China BAK Battery today announced that the Company's Shenzhen production facility successfully passed an audit conducted by Samsung, a prerequisite for the use of the Company's prismatic lithium ion battery cells in Samsung cell phones. "We believe the successful factory audit by Samsung demonstrates the high quality and operational efficiency of our production processes and we are confident that our sample units will meet Samsung's requirements. This marks an important milestone for our prismatic batteries which are for the first time being supplied by invitation on a test basis to an international tier one cell phone manufacturer."
We expect our cylindrical cells business to break even in the fourth quarter of fiscal year 2011 due to improved pricing strategy as we expect our new low-cost and longer life cycle cylindrical cells used in notebook computers and power-tool manufacturers to exhibit strong sales volume in the coming quarters. In addition, we anticipate profitability from our prismatic battery business to show improvement in the third quarter due to improved yield and higher capacity utilization.
As per the supply contract, in calendar year 2011, China BAK will supply 20,000 units of lithium-ion high-power batteries, which will be used to power Xidesheng Bicycle's lithium-ion electric bicycles. Management expects to receive additional orders from Xidesheng Bicycle. "The market demand for high-power lithium batteries used in E-bikes is continually increasing and we are gradually increasing our market share in this segment as the market recognizes the high-quality and stable performance of our product. We are encouraged to see new customers like Xidesheng Bicycle place orders with us. We expect to further increase our sales of high-power batteries to E-bike customers."