UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

          [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005

                                    000-49712
                            (Commission File Number)

                             CHINA BAK BATTERY, INC.
             (Exact name of registrant as specified in its charter)




              Nevada                                       88-0442833
(State or other jurisdiction of                (IRS Employer Identification No.)
         Incorporation)



                               BAK Industrial Park
                                No. 1 BAK Street
                        Kuichong Town, Lunggang District
                   Shenzhen, People's Republic of China 518119
               (Address of principal executive offices) (Zip Code)


        Issuer telephone number, including area code: (86 755) 897-70060





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 the filing requirements for at least the past 90 days. [X]Yes [ ] No

As of May 12, 2005,  40,978,533  shares of the  Issuer's  $.001 par value common
stock were outstanding.

Transitional Small Business Disclosure Format: [ ]Yes  [X] No


<PAGE>

                                TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION                                              PAGE


    ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS                                 3

       Consolidated Balance Sheets as of March 31, 2005 (Unaudited)
           and September 30, 2004                                              3

       Consolidated Statement of Operations
           For the Three Months
           Ended March 31, 2005 and 2004  (Unaudited)                          4

       Consolidated Statement of Operations
           For the Six Months
           Ended March 31, 2005 and 2004  (Unaudited)                          5

       Consolidated Statements of Stockholders' Equity (Unaudited)           6-7

       Consolidated Statements of Cash Flows for the Three Months
           Ended March 31, 2005 and 2004  (Unaudited)                          8

       Consolidated Statements of Cash Flows for the Six Months
           Ended March 31, 2005 and 2004  (Unaudited)                          9

       Notes to Consolidated Financial Statements                          10-17


    ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS
               OR PLAN OF OPERATION                                        18-23

    ITEM 3.    CONTROLS AND PROCEDURES                                        23


PART II - OTHER INFORMATION                                                   24

    ITEM 6.    EXHIBITS                                                       24


SIGNATURES                                                                    25





                                       2

<PAGE>
<TABLE>
<CAPTION>




                             CHINA BAK BATTERY, INC.
             (Formerly known as Medina Coffee, Inc.) and Subsidiary
                           Consolidated Balance Sheets

                   As of March 31, 2005 and September 30, 2004
                        (Amounts Expressed in US Dollars)
                                   (Unauidted)

                                       Assets
                                       ------
                                                                             March  31,   September 30,
                                                                               2005           2004
                                                                                 $              $
                                                                                            (Audited)
<S>                                                                        <C>             <C>
Current Assets

     Cash                                                                    10,886,298       3,212,176
     Cash -Restricted                                                        10,555,838       7,120,069
     Accounts Receivable, Net                                                30,717,771      20,999,561
     Inventories                                                             12,125,092      29,535,985
     Prepaid Expenses                                                         1,517,750       1,330,645
     Notes Receivable                                                           244,460          18,122
     Accounts Receivable - Related Party                                        561,989         911,093
                                                                           ------------    ------------
          Total Current                                                      66,609,198      63,127,651
                                                                           ------------    ------------
Long-Term Assets
     Property, Plant, & Equipment                                            22,602,319      19,875,583
     Construction in Progress                                                31,811,026      23,656,190
     Land Use Rights                                                          4,029,038       4,029,038
     Less Accumulated Depreciation                                           (3,868,270)     (2,370,774)
                                                                           ------------    ------------
          Long-term Assets, Net                                              54,574,113      45,190,037
                                                                           ------------    ------------
Other Assets

     Other Receivables                                                          149,469         225,972
     Intangible Assets, Net                                                      50,056          58,362
                                                                           ------------    ------------
          Total other                                                           199,525         284,334
                                                                           ------------    ------------

     Total Assets                                                           121,382,836     108,602,022
                                                                           ============    ============

                                Liabilities and Stockholders' Equity
                                ------------------------------------
Current Liabilities

     Accounts Payable                                                        17,810,106      23,570,087
     Bank Loans, Short Term                                                  28,876,941      27,304,162
     Short Term Loans                                                              --         1,812,316
     Notes Payable, Other                                                    25,222,575      20,772,559
     Land Use Rights Payable                                                  3,751,028       3,750,756
     Construction Costs Payable                                               2,549,304       6,347,846
     Customer Deposits                                                          208,450         369,390
     Accrued Expenses                                                         3,388,537       5,247,656
     Other Liabilities                                                          436,078         181,223
                                                                           ------------    ------------
          Total Current                                                      82,243,019      89,355,995
                                                                           ------------    ------------

Stockholders' Equity
     Capital Stock-$.001 Par Value; 100,000,000 Shares                           39,826          31,226
     Authorized; 39,826,075 and 31,225,642 Shares Issued and outstanding
     at March 31, 2005 and September 30, 2004, respectively
     Additional Paid In Capital                                              27,572,874      12,052,845
     Accumulated Comprehensive Income (Loss)                                     (1,669)           (144)
     Reserves                                                                 2,323,673       1,724,246
     Retained Earnings                                                        9,205,113       5,437,854
                                                                           ------------    ------------
                                                                             39,139,817      19,246,027
                                                                           ------------    ------------

     Total Liabilities and Stockholders' Equity                             121,382,836     108,602,022
                                                                           ============    ============
</TABLE>


     The  accompanying  notes  are  an  intergral  part  of  these  consolidated
financial statements.

                                       3
<PAGE>


                             CHINA BAK BATTERY, INC.
             (Formerly known as Medina Coffee, Inc.) and Subsidiary
                      Consolidated Statements of Operations

               For The Three Months Ended March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)

                                                 2005         2004
                                                   $            $

Revenues, Net of Returns                       25,878,407   16,166,081

Cost of Goods Sold                             19,717,964   12,279,578
                                               ----------   ----------

Gross Profit                                    6,160,443    3,886,503
                                               ----------   ----------

Expenses:
     Selling Expense                              896,954      403,804
     General and Administrative Expenses          688,599    1,433,426
     Research and Development                     165,770      114,498
     Bad Debts Expense                            294,252      119,881
     Depreciation and Amortization                751,078      404,107
                                               ----------   ----------
           Total Expenses                       2,796,653    2,475,716
                                               ----------   ----------

Operating Income                                3,363,790    1,410,787

Other Expense
     Finance Costs                                572,064      107,308
     Other Expense                                  8,759        5,559
                                               ----------   ----------

Net Income Before Provision for Income Taxes    2,782,967    1,297,920

Provision for Income Taxes                        219,776       97,394
                                               ----------   ----------

Net Income                                      2,563,191    1,200,526
                                               ==========   ==========

Net Income Per Share - Basic and Diluted             0.07         0.04
                                               ==========   ==========

Weighted Average Shares Outstanding            38,010,428   31,225,664
                                               ==========   ==========



     The accompanying notes are an integral part of these consolidated financial
statements.


                                       4
<PAGE>




                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                      Consolidated Statements of Operations

                For The Six Months Ended March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)

                                                    2005            2004
                                                      $               $

Revenues, Net of Returns                          51,004,672      31,750,468

Cost of Goods Sold                                39,739,301      24,271,267
                                                  ----------      ----------

Gross Profit                                      11,265,371       7,479,201
                                                  ----------      ----------

Expenses:
     Selling Expense                               1,702,971         836,189
     General and Administrative Expenses           1,808,196       1,924,452
     Research and Development                        185,791         206,305
     Bad Debts Expense                               345,487         107,595
     Depreciation and Amortization                 1,505,805         593,884
                                                  ----------      ----------
           Total Expenses                          5,548,250       3,668,425
                                                  ----------      ----------

Operating Income                                   5,717,121       3,810,776

Other Expense
     Finance Costs                                   961,714         157,980
     Other Expense                                    24,879          14,558
                                                  ----------      ----------

Net Income Before Provision for Income Taxes       4,730,528       3,638,238

Provision for Income Taxes                           363,842          97,394
                                                  ----------      ----------

Net Income                                         4,366,686       3,540,844
                                                  ==========      ==========

Net Income Per Share - Basic and Diluted                0.13            0.11
                                                  ==========      ==========

Weighted Average Shares Outstanding               34,580,756      31,225,642
                                                  ==========      ==========


     The accompanying notes are an integral part of these consolidated financial
statements.


                                       5
<PAGE>
<TABLE>
<CAPTION>





                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
           Consolidated Statements of Changes in Stockholders' Equity
                     For The Six Months Ended March 31, 2005
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)

                                                            Par Value       Additional
                                             Number of        Common         Paid-In
                                              Shares          Stock          Capital
-----------------------------------------   ------------   ------------   -----------
<S>                                         <C>            <C>            <C>
                                                                 $              $


Balance - September 30, 2003                  31,225,642         31,226      1,176,927

Capital Contribution                                --             --       10,873,899
Net Income (Loss)                                   --             --             --
Transfer to Reserve                                 --             --             --
Deemed Distribution to Shareholders -
      Intangible Assets                             --             --             --
Foreign Currency Translation                        --             --             --
-----------------------------------------   ------------   ------------   ------------

Balance -  March 31, 2004                     31,225,642         31,226     12,050,826
-----------------------------------------   ------------   ------------   ------------

Balance - September 30, 2004                  31,225,642         31,226     12,052,845

Contribution of Cash by Stockholders           8,600,433          8,600     15,520,029
Net Income                                          --             --             --
Transfer to Reserves                                --             --             --
Foreign Currency Translation                        --             --             --
-----------------------------------------   ------------   ------------   ------------

Balance - March 31, 2005                      39,826,075   $     39,826   $ 27,572,874
=========================================   ============   ============   ============
</TABLE>


     The accompanying notes are an integral part of these consolidated financial
statements.

                                       6
<PAGE>
<TABLE>
<CAPTION>



                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
     Consolidated Statements of Changes in Stockholders' Equity (continued)
                     For The Six Months Ended March 31, 2005
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)


Continued


                                                Retained                     Comprehensive   Stockholders'
                                                Earnings          Reserves    Income (Loss)      Equity
                                               ------------    ------------   ------------    ------------
<S>                                            <C>             <C>            <C>             <C>
                                                     $                $             $               $


Balance - September 30, 2003                      3,630,298         651,583            (49)      5,489,985

Capital Contribution                                   --              --             --        10,873,899
Net Income (Loss)                                 3,540,843            --             --         3,540,843
Transfer to Reserve                                (514,404)        514,404           --              --
Deemed Distribution to Shareholders -
      Intangible Assets                          (3,866,088)           --             --        (3,866,088)
Foreign Currency Translation                           --              --               49              49
-----------------------------------------      ------------    ------------   ------------    ------------

Balance -  March 31, 2004                         2,790,649       1,165,987           --        16,038,688
-----------------------------------------      ------------    ------------   ------------    ------------

Balance - September 30, 2004                      5,437,854       1,724,246           (144)     19,246,027

Contribution of Cash by Stockholders                   --              --             --        15,528,629
Net Income                                        4,366,686            --             --         4,366,686
Transfer to Reserves                               (599,427)        599,427           --              --
Foreign Currency Translation                           --              --           (1,525)         (1,525)
-----------------------------------------      ------------    ------------   ------------    ------------

Balance - March 31, 2005                       $  9,205,113    $  2,323,673   $     (1,669)   $ 39,139,817
=========================================      ============    ============   ============    ============
</TABLE>


                                       7
<PAGE>
<TABLE>
<CAPTION>


                               CHINA BAK BATTERY,
                                      INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                      Consolidated Statements of Cash Flows
               For The Three Months Ended March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)

                                                                2005           2004
                                                                 $              $
<S>                                                        <C>             <C>
Cash Flows from Operating Activities

Net Income                                                    2,563,191      1,200,526
  Adjustments to reconcile net income to net cash
   from operating activities:
  Bad debt expense                                              294,252        119,881
  Amortization                                                    2,397            166
  Depreciation                                                  748,678        399,137
  Changes in Assets and Liabilities:

     Accounts Receivable                                     (4,000,209)    (3,524,821)
     Inventory                                                7,175,667     (6,184,949)
     Prepaid Expenses                                        (1,108,578)    (1,752,136)
     Note Receivable                                            211,185         (1,414)
     Accounts Payable                                        (2,973,006)     6,290,314
     Customer Deposits                                          (23,594)      (392,609)
     Accrued Expenses                                           804,944      3,422,900
     Construction Costs Payable                              (4,545,101)          --
     Other Liabilities                                          254,842             (9)
     Deferred Expenses                                             --           19,987

                                                            -----------    -----------
       Net Cash Flows from Operating Activities                (595,332)      (403,027)
                                                            -----------    -----------

Cash Flows from Investing Activities
  Acquisition of Property and Equipment                      (1,425,750)      (529,714)
  Construction in Progress                                   (4,784,404)    (3,563,523)
  Investment in Intangible Assets                                  --             --
                                                            -----------    -----------
       Net Cash Flows from Investing Activities              (6,210,154)    (4,093,237)
                                                            -----------    -----------

Cash Flows from Financing Activities
  Proceeds from Borrowings                                   27,229,641     10,836,727
  Repayment of Borrowing                                    (25,694,732)    (6,750,614)
  Cash Pledged To Bank                                       (2,628,818)    (1,226,900)
  Deemed Distribution to Shareholders - Intangible Assets          --             --
  Proceeds from Issuance of Capital Stock                    15,528,629           --
                                                            -----------    -----------
       Net Cash flows from Financing Activities              14,434,720      2,859,213
                                                            -----------    -----------

Effect of Exchange Rate Changes on Cash                            --              (58)

Net Increase (Decrease) in Cash                               7,629,234     (1,637,109)

Cash - Beginning of Period                                    3,257,064      2,511,771

                                                            -----------    -----------
Cash - End of Period                                         10,886,298        874,662
                                                            ===========    ===========

Supplemental Cash Flow Disclosures:
  Interest Paid                                                 561,508         73,410
                                                            ===========    ===========
  Income Taxes Paid                                              43,156           --
                                                            ===========    ===========
</TABLE>


     The accompanying notes are an integral part of these consolidated financial
statements.

                                       8
<PAGE>
<TABLE>
<CAPTION>


                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                      Consolidated Statements of Cash Flows
                For The Six Months Ended March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)

                                                                2005            2004
                                                                  $               $

<S>                                                         <C>             <C>
Cash Flows from Operating Activities

Net Income                                                    4,366,686      3,540,844
  Adjustments to reconcile net income to net cash
   from operating activities:
  Bad debt expense                                              345,487        107,595
  Amortization                                                    8,306            460
  Depreciation                                                1,497,496        588,620
  Changes in Assets and Liabilities:

     Accounts Receivable                                     (9,637,817)    (7,018,989)
     Inventory                                               17,410,893     (5,195,713)
     Prepaid Expenses                                          (187,105)    (3,214,680)
     Note Receivable                                           (226,338)      (258,825)
     Accounts Payable                                        (5,759,981)     9,142,301
     Customer Deposits                                         (160,940)      (617,508)
     Accrued Expenses                                        (1,859,119)     3,515,983
     Construction Costs Payable                              (3,798,542)          --
     Other Liabilities                                          254,855         60,408
     Deferred Expenses                                             --           (7,373)

                                                            -----------    -----------
       Net Cash Flows from Operating Activities               2,253,881        643,123
                                                            -----------    -----------

Cash Flows from Investing Activities
  Acquisition of Property and Equipment                      (2,726,736)    (3,335,334)
  Construction in Progress                                   (8,154,836)   (12,150,348)
  Investment in Intangible Assets                                  --           (5,685)
                                                            -----------    -----------
       Net Cash Flows from Investing Activities             (10,881,572)   (15,491,367)
                                                            -----------    -----------

Cash Flows from Financing Activities
  Proceeds from Borrowings                                   48,749,538     20,843,580
  Repayment of Borrowing                                    (44,539,060)   (11,572,559)
  Cash Pledged To Bank                                       (3,435,769)    (1,226,900)
  Deemed Distribution to Shareholders - Intangible Assets          --       (3,866,088)
  Proceeds from Issuance of Capital Stock                    15,528,629     10,873,899
                                                            -----------    -----------
       Net Cash flows from Financing Activities              16,303,338     15,051,932
                                                            -----------    -----------

Effect of Exchange Rate Changes on Cash                          (1,525)            49

Net Increase (Decrease) in Cash                               7,674,122        203,737

Cash - Beginning of Period                                    3,212,176        670,925

                                                            -----------    -----------
Cash - End of Period                                         10,886,298        874,662
                                                            ===========    ===========

Supplemental Cash Flow Disclosures:
  Interest Paid                                                 874,703        126,208
                                                            ===========    ===========
  Income Taxes Paid                                             138,014           --
                                                            ===========    ===========
</TABLE>



     The accompanying notes are an integral part of these consolidated financial
statements.


                                       9
<PAGE>




                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                   Notes to Consolidated Financial Statements
                             March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)


1.   BASIS OF PRESENTATION


     The condensed  consolidated financial statements of China BAK Battery, Inc.
     (formerly  known as Medina  Coffee,  Inc.) and Subsidiary  (the  "Company")
     included herein have been prepared by the Company,  without audit, pursuant
     to the rules and regulations of the Securities and Exchange Commission (the
     "SEC").  Certain information and footnote  disclosures normally included in
     financial  statements  prepared  in  conjunction  with  generally  accepted
     accounting principles have been condensed or omitted pursuant to such rules
     and  regulations,  although the Company  believes that the  disclosures are
     adequate to make the information presented not misleading.  These condensed
     consolidated  financial  statements  should be read in conjunction with the
     annual  audited  consolidated  financial  statements  and the notes thereto
     included in the Company's  annual report on Form 10-KSB,  and other reports
     filed with the SEC.

     The  accompanying   unaudited  interim  consolidated  financial  statements
     reflect all adjustments of a normal and recurring  nature which are, in the
     opinion of management,  necessary to present fairly the financial position,
     results of operations and cash flows of the Company for the interim periods
     presented.  The results of operations for these periods are not necessarily
     comparable to, or indicative of, results of any other interim period or for
     the fiscal year taken as a whole.  Factors that affect the comparability of
     financial data from year to year and for comparable interim periods include
     non-recurring  expenses associated with the Company's registration with the
     SEC, costs incurred to raise capital and stock awards.


     The condensed  consolidated financial statements are prepared in accordance
     with generally accepted accounting  principles used in the United States of
     America and include the accounts of BAK International  Limited and Shenzhen
     BAK  Battery  Co,  Ltd.  for  all  periods   presented.   All   significant
     intercompany   balances   and   transactions   have  been   eliminated   on
     consolidation.

                                       10
<PAGE>


                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                   Notes to Consolidated Financial Statements
                             March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)


2.   RECAPITALIZATION TRANSACTION

     On January 20, 2005,  China BAK  Battery,  Inc.  (formerly  known as Medina
     Coffee,  Inc.) and Subsidiary  completed a stock exchange  transaction with
     the stockholders of BAK International Limited., a Hong Kong company, or BAK
     International.  The exchange was  consummated  under Nevada law pursuant to
     the terms of a Securities  Exchange Agreement dated effective as of January
     3, 2005 by and among China BAK, BAK  International  and the stockholders of
     BAK  International.  Pursuant to the  Securities  Exchange  Agreement,  the
     Company  issued  39,826,075  shares of common  stock,  par value $0.001 per
     share, to the  stockholders  of BAK  International  (31,225,642  Shares are
     original  shareholders  of BAK  and  8,600,433  Shares  to new  investors),
     representing  approximately 97.2% of the China BAK post-exchange issued and
     outstanding  common stock, in exchange for 100% of the outstanding  capital
     stock of BAK  International.  The Company presently carries on the business
     of  Shenzhen  BAK  Battery  Co.,  Ltd.,  a  Chinese   corporation  and  BAK
     International's wholly-owned subsidiary, or BAK Battery.

     The reverse merger transaction has been accounted for as a recapitalization
     of BAK  International  whereby  the  historical  financial  statements  and
     operations  of  BAK  become  the  historical  financial  statements  of the
     Registrant  with no  adjustment  to the  carrying  value of the  assets and
     liabilities.    The   accompanying   financial   statements   reflect   the
     recapitalization of the stockholders equity as if the transaction  occurred
     as of the beginning of the first period presented.


3.   ORGANIZATION AND PRINCIPAL ACTIVITIES

     BAK  International  Limited was  incorporated  in Hong Kong on December 29,
     2003 under the  Companies  Ordinance  as BATCO  International  Limited  and
     subsequently changed its' name to BAK International  Limited on November 3,
     2004. BAK International  Limited acquired 100% of the outstanding shares of
     Shenzhen BAK Battery Co., Ltd ("BAK") for a total consideration of USD$11.5
     million on November 6, 2004. Simultaneously, the former shareholders of BAK
     acquired  96.8%  of  the  issued  shares  of  BAK  International   Limited.
     Consequently,   the   shareholders   of  BAK   International   Limited  are
     substantially  the same as the former  shareholders  as BAK  therefore  the
     transaction  has been  accounted for as a  recapitalization  of BAK with no
     adjustment to the historical basis of the assets and liabilities of BAK and
     the operations  consolidated as though the  transaction  occurred as of the
     beginning  of the first  accounting  period  presented  in these  financial
     statements.



                                       11
<PAGE>



                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                   Notes to Consolidated Financial Statements
                             March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)



3.   ORGANIZATION AND PRINCIPAL ACTIVITIES (cont'd)

     Shenzhen BAK Battery Co.,  Ltd.  ("BAK") was founded on August 3, 2001 as a
     China-based  company  specializing  in lithium  ion (known as  "Li-ion"  or
     "Li-ion cell") battery cell production,  for use in the replacement battery
     market, primarily for cell phones in the Peoples Republic of China (PRC).


     On January 20, 2005, BAK  International  closed a private  placement of its
     securities  with  unrelated  investors  whereby it issued an  aggregate  of
     8,600,433  shares of common stock for gross  proceeds of  $17,000,000.  The
     cash and shares of common stock will be held in escrow until the completion
     of the reverse merger  transaction  described in Note 2 and the filing of a
     registration  statement  with the Securities  and Exchange  Commission.  In
     conjunction  with this  financing,  the Chief  Executive  Officer and major
     shareholder  of  the  Company  agreed  to  place  2,179,550  shares  of the
     Company's  common stock owned by him into an escrow  account,  of which 50%
     are to be released to the investors in the private placement if audited net
     income  for the  fiscal  year  ending  September  30,  2005 is not at least
     $12,000,000 and of which 50% are to be released to investors in the private
     placement  if audited net income for the fiscal year ending  September  30,
     2006 is not at least $27,000,000.

     The  Company  changed  its  year-end  from  December  31 to  September  30,
     effective from September 30, 2004.

     In February 2005,  the Company  changed its name from Medina Coffee Inc. to
     China BAK Battery, Inc.


     The Company is subject to the  consideration  and risks of operating in the
     PRC.  These  include  risks  associated  with the  political  and  economic
     environment, foreign currency exchange and the legal system in the PRC.

     The  economy  of  PRC  differs  significantly  from  the  economies  of the
     "western"  industrialized  nations in such respects as structure,  level of
     development,  gross national product,  growth rate,  capital  reinvestment,
     resource  allocation,  self-sufficiency,  rate of inflation  and balance of
     payments  position,  among  others.  Only  recently has the PRC  government
     encouraged substantial private economic activities. The Chinese economy has
     experienced  significant  growth in the past several years, but such growth
     has been  uneven  among  various  sectors  of the  economy  and  geographic
     regions.   Actions  by  the  PRC  government  to  control   inflation  have
     significantly  restrained  economic  expansion in the recent past.  Similar
     actions  by the PRC  government  in the  future  could  have a  significant
     adverse effect on economic conditions in PRC.


                                       12
<PAGE>




                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                   Notes to Consolidated Financial Statements
                             March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)


3.   ORGANIZATION AND PRINCIPAL ACTIVITIES (cont'd)

     Many laws and  regulations  dealing  with  economic  matters in general and
     foreign investment in particular have been enacted in the PRC. However, the
     PRC still does not have a comprehensive  system of laws, and enforcement of
     existing laws may be uncertain and sporadic.

     The Company's operating assets and primary sources of income and cash flows
     are of interests  in the PRC.  The PRC economy has, for many years,  been a
     centrally-planned  economy, operating on the basis of annual, five-year and
     ten-year state plans adopted by central PRC governmental authorities, which
     set out national production and development targets. The PRC government has
     been  pursuing  economic  reforms  since it first  adopted its  "open-door"
     policy in 1978. There is no assurance that the PRC government will continue
     to pursue economic reforms or that there will not be any significant change
     in its economic or other policies,  particularly in the event of any change
     in the  political  leadership  of,  or the  political,  economic  or social
     conditions  in, the PRC.  There is also no assurance  that the Company will
     not be adversely  affected by any such change in  governmental  policies or
     any unfavorable change in the political, economic or social conditions, the
     laws or regulations, or the rate or method of taxation in the PRC.

     As many of the economic reforms which have been or are being implemented by
     the PRC government are  unprecedented or experimental,  they may be subject
     to adjustment or refinement, which may have adverse effects on the Company.
     Further,  through state plans and other  economic and fiscal  measures,  it
     remains possible for the PRC government to exert  significant  influence on
     the PRC economy.

     The Company's  financial  instruments  that are exposed to concentration of
     credit risk consist  primarily of cash and cash  equivalents,  and accounts
     receivable  from customers.  Cash and cash  equivalents are maintained with
     major banks in the PRC. The Company's  business  activity is primarily with
     customers in the PRC. The Company periodically performs credit analysis and
     monitors the financial condition of its clients in order to minimize credit
     risk.

     Any  devaluation  of the Renminbi  (RMB)  against the United  States dollar
     would  consequently  have  adverse  effects  on  the  Company's   financial
     performance  and asset values when  measured in terms of the United  States
     dollar.  Should the RMB  significantly  devalue  against the United  States
     dollar,  such  devaluation  could  have a  material  adverse  effect on the
     Company's  earnings and the foreign  currency  equivalent of such earnings.
     The Company does not hedge its RMB - United  States  dollar  exchange  rate
     exposure.


                                       13
<PAGE>



                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                   Notes to Consolidated Financial Statements
                             March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)


3.   ORGANIZATION AND PRINCIPAL ACTIVITIES (cont'd)

     On January 1, 1994, the PRC government introduced a single rate of exchange
     as  quoted  daily by the  People's  Bank of China  (the  "Unified  Exchange
     Rate").  No representation is made that the RMB amounts have been, or could
     be,  converted  into US$ at that or any rate.  This  quotation  of exchange
     rates  does  not  imply  free   convertibility  of  RMB  to  other  foreign
     currencies. All foreign exchange transactions continue to take place either
     through the Bank of China or other banks authorized to buy and sell foreign
     currencies  at the  exchange  rate  quoted by the  People's  Bank of China.
     Approval  of foreign  currency  payments by the  People's  Bank of China or
     other institutions  requires submitting a payment application form together
     with suppliers' invoices, shipping documents and signed contracts.


4.   RECENTLY ISSUED ACCOUNTING STANDARDS

     In November 2004, the Financial  Accounting Standards Board ("FASB") issued
     Statement  of Financial  Accounting  Standard  ("SFAS") No. 151  "Inventory
     Costs - an amendment of ARB No. 43, Chapter 4" ("SFAS 151"). This statement
     amends the  guidance  in ARB No. 43,  Chapter 4,  "Inventory  Pricing,"  to
     clarify the  accounting  for  abnormal  amounts of idle  facility  expense,
     freight, handling costs, and wasted material (spoilage).  SFAS 151 requires
     that those items be recognized as current-period charges. In addition, this
     Statement  requires that allocation of fixed production  overheads to costs
     of  conversion  be  based  upon  the  normal  capacity  of  the  production
     facilities.  The  provisions  of SFAS 151 are  effective  for fiscal  years
     beginning  after June 15, 2005.  As such,  the Company is required to adopt
     these  provisions  at the  beginning of the fiscal year ended  December 31,
     2006.  The Company is  currently  evaluating  the impact of SFAS 151 on its
     consolidated financial statements.

     In December 2004, the FASB issued SFAS No. 152  "Accounting for Real Estate
     Time-Sharing  Transactions - an amendment of FASB Statements No. 66 and 67"
     ("SFAS 152").  This statement  amends FASB Statement No. 66 "Accounting for
     Sales of Real Estate" to reference the financial  accounting  and reporting
     guidance  for real  estate  time-sharing  transactions  that is provided in
     AICPA Statement of Position 04-2  "Accounting for Real Estate  Time-Sharing
     Transactions"  ("SOP  04-2").  SFAS 152 also amends FASB  Statement  No. 67
     "Accounting  for  Costs  and  Initial  Rental  operations  of  Real  Estate
     Projects" to state that the guidance for  incidental  operations  and costs
     incurred  to sell  real  estate  projects  does not  apply  to real  estate
     time-sharing  transactions,  with the accounting  for those  operations and
     costs being subject to the guidance in SOP 04-2. The provisions of SFAS 152
     are effective in fiscal years  beginning  after June 15, 2005. As such, the
     Company is required  to adopt  these  provisions  at the  beginning  of the
     fiscal year ended  December 31, 2006.  The Company is currently  evaluating
     the impact of SFAS 152 on its consolidated financial statements.

                                       14
<PAGE>



                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                   Notes to Consolidated Financial Statements
                             March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)



4.   RECENTLY ISSUED ACCOUNTING STANDARDS (cont'd)

     In December 2004,  the FASB issued SFAS No. 153,  "Exchanges of Nonmonetary
     Assets - an  amendment  of APB  Opinion  No.  29"  ("SFAS  153").  SFAS 153
     replaces the exception  from fair value  measurement  in APB Opinion No. 29
     for  nonmonetary  exchanges  of similar  productive  assets  with a general
     exception from fair value  measurement for exchanges of nonmonetary  assets
     that  do  not  have  commercial  substance.   A  nonmonetary  exchange  has
     commercial substance if the future cash flows of the entity are expected to
     change significantly as a result of the exchange. SFAS 153 is effective for
     all interim periods  beginning after June 15, 2005. As such, the Company is
     required to adopt these  provisions at the beginning of the fiscal  quarter
     ended September 30, 2005. The Company is currently evaluating the impact of
     SFAS 153 on its consolidated financial statements.

     In December  2004,  the FASB issued SFAS No.  123R,  "Share-Based  Payment"
     ("SFAS  123R").  SFAS 123R revises FASB Statement No. 123  "Accounting  for
     Stock-Based Compensation" and supersedes APB Opinion No. 25 "Accounting for
     Stock Issued to  Employees".  SFAS 123R requires all public and  non-public
     companies to measure and recognize compensation expense for all stock-based
     payments for services  received at the grant-date fair value, with the cost
     recognized over the vesting period (or the requisite service period).  SFAS
     123R is effective for non-small  business  issuers for all interim  periods
     beginning  after June 15, 2005.  SFAS 123R is effective for small  business
     issuers for all interim periods beginning after December 15, 2005. As such,
     the Company is required to adopt these  provisions  at the beginning of the
     fiscal  quarter ended  September 30, 2005.  Retroactive  application of the
     provisions  of SFAS 123R to the  beginning of the fiscal year that includes
     the effective date is permitted, but not required. The Company is currently
     evaluating  the  impact  of  SFAS  123R  on  its   consolidated   financial
     statements.


5.   BANK DEBTS

     During the quarter  ended March 31,  2005,  the Company  entered  into debt
     agreements with two separate banks in the aggregate amount of approximately
     $21,320,000.  The loans are to support  the  working  capital  needs of the
     Company.  Interest  is charged on the debt at rates  ranging  from 4.75% to
     5.22% per annum.  The loans contain the personal  guaranty of the principal
     stockholders of the Company.


                                       15
<PAGE>

                             CHINA BAK BATTERY, INC.
             (Formerly Known as Medina Coffee, Inc.) and Subsidiary
                   Notes to Consolidated Financial Statements
                             March 31, 2005 and 2004
                        (Amounts Expressed in US Dollars)
                                   (Unaudited)



6.   CONTINGENCIES AND COMMITMENTS

     A.   Contingent Liabilities

          1.   Land Use and Ownership Certificate:

               According to relevant PRC laws and regulations,  a land use right
               certificate,  along with government  approvals for land planning,
               project  planning,  and  construction  need to be obtained before
               construction of building is commenced.  An ownership  certificate
               shall be granted by the  government  upon  application  under the
               condition  that the  aforementioned  certificate  and  government
               approvals are obtained.

               BAK has not yet  obtained  the land  use  right  certificate  and
               government   approvals   relating  to  the  construction  of  BAK
               Industrial Park (the Company's operating premises).  However, BAK
               has applied to obtain the land use right certificate of approval.

               Management  believes,  under the condition  that BAK is granted a
               land use right certificate and related approvals, there should be
               no legal barriers for BAK to obtain an ownership  certificate for
               the premises presently under construction in BAK Industrial Park.
               However, in the event that BAK fails to obtain the land use right
               certificate relating to BAK Industrial Park and/or the government
               approvals  required for the  construction of BAK Industrial Park,
               there  is the  risk  that the  buildings  constructed  need to be
               vacated as illegitimate constructions.

               However, management believes that this possibility while present,
               is very remote.  At a result,  no provision  has been made in the
               financial statements for this potential occurrence.


          2.   2005  -  US$  1,715,399   Guaranteed  for  Shenzhen   Tongli,   a
               non-related party
               2005  -  US$  1,208,153   Guaranteed  for  Shenzhen  Zhengda,   a
               non-related party
               2005 - US$ 3,856,566 Notes Receivable Discounted


               The Company sells notes and accounts receivable from time to time
               to banks at a  discount.  At the time of the sale all  rights and
               privileges  of holding the note are  transferred  to the banks or
               suppliers.  When notes are sold,  the  Company  removes the asset
               from its book with a corresponding  expense for the amount of the
               discount. The Company remains contingently liable on a portion of
               the amount outstanding in the event the note maker defaults.  The
               company was contingently liable at March 31, 2005 and 2004 in the
               amounts of $3,856,566.


               No provision has been made in the financial  statements for these
               contingencies.


                                       16
<PAGE>


6.   CONTINGENCIES AND COMMITMENTS (cont'd)

     A.   Contingent Liabilities (cont'd)

          3.   BAK and Development and  Construction  (Group) Company Limited By
               Shares  ("Changchun  Co.") of  Changchun  Economic  &  Technology
               Development   District,   have  entered  into  a   Cross-Guaranty
               Agreement, dated February 20, 2004 (the "Agreement"), pursuant to
               which the parties were  obligated to guaranty a specified  amount
               of each other's  indebtedness to specifically  identified lending
               institutions.  As of  December  22,  2004,  Chang Chu Jingkai had
               guaranteed    indebtedness    of   the    Company   to   Longgang
               Division,Shenzhen    Branch,    Agricultural    Bank   of   China
               (Agricultural  Bank) in the amount of USD$  24,164,220  (The "BAK
               Indebtedness").  BAK  has  not  guaranteed  any  indebtedness  of
               Changchun Co. in accordance  with the Agreement.  On December 22,
               2004,  the  Company  received  from  Changchun  Co. a  letter  of
               termination pursuant to which the Agreement was deemed terminated
               by Changchun Co. and the Company was relieved of all  obligations
               to guaranty any indebtedness of Changchun Co. in the future.  The
               termination  of the Agreement in no way effects  Changchun  Co.'s
               continuing guaranty of the BAK Indebtedness.

          4.   Social Insurance of BAK's Employees:

               BAK is required to cover  employees  with various types of social
               insurance.  Although  all  insurances  have  been  purchased  for
               management employees,  BAK has not fully covered other employees.
               Management  believes that BAK needs to provide all employees with
               the required insurance.

               In the event that any current employee, or former employee, files
               a complaint with the government, not only will BAK be required to
               purchase  insurance for such employee,  but BAK may be subject to
               administrative  fines.  As the Company  believes that these fines
               are nominal,  no provision for any potential  fines has been made
               in the accompanying financial statement.

          B.   Capital Commitments

               BAK  has  commitments  under   construction   contracts  for  the
               construction   of  factory,   office,   and  employee   residence
               buildings,   amounting  to   $1,834,065.   These   contracts  are
               contemplated  to be completed  at various  dates up to the end of
               the 2005 calendar year.


                                       17
<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation

Results of  operations  for the three months ended March 31, 2005 as compared to
the three months ended March 31, 2004.

Revenues

Revenues  increased to  approximately  $25.88 million for the three months ended
March 31, 2005 as compared to  approximately  $16.17  million for same period of
the prior year, an increase of approximately  $9.71 million or 60%. Our revenues
increased  during the period as a result of inroads made into the aluminum  case
cell market where  revenues  increased to  approximately  $ 6.84 million for the
period as compared to approximately  $2.36 in the prior year period, an increase
of $4.48  million.  Revenues  relating  to steel  case  batteries  increased  to
approximately  $11.4 million from approximately  $9.98 million in the prior year
period,  an  increase  of  approximately  $1.42  million or 14 %. Our  customers
continued to demand price concessions  during the second quarter of fiscal 2005,
while  simultaneously  raising  the bar with  respect  to  quality  and  service
requirements.  In response  to these  conditions,  we relied on the  time-tested
approach  of cost and price  containment.  The  Company  was able to gain market
share both domestically and  internationally  during the period because,  in our
belief, our production volume and technological  advantage gives us an advantage
over our competitors with regard to supply ability and cost.

Gross Profit

Gross profit for the three months ended March 31, 2005 was  approximately  $6.16
million or 23.8% of revenues as compared to gross profit of approximately  $3.89
million or 24.06% of revenues for the same period of the prior year.

The slight  reduction in gross  profit,  as a percentage  of revenues,  resulted
primarily from a combination of increased unit selling prices and increased unit
manufacturing  costs  stemming from an increase in prices for most raw materials
used in the  manufacturing  process.  Steel  case cell  battery  selling  prices
increased  by 6 % during  the  period,  while  cost of  steel  case  cell  units
increased by about 12%,  resulting  in an overall  decrease in gross profit from
26% to 21% of  revenues.  In the  aluminum  case cell  market,  price  increases
averaged 1.6% and unit costs increased by13%,  thereby reducing gross profit. As
such,  gross  profits in aluminum  case segment  decreased  from 26 % to 18 % of
revenues.  We did,  however,  gain market  share due in part to our  decision to
maintain low pricing,  the improved quality of our products and the improvements
we made in  manufacturing  efficiencies.  Prior  to 2004,  we sold our  products
primarily  into the  replacement  battery market (as opposed to the OEM market).
Products in the replacement  market face lower prices and,  consequently,  lower
gross profit margins. Our profit margins should increase as we move into the OEM
segment.

Continued  vertical  integration  of  the  manufacturing   process,   increasing
production  efficiencies,  and low labor  costs  collectively  served to contain
costs and we anticipate that these activities will position us to maintain gross
profit  margins at or near the 22% range during our current  fiscal  year.  Cost
savings  realized from the above  initiatives  will help to offset potential raw
material and other price increases during 2005 and beyond.  Management continues
to focus on cost containment and savings  realized based on increased  economies
of scale in order to maintain gross profit margins near 2004 levels.

Some entities  include all costs  associated with their  distribution  system in
cost of  goods  sold  while  other  companies  may  record  a  portion  of their
distribution  costs in selling  expense.  Because of this disparity in financial
reporting,  gross  margins  between our company and other  companies  may not be
comparable.  With the exception of  transportation  and freight charges which we
include  under selling  expenses,  we believe we include most other costs of our
distribution system.



                                       18
<PAGE>

Selling Expenses

Selling expenses increased to approximately  $897,000 for the three month period
ended March 31, 2005 as compared to  approximately  $404,000 for the same period
of the prior year, an increase of approximately $493,000 or about 122%.

Salaries  related to selling efforts  increased to  approximately  $530,000 from
approximately  $134,000  for the same period of the prior  year,  an increase of
approximately  $396,000.  More sales and  marketing  efforts  were  required  to
continue gaining market share and to grow revenues.  We had 76 employees engaged
in sales and  marketing  as of March 31,  2005 as compared to 63 as of March 31,
2004. In connection with the introduction of a formal and coordinated  marketing
campaign,   marketing   expenses   decreased  to   approximately   $44,000  from
approximately $62,000 incurred in the same period of the prior year, an decrease
of approximately $18,000.  Transportation,  filing fees, promotion,  trademarks,
and other related  selling and  marketing  expenses  increased to  approximately
$314,000 from  approximately  $210,000 for the same period of the prior year, an
increase of approximately $104,000

Marketing or advertising costs consist primarily of promoting  ourselves and our
products through printed advertisements in trade publications and displaying our
products  through  attendance  and  industry  trade  exhibitions.  We do not pay
slotting  fees,  engage in  cooperative  advertising  programs,  participate  in
buydown programs or similar arrangements.  No material estimates are required to
determine our marketing or advertising costs.

General and Administrative Expenses

General and administrative  expenses decreased to approximately $689,000 for the
three months ended March 31, 2005 as compared to  approximately  $1,433  million
for the same period of the prior year, an decrease of approximately  $744,000 or
51%. As a percentage of revenues,  general and administrative expenses were 2.6%
and 8.9% as of March 31, 2005 and March 31, 2004, respectively.  Despite efforts
related to  increasing  manufacturing  facilities,  general  and  administrative
expenses remained manageable relative to revenues.

Salaries and benefits,  including training,  increased to approximately $402,000
for the three month period ended March 31, 2005 from approximately  $340,000 for
the three month  period  ended  March 31,  2004,  an  increase of  approximately
$62,000 or 18%. We had152 employees in machinery and engineering positions as of
March 31, 2005,  as compared to 32 employees as of the same period for the prior
year. Increases in office expenses,  insurance,  professional fees, maintenance,
recruitment,  and other  administrative  expenses accounted for the remainder of
the increase in this category.

Research and Development Expenses

Research and development  expenses  increased to approximately  $166,000 for the
three months ended March 31, 2005 as compared to approximately  $115,000 for the
same period of the prior year,  an  increase  of  approximately  $51,000 or 44%.
Increase in research and development staff to 108 as of March 31, 2005 from91 as
of the same period of the prior year was the primary  factor  accounting for the
increase in this category. New initiatives, such as rechargeable lithium polymer
batteries research and development,  and an increase in patent  applications and
maintenance required incremental staff hiring contributed to the increase.

Bad Debts

Bad debt expense totaled approximately $294,000 for the three months ended March
31, 2005 as compared to approximately  $120,000 for the same period of the prior
year,  a increase of $174,000 or 145%.  As a percentage  of revenues,  bad debts
were  approximately  1.1% and 0.7% for the three months ended March 31, 2005 and
2004,  respectively.  We believe  that the reserve for bad debts as of March 31,
2005 is adequate and will adjust future reserves as we gain more experience with
our customers.



                                       19
<PAGE>

Depreciation and Amortization

Depreciation  and  amortization  totaled  approximately  $751,000  for the three
months ended March 31, 2005 as compared to  approximately  $404,000 for the same
period of the prior  year,  an increase of  approximately  $347,000 or 86%.  The
increase in depreciation and amortization  principally reflects our expansion or
manufacturing facilities and related acquisitions.

Operating Income

Operating income totaled  approximately $3.36 million for the three months ended
March 31, 2005 as compared to operating  income of  approximately  $1.41 million
for the same  period of the prior  year,  an  increase  of  approximately  $1.95
million or 138%.

As a percentage of revenues, operating income was 12% for the three months ended
March 31, 2005 as  compared  to 8.7% for the same period of the prior year.  The
growth in operating income as a percentage of revenues was  substantially due to
the increase in gross profit.

Finance Costs

Finance  costs  increased to  approximately  $572,000 for the three month period
ended March 31, 2005 as compared to  approximately  $107,000 for the same period
of the prior year, an increase of approximately $465,000 or 435%.

We had  approximately  $54  million in short term loans and notes  payable as of
March 31, 2005 as compared to  approximately  $20.7  million  outstanding  as of
March 31,  2004.  Short term loans and notes  payable are  comprised  of various
short term bank loans and promissory  notes, with interest ranging from 4.75% to
5.84 %, and  maturities of generally  less than twelve  months.  The increase in
interest  bearing debt caused the increase in finance costs. The funds were used
for working capital purposes based on the increase in revenues.

Net Income

Primarily as a result of increased sales during the period, we increased our net
income to approximately  $2.5 million as compared to approximately  $1.2 million
for the same period of the prior year, an increase of approximately $1.0 million
or about 108%.

Dividends

We have not paid out any dividends to date. In determining our dividend  policy,
our Board of Directors considers current and long term profitability,  committed
and potential cash requirements,  and our overall financial condition. We do not
anticipate  the  payment of any  dividends  in the future  based on the  present
financial  requirements  for  expansion.  Should we decide in the  future to pay
dividends, as a holding company, our ability to do so and meet other obligations
depends  upon the receipt of  dividends  or other  payments  from our  operating
subsidiaries  and other  holdings and  investments.  In addition,  our operating
subsidiaries, from time to time, may be subject to restrictions on their ability
to make  distributions to us, including as a result of restrictive  covenants in
loan  agreements,  restrictions  on the  conversion of local  currency into U.S.
dollars or other hard currency and other regulatory restrictions.

Results of operations for the six months ended March 31, 2005 as compared to the
six months ended March 31, 2004.

Revenues

Revenues  increased to approximately  $51 million for the six months ended March
31, 2005 as compared to  approximately  $32 million for same period of the prior
year, an increase of  approximately  $19 million or 59%. Our revenues  increased
during the period as a result of inroads made into the aluminum case cell market
where  revenues  increased  to  approximately  $13.39  million for the period as



                                       20
<PAGE>

compared to approximately  $4.25 in the prior year period,  an increase of $9.14
million.  Revenues  relating to steel case batteries  increased to approximately
$25.54 million from  approximately  $23.67 million in the prior year period,  an
increase of  approximately  $1.87 million or 7.9%.  Our  customers  continued to
demand  price  concessions  during the  second  quarter  of fiscal  2005,  while
simultaneously raising the bar with respect to quality and service requirements.
In response to these conditions,  we relied on the time-tested  approach of cost
containment and price reductions.  Despite continued pricing pressure  resulting
in selling price  reductions  during the year in the steel case market,  we were
able to gain  market  share both  domestically  and  internationally  during the
period because, in our belief, our production volume and technological advantage
gives us an advantage  over our  competitors  with regard to supply  ability and
cost.

Gross Profit

Gross  profit for the six months  ended March 31, 2005 was  approximately  $11.3
million or 22% of revenues as compared  to gross  profit of  approximately  $7.5
million or 24% of revenues for the same period of the prior year.

The decrease in gross  profit,  as a percentage  of  revenues,  resulted  from a
combination of increased unit selling  prices,  primarily in the aluminum market
and increased unit  manufacturing  costs stemming from an increase in prices for
most raw materials used in the  manufacturing  process.  Steel case cell battery
selling  prices  decreased  by 4.3% during the period,  while cost of steel case
cell units  increased by about 1.5 %, resulting in an overall  decrease in gross
profit from 23 % to 19 % of revenues.  In the aluminum  case cell market,  price
increases averaged 12 % and unit costs increased by 33 %, thereby reducing gross
profit.  As such, gross profits in aluminum case segment  decreased from 28 % to
16 % of revenues. We did, however, gain market share due in part to our decision
to  maintain  low  pricing,  the  improved  quality  of  our  products  and  the
improvements we made in manufacturing  efficiencies.  Prior to 2004, we sold our
products  primarily into the  replacement  battery market (as opposed to the OEM
market). Products in the replacement market face lower prices and, consequently,
lower gross profit  margins.  Our profit margins should increase as we move into
the OEM segment.

Continued  vertical  integration  of  the  manufacturing   process,   increasing
production  efficiencies,  and low labor  costs  collectively  served to contain
costs and we anticipate that these activities will position us to maintain gross
profit  margins at or near the 22% range during our current  fiscal  year.  Cost
savings  realized from the above  initiatives  will help to offset potential raw
material and other price increases during 2005 and beyond.  Management continues
to focus on cost containment and savings  realized based on increased  economies
of scale in order to maintain gross profit margins near 2004 levels.

Some entities  include all costs  associated with their  distribution  system in
cost of  goods  sold  while  other  companies  may  record  a  portion  of their
distribution  costs in selling  expense.  Because of this disparity in financial
reporting,  gross  margins  between our company and other  companies  may not be
comparable.  With the exception of  transportation  and freight charges which we
include  under selling  expenses,  we believe we include most other costs of our
distribution system.

Selling Expenses

Selling  expenses  increased  to  approximately  $1.7  million for the six month
period ended March 31, 2005 as compared to  approximately  $836,000 for the same
period of the prior year, an increase of approximately $837,000 or about 100%.

Salaries  related to selling efforts  increased to  approximately  $1.28 million
from  approximately  $523,000 for the same period of the prior year, an increase
of  approximately  $757,000.  More sales and marketing  efforts were required to
continue gaining market share and to grow revenues.  We had 76 employees engaged
in sales and  marketing  as of March 31,  2005 as compared to 63 as of March 31,
2004. In connection with the introduction of a formal and coordinated  marketing
campaign,  marketing  expenses  increased to  approximately  $1.82  million from
approximately  $840,000  incurred  in the same  period  of the  prior  year,  an
increase of  approximately  $980,000.  Transportation,  filing fees,  promotion,
trademarks,  and other related selling and marketing  expenses accounted for the
majority of the increase.



                                       21
<PAGE>

Marketing or advertising costs consist primarily of promoting  ourselves and our
products through printed advertisements in trade publications and displaying our
products  through  attendance  and  industry  trade  exhibitions.  We do not pay
slotting  fees,  engage in  cooperative  advertising  programs,  participate  in
buydown programs or similar arrangements.  No material estimates are required to
determine our marketing or advertising costs.

General and Administrative Expenses

General and administrative expenses decreased to approximately $1.80 million for
the six months ended March 31, 2005 as compared to  approximately  $1.92 for the
same period of the prior year, a decrease of approximately $120,000 or 6.25%. As
a percentage of revenues,  general and administrative  expenses were 3.5% and 6%
as of March 31, 2005 and March 31, 2004,  respectively.  Despite efforts related
to increasing  manufacturing  facilities,  general and  administrative  expenses
remained manageable relative to revenues.

Salaries and benefits,  including  training,  increased to  approximately  $4.41
million for the six month period ended March 31, 2005 from  approximately  $3.25
for the six month  period  ended March 31,  2004,  an increase of  approximately
$1.16  million  or 35%.  We had  152  employees  in  machinery  and  engineering
positions  as of March 31,  2005,  as  compared to 32  employees  as of the same
period for the prior year. Increases in office expenses, insurance, professional
fees, maintenance,  recruitment, and other administrative expenses accounted for
the remainder of the increase in this category.

Research and Development Expenses

Research and development  expenses  decreased to approximately  $186,000 for the
six months  ended March 31, 2005 as compared to  approximately  $206,000 for the
same period of the prior year,  a decrease of  approximately  $20,000 or 10%.The
Company engaged in less patent  applications in the first quarter of fiscal 2005
and enacted it's new initiatives, such as rechargeable lithium polymer batteries
research and development, during the second quarter of 2005.

Bad Debts

Bad debt expense totaled  approximately  $345,000 for the six months ended March
31, 2005 as compared to approximately  $108,000 for the same period of the prior
year,  a increase of $237,000 or 219%.  As a percentage  of revenues,  bad debts
were  approximately  0.7% and 0.3% for the six months  ended  March 31, 2005 and
2004,  respectively.  We believe  that the reserve for bad debts as of March 31,
2005 is adequate and will adjust future reserves as we gain more experience with
our customers.

Depreciation and Amortization

Depreciation and  amortization  totaled  approximately  $1.5 million for the six
months ended March 31, 2005 as compared to  approximately  $594,000 for the same
period of the prior year,  an increase of  approximately  $906,000 or 153%.  The
increase in depreciation and amortization  principally reflects our expansion or
manufacturing facilities and related acquisitions.

Operating Income

Operating  income totaled  approximately  $5.71 million for the six months ended
March 31, 2005 as compared to operating  income of  approximately  $3.81 million
for the same  period of the prior  year,  an  increase  of  approximately  $1.90
million or 49%.

As a percentage of revenues, operating income was 11.2% for the six months ended
March 31, 2005 as  compared to 12.0% for the same period of the prior year.  The
reduction in operating income as a percentage of revenues was  substantially due
to the increase in selling expense and depreciation / amortization.



                                       22
<PAGE>

Finance Costs

Finance costs increased to approximately $961,000 for the six month period ended
March 31, 2005 as compared to approximately  $158,000 for the same period of the
prior year, an increase of approximately $803,000 or 508%.

We had  approximately  $54  million in short term loans and notes  payable as of
March 31, 2005 as compared to  approximately  $20.7  million  outstanding  as of
March 31,  2004.  Short term loans and notes  payable are  comprised  of various
short term bank loans and promissory notes, with interest ranging from 4.75 % to
5.84 %, and  maturities of generally  less than twelve  months.  The increase in
interest  bearing debt caused the increase in finance costs. The funds were used
for working capital purposes based on the increase in revenues.

Net Income

Primarily as a result of increased sales during the period, we increased our net
income to approximately $4.36 million as compared to approximately $3.54 million
for the same period of the prior year, an increase of  approximately  $82,000 or
about 23.3%.

Dividends

We have not paid out any dividends to date. In determining our dividend  policy,
our Board of Directors considers current and long term profitability,  committed
and potential cash requirements,  and our overall financial condition. We do not
anticipate  the  payment of any  dividends  in the future  based on the  present
financial  requirements  for  expansion.  Should we decide in the  future to pay
dividends, as a holding company, our ability to do so and meet other obligations
depends  upon the receipt of  dividends  or other  payments  from our  operating
subsidiaries  and other  holdings and  investments.  In addition,  our operating
subsidiaries, from time to time, may be subject to restrictions on their ability
to make  distributions to us, including as a result of restrictive  covenants in
loan  agreements,  restrictions  on the  conversion of local  currency into U.S.
dollars or other hard currency and other regulatory restrictions.


Item 3.  Controls and Procedures

Prior to the conclusion of the period covered by this report,  we carried out an
evaluation,  under the supervision and with the participation of our management,
including  our Chief  Executive  Officer  and Chief  Financial  Officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures   pursuant  to  Exchange  Act  Rule  13(a)-14(c).   Based  upon  that
evaluation,  our Chief Executive  Officer and Chief Financial  Officer concluded
that our disclosure  controls and  procedures  are effective in timely  alerting
them  to  material  information  relating  to  us  (including  our  consolidated
subsidiaries) required to be included in our periodic SEC filings.

There have been no  significant  changes in our  internal  controls  or in other
factors that could significantly affect internal controls subsequent to the date
we carried out this evaluation.



                                       23
<PAGE>

PART II  OTHER INFORMATION

Item 6.  Exhibits

The following documents are filed as part of this report:

31.1     Chief Executive Officer Certification furnished pursuant to Section 302
         of the Sarbanes-Oxley Act of 2002

31.2     Chief Financial Officer Certification furnished pursuant to Section 302
         of the Sarbanes-Oxley Act of 2002

32.1     Chief Executive Officer Certification furnished pursuant to Section 906
         of the Sarbanes-Oxley Act of 2002

32.2     Chief Financial Officer Certification furnished pursuant to Section 906
         of the Sarbanes-Oxley Act of 2002



















                                       24
<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                           CHINA BAK BATTERY, INC.
                                           (Registrant)




Date: May 13, 2005                                    /s/ Li Xiangqian
                                           -------------------------------------
                                           Li Xiangqian, Chief Executive Officer



Date: May 13, 2005                                    /s/ Han Yongbin
                                           -------------------------------------
                                           Han Yongbin, Chief Financial Officer



















                                       25