planning and construction
from the government of Shenzhen on June 20, 2007. Under an agreement with the
government of Shenzhen for the acquisition of the land use rights to BAK
Industrial Park dated June 29, 2007, effective June 2008, the government agreed
to provide us with the land use rights certificate relating to BAK Industrial
Park on the condition that the Company would pay it an additional $11,819,841.
According to a notice received from the government of Shenzhen on June 6, 2008,
the Company obtained government grants of $7,889,991 to subsidize this
additional payment. As of September 30, 2008, the Company had fully paid the
remaining cost of $3,929,850 and had obtained the land use rights certificate
for BAK Industrial Park. </P>
<P align=center>49</P>
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<P align=justify>We have insurance for our manufacturing facilities for Shenzhen
BAK Battery Co., Ltd located in BAK Industrial Park and our manufacturing
facilities at our Tianjin facility. However, we are not able to insure our new
Research and Development Test Centre to be constructed in Shenzhen, China, until
we receive the required certificate of property ownership. Upon receipt of the
certificate of property ownership, we intend to procure such insurance. The
applications for the related certificates of property ownership rights are in
process with respect to our facilities at BAK Industrial Park and Tianjin (see
discussion of our Research and Development Test Centre below). As we have been
granted the land use rights certificate to the premises presently occupied by
the Company in BAK Industrial Park, there should be no legal barriers for us to
obtain a property ownership certificate for this property. However, it is
possible that the Shenzhen government may determine that even with our land use
rights certificate, the buildings constructed at BAK Industrial Park were still
constructed without the proper authority and must be vacated as illegitimate
constructions, and we might be subject to penalties and fines. However, we
believe that this possibility, while present, is remote. </P>
<P align=justify>As of September 30, 2007, we had fully paid the lease
prepayment amount of $14.1 million for the acquisition of land use rights
regarding our Tianjin facility. As of September 30, 2008, we had obtained the
relevant land use rights certificate to this facility. As of March 31, 2010, we
were in the process of obtaining the relevant property ownership rights
certificate to this facility. Pursuant to our land use rights certificate
relating to our Tianjin facility, the Tianjin government had originally
requested that we complete construction of the Tianjin facility before September
30, 2008. As of September 30, 2008, we had not done so. Notwithstanding this
requirement, we have obtained an extension from the Business Administration
Bureau of Beichen District, Tianjin, to make the remaining contribution of the
registered capital by December 11, 2009, which we have interpreted as an
extension of the completion date of construction to this date. As of March 31,
2010, we are in discussions with the authorities regarding an extension of this
deadline and no action has been taken by the authorities.</P>
<P align=justify>As of September 30, 2007, we had paid the lease prepayment
amount of $717,000 for the acquisition of land use rights for a new Research and
Development Test Centre to be constructed in Shenzhen, China. As of September
30, 2008, we had obtained the relevant property ownership and land use rights
certificate. Pursuant to the property ownership and land use rights certificate,
we are required to complete at least 25% of the construction of the new Research
and Development Test Centre facility by September 30, 2008. As of September 30,
2008, we had not done so. Notwithstanding this requirement, the Shenzhen
government has agreed to increase the dimensions of the Research and Development
Test Centre and signed two supplemental agreements with us. According to the
supplemental agreements, we are required to complete the construction by May 6,
2011. In addition, according to the property ownership and land use rights
certificate, such land may not be pledged without the approval of the relevant
government office. We are required to pledge our property ownership and land use
rights certificate in relation to the new Research and Development Test Centre
to China Development Bank pursuant to the loan agreement entered into with it.
As of March 31, 2010, we were in the process of negotiating with the relevant
government bureau for the requisite approval. In addition, the so-named
&#147;property ownership and land use rights certificate&#148; relating to this facility
that we were issued lacks certain terms relating to property ownership rights,
which appears to indicate that the granting government has so far only granted
us the relevant land use rights. As a result, this certificate may not be
adequate evidence of our property ownership rights to this property. We
anticipate that the government will re-grant this certificate with adequate
property ownership indicia after we have satisfied the above construction
requirement and followed certain procedures. </P>
<P align=justify><B>Contractual Obligations and Commercial Commitments</B></P>
<P align=justify>Please refer to Item 7, &#147;Management&#146;s Discussion and Analysis
of Financial Condition and Results of Operations &#150; Contractual Obligations and
Commercial Commitments&#148; in the 2009 Form 10-K for a discussion of our
contractual obligations and commercial commitments as of September 30, 2009.
Except as otherwise noted in this report, there were no material changes outside the ordinary course of our business in
our contractual obligations and commercial commitments for the quarter ended
March 31, 2010. </P>
<P align=center>50</P>
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<P align=justify><B>Off-Balance Sheet Transactions</B></P>
<P align=justify>In the ordinary course of business practices in China, we enter
into transactions with banks or other lenders where we guarantee the debt of
other parties. These parties may be related to or unrelated to us. Conversely,
our debt with lenders may also be guaranteed by other parties which may be
related or unrelated to us. </P>
<P align=justify>Under U.S. GAAP, these transactions may not be recorded on our
balance sheet or may be recorded in amounts different than the full contract or
notional amount of the transaction. Our primary off-balance sheet arrangements
would result from our loan guaranties in which Shenzhen BAK, BAK International,
BAK Tianjin, and/or Mr. Xiangqian Li, our director, Chairman, President, and
Chief Executive Officer, would provide contractual assurance of the debt, or
guarantee the timely re-payment of principal and interest of the guaranteed
party. Neither Shenzhen BAK, BAK International, BAK Tianjin, nor Mr. Xiangqian
Li received, nor is entitled to receive, any consideration for the
above-referenced guarantees, and we are not independently obligated to indemnify
any of those guarantors for any amounts paid by them pursuant to any
guarantee.</P>
<P align=justify>Typically, no fees are received for this service. Thus, in
those transactions, Shenzhen BAK would have a contingent obligation related to
the guarantee of payment in the event the underlying loan is in default. </P>
<P align=justify>Transactions described above require accounting treatment under
ASC Topic 460 &#147;Guarantees&#148;. Under that standard, we would be required to
recognize the fair value of guarantees issued or modified after December 31,
2002, for non-contingent guarantee obligations, and also a liability for
contingent guarantee obligations based on the probability that the guaranteed
party will not perform under the contractual terms of the guaranty agreement.
</P>
<P align=justify>We have assessed the contingent liabilities arising from the
above-described guarantees and have considered them immaterial to the
consolidated financial statements. Therefore, no liabilities in respect of the
guarantees were recognized as of March 31, 2010. As of March 31, 2010, we
provided a guarantee for a non-related party, Nanjing Special Metal Equipment
Co., Ltd., of one-year short-term bank loans with Evergrowing Bank with a
maturity of August 6, 2010. We also provided the guarantees for five other
non-related parties, Hunan Reshine New Material Ltd, Shenzhen Tongli Hi-tech Co.
Ltd., Shenzhen B&amp;G Technology Development Co. Ltd., Beijing Triolion
Technology Co. Ltd. and Siping Juyuan Hanyang Plate Heat Exchanger Co. Ltd. The
maximum amount of our exposure for these guarantees was $29.2 million and $28.6
million at March 31, 2010 and September 30, 2009, respectively.</P>
<P align=justify><B>Critical Accounting Policies</B></P>
<P align=justify>Our consolidated financial information has been prepared in
accordance with U.S. GAAP, which requires us to make judgments, estimates and
assumptions that affect (1) the reported amounts of our assets and liabilities,
(2) the disclosure of our contingent assets and liabilities at the end of each
fiscal period and (3) the reported amounts of revenues and expenses during each
fiscal period. We continually evaluate these estimates based on our own
historical experience, knowledge and assessment of current business and other
conditions, our expectations regarding the future based on available information
and reasonable assumptions, which together form our basis for making judgments
about matters that are not readily apparent from other sources. Since the use of
estimates is an integral component of the financial reporting process, our
actual results could differ from those estimates. Some of our accounting
policies require a higher degree of judgment than others in their application.
</P>
<P align=justify>When reviewing our financial statements, the following should
also be considered: (1) our selection of critical accounting policies, (2) the
judgment and other uncertainties affecting the application of those policies,
and (3) the sensitivity of reported results to changes in conditions and
assumptions. We believe the following accounting policies involve the most
significant judgment and estimates used in the preparation of our financial
statements. </P>
<P align=justify><B><I>Recoverability of Long-Lived Assets</I></B></P>
<P align=justify>Our business is capital intensive and has required, and will
continue to require, significant investments in property, plant and equipment.
As of March 31, 2010 and September 30, 2009, the carrying amount of property,
plant and equipment, net was $218.1 million and $219.7 million, respectively. We
assess the recoverability of property, plant and equipment to be held and used
by a comparison of the carrying amount of an asset or group of assets to the
future net undiscounted cash flows expected to be generated by the asset or
group of assets. If such assets are considered impaired, the impairment
recognized is measured as the amount by which the carrying amount of the assets
exceeds the fair value of the assets. </P>
<P align=justify>A prolonged general economic downturn and, specifically, a
continued downturn in the battery cell industry as well as other market factors
could intensify competitive pricing pressure, create an imbalance of industry
supply and demand, or otherwise diminish volumes or profits. Such events,
combined with changes in interest rates, could adversely affect our estimates of future net cash flows to be generated by our
long-lived assets. Consequently, it is possible that our future operating
results could be materially and adversely affected by additional impairment
charges related to the recoverability of our long-lived assets.</P>
<P align=center>51</P>
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<P align=justify><B><I>Inventory Obsolescence</I></B></P>
<P align=justify>We review our inventory for potential impairment on a quarterly
or more frequent basis as deemed necessary. Such review includes, but is not
limited to, reviewing the levels of inventory versus customer requirements and
obsolescence. The review and evaluation also considers the potential sale of
impaired inventory at lower than market prices. At each balance sheet date, we
identify inventories that are worth less than cost and write them down to their
net realizable value and the difference is charged to our cost of revenues of
that period. Though management considers such write-down of inventories adequate
and proper, changes in sales volumes due to unexpected economic or competitive
conditions are among the factors that could materially affect the adequacy of
such write down.</P>
<P align=justify><B><I>Allowance for Doubtful Accounts</I></B></P>
<P align=justify>The allowance for doubtful accounts is our best estimate of the
amount of probable credit losses in our accounts receivable. We determine the
allowance based on historical write-off experience, customer specific facts and
economic conditions. Bad debt expense is included in the general and
administrative expenses. We review outstanding account balances individually for
collectability. Account balances are charged off against the allowance after all
means of collection have been exhausted and the potential for recovery is
considered remote. As of March 31, 2010 and September 30, 2009, we had not
charged off any balances as we had yet to exhaust all means of collection.</P>
<P align=justify><B><I>Equity-Based Compensation</I></B></P>
<P align=justify>We adopted the provisions of ASC Topic 718 &#147;Compensation &#150;
Stock Compensation,&#148; which requires the use of the fair value method of
accounting for share-based compensation. Under the fair value based method,
compensation cost related to employee stock options or similar equity
instruments is measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting period. ASC
Topic 718 also requires measurement of cost of a liability-classified award
based on its current fair value. The fair value of the liability-classified
award will be subsequently remeasured at each reporting date through the
settlement date. Change in fair value during the requisite service period will
be recognized as compensation cost over that period. </P>
<P align=justify>We determine fair value using the Black-Scholes model. Under
this model, certain assumptions, including the risk-free interest rate, the
expected life of the options and the estimated fair value of our ordinary shares
and the expected volatility, are required to determine the fair value of the
options. If different assumptions had been used, the fair value of the options
would have been different from the amount we computed and recorded, which would
have resulted in either an increase or decrease in the compensation expense.</P>
<P align=justify>Pursuant to ASC Topic 718, we have recognized compensation
costs of $1.9 million in relation to stock-based awards to our employees and
non-employee directors for the six months ended March 31, 2010, as an increase
in both the operating costs and shareholder&#146;s equity. </P>
<P align=justify><B>Recently Issued Accounting Pronouncements</B></P>
<P align=justify>In June 2009, the FASB issued ASC Topic 860, &#147;Transfers and
Servicing,&#148; which improves the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial performance, and cash flows; and a
transferor&#146;s continuing involvement, if any, in transferred financial assets.
ASC Topic 860 is effective as of the beginning of each reporting entity&#146;s first
annual reporting period that begins after November 15, 2009, for interim periods
within that first annual reporting period and for interim and annual reporting
periods thereafter. The adoption of ASC Topic 860 is not expected to have a
material impact on our financial statements. </P>
<P align=justify>In June 2009, the FASB issued ASC Topic 810, &#147;Consolidation,&#148;
which amends FASB Interpretation No. 46 (revised December 2003) to address the
elimination of the concept of a qualifying special purpose entity. ASC Topic 810
also replaces the quantitative-based risks and rewards calculation for
determining which enterprise has a controlling financial interest in a variable
interest entity with an approach focused on identifying which enterprise has the
power to direct the activities of a variable interest entity and the obligation
to absorb losses of the entity or the right to receive benefits from the entity. Additionally, ASC Topic 810 provides more timely and
useful information about an enterprise&#146;s involvement with a variable interest
entity. ASC Topic 810 shall be effective as of the beginning of each reporting
entity&#146;s first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and
annual reporting periods thereafter. Earlier application is prohibited. The
adoption of ASC Topic 810 is not expected to have a material impact on our
financial statements. </P>
<P align=center>52</P>
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<P align=justify>In October 2009, the FASB issued ASU 2009-13, &#147;Revenue
Recognition (Topic 605) &#150; Multiple-Deliverable Revenue Arrangements,&#148; or ASU
2009-13. ASU 2009-13 requires companies to allocate revenue in multiple-element
arrangements based on an element&#146;s estimated selling price if vendor-specific or
other third party evidence of value is not available. ASU 2009-13 is to be
applied on a prospective basis for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010, with
earlier application permitted. We are currently evaluating the impact of the
adoption of ASU 2009-13 on our financial statements. </P>
<P align=justify>In January 2010, the FASB issued ASU 2010-06, &#147;Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements&#148;, or ASU 2010-06 that expands the required disclosures about fair
value measurements. This guidance provides for new disclosures requiring the
Company to (i) disclose separately the amounts of significant transfers in and
out of Level 1 and Level 2 fair value measurements and describe the reasons for
the transfers and (ii) present separately information about purchases, sales,
issuances and settlements in the reconciliation of Level 3 fair value
measurements. This guidance also provides clarification of existing disclosures
requiring the Company to (i) determine each class of assets and liabilities
based on the nature and risks of the investments rather than by major security
type and (ii) for each class of assets and liabilities, disclose the valuation
techniques and inputs used to measure fair value for both Level 2 and Level 3
fair value measurements. ASU 2010-06 is effective for interim and annual
reporting periods beginning after December 15, 2009, except for the disclosures
about purchases, sales, issuances, and settlements in the roll forward of
activity in Level 3 fair value measurements. Those disclosures are effective for
fiscal years beginning after December 15, 2010, and for interim periods within
those fiscal years. Early application is permitted. The adoption of ASU 2010-06
has no material impact on our financial statements. </P>
<P align=justify>In February 2010, the FASB issued
(ASU) 2010-09, Subsequent Events&#151;Amendments to Certain Recognition and
Disclosure Requirements or ASU 2010-09. The ASU amends the guidance on
subsequent events in the FASB Accounting Standards Codification to (1) eliminate
the requirement for an SEC filer to disclose the date through which it has
evaluated subsequent events, (2) clarify the period through which conduit bond
obligors must evaluate subsequent events, and (3) refine the scope of the
disclosure requirements for reissued financial statements. All of the amendments
in ASU 2010-09 were effective upon issuance on February 24, 2010, except for the
use of the issued date for conduit debt obligors. That amendment is effective
for interim or annual periods ending after June 15, 2010. The adoption of ASU
2009-09 has no material impact on our financial statements. </P>
<P align=justify><B>Exchange Rates</B></P>
<P align=justify>The financial records of Shenzhen BAK, BAK Electronics and BAK
Tianjin are maintained in RMB. In order to prepare our financial statements, we
have translated amounts in RMB into amounts in U.S. dollars. The amounts of our
assets and liabilities on our balance sheets are translated using the closing
exchange rate as of the date of the balance sheet. Revenues, expenses, gains and
losses are translated using the average exchange rate prevailing during the
period covered by such financial statements. Adjustments resulting from the
translation, if any, are included in our cumulative other comprehensive income /
(loss) in our stockholders&#146; equity section of our balance sheet. All other
amounts that were originally booked in RMB and translated into U.S. dollars were
translated using the closing exchange rate on the date of recognition.
Consequently, the exchange rates at which the amounts in those comparisons were
computed varied from year to year. </P>
<P align=justify>The exchange rates used to translate amounts in RMB into U.S.
dollars in connection with the preparation of our financial statements were as
follows:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="27%"
    colSpan=4><B>RMB per U.S. Dollar</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2010</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2009</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Balance sheet items as of March 31 </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>6.8259 </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>6.8336 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>Amounts included in the statement of operations and
      comprehensive income, statement of changes in stockholders&#146; equity and
      statement of cash flows for the six months ended March 31 </TD>
    <TD vAlign=bottom align=left width="1%" ></TD>
    <TD vAlign=bottom align=right width="12%">6.8275 </TD>
    <TD vAlign=bottom align=right width="2%" ></TD>
    <TD vAlign=bottom align=right width="1%" ></TD>
    <TD vAlign=bottom align=right width="12%">6.8376 </TD>
    <TD align=left width="2%" ></TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff>Balance sheet items as of September 30 </TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>- </TD>
    <TD vAlign=bottom align=left width="2%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=left width="1%"
    bgColor=#e6efff>&nbsp;</TD>
    <TD vAlign=bottom align=right width="12%" bgColor=#e6efff>6.8263 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD></TR></TABLE><BR>
<p align="center">53</p>
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<P align=justify><B>ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK. </B></P>
<P align=justify><B>Interest Rate Risk</B></P>
<P align=justify>We are exposed to interest rate risk primarily with respect to
our short-term bank loans and long-term bank loans. Although the interest rates,
which are based on the banks&#146; prime rates with respect to our short-term loans
are fixed for the terms of the loans, the terms are typically three to twelve
months for short-term bank loans and interest rates are subject to change upon
renewal. There were no material changes in interest rates for short-term bank
loans renewed during the three months ended March 31, 2010. </P>
<P align=justify>Please refer to Item 2, &#147;Management&#146;s Discussion and Analysis
of Financial Condition and Results of Operations &#151; Liquidity and Capital
Resources &#151; Financing Activities&#148; for a discussion of our credit facilities and
loan agreements.</P>
<P align=justify>A hypothetical 1.0% increase in the annual interest rates for
all of our credit facilities under which we had outstanding borrowings at March
31, 2010, would increase net loss before provision for income taxes by
approximately $2.0 million, or 32.7%, for the six months ended March 31, 2010.
Management monitors the banks&#146; prime rates in conjunction with our cash
requirements to determine the appropriate level of debt balances relative to
other sources of funds. We have not entered into any hedging transactions in an
effort to reduce our exposure to interest rate risk.</P>
<P align=justify><B>Foreign Exchange Risk</B></P>
<P align=justify>Although our reporting currency is the U.S. dollar, the
financial records of our operating subsidiaries are maintained in their local
currency, the RMB, which is our functional currency. Approximately 68.6% of our
revenues and 99.0% of our costs and expenses for the six months ended March
31, 2010 are denominated in RMB, with the balance denominated in U.S. dollars.
Approximately 99.1% of our assets except for cash were denominated in RMB as of
March 31, 2010. As a result, we are exposed to foreign exchange risk as our
revenues and results of operations may be affected by fluctuations in the
exchange rate between U.S. dollars and RMB. If the RMB depreciates against the
U.S. dollar, the value of our RMB revenues, earnings and assets as expressed in
our U.S. dollar financial statements will decline. Assets and liabilities of our
operating subsidiaries are translated into U.S. dollars at the exchange rate at
the balance sheet date, their equity accounts are translated at historical
exchange rates, and their income and expenses items are translated using the
average rate for the period. Any resulting exchange differences are recorded in
accumulated other comprehensive income or loss. An average appreciation
(depreciation) of the RMB against the U.S. dollar of 5% would increase
(decrease) our comprehensive income by $10.3 million based on our outstanding
revenues, costs and expenses, assets, and liabilities denominated in RMB as of
March 31, 2010. As of March 31, 2010, our accumulated other comprehensive income
was $24.5 million. We have not entered into any hedging transactions in an
effort to reduce our exposure to foreign exchange risk. </P>
<P align=justify><B>Inflation Risk</B></P>
<P align=justify>Inflationary factors such as increases in the cost of our
products and overhead costs may adversely affect our operating results. Although
we do not believe that inflation has had a material impact on our financial
position or results of operations to date, a high rate of inflation in the
future may have an adverse effect on our ability to maintain current levels of
gross margin and selling and general and administrative expenses as a percentage
of net revenues if the selling prices of our products do not increase with these
increased costs. </P>
<P align=justify><B>ITEM 4. CONTROLS AND PROCEDURES.</B></P>
<P align=justify><B>Disclosure Controls and Procedures</B></P>
<P align=justify>As required by Rule 13a-15 under the Exchange Act, our
management has carried out an evaluation, with the participation and under the
supervision of our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures as of March 31, 2010. Disclosure controls and procedures refer to
controls and other procedures designed to ensure that information required to be
disclosed in the reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the SEC and that such information is accumulated and
communicated to our management, including our chief executive officer and chief
financial officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating our disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management is required to apply its judgment in
evaluating and implementing possible controls and procedures.</P>
<P align=center>54</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_68></A>
<P align=justify>Management conducted its evaluation of disclosure controls and
procedures under the supervision of our chief executive officer and our chief
financial officer. Based upon, and as of the date of this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls and procedures were not effective, because of the material weaknesses
described in Item 9A, &#147;Controls and Procedures&#148; of the 2009 Form 10-K, which we
are still in the process of remediating. Investors are directed to Item 9A of
the 2009 Form 10-K for the description of these weaknesses. </P>
<P align=justify><B>Remediation Measures for Material Weaknesses</B></P>
<P align=justify>We are continuing to remediate the material weaknesses
described in our 2009 Form 10-K and implemented the new measures described below
in our ongoing efforts to address these internal control deficiencies.</P>
<P align=justify>We further developed policies and procedures governing the
hiring and training of personnel to better assure sufficient personnel with the
requisite knowledge, experience and training in the application of generally
accepted accounting principles commensurate with our financial reporting and
U.S. GAAP requirements. We utilized qualified accounting advisors and
supervisors to ensure that our staff has adequate professional knowledge and
monitored the need for additional or better-qualified staff. In addition, we
utilized appropriate training programs on accounting principles and procedures
to better ensure the adequacy of our accounting and finance personnel.</P>
<P align=justify>We continued to develop our corporate culture toward
emphasizing the importance of internal controls and to ensure that all personnel
involved in maintaining proper internal controls recognize the importance of
strictly adhering to accounting principles generally accepted in the United
States of America.</P>
<P align=justify>We continued to provide additional training to the Company&#146;s
internal auditor on appropriate controls and procedures necessary to document
and evaluate our internal control procedures. In addition, one of our employees
has assumed the full-time position of Director of Internal Audit, and has been,
and will continue to be, responsible for compliance with internal controls.</P>
<P align=justify>We further enhanced the self-assessment of our internal control
over financial reporting by increasing our periodic independent testing, which
would evaluate the adequacy of the design and effectiveness of our internal
control procedures.</P>
<P align=justify>We also implemented procedures to maintain effective control
over the accounting for construction in progress assets and the determination of
depreciation expense when the assets are ready for their intended use, including
the following:</P>
<UL style="TEXT-ALIGN: justify">
  <LI>We provided additional training to finance managers to review any
  applicable accounting entry and time of transfer;
  <LI>We further trained our finance department to transfer construction in
  progress to cost of property, plant and equipment when it is ready for its
  intended use, at which time depreciation charges shall commence thereon. The
  criteria used to determine when an asset is ready for intended use are based
  on policies that are consistent with U.S. GAAP. </LI></UL>
<P align=justify>In addition, we have hired a new Chief Financial Officer, Mr. Jun Zou, who has more than 16 years of international financial management and
capital market experience. We believe Mr. Jun Zou's leadership will strengthen
our
internal control management practices.</P>
<P align=justify>We believe that we are taking the steps necessary for
remediation of the remaining material weaknesses identified above, and we will
continue to monitor the effectiveness of these steps and to make any changes
that our management deems appropriate.</P>
<P align=justify><B>Changes in Internal Control over Financial Reporting</B></P>
<P align=justify>Other than the remediation measures described above, there were
no changes in our internal controls over financial reporting after March 31,
2010 that have materially affected, or are reasonably likely to materially
affect our internal control over financial reporting. </P>
<P align=center>55</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=--><A name=page_69></A>
<P align=center><B>PART II<BR></B><B><U>OTHER INFORMATION</U></B><B> </B></P>
<P align=justify><B>ITEM 1. LEGAL PROCEEDINGS.</B></P>
<P align=justify>There have been no material developments to the legal
proceedings reported in our 2009 Form 10-K. Investors are directed to Item 3,
&#147;Legal Proceedings&#148; of the 2009 Form 10-K for the description of these legal
proceedings.</P>
<P align=justify><B>ITEM 1A. RISK FACTORS.</B></P>
<P align=justify>There have been no material changes to the risk factors
disclosed in our 2009 Form 10-K. Investors are directed to Item 1, &#147;Risk
Factors&#148; of the 2009 Form 10-K. </P>
<P align=justify><B>ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS. </B></P>
<P align=justify>None. <B></B></P>
<P align=justify><B>ITEM 3. DEFAULTS UPON SENIOR SECURITIES. </B></P>
<P align=justify>None.<B> </B></P>
<P align=justify><B>ITEM 4. (REMOVED AND RESERVED). </B></P>
<P align=justify><B>ITEM 5. OTHER INFORMATION. </B></P>
<P align=justify>We have no information to disclose that was required to be in a
report on Form 8-K during the period covered by this Report, but was not
reported. There have been no material changes to the procedures by which
security holders may recommend nominees to our board of directors.</P>
<P align=justify><B>ITEM 6. EXHIBITS.</B></P>
<P align=justify>The following exhibits are filed as part of this report or
incorporated by reference: <B></B></P>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" DIR="ltr" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111" height="680">
  <tr>
    <td WIDTH="10%" height="19"><font FACE="Times New Roman" SIZE="2"><b>Exhibit</b></font></td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2"><b>No.</b></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2"><b>Description</b></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit31-1.htm">31.1</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit31-1.htm">Certifications of Principal Executive Officer
    filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit31-2.htm">31.2</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit31-2.htm">Certifications of
    Principal Financial Officer filed pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit32-1.htm">32.1</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit32-1.htm">Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit32-2.htm">32.2</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit32-2.htm">Certifications of
    Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-1.htm">99.1</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-1.htm">Loan
    Agreement by and between Shenzhen BAK Battery Co., Ltd. and China
    Development Bank, dated February 9, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-2.htm">99.2</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-2.htm">Summary of Loan
    Agreement by and between Shenzhen BAK Battery Co., Ltd. and Shenzhen Branch,
    China CITIC Bank Co., Ltd, dated February 2, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-3.htm">99.3</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-3.htm">Summary of Loan Agreement by and between Shenzhen BAK Battery Co., Ltd. and
    Shenzhen Branch, China CITIC Bank Co., Ltd, dated February 3, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-4.htm">99.4</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-4.htm">Summary of Loan
    Agreement by and between Shenzhen BAK Battery Co., Ltd. and Shenzhen
    Longgang Branch, Bank of China, dated March 8, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-5.htm">99.5</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-5.htm">Summary of Loan Agreement by and between Shenzhen BAK Battery Co., Ltd. and
    Shenzhen Longgang Branch, Bank of China, dated March 10, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-6.htm">99.6</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-6.htm">Summary of Guaranty
    Contract of Maximum Amount by and between BAK International Limited and
    Shenzhen Longgang Branch, Bank of China, dated March 8, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-7.htm">99.7</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-7.htm">Summary of Guaranty Contract of Maximum Amount by and between Xiangqian Li
    and Shenzhen Longgang Branch, Bank of China, dated March 8, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-8.htm">99.8</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-8.htm">Summary of Mortgage
    Contract of Maximum Amount by and between Shenzhen BAK Battery, Co., Ltd.
    and Shenzhen Longgang Branch, Bank of China, dated March 8, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-9.htm">99.9</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-9.htm">Summary of Loan Agreement by and between Shenzhen BAK Battery Co., Ltd. and
    Shenzhen Hi-Tech District Branch, Industrial Bank Co. Ltd, dated January 6,
    2010</a>.</font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-10.htm">99.10</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-10.htm">Summary of Loan
    Agreement by and between Shenzhen BAK Battery Co., Ltd. and Shenzhen Eastern
    Branch, Agricultural Bank of China, dated January 21, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-11.htm">99.11</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-11.htm">Summary of Loan Agreement by and between Shenzhen BAK Battery Co., Ltd. and
    Shenzhen Eastern Branch, Agricultural Bank of China, dated January 22, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-12.htm">99.12</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-12.htm">Summary of Loan
    Agreement by and between Shenzhen BAK Battery Co., Ltd. and Shenzhen Eastern
    Branch, Agricultural Bank of China, dated January 6, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-13.htm">99.13</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-13.htm">Summary of Guaranty Contract of Maximum Amount by and between Shenzhen BAK
    Battery Co., Ltd. and Tianjin Branch, China Bohai Bank, dated January 19,
    2010</a>.</font></td>
  </tr>
  <tr>
    <td WIDTH="10%" height="19">&nbsp;</td>
    <td WIDTH="92%" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-14.htm">99.14</a></font></td>
    <td WIDTH="92%" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-14.htm">Summary of
    Comprehensive Credit Facility Agreement of Maximum Amount by and between BAK
    International (Tianjin) Limited Co., Ltd. and Tianjin Branch, China Bohai
    Bank, dated January 19, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="19">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-15.htm">99.15</a></font></td>
    <td WIDTH="92%" bgcolor="#EEEEEE" height="15"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-15.htm">Summary of Loan Agreement by and between BAK International (Tianjin) Limited
    and Bank of China, Tianjin Branch, dated January 19, 2010.</a></font></td>
  </tr>
</table>
<BR>
<p align="center">56</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<table CELLSPACING="0" BORDER="0" WIDTH="100%" DIR="ltr" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="10%"><font FACE="Times New Roman" SIZE="2"><b>Exhibit</b></font></td>
    <td WIDTH="91%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%"><font FACE="Times New Roman" SIZE="2"><b>No.</b></font></td>
    <td WIDTH="91%"><font FACE="Times New Roman" SIZE="2"><b>Description</b></font></td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE">&nbsp;</td>
    <td WIDTH="91%" bgcolor="#EEEEEE">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%" bgcolor="#EEEEEE"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-16.htm">99.16</a></font></td>
    <td WIDTH="91%" bgcolor="#EEEEEE"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-16.htm">Summary of Loan Agreement by and between Shenzhen BAK Battery Co., Ltd. and
    Longgang Branch, Shenzhen Development Bank Co., Ltd, dated January 4, 2010.</a></font></td>
  </tr>
  <tr>
    <td WIDTH="10%">&nbsp;</td>
    <td WIDTH="91%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="10%"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-17.htm">99.17</a></font></td>
    <td WIDTH="91%"><font FACE="Times New Roman" SIZE="2">
    <a href="exhibit99-17.htm">Summary of Loan
    Agreement by and between Shenzhen BAK Battery Co., Ltd. and Longgang Branch,
    Shenzhen Development Bank Co., Ltd, dated February 3, 2010</a>.</font></td>
  </tr>
</table>
<p align="center">57</p>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<!--$$/page=-->
<p style="margin-top: 0; margin-bottom: 0"><A name=page_70></A></p>
<p style="margin-bottom: 0" align="center"><B>SIGNATURES </B></p>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with Section 13 or
15(d) of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >Date: May 10, 2010 </TD>
    <TD align=left width="50%" colSpan=2><B>CHINA BAK BATTERY, INC.</B> </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="45%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >By: </TD>
    <TD align=left width="45%"><U>/s/ Xiangqian
      Li&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      &nbsp;</U></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%">Xiangqian Li, Chief Executive Officer </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%"><I>(Principal Executive Officer)</I> </TD></TR>
  <TR>
    <TD >&nbsp; </TD>
    <TD width="5%" >&nbsp; </TD>
    <TD width="45%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >By: </TD>
    <TD align=left width="45%"><U>/s/ Jun
      Zou&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%">Jun Zou, Chief Financial Officer </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%"><I>(Principal Financial Officer and
      Principal</I> </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; </TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%"><I>Accounting Officer)</I>
</TD></TR></TABLE><BR>
<p align="center">58</p>
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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>exhibit31-1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 31.1 - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

<hr color="#000000" size="3">

<body>

<P align=right><B>Exhibit 31.1 </B></P>
<P align=center><B>CERTIFICATIONS</B> </P>
<P align=justify>I, Xiangqian Li, certify that:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">1. </TD>
    <TD>
      <P align=justify>I have reviewed this quarterly report on Form 10-Q of
      China BAK Battery, Inc.;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">2. </TD>
    <TD>
      <P align=justify>Based on my knowledge, this report does not contain any
      untrue statement of a material fact or omit to state a material fact
      necessary to make the statements made, in light of the circumstances under
      which such statements were made, not misleading with respect to the period
      covered by this report;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">3. </TD>
    <TD>
      <P align=justify>Based on my knowledge, the financial statements, and
      other financial information included in this report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      report;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">4. </TD>
    <TD>
      <P align=justify>The registrant&#146;s other certifying officer and I are
      responsible for establishing and maintaining disclosure controls and
      procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
      internal control over financial reporting (as defined in Exchange Act
      Rules 13a-15(f) and 15d-15(f)) for the registrant and
  have:</P></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>
      &nbsp;</TD></TR>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">a) </TD>
    <TD>
      <P align=justify>Designed such disclosure controls and procedures, or
      caused such disclosure controls and procedures to be designed under our
      supervision, to ensure that material information relating to the
      registrant, including its consolidated subsidiaries, is made known to us
      by others within those entities, particularly during the period in which
      this report is being prepared;</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">b) </TD>
    <TD>
      <P align=justify>Designed such internal control over financial reporting,
      or caused such internal control over financial reporting to be designed
      under our supervision, to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial
      statements for external purposes in accordance with generally accepted
      accounting principles;</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">c) </TD>
    <TD>
      <P align=justify>Evaluated the effectiveness of the registrant&#146;s
      disclosure controls and procedures and presented in this report our
      conclusions about the effectiveness of the disclosure controls and
      procedures, as of the end of the period covered by this report based on
      such evaluation; and</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">d) </TD>
    <TD>
      <P align=justify>Disclosed in this report any change in the registrant&#146;s
      internal control over financial reporting that occurred during the
      registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth fiscal
      quarter in the case of an annual report) that has materially affected, or
      is reasonably likely to materially affect, the registrant&#146;s internal
      control over financial reporting; and</P></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>
      &nbsp;</TD></TR>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">5. </TD>
    <TD>
      <P align=justify>The registrant&#146;s other certifying officer and I have
      disclosed, based on our most recent evaluation of internal control over
      financial reporting, to the registrant&#146;s auditors and the audit committee
      of the registrant&#146;s board of directors (or persons performing the
      equivalent functions):</P></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>
      &nbsp;</TD></TR>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">a) </TD>
    <TD>
      <P align=justify>All significant deficiencies and material weaknesses in
      the design or operation of internal control over financial reporting which
      are reasonably likely to adversely affect the registrant&#146;s ability to
      record, process, summarize and report financial information; and</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">b) </TD>
    <TD>
      <P align=justify>Any fraud, whether or not material, that involves
      management or other employees who have a significant role in the
      registrant&#146;s internal control over financial
reporting.</P></TD></TR></TABLE>
<P align=justify>Date: May 10, 2010 </P>
<P align=justify><U>/s/ Xiangqian
Li&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;</U><BR>Xiangqian Li <BR>Chief Executive Officer <BR><I>(Principal
Executive Officer) </I></P>
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<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>exhibit31-2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 31.2 - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

<hr color="#000000" size="3">
<P align=right><B>Exhibit 31.2 </B></P>
<P align=center><B>CERTIFICATIONS</B> </P>
<P align=justify>I, Jun Zou, certify that:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">1. </TD>
    <TD>
      <P align=justify>I have reviewed this quarterly report on Form 10-Q of
      China BAK Battery, Inc.;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">2. </TD>
    <TD>
      <P align=justify>Based on my knowledge, this report does not contain any
      untrue statement of a material fact or omit to state a material fact
      necessary to make the statements made, in light of the circumstances under
      which such statements were made, not misleading with respect to the period
      covered by this report;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">3. </TD>
    <TD>
      <P align=justify>Based on my knowledge, the financial statements, and
      other financial information included in this report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      report;</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">4. </TD>
    <TD>
      <P align=justify>The registrant&#146;s other certifying officer and I are
      responsible for establishing and maintaining disclosure controls and
      procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
      internal control over financial reporting (as defined in Exchange Act
      Rules 13a-15(f) and 15d-15(f)) for the registrant and
  have:</P></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>
      &nbsp;</TD></TR>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">a) </TD>
    <TD>
      <P align=justify>Designed such disclosure controls and procedures, or
      caused such disclosure controls and procedures to be designed under our
      supervision, to ensure that material information relating to the
      registrant, including its consolidated subsidiaries, is made known to us
      by others within those entities, particularly during the period in which
      this report is being prepared;</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">b) </TD>
    <TD>
      <P align=justify>Designed such internal control over financial reporting,
      or caused such internal control over financial reporting to be designed
      under our supervision, to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial
      statements for external purposes in accordance with generally accepted
      accounting principles;</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">c) </TD>
    <TD>
      <P align=justify>Evaluated the effectiveness of the registrant&#146;s
      disclosure controls and procedures and presented in this report our
      conclusions about the effectiveness of the disclosure controls and
      procedures, as of the end of the period covered by this report based on
      such evaluation; and</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">d) </TD>
    <TD>
      <P align=justify>Disclosed in this report any change in the registrant&#146;s
      internal control over financial reporting that occurred during the
      registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth fiscal
      quarter in the case of an annual report) that has materially affected, or
      is reasonably likely to materially affect, the registrant&#146;s internal
      control over financial reporting; and</P></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>
      &nbsp;</TD></TR>

  <TR>
    <TD width="5%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">5. </TD>
    <TD>
      <P align=justify>The registrant&#146;s other certifying officer and I have
      disclosed, based on our most recent evaluation of internal control over
      financial reporting, to the registrant&#146;s auditors and the audit committee
      of the registrant&#146;s board of directors (or persons performing the
      equivalent functions):</P></TD></TR></TABLE>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>
      &nbsp;</TD></TR>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">a) </TD>
    <TD>
      <P align=justify>All significant deficiencies and material weaknesses in
      the design or operation of internal control over financial reporting which
      are reasonably likely to adversely affect the registrant&#146;s ability to
      record, process, summarize and report financial information; and</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">b) </TD>
    <TD>
      <P align=justify>Any fraud, whether or not material, that involves
      management or other employees who have a significant role in the
      registrant&#146;s internal control over financial
reporting.</P></TD></TR></TABLE>
<P align=justify>Date: May 10, 2010 </P>
<P align=justify><U>/s/ Jun
Zou&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;</U><BR>Jun Zou <BR>Chief Financial Officer <BR><I>(Principal Financial
and Accounting Officer) </I></P>

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<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>exhibit32-1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
  <TITLE>China BAK Battery, Inc.: Exhibit 32.1 - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

<hr color="#000000" size="3">
<P align=right><B>Exhibit 32.1 </B></P>
<P align=center><B>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, <BR>AS
ADOPTED PURSUANT TO SECTION 906 OF THE <BR>SARBANES-OXLEY ACT OF 2002 </B></P>
<P align=justify>The undersigned, Xiangqian Li, the Chief Executive Officer of
CHINA BAK BATTERY, INC. (the &#147;Company&#148;), DOES HEREBY CERTIFY that: </P>
<P align=justify style="text-indent: 5%">1. The Company&#146;s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2010 (the &#147;Report&#148;), fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934; and </P>
<P align=justify style="text-indent: 5%">2. Information contained in the Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company. </P>
<P align=justify>IN WITNESS WHEREOF, each of the undersigned has executed this
statement this 10th day of May, 2010. </P>
<P style="MARGIN-LEFT: 50%" align=justify><U>/s/ Xiangqian
Li&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;<BR></U>Xiangqian Li <BR>Chief Executive Officer <BR><I>(Principal
Executive Officer) </I></P>
<P align=justify>A signed original of this written statement required by Section
906 has been provided to China BAK Battery, Inc. and will be retained by China
BAK Battery, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request. </P>
<P align=justify>The forgoing certification is being furnished to the Securities
and Exchange Commission pursuant to &#167; 18 U.S.C. Section 1350. It is not being
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and is not to be incorporated by reference into any filing of the
Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing. </P>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>exhibit32-2.htm
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<HTML>
<HEAD>
 <TITLE>China BAK Battery, Inc.: Exhibit 32.2 - Filed by newsfilecorp.com</TITLE>

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<BODY style="font-size:10pt;">

<hr color="#000000" size="3">
<P align=right><B>Exhibit 32.2 </B></P>
<P align=center><B>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, <BR>AS
ADOPTED PURSUANT TO SECTION 906 OF THE <BR>SARBANES-OXLEY ACT OF 2002 </B></P>
<P align=justify>The undersigned, Jun Zou, the Chief Financial Officer of CHINA
BAK BATTERY, INC. (the &#147;Company&#148;), DOES HEREBY CERTIFY that: </P>
<P align=justify style="text-indent: 5%">1. The Company&#146;s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2010 (the &#147;Report&#148;), fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934; and </P>
<P align=justify style="text-indent: 5%">2. Information contained in the Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company. </P>
<P align=justify>IN WITNESS WHEREOF, each of the undersigned has executed this
statement this 10th day of May, 2010. </P>
<P style="MARGIN-LEFT: 50%" align=justify><U>/s/ Jun
Zou&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;<BR></U>Jun Zou <BR>Chief Financial Officer <BR><I>(Principal Financial
and Accounting Officer) </I></P>
<P align=justify>A signed original of this written statement required by Section
906 has been provided to China BAK Battery, Inc. and will be retained by China
BAK Battery, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request. </P>
<P align=justify>The forgoing certification is being furnished to the Securities
and Exchange Commission pursuant to &#167; 18 U.S.C. Section 1350. It is not being
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and is not to be incorporated by reference into any filing of the
Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing. </P>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>6
<FILENAME>exhibit99-1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>


<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.1 - Filed by newsfilecorp.com</TITLE>

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<P align="right">
<B>Exhibit 99.1</B><BR>
</P>
<P align="right">
<B>No. 4403236012009020660</B></P>
<P align="center">
&nbsp;</P>
<P align="center">
<B><font size="5">Loan Agreement</font></B></P>
<P align="center">
&nbsp;</P>
<P align="center">
&nbsp;</P>
<P align="center">
&nbsp;</P>
<P align="center">
&nbsp;</P>
<P align="justify">
Type: Fixed assets loan </P>
<P align="justify">
Purpose: Constructing BAK Battery R&amp;D Centre </P>

<P align="justify">
Borrower: Shenzhen BAK Battery Co., Ltd.</P>

<P align="justify">
Lender: China Development Bank </P>

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<P align="justify">
<B>Borrower: Shenzhen BAK Battery Co., Ltd. </B></P>
<P align="justify">
<B>Address: BAK Industry Park, Kuichong Street, Longgang District, Shenzhen City. </B></P>
<P align="justify">
<B>Legal Representative: Xiangqian Li </B></P>
<P align="justify">
<B>Postcode: 518119 </B></P>
<P align="justify">
<B>Handling Person: Jin Zhu </B></P>
<P align="justify">
<B>Telephone: 0755-89770025 </B></P>
<P align="justify">
<B>Fax: 0755-89770527 </B></P>
<P align="justify">
&nbsp;</P>
<P align="justify">
<br>
<B>Lender: China Development Bank </B></P>
<P align="justify">
<B>Address: No 29 Fucheng Menwai Dajie, Xi Cheng District, Beijing </B></P>
<P align="justify">
<B>Legal Representative: Yuan Chen </B></P>
<P align="justify">
<B>Postcode: 100037 </B></P>
<P align="justify">
<B>Handling Branch: Shenzhen Branch </B></P>
<P align="justify">
<B>Address of Handling Branch: 11-15 Floor, Citic Tower, No. 1093 Shennan Road, Shenzhen </B></P>

<P align="justify">
<B>Responsible officer of Branch: Xiaoping Yu </B></P>

<P align="justify">
<B>Handling Person: Song Gao </B></P>

<P align="justify">
<B>Telephone: 0755-25942849 </B></P>

<P align="justify">
<B>Tax: 0755-25987706 </B></P>

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<P align="justify">
For the purpose of constructing BAK Battery R&amp;D Centre, the Borrower succeeded in applying for a loan in RMB from the Lender. In accordance with relevant laws and regulations of PRC, the Borrower and the Lender have reached the following
agreement through friendly negotiation. </P>
<P align="center">
<B>ARTICLE 1-  DEFINITIONS</B><BR>
</P>
<P align="justify">
Unless otherwise stipulated in this Agreement, the definitions are as follows:</P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
1.1 	</TD>
	<TD>
<P align="justify">&#147;Loan Amount&#148; shall mean the amount of loan to be provided by the Lender to the Borrower.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.2 	</TD>
	<TD>
<P align="justify">&#147;Drawing&#148; shall mean the Borrower draws the loan under this Agreement from the Lender subject to the provisions of this Agreement, namely the Lender transfers the loan to the account of the Borrower subject to the
provisions of this Agreement.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.3 	</TD>
	<TD>
<P align="justify">&#147;Drawing Date&#148; shall mean the date when the Lender transfers the loan to the account of the Borrower subject to the provisions of this Agreement.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.4 	</TD>
	<TD>
<P align="justify">&#147;Principal Repayment Date&#148; shall mean the date when the Borrower repay the principal to the Lender subject to the provisions of this Agreement.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.5 	</TD>
	<TD>
<P align="justify">&#147;Extension Term&#148; shall mean the Borrower and the Lender agree to extend the term of loan.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.6 	</TD>
	<TD>
<P align="justify">&#147;Loan Account&#148; shall mean an account which are opened by the Handling Branch of the Lender and used for recording relevant matters in respect of the providing of the loan and the repaying of the loan and interest.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.7 	</TD>
	<TD>
<P align="justify">&#147;Deposit Account&#148; shall mean an account which are opened by the Handling Branch or the Balance handling bank and used by the Borrower to deal with the transactions in respect of the transfer and balancing of the loan.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.8 	</TD>
	<TD>
<P align="justify">&#147;Capital Payment&#148; shall mean the Lender transfers the loan to the Deposit Account subject to the Borrower&#146;s request.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.9 	</TD>
	<TD>
<P align="justify">&#147;Handling Branch&#148; shall mean the Lender&#146;s branch which is mainly responsible for the specific matters in respect of the management of the loan after the execution of this Agreement. The deeds of the Handling Branch
in accordance with this Agreement shall be deemed as the same of the Lender.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.10 	</TD>
	<TD>
<P align="justify">&#147;Balance handling bank&#148; shall mean a bank which is, subject to relevant agreements, responsible for providing balance services and supervising the usage of the loan under this Agreement in accordance with the
Lender&#146;s request.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.11 	</TD>
	<TD>
<P align="justify">&#147;Grace Period&#148; shall mean the period during which the Borrower only needs to pay the interest.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.12 	</TD>
	<TD>
<P align="justify">&#147;Operation Day&#148; shall mean the working days of the Lender excluding statutory holidays and the general holidays.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
1.13 	</TD>
	<TD>
<P align="justify">&#147;Overdue Loan&#148; shall mean the repayment which is made on the due date subject to the provisions of this Agreement. (excluding the repayment which is in advance)</P>
	</TD>
</TR>
<tr>
  <TD>&nbsp;</TD><TD>&nbsp;</TD>
</tr>
<tr>
	<TD width=5% valign=top>
1.14 	</TD>
	<TD>
<P align="justify">&#147;Appropriation Loan&#148; shall mean the usage of the loan not subject to the provisions of this Agreement.</P>
	</TD>
</tr>
</TABLE>
<BR>
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<p align="center">
<B><br>
ARTICLE 2 - AMOUNT OF LOAN</B><BR>
</p>
<P align="justify">
The amount of the loan under this Agreement is RMB 150 million Yuan.</P>
<P align="center">
<B>ARTICLE 3 - USAGE OF THE LOAN</B><BR>
</P>
<P align="justify">
The loan under this Agreement shall be used for the construction of BAK Battery R&amp;D Centre by the Borrower. </P>
<P align="justify">
The Borrower shall not change the usage of the loan under this Agreement. If the Borrower changes the usage of the loan under this Agreement, the Borrower should pay the penalty interest subject to the provisions of this Agreement. </P>
<P align="center">
<B>ARTICLE 4 - TERM OF LOAN</B><BR>
</P>
<P align="justify">
The term of the loan, subject to relevant provisions of this Agreement, shall be commencing on the Drawing Date of the first sum and ending on the Repayment Date of the last sum, namely from February 9, 2010 to February 9,2016, total 72 months. The
grace period is two years from February 9, 2010 to February 9, 2012. </P>
<P align="center">
<B>ARTICLE 5  - INTEREST RATE OF THE LOAN</B></P>
<P align="justify">
5.1 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
Interest rate per year of the first executive loan is the base rate for 6 years&#146;
loan publicized by the People&#146;s Bank of China, namely interest per year 5.90% . </P>
<P align="justify">
5.2 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
After the drawing of the first sum of the loan under this Agreement, if the
People&#146;s Bank of China adjusts the base rate, the interest rate will adjust
accordingly on the date immediate after the preceding interest payment date
after the adjustment, namely from the following day of such interest payment
date the valid base rate publicized by the People&#146;s Bank of China for the same
term and same amount loan shall be applied until the next base rate adjustment
date. </P>
<P align="justify">
5.3 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
In case of Overdue Loan or Appropriation Loan, the penalty interest rate shall
be applied from the date of Overdue Loan or Appropriation Loan until the date
when they are corrected. </P>

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<P align="justify">
The calculation standards of the interest penalty are:
<A name="page_5"></A>

<BR> </P>

<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top align="center">
a) 	</TD>
	<TD>
<P align="justify">The Overdue Loan rate under this Agreement = the executive rate under this Agreement &times; 150%.</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
b) 	</TD>
	<TD>
<P align="justify">The penalty interest rate of Appropriation Loan under this Agreement = the executive rate under this Agreement &times; 200%.</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
c) 	</TD>
	<TD>
<P align="justify">If Overdue Loan or Appropriation Loan happens on the same loan, the penalty interest rate shall be the heavier one.</P>
	</TD>
</TR>
</TABLE>
<P align="justify">
5.4</P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
&nbsp;If the base rate adjusts, the interest rate, penalty interest rate of
Overdue Loan and Appropriation Loan shall be calculated in section. </P>
<P align="center">
<B>ARTICLE 6 - CALCULATION AND SETTLEMENT OF INTEREST</B></P>
<P align="justify">
The interest of the loan under this Agreement shall be calculated from the date on which the lender transfers the loan into the Deposit Account. </P>
<P align="justify">
The calculation and settlement of interest date is 20<SUP>th</SUP> March, 20<SUP>th</SUP> June, 20<SUP>th</SUP> September, and 20<SUP>th</SUP> December each year. The interest payment date under this Agreement is the next day of the calculation and
settlement of interest date. If the interest payment date is legal holiday or general holiday, such interest payment date shall postpone to the Lender&#146;s first Operation Day after the legal holiday or general holiday. The last sum of interest
payment date under this Agreement is the repayment date of the last sum of loan. </P>
<P align="justify">
The Borrower shall transfer the payable interest into the Deposit Account opened at the Lender&#146;s Handling Branch ahead of 3 days before the interest payment date. The Lender&#146;s Handling Branch charges the interest from the Deposit Account
directly. If the Borrower fails in transferring the payable interest into the Deposit Account opened at the Lender&#146;s Handling Branch ahead of 3 days before the interest payment date, the Borrower shall pay the relevant cost incurred during the
transfer of the money. </P>
<P align="justify">
The Lender shall charge the Borrower with compound interest for the over-due interest. Thereunto for the interest of the Overdue Loan or Appropriation Loan, the compound interest shall be calculated in accordance with the penalty interest. </P>
<P align="center">
<B>ARTICLE 7  - CONDITIONS FOR DRAWING</B></P>
<P align="justify">
If the Borrower fails to satisfy all the following conditions, the Lender is entitled to refuse the drawing application of the Borrower: </P>
<P align="justify">
7.1 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
This Loan Agreement maintains validity and there is not any breach of the
Agreement by the Lender. </P>
<P align="justify">
7.2 </P>

<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The guaranty agreement required subject to this Agreement has been executed and
has
entered into effect.<BR>
</P>

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<P align="justify">
&nbsp;</P>
<P align="justify">
7.3 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower has provided a letter of commitment in which the Borrower promises to mortgage the land use certificate of Hi-Tech District to the Lender immediate after such certificate has been obtained. The Borrower shall also mortgage the BAK
Battery R&amp;D Centre Building which is under construction to the Lender after such project is checked and accepted. </P>
<P align="center">
<B>ARTICLE 8 - DRAWING PLANS AND DRAWING PROCEDURE</B></P>
<P align="justify">
The Borrower shall draw the loan fund subject to the plans as follows: </P>
<P align="justify" style="margin-left: 5%">
Drawing RMB 50 million Yuan in February 2010; <br>
Drawing RMB 30 million Yuan in July 2010; <br>
Drawing RMB 30 million Yuan in January 2011; <br>
Drawing RMB 40 million Yuan in June 2011 </P>
<P align="justify">
The Borrower shall submit a loan certification of which the form and content are consistent with the requirements of the Handling Branch ahead of 5 days before the stipulated Drawing Date. </P>
<P align="justify">
If the Borrower can not draw the loan on the stipulated date for special reasons, the Borrower shall submit a written application ahead of 10 days before the stipulated Drawing Date. After obtaining the approval of the Lender, the Borrower shall
enter into a revised agreement with the Lender in respect of the drawing plan. </P>
<P align="justify">
If the Borrower fails to draw the loan on the date or with the amount stipulated in this Agreement or the revised agreement, the Lender is entitled to cease part of the loan or transfer the loan directly into the Deposit Account on the date and with
the amount stipulated and charge the Borrower with the stipulated interest under this Agreement. </P>
<P align="center">
<B>ARTICLE 9   - REPAYMENT PLAN AND REPAYMENT PROCEDURE</B></P>
<P align="justify">
The Borrower shall repay the principal to the Lender according to the plan as follows:</P>
<div align="center">
  <center>
<TABLE style="font-size:8pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="80%" border="0"><TR valign="top">
	<TD align=left width="40%" height="15">
<font size="2">November
21,
2012
	</TD>
	<TD width="5%" align=left height="15">
<font size="2">RMB
	</TD>
	<TD width="35%" align=left height="15" style="font-size: 10pt; font-family: Times New Roman">
10,000,000
Yuan; </font>
	</font>
	</TD>
</TR>
<TR valign="top">
	<TD align=left width="40%" height="15">
<font size="2">May
21,
2013
	</TD>
	<TD width="5%" align=left height="15">
<font size="2">RMB
	</TD>
	<TD width="35%" align=left height="15" style="font-size: 10pt; font-family: Times New Roman">
20,000,000
Yuan; </font>
	</font>
	</TD>
</TR>
<TR valign="top">
	<TD align=left width="40%" height="15">
<font size="2">November
21,
2013
	</TD>
	<TD width="5%" align=left height="15">
<font size="2">RMB
	</TD>
	<TD width="35%" align=left height="15" style="font-size: 10pt; font-family: Times New Roman">
20,000,000
Yuan; </font>
	</font>
	</TD>
</TR>
<TR valign="top">
	<TD align=left width="40%" height="15">
<font size="2">May
21,
2014
&nbsp;
	</TD>
	<TD width="5%" align=left height="15">
<font size="2">RMB
	</TD>
	<TD width="35%" align=left height="15" style="font-size: 10pt; font-family: Times New Roman">
20,000,000
Yuan; </font>
	</font>
	</TD>
</TR>
<TR valign="top">
	<TD align=left width="40%" height="15">
<font size="2">November
21,
2014
	</TD>
	<TD width="5%" align=left height="15">
<font size="2">RMB
	</TD>
	<TD width="35%" align=left height="15" style="font-size: 10pt; font-family: Times New Roman">
25,000,000
Yuan; </font>
	</font>
	</TD>
</TR>
<TR valign="top">
	<TD align=left width="40%" height="11">
<font size="2">May
21,
2015
	</TD>
	<TD width="5%" align=left height="11">
<font size="2">RMB
	</TD>
	<TD width="35%" align=left height="11" style="font-size: 10pt; font-family: Times New Roman">
25,000,000&nbsp;
Yuan; </font>
	</font>
	</TD>
</TR>
<TR valign="top">
	<TD align=left width="40%" height="15">
<font size="2">February 9, 2016
	</TD>
	<TD width="5%" align=left height="15">
<font size="2">RMB
	</TD>
	<TD width="35%" align=left height="15" style="font-size: 10pt; font-family: Times New Roman">
30,000,000 Yuan </font>
	</font>
	</TD>
</TR>
</TABLE>
  </center>
</div>
<BR>

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<P align="justify">
The Borrower shall remit the full payable principal into the Deposit Account ahead of 3 days before the Repayment Date. The Lender shall collect the principal from the Deposit Account directly. </P>
<P align="justify">
In case that the stipulated Repayment Date under this Agreement is a legal holiday or a general holiday, the Borrower can choose to repay the loan on the latest Operation Day before the legal holiday or the general holiday. The Lender shall not
charge the interest from the actual repayment date to the stipulated repayment date. The Borrower can also choose to repay the loan on the first Operation Day after the legal holiday or the general holiday, the Lender shall charge the incremental
interest from the stipulated repayment date to the actual repayment date. If the Borrower does not repay the full loan on the first Operation Day after the legal holiday or the general holiday, it shall be deemed as overdue repayment. The Lender
shall calculate and charge the overdue penalty interest from the stipulated repayment date under this Agreement. </P>
<P align="justify">
Within the stipulated term of repayment of the loan, if the Borrower fails to repay the principal according to the repayment plan under this Agreement for special reason, the Borrower shall apply for the adjustment of the repayment plan. The
Borrower shall submit a written application to the Lender to 14 days before the stipulated repayment date. After the checkups and acceptance of the Lender, the Borrower and the Lender shall sign on agreement on the modification of the repayment
plan. </P>
<P align="justify">
If the Borrower fails to repay the principal according to the term of the repayment of the loan under this Agreement, the Borrower shall apply the Lender for extended period. The Borrower shall submit a writing application to 30 days before the
repayment date of the last sum of loan stipulated under this Agreement. After the checkups and acceptance of the Lender, the Borrower and Lender shall sign on an extended agreement. </P>
<P align="justify">
If the Borrower fails to repay the matured principal stipulated under this Agreement, the Lender shall charge the overdue penalty interest under the rules of this Agreement. </P>
<P align="center">
<B>ARTICLE 10 - REPAYMENT SEQUENCE</B><BR>
</P>
<P align="justify">
If the Borrower&#146;s repayment amount is less than the total amount of the due loan, it shall arrange the repayment amount according to the sequence as follows: </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
10.1 	</TD>
	<TD>
Pay the cost payable, sum of indemnity, damages and breach of Agreement damages
according to the law or this Agreement;
	</TD>
</TR>
<TR>
	<TD width=5% valign=top>
&nbsp;</TD>
	<TD>
&nbsp;</TD>
</TR>
<TR>
	<TD width=5% valign=top>
10.2 	</TD>
	<TD>
<P align="justify">Pay the penalty interest and compound interest payable;</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
10.3 	</TD>
	<TD>
<P align="justify">Pay the interest payable.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
10.4 	</TD>
	<TD>
<P align="justify">Pay the principal payable.</P>
	</TD>
</TR>
</TABLE>
<BR>
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<P align="justify">
If the Borrower&#146;s repayment amount is not enough to pay the full debt in the same sequence, it shall be paid according to the sequence in which the debt occurs. </P>
<P align="center">
<B>ARTICLE 11  - ADVANCE REPAYMENTS</B></P>
<P align="justify">
11.1<B> </B>  </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
After admitted by the Lender in paper method, the Borrower can repay the loan under this Agreement in advance.  </P>
<P align="justify">
11.2 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
If the Borrower wants to repay the loan in advance, the Borrower shall satisfy
the following conditions: </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top align="center">
a) 	</TD>
	<TD>
<P align="justify">The Borrower does not owe any principal, interest or other cost under this Agreement;</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
b) 	</TD>
	<TD>
<P align="justify">The minimum amount of the advance repayment is 10.000.000 Yuan, and shall be the integer times of RMB 1,000,000. (except for the single payment for the full residual loan principal);</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
c) 	</TD>
	<TD>
<P align="justify">The Borrower shall not apply for drawing the advance repayment loan again;</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
d) 	</TD>
	<TD>
<P align="justify">The amount of advance repayment shall be used firstly for the payment of the latest loan due, namely pay in the reverse order.</P>
	</TD>
</TR>
</TABLE>
<P align="justify">
11.3  </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
If the Borrower wants to repay in advance, the Borrower shall submit written
application to 14 days before the date he plans to repay.  </P>
<P align="center">
<B>ARTICLE 12  - ACCOUNT MANAGEMENT</B></P>
<P align="justify">
The Borrower shall open the Loan account and Deposit Account at the Lender&#146;s Handling Branch before January 25, 2010 for providing loan, calculation and settlement and reclaiming the principal and interest of the loan. </P>
<P align="center">
<B>ARTICLE 13  - STATEMENTS AND WARRANTIES  OF THE BORROWER</B></P>
<P align="justify">
13.1 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower is a corporation established according to the law with valid
business license. The Borrower owns assets and operates business according to
the law. </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
13.2 	</TD>
	<TD>
<P align="justify">The Borrower has completed the internal authorization procedure which is necessary for the execution of the Agreement. The representative who signs this Agreement is a authorized representative of the Borrower, and this Agreement
has binding force on the Borrower when it comes into validity.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
13.3 	</TD>
	<TD>
<P align="justify">The financial statement the Borrower provided to the Lender coincides to the laws , regulations and applicable accounting principle (accounting system) in validity and
force which responses the changes in financial position of the Borrower in the financial report year truly and correctly. </P>
	</TD>
</TR>
</TABLE>
<BR>
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<P align="justify">
13.4 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower does not conceal any happened or potential situation which may
influence the Lender&#146;s estimate on the financial position and capability of
repayment of the Borrower. </P>
<P align="justify">
13.5 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower confirms that a) the loan project has been approved by the relevant
governmental authorities and the instrument of ratification is true and lawful;
b) the technical scheme, construction content and construction scale of the loan
project are in reason and feasible; c) No deduction, extension or expansion of
the construction scale and standard of the project exists. </P>
<P align="justify">
13.6 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower confirms that other documents the Borrower provided to the Lender
are true, correct, integrated and the copies submitted coincide to the original
documents. </P>
<P align="justify">
13.7 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower promises not to set mortgage on the land-use right of the industry zone, BAK, Kuichong, Longgang and the forecasting title of the building to the third party during the loan term. </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
13.8 	</TD>
	<TD>
<P align="justify">The statement and assurance hereinbefore maintain validity during the term in which this Agreement maintains validity.</P>
	</TD>
</TR>
</TABLE>
<P align="center">
<B>ARTICLE 14  - PAYMENT</B><BR>
</P>
<P align="justify">
The Borrower shall forecast the demand of the loan fund and notify the Lender&#146;s Handling Branch about the demand in paper method to the latest 3 working days at the end of one month. </P>
<P align="justify">
The Borrower shall submit payment certification with specimen signature to the Lender&#146;s Handling Branch on the payment date. (Such payment certification can be attachment of this Agreement and the foundation of the payment). The Lender shall
examine the documents hereinbefore according to the internal management procedure. If the payment foundation coincides to the requirements, the Lender shall go through the formalities on the day receiving the payment notification. If the payment
foundation does not satisfy the requirements, the Lender can defer the payment or refuse to pay. </P>
<P align="justify">
The payment foundation the Borrower shall submit can include but not limited to: project budget granted by authorized department, preliminary designing plan of the project, project agreement, investment project list, investment plan and other
documents the Lender requires the Borrower to provide. </P>
<P align="center">
<B>ARTICLE 15  - EXAMINATION OF THE USE OF THE LOAN</B></P>
<P align="justify">
After the providing of the loan, the Lender is entitled to examine the use of the loan under
this Agreement via on spot or not. The Borrower shall provide the execution report of the use of the loan and relevant verifications of such use as required by the Lender&#146;s Handling Branch. The Lender can check the use of loan on the spot. The
Borrower shall cooperate actively and provide relevant documents according to the Lender&#146;s requirement. The content of the examination includes: </P>

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<P align="justify">
15.1 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
Whether the capital of the project and other relevant fund arrived according to
this Agreement; </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
15.2 	</TD>
	<TD>
<P align="justify">Whether the usage of the loan changed. Whether the loan transferred into the areas of portfolio transaction, futures trading, real estate business and risk investment, which is prohibited by explicit order.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
15.3 	</TD>
	<TD>
<P align="justify">Whether the project carries on successfully. Whether there is any material accident. Whether the important facility is delivered to the spot. Whether there is any situation of delay of the construction.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
15.4 	</TD>
	<TD>
<P align="justify">Whether the accumulative total completion amount and the project image completion coincides to the project accumulative total financial expenditure. Whether the cost and expenditure is accord with the rules.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
15.5 	</TD>
	<TD>
<P align="justify">Whether the forecast total investment can be controlled in the scope of the budgetary estimate.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
15.6 	</TD>
	<TD>
<P align="justify">Other situation the Lender deems necessary to examine.</P>
	</TD>
</TR>
</TABLE>
<P align="justify">
If the Lender discovers any incorrect use of the loan which may influence the successful construction of the project during the examination, the Lender can require the Borrower rectify in a limited time. </P>
<P align="center">
<B>ARTICLE 16 - INFORMATION DISCLOSURE</B><BR>
</P>
<P align="justify">
16.1 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
During the term the loan project under construction, the Borrower shall submit the statistical report monthly of last month to the Lender&#146;s Handling Branch in the form which the Lender requires before the 5<SUP>th</SUP> day each month. The
Borrower shall submit the loan project report yearly of last year to the Lender&#146;s Handling Branch in the form which the Lender requires before February 15 each year. </P>
<P align="justify">
16.2</P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
Within 15 days from the check for acceptance and final accounting of the loan
project, the Borrower shall submit the report on final accounts of the completed
loan project, report on investment benefit analysis of the loan project and
relevant documents to the Lender&#146;s Handling Branch. </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
16.3 	</TD>
	<TD>
<P align="justify">The Borrower shall submit full set of financial statements (including balance sheet, profit and loss statement, cash flow statement and audit report) of last accounting year
audited by a CPA firm which is recognized by the Lender before March, 31 each year. The Borrower shall submit full set of financial statements to the Lender before 10<SUP>th</SUP> day each quarter. The Borrower shall submit full set of financial
statements of the preceding half year to the Lender before September, 10 each year. </P>
	</TD>
</TR>
</TABLE>
<BR>
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<P align="justify">
16.4 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
If the Borrower change its registered capital, business scope, operating period,
type of the corporation or transfers the stock rights, the Borrower shall notify
the Lender 10 days in advance and submit relevant documents to the Lender for
record. </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
16.5 	</TD>
	<TD>
<P align="justify">If the Borrower changes its corporate name, domicile or modify its bylaw, or there is important change on the legal representative or financial responsible person, or there is important change on the financial situation, the
Borrower shall notify the Lender in paper method and submit relevant documents to the Lender for record within 10 days from the day on which the incident occurs.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
16.6 	</TD>
	<TD>
<P align="justify">If the Borrower changes the construction scale and standard of the project, the Borrower shall notify the Lender in writing within 5 days after obtaining relevant letters of ratification.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
16.7 	</TD>
	<TD>
<P align="justify">The Lender is entitled to ask the Borrower to provide important dynamic information about the use of loan in the term from the project establishment to the termination of this Agreement and the Borrower shall provide such
information in time.</P>
	</TD>
</TR>
</TABLE>
<P align="justify">
<B>ARTICLE 17 - LOAN PROJECT SUPERVISION</B><BR>
</P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
17.1 	</TD>
	<TD>
<P align="justify">The Lender can interview the Borrower and the loan project regularly. The Lender may inquiry about the information with following methods which shall be cooperated actively by the Borrower:</P>
	</TD>
</TR>
</TABLE>
<BR><TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top align="center">
a) 	</TD>
	<TD>
<P align="justify">Heeds the Borrower&#146;s introduction about the loan project.</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
b) 	</TD>
	<TD>
<P align="justify">Reviews the financial statements, accounting document, accounting book, other financial and accounting documents and relevant documents of the Borrower or the loan project.</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
c) 	</TD>
	<TD>
<P align="justify">Enters into the loan project scene and inspects, inquires and certifies the situation of the invitation to bid and bidding, the quality of the project and the project image schedule.</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
d) 	</TD>
	<TD>
<P align="justify">Review the finance and fund situation of the Borrower. Inquires about the information from the employees and heeds their opinions.</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
<TD width=5%>17.2 </TD>	<TD>
<P align="justify">The Borrower shall invite bid and bidding for the project under this Agreement. The
Lender can verify and examine the invitation to bid and bidding, the Borrower shall cooperate actively. </P>
	</TD>
</TR>
</TABLE>
<P align="justify">
17.3 </P>

<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower shall invite qualified project construction supervisor to inspect
and
supervise the construction of the project and the fixing and debugging of the facilities according to relevant laws and regulations and trade requirements on the project construction supervision. Required by the Lender, the Borrower shall provide
relevant project construction supervision report to the Lender immediately. </P>

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<P align="justify">
17.4 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower shall buy insurance for the construction project under this
Agreement according to relevant laws and regulations and trade requirements.
Required by the Lender, the Borrower shall provide relevant copies of insurance
agreements or relevant receipts of the insurance. </P>
<P align="center">
<B>ARTICLE 18  - RIGHTS AND OBLIGATIONS OF THE BORROWER</B></P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
18.1 	</TD>
	<TD>
<P align="justify">The Borrower is entitled to use the loan in accordance with this Agreement.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
18.2 	</TD>
	<TD>
<P align="justify">The Borrower is entitled to repay the loan in advance in accordance with this
Agreement.</P>
	</TD>
</TR>
</TABLE>
<P align="justify">
<BR>
</P>
<P align="justify">
18.3 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower shall draw the loan base upon the drawing plan stipulated in this
Agreement. </P>
<P align="justify">
18.4 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower shall repay the loan and its interest based upon the stipulated
articles in this Agreement. </P>
<P align="justify">
18.5 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower shall obtain the written approval for transferring its operation
assets, which involves more than 30% of its total assets listed in its latest
annual financial statement. </P>
<P align="justify">
18.6 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower shall notify the Lender 20 Operation Days in advance and obtain the
Lender&#146;s written approval to alter its property rights and systems including
merging and separating. The aforesaid alternation shall not cause damages on the
legal rights and profits of the Lender under this Agreement. </P>
<P align="justify">
18.7
</P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
In case the ability of guaranty of the Guarantor or the value of the collateral
under this Agreement gets lower and the situation can affect the guaranty of the
loan, the Borrower shall make up the collateral in the term demanded by the
Lender.
</P>
<P align="justify">
18.8 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower shall obtain the written approval of the Lender to provide guaranty to any third party with the total guaranty exceeding RMB 300 million Yuan or 50% of its total assets listed in its latest annual financial statement. </P>
<P align="justify">
18.9 </P>

<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Borrower shall act co-ordinately during the course of its credit rating
achieved by the Lender and provide relevant materials in accordance with the
Lender&#146;s requests. </P>

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<P align="center">
<B>ARTICLE 19   - RIGHTS AND OBLIGATIONS OF THE LENDER</B></P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top>
19.1 	</TD>
	<TD>
<P align="justify">The Lender is entitled to claim the loan and its interest under this Agreement.</P>
	</TD>
</TR>
<TR><TD>&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top>
19.2 	</TD>
	<TD>
<P align="justify">The Lender is entitled to claim the annual re-inspection on the Lender&#146;s credit and the
quality of the loan items in order to make the decision of whether continue to provide the loan for the Lender. </P>
<P align="justify">The Lender shall provide loan for the items that satisfy the conditions and withdraw those do not. </P>
	</TD>
</TR>
</TABLE>
<P align="justify">
19.3 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Lender shall obey the regulations on rates and accumulating interest of
People&#146;s Bank of China. </P>
<P align="justify">
19.4 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The Lender shall notify the Borrower immediately when he needs to adjust the
lending rate according to this Agreement. </P>
<P align="center">
<B>ARTICLE 20  - GUARANTY</B><BR>
</P>
<P align="justify">
20.1 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
This Agreement shall adopt the following methods of guaranty: <br>
<br>
Li Xiangqian, the guarantor, shall bear joint and several liabilities for the loan. </P>
<P align="justify">
20.2 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
The mortgager, Shenzhen BAK Battery Co., Ltd, undertakes to provide guaranty the land use certificate (No. Shenfangdizi 4000376876) of BAK Battery R&amp;D Test Center at Shenzhen Hi-tech Industrial Park and the facilities to be constructed on
it. <br>
<br>
The Guarantor (mortgager or pledger) shall sign a valid Guaranty Agreement in accordance with relevant laws with the Lender in time. </P>
<P align="center">
<B>ARTICLE 21  - LIABILITIES OF THE LENDER FOR BREACH OF AGREEMENT</B></P>
<P align="justify">
21.1  </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
In case the Lender fails to perform what is stipulated in Article 14, 16,
18(3)-(9) or 20 of this Agreement or any statements and warranties he made in
Article 13 of this Agreement is proved not true or misleading, the Borrower is
entitled to declare that the Lender shall correct them within time limit. If the
Lender fails to correct the faults in schedule, the Borrower is entitled to take
one or more steps of the following:  </P>
<TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top align="center">
a) 	</TD>
	<TD>
<P align="justify">Stop providing the loan;</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
b) 	</TD>
	<TD>
<P align="justify">May demand the indebtedness of the Lender become mature before the expiry of the original term. At the same time require the Lender repaying the loan provided and its interest with time limit. The Borrower also is entitled to
deduct the repayment directly from the bank account opened by the Lender until all his debt under this Agreement is settled. (The Lender has performed the act of authorizing the aforesaid right to the Borrower of deducting the repayment directly when this
Agreement is signed by both Parties,);</P>
	</TD>
</TR>
</TABLE>
<BR>
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<BR><TABLE BCLLIST style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0">
<TR>
	<TD width=5% valign=top align="center">
c) 	</TD>
	<TD>
<P align="justify">Unilaterally terminate this Agreement;</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
d) 	</TD>
	<TD>
<P align="justify">Achieve the execution of the collateral under the Guaranty Agreement;</P>
	</TD>
</TR>
<TR><TD align="center">&nbsp;</TD><TD>&nbsp;</TD></TR><TR>
	<TD width=5% valign=top align="center">
e) 	</TD>
	<TD>
<P align="justify">Take other steps stipulated in this Agreement or in according to relevant PRC laws and regulations.</P>
	</TD>
</TR>
</TABLE>
<P align="justify">
21.2 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
In case the Lender breaches this Agreement other than Article 14,16, 18(3)-(9)
or 20, the Borrower is entitled to declare that the Lender shall implement his
obligations under this Agreement for what he breached with time limit. If the
Lender fails to perform the aforesaid implements in schedule, the Borrower is
entitled to claim for compensations from the Lender. </P>
<P align="justify">
21.3 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
In case any litigation deriving from the breach of this Agreement by the Lender,
he shall bear the lawyers fee paid by the Borrower for the aforesaid litigation. </P>
<P align="center">
<B>ARTICLE 25  - LIABILITIES OF THE BORROWER FOR BREACH OF AGREEMENT</B><BR>
</P>
<P align="justify">
25.1 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
In case the Borrower fails to provide the loan to the Lender under this
Agreement or accumulate interest not in accordance with the relevant regulations
of interest on People&#146;s Bank of China and the items of this Agreement, the
Lender is entitled to require the Borrower to correct with time limit. In case
any loss of the Lender brought by the Borrower, the Lender is entitled to
require indemnification. </P>
<P align="justify">
25.2 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
In case a lawsuit is caused by the Borrower due to his/her breach of Agreement,
the Borrower shall bear the attorney fee of the said lawsuit for the Lender. </P>
<P align="center">
<B>ARTICLE 26  - MODIFICATION AND TERMINATION OF AGREEMENT</B></P>
<P align="justify">
26.1  </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
Unless otherwise agreed, any party shall not modify or terminate this Agreement
after this Agreement becomes effective. Through consultation, the Lender and the
Borrower may modify or alter this Agreement by reaching a written agreement.  </P>
<P align="justify">
26.2  </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
In the event that any change of laws, regulations and polices leads to all or
parts of this Agreement do not meet the requirement under such laws, regulations
and polices, the Borrower and the Lender shall negotiate about it promptly and
modify the relevant provisions duly.  </P>
<P align="justify">
26.3  </P>

<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
Either party claiming Force Majeure for non-performance of its obligation shall inform
the other Party in time for the purpose of mitigating the loss brought to the other Party.</P>

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<P align="center">
<B>ARTICLE 27  - ENTIRETY AND PROVISION INDEPENDENCE OF AGREEMENT</B></P>
<P align="justify">
Each written supplement, modification or alternation is component of this Agreement. </P>
<P align="justify">
Each provision in this Agreement is independent. Any null, illegal or inexecutable provision does not affect the effectiveness of other provisions. </P>
<P>
<B>ARTICLE 28  - CONFIDENTIALITY</B><BR>
</P>
<P align="justify">
Unless both Borrower and lender agree, either party shall not disclose the content of this Agreement to any third party subject to imperative provision(s) or the compellent requirements by the govern department or the other agreement reached by both
Parties. The obligation of confidentiality bearing by both Parties do not release due to the cancellation of this Agreement. </P>
<P>
<B>ARTICLE 29  - DISPUTE RESOLUTION</B><BR>
</P>
<P align="justify">
In case of any dispute deriving from the performance of this Agreement, such dispute shall be settled by consultation between the Borrower and the Lender. If no agreement can be reached through consultation, the dispute shall be submitted to the
People&#146;s Court located in the place of the Shenzhen Branch of the Lender. </P>
<P>
<B>ARTICLE 30  - MISCELLANEOUS PROVISIONS</B></P>
<P align="justify">
30.1 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
Any matter that is not stipulated in this Agreement shall be handled through negotiation between the Borrower and the Lender or subject to relevant law or regulations of the PRC. </P>
<P align="justify">
30.2 </P>
<P align="justify" style="margin-left: 5%; margin-top: -25.5pt">
This Agreement has 3 originals. The Borrower, the Lender and the Guarantor shall
retain 1 original respectively. The counterparts of this Agreement shall be 6
copies, the Borrower retains 4 copies and the Lender shall retain 2copies
respectively. </P>
<P>
<B>ARTICLE 31  - EFFECTIVENESS</B><BR>
</P>
<P align="justify">
This Agreement shall come into effect once it is signed or stamped by both Parties.</P>

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<BR>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0"><TR valign="top">
	<TD align=left height="30" width="635">
Borrower:
	</TD>
	<TD width=635 align=left height="30">
(common chop or special chop for Agreement)
	</TD>
</TR>
<TR valign="top">
	<TD align=left height="1" width="635">
Legal representative:
	</TD>
	<TD width=635 align=left height="1">
&nbsp;
	</TD>
</TR>
<TR valign="top">
	<TD align=left height="15" width="635">
(or the authorized person)
	</TD>
	<TD width=635 align=left height="15">
&nbsp;
	</TD>
</TR>
</TABLE>
<P align="justify">
The bank name and account of the Borrower:</P>
<TABLE style="font-size:10pt;border-color:black;border-collapse:collapse;" cellpadding="0" cellspacing="0" width="100%" border="0"><TR valign="top">
	<TD align=left width="635">
Lender:
	</TD>
	<TD width=635 align=left>
(common chop or special chop for Agreement)
	</TD>
</TR>
<TR>
	<TD width="635">
&nbsp;
	</TD>
<TD width="635">
&nbsp;
	</TD>
</TR>
<TR valign="top">
	<TD align=left width="635">
Legal representative:
	</TD>
	<TD width=635 align=left>
&nbsp;
	</TD>
</TR>
<TR valign="top">
	<TD align=left width="635">
(Or the authorized person)
	</TD>
	<TD width=635 align=left>
&nbsp;
	</TD>
</TR>
</TABLE>
<P align="justify">
&nbsp;</P>

<P align="justify">
&nbsp;</P>

<P align="justify">
Place: Shenzhen, Guangdong Province</P>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>7
<FILENAME>exhibit99-2.htm
<DESCRIPTION>EXHIBIT 99.2
<TEXT>



<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.2 - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

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<P align="right">
<B>Exhibit 99.2</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK <br>
Battery Co., Ltd. (&#147;the Company&#148;) and Shenzhen Branch, China CITIC Bank Co., Ltd
<br>
(&#147;the Creditor&#148;) dated February 2, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: (2010) Shenyinsun daizi 005;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 50 million;</P>
	</li>
  <li>
<P align="justify">Loan term: from February 2, 2010 to May 2, 2010;</P>
	</li>
  <li>
<P align="justify">Floating interest rate: 4.374%, rate adjustment in line with
benchmark interest rate adjustment of The People&#146;s Bank of China;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Penalty interest rate for delayed repayment: 4.374% plus 50%
*4.374%;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds:
4.374% *1;</P>
	  </li>
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement
day is 20<B><SUP>th </SUP></B>of each month;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Purpose of the loan is to provide working capital for the
Company;</P>
	</li>
  <li>
<P align="justify">In the event of occurrence of any of the following during the
term of loan, the Creditor is entitled to demand repayment of loan principal
before maturity and withdraw directly from any accounts of the Company for the
repayment:</P>
	</li>
</ul>
<blockquote>
  <blockquote>
<UL style="text-align:justify;" type="square">
<LI>
Delay in repayment of interest for the loan;</LI>
<LI>
The Company suffers operation loss or sharp decline in operation;</LI>
<LI>
Being involved in or threatened to be involved in lawsuit, arbitration or other legal disputes;</LI>
<LI>
Providing untrue financial statements or information;</LI>
<LI>
Embezzling loan (i.e. using loan proceeds for purposes other than what is agreed in the contract without the consent of the Creditor);</LI>
<LI>
Refusing the examination or supervision of the Creditor on the Company&#146;s operational and financial conditions, and refuse to provide relevant financial statements and information;</LI>
<LI>
Great changes in management;</LI>
<LI>
Occurrence of other instances which endanger the safety of the loan provided by the Creditor;</LI>
</UL>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>Breach of contract penalties: correct the breach of contract in time limit; suspension of loan unprovided; terminate the loan agreement, demand prepayment of loan principal and interest before maturity; imposition of punitive interest incurred due
to delayed loan; imposition of punitive interest for embezzlement of loan; imposition of plural interest for unpaid interest; withdraw from any accounts of the Company the loan principal and interest; indemnification for the Creditor&#146;s expenses
incurred due to demanding the loan principal and interest in case of litigation, etc.</li>
</ul>

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<ul type="circle">
  <li>The Company guaranteed not to use the loan borrowed from the Creditor to invest in purchasing securities or real estates. Otherwise, the Company shall be liable for any loss incurred to the Creditor.</li>
</ul>
<P align="justify">
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Loan arrangement</LI>
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Interest penalty of loan</LI>
<LI>
Guarantee of the loan agreement</LI>
<LI>
Renew of obligation</LI>
<LI>
Announcement and guarantee of the Company</LI>
<LI>
Rights and obligation of the Company</LI>
<LI>
Rights and obligations of the Creditor</LI>
<LI>
Disputation settlement</LI>
<LI>
Validity</LI>
<LI>
Supplemental</LI>
</UL>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>8
<FILENAME>exhibit99-3.htm
<DESCRIPTION>EXHIBIT 99.3
<TEXT>


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<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.3 - Filed by newsfilecorp.com</TITLE>

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<BODY style="font-size:10pt;">

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<P align="right">
<B>Exhibit 99.3</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK <br>
Battery Co., Ltd. (&#147;the Company&#148;) and Shenzhen Branch, China CITIC Bank Co., Ltd
<br>
(&#147;the Creditor&#148;) dated February 3, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: (2010) Shenyinsun daizi 006;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 50 million;</P>
	</li>
  <li>
<P align="justify">Loan term: from February 4, 2010 to May 4, 2010;</P>
	</li>
  <li>
<P align="justify">Floating interest rate: 4.86%, rate adjustment in line with
benchmark interest rate adjustment of The People&#146;s Bank of China;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Penalty interest rate for delayed repayment: 4.86% plus 50%
*4.86%;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds:
4.86% *1;</P>
	  </li>
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement
day is 20<B><SUP>th </SUP></B>of each month;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Purpose of the loan is to provide working capital for the
Company;</P>
	</li>
  <li>
<P align="justify">In the event of occurrence of any of the following during the
term of loan, the Creditor is entitled to demand repayment of loan principal
before maturity and withdraw directly from any accounts of the Company for the
repayment:</P>
	</li>
</ul>
<blockquote>
  <blockquote>
<UL style="text-align:justify;" type="square">
<LI>
Delay in repayment of interest for the loan;</LI>
<LI>
The Company suffers operation loss or sharp decline in operation;</LI>
<LI>
Being involved in or threatened to be involved in lawsuit, arbitration or other legal disputes;</LI>
<LI>
Providing untrue financial statements or information;</LI>
<LI>
Embezzling loan (i.e. using loan proceeds for purposes other than what is agreed in the contract without the consent of the Creditor);</LI>
<LI>
Refusing the examination or supervision of the Creditor on the Company&#146;s operational and financial conditions, and refuse to provide relevant financial statements and information;</LI>
<LI>
Great changes in management;</LI>
<LI>
Occurrence of other instances which endanger the safety of the loan provided by the Creditor;</LI>
</UL>
  </blockquote>
</blockquote>
<UL style="text-align:justify;" type="circle">
<LI>
Breach of contract penalties: correct the breach of contract in time limit; suspension of loan unprovided; terminate the loan agreement, demand prepayment of loan principal and interest before maturity; imposition of punitive interest incurred due
to delayed loan; imposition of punitive interest for embezzlement of loan; imposition of plural interest for unpaid interest; withdraw from any accounts of the Company the loan principal and interest; indemnification for the Creditor&#146;s expenses
incurred due to demanding the loan principal and interest in case of litigation, etc.</LI>
</UL>

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<UL style="text-align:justify;" type="circle">
<LI>
The Company guaranteed not to use the loan borrowed from the Creditor to invest in purchasing securities or real estates. Otherwise, the Company shall be liable for any loss incurred to the Creditor.</LI>
</UL>
<P align="justify">
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Loan arrangement</LI>
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Interest penalty of loan</LI>
<LI>
Guarantee of the loan agreement</LI>
<LI>
Renew of obligation</LI>
<LI>
Announcement and guarantee of the Company</LI>
<LI>
Rights and obligation of the Company</LI>
<LI>
Rights and obligations of the Creditor</LI>
<LI>
Disputation settlement</LI>
<LI>
Validity</LI>
<LI>
Supplemental</LI>
</UL>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>9
<FILENAME>exhibit99-4.htm
<DESCRIPTION>EXHIBIT 99.4
<TEXT>



<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.4 - Filed by newsfilecorp.com</TITLE>
  </HEAD>

<BODY style="font-size:10pt;">

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<P align="right">
<B>Exhibit 99.4</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK Battery
<br>
Co., Ltd. (&#147;the Company&#148;) and Shenzhen Longgang Branch, Bank of China
<br>
(the &#147;Creditor&#148;) Dated March 10, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main articles:</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: 2010 Zhenzhongyin Gangjiezi 00007;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 150 million;</P>
	</li>
  <li>
<P align="justify">Loan Term: from March 10, 2010 to March 11, 2011;</P>
	</li>
  <li>
<P align="justify">Interest rate: fixed at 5.31%;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement day is the 20<B><SUP>th </SUP></B>day of each month;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for delayed repayment: 5.31% plus 50% *5.31%;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds: 5.31% *1;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">If any of the following occurs, the Creditor is entitled to demand prepayment of loan principal and interest before maturity and cancel all loans unprovided:</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Delay in repayment of loan interest and the loan principal;</P>
	  </li>
      <li>
<P align="justify">The Company uses loan proceeds for purposes other than what is
agreed without the consent of the Creditor; </P>
	  </li>
      <li>
<P align="justify">
The Company provides untrue declaration or hide important
financial
information about its operation;
</P>
      </li>
      <li>
<P align="justify">
The Company terminates operation or is stopped from operation; <BR>
</P>
      </li>
    </ul>
  </blockquote>
</blockquote>
<UL style="text-align:justify;" type="circle">
<LI>
Purpose of the loan is to repay two loans: one is expired on March 13, 2010 (No. 09853563) and another is expired on March 31, 2010(No. 09854121);</LI>
<LI>
Advanced repayment of loan needs to be approved by the Creditor;</LI>
<LI>
Breach of contract penalties: correct the breach of contract in time limit; suspension of loan unprovided; release loan agreement, demand prepayment of loan principal and interest before maturity; imposition of punitive interest incurred due to
delayed loan; imposition of punitive interest for embezzlement of loan; imposition of plural interest for unpaid interest; withdraw from any accounts of the Company the loan principal, interest and other fees; compensation for the Creditor&#146;s
expenses incurred due to demanding the loan principal and interest in case of litigation, etc.</LI>
</UL>
<P align="justify">
<B>Headlines of the articles omitted</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Loan arrangement</LI>
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Guarantee</LI>
<LI>
Declaration and Promise</LI>
<LI>
Rights reserved</LI>
<LI>
Modification, Amendment and Termination of Contract</LI>
<LI>
Disputation settlement</LI>
<LI>
Fee</LI>
<LI>
Attachment</LI>
<LI>
Other agreements</LI>
<LI>
Validity</LI>
</UL>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>10
<FILENAME>exhibit99-5.htm
<DESCRIPTION>EXHIBIT 99.5
<TEXT>



<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.5 - Filed by newsfilecorp.com</TITLE>

</HEAD>

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<P align="right">
<B>Exhibit 99.5</B></P>
<P align="center">
<B><U>Comprehensive Credit Facility Agreement of Maximum Amount (&#147;Credit
<br>
Facility Agreement&#148;) Entered into by and between Shenzhen BAK Battery Co., Ltd
<br>
(&#147;the Company&#148;) and Shenzhen Longgang Branch, Bank of China (the
&#147;Creditor&#148;) <br>
Dated March 8</U></B><B><U><SUP>th</SUP></U></B><B><U>, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main articles:</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: 2010 Zhenzhongyin Gang Exiezi 000119;</P>
	</li>
  <li>
<P align="justify">Maximum amount of credit facilities to be provided: RMB 450 million;</P>
	</li>
  <li>
<P align="justify">Term: from March 4, 2010 to March 4, 2011.</P>
	</li>
  <li>
<P align="justify">Purpose of the loan is to provide working capital for the Company;</P>
	</li>
  <li>
<P align="justify">In the event of occurrence of any of the following during the term of loan, the Creditor is entitled to adjust the credit amount or even terminate the credit:</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Delay in repayment of interest for the loan;</P>
	  </li>
      <li>
<P align="justify">Embezzling loan (i.e. using loan proceeds for purposes other than what is agreed in the contract without the consent of the Creditor);</P>
	  </li>
      <li>
<P align="justify">Making untrue declaration or breach of promise;</P>
	  </li>
      <li>
<P align="justify">Breach of other agreements</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul>
  <li type="circle">
<P align="justify">Remedies in the event of breach of contract include adjustment of the credit amount, suspension of credit, imposition of punitive interest and overdue interest, an increase of guarantee deposit and the call back of loan principal
and interest before maturity.</P>
	</li>
</ul>
<P align="justify">
<B>Headlines of the articles omitted</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Procedure on using the comprehensive credit facility</LI>
<LI>
Guarantee</LI>
<LI>
Declaration and promise of the Company</LI>
<LI>
Rights reversed</LI>
<LI>
Modification, amendment, termination and invalidation of the Contract</LI>
<LI>
Disputation settlement</LI>
<LI>
Fee</LI>
<LI>
Attachment</LI>
<LI>
Other agreements</LI>
<LI>
Validity</LI>
</UL>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.6
<SEQUENCE>11
<FILENAME>exhibit99-6.htm
<DESCRIPTION>EXHIBIT 99.6
<TEXT>



<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.6 - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

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<P align="right">
<B>Exhibit 99.6</B><BR>
</P>
<P align="center">
<B><U>Summary of Guaranty Contract of Maximum Amount ( the &#147;Contract&#148;) Entered
<br>
into by and between BAK International Limited and Shenzhen Longgang Branch, <br>
Bank of China (the &#147;Creditor&#148;) on March
8</U></B><B><U><SUP>th</SUP></U></B><B><U>, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents:</B><BR>
</P>
<ul type="circle">
  <li>Guaranty Contract number: 2010 Zhenzhongyin Gang EBaozi000119-2;</li>
  <li>Bak International Limited undertakes to assume joint and several liabilities
for Shenzhen BAK Battery Co., Ltd (the &#147;Obligor&#148;)&#146;s indebtedness towards Bank of China under the Comprehensive Credit Facility Agreement of Maximum Amount (reference no.: 2010 Zhenzhongyin Gang Exiezi 000119) from March 4, 2010 to
March 4, 2011, and the maximum amount secured is RMB 450 million. <br>
&nbsp;</li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Guaranty Responsibility</B>: The guaranty under this Contract shall be
guaranty with joint and several liabilities. The guarantor is obligated to pay
off the debt in the event the obligor is unable to pay off the debt (including
the creditor declares the debt becomes mature in advance to its original expiry
date due to default of the obligor or the guarantor). </P>
  </li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Scope of Guaranty: </B>The guaranty shall cover all of the loan principal,
interest, penalty interest, breach of contract compensation, damages,
undertaking fee and all the expenses such as litigation cost, lawyer&#146;s fee,
notification cost and public notice cost etc. which is incurred to the Creditor
in realizing its creditor&#146;s right. </P>
  </li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Guaranty period:</B> The guaranty period is from the effective date of this
Contract to two years after the expiry of the term of the Credit Facility
Agreement and relevant agreement entered into under the Credit Facility
Agreement. </P>
  </li>
</ul>
<P align="justify">
<B>Headlines of the articles omitted:</B><BR>
</P>
<ul type="circle">
  <li>Payment on demand</li>
  <li>Declaration and guaranty</li>
  <li>Remedies for breach of contract</li>
  <li>Right reserved</li>
  <li>Modification, amendment and termination of the Contract</li>
  <li>Disputation settlement</li>
  <li>Fee</li>
  <li>Attachment</li>
  <li>Supplement articles</li>
  <li>Validity</li>
</ul>

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<DOCUMENT>
<TYPE>EX-99.7
<SEQUENCE>12
<FILENAME>exhibit99-7.htm
<DESCRIPTION>EXHIBIT 99.7
<TEXT>



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<P align="right">
<B>Exhibit 99.7</B><BR>
</P>
<P align="center">
<B><U>Summary of Guaranty Contract of Maximum Amount ( the &#147;Contract&#148;) Entered
<br>
into by and between Xiangqian Li and Shenzhen Longgang Branch, Bank of China <br>
(the &#147;Creditor&#148;) on March 8</U></B><B><U><SUP>th</SUP></U></B><B><U>,
2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents:</B><BR>
</P>
<ul type="circle">
  <li>Guaranty Contract number: 2010 Zhenzhongyin Gang EBaozi 000119-1;</li>
  <li>Xiangqian Li undertakes to assume joint and several liabilities for Shenzhen
BAK Battery Co., Ltd (the &#147;Obligor&#148;)&#146;s indebtedness towards Bank of China under the Comprehensive Credit Facility Agreement of Maximum Amount (reference no.: 2010 Zhenzhongyin Gang Exiezi 000119) from March 4, 2010 to March 4, 2011,
and the maximum amount secured is RMB 450 million. <br>
&nbsp;</li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Guaranty Responsibility</B>: The guaranty under this Contract shall be guaranty with joint and several liabilities. The guarantor is obligated to pay off the debt in the event the obligor is unable to pay off the debt (including the creditor
declares the debt becomes mature in advance to its original expiry date due to default of the obligor or the guarantor). </P>
  </li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Scope of Guaranty: </B>The guaranty shall cover all of the loan principal, interest, penalty interest, breach of contract compensation, damages, undertaking fee and all the expenses such as litigation cost, lawyer&#146;s fee, notification cost
and public notice cost etc. which is incurred to the Creditor in realizing its creditor&#146;s right. </P>
  </li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Guaranty period:</B> The guaranty period is from the effective date of this Contract to two years after the expiry of the term of the Credit Facility Agreement and relevant agreement entered into under the Credit Facility Agreement. </P>
  </li>
</ul>
<P align="justify">
<B>Headlines of the articles omitted:</B><BR>
</P>
<ul type="circle">
  <li>Payment on demand</li>
  <li>Declaration and guaranty</li>
  <li>Remedies for breach of contract</li>
  <li>Right reserved</li>
  <li>Modification, amendment and termination of the Contract</li>
  <li>Disputation settlement</li>
  <li>Fee</li>
  <li>Attachment</li>
  <li>Supplement articles</li>
  <li>Validity</li>
</ul>

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<DOCUMENT>
<TYPE>EX-99.8
<SEQUENCE>13
<FILENAME>exhibit99-8.htm
<DESCRIPTION>EXHIBIT 99.8
<TEXT>


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<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.8 - Filed by newsfilecorp.com</TITLE>

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<P align="right">
<B>Exhibit 99.8</B><BR>
</P>
<P align="center">
<B><U>Summary of Mortgage Contract of Maximum Amount ( the &#147;Contract&#148;) Entered into
<br>
by and between Shenzhen BAK Battery, Co., Ltd (the &#147;Mortgager&#148;) and Shenzhen
<br>
Longgang Branch, Bank of China (the &#147;Creditor&#148;) on March
8</U></B><B><U><SUP>th</SUP></U></B><B><U>, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
<B>Contract number</B>: 2010 Zhenzhongyin Gang Edi 000119;</LI>
<LI>
In order to guarantee the indebtedness of Shenzhen BAK Battery Co., Ltd. (the &#147;Obligor&#148;) towards the Creditor under the Comprehensive Credit Facility Agreement of Maximum Amount (reference no.: 2010Zhenzhongyin Gang Exiezi 000119) from
March 4, 2010 to March 4, 2011, the Mortgager agrees to pledge its property to the Creditor.</LI>
<LI>
<B>Scope of Guaranty: </B>The guaranty shall cover all of the loan principal, interest, penalty interest, breach of contract compensation, damages, undertaking fee and all the expenses such as litigation cost, lawyer&#146;s fee, notification cost
and public notice cost etc. which is incurred to the Creditor in realizing its creditor&#146;s right.</LI>
<LI>
<B>Collaterals: </B>The Mortgager agrees to pledge its machineries and equipments to the Creditor.</LI>
</UL>
<p>
<B>Headlines of the articles omitted:</B></p>
<UL style="text-align:justify;" type="circle">
<LI>
Payment on demand</LI>
<LI>
Validity of the Creditor&#146;s Right</LI>
<LI>
Occupancy of Collaterals</LI>
<LI>
Mortgage Registration</LI>
<LI>
Settlement of reduced-value Collaterals</LI>
<LI>
Interest generated</LI>
<LI>
Collaterals insurance</LI>
<LI>
Realizing of Creditor&#146;s Right</LI>
<LI>
Declaration and undertaking of the Mortgager</LI>
<LI>
Breach of Contract and settlement</LI>
<LI>
Modification, Amendment and Termination of Contract</LI>
<LI>
Fee</LI>
<LI>
Effectiveness and Disputation settlement</LI>
<LI>
Attachment</LI>
<LI>
Supplement articles</LI>
</UL>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.9
<SEQUENCE>14
<FILENAME>exhibit99-9.htm
<DESCRIPTION>EXHIBIT 99.9
<TEXT>




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   <TITLE>China BAK Battery, Inc.: Exhibit 99.9 - Filed by newsfilecorp.com</TITLE>

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<P align="right">
<B>Exhibit 99.9</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK <br>
Battery Co., Ltd. (&#147;the Company&#148;) and Shenzhen Hi-Tech District Branch,
<br>
Industrial Bank CO. Ltd (&#147;the Creditor&#148;) dated January 6, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: Xingyinshen Gaoxinqu Shouxinduanjiezi(2009)021;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 50 million;</P>
	</li>
  <li>
<P align="justify">Loan term: from January 6, 2010 to December 31, 2010;</P>
	</li>
  <li>
<P align="justify">Fixed interest rate: annually 4.779%;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement day is the 20th day of each month;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for delayed repayment: 4.779% plus 50% *4.779%;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds: 4.779% plus 50% *4.779%;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Purpose of the loan is to provide working capital for the Company;</P>
	</li>
  <li>
<P align="justify">Advanced repayment of loan needs to be approved by the Creditor;</P>
	</li>
  <li>
<P align="justify">Breach of contract penalties: correct the breach of contract in time limit; suspension of loan unprovided; release loan agreement, demand prepayment of loan principal and interest before maturity; imposition of punitive interest
incurred due to delayed loan; imposition of punitive interest for embezzlement of loan; imposition of plural interest for unpaid interest; withdraw from any accounts of the Company the loan principal, interest and other fees; compensation for the
Creditor&#146;s expenses incurred due to demanding the loan principal and interest in case of litigation, etc.</P>
	</li>
</ul>
<P align="justify">
<BR>
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Termination and explanation</LI>
<LI>
Loan arrangement</LI>
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Rights and obligations of both the Creditor and the Company</LI>
<LI>
Declaration and undertaking of the Company</LI>
<LI>
Interest penalty of loan</LI>
<LI>
Guarantee</LI>
<LI>
Continuity of Obligations</LI>
<LI>
Disputation settlement</LI>
<LI>
Validity</LI>
<LI>
Supplement articles</LI>
</UL>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.10
<SEQUENCE>15
<FILENAME>exhibit99-10.htm
<DESCRIPTION>EXHIBIT 99.10
<TEXT>



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   <TITLE>China BAK Battery, Inc.: Exhibit 99.10 - Filed by newsfilecorp.com</TITLE>

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<P align="right">
<B>Exhibit 99.10</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK <br>
Battery Co., Ltd. (&#147;the Company&#148;) and Shenzhen Eastern Branch, Agricultural
<br>
Bank of China (&#147;the Creditor&#148;) dated January 21, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: 81101201000000105;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 50 million;</P>
	</li>
  <li>
<P align="justify">Loan term: from January 21, 2010 to January 21, 2011;</P>
	</li>
  <li>
<P align="justify">Floating interest rate: annually 5.31%, rate adjustment in a 3-month cycle;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement day is the 20th day of each month;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for delayed repayment: 5.31% plus 30% *5.31%;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds: 5.31% plus 50% *5.31%;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Purpose of the loan is to provide working capital for purchasing raw material of the Company;</P>
	</li>
  <li>
<P align="justify">Advanced repayment of loan needs to be approved by the Creditor;</P>
	</li>
  <li>
<P align="justify">Breach of contract penalties: correct the breach of contract in time limit; suspension of loan unprovided; release loan agreement, demand prepayment of loan principal and interest before maturity; imposition of punitive interest
incurred due to delayed loan; imposition of punitive interest for embezzlement of loan; imposition of plural interest for unpaid interest; withdraw from any accounts of the Company the loan principal, interest and other fees; compensation for the
Creditor&#146;s expenses incurred due to demanding the loan principal and interest in case of litigation, etc.</P>
	</li>
  <li>
<P align="justify">Supplemental: in the event that the Company repaid the loan in advance, it has to pay extra handling fee: advanced repaid amount * share months * 1&#137;.</P>
	</li>
</ul>
<P align="justify">
<BR>
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Loan arrangement</LI>
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Rights and obligation of the Creditor</LI>
<LI>
Rights and obligations of the Company</LI>
<LI>
Interest penalty of loan</LI>
<LI>
Guarantee of the loan agreement</LI>
<LI>
Disputation settlement</LI>
<LI>
Validity</LI>
<LI>
Text</LI>
<LI>
Notification</LI>
</UL>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.11
<SEQUENCE>16
<FILENAME>exhibit99-11.htm
<DESCRIPTION>EXHIBIT 99.11
<TEXT>



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   <TITLE>China BAK Battery, Inc.: Exhibit 99.11 - Filed by newsfilecorp.com</TITLE>

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<P align="right">
<B>Exhibit 99.11</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK <br>
Battery Co., Ltd. (&#147;the Company&#148;) and Shenzhen Eastern Branch, Agricultural
<br>
Bank of China (&#147;the Creditor&#148;) dated January 22, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: 81101201000000114;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 50 million;</P>
	</li>
  <li>
<P align="justify">Loan term: from January 22, 2010 to January 22, 2011;</P>
	</li>
  <li>
<P align="justify">Floating interest rate: annually 5.31%, rate adjustment in a 3-month cycle;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement day is the 20th day of each month;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for delayed repayment: 5.31% plus 30% *5.31%;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds: 5.31% plus 50% *5.31%;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Purpose of the loan is to provide working capital for purchasing raw material of the Company;</P>
	</li>
  <li>
<P align="justify">Advanced repayment of loan needs to be approved by the Creditor;</P>
	</li>
  <li>
<P align="justify">Breach of contract penalties: correct the breach of contract in time limit; suspension of loan unprovided; release loan agreement, demand prepayment of loan principal and interest before maturity; imposition of punitive interest
incurred due to delayed loan; imposition of punitive interest for embezzlement of loan; imposition of plural interest for unpaid interest; withdraw from any accounts of the Company the loan principal, interest and other fees; compensation for the
Creditor&#146;s expenses incurred due to demanding the loan principal and interest in case of litigation, etc.</P>
	</li>
  <li>
<P align="justify">Supplemental: in the event that the Company repaid the loan in advance, it has to pay extra handling fee: advanced repaid amount * share months * 1&#137;.</P>
	</li>
</ul>
<P align="justify">
<BR>
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Loan arrangement</LI>
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Rights and obligation of the Creditor</LI>
<LI>
Rights and obligations of the Company</LI>
<LI>
Interest penalty of loan</LI>
<LI>
Guarantee of the loan agreement</LI>
<LI>
Disputation settlement</LI>
<LI>
Validity</LI>
<LI>
Text</LI>
<LI>
Notification</LI>
</UL>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.12
<SEQUENCE>17
<FILENAME>exhibit99-12.htm
<DESCRIPTION>EXHIBIT 99.12
<TEXT>



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   <TITLE>China BAK Battery, Inc.: Exhibit 99.12 - Filed by newsfilecorp.com</TITLE>

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<P align="right">
<B>Exhibit 99.12</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK Battery Co., Ltd.
<br>
(&#147;the Company&#148;) and Shenzhen Eastern Branch, Agricultural Bank of China <br>
(&#147;the Creditor&#148;) dated January 6, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: 81101201000000018;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 75 million;</P>
	</li>
  <li>
<P align="justify">Loan term: from January 6, 2010 to January 6, 2011;</P>
	</li>
  <li>
<P align="justify">Floating interest rate: annually 5.31%, rate adjustment in a 3-month cycle;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement day is the 20th day of each month;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for delayed repayment: 5.31% plus 30% *5.31%;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds: 5.31% plus 50% *5.31%;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Purpose of the loan is to provide working capital for purchasing raw material of the Company;</P>
	</li>
  <li>
<P align="justify">Advanced repayment of loan needs to be approved by the Creditor;</P>
	</li>
  <li>
<P align="justify">Breach of contract penalties: correct the breach of contract in time limit; suspension of loan unprovided; release loan agreement, demand prepayment of loan principal and interest before maturity; imposition of punitive interest
incurred due to delayed loan; imposition of punitive interest for embezzlement of loan; imposition of plural interest for unpaid interest; withdraw from any accounts of the Company the loan principal, interest and other fees; compensation for the
Creditor&#146;s expenses incurred due to demanding the loan principal and interest in case of litigation, etc.</P>
	</li>
  <li>
<P align="justify">
Supplemental: in the event that the Company repaid the loan in advance, it has to pay extra handling fee: advanced repaid amount * share months * 1&#137;.</P>
  </li>
</ul>
<P align="justify">
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;">
<LI>
Loan arrangement</LI>
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Rights and obligation of the Creditor</LI>
<LI>
Rights and obligations of the Company</LI>
<LI>
Interest penalty of loan</LI>
<LI>
Guarantee of the loan agreement</LI>
<LI>
Disputation settlement</LI>
<LI>
Validity</LI>
<LI>
Text</LI>
<LI>
Notification</LI>
</UL>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.13
<SEQUENCE>18
<FILENAME>exhibit99-13.htm
<DESCRIPTION>EXHIBIT 99.13
<TEXT>



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   <TITLE>China BAK Battery, Inc.: Exhibit 99.13 - Filed by newsfilecorp.com</TITLE>

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<P align="right">
<B>Exhibit 99.13</B><BR>
</P>
<P align="center">
<B><U>Summary of Guaranty Contract of Maximum Amount ( the &#147;Contract&#148;) Entered<br>
into by and between Shenzhen BAK Battery Co., Ltd (the &#147;Guarantor&#148;)and
<br>
Tianjin Branch, China Bohai Bank (the &#147;Creditor&#148;) on January 19,
2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents:</B><BR>
</P>
<ul type="circle">
  <li>Guaranty Contract number: Bojinfen Zuigaobao(2010)4;</li>
  <li>Shenzhen BAK Battery Co., Ltd undertakes to assume joint and several
liabilities for BAK International (Tianjin) Limited (the &#147;Obligor&#148;)&#146;s indebtedness towards China Bohai Bank under the Comprehensive Credit Facility Agreement of Maximum Amount (reference no.: Bojin Fenzong (2010)2) from January 19,
2010 to January 18, 2011, and the maximum amount secured is RMB 100 million.</li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Guaranty Responsibility</B>: The guaranty under this Contract shall be guaranty with joint and several liabilities. The guarantor is obligated to pay off the debt in
the event the obligor is unable to pay off the debt (including the creditor declares the debt becomes mature in advance to its original expiry date due to default of the obligor or the guarantor).</P>
  </li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Scope of Guaranty: </B>The guaranty shall cover all of the loan principal, interest, penalty interest, breach of contract compensation, damages, undertaking fee and all the expenses such as litigation cost, lawyer&#146;s fee, notification cost
and public notice cost etc. which is incurred to the Creditor in realizing its creditor&#146;s right. </P>
  </li>
  <li>
<P align="justify" style="margin-top: 0; margin-bottom: 5">
<B>Guaranty period:</B> The guaranty period is from the effective date of this Contract to two years after the expiry of the term of the Credit Facility Agreement and relevant agreement entered into under the Credit Facility Agreement. </P>
  </li>
</ul>
<P align="justify">
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Terms and explanation</LI>
<LI>
Payment on demand</LI>
<LI>
Declaration and guaranty of Guarantor</LI>
<LI>
Remedies for breach of contract</LI>
<LI>
Modification, amendment and termination of the Contract</LI>
<LI>
Disputation settlement</LI>
<LI>
Fee</LI>
<LI>
Other agreements</LI>
<LI>
Validity</LI>
</UL>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.14
<SEQUENCE>19
<FILENAME>exhibit99-14.htm
<DESCRIPTION>EXHIBIT 99.14
<TEXT>



<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.14 - Filed by newsfilecorp.com</TITLE>
  </HEAD>

<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">


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<A name="page_1"></A>

<P align="right">
<B>Exhibit 99.14</B><BR>
</P>
<P align="center">
<B><U>Comprehensive Credit Facility Agreement of Maximum Amount <br>
(&#147;Credit Facility Agreement&#148;) Entered into by and between BAK International (Tianjin) Limited Co., Ltd
<br>
(&#147;the Company&#148;) and Tianjin Branch, China Bohai Bank (the
&#147;Creditor&#148;) Dated January 19, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main articles:</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: Bojin Fenzong(2010)2;</P>
	</li>
  <li>
<P align="justify">Maximum amount of credit facilities to be provided: RMB 100 million;</P>
	</li>
  <li>
<P align="justify">Term: from January 19, 2010 to January 19, 2011.</P>
	</li>
  <li>
<P align="justify">Purpose of the loan is to provide working capital for the Company;</P>
	</li>
  <li>
<P align="justify">In the event of occurrence of any of the following during the term of loan, the Creditor is entitled to adjust the credit amount or even terminate the credit:</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Delay in repayment of interest for the loan;</P>
	  </li>
      <li>
<P align="justify">Embezzling loan (i.e. using loan proceeds for purposes other than what is agreed in the contract without the consent of the Creditor);</P>
	  </li>
      <li>
<P align="justify">Making untrue declaration or breach of promise;</P>
	  </li>
      <li>
<P align="justify">Breach of other agreements</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Remedies in the event of breach of contract include adjustment of the credit amount, suspension of credit, imposition of punitive interest and overdue interest, an increase of guarantee deposit and the call back of loan principal
and interest before maturity.</P>
	</li>
  <li>
<P align="justify">Special agreement: The Company would borrow RMB 40 million for short-term loans currently. After the annual report audit for the year of 2009 is released and phase-1 project realizes the scale of production, the remaining amount
of credit facilities, RMB 60 million, could be borrowed with Creditor&#146;s approval.</P>
	</li>
</ul>
<P align="justify">
<BR>
<B>Headlines of the articles omitted</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Terms and Explanation</LI>
<LI>
Procedure on using the comprehensive credit facility</LI>
<LI type="circle">
Precondition</LI>
<LI>
Guarantee</LI>
<LI>
Declaration and promise of the Company</LI>
<LI>
Modification, amendment, termination and invalidation of the Contract</LI>
<LI>
Disputation settlement</LI>
<LI>
Information Disclosure</LI>
<LI>
Attachment</LI>
<LI>
Other agreements</LI>
<LI>
Validity</LI>
</UL>

<HR noshade align="center" width="100%" size=5 color="black">


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</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.15
<SEQUENCE>20
<FILENAME>exhibit99-15.htm
<DESCRIPTION>EXHIBIT 99.15
<TEXT>



<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.15 - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">


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<P align="right">
<B>Exhibit 99.15</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between BAK International
<br>
(Tianjin) Limited (&#147;the Company&#148;) and Bank of China, Tianjin Branch
<br>
(the &#147;Creditor&#148;) Dated January 19, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main articles:</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: Bojin Fenduanqi (2010)7;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 40 million;</P>
	</li>
  <li>
<P align="justify">Loan Term: from January 19, 2010 to January 18, 2011;</P>
	</li>
  <li>
<P align="justify">Floating interest rate: Interest rate of loan shall be equal to the benchmark rate announced by the People&#146;s Bank of China, and be adjusted annually;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Interest accrued and settled per quarter, interest settlement day is the 20<B><SUP>th </SUP></B>day of the third month in each quarter;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for delayed repayment: current interest rate plus 50% * current interest rate;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds: current interest rate *1;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">If any of the following occurs, the Creditor is entitled to demand prepayment of loan principal and interest before maturity and cancel all loans unprovided:</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Delay in repayment of loan interest and the loan principal;</P>
	  </li>
      <li>
<P align="justify">The Company uses loan proceeds for purposes other than what is
agreed without the consent of the Creditor; </P>
	  </li>
      <li>
<P align="justify">
The Company provides untrue declaration or hide important financial information about its operation; </P>
      </li>
      <li>
<P align="justify">
The Company terminates operation or is stopped from operation; </P>
      </li>
    </ul>
  </blockquote>
</blockquote>
<UL style="text-align:justify;" type="circle">
<LI>
Purpose of the loan is to purchase raw materials for the Company;</LI>
<LI>
Advanced repayment of loan needs to be approved by the Creditor;</LI>
<LI>
Breach of contract penalties: suspension of loan unprovided; release loan agreement, demand prepayment of loan principal and interest before maturity; imposition of punitive interest incurred due to delayed loan; imposition of punitive interest for
embezzlement of loan; withdraw from any accounts of the Company the loan principal, interest and other fees; compensation for the Creditor&#146;s expenses incurred due to demanding the loan principal and interest in case of litigation, etc.</LI>
</UL>
<P align="justify">
<B>Headlines of the articles omitted</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Loan arrangement</LI>
<LI>
Interest clearing of the loan</LI>
<LI>
Precondition</LI>
<LI>
Payment of the loan</LI>
<LI>
Guarantee</LI>
<LI>
Declaration and Promise of the Company</LI>
<LI>
Rights reserved</LI>
<LI>
Modification, Amendment and Termination of Contract</LI>
<LI>
Disputation settlement</LI>
<LI>
Fee</LI>
<LI>
Attachment</LI>
</UL>

<hr color="#000000" size="5">


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</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.16
<SEQUENCE>21
<FILENAME>exhibit99-16.htm
<DESCRIPTION>EXHIBIT 99.16
<TEXT>



<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.16 - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">


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<A name="page_1"></A>

<P align="right">
<B>Exhibit 99.16</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK Battery Co., Ltd.
<br>
(&#147;the Company&#148;) and Longgang Branch, Shenzhen Development Bank Co., Ltd
<br>
(the &#147;Creditor&#148;) on January 4, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents:</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: Shenfa Longgang Daizi 20091230002;</P>
	</li>
  <li>
<P align="justify">Main Contract: Comprehensive Credit Facility Agreement;</P>
	</li>
  <li>
<P align="justify">Main Contract number: Shenfa Longgang Zongzidi 20091221001;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 60 million;</P>
	</li>
  <li>
<P align="justify">Loan term: from January 4, 2010 to January 4 , 2011;</P>
	</li>
  <li>
<P align="justify">Floating interest rate: Interest rate of loan shall be 95% of the benchmark rate announced by the People&#146;s Bank of China, and be adjusted every 3 months;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement day is the 20<B><SUP>th </SUP></B>day of each month;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for delayed repayment: current interest rate plus 50% * current interest rate;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds: current interest rate *1;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Purpose of the loan is to provide working capital for the Company;</P>
	</li>
  <li>
<P align="justify">If any of the following occurs, the Creditor is entitled to demand prepayment of loan principal and interest before maturity and cancel all loans unprovided ;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">The Company terminates operation or is stopped from operation;</P>
	  </li>
      <li>The Company provides untrue documents or hide important
financial
information about its operation; </li>
      <li>The Company intentionally evades bank debts by way of related party
transaction or other means; </li>
      <li>The Company uses loan proceeds for purposes other than what is agreed
without the consent of the Creditor; </li>
      <li>Occurrence of other instances which endangers or may endanger the
safety of the loan provided by the Creditor; </li>
    </ul>
  </blockquote>
</blockquote>
<P align="justify">
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Rights and obligation of the Company</LI>
<LI>
Rights and obligations of the Creditor</LI>
<LI>
Disputation settlement and Validity</LI>
<LI>
Fees</LI>
<LI>
Breach of contract penalties</LI>
<LI>
Declaration, guaranty and undertaking of the Company</LI>
<LI>
Amendment and Termination of Contract</LI>
<LI>
Others</LI>
<LI>
Text</LI>
</UL>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.17
<SEQUENCE>22
<FILENAME>exhibit99-17.htm
<DESCRIPTION>EXHIBIT 99.17
<TEXT>


<HTML>
<HEAD>
   <TITLE>China BAK Battery, Inc.: Exhibit 99.17 - Filed by newsfilecorp.com</TITLE>

</HEAD>

<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">


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<A name="page_1"></A>

<P align="right">
<B>Exhibit 99.17</B><BR>
</P>
<P align="center">
<B><U>Summary of Loan Agreement Entered into by and between Shenzhen BAK Battery Co., Ltd.
<br>
(&#147;the Company&#148;) and Longgang Branch, Shenzhen Development Bank Co., Ltd
<br>
(the &#147;Creditor&#148;) on February 3, 2010</U></B><B> </B></P>
<P align="justify">
<B>Main contents:</B></P>
<ul type="circle">
  <li>
<P align="justify">Contract number: Shenfa Longgang Daizi 20100127001;</P>
	</li>
  <li>
<P align="justify">Main Contract: Comprehensive Credit Facility Agreement;</P>
	</li>
  <li>
<P align="justify">Main Contract number: Shenfa Longgang Zongzidi 20091221001;</P>
	</li>
  <li>
<P align="justify">Loan principal: RMB 70 million;</P>
	</li>
  <li>
<P align="justify">Loan term: from February 3, 2010 to February 3 , 2011;</P>
	</li>
  <li>
<P align="justify">Floating interest rate: Interest rate of loan shall be 90% of the benchmark rate announced by the People&#146;s Bank of China, and be adjusted every 3 months;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">Interest accrued and settled per month, interest settlement day is the 20<B><SUP>th </SUP></B>day of each month;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for delayed repayment: current interest rate plus 50% * current interest rate;</P>
	  </li>
      <li>
<P align="justify">Penalty interest rate for embezzlement of loan proceeds: current interest rate *1;</P>
	  </li>
    </ul>
  </blockquote>
</blockquote>
<ul type="circle">
  <li>
<P align="justify">Purpose of the loan is to provide working capital for the Company;</P>
	</li>
  <li>
<P align="justify">If any of the following occurs, the Creditor is entitled to demand prepayment of loan principal and interest before maturity and cancel all loans unprovided ;</P>
	</li>
</ul>
<blockquote>
  <blockquote>
    <ul type="square">
      <li>
<P align="justify">The Company terminates operation or is stopped from
operation;</P>
	  </li>
      <li>
<P align="justify">
The Company provides untrue documents or hide important    financial information about its operation;
</P>
      </li>
      <li>
<P align="justify">
The Company intentionally evades bank debts by way of related party transaction or other means;</P>
      </li>
      <li>
<P align="justify">
The Company uses loan proceeds for purposes
other than what is agreed without the consent of the Creditor;
</P>
      </li>
      <li>
<P align="justify">
Occurrence of other instances which endangers or may endanger the safety of the loan provided by the Creditor;
</P>
      </li>
    </ul>
  </blockquote>
</blockquote>
<P align="justify">
<B>Headlines of the articles omitted:</B><BR>
</P>
<UL style="text-align:justify;" type="circle">
<LI>
Interest clearing of the loan</LI>
<LI>
Payment of the loan</LI>
<LI>
Rights and obligation of the Company</LI>
<LI>
Rights and obligations of the Creditor</LI>
<LI>
Disputation settlement and Validity</LI>
<LI>
Fees</LI>
<LI>
Breach of contract penalties</LI>
<LI>
Declaration, guaranty and undertaking of the Company</LI>
<LI>
Amendment and Termination of Contract</LI>
<LI>
Others</LI>
<LI>
Text</LI>
</UL>

<HR noshade align="center" width="100%" size=5 color="black">


</BODY>

</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>23
<FILENAME>f10qx2x1.jpg
<TEXT>
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