As Filed with the Securities and Exchange Commission on April 25, 2008 |
Registration
No. 333-147355
|
Delaware
|
3690
|
20-4062622
|
(State
or Other Jurisdiction of
|
(Primary
Standard
Industrial
|
(I.R.S.
Employer Identification No.)
|
Incorporation
|
Classification
Code Number)
|
|
or
Organization)
|
Thomas
J. Poletti, Esq.
Katherine
J. Blair, Esq.
Kirkpatrick
& Lockhart Preston Gates Ellis LLP
10100
Santa Monica Blvd., 7th Floor
Los
Angeles, CA 90067
Telephone
(310) 552-5000
Facsimile
(310) 552-5001
|
Joseph
V. Stubbs, Esq.
Scott
Galer, Esq.
Stubbs
Alderton & Markiles, LLP
15260
Ventura Boulevard, 20th Floor
Sherman
Oaks, California 91403
Telephone
(818) 444-4500
Facsimile
(818) 444-4520
|
Proposed
|
Proposed
|
||||||||||||
Maximum
|
Maximum
|
Amount of
|
|||||||||||
Title of Each Class of
|
Amount To Be
|
Offering Price
|
Aggregate
|
Registration
|
|||||||||
Securities To Be Registered
|
Registered (1)
|
Per Share
|
Offering Price
|
Fee
|
|||||||||
Common Stock, $.001 par value
per share
|
790,000
|
(2)
|
$
|
4.00
|
(2)
|
$
|
3,160,000
|
(2)
|
$
|
100.45
|
|||
Common
Stock, $.001 par value per share
|
4,144,327
|
(3)
|
$
|
4.00
|
(4)
|
$
|
16,577,308
|
(4)
|
$
|
508.92
|
|||
Total
Registration Fee
|
$
|
609.37
|
(5)
|
(1) |
In
accordance with Rule 416(a), the Registrant is also registering hereunder
an indeterminate number of additional shares of common stock that
shall be
issuable pursuant to Rule 416 to prevent dilution resulting from
stock
splits, stock dividends or similar
transactions.
|
(2) |
The
registration fee for securities to be offered by the Registrant is
based
on an estimate of the Proposed Maximum Aggregate Offering Price of
the
securities, and such estimate is solely for the purpose of calculating
the
registration fee pursuant to Rule 457(o). Includes shares which the
underwriters have the option to purchase to cover over-allotments,
if
any.
|
(3) |
This
Registration Statement also covers the resale under a separate resale
prospectus (the “Resale Prospectus”) by selling stockholders of the
Registrant of up to 4,144,327 shares of Common Stock previously issued
to
such selling stockholders as named in the Resale
Prospectus.
|
(4) |
Estimated
solely for the purpose of calculating the registration fee pursuant
to
Rule 457.
|
(5) |
Previously
paid.
|
· |
IPO
Prospectus.
A
prospectus to be used for the initial public offering by the Registrant
of
up to 700,000 shares of the Registrant's common stock (in addition
to
90,000 shares that may be sold upon exercise of the underwriters'
over-allotment option) (the "IPO Prospectus") through the underwriters
named on the cover page of the IPO
Prospectus.
|
· |
Resale
Prospectus.
A
prospectus to be used for the resale by selling stockholders of up
to
4,144,327 shares of the Registrant’s common stock (the “Resale
Prospectus”).
|
· |
they
contain different outside and inside front covers;
|
· |
they
contain different Offering sections in the Prospectus Summary section
beginning on page 1;
|
· |
they
contain different Use of Proceeds sections on page 25;
|
· |
the
Dilution section is deleted from the Resale Prospectus on page 27;
|
· |
a
Selling Stockholder section is included in the Resale Prospectus
beginning
on page 60A;
|
· |
references
in the IPO Prospectus to the Resale Prospectus will be deleted from
the
Resale Prospectus;
|
· |
the
Underwriting section from the IPO Prospectus on page 70is
deleted from the Resale Prospectus and a Plan of Distribution is
inserted
in its place;
|
· |
the
Legal Matters section in the Resale Prospectus on page 72deletes
the reference to counsel for the underwriters; and
|
· |
the
outside back cover of the IPO Prospectus is deleted from the Resale
Prospectus.
|
|
|
|
|
Per
Share
|
Total
|
|||||
Public
offering price
|
$
|
|
$
|
|
|||
Underwriting
discounts and commissions
|
$
|
|
$
|
|
|||
Proceeds,
before expenses, to Hong Kong Highpower Technology, Inc.
|
$
|
|
$
|
|
|
|
|
PROSPECTUS
SUMMARY
|
1
|
|||
SUMMARY
FINANCIAL DATA
|
5
|
|||
RISK
FACTORS
|
7
|
|||
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
|
23
|
|||
USE
OF PROCEEDS
|
25
|
|||
DIVIDEND
POLICY
|
25
|
|||
CAPITALIZATION
|
26
|
|||
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
27
|
|||
DILUTION
|
27
|
|||
ACCOUNTING
OF THE SHARE EXCHANGE
|
28
|
|||
SELECTED
CONSOLIDATED FINANCIAL DATA
|
29
|
|||
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
31
|
|||
DESCRIPTION
OF BUSINESS
|
44
|
|||
MANAGEMENT
|
54
|
|||
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
61
|
|||
BENEFICIAL
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
62
|
|||
DESCRIPTION
OF SECURITIES
|
63
|
|||
SHARES
ELIGIBLE FOR FUTURE SALE
|
67
|
|||
UNDERWRITING
|
70
|
|||
LEGAL
MATTERS
|
72
|
|||
EXPERTS
|
72
|
|||
ADDITIONAL
INFORMATION
|
72
|
|||
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-1
|
|||
PART
II INFORMATION NOT REQUIRED IN THE PROSPECTUS
|
II-1
|
|||
SIGNATURES
|
II-4
|
· |
personal
portable electronic devices, such as digital cameras, DVD players,
electric razors and electric
toothbrushes;
|
· |
electric
toys, such as radio-controlled
cars;
|
· |
industrial
applications, such as industrial lighting, medical devices and
communications equipment;
|
· |
power
tools; and
|
· |
electric
bikes
|
Common
stock offered we are offering
|
700,000
shares (1)
|
Common
stock outstanding after the offering
|
21,178,090
shares (2)
|
Offering
Price
|
$3.00
to $4.00 per share (estimated)
|
Use
of proceeds
|
We
intend to use the net proceeds of this offering for general corporate
purposes. See "Use of Proceeds" on page 25 for
more information on the use of proceeds.
|
Risk
factors
|
Investing
in these securities involves a high degree of risk. As an investor
you
should be able to bear a complete loss of your investment. You should
carefully consider the information set forth in the “Risk Factors” section
beginning on page 7.
|
(1)
|
Excludes
up to 90,000 shares that may be sold upon the underwriters’ over-allotment
option. We are also concurrently registering for resale under a separate
prospectus up to 4,144,327 shares of our common stock held by the
selling
stockholders named under a prospectus. None of these securities are
being
offered by us and we will not receive any proceeds from the sale
of these
shares. For additional information, see above under “Prospectus
Summary – Recent Events.”
|
(2)
|
Based
on 20,478,090 shares
of common stock issued and outstanding as of April 25,
2008.
|
Consolidated
Statements of Operations
|
Year
Ended December 31,
|
|||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
|
|
|
(unaudited)
|
||||||||||||
(restated)
|
(restated)
|
(restated)
|
(restated)
|
|||||||||||||
|
(in
thousands)
|
|||||||||||||||
Net
Sales
|
$
|
73,262
|
$
|
44,376
|
$
|
25,010
|
$
|
10,956
|
$
|
3,599
|
||||||
|
||||||||||||||||
Cost
of Sales
|
(63,791
|
)
|
(36,959
|
)
|
(20,757
|
)
|
(9,306
|
)
|
(3,290
|
)
|
||||||
|
||||||||||||||||
Gross
profit
|
$
|
9,470
|
$
|
7,417
|
$
|
4,253
|
$
|
1,651
|
$
|
309
|
||||||
|
||||||||||||||||
Depreciation
|
(120
|
)
|
(80
|
)
|
(46
|
)
|
(25
|
)
|
(10
|
)
|
||||||
Selling
and distributing costs
|
(2,096
|
)
|
(1,634
|
)
|
(857
|
)
|
(641
|
)
|
(61
|
)
|
||||||
Administrative
and other operating expenses
|
(4,178
|
)
|
(2,160
|
)
|
(854
|
)
|
(549
|
)
|
(181
|
)
|
||||||
|
||||||||||||||||
Income
from operations
|
$
|
3,076
|
$
|
3,543
|
$
|
2,495
|
$
|
435
|
$
|
57
|
||||||
Fees
and costs related to reorganization
|
(719
|
)
|
(75
|
)
|
-
|
-
|
-
|
|||||||||
Other
Income
|
149
|
59
|
58
|
33
|
0
|
|||||||||||
|
||||||||||||||||
Interest
expenses
|
(696
|
)
|
(254
|
)
|
(55
|
)
|
(10
|
)
|
0
|
|||||||
|
||||||||||||||||
Income
before taxes
|
$
|
1,809
|
$
|
3,273
|
$
|
2,499
|
$
|
458
|
$
|
57
|
||||||
|
||||||||||||||||
Income
taxes
|
(145
|
)
|
(240
|
)
|
(188
|
)
|
17
|
0
|
||||||||
Net
income
|
$
|
1,664
|
$
|
3,032
|
$
|
2,311
|
$
|
475
|
$
|
57
|
||||||
Basic
and diluted net income per common share
|
$
|
0.11
|
$
|
0.20
|
$
|
0.16
|
$
|
0.03
|
$
|
0.00
|
||||||
Basic
weighted average common shares outstanding
|
15,731,988
|
14,798,328
|
14,798,328
|
14,798,328
|
14,798,328
|
|||||||||||
Dividends
declared per common share
|
$
|
0.045
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Consolidated
Balance Sheets
|
As
of December 31,
|
|||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
|
|
|
(unaudited)
|
||||||||||||
|
(in
thousands)
|
|||||||||||||||
Current
Assets
|
$
|
40,167
|
$
|
28,573
|
$
|
12,851
|
$
|
6,322
|
$
|
1,910
|
||||||
Total
Assets
|
48,920
|
31,736
|
14,585
|
7,378
|
2,317
|
|||||||||||
Current
Liabilities
|
37,366
|
24,571
|
10,728
|
5,907
|
2,056
|
|||||||||||
Total
Liabilities
|
37,366
|
24,571
|
10,728
|
5,907
|
2,140
|
|||||||||||
Total
Stockholders’ Equity
|
11,554
|
7,165
|
3,857
|
1,472
|
177
|
— |
maintain
our leading position in the Ni-MH battery
market;
|
— |
retain
existing customers or acquire new
customers;
|
— |
diversify
our revenue sources by successfully developing and selling our
products in
the global battery market and other
markets;
|
— |
keep
up with evolving industry standards and market
developments;
|
— |
respond
to competitive market conditions;
|
— |
maintain
adequate control of our expenses;
|
— |
manage
our relationships with our
suppliers;
|
— |
attract,
train, retain and motivate qualified personnel;
or
|
— |
protect
our proprietary technologies.
|
· |
our
ability raise capital to acquire additional raw materials and expand
our
manufacturing facilities;
|
· |
delays
and cost overruns, due to increases in raw material prices and problems
with equipment vendors;
|
· |
delays
or denial of required approvals and certifications by relevant government
authorities;
|
· |
diversion
of significant management attention and other resources;
and
|
· |
failure
to execute our expansion plan effectively.
|
— |
vulnerability
of our business to a general economic downturn in China;
|
— |
fluctuation
and unpredictability of costs related to the raw material used to
manufacture our products;
|
— |
seasonality
of our business;
|
— |
changes
in the laws of the PRC that affect our operations;
|
— |
competition
from our competitors; and
|
— |
Our
ability to obtain necessary government certifications and/or licenses
to
conduct our business.
|
—
|
quarantines
or closures of some of our manufacturing facilities, which would
severely
disrupt our operations,
|
— |
the
sickness or death of our key officers and employees,
and
|
— |
a
general slowdown in the Chinese
economy.
|
— |
access
to the capital markets of the United
States;
|
—
|
the
increased market liquidity expected to result from exchanging stock
in a
private company
for securities of a public company that may eventually be
traded;
|
— |
the
ability to use registered securities to make acquisition of assets
or
businesses;
|
— |
increased
visibility in the financial
community;
|
— |
enhanced
access to the capital markets;
|
— |
improved
transparency of operations; and
|
— |
perceived
credibility and enhanced corporate image of being a publicly traded
company.
|
·
|
Our
reliance on our major customers for a large portion of our net
sales;
|
·
|
Our
reliance on a limited number of suppliers for nickel, our principal
raw
material;
|
·
|
Our
ability to develop and market new
products;
|
·
|
Our
ability to establish and maintain a strong
brand;
|
·
|
Continued
maintenance of certificates, permits and licenses required to conduct
business in China;
|
·
|
Protection
of our intellectual property
rights;
|
·
|
The
market acceptance of our products;
|
·
|
Exposure
to product liability and defect
claims;
|
·
|
Changes
in the laws of the PRC that affect our
operations;
|
·
|
Any
recurrence of severe acute respiratory syndrome, or
SARS;
|
·
|
Our
ability to obtain all necessary government certifications and/or
licenses
to conduct our business;
|
·
|
Development
of a public trading market for our
securities;
|
·
|
The
cost of complying with current and future governmental regulations
and the
impact of any changes in the regulations on our operations; and
|
·
|
The
other factors referenced in this prospectus, including, without
limitation, under the sections entitled “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,”
and “Business.”
|
|
December 31, 2007
|
||||||
|
Actual
|
As
adjusted
|
|||||
|
(unaudited,
in thousands)
|
||||||
Long
term debt
|
$
|
[_________
|
]
|
[________
|
]
|
||
Stockholders'
equity:
|
|||||||
Preferred
stock, $0.001 par value, 10,000,000 shares authorized, 0 shares
issued and
outstanding at September 30, 2007
|
—
|
—
|
|||||
Common
stock, 100,000,000 shares authorized, [________] issued and outstanding
at
December 31, 2007, and [________] shares issued and outstanding
on an
as-adjusted basis at December 31, 2007(1)
|
[_________
|
]
|
[________
|
]
|
|||
Additional
paid in capital
|
[_________
|
]
|
[________
|
]
|
|||
Statutory
reserves
|
[_________
|
]
|
[________
|
]
|
|||
Accumulated
other comprehensive income
|
[_________
|
]
|
[________
|
]
|
|||
Retained
earnings
|
[_________
|
]
|
[________
|
]
|
|||
Total
stockholders' equity
|
$
|
[_________
|
]
|
[________
|
]
|
||
Total
capitalization
|
$
|
[_________
|
]
|
[________
|
]
|
(1) |
The
number of our shares of common stock shown above to be outstanding
after
this offering is based on 20,478,090 shares outstanding as of December
31,
2007.
|
Assumed
public offering price per share
|
|||||||
Net
tangible book value per share as of December 31, 2007
|
$
|
|
|
|
|||
Increase
per share attributable to new public investors
|
|||||||
|
|||||||
Pro
forma net tangible book value per share after this offering
|
|||||||
|
|||||||
Dilution
per share to new public investors
|
|||||||
|
|
|
Shares Purchased
|
Total Cash Consideration
|
|
|||||||||||||
|
Number
|
Percent
|
Amount
(in thousands)
|
Percent
|
Average Price Per
Share
|
|||||||||||
Existing
stockholders
|
% |
$
|
|
%
|
$
|
|||||||||||
New
investors
|
|
|
|
%
|
$
|
|
%
|
$
|
||||||||
Total
|
100
|
%
|
100
|
%
|
Consolidated Statements of Operations
|
Year Ended December 31,
|
|||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
|
|
|
(unaudited)
|
||||||||||||
(restated)
|
(restated)
|
(restated)
|
(restated)
|
|||||||||||||
|
(in
thousands)
|
|||||||||||||||
Net
Sales
|
$
|
73,262
|
$
|
44,376
|
$
|
25,010
|
$
|
10,956
|
$
|
3,599
|
||||||
|
||||||||||||||||
Cost
of Sales
|
(63,791
|
)
|
(36,959
|
)
|
(20,757
|
)
|
(9,306
|
)
|
(3,290
|
)
|
||||||
|
||||||||||||||||
Gross
profit
|
$
|
9,470
|
$
|
7,417
|
$
|
4,253
|
$
|
1,651
|
$
|
309
|
||||||
|
||||||||||||||||
Depreciation
|
(121
|
)
|
(80
|
)
|
(46
|
)
|
(25
|
)
|
(10
|
)
|
||||||
Selling
and distributing costs
|
(2,096
|
)
|
(1,634
|
)
|
(857
|
)
|
(641
|
)
|
(61
|
)
|
||||||
Administrative
and other operating expenses
|
(4,178
|
)
|
(2,160
|
)
|
(854
|
)
|
(549
|
)
|
(181
|
)
|
||||||
|
||||||||||||||||
Income
from operations
|
$
|
3,076
|
$
|
3,543
|
$
|
2,495
|
$
|
435
|
$
|
57
|
||||||
Fees
and costs related to reorganization
|
(719
|
)
|
(75
|
)
|
-
|
-
|
-
|
|||||||||
Other
Income
|
149
|
59
|
58
|
33
|
0
|
|||||||||||
|
||||||||||||||||
Interest
expenses
|
(696
|
)
|
(254
|
)
|
(55
|
)
|
(10
|
)
|
0
|
|||||||
|
||||||||||||||||
Income
before taxes
|
$
|
1,809
|
$
|
3,273
|
$
|
2,499
|
$
|
458
|
$
|
57
|
||||||
|
||||||||||||||||
Income
taxes
|
(145
|
)
|
(240
|
)
|
(188
|
)
|
17
|
0
|
||||||||
Net
income
|
$
|
1,664
|
$
|
3,032
|
$
|
2,311
|
$
|
475
|
$
|
57
|
||||||
Basic
and diluted net income per common share
|
$
|
0.11
|
$
|
0.20
|
$
|
0.16
|
$
|
0.03
|
$
|
0.00
|
||||||
Basic
weighted average common shares outstanding
|
15,731,988
|
14,798,328
|
14,798,328
|
14,798,328
|
14,798,328
|
|||||||||||
Dividends
declared per common share
|
$
|
0.045
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Consolidated Balance Sheets
|
As of December 31,
|
|||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
|
|
|
(unaudited)
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Current
Assets
|
$
|
40,167
|
$
|
28,573
|
$
|
12,851
|
$
|
6,322
|
$
|
1,910
|
||||||
Total
Assets
|
48,920
|
31,736
|
14,585
|
7,378
|
2,317
|
|||||||||||
Current
Liabilities
|
37,366
|
24,571
|
10,728
|
5,907
|
2,056
|
|||||||||||
Total
Liabilities
|
37,366
|
24,571
|
10,728
|
5,907
|
2,140
|
|||||||||||
Total
Stockholders’ Equity
|
11,554
|
7,165
|
3,857
|
1,472
|
177
|
Year Ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(restated)
|
(restated)
|
|||||||||
(in
thousands)
|
||||||||||
Net
Sales
|
$
|
73,262
|
$
|
44,376
|
$
|
25,010
|
||||
|
||||||||||
Cost
of Sales
|
(63,791
|
)
|
(36,959
|
)
|
(20,757
|
)
|
||||
|
||||||||||
Gross
profit
|
$
|
9,470
|
$
|
7,417
|
$
|
4,253
|
||||
|
||||||||||
Depreciation
|
(121
|
)
|
(80
|
)
|
(46
|
)
|
||||
Selling
and distributing costs
|
(2,096
|
)
|
(1,634
|
)
|
(857
|
)
|
||||
Administrative
and other operating expenses
|
(4,178
|
)
|
(2,160
|
)
|
(854
|
)
|
||||
|
||||||||||
Income
from operations
|
$
|
3,076
|
$
|
3,543
|
$
|
2,496
|
||||
Other
income
|
149
|
59
|
58
|
|||||||
Fees
and costs related to reorganization
|
(719
|
)
|
(75
|
)
|
-
|
|||||
|
||||||||||
Interest
expenses
|
(696
|
)
|
(254
|
)
|
(55
|
)
|
||||
|
||||||||||
Income
before taxes
|
$
|
1,809
|
$
|
3,273
|
$
|
2,499
|
||||
|
||||||||||
Income
taxes
|
(145
|
)
|
(240
|
)
|
(188
|
)
|
||||
Net
income
|
$
|
1,664
|
$
|
3,032
|
$
|
2,311
|
||||
Basic
and diluted net income per common share
|
$
|
0.11
|
$
|
0.20
|
$
|
0.16
|
||||
Basic
weighted average common shares outstanding
|
15,731,988
|
14,798,328
|
14,798,328
|
·
|
EBITDA
(1) does not reflect our cash expenditures or future requirements for
capital expenditures or contractual commitments; (2) does not reflect
changes in, or cash requirements for, our working capital needs;
(3) does not reflect the interest expense, or the cash requirements
necessary to service interest or principal payments, on our debt;
(4) does not reflect income taxes or the cash requirements for any
tax payments; and (5) does not reflect all of the costs associated
with operating our business;
|
·
|
although
depreciation and amortization are non-cash charges, the assets
being
depreciated and amortized often will have to be replaced in the
future,
and EBITDA
does not reflect any cash requirements for such
replacements;
|
·
|
other
companies may calculate EBITDA differently than we do, limiting
its
usefulness as a comparative
measure.
|
Years
Ended December 31
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$
|
$
|
$
|
||||||||
Net
income
|
1,663,690
|
3,032,327
|
2,311,031
|
|||||||
Interest
expense
|
696,132
|
253,617
|
54,971
|
|||||||
Income
taxes
|
145,458
|
240,487
|
187,634
|
|||||||
Depreciation
|
560,073
|
343,841
|
182,307
|
|||||||
Amortization
|
-
|
-
|
-
|
|||||||
EBITDA
|
3,065,353
|
3,870,272
|
2,735,943
|
Name
of Bank
|
Amount
Granted |
Amount
Outstanding Under Loan
|
Guaranteed by Officers
|
|||||||
DBS
Bank (China) Limited
|
$
|
11.18
million
|
$
|
5.03
million
|
Dang
Yu Pan, Wen Liang Li, Wen Wei Ma
|
|||||
Shenzhen
Development Bank Co., Ltd
|
$
|
6.82
million
|
$
|
5.17
million
|
Dang
Yu Pan
|
|||||
Shanghai
Pudong Development Bank Co. Ltd.
|
$
|
3.9
million
|
$
|
2.96
million
|
Dang
Yu Pan
|
|||||
Citibank
China Co., ltd.
|
$
|
2.0
million
|
$
|
0.68
million
|
Dang
Yu Pan, Wen Liang Li, Wen Wei Ma
|
Payments due by period
|
||||||||||||||||
Total
|
Less than 1
year |
1-3 years
|
3-5 years
|
More than 5
years |
||||||||||||
Credit
Facilities
|
$
|
15,410,542
|
$
|
15,410,542
|
-
|
-
|
-
|
|||||||||
Purchase
Obligations (1)
|
$
|
19,561,118
|
$
|
19,561,118
|
-
|
-
|
-
|
|||||||||
License
Agreement
|
$
|
1,327,026
|
$
|
1,327,026
|
-
|
-
|
-
|
|||||||||
Capital
Commitment
|
$
|
146,647
|
$
|
146,647
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
36,445,333
|
$
|
36,445,333
|
-
|
-
|
-
|
(1)
|
Primarily
represents obligations to purchase specified quantities of raw
materials.
|
—
|
Low
Costs.
China continues to have a significant low cost of labor as well as
easy
access to raw materials and land.
|
—
|
Proximity
to electronics supply chain.
Electronics manufacturing in general continues to shift to China,
giving
China-based manufacturers a further cost and cycle time
advantage.
|
—
|
Proximity
to end-markets.
China has focused in recent years on building its research, development
and engineering skill base in all aspects of higher end manufacturing,
including batteries.
|
·
|
Consumer
Batteries – Relative to ordinary Ni-Cad rechargeable batteries, as well as
their non-rechargeable counterparts, our Ni-MH batteries offer higher
power capacity allowing for longer working time and shortened charging
time during equivalent working periods. We produce A, AA and AAA
sized
batteries in blister packing as well as chargers and battery
packs.
|
·
|
Industrial
Batteries – These batteries are designed for electric bikes, power tools
and electric toys. They are specifically designed for high-drain
discharge
applications, possessing low internal resistance, more power, and
longer
discharging time.
|
Year Ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Consumer
Batteries
|
80
|
%
|
77
|
%
|
84
|
%
|
||||
Industrial
Batteries
|
19
|
21
|
14
|
|||||||
Materials
|
1
|
2
|
2
|
|||||||
100
|
%
|
100
|
%
|
100
|
%
|
·
|
setting
internal controls and regulations for semi-finished and finished
products;
|
·
|
testing
samples of raw materials from
suppliers;
|
·
|
implementing
sampling systems and sample files;
|
·
|
maintaining
quality of equipment and instruments;
and
|
·
|
articulating
the responsibilities of quality control
staff.
|
Year Ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
China
and Hong Kong
|
39.5
|
%
|
65.4
|
%
|
68.5
|
%
|
||||
Europe
|
34.6
|
16.4
|
11.2
|
|||||||
North
America
|
17.5
|
10.2
|
7.5
|
|||||||
Asia
|
8.1
|
7.4
|
12.8
|
|||||||
South
America and Others
|
0.3
|
0.6
|
-
|
|||||||
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
— |
Convention
establishing the World Intellectual Property Organization (WIPO
Convention) (June 4, 1980);
|
— |
Paris
Convention for the Protection of Industrial Property (March 19,
1985);
|
— |
Patent
Cooperation Treaty (January 1, 1994);
and
|
— |
The
Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPs)
(November 11, 2001).
|
Location
|
Area
(square feet)
|
Principal Use
|
Lease
expiration date
|
|||
Workshop
A1 & dormitory , Luo Shan Industrial Park, Shan Xia Community, Ping Hu
Street, Long Gang District, Shenzhen
|
58,986
|
Industry
& Residence
|
September
30, 2009
|
|||
Workshop
A2 & dormitory, Luo Shan Industrial Park, Shan Xia Community, Ping Hu
Street, Long Gang District, Shenzhen
|
81,117
|
Industry
& Residence
|
September
30, 2009
|
|||
4th
Floor, Building A, (4th
Floor, Building 1 & 2nd
Floor, Building B2 ) Workshop, B2 Area, Luo Shan Industrial Park,
Shan Xia
Community, Ping Hu Street, Long Gang District, Shenzhen
|
94,722
|
Industry
& Residence
|
June
14, 2010
|
|||
Storage,
Building 2, (6th
Floor, Building 1)Area B2, Luo Shan Industrial Park, Shan Xia Community,
Ping Hu Street, Long Gang District, Shenzhen
|
50,698
|
Industry
& Residence
|
December
31, 2010
|
1st-4th
Floor, Building 12, (1st-7th
Floor, Building 9), Da Wang Industrial Park, Xin Xia Road, Ping Hu
Street,
Long Gang District, Shenzhen
|
55,897
|
Industry
& Residence
|
September
30, 2008
|
|||
Workshop
& dormitory , chong Tou Hu village,Renming Road,Guang Lan Street, Bao
An District, Shenzhen
|
146,336
|
Industry
& Residence
|
September
15, 2010
|
Name
|
Age
|
Position
|
||
Dang
Yu Pan
|
39
|
Chairman
of the Board and Chief Executive Officer
|
||
Wen
Liang Li
|
42
|
Vice
President, Chief Technology Officer and Director
|
||
Wen
Wei Ma
|
38
|
Vice
President of Manufacturing
|
||
Yu
Zhi Qiu
|
36
|
Chief
Financial Officer
|
||
Wen
Jia Xiao
|
31
|
Vice
President of Quality Control
|
||
Xinhai
Li
|
45
|
Director
|
||
Chao
Li
|
63
|
Director
|
||
Ping
Li
|
43
|
Director
|
|
·
|
The
appointment, replacement, compensation, and oversight of work of
the
independent auditor, including resolution of disagreements between
management and the independent auditor regarding financial reporting,
for
the purpose of preparing or issuing an audit report or performing
other
audit, review or attest services.
|
|
·
|
Reviewing
and discussing with management and the independent auditor various
topics
and events that may have significant financial impact on our company
or
that are the subject of discussions between management and the independent
auditors.
|
Name
and Position
|
Year
|
Salary
|
Bonus
|
All other
compensation (1)
|
Total
|
|||||||||||
Dang
Yu Pan
|
2007
|
$
|
18,000
|
$
|
-
|
25,000(2
|
)
|
43,000
|
||||||||
Chief
Executive Officer and
|
2006
|
$
|
9,000
|
$
|
-
|
$
|
24,000(2
|
)
|
$
|
33,000
|
||||||
Chairman
of the Board
|
||||||||||||||||
Yu
Zhi Qiu
|
2007
|
$
|
15,000
|
$
|
16,000
|
$
|
-
|
$
|
31,000
|
|||||||
Chief
Financial Officer
|
2006
|
$
|
15,000
|
$
|
16,000
|
$
|
-
|
$
|
31,000
|
|||||||
Richard
Rappaport(3)
|
2007
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Former
Chief Executive Officer
|
2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
and
Former Director
|
||||||||||||||||
Anthony
Pintsopoulos (3)
|
2007
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Form
Chief Financial Officer
|
2006
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
and
Former Director
|
Name
|
Fees Earned
or Paid in Cash ($)
|
Stock
Awards ($)
|
Option
Awards
($) |
Non-Equity
Incentive Plan Compensation ($)
|
Change in
Pension Value and Nonqualified Deferred Compensation Earnings |
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||
Wen
Liang Li
|
20,000
|
(1)
|
-
|
-
|
-
|
-
|
-
|
20,000
|
(1)
|
·
|
indemnify
officers and directors against certain liabilities that may arise
because
of their status as officers or directors;
|
·
|
advance
expenses, as incurred, to officers and directors in connection with
a
legal proceeding, subject to limited exceptions; or
|
·
|
obtain
directors’ and officers’ insurance.
|
Name of Bank
|
Amount
Granted
|
Amount
Outstanding Under
Loan
|
Guaranteed by Officers
|
|||
DBS
Bank (China) Limited
|
$11.18 million
|
$5.03 million
|
Dang
Yu Pan, Wen Liang Li, Wen Wei Ma
|
|||
Shenzhen
Development Bank Co., Ltd
|
$
6.82 million
|
$5.17 million
|
Dang
Yu Pan
|
|||
Shanghai
Pudong Development Bank Co. Ltd.
|
$
3.9 million
|
$2.96 million
|
Dang
Yu Pan
|
|||
Citibank
China Co., ltd.
|
$2.0 million
|
$0.68 million
|
Dang
Yu Pan, Wen Liang Li, Wen Wei
Ma
|
·
|
Each
person known to be the beneficial owner of 5% or more of the outstanding
common stock of our company;
|
·
|
Each
executive officer;
|
·
|
Each
director; and
|
·
|
All
of the executive officers and directors as a
group.
|
Name and Address
of Beneficial Owner
|
Title
|
Beneficially
Owned
Prior to and
After the
Offering
|
Percent of
Class
Beneficially
Owned
Prior to
Offering
|
Percent of Class
Beneficially
Owned After
Offering(1)
|
|||||||||
|
|
|
|||||||||||
Directors
and Executive Officers
|
|
||||||||||||
Dang
Yu Pan
|
Chief Executive Officer and Chairman of the Board |
8,287,061
|
(2)
|
40.5
|
%
|
39.1
|
%
|
||||||
|
|
|
|
||||||||||
Wen
Liang Li
|
Vice President, Chief Technology Officer and Director |
3,255,632
|
15.9
|
%
|
15.4
|
%
|
|||||||
|
|
|
|
||||||||||
Wen
Wei Ma
|
Vice President of Manufacturing |
1,479,835
|
7.2
|
%
|
7.0
|
%
|
|||||||
|
|
|
|
||||||||||
Yu
Zhi Qiu
|
Chief Financial Officer |
306,325
|
1.5
|
%
|
1.4
|
%
|
|||||||
|
|
|
|
||||||||||
Wen
Jia Xiao
|
Vice President of Quality Control |
266,370
|
1.3
|
%
|
1.3
|
%
|
|||||||
Xinhai
Li
|
Director |
-
|
-
|
-
|
|||||||||
Chao
Li
|
Director |
-
|
-
|
-
|
|||||||||
Ping
Li
|
Director |
-
|
-
|
-
|
|||||||||
|
|
||||||||||||
Officers
and Directors as a Group (total of 8 persons)
|
|
13,022,528
|
(2)
|
63.6
|
%
|
61.5
|
%
|
(1) |
Assumes
offering of 700,000 shares without underwriters’ exercise of its 90,000
additional shares to cover
over-allotments.
|
(2) |
Includes
(i) an aggregate of 2,219,747 shares over which Mr. Pan has voting
power
and the right to acquire ownership pursuant to a loan agreement dated
February 5, 2007 between Mr. Pan and other shareholders, including
Yu Zhi
Qiu, Chief Financial Officer, who holds 306,325 shares and, Wen Jia
Xiao,
Vice President of Quality Control, who holds 266,370 shares, and
(ii)
591,933 shares held by a company that is 100% owned by Mr.
Pan.
|
(i) |
have
equal ratable rights to dividends from funds legally available therefore,
if declared by our Board of
Directors;
|
(ii) |
are
entitled to share ratably in all our assets available for distribution
to
holders of common stock upon our liquidation, dissolution or winding
up;
|
(iii) |
do
not have preemptive, subscription or conversion rights or redemption
or
sinking fund provisions; and
|
(iv) |
are
entitled to one non-cumulative vote per share on all matters on which
stockholders may vote at all meetings of our
stockholders.
|
·
|
Our
ability to obtain additional financing and, if available, the terms
and
conditions of the financing;
|
·
|
Our
financial position and results of
operations;
|
·
|
Concern
as to, or other evidence of, the reliability and safety of our products
and services or our competitors’ products and
services;
|
·
|
Announcements
of innovations or new products or services by us or our
competitors;
|
·
|
U.S.
federal and state governmental regulatory actions and the impact
of such
requirements on our business;
|
·
|
The
development of litigation against
us;
|
·
|
Period-to-period
fluctuations in our operating
results;
|
·
|
Changes
in estimates of our performance by any securities
analysts;
|
·
|
The
issuance of new equity securities pursuant to a future offering or
acquisition;
|
·
|
Changes
in interest rates;
|
·
|
Competitive
developments, including announcements by competitors of new products
or
services or significant contracts, acquisitions, strategic partnerships,
joint ventures or capital
commitments;
|
·
|
Investor
perceptions of our company; and
|
·
|
General
economic and other national
conditions.
|
·
|
prior
to such date, the Board of Directors approved either the business
combination or the transaction that resulted in the stockholder becoming
an interested stockholder;
|
·
|
upon
consummation of the transaction that resulted in the stockholder
becoming
an interested stockholder, the interested stockholder owned at least
85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the
number of
shares outstanding those shares owned by persons who are directors
and
also officers and by employee stock plans in which employee participants
do not have the right to determine confidentially whether shares
held
subject to the plan will be tendered in a tender or exchange offer;
or
|
·
|
on
or subsequent to such date, the business combination is approved
by the
Board of Directors and authorized at an annual meeting or special
meeting
of stockholders and not by written consent, by the affirmative vote
of at
least 66 2/3% of the outstanding voting stock that is not owned by
the
interested stockholder.
|
·
|
any
merger or consolidation involving the corporation and the interested
stockholder;
|
·
|
any
sale, transfer, pledge or other disposition of 10% or more of the
assets
of the corporation involving the interested stockholder;
|
·
|
subject
to certain exceptions, any transaction that results in the issuance
or
transfer by the corporation of any stock of the corporation to the
interested stockholder;
|
·
|
any
transaction involving the corporation that has the effect of increasing
the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder;
or
|
·
|
the
receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided
by or
through the corporation.
|
·
|
provide
our board of directors with the ability to alter our bylaws without
stockholder approval;
|
·
|
provide
for an advance notice procedure with regard to the nomination of
candidates for election as directors and with regard to business
to be
brought before a meeting of
stockholders;
|
·
|
provide
that vacancies on our board of directors may be filled by a majority
of
directors in office, although less than a
quorum.
|
Approximate Number of
Shares Eligible for
Future Sale
|
Date
|
|
700,000
|
After
the date of this prospectus, freely tradeable shares sold in this
offering.
|
|
4,144,327
|
After
the date of this prospectus, these shares will have been registered
under
a separate prospectus (“Resale Prospectus”) and will be freely tradeable
by certain selling stockholders listed in the Resale Prospectus.
These
shares consist of all of the shares of common stock registered
under the
Resale Prospectus. Of the 4,144,327 shares, selling stockholders
holding
an aggregate of 2,836,364 shares of common stock have agreed that
they
will not sell any of such securities until ninety (90) days after
our
common stock begins to be listed or quoted on either the New York
Stock
Exchange, American Stock Exchange, NASDAQ Global Market, NASDAQ
Capital
Market or the OTC Bulletin Board, when one-tenth of their shares
are
released from the lock up, after which their shares will automatically
be
released from the lock up on a monthly basis pro rata over a nine
month
period.
|
|
1,535,435
|
These
shares will be freely tradeable after the Securities and Exchange
Commission declares effective the registration statement that we
will file
within ten days after the end of the six-month period that immediately
follows the date on which we file the registration statement to
register
the shares issued in the Private Placement.
|
|
14,798,328
|
On
November 5, 2008, which is one year after the filing of a current
report
on form 8-K reporting the closing of the share exchange transaction,
these
shares, which were issued in connection with the share exchange
transaction, may be sold under and subject to Rule 144. However,
all of
the holders of these shares have agreed with WestPark Capital not
to
directly or indirectly sell, offer, contract or grant any option
to sell,
pledge, transfer (excluding intra-family transfers, transfers to
a trust
for estate planning purposes or to beneficiaries of officers, directors
and shareholders upon their death), or otherwise dispose of or
enter into
any transaction which may result in the disposition of any shares
of our
common stock or securities convertible into, exchangeable or exercisable
for any shares of our common stock, without the prior written consent
of
WestPark Capital, for a period of 12 months after the date of this
prospectus.
|
Underwriter
|
Number of Shares
|
|||
WestPark
Capital, Inc.
|
||||
Total
|
CONTENTS
|
PAGE
|
|
DECEMBER
31, 2007, 2006 AND 2005
|
||
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-2
|
|
CONSOLIDATED
BALANCE SHEETS
|
F-3
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
F-5
|
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
|
F-6
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
F-7
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-8
|
At December 31,
|
|||||||
|
2007
|
2006
|
|||||
|
$
|
$
|
|||||
ASSETS
|
|
|
|||||
Current
Assets:
|
|
|
|||||
Cash
and cash equivalents
|
1,489,262
|
488,070
|
|||||
Restricted
cash
|
5,453,650
|
1,010,580
|
|||||
Accounts
receivable
|
15,906,175
|
8,127,170
|
|||||
Notes
receivable
|
386,482
|
76,764
|
|||||
Prepaid
expenses and other receivables - Note 6
|
2,501,796
|
2,612,091
|
|||||
Advance
to related parties - Note 11
|
-
|
634,161
|
|||||
Inventories-
Note 7
|
14,371,289
|
15,623,791
|
|||||
Prepaid
lease payments
|
58,570
|
-
|
|||||
|
|
||||||
Total
Current Assets
|
40,167,224
|
28,572,627
|
|||||
Deferred
tax assets - Note 6
|
28,277
|
8,443
|
|||||
Deposit
paid for acquisition of machinery -Note 15
|
1,115,123
|
-
|
|||||
Plant
and equipment, net - Note 8
|
3,789,382
|
3,154,660
|
|||||
Leasehold
land - Note 9
|
2,869,925
|
-
|
|||||
Intangible
asset, net - Note 10
|
950,000
|
-
|
|||||
|
|||||||
TOTAL
ASSETS
|
48,919,931
|
31,735,730
|
|||||
|
|
|
|||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|||||
|
|
|
|||||
LIABILITIES
|
|
|
|||||
Current
Liabilities:
|
|
|
|||||
Accounts
payable
|
19,561,118
|
17,327,402
|
|||||
Other
payables and accrued liabilities - Note 11
|
2,320,956
|
1,170,275
|
|||||
Income
taxes payable
|
73,768
|
122,710
|
|||||
Bank
borrowings - Note 13
|
15,410,542
|
5,950,626
|
|||||
|
|
|
|||||
Total
Current Liabilities
|
37,366,384
|
24,571,013
|
|||||
COMMITMENTS
AND CONTINGENCIES - Note 15
|
At December 31,
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
STOCKHOLDERS’
EQUITY
|
|||||||
Preferred
Stock
|
|||||||
Par
value: US$0.0001
|
|||||||
Authorized:
10,000,000 shares
|
|||||||
Issued
and outstanding: none
|
-
|
-
|
|||||
Common
stock
|
|||||||
Par
value : $0.0001
|
|||||||
Authorized:
100,000,000 shares
|
|||||||
Issued
and outstanding: 2007- 20,478,090 shares (2006- 14,798,328
shares)
|
2,048
|
1,480
|
|||||
Additional
paid-in capital
|
2,765,102
|
62,837
|
|||||
Accumulated
other comprehensive income
|
1,157,872
|
470,383
|
|||||
Retained
earnings
|
7,628,525
|
6,630,017
|
|||||
TOTAL
STOCKHOLDERS’ EQUITY
|
11,553,547
|
7,164,717
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
48,919,931
|
31,735,730
|
Year ended December 31,
|
||||||||||
2006
|
2006
|
|
2005
|
|||||||
$
|
$
|
$
|
||||||||
Net
sales
|
73,261,720
|
44,375,682
|
25,010,030
|
|||||||
Cost
of sales
|
(63,791,248
|
)
|
(36,958,529
|
)
|
(20,757,320
|
)
|
||||
Gross
profit
|
9,470,472
|
7,417,153
|
4,252,710
|
|||||||
Depreciation
|
(120,517
|
)
|
(80,213
|
)
|
(46,209
|
)
|
||||
Selling
and distributing costs
|
(2,095,594
|
)
|
(1,634,366
|
)
|
(856,526
|
)
|
||||
Administrative
and other operating expenses
|
(4,178,468
|
)
|
(2,159,502
|
)
|
(854,246
|
)
|
||||
Income
from operations
|
3,075,893
|
3,543,072
|
2,495,729
|
|||||||
Fees
and costs related to reorganization
|
(719,266
|
)
|
(75,229
|
)
|
-
|
|||||
Other
income - Note 3
|
148,653
|
58,588
|
57,907
|
|||||||
Interest
expenses – Note 4
|
(696,132
|
)
|
(253,617
|
)
|
(54,971
|
)
|
||||
Income
before taxes
|
1,809,148
|
3,272,814
|
2,498,665
|
|||||||
Income
taxes - Note 6
|
(145,458
|
)
|
(240,487
|
)
|
(187,634
|
)
|
||||
Net
income
|
1,663,690
|
3,032,327
|
2,311,031
|
|||||||
Earnings per share of common stock | ||||||||||
-
Basic and dilutive
|
0.11
|
0.20
|
0.16
|
|||||||
Weighted average number of common shares | ||||||||||
-
Basic and dilutive
|
15,731,988
|
14,798,328
|
14,798,328
|
Accumulated
|
|||||||||||||||||||
Additional
|
other
|
||||||||||||||||||
Common stock
|
paid-in
|
comprehensive
|
Retained
|
||||||||||||||||
Shares
|
Amount
|
capital
|
income
|
earnings
|
Total
|
||||||||||||||
$
|
$
|
$
|
$
|
$
|
|||||||||||||||
Balance,
January 1, 2005
|
14,798,328
|
1,480
|
62,837
|
43
|
1,286,659
|
1,351,019
|
|||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
2,311,031
|
2,311,031
|
|||||||||||||
Foreign
currency translation adjustments
|
-
|
-
|
-
|
195,010
|
-
|
195,010
|
|||||||||||||
Total
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
2,506,041
|
|||||||||||||
Balance,
December 31, 2005
|
14,798,328
|
1,480
|
62,837
|
195,053
|
3,597,690
|
3,857,060
|
|||||||||||||
Comprehensive
income
|
|||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
3,032,327
|
3,032,327
|
|||||||||||||
Foreign
currency translation adjustments
|
-
|
-
|
-
|
275,330
|
-
|
275,330
|
|||||||||||||
Total
comprehensive income
|
-
|
-
|
-
|
3,307,657
|
|||||||||||||||
Balance,
December 31, 2006
|
14,798,328
|
1,480
|
62,837
|
470,383
|
6,630,017
|
7,164,717
|
|||||||||||||
Shares
Issued in connection with reverse merger
|
2,834,398
|
284
|
(35,451
|
)
|
-
|
-
|
(35,167
|
)
|
|||||||||||
Shares
issued in private placement, net of offering cost of
$382,000
|
2,836,364
|
284
|
2,737,716
|
-
|
-
|
2,738,000
|
|||||||||||||
Comprehensive
income
|
|||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
1,663,690
|
1,663,690
|
|||||||||||||
Foreign
currency translation adjustments
|
-
|
-
|
-
|
687,489
|
-
|
687,489
|
|||||||||||||
Total
comprehensive income
|
-
|
-
|
-
|
2,351,179
|
|||||||||||||||
Dividends
|
-
|
-
|
-
|
-
|
(665,182
|
)
|
(665,182
|
)
|
|||||||||||
Balance,
December 31, 2007
|
20,478,090
|
2,048
|
2,765,102
|
1,157,872
|
7,628,525
|
11,553,547
|
Year ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$ |
$
|
$
|
||||||||
Cash
flows from operating activities
|
||||||||||
Net
income
|
1,663,690
|
3,032,327
|
2,311,031
|
|||||||
Adjustments
to reconcile net income to net cash flows provided by (used in)
operating
activities:
|
||||||||||
Bad
debts written off
|
3,649
|
22,878
|
9,645
|
|||||||
Depreciation
|
560,073
|
343,841
|
182,307
|
|||||||
Amortization
of intangible asset
|
50,000
|
-
|
-
|
|||||||
Loss
on disposal of plant and equipment
|
20,046
|
32,844
|
5,261
|
|||||||
Changes
in operating assets and liabilities:
|
||||||||||
(Increase)/decrease
in-
|
||||||||||
Accounts
receivable
|
(7,018,013
|
)
|
(3,155,007
|
)
|
(1,778,398
|
)
|
||||
Notes
receivable
|
(309,829
|
)
|
620,101
|
(511,456
|
)
|
|||||
Prepaid
expenses and other receivables
|
305,785
|
(1,826,594
|
)
|
(313,424
|
)
|
|||||
Inventories
|
2,183,344
|
(9,556,898
|
)
|
(3,148,845
|
)
|
|||||
(Increase)/decrease
in-
|
||||||||||
Accounts
payable
|
1,082,433
|
8,387,286
|
3,814,931
|
|||||||
Other
payables and accrued liabilities
|
78,974
|
(32,771
|
)
|
154,267
|
||||||
Income
tax payable
|
(74,825
|
)
|
27
|
126,803
|
||||||
Net
cash flows provided by (used in) operating activities
|
(1,454,673
|
)
|
(2,132,020
|
)
|
852,122
|
|||||
Cash
flows from investing activities
|
||||||||||
Acquisition
of plant and equipment
|
(1,030,725
|
)
|
(1,733,167
|
)
|
(849,768
|
)
|
||||
Acquisition
of land
|
(2,832,348
|
)
|
-
|
-
|
||||||
Proceeds
from disposal of plant and equipment
|
32,976
|
13,747
|
11,186
|
|||||||
Deposit
paid for acquisition of machinery
|
(1,115,123
|
)
|
-
|
-
|
||||||
Net
cash flows used in investing activities
|
(4,945,220
|
)
|
(1,719,420
|
)
|
(838,582
|
)
|
||||
Cash
flows from financing activities
|
||||||||||
Proceeds
from issuance of common stock
|
2,738,000
|
-
|
-
|
|||||||
Proceeds
from new short-term bank loans
|
2,374,241
|
879,630
|
977,681
|
|||||||
Repayment
of short-term bank loans
|
(923,316
|
)
|
(973,876
|
)
|
(274,973
|
)
|
||||
Repayment
of other loans
|
4,173,106
|
-
|
(85,547
|
)
|
||||||
Net
advancement of other bank borrowings
|
3,155,109
|
4,955,996
|
-
|
|||||||
Increase
in restricted cash
|
(4,234,327
|
)
|
(991,050
|
)
|
-
|
|||||
Advance
to related parties
|
768,159
|
(38,495
|
)
|
(468,151
|
)
|
|||||
Dividend
paid
|
(665,182
|
)
|
-
|
-
|
||||||
Net
cash flows provided by financing activities
|
7,385,790
|
3,832,205
|
149,010
|
|||||||
Net
increase (decrease) in cash and cash equivalents
|
985,897
|
(19,235
|
)
|
162,550
|
||||||
Effect
of foreign currency translation on cash and cash
equivalents
|
15,295
|
40,279
|
5,968
|
|||||||
Cash
and cash equivalents - beginning of year
|
488,070
|
467,026
|
298,508
|
|||||||
Cash
and cash equivalents - end of year
|
1,489,262
|
488,070
|
467,026
|
1. |
Organization
and Basis of Presentation
|
1. |
Organization
and Basis of Presentation
(continued)
|
2. |
Summary
of significant accounting
policies
|
2. |
Summary
of significant accounting policies
(continued)
|
2. |
Summary
of significant accounting policies
(continued)
|
2. |
Summary
of significant accounting policies
(continued)
|
Furniture,
fixtures and office equipment
|
20
|
%
|
||
Leasehold
improvement
|
50
|
%
|
||
Machinery
and equipment
|
10
|
%
|
||
Motor
vehicles
|
20
|
%
|
2. |
Summary
of significant accounting policies
(continued)
|
2. |
Summary
of significant accounting policies
(continued)
|
|
2007
|
2006
|
2005
|
|||||||
|
|
|
|
|||||||
Year
end RMB : US$ exchange rate
|
7.332
|
7.804
|
8.070
|
|||||||
Average
yearly RMB : US$ exchange rate
|
7.581
|
7.958
|
8.183
|
2. |
Summary
of significant accounting policies
(continued)
|
2. |
Summary
of significant accounting policies
(continued)
|
3. |
Other
income
|
Years
ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$
|
$
|
$
|
||||||||
Bank
interest income
|
75,546
|
11,626
|
3,625
|
|||||||
Net
exchange gains
|
-
|
-
|
15,989
|
|||||||
Sundry
income
|
73,107
|
46,962
|
37,293
|
|||||||
148,653
|
58,588
|
57,907
|
4. |
Interest
Expense
|
Years
ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$
|
$
|
$
|
||||||||
Interest
on trade related bank loans
|
547,573
|
208,269
|
26,610
|
|||||||
Interest
on short-term bank loans
|
135,369
|
45,348
|
25,795
|
|||||||
Interest
on other loans
|
13,190
|
-
|
2,566
|
|||||||
696,132
|
253,617
|
54,971
|
5. |
Income
taxes
|
Years
ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$
|
$
|
$
|
||||||||
United
States
|
(490,234
|
)
|
-
|
-
|
||||||
Hong
Kong
|
689,749
|
(76,601
|
)
|
(3,122
|
)
|
|||||
People’s
Republic of China
|
1,609,633
|
3,349,415
|
2,501,787
|
|||||||
1,809,148
|
3,272,814
|
2,498,665
|
Years
ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$
|
$
|
$
|
||||||||
PRC
income tax
|
||||||||||
Current
year
|
173,735
|
241,313
|
178,378
|
|||||||
Deferred
taxes
|
(28,277
|
)
|
(826
|
)
|
9,256
|
|||||
145,458
|
240,487
|
187,634
|
Years
ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$
|
$
|
$
|
||||||||
Income
before taxes
|
1,809,148
|
3,272,814
|
2,498,665
|
|||||||
Provision
for income taxes at applicable income tax rate
|
271,372
|
490,922
|
374,799
|
|||||||
Income
not subject to tax
|
(84,614
|
)
|
(2,522
|
)
|
-
|
|||||
Non-deductible
expenses for income tax purposes
|
229
|
11,490
|
468
|
|||||||
Tax
exemption of PRC subsidiary
|
(133,885
|
)
|
(243,835
|
)
|
(178,378
|
)
|
||||
Tax
rate differential
|
94,865
|
825
|
(9,255
|
)
|
||||||
Others
|
(2,509
|
)
|
(16,393
|
)
|
-
|
|||||
145,458
|
240,487
|
187,634
|
5. |
Income
taxes (continued)
|
At
December 31
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Temporary
difference on:
|
|||||||
Recognition
of expenses
|
(24,527
|
)
|
(8,443
|
)
|
|||
Accelerated
tax depreciation on intangible assets
|
(3,750
|
)
|
-
|
||||
Deferred
tax assets, net
|
(28,277
|
)
|
(8,443
|
)
|
|||
Recognized
in the balance sheet:
|
|||||||
Net
deferred tax assets
|
(28,277
|
)
|
(8,443
|
)
|
Years
ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$ |
$
|
$
|
||||||||
Statutory
income tax rate
|
15
|
%
|
15
|
%
|
15
|
%
|
||||
Exempted
income tax rate
|
7.5
|
%
|
7.5
|
%
|
7.5
|
%
|
||||
Income
tax exemption
|
133,885
|
243,835
|
178,378
|
|||||||
Tax
effect derived from exemption
|
||||||||||
(per
share)
|
$
|
0.01
|
$
|
0.02
|
$
|
0.37
|
5. |
Income
taxes (continued)
|
6. |
Prepaid
expenses and other
receivables
|
At
December 31,
|
|||||||
2007
|
2006
|
||||||
$ |
$
|
||||||
Purchase
deposits paid
|
264,138
|
935,417
|
|||||
Advance
to staff
|
74,502
|
21,540
|
|||||
Other
deposits and prepayments
|
147,503
|
130,870
|
|||||
Value-added
tax prepayment
|
1,103,063
|
1,220,524
|
|||||
Other
receivables
|
912,590
|
303,740
|
|||||
2,501,796
|
2,612,091
|
7. |
Prepaid
expenses and other
receivables
|
At
December 31
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Raw
materials
|
4,507,255
|
5,040,028
|
|||||
Work
in progress
|
1,694,997
|
1,415,942
|
|||||
Finished
goods
|
8,101,083
|
9,096,003
|
|||||
Consumables
|
49,197
|
52,122
|
|||||
Packing
materials
|
18,757
|
19,696
|
|||||
14,371,289
|
15,623,791
|
8. |
Plant
and equipment
|
At
December 31,
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Cost
|
|||||||
Furniture,
fixtures and office equipment
|
643,196
|
510,853
|
|||||
Leasehold
improvement
|
146,622
|
137,761
|
|||||
Machinery
and equipment
|
3,940,847
|
2,938,971
|
|||||
Motor
vehicles
|
344,088
|
250,655
|
|||||
5,074,753
|
3,838,240
|
||||||
Accumulated
depreciation
|
|||||||
Furniture,
fixtures and office equipment
|
211,342
|
92,092
|
|||||
Leasehold
improvement
|
100,864
|
25,888
|
|||||
Machinery
and equipment
|
834,206
|
475,767
|
|||||
Motor
vehicles
|
138,959
|
89,833
|
|||||
1,285,371
|
683,580
|
||||||
Net
|
|||||||
Furniture,
fixtures and office equipment
|
431,854
|
418,761
|
|||||
Leasehold
improvement
|
45,758
|
111,873
|
|||||
Machinery
and equipment
|
3,106,641
|
2,463,204
|
|||||
Motor
vehicles
|
205,129
|
160,822
|
|||||
3,789,382
|
3,154,660
|
Years
ended December 31,
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Included
in factory overheads
|
439,556
|
263,628
|
|||||
Included
in operating expenses
|
120,517
|
80,213
|
|||||
560,073
|
343,841
|
9. |
Leasehold
land
|
At
December 31,
|
|||||||
2007
|
2006
|
||||||
$ |
$
|
||||||
Cost
|
2,928,495
|
-
|
|||||
Accumulated
amortization
|
-
|
-
|
|||||
Net
|
2,928,495
|
-
|
|||||
Analyzed
for reporting purposes as:
|
|||||||
Current
asset
|
58,570
|
-
|
|||||
Non-current
asset
|
2,869,925
|
-
|
|||||
2,928,495
|
-
|
10. |
Intangible
asset - Consumer
battery license
|
At
December 31,
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Cost
|
|||||||
Consumer
battery license
|
1,000,000
|
-
|
|||||
Accumulated
amortization
|
50,000
|
-
|
|||||
Net
|
950,000
|
-
|
10. |
Intangible
asset (continued)
|
Year
ending December 31
|
$
|
|||
2008
|
50,000
|
|||
2009
|
50,000
|
|||
2010
|
50,000
|
|||
2011
|
50,000
|
|||
2012
|
50,000
|
|||
2013
and thereafter
|
700,000
|
11. |
Other
payables and accrued
liabilities
|
At
December 31,
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Accrued
expenses
|
765,760
|
622,010
|
|||||
Accrued
staff welfare
|
90,316
|
111,749
|
|||||
Royalty
fee
|
1,327,026
|
112,580
|
|||||
Sales
deposits received
|
136,295
|
86,182
|
|||||
Other
payables
|
1,559
|
237,754
|
|||||
2,320,956
|
1,170,275
|
12. |
Advance
to related parties
|
At
December 31,
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Advance
to shareholders
|
-
|
634,161
|
13. |
Bank
borrowings
|
At
December 31
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Secured:
|
|||||||
Repayable
within one year
|
|||||||
Short
term bank loans
|
2,454,838
|
896,964
|
|||||
Other
trade related bank loans
|
12,955,704
|
5,053,662
|
|||||
15,410,542
|
5,950,626
|
Amount
|
||||||||||
Facilities
granted
|
Granted
|
Utilized
|
Unused
|
|||||||
$
|
$
|
$
|
||||||||
Short
term bank loans
|
4,170,000
|
2,454,838
|
1,715,162
|
|||||||
Other
trade related loan facilities including:
|
||||||||||
-
Accounts payable financing
|
14,000,000
|
7,928,535
|
6,071,465
|
|||||||
-
Accounts receivable financing
|
6,000,000
|
5,027,169
|
972,831
|
|||||||
24,170,000
|
15,410,542
|
8,759,458
|
14. |
Pension
plans
|
15. |
Commitments
and contingencies
|
Year
ending December 31
|
$
|
|||
2008
|
612,156
|
|||
2009
|
780,136
|
|||
2010
|
428,547
|
|||
2011
|
204,952
|
|||
2,025,791
|
$
|
||||
Contracted
value
|
1,261,770
|
|||
Less:
deposit paid
|
(1,115,123
|
)
|
||
Capital
commitment
|
146,647
|
15. |
Commitments
and contingencies
(continued)
|
At
December 31
|
|||||||
2007
|
2006
|
||||||
$
|
$
|
||||||
Bills
discounted
|
106,378
|
1,323,442
|
16. |
Related
party transactions
|
Year
ended December 31
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$ |
$
|
$
|
||||||||
Management
fee paid to Canhold International Limited
|
21,134
|
15,302
|
12,138
|
17. |
Segment
information
|
17. |
Segment
information (continued)
|
Years
ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Net
revenue
|
$ |
$
|
$
|
|||||||
Hong
Kong and China
|
28,919,384
|
29,009,277
|
17,126,358
|
|||||||
Asia
|
5,965,339
|
3,294,838
|
3,198,143
|
|||||||
Europe
|
25,318,608
|
7,288,751
|
2,807,580
|
|||||||
North
America
|
12,851,807
|
4,511,914
|
1,877,949
|
|||||||
South
America
|
206,582
|
270,902
|
-
|
|||||||
73,261,720
|
44,375,682
|
25,010,030
|
At
December 31
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Accounts
receivable
|
$ |
$
|
$
|
|||||||
Hong
Kong and China
|
4,258,010
|
5,545,244
|
3,913,344
|
|||||||
Asia
|
1,023,284
|
262,743
|
119,359
|
|||||||
Europe
|
6,761,615
|
1,857,294
|
525,633
|
|||||||
North
America
|
3,863,266
|
461,889
|
212,315
|
|||||||
15,906,175
|
8,127,170
|
4,770,651
|
18. |
Dividends
|
At
December 31
|
||||||||||
2007
|
2006
|
2005
|
||||||||
$ |
$
|
$
|
||||||||
Dividends
|
||||||||||
Interim
dividend declared and paid on September 30, 2007 approximately
$
0.045 per share:
|
665,182
|
-
|
-
|
19. |
Quarterly
Results of Operations
(unaudited)
|
Three Months Ended
|
Year Ended
|
|||||||||||||||
March 31,
|
June 30,
|
September 30,
|
December 31,
|
December 31,
|
||||||||||||
2007
|
2007
|
2007
|
2007
|
2007
|
||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||
Net
revenue
|
11,539,505
|
20,466,844
|
19,879,829
|
21,375,542
|
73,261,720
|
|||||||||||
Gross
profit
|
1,056,415
|
2,847,274
|
2,610,045
|
2,956,738
|
9,470,472
|
|||||||||||
Net
income
|
(502,663
|
)
|
1,174,090
|
838,119
|
154,144
|
1,663,690
|
||||||||||
Net
(loss)/income per common share:
|
||||||||||||||||
Basic
|
(0.03
|
)
|
0.08
|
0.06
|
0.01
|
0.11
|
||||||||||
Diluted
|
(0.03
|
)
|
0.08
|
0.06
|
0.01
|
0.11
|
||||||||||
Weighted
average common shares
|
||||||||||||||||
Basic
|
14,798,328
|
14,798,328
|
14,798,328
|
18,502,521
|
15,731,988
|
|||||||||||
Diluted
|
14,798,328
|
14,798,328
|
14,798,328
|
18,502,521
|
15,731,988
|
Three Months Ended
|
Year Ended
|
|||||||||||||||
March 31,
|
June 30,
|
September 30,
|
December 31
|
December 31,
|
||||||||||||
2006
|
2006
|
2006
|
2006
|
2006
|
||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||
Net
revenue
|
7,612,812
|
10,026,403
|
13,571,303
|
13,165,164
|
44,375,682
|
|||||||||||
Gross
profit
|
1,539,541
|
1,909,390
|
1,615,066
|
2,353,156
|
7,417,153
|
|||||||||||
Net
income
|
808,562
|
930,832
|
392,134
|
900,799
|
3,032,327
|
|||||||||||
Net
income per common share:
|
||||||||||||||||
Basic
|
0.05
|
0.06
|
0.03
|
0.06
|
0.20
|
|||||||||||
Diluted
|
0.05
|
0.06
|
0.03
|
0.06
|
0.20
|
|||||||||||
Weighted
average common shares
|
||||||||||||||||
Basic
|
14,798,328
|
14,798,328
|
14,798,328
|
14,798,328
|
14,798,328
|
|||||||||||
Diluted
|
14,798,328
|
14,798,328
|
14,798,328
|
14,798,328
|
14,798,328
|
PROSPECTUS
SUMMARY
|
|
1
|
SUMMARY
FINANCIAL DATA
|
5
|
|
RISK
FACTORS
|
7
|
|
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
|
23
|
|
USE
OF PROCEEDS
|
25
|
|
DIVIDEND
POLICY
|
25
|
|
CAPITALIZATION
|
26
|
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
27
|
|
ACCOUNTING
OF THE SHARE EXCHANGE
|
28
|
|
SELECTED
CONSOLIDATED FINANCIAL DATA
|
29
|
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
31
|
|
DESCRIPTION
OF BUSINESS
|
39
|
|
MANAGEMENT
|
54
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
61
|
|
BENEFICIAL
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
63
|
|
DESCRIPTION
OF SECURITIES
|
63
|
|
SELLING
STOCKHOLDERS
|
67A
|
|
SHARES
ELIGIBLE FOR FUTURE SALE
|
67
|
|
PLAN
OF DISTRIBUTION
|
71
|
|
LEGAL
MATTERS
|
73
|
|
EXPERTS
|
73
|
|
ADDITIONAL
INFORMATION
|
73
|
|
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-1
|
|
PART
II INFORMATION NOT REQUIRED IN THE PROSPECTUS
|
II-1
|
|
SIGNATURES
|
II-2
|
Common
stock offered by selling stockholders
|
4,144,327
shares
|
|
Common
stock outstanding
|
20,478,090
shares(1)
|
|
Use
of proceeds
|
We
will not receive any proceeds from the sale of the common stock by
the
selling stockholders, except for funds from the exercise of warrants
by
the selling stockholders, if and when
exercised.
|
(1)
|
The
number of shares of our common stock outstanding as of November
2, 2007,
excludes up to 700,000 shares of our common stock (excluding an
underwriters’ option to purchase an additional 90,000 shares to cover
over-allotments) to be offered by us in a firm commitment public
offering
concurrently herewith.
|
·
|
the
number of shares owned by each stockholder prior to this offering;
|
·
|
the
percentage owned by each stockholder prior to completion of the offering;
|
·
|
the
total number of shares that are to be offered for each stockholder;
|
·
|
the
total number of shares that will be owned by each stockholder upon
completion of the offering; and
|
·
|
the
percentage owned by each stockholder upon completion of the offering.
|
Name of Selling Shareholder
|
Number of Shares
of Common Stock
Beneficially Owned
Prior to Offering
|
Percentage of
Shares of Common
Stock Beneficially
Owned Prior to
the Offering (1)
|
Number of
Shares of
Common Stock
Registered for
Sale Hereby
|
Number of Shares
of Common stock
Beneficially
Owned After
Completion of the
Offering (2)
|
Percentage of Shares
of Common Stock
Beneficially Owned
After Completion of
the Offering (2)
|
|||||||||||
Debbie
Schwartzberg
|
1,023,623
|
(3)
|
5.0
|
%
|
1,023,623
|
—
|
—
|
%
|
||||||||
Black
Diamond Fund
|
454,545
|
(4)
|
2.2
|
%
|
454,545
|
—
|
—
|
|||||||||
MidSouth
Investor Fund, LP
|
454,545
|
(5)
|
2.2
|
%
|
454,545
|
—
|
—
|
|||||||||
J&N
Invest, LLC
|
181,818
|
(6)
|
*
|
181,818
|
—
|
—
|
||||||||||
Glenn
Krinsky
|
142,170
|
*
|
142,170
|
—
|
—
|
|||||||||||
Charles
Frisco
|
142,170
|
*
|
142,170
|
—
|
—
|
|||||||||||
Enable
Opportunity Partners, LP
|
136,364
|
(7)
|
*
|
136,364
|
—
|
—
|
||||||||||
Fredric
Colman
|
94,750
|
*
|
94,750
|
—
|
—
|
|||||||||||
Stellar
Capital Fund, LLC
|
90,909
|
(8)
|
*
|
90,909
|
—
|
—
|
||||||||||
F
Berdon Co LP
|
90,900
|
(9)
|
*
|
90,900
|
—
|
—
|
||||||||||
Howard
Berg
|
90,909
|
*
|
90,909
|
—
|
—
|
|||||||||||
David
Clarke
|
70,000
|
*
|
70,000
|
—
|
—
|
|||||||||||
Kagel
Family Trust
|
70,000
|
(10)
|
*
|
70,000
|
—
|
—
|
||||||||||
Mark
Nielsen
|
50,000
|
*
|
50,000
|
—
|
—
|
|||||||||||
Harry
Datys
|
50,000
|
(11)
|
*
|
50,000
|
—
|
—
|
||||||||||
Paul
Masters IRA
|
45,464
|
(12)
|
*
|
45,464
|
—
|
—
|
||||||||||
Meng
Yang
|
45,455
|
*
|
45,455
|
—
|
—
|
Name of Selling Shareholder
|
Number of Shares
of Common Stock
Beneficially Owned
Prior to Offering
|
Percentage of
Shares of Common
Stock Beneficially
Owned Prior to
the Offering (1)
|
Number of
Shares of
Common Stock
Registered for
Sale Hereby
|
Number of Shares
of Common stock
Beneficially
Owned After
Completion of the
Offering (2)
|
Percentage of Shares
of Common Stock
Beneficially Owned
After Completion of
the Offering (2)
|
|||||||||||
Continuum
Capital Partners L.P.
|
45,455
|
(13)
|
*
|
45,455
|
—
|
—
|
||||||||||
Brent
Butcher
|
45,455
|
*
|
45,455
|
—
|
—
|
|||||||||||
Christine
Metsch
|
45,455
|
*
|
45,455
|
—
|
—
|
|||||||||||
Paul
Rathwell
|
45,455
|
*
|
45,455
|
—
|
—
|
|||||||||||
Tangiers
Investors, LP.
|
45,455
|
(14)
|
*
|
45,455
|
—
|
—
|
||||||||||
Sharon
Mitchell
|
45,000
|
*
|
45,000
|
—
|
—
|
|||||||||||
Linda
Rosenberg
|
40,000
|
*
|
40,000
|
—
|
—
|
|||||||||||
Richard
Pawlinger
|
36,364
|
*
|
36,364
|
—
|
—
|
|||||||||||
William
Lurie
|
36,364
|
*
|
36,364
|
—
|
—
|
|||||||||||
George
Glenn Izmirian
|
36,091
|
*
|
36,091
|
—
|
—
|
|||||||||||
John
Herbert William Rathwell
|
34,091
|
*
|
34,091
|
—
|
—
|
|||||||||||
David
Chazanovitz
|
31,977
|
*
|
31,977
|
—
|
—
|
|||||||||||
Douglas
Kuber
|
30,000
|
*
|
30,000
|
—
|
—
|
|||||||||||
Michael
Glantz
|
27,273
|
*
|
27,273
|
—
|
—
|
|||||||||||
Richard
and Donna Hoefer
|
27,273
|
*
|
27,273
|
—
|
—
|
|||||||||||
Carl
Cooke
|
27,273
|
*
|
27,273
|
—
|
—
|
|||||||||||
Steven
Rothstein
|
25,000
|
*
|
25,000
|
—
|
—
|
|||||||||||
Joseph
and Randi Lauritano
|
22,727
|
*
|
22,727
|
—
|
—
|
|||||||||||
Harold
Lefkowitz
|
22,727
|
*
|
22,727
|
—
|
—
|
|||||||||||
John
Winfield
|
22,727
|
*
|
22,727
|
—
|
—
|
|||||||||||
Jerry
Reiff
|
20,000
|
*
|
20,000
|
—
|
—
|
|||||||||||
Dennis
Holman
|
20,000
|
*
|
20,000
|
—
|
—
|
|||||||||||
Marvin
Rosenblatt
|
20,000
|
*
|
20,000
|
—
|
—
|
|||||||||||
David
Boyer
|
20,000
|
*
|
20,000
|
—
|
—
|
|||||||||||
Richard
Rudin
|
18,180
|
*
|
18,180
|
—
|
—
|
|||||||||||
John
O. Forrer
|
13,636
|
*
|
13,636
|
—
|
—
|
|||||||||||
Miriam
F. Mooney Trust F/B/O David Forrer
|
13,636
|
(15)
|
*
|
13,636
|
—
|
—
|
||||||||||
Miriam
F. Mooney Trust F/B/O Catherine Sotto
|
13,636
|
(15)
|
*
|
13,636
|
—
|
—
|
||||||||||
Miriam
F. Mooney Trust F/B/O Joan Connolly
|
13,636
|
(15)
|
*
|
13,636
|
—
|
—
|
||||||||||
John
Rathwell
|
11,364
|
*
|
11,364
|
—
|
—
|
|||||||||||
William
and Ann Collins
|
10,909
|
*
|
10,909
|
—
|
—
|
|||||||||||
Denise
Cooke
|
9,091
|
*
|
9,091
|
—
|
—
|
|||||||||||
Michael
and Dindy Pawlinger
|
9,091
|
*
|
9,091
|
—
|
—
|
|||||||||||
Heidtke
401 K Profit Sharing Plan and Trust
|
9,091
|
(16)
|
*
|
9,091
|
—
|
—
|
||||||||||
Richard
Charles Treesh
|
9,000
|
*
|
9,000
|
—
|
—
|
|||||||||||
Mitchell
J. Lipcon Profit Sharing Keough Plan
|
7,273
|
(17)
|
*
|
7,273
|
—
|
—
|
*
|
Indicates
less than 1.0%.
|
(1)
|
Based
on 20,478,090 shares of common stock outstanding as of the date of
this
prospectus. The number of shares of our common stock outstanding
excludes
up to 700,000 shares of our common stock to be offered by us in a
firm
commitment public offering concurrently herewith (excluding underwriters’
overallotment of 90,000 shares of common
stock).
|
(2)
|
Represents
the amount of shares that will be held by the selling stockholders
after
completion of this offering based on the assumption that all shares
registered for sale hereby will be sold. However, the selling stockholders
may offer all, some or none of the shares pursuant to this prospectus,
and
to our knowledge there are currently no agreements, arrangements
or
understanding with respect to the sale of any of the shares that
may be
held by the selling stockholders after completion of this
offering.
|
(3)
|
Debbie
Schwartzberg is a noteholder of the parent company of WestPark Capital,
Inc., which entitles her to a 1.5% interest in the net profits of
the
parent company of WestPark Capital, Inc. Some of the controlling
shareholders and control persons of WestPark Capital, Inc. were also,
prior to the completion of the Share Exchange, controlling shareholders
and control persons of our company, including Richard Rappaport,
who is
the Chief Executive Officer of WestPark and was the President and
a
significant stockholder of our company prior to the Share Exchange,
and
Anthony C. Pintsopoulos, who is the Chief Financial Officer of WestPark
and was a controlling stockholder and an officer and director of
our
company prior to the Share Exchange. Each of Messrs. Rappaport and
Pintsopoulos resigned from all of their executive and director positions
with our company upon the closing of the Share
Exchange
|
(4)
|
Brandon
S. Goulding has voting and investment control over the shares owned
by
this entity.
|
(5)
|
Lyman
O. Heidtke, as general partner, has voting and investment control
over the
shares owned by this entity. Mr. Heidtke is President of Heidtke
& Co,
Inc, a registered broker dealer affiliated with
MidSouth.
|
(6)
|
Jeffrey
Rubin has voting and investment control over the shares owned by
this
entity.
|
(7)
|
Brendan
O’Neil has voting and investment control over the shares owned by this
entity.
|
(8)
|
Richard
Schmidt, as the managing member, has voting and investment control
over
the shares owned by this entity.
|
(9)
|
Frederick
Berden, as general partner, has voting and investment control over
the
shares owned by this entity. F Berdon Co., LP is an affiliate of
OTA, LLC,
a registered broker-dealer.
|
(10)
|
David
L. Kagel has voting and investment control over the shares owned
by this
entity.
|
(11)
|
Harry
Datys is an affiliate of WestPark Capital, Inc a registered broker-dealer.
The shares owned by Mr. Datys are subject to the restrictions on
transfer
contained in FINRA Rule 2710(g) and may not be sold, transferred,
assigned, pledged or hypothecated, or be the subject of any hedging,
short
sale, derivative, put or call transaction that would result in the
effective economic disposition of the securities by any person for
a
period of 180 days immediately following the date of effectiveness
or
commencement of sales of this public offering, except as provided
in FINRA
Rule 2710(g)(2).
|
(12)
|
Paul
Masters has voting and investment control over these shares. Paul
Masters
IRA is an affiliate of OTA, LLC, a registered
broker-dealer.
|
(13)
|
Gil
Schwartzberg has voting and investment control over the shares owned
by
this entity.
|
(14)
|
Edward
Liceaga has voting and investment control over the shares owned by
this
entity.
|
(15)
|
John
O. Forrer, as trustee, has voting and investment control over the
shares
owned by this entity.
|
(16)
|
Lyman
O. Heidtke, as trustee, has voting and investment control over the
shares
owned by this entity. Mr. Heidtke, is the President of Heidtke & Co,
Inc., a registered broker-dealer
|
(17)
|
Mitchell
J. Lipcon, as trustee, has voting and investment control over these
shares.
|
Securities
and Exchange Commission registration fee
|
$
|
609.37
|
||
FINRA
Filing Fee
|
2,474.00
|
|||
American
Stock Exchange Listing Fee
|
[____
|
]
|
||
Transfer
Agent Fees
|
[____
|
]
|
||
Blue
Sky Fees and Expenses
|
[____
|
]
|
||
Accounting
fees and expenses
|
[____
|
]
|
||
Legal
fees and expenses
|
[____
|
]
|
||
Miscellaneous
|
[____
|
]
|
||
Total
|
$
|
[____
|
]
|
• |
indemnify
officers and directors against certain liabilities that may arise
because
of their status as officers or
directors;
|
• |
advance
expenses, as incurred, to officers and directors in connection with
a
legal proceeding, subject to limited exceptions;
or
|
• |
obtain
directors’ and officers’ insurance.
|
1.1*
|
Form
of Underwriting Agreement
|
|
2.1
|
Share
Exchange Agreement, dated as of August 21, 2006, by and among the
Registrant, KGE Group, Limited, and Full Art International, Ltd.
(incorporated by reference from Exhibit 2.1 to the Current Report
on Form
8-K filed with the Securities and Exchange Commission on November
5,
2007).
|
|
3.1
|
Certificate
of Incorporation (incorporated by reference from Exhibit 3.1 to
the
Registration Statement on Form 10-SB (File No. 000-52103) filed
with the
Securities and Exchange Commission on July 5,
2006).
|
3.2
|
Bylaws
(incorporated by reference from Exhibit 3.2 to the Registration
Statement
on Form 10-SB (File No. 000-52103) filed with the Securities and
Exchange
Commission on July 5, 2006).
|
|
3.3
|
Articles
of Merger Effecting Name Change (incorporated by reference from
Exhibit
3.3 to the Current Report on Form 8-K filed with the Securities
and
Exchange Commission on November 5, 2007).
|
|
4.1*
|
Specimen
Certificate of Common Stock.
|
|
5.1*
|
Opinion
of Kirkpatrick & Lockhart Preston Gates Ellis LLP
|
|
10.1
|
Form
of Subscription Agreement (incorporated by reference from Exhibit
10.1 to
the Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 5, 2007).
|
|
10.2**
|
Amended
Consumer Battery License Agreement, amended as of August 8, 2007,
by and
between Shenzhen Highpower Technology Co., Ltd and Ovonic Battery
Company,
Inc. (incorporated by reference from Exhibit 10.2 to the Annual
Report on
Form 10-K filed with the Securities and Exchange Commission on
April 11,
2008).
|
|
10.3
|
State-owned
Land Use Rights Grant Contract No. 441302 – B – 112 dated as of
May 23, 2007, by and between the Land and Resources Bureau of Huizhou
City, Guangdong Province and Shenzhen Highpower Technology Co.,
Ltd.
(translated to English) (incorporated by reference from Exhibit
10.4 to
the Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 5, 2007).
|
|
10.4
|
Credit
Facility dated August 17, 2007 by and between DBS Bank (China)
Limited
Company Shenzhen Branch and Shenzhen Highpower Technology Co.,
Ltd.
(translated to English). (incorporated by reference from Exhibit
10.5 to
the Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 5, 2007).
|
|
10.4(a)
|
Letter
of Undertaking executed by Dan Yu Pan, Wen Liang Li and Wen Wei
Ma on
behalf of Shenzhen Highpower Technology Company Limited to and
in favor of
DBS Bank (China) Limited Shenzhen Branch (translated to
English).
|
|
10.5
|
Commercial
Acceptance Bill Discount Quotation Agreement dated as of June 18,
2007 by
and between Shenzhen Development Bank Shenzhen Ai Guo Road Branch
and
Shenzhen Highpower Technology Co., Ltd. (translated to English)
(incorporated by reference from Exhibit 10.6 to the Current Report
on Form
8-K filed with the Securities and Exchange Commission on November
5,
2007).
|
|
10.5(a)
|
Guaranty
Contract for Maximum Credit Line dated as of June 18, 2007 by and
between
Dang Yu Pan and Shenzhen Development Bank Shenzhen Ai Guo Road
Branch
(translated to English).
|
|
10.6
|
Facility
Quotation Agreement dated as of September 18, 2007 by and between
Shanghai
Pudong Development Bank Shenzhen Long Hua Branch and Shenzhen Highpower
Technology Co., Ltd. (translated to English) (incorporated by reference
from Exhibit 10.7 to the Current Report on Form 8-K filed with
the
Securities and Exchange Commission on November 5,
2007).
|
|
10.6(a)
|
Contract
for Guarantee of Maximum Line of Credit dated as of September 18,
2007 by
and between Dang Yu Pan and Shanghai Pudong Development Bank Shenzhen
Branch (translated to English).
|
|
10.7*
|
Form
of Registration Rights Agreement entered into by and between the
Registrant and WestPark Capital, Inc. Affiliates.
|
|
10.8
|
Non-Undertaking
Short-Term Revolving Financing Agreement dated as of October 11,
2007 by
and between Citibank China Co., Ltd. (“Lender”) and Shenzhen Highpower
Technology Col, Ltd. and corresponding Letters of Guarantee between
Lender
and Dang Yu Pan, Wen Wei Ma and Wen Liang Li (translated to English)
(incorporated by reference from Exhibit 10.7 to the Annual Report
on Form
10-K filed with the Securities and Exchange Commission on April
18,
2008).
|
|
16.1
|
Letter
from AJ. Robbins, PC to the Securities and Exchange Commission
dated
November 2, 2007 (incorporated by reference from Exhibit 16.1 to
the
Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 5,
2007).
|
21.1
|
List
of Subsidiaries (incorporated by reference from Exhibit 21.1 to
the
Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 5, 2007).
|
|
23.1
|
Consent
of Dominic K.F. Chan & Co, Certified Public
Accountants.
|
|
23.2*
|
Consent
of Kirkpatrick & Lockhart Preston Gates Ellis LLP (contained in
Exhibit 5.1).
|
|
24.1
|
Power
of Attorney (included on signature
page).
|
HONG
KONG HIGHPOWER TECHNOLOGY, INC.
|
||
|
By:
|
/s/
Dang Yu Pan
|
|
Name
|
Dang
Yu Pan
|
|
Title:
|
Chief
Executive Officer and Chairman of the
Board
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/
Dang Yu Pan
|
|
Chief
Executive Officer and Chairman of the
Board (Principal Executive Officer) |
|
April
25, 2008
|
Dang
Yu Pan
|
|
|
|
|
/s/
Yu Zhi Qiu
|
|
Chief
Financial Officer (Principal Financial and
Accounting Officer) |
|
April
25, 2008
|
Yu
Zhi Qiu
|
|
|
|
|
/s/
Wen Liang Li
|
|
Vice
President, Chief Technology Officer and
Director |
|
April
25, 2008
|
Wen
Liang Li
|
|
|
|
|
/s/
Xinhai Li
|
Director
|
April
25, 2008
|
||
Xinhai
Li
|
||||
/s/
Chao Li
|
Director
|
April
25, 2008
|
||
Chao
Li
|
||||
/s/
Ping Li
|
Director
|
April
25, 2008
|
||
Ping
Li
|
1.1*
|
Form
of Underwriting Agreement
|
|
2.1
|
Share
Exchange Agreement, dated as of August 21, 2006, by and among
the
Registrant, KGE Group, Limited, and Full Art International, Ltd.
(incorporated by reference from Exhibit 2.1 to the Current Report
on Form
8-K filed with the Securities and Exchange Commission on November
5,
2007).
|
|
3.1
|
Certificate
of Incorporation (incorporated by reference from Exhibit 3.1
to the
Registration Statement on Form 10-SB (File No. 000-52103) filed
with the
Securities and Exchange Commission on July 5, 2006).
|
|
3.2
|
Bylaws
(incorporated by reference from Exhibit 3.2 to the Registration
Statement
on Form 10-SB (File No. 000-52103) filed with the Securities
and Exchange
Commission on July 5, 2006).
|
|
3.3
|
Articles
of Merger Effecting Name Change (incorporated by reference from
Exhibit
3.3 to the Current Report on Form 8-K filed with the Securities
and
Exchange Commission on November 5, 2007).
|
|
4.1*
|
Specimen
Certificate of Common Stock.
|
|
5.1*
|
Opinion
of Kirkpatrick & Lockhart Preston Gates Ellis LLP
|
|
10.1
|
Form
of Subscription Agreement (incorporated by reference from Exhibit
10.1 to
the Current Report on Form 8-K filed with the Securities and
Exchange
Commission on November 5, 2007).
|
|
10.2**
|
Amended
Consumer Battery License Agreement, amended as of August 8, 2007,
by and
between Shenzhen Highpower Technology Co., Ltd and Ovonic Battery
Company,
Inc. (incorporated by reference from Exhibit 10.2 to the Annual
Report on
Form 10-K filed with the Securities and Exchange Commission on
April 11,
2008).
|
|
10.3
|
State-owned
Land Use Rights Grant Contract No. 441302 – B – 112 dated as of
May 23, 2007, by and between the Land and Resources Bureau of
Huizhou
City, Guangdong Province and Shenzhen Highpower Technology Co.,
Ltd.
(translated to English) (incorporated by reference from Exhibit
10.4 to
the Current Report on Form 8-K filed with the Securities and
Exchange
Commission on November 5, 2007).
|
|
10.4
|
Credit
Facility dated August 17, 2007 by and between DBS Bank (China)
Limited
Company Shenzhen Branch and Shenzhen Highpower Technology Co.,
Ltd.
(translated to English). (incorporated by reference from Exhibit
10.5 to
the Current Report on Form 8-K filed with the Securities and
Exchange
Commission on November 5, 2007).
|
|
10.4(a)
|
Letter
of Undertaking executed by Dan Yu Pan, Wen Liang Li and Wen Wei
Ma on
behalf of Shenzhen Highpower Technology Company Limited to and
in favor of
DBS Bank (China) Limited Shenzhen Branch (translated to
English).
|
|
10.5
|
Commercial
Acceptance Bill Discount Quotation Agreement dated as of June
18, 2007 by
and between Shenzhen Development Bank Shenzhen Ai Guo Road Branch
and
Shenzhen Highpower Technology Co., Ltd. (translated to English)
(incorporated by reference from Exhibit 10.6 to the Current Report
on Form
8-K filed with the Securities and Exchange Commission on November
5,
2007).
|
|
10.5(a)
|
Guaranty
Contract for Maximum Credit Line dated as of June 18, 2007 by
and between
Dang Yu Pan and Shenzhen Development Bank Shenzhen Ai Guo Road
Branch
(translated to English).
|
|
10.6
|
Facility
Quotation Agreement dated as of September 18, 2007 by and between
Shanghai
Pudong Development Bank Shenzhen Long Hua Branch and Shenzhen
Highpower
Technology Co., Ltd. (translated to English) (incorporated by
reference
from Exhibit 10.7 to the Current Report on Form 8-K filed with
the
Securities and Exchange Commission on November 5,
2007).
|
10.6(a)
|
Contract
for Guarantee of Maximum Line of Credit dated as of September
18, 2007 by
and between Dang Yu Pan and Shanghai Pudong Development Bank
Shenzhen
Branch (translated to English).
|
|
10.7*
|
Form
of Registration Rights Agreement entered into by and between
the
Registrant and WestPark Capital, Inc. Affiliates.
|
|
10.8
|
Non-Undertaking
Short-Term Revolving Financing Agreement dated as of October
11, 2007 by
and between Citibank China Co., Ltd. (“Lender”) and Shenzhen Highpower
Technology Col, Ltd. and corresponding Letters of Guarantee between
Lender
and Dang Yu Pan, Wen Wei Ma and Wen Liang Li (translated to English)
(incorporated by reference from Exhibit 10.7 to the Annual Report
on Form
10-K filed with the Securities and Exchange Commission on April
18,
2008).
|
|
16.1
|
Letter
from AJ. Robbins, PC to the Securities and Exchange Commission
dated
November 2, 2007 (incorporated by reference from Exhibit 16.1
to the
Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 5, 2007).
|
|
21.1
|
List
of Subsidiaries (incorporated by reference from Exhibit 21.1
to the
Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 5, 2007).
|
|
23.1
|
Consent
of Dominic K.F. Chan & Co, Certified Public Accountants.
|
|
23.2*
|
Consent
of Kirkpatrick & Lockhart Preston Gates Ellis LLP (contained in
Exhibit 5.1).
|
|
24.1
|
Power
of Attorney (included on signature
page).
|