Short-term Bank Loans

12 Months Ended

Sep. 30, 2014

Short-term Bank Loans [Text Block]

11. Short-term Bank Loans

As of the September 30, 2014, the Company borrowed $4,887,216 (RMB30 million) from Bank of Dandong for a period from August 19, 2014 to August 18, 2015, bearing interest at 7.8% per annum. The loan was guaranteed by Mr. Xiangqian Li, the Company’s CEO and Shenzhen BAK, a former subsidiary of the Company.

As of September 30, 2013, the Company had several short-term bank loans with aggregate outstanding balances of $151,404,677. The loans were primarily obtained for general working capital, carried at interest rates ranging from 4.44% to 15. 0% per annum, and had maturity dates ranging from 9 to 12 months. The loans were guaranteed by Mr. Xiangqian Li, the Company’s CEO, and Ms. Xiaoqiu Yu, the wife of the CEO, who did not receive any compensation for acting as a guarantor. The loans were also guaranteed by Shenzhen BAK, Tianjin New Energy, BAK Tianjin and BAK International. These facilities were secured by the Company’s assets with the following carrying values:

		2013		2014
Inventories	$	24,505,399	$	-
Accounts receivable, net		31,392,774		-
Machinery and equipment, net		12,211,038		-
Land use rights, buildings and construction in progress of BAK Industrial Park		87,763,440		-
Land use rights and buildings of Research and Development Test Centre		43,143,525		-
Land use rights #1 and buildings of Tianjin Industrial Park Zone		17,857,940		-
	$	216,874,116	$	-

During the years ended September 30, 2013 and 2014, interest expenses of $12,720,653 and $5,737,093, respectively, was incurred on the Company's bank borrowings.