Unassociated Document
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed
by
the Registrant x
Filed
by
a Party other than the Registrant o
Check
the
appropriate box:
o Preliminary
Proxy Statement
o Confidential,
For Use of the
Commission Only (As Permitted by Rule 14a-6(e)(2))
o Definitive
Proxy
Statement
x Definitive
Additional
Materials
o Soliciting
Material under Rule
14a-12
CHINA
BAK BATTERY, INC.
(Name
of
Registrant as Specified In Its Charter)
_____________________________________________________________
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee required
o Fee
computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title
of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule
0-11
(set
forth the amount on which the filing fee is calculated and state how it was
determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total
fee paid:
o Fee
paid previously with
preliminary materials.
o Check
box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for
which the offsetting fee was paid previously. Identify the previous filing
by
registration statement number, or the form or schedule and the date of its
filing.
(1)
Amount Previously Paid:
(2)
Form,
Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date
Filed:
______________________________________________________________
CHINA
BAK BATTERY, INC.
BAK
Industrial Park, No. 1 BAK Street
Kuichong
Town, Longgang District
Shenzhen,
518119
People’s
Republic of China
__________
SUPPLEMENT
TO PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON SEPTEMBER 21, 2007
__________
The
following information (the “Supplement”) is provided to correct information
provided in the Proxy Statement dated July 30, 2007 (the “Proxy Statement”),
regarding the former auditors of China BAK Battery, Inc. (the “Company” or “we”)
and the audit and other fees charged by the Company’s independent registered
public accounting firms for services provided during fiscal 2006 and 2005,
that
is being furnished to stockholders in connection with the solicitation of
proxies on behalf of the Board of Directors of the Company (the “Board”) for use
at the 2007 Annual Meeting of Stockholders to be held at 9:00 a.m. local time
on
Friday, September 21, 2007, and at any adjournment or adjournments thereof,
at
BAK Industrial Park, No. 1 BAK Street, Kuichong Town, Longgang District,
Shenzhen, 518119, People’s Republic of China (the “Annual Meeting”). The
information in this Supplement replaces the sections entitled “Former Auditors”
and “Independent Registered Public Accounting Firm’s Fees,” included in the
Proxy Statement under Proposal 2 “Ratification of Selection of Independent
Auditors,” and should be read in conjunction with the Proxy
Statement.
* * * * *
Former
Auditors
On
January 20, 2005, we dismissed George Stewart, C.P.A. as our independent
registered public accounting firm and appointed Schwartz Levitsky Feldman LLP
(“SLF”), as our independent registered public accounting firm. The dismissal of
George Stewart, C.P.A. was approved by the Board of Directors of the Company
at
such time. On
May
15, 2006, the Company changed its independent registered public accounting
firm
from SLF to KPMG. On July 7, 2006, the Board, acting upon the recommendation
of
the Audit Committee, ratified and authorized the appointment KPMG as the
Company’s independent registered public accounting firm for the fiscal year
ending September 30, 2006. Subsequently, effective April 1, 2007, the Board
dismissed KPMG and authorized the appointment of PKF as the Company’s
independent registered public accounting firm for the fiscal year ending
September 30, 2007. On April 2, 2007 the Company and PKF signed a formal
engagement letter appointing PKF as the Company’s independent registered public
accounting firm for the fiscal year ending September 30, 2007.
For
the
fiscal years ended September 30, 2005 and 2006, the Company’s principal
accountants’ report on the Company’s financial statements did not contain any
adverse opinion or disclaimer of opinion, nor was it qualified or modified
as to
uncertainty, audit scope or accounting principles, except as follows: KPMG’s
audit report, dated December 8, 2006, on the consolidated financial statements
of the Company and its subsidiaries (the “Group”) as of and for the years ended
September 30, 2006 and 2005, contained a separate paragraph stating that
“As
discussed in note 2(q) to the consolidated financial statements, on October
1,
2005, the Group adopted Statement of Financial Accounting Standards (‘SFAS’)
No.123 (Revised 2004), “Share-Based Payment,” using the modified prospective
method, representing a change in the Group’s method of accounting for
stock-based compensation.” The
audit
report, dated August 22, 2006, of KPMG on the consolidated financial statements
of the Group as of September 30, 2005 and 2004 and for the three-year period
ended September 30, 2005, which was included in Amendment No. 3 to our
Form
10-KSB/A for the fiscal year ended September 30, 2005, did not contain
an
adverse opinion or disclaimer of opinion, and was not qualified or modified
as
to uncertainty, audit scope or accounting principles, except as follows:
KPMG’s
report contained a separate paragraph stating that “As described in Note 3 to
the accompanying consolidated financial statements, the Company has restated
the
consolidated balance sheets as of September 30, 2004 and 2005 and the related
consolidated statements of income and comprehensive income, and cash flows
for
each of the years in the three-year period ended September 30, 2005, which
were
previously audited by other independent accountants, to correct certain
accounting errors that were detected after the original issuance of those
consolidated financial statements.” The
audit
report of KPMG on management’s assessment of the effectiveness of internal
control over financial reporting and the effectiveness of internal control
over
financial reporting as of September 30, 2006, which is included in our
Annual
Report on Form 10-K for the fiscal year ended September 30, 2006 (the “2006 Form
10-K”), did not contain any adverse opinion or disclaimer of opinion, nor was
it
qualified or modified as to uncertainty, audit scope, or accounting principles,
except that KPMG’s report indicates that the Group did not maintain effective
internal control over financial reporting as of September 30, 2006, because
of
the effect of material weaknesses, including those set forth below, described
in
such report and elsewhere in the 2006 Form 10-K.
During
the fiscal years ended September 30, 2005 and 2006, there were no disagreements
with the Company’s former accountants on any matters of accounting principles or
practices, financial statement disclosure or auditing scope or procedure
which,
if not resolved to such former accountant’s satisfaction, would have caused such
former accountant to make reference in connection with their opinion to
the
subject matter of the disagreement. During the fiscal years ended September
30,
2005 and 2006, there were no “reportable events,” as such term is defined in
Item 304(a)(1)(v) of Regulation S-K, except that KPMG advised the Group of
certain material weakness in its internal controls over financial reporting,
which were reported by the Company under Item 9A. “Controls and Procedures” of
the 2006 Form 10-K, to the effect that the Company had an insufficient
complement of personnel, including in senior management, with a level of
accounting knowledge, experience and training in the application of U.S.
GAAP
and did not implement adequate supervisory review to ensure that the
consolidated financial statements were prepared in conformity with U.S.
GAAP.
The lack of sufficient personnel with such accounting knowledge, experience
and
training contributed to the following material weaknesses in the Group’s (i)
accounting for capitalization of interest costs, and the related recognition
of
property, plant and equipment and depreciation expense; (ii) accounting
for
deferred taxes under U.S. GAAP, in particular the identification and measurement
of differences between the respective tax and financial reporting bases
of
certain assets and liabilities and the determination of the applicable
income
tax rate to ensure that deferred taxes were accurately presented in the
Group’s
consolidated financial statements; (iii) accounting for the share-based
compensation, in particular the accounting for cancellation and replacement
of
certain option grants and the classification of the associated share-based
compensation expense in the consolidated statement of income and comprehensive
income; (iv) the calculation of earnings per share in accordance with Statement
of Financial Accounting Standards No. 128 “Earnings per Share,” in particular
the identification of dilutive instruments in the calculation of diluted
earnings per share; (v)
accounting for the complete and accurate recognition of construction in
progress
assets; and (vi) accounting for construction in progress assets and the
determination of depreciation expense when the assets are ready for their
intended use.
Each
of
KPMG, SLF and George Stewart, C.P.A. were provided copies of the disclosures
contained above.
Independent
Registered Public Accounting Firm’s Fees
George
Stewart, C.P.A. and SLF performed services for us in fiscal 2005 and SLF and
KPMG performed services for us in fiscal 2006 related to financial statement
audit work, quarterly reviews, audit of internal control over financial
reporting and registration statements. Fees paid or payable to George Stewart,
C.P.A., SLF and KPMG in fiscal 2006 and 2005 were as follows:
| |
|
2005
|
|
2006
|
|
|
Audit
fees(1)
|
|
$
|
161,000
|
|
$
|
935,826
|
|
|
Audit-related
fees(2)
|
|
|
97,000
|
|
|
9,342
|
|
|
Tax
fees
|
|
|
—
|
|
|
—
|
|
|
All
other fees
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
|
258,000
|
|
|
945,168
|
|
__________
|
(1)
|
Consists
of fees billed for the audit of our annual financial statements,
review of
financial statements included in our Quarterly Reports on Form 10-Q
and
services that are normally provided by the accountant in connection
with
statutory and regulatory filings or
engagements.
|
|
(2)
|
Consists
of assurance and related services that are reasonably related to
the
performance of the audit and reviews of our financial statements
and are
not included in “audit fees” in this table. The services provided by our
accountants within this category consisted of advice relating to
SEC
matters and employee benefit
matters.
|