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China BAK Battery, Inc. (Parent Company)
 12 Months Ended
Sep. 30, 2015
China BAK Battery, Inc. (Parent Company) [Text Block]
22.

China BAK Battery, Inc. (Parent Company)

Under PRC regulations, subsidiaries in PRC (“the PRC subsidiaries”) may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC GAAP. In addition, the PRC subsidiaries are required to set aside at least 10% of their after tax net profits each year, if any, to fund the statutory general reserve until the balance of the reserves reaches 50% of their registered capital. The statutory general reserves are not distributable in the form of cash dividends to the Company and can be used to make up cumulative prior year losses, if any, and may be converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings, or by increasing the par value of the shares currently held by them, provided that the reserve balance after such issue is not less than 25% of the registered capital. As of September 30, 2014 and 2015, additional transfers of $15,250,000 and $15,250,000 were required for Dalian BAK Power and Dalian BAK Trading before the statutory general reserve reached 50% of the registered capital of the PRC subsidiaries, respectively. As of September 30, 2014 and 2015, there was no appropriation from retained earnings and set aside for statutory general reserves by the PRC subsidiaries. BAK Dalian did not have after tax net profits since its incorporation and therefore no appropriation was made to fund its statutory general reserve as of September 30, 2014 and 2015. Dalian BAK Power had after tax profits of nil and $15,769,742 in fiscal 2014 and 2015, respectively.

Schedule I of Article 504 of Regulation SX requires the condensed financial information of the registrant (Parent Company) to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of this test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party (i.e., lender, regulatory agency, foreign government, etc.).

SCHEDULE I – CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CHINA BAK BATTERY, INC.
PARENT COMPANY STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND 2015

      2014     2015  
  REVENUE, net $   -   $   -  
  OPERATING EXPENSES:            
     Salaries and consulting expenses   (190,286 )   (711,214 )
     General and administrative   (812,355 )   (932,632 )
               Total operating expenses   (1,002,641 )   (1,643,846 )
  LOSS FROM OPERATIONS   (1,002,641 )   (1,643,846 )
  OTHER INCOME (EXPENSE)   -     -  
  LOSS ATTRIBUTABLE TO PARENT COMPANY   (1,002,641 )   (1,643,846 )
  EQUITY IN EARNINGS OF SUBSIDIARIES   38,778,557     17,517,772  
  NET INCOME AVAILABLE TO SHAREHOLDERS $ 37,775,916   $ 15,873,926  

CHINA BAK BATTERY, INC.
PARENT COMPANY BALANCE SHEETS
AS OF SEPTEMBER 30, 2014 AND 2015

      2014     2015  
  ASSETS            
               
  CURRENT ASSETS:            
     Other receivables $ 7,000   $   -  
               Total current assets   7,000     -  
               
     Interests in subsidiaries   -     23,279,070  
               Total assets $ 7,000   $ 23,279,070  
               
  LIABILITIES AND SHAREHOLDERS' EQUITY            
               
  CURRENT LIABILITIES:            
     Accrued expenses and other payables $ 1,637,684   $ 1,610,183  
         Total current liabilities   1,637,684     1,610,183  
     Interests in subsidiaries  

  2,704,939

   

  -

 
  SHAREHOLDERS' EQUITY   (4,335,623 )   21,668,887  
                   Total liabilities and shareholders' equity $ 7,000   $ 23,279,070  

CHINA BAK BATTERY, INC.
PARENT COMPANY STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND 2015

      2014     2015  
  CASH FLOWS FROM OPERATING ACTIVITIES:            
     Net income available to shareholders $ 37,775,916 $     15,873,926  
     Adjustments to reconcile net income to net cash used in operating activities:            
         Equity in earnings of subsidiaries   (38,778,557 )   (17,517,772 )
         Provision for doubtful debts   -     7,000  
         Share based compensation   88,745     750,167  
         Change in operating assets and liabilities            
                   Accrued expenses and other payable   266,034     (27,501 )
                   Net cash used in operating activities   (647,862 )   (914,180 )
               
  CASH FLOWS FROM INVESTING ACTIVITIES:            
     Decrease in interest in subsidiaries   647,862     914,180  
                   Net cash provided by investing activities   647,862     914,180  
               
  CASH FLOWS FROM FINANCING ACTIVITIES:            
                   Net cash provided by financing activities   -     -  
               
  CHANGE IN CASH   -     -  
               
  CASH, beginning of year   -     -  
               
  CASH, end of year $   -   $   -  

The condensed parent company financial statements have been prepared using the equity method to account for its subsidiaries. Refer to the consolidated financial statements and notes presented above for additional information and disclosures with respect to these financial statements.