x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
For
the Quarterly Period Ended June 30, 2010
|
||
OR
|
||
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Delaware
|
20-4062622
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
Number)
|
Large accelerated filer o
|
Accelerated filer ¨
|
Non-accelerated filer o
|
Smaller reporting company x
|
Page
|
||||||
Part I
|
Financial
Information
|
|||||
Item
1.
|
Financial
Statements
|
2
|
||||
(a)
|
Balance
Sheets as of June 30, 2010 (Unaudited) and December 31,
2009
|
2
|
||||
(b)
|
Statements
of Comprehensive Income for the Six Months Ended June 30, 2010 and 2009
(Unaudited)
|
4
|
||||
(c)
|
Statements
of Cash Flows for the Six Months Ended June 30, 2010 and 2009
(Unaudited)
|
5
|
||||
(d)
|
Notes
to Financial Statements (Unaudited)
|
6
|
||||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
36
|
||||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
42
|
||||
Item
4.
|
Controls
and Procedures
|
43
|
||||
Part II
|
Other
Information
|
|||||
Item
1.
|
Legal
Proceedings
|
43
|
||||
Item
1A.
|
Risk
Factors
|
43
|
||||
Item
2.
|
Unregistered
Sale of Equity Securities and Use of Proceeds
|
43
|
||||
Item
3.
|
Default
Upon Senior Securities
|
43
|
||||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
43
|
||||
Item
5.
|
Other
Information
|
44
|
||||
Item
6.
|
Exhibits
|
44
|
||||
Signatures
|
45
|
As of
|
||||||||
June
30,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
ASSETS
|
||||||||
Current
Assets :
|
||||||||
Cash
and cash equivalents
|
3,548,525 | 2,967,586 | ||||||
Restricted
cash
|
6,683,776 | 5,478,418 | ||||||
Accounts
receivable
|
18,888,393 | 14,896,503 | ||||||
Notes
receivable
|
860,786 | 596,795 | ||||||
Prepaid
expenses and other receivables – Note 7
|
4,345,588 | 2,366,734 | ||||||
Inventories
– Note
11
|
15,017,272 | 10,633,566 | ||||||
Total
Current Assets
|
49,344,340 | 36,939,602 | ||||||
Plant
and equipment, net – Note 12
|
12,118,022 | 10,284,873 | ||||||
Leasehold
land, net – Note
13
|
2,987,656 | 3,019,509 | ||||||
Intangible
asset, net – Note
14
|
825,000 | 850,000 | ||||||
Investment
securities – Note
15
|
52,725 | 52,732 | ||||||
Investment
in an associate
|
142,515 | - | ||||||
TOTAL
ASSETS
|
65,470,258 | 51,146,716 | ||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
LIABILITIES
|
||||||||
Current
Liabilities :
|
||||||||
Non-trading
foreign currency derivatives liabilities
|
11,039 | 11,041 | ||||||
Accounts
payable
|
19,969,317 | 10,738,714 | ||||||
Other
payables and accrued liabilities – Note 19
|
4,456,429 | 3,563,308 | ||||||
Income
taxes payable
|
589,804 | 876,739 | ||||||
Bank
borrowings – Note
20
|
16,151,634 | 14,787,714 | ||||||
Total
Current Liabilities
|
41,178,223 | 29,977,516 | ||||||
COMMITMENTS
AND CONTINGENCIES – Note
22
|
As of
|
||||||||
June
30,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
STOCKHOLDERS’
EQUITY
|
||||||||
Preferred
Stock
|
||||||||
Par
value: $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: 2010 –13,582,106 shares (2009 –13,582,106
shares)
|
1,358 | 1,358 | ||||||
Additional
paid-in capital
|
5,155,864 | 5,065,426 | ||||||
Accumulated
other comprehensive income
|
1,890,208 | 2,023,858 | ||||||
Retained
earnings
|
17,244,605 | 14,078,558 | ||||||
TOTAL
STOCKHOLDERS’ EQUITY
|
24,292,035 | 21,169,200 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
65,470,258 | 51,146,716 |
Three
months ended
June
30,
|
Six months
ended
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Net
sales
|
28,978,114 | 15,445,484 | 49,201,486 | 26,755,289 | ||||||||||||
Cost
of sales
|
(23,578,703 | ) | (12,371,676 | ) | (39,555,745 | ) | (21,285,385 | ) | ||||||||
Gross
profit
|
5,399,411 | 3,073,808 | 9,645,741 | 5,469,904 | ||||||||||||
Depreciation – Note
12
|
(69,719 | ) | (68,075 | ) | (138,961 | ) | (119,189 | ) | ||||||||
Selling
and distribution costs
|
(1,110,448 | ) | (580,458 | ) | (1,862,502 | ) | (1,111,807 | ) | ||||||||
General
and administrative costs, including stock-based
compensation
|
(2,168,103 | ) | (1,046,340 | ) | (3,621,710 | ) | (2,149,262 | ) | ||||||||
Loss
on exchange rate difference
|
(130,130 | ) | (22,865 | ) | (152,484 | ) | (55,589 | ) | ||||||||
Income
from operations
|
1,921,011 | 1,356,070 | 3,870,084 | 2,034,057 | ||||||||||||
Change
in fair value of currency forwards
|
- | (21,510 | ) | - | (109,623 | ) | ||||||||||
Other
income – Note
3
|
126,026 | 21,774 | 203,400 | 88,589 | ||||||||||||
Interest
expenses – Note
4
|
(101,111 | ) | (39,377 | ) | (167,444 | ) | (80,497 | ) | ||||||||
Other
expenses - Note 5
|
- | (119,549 | ) | - | (171,085 | ) | ||||||||||
Income
before taxes
|
1,945,926 | 1,197,408 | 3,906,040 | 1,761,441 | ||||||||||||
Income
taxes – Note
6
|
(360,579 | ) | (228,752 | ) | (739,993 | ) | (389,819 | ) | ||||||||
Net
income for the period
|
1,585,347 | 968,656 | 3,166,047 | 1,371,622 | ||||||||||||
Other
comprehensive income
|
||||||||||||||||
-
Foreign currency translation gain
|
(7,898 | ) | 456,215 | (23,495 | ) | 492,064 | ||||||||||
-
Cash flow hedge
|
(2,515 | ) | - | 2 | - | |||||||||||
Comprehensive
income
|
1,574,934 | 1,424,871 | 3,142,554 | 1,863,686 | ||||||||||||
Earnings
per share of common stock
|
||||||||||||||||
-
Basic
|
0.12 | 0.07 | 0.23 | 0.10 | ||||||||||||
-
Diluted
|
0.12 | 0.07 | 0.23 | 0.10 | ||||||||||||
Weighted
average number of common stock
|
||||||||||||||||
-
Basic
|
13,582,106 | 13,762,217 | 13,582,106 | 13,651,389 | ||||||||||||
-
Diluted
|
13,732,096 | 13,812,547 | 13,732,096 | 13,703,889 |
Six months ended June 30,
|
||||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income
|
3,166,047 | 1,371,622 | ||||||
Adjustments
to reconcile net income to net cash provided by operating activities
:
|
||||||||
Amortization
of intangible asset
|
25,000 | 25,000 | ||||||
Amortization
of leasehold land
|
31,853 | 31,331 | ||||||
Depreciation
|
674,296 | 424,007 | ||||||
Change
in fair value of currency forwards
|
- | 109,623 | ||||||
Loss
on disposal of plant and equipment
|
48,381 | 6,834 | ||||||
Share
based payment
|
80,372 | 216,667 | ||||||
Bad
debt written off
|
5,626 | - | ||||||
Changes
in operating assets and liabilities :
|
||||||||
(Increase)
decrease in -
|
||||||||
Accounts
receivable
|
(4,604,365 | ) | (850,943 | ) | ||||
Notes
receivable
|
(266,209 | ) | (146,046 | ) | ||||
Prepaid
expenses and other receivables
|
(1,979,423 | ) | (1,743,845 | ) | ||||
Inventories
|
(4,385,862 | ) | 3,451,450 | |||||
Increase
(decrease) in -
|
||||||||
Accounts
payable
|
9,837,912 | 835,955 | ||||||
Other
payables and accrued liabilities
|
893,755 | 3,532,852 | ||||||
Income
taxes payable
|
(286,852 | ) | (165,841 | ) | ||||
Net
cash flows provided by operating activities
|
3,240,531 | 7,098,666 | ||||||
Cash
flows from investing activities
|
||||||||
Acquisition
of plant and equipment
|
(2,563,278 | ) | (1,569,989 | ) | ||||
Investment
in an associate
|
(142,515 | ) | - | |||||
Net
cash flows used in investing activities
|
(2,705,793 | ) | (1,569,989 | ) | ||||
Cash
flows from financing activities
|
||||||||
Proceeds
from new short-term bank loans
|
4,803,830 | 2,626,113 | ||||||
Repayment
of short-term bank loans
|
- | |||||||
Repayment
of other secured loans
|
(3,437,764 | ) | (11,936,980 | ) | ||||
(Decrease)
Increase in restricted cash
|
(1,206,238 | ) | 779,112 | |||||
Net
cash flows (used in) provided by financing activities
|
159,828 | (8,531,755 | ) | |||||
Net
(decrease) increase in cash and cash equivalents
|
694,566 | (3,003,078 | ) | |||||
Effect
of foreign currency translation on cash and cash
equivalents
|
(113,627 | ) | 148,370 | |||||
Cash
and cash equivalents - beginning of period
|
2,967,586 | 4,175,780 | ||||||
Cash
and cash equivalents - end of period
|
3,548,525 | 1,321,072 | ||||||
Supplemental
disclosures for cash flow information :
|
||||||||
Cash
paid for :
|
||||||||
Interest
|
167,445 | 80,497 |
1.
|
Organization
and Basis of Presentation
|
1.
|
Organization and Basis of
Presentation (continued)
|
|
Description of
business
|
|
The
subsidiaries of the Company include the
following:
|
Name of company
|
Place and date
of incorporation
|
Attributable
equity interest
held
|
Principal activities
|
||||
Hong
Kong Highpower Technology Co., Ltd
(“HKHTC”)
|
Hong
Kong
Jul
4, 2003
|
100 | % |
Investment
holding
|
|||
Shenzhen
Highpower Technology Co., Ltd
(“SZ
Highpower”)
|
PRC
Oct
8, 2002
|
100 | % |
Manufacturing
of batteries
|
|||
HZ
Highpower Technology Co., Ltd
(“HZ
Highpower”)
|
PRC
Jan
29, 2008
|
100 | % |
Inactive
|
|||
Spring
Power Technology (Shenzhen) Co., Ltd
(“SZ
Spring Power”)
|
PRC
Jun
4, 2008
|
100 | % |
Manufacturing
of
batteries
|
|
The
associate of the Company include the
following:
|
Springpower
International, Inc.
(“Springpower
International”)
|
Canada
Mar
22, 2010
|
40 | % |
Research
and development of
batteries
|
2.
|
Summary
of significant accounting policies
|
2.
|
Summary
of significant accounting policies (continued)
|
|
(a)
|
Comparative
amounts
|
2.
|
Summary
of significant accounting policies (continued)
|
2010
|
2009
|
|||||||
Company
A
|
19 | % | 22 | % | ||||
Company
B
|
* | 13 | % | |||||
* Less
than 10%
|
||||||||
19 | % | 35 | % |
Percentage of accounts
receivable
|
||||||||
June 30,
|
June 30,
|
|||||||
2010
|
2009
|
|||||||
Company
A
|
29 | % | 24 | % | ||||
Company
B
|
* | 11 | % | |||||
Company
C
|
16 | % | * | |||||
* Less
than 10%
|
||||||||
Largest
receivable balances
|
45 | % | 35 | % |
2.
|
Summary
of significant accounting policies (continued)
|
Buildings
|
5% - 10 | % | ||
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)
|
2.
|
Summary
of significant accounting policies (continued)
|
2.
|
Summary
of significant accounting policies (continued)
|
June
30, 2010
|
June
30,2009
|
|||||||
Quarter
end RMB : US$ exchange rate
|
6.8279 | 6.8186 | ||||||
Average
quarterly RMB : US$ exchange rate
|
6.8271 | 6.8535 |
2.
|
Summary
of significant accounting policies (continued)
|
2.
|
Summary
of significant accounting policies (continued)
|
2.
|
Summary
of significant accounting policies (continued)
|
2.
|
Summary
of significant accounting policies (continued)
|
2.
|
Summary
of significant accounting policies (continued)
|
3.
|
Other
income
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Bank
interest income
|
20,605 | 7,627 | 49,853 | 32,769 | ||||||||||||
Foreign
exchange contract income
|
3,774 | - | 5,356 | - | ||||||||||||
Government
sponsor
|
35,266 | - | 49,913 | - | ||||||||||||
Sundry
income
|
66,381 | 14,147 | 98,278 | 55,820 | ||||||||||||
126,026 | 21,774 | 203,400 | 88,589 |
4.
|
Interest
expenses
|
Three
months ended
June 30,
|
Six
months ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Interest
on trade related bank loan
|
91,928 | 35,203 | 152,001 | 63,403 | ||||||||||||
Interest
on short-term bank loans
|
9,183 | 4,174 | 15,443 | 17,094 | ||||||||||||
101,111 | 39,377 | 167,444 | 80,497 |
5.
|
Other
expenses
|
Three
months ended
June 30,
|
Six
months ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Foreign
exchange contract expenses
|
- | 119,549 | - | 171,085 | ||||||||||||
- | 119,549 | - | 171,085 |
6.
|
Income
taxes
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
PRC
income taxes
|
360,579 | 228,752 | 739,993 | 389,819 |
7.
|
Prepaid
expenses and other
receivables
|
At of
|
||||||||
June
30,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Purchase
deposits paid
|
1,317,417 | 800,437 | ||||||
Advance
to staff
|
126,207 | 150,139 | ||||||
Valued-added
tax prepayment
|
1,739,046 | 339,868 | ||||||
Other
deposits and prepayments
|
417,052 | 423,058 | ||||||
Other
receivables
|
745,866 | 653,232 | ||||||
4,345,588 | 2,366,734 |
8.
|
Deferred
charges – Stock-based
compensation
|
At of
|
||||||||
June
30,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
Cost
|
||||||||
Stock-based
compensation – consulting fee
|
- | 520,000 | ||||||
Accumulated
amortization
|
- | (520,000 | ) | |||||
Net
|
- | - |
9.
|
Share
– based compensation expenses
|
9.
|
Share
– based compensation expenses (continued)
|
Weighted
Average
Grant Date
Price
|
||||||||
Shares
|
$
|
|||||||
Non-vested
at December 31, 2009
|
||||||||
Granted
|
17,000 | 8.11 | ||||||
Vested
|
(8,500 | ) | 5.74 | |||||
Forfeited
|
- | - | ||||||
Non-vested
at June 30, 2010
|
8,500 | 10.48 |
Weighted
|
||||||||||||
Number
of
|
Weighted
average
|
average
remaining
|
||||||||||
options
|
exercise
price
|
life
|
||||||||||
Balance
as of January 1, 2010
|
- | - | - | |||||||||
Granted
during the period
|
100,000 | 3.85 | 10.00 | |||||||||
Forfeited
during the period
|
- | - | ||||||||||
Balance
as of June 30, 2010
|
100,000 | 3.85 | 9.92 |
9.
|
Share
– based compensation expenses (continued)
|
Weighted
|
||||||||||||
Number of
|
Weighted
average
|
average
remaining
|
||||||||||
options
|
exercise price
|
life
|
||||||||||
Exercisable
as of January 1, 2010
|
- | - | - | |||||||||
Exercisable
during the period
|
33,333 | 3.85 | 10.00 | |||||||||
Forfeited
during the period
|
- | - | ||||||||||
Exercisable
as of June 30, 2010
|
33,333 | 3.85 | 9.92 |
10.
|
Earning
per share
|
Six months ended
|
||||||||
June 30,
|
June 30,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$ | $ | |||||||
Numerator:
|
||||||||
Net
income
|
3,166,047 | 1,371,622 | ||||||
Denominator:
|
||||||||
Weighted-average
shares outstanding
|
13,582,106 | 13,651,389 | ||||||
Effect
of dilutive securities
|
149,990 | 52,500 | ||||||
Denominator:
|
||||||||
Weighted-average
shares diluted
|
13,732,096 | 13,703,889 | ||||||
Basic
earning per common share
|
0.23 | 0.10 | ||||||
Diluted
earning per common share
|
0.23 | 0.10 |
11.
|
Inventories
|
At of
|
||||||||
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$ | $ | |||||||
Raw
materials
|
5,376,931 | 4,090,897 | ||||||
Work
in progress
|
1,690,589 | 1,086,523 | ||||||
Finished
goods
|
7,935,094 | 5,441,554 | ||||||
Packing
materials
|
14,658 | 14,592 | ||||||
15,017,272 | 10,633,566 |
12.
|
Plant
and equipment
|
At of
|
||||||||
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$ | $ | |||||||
Cost
|
||||||||
Construction
in progress
|
2,226,938 | 1,207,274 | ||||||
Furniture,
fixtures and office equipment
|
2,054,284 | 1,748,650 | ||||||
Leasehold
improvement
|
671,751 | 750,050 | ||||||
Machinery
and equipment
|
9,965,280 | 9,040,243 | ||||||
Motor
vehicles
|
731,395 | 710,245 | ||||||
Building
|
248,162 | 61,901 | ||||||
15,897,810 | 13,518,363 | |||||||
Accumulated
depreciation
|
||||||||
Construction
in progress
|
- | - | ||||||
Furniture,
fixtures and office equipment
|
782,215 | 619,020 | ||||||
Leasehold
improvement
|
303,786 | 362,042 | ||||||
Machinery
and equipment
|
2,347,272 | 1,962,512 | ||||||
Motor
vehicles
|
340,813 | 288,931 | ||||||
Building
|
5,702 | 985 | ||||||
3,779,788 | 3,233,490 | |||||||
Net
|
||||||||
Construction
in progress
|
2,226,938 | 1,207,274 | ||||||
Furniture,
fixtures and office equipment
|
1,272,069 | 1,129,630 | ||||||
Leasehold
improvement
|
367,965 | 388,008 | ||||||
Machinery
and equipment
|
7,618,008 | 7,077,731 | ||||||
Motor
vehicles
|
390,582 | 421,314 | ||||||
Building
|
242,460 | 60,916 | ||||||
12,118,022 | 10,284,873 |
12.
|
Plant
and equipment (continued)
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Included in factory
overheads
|
244,005 | 118,715 | 535,335 | 304,818 | ||||||||||||
Included in operating
expenses
|
69,719 | 68,075 | 138,961 | 119,189 | ||||||||||||
313,724 | 186,790 | 674,296 | 424,007 |
13.
|
Leasehold
land
|
At of
|
||||||||
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
Cost
|
3,144,901 | 3,145,322 | ||||||
Accumulated
amortization
|
(157,245 | ). | (125,813 | ) | ||||
Net
|
2,987,656 | 3,019,509 |
14.
|
Intangible
asset – Consumer battery license
|
At of
|
||||||||
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
Cost
|
||||||||
Consumer
battery license fee
|
1,000,000 | 1,000,000 | ||||||
Accumulated
amortization
|
(175,000 | ) | (150,000 | ) | ||||
Net
|
825,000 | 850,000 |
14.
|
Intangible
asset – Consumer battery license (continued)
|
15.
|
Investment
Securities
|
As of
|
||||||||
June 30,
2010
(Unaudited)
|
December 31,
2009
(Audited)
|
|||||||
$
|
$
|
|||||||
Investment
securities - cost method
|
52,725 | 52,732 | ||||||
52,725 | 52,732 |
16.
|
Fair
Value Measurements
|
16.
|
Fair
Value Measurements (Continued)
|
Fair Value Measurements at reporting date using
|
||||||||||||||||
June 30,
2010
|
Quoted Price
in active
Markets for
identical
assets
(level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Assets
|
||||||||||||||||
Accounts
receivable
|
18,888,393 | - | - | 18,888,393 | ||||||||||||
Prepaid
expenses and other receivables
|
4,345,588 | - | - | 4,345,588 | ||||||||||||
Notes
receivable
|
860,786 | - | - | 860,786 | ||||||||||||
Liabilities
|
||||||||||||||||
Non-trading
foreign currency derivatives liabilities
|
11,039 | - | 11,039 | - | ||||||||||||
Accounts
payable
|
19,969,317 | - | - | 19,969,317 | ||||||||||||
Other
payables and accrued liabilities
|
4,456,429 | - | - | 4,456,429 |
Fair Value Measurements at reporting date using
|
||||||||||||||||
December
31, 2009
|
Quoted Price
in active
Markets for
identical
assets
(level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Other
Unobservable
Inputs
(Level 3)
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
Assets
|
||||||||||||||||
Accounts
receivable
|
14,896,503 | - | - | 14,896,503 | ||||||||||||
Prepaid
expenses and other receivables
|
2,366,734 | - | - | 2,366,734 | ||||||||||||
Notes
receivable
|
596,795 | - | - | 596,795 | ||||||||||||
Liabilities
|
- | |||||||||||||||
Non-trading
foreign currency derivatives liabilities
|
11,041 | - | 11,041 | - | ||||||||||||
Accounts
payable
|
10,738,714 | - | 10,738,714 | |||||||||||||
Other
payables and accrued liabilities
|
3,563,308 | - | - | 3,563,308 |
17.
|
Risk
Management Activities, Including
Derivative
|
Six months ended June 30,
|
||||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Foreign
exchange contracts, net
|
||||||||
Gain
recognized in Other income, net
|
5,356 | - | ||||||
Gain
recognized in Other expenses, net
|
- | 171,085 |
17.
|
Risk
Management Activities, Including Derivative (continued)
|
18.
|
Change
in fair value of share warrants
|
19.
|
Other
payables and accrued liabilities
|
At of
|
||||||||
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Accrued
expenses
|
1,694,753 | 2,056,261 | ||||||
Royalty
payable
|
1,135,048 | 1,071,787 | ||||||
Sales
deposits received
|
824,602 | 259,550 | ||||||
Other
payables
|
802,026 | 175,710 | ||||||
4,456,429 | 3,563,308 |
20.
|
Bank
borrowings
|
At of
|
||||||||
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Secured:
|
||||||||
Repayable
within one year
|
||||||||
Short
term bank loans
|
- | 2,929,551 | ||||||
Other
trade related bank loans
|
16,151,634 | 11,858,163 | ||||||
16,151,634 | 14,787,714 |
|
(a)
|
charge
over bank deposits of $ which is included in restricted cash on the
Balance sheet;
|
|
(b)
|
personal
guarantee executed by the directors of the
Company;
|
|
(c)
|
the
legal charge over leasehold land with carrying amount $2,987,656 (see Note
13); and
|
|
(d)
|
other
financial covenant
|
21.
|
Pension
plans
|
22.
|
Commitments
and contingencies
|
Period
ending June 30,
|
$
|
|||
2010
|
439,328 | |||
2011
|
258,525 | |||
697,853 |
23.
|
Segment
Information
|
Six months ended June 30,
|
||||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Net
revenue
|
||||||||
Hong
Kong and China
|
32,326,801 | 12,157,121 | ||||||
Asia
|
2,512,843 | 1,573,266 | ||||||
Europe
|
8,990,128 | 9,002,647 | ||||||
North
America
|
5,122,431 | 3,818,465 | ||||||
South
America
|
846 | 41,911 | ||||||
Others
|
248,437 | 161,879 | ||||||
49,201,486 | 26,755,289 |
23.
|
Segment
Information
|
At of
|
||||||||
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Accounts
receivable
|
||||||||
Hong
Kong and China
|
14,316,129 | 8,511,192 | ||||||
Asia
|
550,004 | 476,659 | ||||||
Europe
|
2,623,218 | 4,050,519 | ||||||
North
America
|
1,388,954 | 1,846,832 | ||||||
South
America
|
- | 900 | ||||||
Africa
|
10,088 | 10,300 | ||||||
Other
|
- | 101 | ||||||
18,888,393 | 14,896,503 |
24.
|
Subsequent
Events
|
Exhibit
Number
|
Description of Document
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K,
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
of the Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of
2002.*
|
*
|
This
exhibit shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of
that section, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933 or the Securities Exchange Act of
1934, whether made before or after the date hereof and irrespective of any
general incorporation language in any
filings.
|
Hong
Kong Highpower Technology, Inc.
|
||
Dated:
August 12, 2010
|
/s/
|
Dang Yu Pan
|
By:
|
Dang Yu Pan
|
|
Its:
|
Chairman
of the Board and Chief Executive Officer
|
|
/s/
|
Henry Ngan
|
|
By:
|
Henry Ngan
|
|
Its:
|
Chief
Financial Officer
|