UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2004
[ ] Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _________ to _________
Commission File No. 0-13337
ADVANCED BATTERY TECHNOLOGIES, INC.
----------------------------------------------
(Name of Small Business Issuer in Its Charter)
DELAWARE 22-2497491
------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Wall Street, 15th Floor, New York, NY 10005
-----------------------------------------------
(Address of principal executive offices)
(212) 232-0120 x 221
-----------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
The number of shares outstanding of each of the issuer's class of
equity as of the latest practicable date is stated below:
Title of each class of Common Stock Outstanding as November 15, 2004
------------------------------------------------------------------------
Common Stock, $0.001 par value 10,715,169
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
ADVANCED BATTERY TECHNOLOGIES, INC.
FORM 10-QSB
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Notes to Unaudited Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis or Plan
of Operation 10
Item 3. Controls and Procedures 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 13
PART 1. FINANCIAL INFORMATION
ADVANCED BATTERY TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
September 30, 2004
(Unaudited)
------------------
ASSETS
Current assets
Cash and cash equivalents 61,937
Accounts receivable 30,539
Other receivable 96,009
Inventories 247,328
Prepaid expenses 226,425
---------
Total current assets 662,238
Property, plant and equipment, net 2,572,090
Construction in process 3,961,068
Rights to use land and power, net 431,679
Patents, net 104,615
Prepaid expenses (Note 4) 2,160,485
---------
Total assets 9,892,175
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses 431,995
Notes payable 362,463
Current maturities of long-term debt 33,647
Customer deposits 672,989
Welfare payable 48,044
Loan payable, others 487,549
---------
Total current liabilities 2,036,687
Long-term debt, excluding current maturities 14,747
---------
Total liabilities 2,051,434
---------
Minority interests 1,689,734
Stockholders' equity
Common stock (Note 6) 10,715
Preferred stock (Note 7) -
Additional paid-in capital (Note 8) 7,010,661
Accumulated deficit (911,101)
Accumulated other comprehensive income 40,732
---------
Total stockholders' equity 6,151,007
---------
Total liabilities and stockholders' equity 9,892,175
=========
See the accompanying notes to the unaudited consolidated financial
statements.
-1-
ADVANCED BATTERY TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
(Unaudited) (Unaudited)
----------------------------------------------
Revenues 116,383 - 1,085,058 -
Cost of sales (87,815) - (697,933) -
--------------------- --------------------
Gross profit 28,568 - 387,125 -
Other income 428 - 533 -
Selling expenses (11,453) - (25,195) -
General and administrative
expenses (266,502) (11,735) (588,175) (35,206)
Research and development costs (19,441) - (56,458) -
Depreciation and amortization (6,521) (15,743) (32,967) (47,229)
Interest expense (2,497) - (10,369) -
--------------------- --------------------
Loss before minority interests (277,418) (27,478) (325,506) (82,435)
Minority interests 31,246 8,243 45,672 24,730
--------------------- --------------------
Net loss (246,172) (19,235) (279,834) (57,705)
===================== ====================
Net loss per share (Note 5) (0.02) (0.00) (0.03) (0.01)
===================== ====================
Weighted average number
of shares 10,328,321 9,141,130 9,707,902 9,141,130
========== ========= ========= =========
See the accompanying notes to the unaudited consolidated financial
statements.
-2-
ADVANCED BATTERY TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended
September 30,
2004 2003
(Unaudited)
-----------------------
Cash flows from operating activities :
Net loss (279,834) (57,705)
Adjustments to reconcile net loss to net
cash provided by operating activities :
Depreciation and amortization (Note) 110,135 47,229
Amortization of prepaid expenses 173,265 -
Minority interests (45,672) (24,730)
Changes in operating assets and liabilities :
Increase in accounts receivable (30,478) -
Increase in other receivable (96,009) -
Increase in inventories (144,553) (69,975)
Decrease/(increase) in prepaid expenses 105,013 (564,730)
Decrease/(increase) in taxes receivable 28,495 (15,757)
Increase in accounts payable and accrued
expenses 376,675 118,614
Increase in customer deposits 672,920 -
Increase in welfare payable 27,498 12,098
---------- ----------
Net cash provided by/(used in) operating
activities 897,455 (554,956)
---------- ----------
Cash flows from investing activities :
Purchase of property and equipment (162,862) (220,413)
Purchase of construction in process (1,140,438) (1,086,623)
Purchase of patents (10,585) -
Proceeds to loan receivable, others - (63,766)
Repayment from officers 194,444 -
--------- ---------
Net cash used in investing activities (1,119,441) (1,370,802)
---------- ----------
Cash flows from financing activities :
Net proceeds from long-term debt 26,646 -
Net proceeds from notes payable - 120,817
Net proceeds from loan payable, others 302,315 -
(Repayment to)/advances from officers (53,101) 1,826,813
---------- ----------
Net cash provided by financing activities 275,860 1,947,630
---------- ----------
Net increase in cash and cash equivalents 53,874 21,872
Cash and cash equivalents, beginning of period 8,063 2,441
---------- ----------
Cash and cash equivalents, end of period 61,937 24,313
========== ==========
Note : For the nine months ended September 30, 2004, USD77,168 of
these expenses were included in cost of sales.
See the accompanying notes to the unaudited consolidated financial
statements.
-3-
ADVANCED BATTERY TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. CHANGE OF COMPANY NAME
On July 12, 2004, the name of the Company was changed from Buy
It Cheap.com to Advanced Battery Technologies, Inc. ("ABAT"),
with all the required filings submitted to the United States
Securities and Exchange Commission.
2. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
ABAT and its subsidiaries (the "Group") have been prepared in
accordance with generally accepted accounting principles in the
United States of America for interim consolidated financial
information. Accordingly, they do not include all the
information and footnotes necessary for comprehensive
consolidated financial statements. These statement should be
reviewed in conjunction with the condensed consolidated
financial statements of the Company, notes thereto, and the
Management's Discussion and Analysis set forth in the Company's
Current Report on Form 8-K dated May 6, 2004.
(i) In the opinion of the management of ABAT, all adjustments
considered necessary for a fair presentation of the financial
position and the results of operations and cash flows for the
interim periods have been included. Interim results are not
necessarily indicative of results for a full year.
(ii) The Company has two subsidiaries, Cashtech Investment
Limited ("Cashtech"), a British Virgin Island corporation, and
Heilongjiang ZhongQiang Power-Tech Co., Ltd. ("ZQ Power-Tech").
ZQ Power-Tech is a limited liability company established in the
People's Republic of China in which Cashtech owns 70% interest.
On March 1, 2004, the previous stockholders holding 70%
ownership of ZQ Power-Tech agreed to the transfer of their
shares to obtain 100% ownership in Cashtech. Cashtech is the
legal parent of ZQ Power-Tech since inception, with the transaction
being treated as a reverse merger and recapitalization of ZQ
Power-Tech, which is treated as the accounting acquirer.
On May 6, 2004, ABAT completed a share exchange with the
stakeholders of Cashtech. This share exchange has been
treated as a reverse takeover with Cashtech taken as the
accounting acquirer and ABAT as the accounting acquiree.
The purchase method under reverse takeover accounting has been
applied for the above two share exchanges. These consolidated
financial statements issued under the name of the legal parent,
ABAT, are a continuation of the financial statements of ZQ
Power-Tech. The comparative figures are those of ZQ Power-Tech.
The 30% minority interests in ZQ Power-Tech was reflected in the
comparative figures as if the current group structure was already
in existence. ZQ Power-Tech had been in the development stages
from the date of inception (August 20, 2002) to December 31,
2003 and was considered as a normal operating company starting
from January 1, 2004.
-4-
ADVANCED BATTERY TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
2. BASIS OF PRESENTATION (CONT'D)
(iii) The Group has accumulated deficit as at September 30,
2004. However, based on the substantial backlog of orders
that the Group has accumulated, the management of the Group
believes that these orders will generate sufficient revenue
and cash flows to enable the Group to continue as a going concern.
3. DESCRIPTION OF BUSINESS
ABAT continues to be engaged in the business of designing,
manufacturing and marketing rechargeable polymer lithium-ion
batteries through its subsidiary, ZQ Power-Tech.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by the Company are set forth
in the section "Summary of significant accounting policies" of
the consolidated financial statements of "Cashtech Investment
Limited and Subsidiary" included in the Company's Form 8-K
submitted to the United States Securities and Exchange
Commission on May 21, 2004.
In addition to the above-mentioned accounting policies, the
Company adopted the accounting policy of prepaid expenses
during the current interim period:
Prepaid expenses
Prepaid expenses represent the aggregate fair value of the
Company's common stock issued in return for the consultancy
works and services provided by certain consultants and by an
employee of the Company. The fair value is determined by
reference to the closing price of the Company's common stock as
quoted on the Over-the-Counter Bulletin Board (the "OTCBB") at
the date of entering into the agreements. The prepaid expenses
are amortized on a straight-line basis over the respective
terms of the agreements.
5. LOSS PER SHARE
(i) The basic net loss per share is calculated using the net
loss and the weighted average number of common shares outstanding
during the interim periods.
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
------------------ -------------------
Net loss (USD) (246,172) (19,235) (279,834) (57,705)
========== ========= ========= =========
Weighted average common
shares outstanding 10,328,321 9,141,130# 9,707,902 9,141,130#
========== ========= ========= =========
Basic net loss per
share (USD) (0.02) (0.00) (0.03) (0.01)
========== ========= ========= =========
-5-
ADVANCED BATTERY TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
5. LOSS PER SHARE (CONT'D)
# The number represents the number of shares issued by ABAT for the
share exchange with Cashtech (after taking into account the reverse
stock split as disclosed in Note 6(i)).
(ii) The diluted net loss per share is not presented as there
is no dilutive effect for all periods.
6. COMMON STOCK
No. of shares Amount
---------------- ---------------
Authorized :
Common stock at USD0.001 par value
(Note 6(i)) 60,000,000 60,000
Issued and outstanding :
At July 1, 2004 19,842,582 19,843
Reverse split of outstanding common stock
(Note 6(i)) (17,883,543) (17,884)
Conversion of preferred stock (Note 6(ii)) 8,061,130 8,061
Shares issued to an employee (Note 6(iii)) 200,000 200
Shares issued to consultants (Note 6(iv)) 495,000 495
At September 30, 2004 10,715,169 10,715
Notes :
(i) Pursuant to a resolution adopted by the Company to amend
the certificate of incorporation, on July 12, 2004, the
Company filed a restated certificate of incorporation
with the Secretary of State of Delaware. The restated
certificate of incorporation amended the certificate of
incorporation and :
(a) The authorized number of shares of capital stock
was increased from 20,000,000 common stock and
2,000,000 preferred stock to 60,000,000 common
stock and 5,000,000 preferred stock.
(b) There was a reverse split of the outstanding
common stock for a 1-for-10 basis, effective on
July 12, 2004. The fractional shares resulting
from the reverse split were purchased by the
Company.
(ii) Subsequent to the reverse stock split on July 12, 2004,
the holders of the Company's preferred stock converted
their shares into 8,061,130 shares of common stock (Note
7).
(iii) The shares were issued to an employee of the Company for
the provision of services for a term of two years
commencing on July 11, 2004.
-6-
ADVANCED BATTERY TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
6. COMMON STOCK (CONT'D)
(iv) The Company entered into several consulting agreements
(the "Agreements") with various consultants. In
consideration of the consulting services provided, the
Company agreed to issue in aggregate 495,000 shares of
the Company's common stock to the consultants. The
details of the consulting agreements are as follows :
Common
stock Date of
Services provided Terms issued issuance
------------------------------------------------------------------------------
Marketing, sales channeling,
market research and promotion June 29, 2004 to 220,000 September 14, 2004
June 28, 2006
Provision of technical market July 23, 2004 to 100,000 July 30, 2007
information and technical July 22, 2007
research and development
services
Provision of industry September 8, 2004 125,000 September 9, 2004
and market information to September 7,
in China 2005
Coordination and September 8, 2004 50,000 September 14, 2004
business development to September 7,
services in US 2006
--------
495,00
========
7. PREFERRED STOCK No. of shares Amount
------------------ ----------
Authorized :
Preferred stock at USD0.001 par value
(Note 6(i)) 5,000,000 5,000
========= =====
Issued and outstanding :
At July 1, 2004 806,113 806
Conversion to common stock (Note 6(ii)) (806,113) (806)
At September 30, 2004 - -
Each share of preferred stock was convertible into 10 common
stock (after taking into account the reverse stock split as
disclosed in Note 6(i)).
8. ADDITIONAL PAID-IN CAPITAL
Included in the additional paid-in capital is an amount of
USD2,333,055 which represents the excess of the aggregate fair
value of the Company's common stock issued to an employee (Note
6(iii)) and issued under the Agreements (Note 6(iv)), over the
par value of the stock issued. The fair value is determined by
reference to the closing price of the Company's common stock
quoted on the OTCBB at the dates of entering the agreements.
-7-
ADVANCED BATTERY TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
9. SUPPLEMENTAL CASH FLOW INFORMATION
Nine months ended
September 30,
2004 2003
-------------------
Interest paid 10,369 -
Income taxes - -
Non-cash investing activities
Common stock issued to an employee
and consultants for provision of
services 2,333,750 -
========= ======
10. WARRANTIES
The Group warrants that all equipment manufactured by it will
be free from defects in material and workmanship under normal
use for a period of one year from the date of shipment. The
Group's experience for costs and expenses in connection with
such warranties has been minimal and during the three months
and nine months ended September 30, 2004, no amounts have been
considered necessary to reserve for warranty costs at this time.
11. EQUITY INCENTIVE PLAN
(i) The Company adopted the 2004 Equity Incentive Plan (the
"Plan") on August 24, 2004. The purpose of the Plan is to promote
the success and enhance the value of the Company by linking the
personal interests of the participants of the Plan (the
Participants") to those of the Company's shareholders, and by
providing the Participants with an incentive for outstanding
performance. The Plan is further intended to attract and
retain the services of the Participants upon whose
judgment, interest, and special efforts the successful
operation of the Group is dependent.
Subject to the terms and provisions of the Plan, the
Board of Directors, at any time and from time to time,
may grant shares of stock to eligible persons in such
amounts and upon such terms and conditions as the Board
of Directors shall determine.
The Committee appointed by the Board of Directors to
administer the Plan shall have the authority to determine
all matters relating to the options to be granted under
the Plan including selection of the individuals to be
granted awards or stock options, the number of stocks,
the date, the termination of the stock options or awards,
the stock option term, vesting schedules and all other
terms and conditions thereof.
-8-
ADVANCED BATTERY TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
11. EQUITY INCENTIVE PLAN (CONT'D)
(ii) As mentioned in note 6(iv) of the consolidated financial
statements, ABAT issued a total of 495,000 shares of common stock
to various consultants. 125,000 of the shares were issued under the Plan.
(iii) Other than the transaction as detailed in note 11(ii) of
the consolidated financial statements, no options or warrants have
been made, exercised or lapsed during the three months and nine
months ended September 30, 2004.
-9-
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-looking Statements
This Report contains certain forward-looking statements
regarding the business and financial prospects of Advanced Battery
Technologies, Inc. and its subsidiary, ZQ Power-Tech. These
statements represent Management's present intentions and its present
belief regarding the company's future. Nevertheless, there are
numerous risks and uncertainties that could cause our actual results
to differ from the results suggested in this Report. Among the more
significant factors are:
1. ZQ Power-Tech has only recently initiated marketing. It is
not yet known whether it will be able to sell its products
in quantities sufficient to support significant growth and
profitable operations.
2. A number of competitors who have capital resources far
greater than those of ZQ Power-Tech dominate the market for
rechargeable batteries. If one or more of them chose to
compete aggressively with ZQ Power-Tech, it might prevent
ZQ Power-Tech from effectively expanding its customer base.
3. If the current growth rate of the economy of China were to
be significantly reduced or if China were to experience a
recession, the market for ZQ Power-Tech's products would be
reduced, and the capital available to fund its expansion
program might also be reduced.
Because these and other risks may cause the Company's actual
results to differ from those anticipated by Management, the reader
should not place undue reliance on any forward-looking statements
that appear in this Report. Readers should also take note that the
Company will not necessarily make any public announcement of changes
affecting these forward-looking statements, which should be
considered accurate on this date only.
Results of Operations
Advanced Battery Technologies, Inc. is a holding company with
one subsidiary. Its subsidiary owns 70% of the equity in
Heilongjiang ZhongQiang Power-Tech Co., Ltd., a China limited
liability company ("ZQ Power-Tech"), which is engaged in the business
of designing, manufacturing and marketing rechargeable polymer
lithium-ion ("PLI") batteries.
During the year ended December 31, 2003 ZQ Power-Tech's
activities were focused on development of its product line and the
build-out of its manufacturing facility. ZQ Power-Tech recorded its
first significant revenues in the first quarter of 2004, ending March
31, 2004. All but a trace of the $476,009 in sales recorded in that
quarter were made to two customers. In the second quarter of 2004 ZQ
Power-Tech's sales were only slightly greater, as revenue of $492,666
was recorded. Most of the second quarter sales were made to three
customers.
The Company's level of sales fell in the third quarter to
$116,383. The reduction occurred primarily because the Company's
operations are focused on fulfilling on major order, which does not
call for shipments until the fourth quarter of this year. In
addition, deliveries have recently been slow in part because the
operations personnel at ZQ Power-Tech were focused on completing
additional factory facilities at ZQ Power-Tech's campus in
Heilongjiang. These facilities have now been completed, resulting in
a substantial increase in the manufacturing capacity of ZQ Power-Tech.
-10-
Currently, ZQ Power-Tech has a backlog of $21 million. Almost
the entire backlog consists of an order placed by Aiyingsi Enterprise
Co., Ltd. of Taiwan for standard 3.7 volt PLI battery sets.
Deliveries to Aiyingsi are scheduled monthly from October 2004
through August 2005.
ZQ Power-Tech realized a 36% gross margin on its sales in the
first nine months of 2004, ranging from 44% in the first quarter to
25% in the third quarter, reflecting a different mix of products sold
in each quarter. The gross margin ratio in the future will depend
considerably upon which of ZQ Power-Tech's products are dominating
sales. So it is premature to predict whether the 36% level achieved
to date will be maintained.
The general and administrative expenses recorded in the third
quarter substantially exceeded revenue. This was primarily the
result of very low revenue. However, general and administrative
expense in the third quarter also included a non-cash expense of
$173,265 attributable to the amortization of consulting fees and
salaries that were prepaid by the Company issuing common stock to the
consultants and employee. At September 30, 2004 there remained
$2,160,485 in prepaid expenses on the Company's balance sheets, which
will be amortized as expenses over the next three years. However
the expected increase in ZQ Power-Tech's net sales should result in a
better ratio of expenses to sales.
The Company's revenue less expenses produced a net loss of
$325,506 for the nine months ended September 30, 2004. However,
because Advanced Battery owns only 70% of ZQ Power-Tech, the loss was
reduced by $45,672 on Advanced Battery's statements of operations,
representing 30% of the loss incurred by ZQ Power-Tech. If, in the
future, ZQ Power-Tech reports earnings, the earnings will be
similarly discounted by 30% on Advanced Battery's statements of
operations, as long as there remains 30% of ZQ Power-Tech that is not
owned by Advanced Battery.
Liquidity and Capital Resources
To date, the development and initial operations of ZQ Power-
Tech have been financed primarily by contributions to capital made by
Zhiguo Fu, the Company's Chairman. At September 30, 2004 ZQ Power-
Tech had a working capital deficit of $1,374,449, an increase in the
deficit of $1,167,318 since March 31, 2004. Among the principal
factors in the deficit were customer deposits totaling $672,989,
which will be amortized as products are delivered, and an unsecured
note payable to a Chinese institutional lender in the amount of
$362,463. The note is due on January 1, 2005.
Despite its negative working capital, ZQ Power-Tech has
sufficient liquidity to fund its near-term operations. The principal
capital resource available is $6,533,158 in property, plant and
equipment and construction in process, which ZQ Power-Tech owns
without lien. Based on the substantial backlog of orders that ZQ
Power-Tech has accumulated, it believes that secured financing will
be available to it on favorable terms when needed. Until then, if
short-term cash shortages occur, Mr. Fu has committed to provide
financing as needed. In addition, the Shuangcheng Science and
Technology Bureau has committed to grant $604,105 to ZQ Power-Tech if
its products have achieved international standards or the standards
of the local bureau by the end of 2004.
Based upon the financial resources available to ZQ Power-Tech,
management believes that it has sufficient capital and liquidity to
sustain operations for the foreseeable future.
ITEM 3. CONTROL AND PROCEDURES
We maintain disclosure controls and procedures that are designed to
ensure that information that is required to be disclosed in the
Securities Exchange Act of 1934 reports are recorded, processed,
summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and
communicated to our management to allow timely decisions regarding
required disclosure.
At of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our
management, including Zhiguo Fu, our Chief Executive Officer, and
Guohua Wan, our Chief Financial Officer, pursuant to Rule 13a-15
under the Securities Exchange Act of 1934, as amended. Based on
their evaluation, they concluded that as of the end of the period
covered by this report, our disclosure controls and procedures were
effective under Rule 13a-15.
There were no significant changes in our internal controls or in
other factors that could significantly affect these controls
subsequent to the end of the period covered by this report, including
any significant deficiencies or material weaknesses of internal
controls that would require corrective action.
-12-
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
Conversion of preferred shares to common shares
On July 12, 2004, the Company filed a Restated Certificate of
Incorporation with the Secretary of State of Delaware. The Restated
Certificate of Incorporation amended the Certificate of Incorporation
to effect a reverse split on the outstanding Common Stock in the
ratio of 1:10.
Unregistered sales of equity securities
Subsequent to the reverse stock split, all of the holders of the
Series D Preferred Stock converted their preferred shares into
8,061,130 shares of common stock of the Company. The exchange was
exempt pursuant to Section 3(a)(9) of the Securities Act. There were
no underwriters.
On July 30, 2004, the Company issued 100,000 shares of restricted
common stock to Chan Ching Chuen for services as a technical
consultant - electronic engineering on product development, technical
marketing information and technical research for the Company's future
development. The transaction was exempt pursuant to Section 4(2) of
the Securities Act since the shares were issued to an individual who
had access to detailed information about the Company and who was
acquiring the shares for his own account. There were no underwriters.
On June 29, 2004, the Company issued a total of 220,000 shares of
restricted common stock to Li Wing Chun Charles, Lam Chi Yin Henry
and Chan Tsz King. Li Wing Chun Charles was engaged by the Company
to evaluate the marketing and sales channeling of the Hong Kong
regional office and other subsidiaries. Lam Chi Yin Henry was
engaged by the Company to assist the Company with product promotion
in Macau SAR for its Hong Kong regional office. Chan Tsz King was
engaged by the Company to conduct industry and market research.
The transactions were exempt pursuant to Section 4(2) of the
Securities Act since the shares were issued to individuals who had
access to detailed information about the Company and who were
acquiring the shares for their own accounts. There were no
underwriters.
On September 8, 2004, the Company signed a consultant agreement with
Yu Hao to explore business opportunities in the United States. As
compensation, the Company issued 50,000 shares of restricted common
stock to Yu Hao. The transaction was exempt pursuant to Section 4(2)
of the Securities Act since the shares were issued to an individual
who had access to detailed information about the Company and who was
acquiring the shares for her own account. There were no underwriters.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
-13-
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits: None.
Reports on Form 8-K:
a. Report dated July 12, 2004 regarding name change, reverse
stock split, and increase in the authorized shares.
b. Report dated July 20, 2004 regarding change in the fiscal year.
c. Report dated September 14, 2004 regarding election of new
directors and replacement of the Chief Financial Officer.
d. Report dated September 27, 2004 regarding change in the
Company's certifying accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
ADVANCED BATTERY TECHNOLOGIES, INC.
Date: November 16, 2004 By: /s/ Zhiguo Fu
----------------------------------
Zhiguo Fu, Chief Executive Officer
Date: November 16, 2004 By: /s/ Guohua Wan
-----------------------------------
Guohua Wan, Chief Financial Officer