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Page
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SUMMARY
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1
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RISK
FACTORS
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5
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AVAILABLE
INFORMATION
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6
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INCORPORATION
BY REFERENCE
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6
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FORWARD-LOOKING
STATEMENTS
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7
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USE
OF PROCEEDS
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7
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PRIVATE
PLACEMENT OF COMMON SHARES
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7
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SELLING
STOCKHOLDERS
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8
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PLAN
OF DISTRIBUTION
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9
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MARKET
PRICE INFORMATION FOR OUR COMMON STOCK
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11
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DESCRIPTION
OF CAPITAL STOCK
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11
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MATERIAL UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES
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14
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LEGAL
MATTERS
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16
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EXPERTS
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17
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INDEMNIFICATION
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17
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cellular
phones—customer segments include original equipment manufacturing, or OEM,
customers and replacement battery manufacturers;
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notebook
computers;
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portable
consumer electronics, such as digital cameras, portable media players,
portable gaming devices and
personal digital assistants, or PDAs; and
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cordless
power tools and other applications, such as miner’s lamps, electric
bicycles and hybrid electric
vehicles.
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Lithium
polymer cells for use in ultra-portable electronic devices, such
as
high-end cellular phones, Bluetooth headsets, digital medial players
and
digital audio players. We began commercial production of lithium
polymer
cells in September 2005.
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Cylindrical
lithium-ion cells for use in notebook computers. We began commercial
production of cylindrical cells for notebook computers in June 2006
using
our new semi-automated production lines. In March 2007, our
cylindrical lithium-ion cells met the safety standards for use in
mining
lamps set by the Quality Supervision and Testing Center of the Chemical
and Physical Power Sources of the Ministry of Information Industry.
In
August 2007, we signed a non-binding letter of intent with Hewlett-Packard
Company (“HP”) (NYSE: HPQ), under which both parties have undertaken to
work together in a set timeframe to reach a definitive agreement
for us to
supply cylindrical lithium-ion battery cells to HP or HP’s designated
battery pack manufacturers for notebook computer batteries to be
used in
notebook computers manufactured by
HP.
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High-power,
lithium-phosphate cells for use in cordless power tools and other
applications. We began commercial production of lithium-phosphate
cells in
October 2005 for use in cordless power tools. Currently, we are actively
seeking new market opportunities for our lithium-phosphate cells,
such as
miner’s lamps, electric bicycles and hybrid electric
vehicles.
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—
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Strong
focus on lithium-based batteries and core competency in lithium-ion
battery technology;
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Strong
R&D capabilities;
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Economies
of scale;
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China-based,
low-cost manufacturing model;
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Optimal
use of automation in production process; and
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Experienced
management team with proven technology and operational
record.
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Enhance
leading-edge technology through continual
innovation.
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Continue
our cost leadership through yield improvements and refining our
manufacturing process.
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Expand
our customer base and develop new application markets.
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Increase
manufacturing capacity by leveraging our existing infrastructure,
access
to low-cost local resources and proximity to supply chain and electronics
manufacturing base.
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our
anticipated growth strategies and our ability to manage the expansion
of
our business operations effectively;
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our
future business development, results of operations and financial
condition;
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our
ability to fund our operations and manage our substantial short-term
indebtedness;
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our
ability to maintain or increase our market share in the competitive
markets in which we do business;
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our
limited operating history in developing, manufacturing and selling
of
lithium-based rechargeable battery cells;
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our
ability to keep up with rapidly changing technologies and evolving
industry standards, including our ability to achieve technological
advances;
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our
dependence on the growth in demand for the portable electronic devices
that are powered by our products;
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our
ability to diversify our product offering and capture new market
opportunities;
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our
ability to obtain OEM qualifications from brand names;
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our
ability to source our needs for skilled labor, machinery and raw
materials
economically;
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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;
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uncertainties
with respect to the PRC legal and regulatory
environment;
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our
ability to remediate any material weaknesses in our internal control
over
financial reporting;
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our
ability to maintain cost leadership; and
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our
ability to acquire land use rights to our
facilities.
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Shenzhen
BAK, located in Shenzhen, China, incorporated in August 2001, which
focuses on the development and manufacture of three types of cells:
prismatic cells, cylindrical cells and high-power lithium-phosphate
cells;
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—
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BAK
Electronics located in Shenzhen, China, incorporated in August 2005,
which
focuses on the development and manufacture of lithium polymer cells;
and
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—
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BAK
Tianjin, located in Tianjin, China, incorporated in December 2006,
which
focuses on the manufacture of advanced lithium-ion batteries for
use in
light electric vehicles and uninterruptible power supply
units.
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Common
stock offered by the selling stockholders
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3,500,000
outstanding shares
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Common
stock outstanding immediately after this offering
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52,954,603
shares
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Nasdaq
Global Market symbol
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“CBAK”
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—
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the
lack of depth and liquidity of the market for our common
stock;
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actual
or anticipated fluctuations in our quarterly operating
results;
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announcements
of new products or services by us or our competitors;
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changes
in financial estimates by securities analysts;
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market
conditions in our industry;
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changes
in operations or market valuations of other companies in our
industry;
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our
sales of common stock;
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investor
perceptions of us and our business;
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changes
in the estimates of the future size and growth rate of our
markets;
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market
conditions in industries of our customers;
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announcements
by our competitors of significant acquisitions;
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strategic
partnerships, joint ventures or capital commitments;
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recruitment
or departures of key personnel;
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potential
litigation;
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any
material weaknesses in our internal control over financial reporting;
and
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the
overall economy, geopolitical events, terrorist activities, or threats
of
terrorism.
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our
Annual Report on Form 10-K for the fiscal year ended
September 30, 2007, filed with the SEC on December 19, 2007;
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our
Quarterly Report on Form 10-Q for the quarter ended December 31,
2007, filed with the SEC on February 6, 2008;
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our
Current Report on Form 8-K, filed with the SEC on March 31, 2008
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and
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—
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the
description of our common stock set forth in a registration statement
on
Form 8-A, filed on June 6, 2006, pursuant to Section 12(b)
of the Securities Exchange Act of 1934, including any amendment or
report
updating such description.
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Selling
Stockholders
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Shares of
Common
Stock
Beneficially
Owned (2)
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Percent of
Common
Stock (1) (3)
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Shares of
Common
Stock
to be
Registered
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Percent of
Common
Stock
After
Completion
of
Offering (3)
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Hudson
Bay Fund, LP
(4)
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537,500
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1.0
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%
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537,500
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0
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Hudson
Bay Overseas Fund, Ltd.
(5)
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712,500
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1.3
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%
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712,500
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0
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Enable
Growth Partners LP
(6)
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1,062,500
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2.0
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%
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1,062,500
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0
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Enable
Opportunity Partners LP (7)
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125,000
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*
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125,000
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0
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Pierce Diversified Strategy Master Fund LLC, Ena (8)
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62,500
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*
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62,500
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0
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Xingpeng
Chen
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1,000,000
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1.9
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%
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1,000,000
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0
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*
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Denotes
less than 1% of the outstanding shares of common stock.
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(1)
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Based
upon 53,227,387 shares of common stock issued and outstanding as of
May 2, 2008.
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(2)
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Under
applicable SEC rules, a person is deemed to be the “beneficial owner” of a
security with regard to which the person directly or indirectly,
has or
shares (a) the voting power, which includes the power to vote or
direct
the voting of the security, or (b) the investment power, which includes
the power to dispose, or direct the disposition, of the security,
in each
case irrespective of the person’s economic interest in the security.
None of the selling stockholders who are not natural persons are
reporting
companies under the Securities Exchange Act of 1934.
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(3)
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In
determining the percent of common stock owned by a person on May
2, 2008,
the numerator is the number of shares of common stock beneficially
owned
by the person, and the denominator is the 53,227,387 shares in the
aggregate of common stock outstanding on May 2, 2008. For purposes
of this
selling stockholders table, the calculation for determining the percent
of
common stock owned by a person after completion of the offering is
the
same, and assumes that no new shares of common stock will be issued
by us
prior to the completion of the offering. Assumes all of the common
stock
offered pursuant to this prospectus is
sold.
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(4)
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Sander
Gerber, Yoav Roth and John Doscas share voting and investment power
over
these securities. Each of Sander Gerber, Yoav Roth and John Doscas
disclaim beneficial ownership over the securities held by Hudson
Bay Fund
LP. The selling stockholder acquired the securities offered for its
own
account in the ordinary course of business, and at the time it acquired
the securities, it had no agreements, plans or understandings, directly
or
indirectly to distribute the securities.
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(5)
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Sander
Gerber, Yoav Roth and John Doscas share voting and investment power over
these securities. Each of Sander Gerber, Yoav Roth and John Doscas
disclaim beneficial ownership over the securities held by Hudson
Bay
Overseas Fund LTD. The selling stockholder acquired the securities
offered
for its own account in the ordinary course of business, and at the
time it
acquired the securities, it had no agreements, plans or understandings,
directly or indirectly to distribute the securities.
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(6)
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Mitch
Levine is the managing partner of Enable Growth Partners LP and has
voting
and investment control over the securities held by Enable Growth
Partners
LP.
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(7)
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Mitch
Levine is the managing partner of Enable Opportunity Partners LP
and has
voting and investment control over the securities held by Enable
Opportunity Partners LP.
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(8)
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Mitch
Levine is the managing partner of Pierce Diversified Strategy Master
Fund
LLC, Ena and has voting and investment control over the securities
held by
Pierce Diversified Strategy Master Fund LLC,
Ena.
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·
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on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
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in
the over-the-counter market;
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in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
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through
the writing of options, whether such options are listed on an options
exchange or otherwise;
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
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block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
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purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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privately
negotiated transactions;
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short
sales;
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sales
pursuant to Rule 144;
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broker-dealers
may agree with the selling securityholders to sell a specified number
of
such shares at a stipulated price per
share;
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a
combination of any such methods of sale;
and
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any
other method permitted pursuant to applicable
law.
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Common
Stock
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||||||
Quarter
Ended
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High
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Low
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|||||
Fiscal
2006
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December 31,
2005
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$
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11.10
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$
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5.60
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March 31,
2006
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$
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12.50
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$
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7.80
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June
30, 2006
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$
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10.75
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$
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8.18
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September 30,
2006
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$
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8.80
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$
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4.24
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Fiscal
2007
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$
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$
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December 31,
2006
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$
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7.99
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$
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5.81
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March 31,
2007
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$
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6.49
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$
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3.25
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June 30,
2007
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$
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4.42
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$
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3.05
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September 30,
2007
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$
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8.82
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$
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3.36
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Fiscal
2008
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December
31, 2007
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$
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9.24
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$
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3.38
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March 31,
2008
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$
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5.88
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$
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3.16
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June
30, 2008 (through
May 2, 2008)
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$
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4.16
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$
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3.60
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for
a period of three years after the date of the transaction in which
the
person became an interested stockholder, unless the transaction is
approved by the board of directors prior to the date the interested
stockholder obtained such status; or
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after
the expiration of the three-year period, unless:
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the
transaction is approved by the board of directors or a majority of
the
voting power held by disinterested stockholders, or
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if
the consideration to be paid by the interested stockholder is at
least
equal to the highest of: (a) the highest price per share paid by
the
interested stockholder within the three years immediately preceding
the
date of the announcement of the combination or in the transaction
in which
it became an interested stockholder, whichever is higher, (b) the
market
value per share of common stock on the date of announcement of the
combination and the date the interested stockholder acquired the
shares,
whichever is higher, or (c) for holders of preferred stock, the highest
liquidation value of the preferred stock, if it is
higher.
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a
U.S. citizen or individual resident in the United States;
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a
corporation, or other entity treated as a corporation created or
organized
under the laws of the United States or any political subdivision
thereof;
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an
estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
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a
trust (i) if a U.S. court can exercise primary supervision over the
administration of such trust and one or more U.S. fiduciaries have
the
authority to control all of the substantial interests of such trust
or
(ii) that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person.
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the
gain is U.S. trade or business income, in which case such gain generally
will be taxed in the same manner as gains of U.S. persons, and such
gains
may also be subject to the branch profits tax in the case of a corporate
Non-U.S. Holder;
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the
Non-U.S. Holder is an individual who is present in the United States
for
more than 182 days in the taxable year of the disposition and who
meets
certain other requirements, in which case such holder generally will
be
subject to U.S. federal income tax at a rate of 30% (or a reduced
rate
under an applicable treaty) on the amount by which capital gains
allocable
to U.S. sources (including gains from the sale, exchange, retirement
or
other disposition of the common stock) exceed capital losses allocable
to
U.S. sources; or
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we
are or have been a “U.S. real property holding corporation” for U.S.
federal income tax purposes at any time during the shorter of the
five-year period ending on the date of disposition or the period
that the
Non-U.S. Holder held our common stock (the “applicable period”).
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We
must indemnify our directors to the fullest extent permitted by Chapter
78
of the Nevada Revised Statutes and may, if and to the extent authorized
by
our board of directors, so indemnify our officers and any other person
whom we have power to indemnify against liability, reasonable expense
or
other matter whatsoever.
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We
may at the discretion of its board of director purchase and maintain
insurance on behalf of our company and any person whom we have power
to
indemnify pursuant to law, our articles of incorporation, our bylaws
or
otherwise.
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