x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
For
the Quarterly Period Ended September 30, 2007
|
||
OR
|
||
o
|
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
No.)
|
Large
accelerated filer o
|
Accelerated
filer ¨
|
Non-accelerated
filer x
|
·
|
Item
1 (Financial Statements) to reflect changes to the Company’s Condensed
Consolidated Financial Statements and related
notes.
|
·
|
Item 2
(Management’s Discussion and Analysis of Financial Condition and Results
of Operations) to reflect changes to Critical Accounting Policies
and
Estimates, Results
of Operations,
Liquidity and Capital Resources and New Accounting
Pronouncements.
|
·
|
Item
3. (Quantitative and Qualitative Discloses About Market Risk) to
reflect
changes to Foreign Currency and Exchange
Risk.
|
·
|
Part
II, Item 1A to reflect changes to Risk
Factors.
|
·
|
the
items previously listed;
|
·
|
the
pro forma financial statements have been removed;
and
|
·
|
the
renumbering of certain pages and notes of this
report.
|
Page
|
||||
Part I
|
Financial
Information
|
|||
Item
1.
|
Financial
Statements
|
|||
HONG
KONG HIGHPOWER TECHNOLOGY, INC. (FORMERLY SRKP 11,
INC.)
|
||||
a)
|
Balance
Sheet as of September 30, 2007 (Unaudited)
|
5
|
||
b)
|
Statements
of Operations for the Three and Nine Months Ended September 30,
2007 and
2006 (Unaudited)
|
6
|
||
c)
|
Statements
of Cash Flows for the Nine Months Ended September 30, 2007 and
2006
(Unaudited)
|
7
|
||
d)
|
Notes
to Financial Statements (Unaudited)
|
8
|
||
HONG
KONG HIGHPOWER TECHNOLOGY COMPANY LIMITED
|
||||
a)
|
Condensed
Consolidated Balance Sheets as of September 30, 2007 (Unaudited)
and
December 31, 2006 (restated)
|
11
|
||
b)
|
Condensed
Consolidated Statements of Operations for the Three and Nine Months
Ended
September 30, 2007 and 2006 (Unaudited) (restated)
|
13
|
||
c)
|
Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended
September
30, 2007 and 2006 (Unaudited) (restated)
|
14
|
||
d)
|
Notes
to Condensed Consolidated Financial Statements (Unaudited)
(restated)
|
16
|
||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
42
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
48
|
||
Item
4.
|
Controls
and Procedures
|
48
|
||
Part II
|
Other
Information
|
|||
Item
1.
|
Legal
Proceedings
|
49
|
||
Item 1A.
|
Risk
Factors
|
49
|
||
Item
2.
|
Unregistered
Sale of Equity Securities and Use of Proceeds
|
64
|
||
Item
3.
|
Default
Upon Senior Securities
|
64
|
||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
64
|
||
Item
5.
|
Other
Information
|
64
|
||
Item
6.
|
Exhibits
|
64
|
||
Signatures
|
65
|
September 30, 2007
|
||||
(Unaudited)
|
||||
ASSETS
|
||||
CURRENT
ASSETS:
|
||||
Cash
|
$
|
6,515
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||
CURRENT
LIABILITIES:
|
||||
Due
to Stockholders
|
$
|
53,000
|
||
COMMITMENTS
AND CONTINGENCIES
|
||||
STOCKHOLDERS'
EQUITY (DEFICIT):
|
||||
Preferred
stock, $.0001 par value, 10,000,000 shares authorized, none
issued
|
—
|
|||
Common
stock, $.0001 par value, 100,000,000 shares authorized, 5,400,000
issued
and outstanding
|
540
|
|||
Additional
paid-in capital
|
1,627
|
|||
(Deficit)
accumulated during development stage
|
(48,652
|
)
|
||
Total
Stockholders' Equity (Deficit)
|
(46,485
|
)
|
||
$
|
6,515
|
Period
From
|
Cumulative
from
|
|||||||||||||||
Three
Months
|
Three
Months
|
Nine
Months
|
January
3, 2006
|
January
3, 2006
|
||||||||||||
Ended
|
Ended
|
Ended
|
(Inception)
to
|
(Inception)
to
|
||||||||||||
September 30, 2007
|
September 30, 2006
|
September 30, 2007
|
September 30, 2006
|
September 30, 2007
|
||||||||||||
REVENUE
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
EXPENSES
|
9,108
|
13,801
|
15,856
|
30,420
|
48,652
|
|||||||||||
NET
(LOSS)
|
$
|
(9,108
|
)
|
$
|
(13,801
|
)
|
$
|
(15,856
|
)
|
$
|
(30,420
|
)
|
$
|
(48,652
|
)
|
|
NET
(LOSS) PER COMMON SHARE-BASIC
|
$
|
*
|
$
|
*
|
$
|
*
|
$
|
*
|
||||||||
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
|
5,400,000
|
5,400,000
|
5,400,000
|
5,400,000
|
Period
From
|
Cumulative
from
|
|||||||||
|
Nine
Months
|
January
3, 2006
|
January
3, 2006
|
|||||||
|
Ended
|
to
|
(Inception)
to
|
|||||||
September 30, 2007
|
September 30, 2006
|
September 30, 2007
|
||||||||
CASH
FLOWS FROM (TO) OPERATING ACTIVITIES:
|
||||||||||
Net
(loss)
|
$
|
(15,856
|
)
|
$
|
(30,420
|
)
|
$
|
(48,652
|
)
|
|
Net
Cash (Used In) Operating Activities
|
(15,856
|
)
|
(30,420
|
)
|
(48,652
|
)
|
||||
CASH
FLOWS FROM (TO) FINANCING ACTIVITIES:
|
||||||||||
Common
stock issued for cash
|
-
|
2,167
|
2,167
|
|||||||
Advances
from stockholders
|
20,000
|
32,250
|
53,000
|
|||||||
Net
Cash Provided by Financing Activities
|
20,000
|
34,417
|
55,167
|
|||||||
NET
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS:
|
4,144
|
3,997
|
6,515
|
|||||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
2,371
|
-
|
-
|
|||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
6,515
|
$
|
3,997
|
$
|
6,515
|
1. |
History
|
2. |
Corporation
Information and
Reorganization
|
3. |
Summary
of Significant Accounting
Policies
|
3. |
Summary
of Significant Accounting Policies
(Cont’d)
|
4. |
Stockholders'
Equity
|
5. |
Related
Party Transactions
|
6. |
Due
to Stockholders
|
7. |
Events
after Balance Sheet Date
|
As
of
|
|||||||
September
30,
|
December
31,
|
||||||
|
2007
|
2006
|
|||||
|
(Unaudited)
|
(Audited)
|
|||||
|
$
|
$
|
|||||
(restated)
|
(restated)
|
||||||
ASSETS
|
|||||||
Current
Assets :
|
|||||||
Cash
and cash equivalents
|
1,576,035
|
488,070
|
|||||
Restricted
cash
|
4,053,585
|
1,010,580
|
|||||
Accounts
receivable
|
14,489,335
|
8,127,170
|
|||||
Notes
receivable
|
-
|
76,764
|
|||||
Prepaid
expenses and other receivables - Note 7
|
2,779,502
|
2,612,091
|
|||||
Advance
to related parties – Note 13
|
-
|
634,161
|
|||||
Inventories,
net – Note 8
|
14,939,809
|
15,623,791
|
|||||
Prepaid
lease payments – Note 10
|
55,443
|
-
|
|||||
Total
Current Assets
|
37,893,709
|
28,572,627
|
|||||
Deferred
tax assets – Note 6
|
25,929
|
8,443
|
|||||
Plant
and equipment, net – Note 9
|
3,639,172
|
3,154,660
|
|||||
Leasehold
land – Note 10
|
2,716,724
|
-
|
|||||
Intangible
asset – Note 11
|
962,500
|
-
|
|||||
TOTAL
ASSETS
|
45,238,034
|
31,735,730
|
|||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
LIABILITIES
|
|||||||
Current
Liabilities :
|
|||||||
Accounts
payable
|
19,241,449
|
17,327,402
|
|||||
Other
payables accrued liabilities - Note 12
|
2,391,144
|
1,170,275
|
|||||
Income
tax payable
|
41,927
|
122,710
|
|||||
Bank
borrowings – Note 14
|
15,162,172
|
5,950,626
|
|||||
Total
Current Liabilities
|
36,836,692
|
24,571,013
|
|||||
TOTAL
LIABILITIES
|
36,836,692
|
24,571,013
|
|||||
COMMITMENTS
AND CONTINGENCIES – Note 16
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
(restated)
|
(restated)
|
||||||
STOCKHOLDERS’
EQUITY
|
|||||||
Preferred
stock
|
|||||||
Par
value: US$0.0001
|
|||||||
Authorized:
10,000,000 shares
|
|||||||
Issued
and outstanding: none
|
-
|
-
|
|||||
Common
stock
|
|||||||
Par
value : US$0.0001
|
|||||||
Authorized:
100,000,000 shares
|
|||||||
Issued
and outstanding: 14,798,328 shares
|
1,480
|
1,480
|
|||||
Additional
paid-in capital
|
62,837
|
62,837
|
|||||
Accumulated
other comprehensive income
|
861,811
|
470,383
|
|||||
Retained
earnings
|
7,475,214
|
6,630,017
|
|||||
TOTAL
STOCKHOLDERS’ EQUITY
|
8,401,342
|
7,164,717
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
45,238,034
|
31,735,730
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||
|
$
|
$
|
$
|
$
|
|||||||||
(restated)
|
(restated)
|
(restated)
|
(restated)
|
||||||||||
Net
sales
|
19,879,829
|
13,571,303
|
51,886,178
|
31,210,518
|
|||||||||
Cost
of sales
|
(17,269,784
|
)
|
(11,956,237
|
)
|
(45,372,444
|
)
|
(26,146,521
|
)
|
|||||
Gross
profit
|
2,610,045
|
1,615,066
|
6,513,734
|
5,063,997
|
|||||||||
Depreciation
– Notes 3 and 9
|
(31,532
|
)
|
(19,347
|
)
|
(85,576
|
)
|
(54,837
|
)
|
|||||
Selling
and distributing costs
|
(631,203
|
)
|
(468,283
|
)
|
(1,579,491
|
)
|
(1,049,943
|
)
|
|||||
Administrative
and other operating expenses
|
(920,690
|
)
|
(639,736
|
)
|
(2,923,043
|
)
|
(1,458,683
|
)
|
|||||
Income
from operations
|
1,026,620
|
487,700
|
1,925,624
|
2,500,534
|
|||||||||
Fees
and costs related reorganization
|
-
|
-
|
-
|
(75,229
|
)
|
||||||||
Other
income - Note 4
|
58,861
|
13,555
|
132,724
|
43,820
|
|||||||||
Interest
expenses – Note 5
|
(189,446
|
)
|
(77,336
|
)
|
(438,086
|
)
|
(168,843
|
)
|
|||||
Income
before taxes
|
896,035
|
423,919
|
1,620,262
|
2,300,282
|
|||||||||
Income
taxes - Note 6
|
(57,916
|
)
|
(31,785
|
)
|
(110,716
|
)
|
(168,754
|
)
|
|||||
Net
income for the period
|
838,119
|
392,134
|
1,509,546
|
2,131,528
|
|||||||||
Other
comprehensive income
|
|||||||||||||
-
Foreign currency translation gain
|
127,959
|
58,119
|
391,428
|
122,552
|
|||||||||
Comprehensive
income
|
966,078
|
450,253
|
1,900,974
|
2,254,080
|
|||||||||
Net
income per share of common stock
|
|||||||||||||
-
Basic and diluted
|
0.06
|
0.03
|
0.10
|
0.14
|
|||||||||
Weighted
average number of common shares outstanding
|
|||||||||||||
-
Basic and diluted
|
14,798,328
|
14,798,328
|
14,798,328
|
14,798,328
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||
|
$
|
$
|
$
|
$
|
|||||||||
(restated)
|
|||||||||||||
Cash
flows from operating activities
|
|||||||||||||
Net
income
|
838,119
|
392,134
|
1,509,546
|
2,131,546
|
|||||||||
Adjustments
to reconcile net income to net cash flows provided by operating activities
:
|
|||||||||||||
Amortisation
of intangible asset
|
12,500
|
-
|
37,500
|
-
|
|||||||||
Bad
debts written off
|
-
|
-
|
21,192
|
22,425
|
|||||||||
Depreciation
|
160,881
|
81,647
|
423,103
|
217,266
|
|||||||||
Loss
on disposal of plant and equipment
|
1,508
|
1,651
|
3,848
|
3,986
|
|||||||||
Income
taxes
|
57,916
|
31,785
|
110,716
|
168,754
|
|||||||||
Changes
in operating assets and liabilities :
|
|||||||||||||
Accounts
receivable
|
(2,613,496
|
)
|
(2,526,165
|
)
|
(5,948,915
|
)
|
(3,698,299
|
)
|
|||||
Notes
receivable
|
67,994
|
(160,515
|
)
|
76,389
|
517,713
|
||||||||
Prepaid
expenses and other receivables
|
(595,143
|
)
|
(661,089
|
)
|
(66,464
|
)
|
(634,879
|
)
|
|||||
Inventories
|
146,921
|
(2,128,902
|
)
|
1,253,050
|
(4,799,694
|
)
|
|||||||
Accounts
payable
|
(789,661
|
)
|
3,773,470
|
1,227,858
|
5,111,468
|
||||||||
Other
payables and accrued liabilities
|
(5,137
|
)
|
(219,122
|
)
|
1,179,232
|
(212,197
|
)
|
||||||
Income
tax payable
|
(16,110
|
)
|
(24,911
|
)
|
(211,597
|
)
|
(213,125
|
)
|
|||||
Net
cash flows used in operating activities
|
(2,733,708
|
)
|
(1,440,017
|
)
|
(384,542
|
)
|
(1,385,036
|
)
|
|||||
Cash
flows from investing activities
|
|||||||||||||
Acquisition
of plant and equipment
|
(276,796
|
)
|
(542,450
|
)
|
(789,753
|
)
|
(1,257,677
|
)
|
|||||
Acquisition
of leasehold land
|
(9,027
|
)
|
-
|
(2,715,046
|
)
|
-
|
|||||||
Acquisition
of intangible asset
|
-
|
-
|
(1,000,000
|
)
|
-
|
||||||||
Proceeds
from disposal of plant and equipment
|
-
|
-
|
6,022
|
5,163
|
|||||||||
Net
cash flows used in investing activities
|
(285,823
|
)
|
(542,450
|
)
|
(4,498,777
|
)
|
(1,252,514
|
)
|
|||||
Cash
flows from financing activities
|
|||||||||||||
Proceeds
from new short-term bank loans
|
1,516
|
249,645
|
455,981
|
498,859
|
|||||||||
Repayment
of short-term bank loans
|
(437,370
|
)
|
(468,057
|
)
|
(716,541
|
)
|
(904,182
|
)
|
|||||
Net
advancement of other bank borrowings
|
6,033,041
|
2,451,569
|
9,060,192
|
4,368,526
|
|||||||||
Increase
in restricted cash
|
(2,276,110
|
)
|
(312,977
|
)
|
(2,942,583
|
)
|
(611,750
|
)
|
|||||
Advance
to related parties
|
7,996
|
174,875
|
78,290
|
(41,766
|
)
|
||||||||
Net
cash flows provided by financing activities
|
3,329,073
|
2,095,055
|
5,935,339
|
3,309,687
|
|||||||||
Net
increase in cash and cash equivalents
|
309,542
|
112,588
|
1,052,020
|
672,137
|
|||||||||
Effect
of foreign currency translation on cash and cash
equivalents
|
21,545
|
(4,940
|
)
|
36,581
|
(1,081
|
)
|
|||||||
Cash
and cash equivalents - beginning of period
|
1,244,948
|
1,030,848
|
487,434
|
467,440
|
|||||||||
Cash
and cash equivalents - end of period
|
1,576,035
|
1,138,496
|
1,576,035
|
1,138,496
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||
|
$
|
$
|
$
|
$
|
|||||||||
|
(restated)
|
||||||||||||
Supplemental
disclosures for cash flow information :
|
|||||||||||||
Cash
paid for :
|
|||||||||||||
Interest
|
829
|
77,264
|
249,469
|
244,055
|
|||||||||
Income
taxes
|
652
|
42,911
|
196,139
|
213,125
|
1. |
Corporation
information and
reorganization
|
Date
of
|
Attributable
|
Registered
|
|||||||||||
Name
of company
|
incorporation
|
equity
interest %
|
capital
|
||||||||||
Direct
|
Indirect
|
||||||||||||
Shenzhen
Highpower Technology Co., Ltd. (“SZ
Highpower”)
|
October 8, 2002 |
100
|
-
|
RMB20,000,000
|
2. |
Description
of business
|
3. |
Summary
of significant accounting
policies
|
3. |
Summary
of significant accounting policies
(Continued)
|
3. |
Summary
of significant accounting policies
(Continued)
|
Consumer
battery license fee
|
5%
|
Furniture,
fixtures and office equipment
|
20
|
%
|
||
Leasehold
improvement
|
50
|
%
|
||
Machinery
and equipment
|
10
|
%
|
||
Motor
vehicles
|
20
|
%
|
3. |
Summary
of significant accounting policies
(continued)
|
3. |
Summary
of significant accounting policies
(continued)
|
4. |
Other
income
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||
|
$
|
$
|
$
|
$
|
|||||||||
Bank
interest income
|
23,125
|
1,956
|
34,797
|
5,162
|
|||||||||
Other
interest income
|
16,280
|
-
|
19,287
|
-
|
|||||||||
Sundry
income
|
19,456
|
11,599
|
78,640
|
38,658
|
|||||||||
58,861
|
13,555
|
132,724
|
43,820
|
5. |
Interest
expenses
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|
||||||
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
Interest
on bills
|
172,142
|
72,740
|
383,954
|
137,428
|
|||||||||
Interest
on short-term bank loans
|
17,261
|
4,596
|
41,104
|
31,415
|
|||||||||
Interest
on other loan
|
43
|
-
|
13,028
|
-
|
|||||||||
189,446
|
77,336
|
438,086
|
168,843
|
6. |
Income
taxes
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|
||||||
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
PRC
income taxes
|
61,663
|
31,785
|
127,900
|
168,754
|
|||||||||
Deferred
tax benefit
|
(3,747
|
)
|
-
|
(17,184
|
)
|
-
|
|||||||
57,916
|
31,785
|
110,716
|
168,754
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|||
$
|
$
|
||||||
Temporary
difference on :
|
|||||||
reorganization
of expenses
|
(23,116
|
)
|
(8,443
|
)
|
|||
accelerated
tax depreciation on intangible asset
|
(2,813
|
)
|
-
|
||||
Deferred
tax assets, net
|
(25,929
|
)
|
(8,443
|
)
|
|||
Reorganized
in the balance sheet:
|
|||||||
Net
deferred tax assets
|
(25,929
|
)
|
(8,443
|
)
|
7. |
Prepaid
expenses and other
receivables
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Purchase
deposits paid
|
60,407
|
935,417
|
|||||
Advance
to staff
|
16,594
|
21,540
|
|||||
Other
deposits and prepayments
|
211,569
|
130,870
|
|||||
Value-added
tax prepayment
|
1,032,517
|
1,220,524
|
|||||
Other
receivables
|
1,458,415
|
303,740
|
|||||
2,779,502
|
2,612,091
|
8. |
Inventories
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Raw
materials
|
4,265,104
|
5,040,028
|
|||||
Work
in progress
|
1,676,227
|
1,415,942
|
|||||
Finished
goods
|
8,923,096
|
9,096,003
|
|||||
Consumables
|
54,482
|
52,122
|
|||||
Packing
materials
|
20,900
|
19,696
|
|||||
14,939,809
|
15,623,791
|
9. |
Plant
and equipment
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Cost
|
|||||||
Furniture,
fixtures and office equipment
|
610,029
|
510,853
|
|||||
Leasehold
improvement
|
143,011
|
137,761
|
|||||
Machinery
and equipment
|
3,659,430
|
2,938,971
|
|||||
Motor
vehicles
|
335,614
|
250,655
|
|||||
4,748,084
|
3,838,240
|
||||||
Accumulated
depreciation
|
|||||||
Furniture,
fixtures and office equipment
|
177,412
|
92,092
|
|||||
Leasehold
improvement
|
80,504
|
25,888
|
|||||
Machinery
and equipment
|
731,402
|
475,767
|
|||||
Motor
vehicles
|
119,594
|
89,833
|
|||||
1,108,912
|
683,580
|
||||||
Net
|
|||||||
Furniture,
fixtures and office equipment
|
432,617
|
418,761
|
|||||
Leasehold
improvement
|
62,507
|
111,873
|
|||||
Machinery
and equipment
|
2,928,028
|
2,463,204
|
|||||
Motor
vehicles
|
216,020
|
160,822
|
|||||
3,639,172
|
3,154,660
|
9. |
Plant
and equipment
(Continued)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|
||||||
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
Included
in factory overheads
|
129,348
|
62,300
|
337,526
|
162,429
|
|||||||||
Included
in operating expenses
|
31,532
|
19,347
|
85,576
|
54,837
|
|||||||||
160,880
|
81,647
|
423,102
|
217,266
|
10. |
Leasehold
land
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Cost
|
2,772,167
|
-
|
|||||
Accumulated
amortization
|
-
|
-
|
|||||
Net
|
2,772,167
|
-
|
|||||
Analyzed
for reporting purposes as:
|
|||||||
Current
asset
|
55,443
|
-
|
|||||
Non-current
asset
|
2,716,724
|
-
|
|||||
2,772,167
|
-
|
11. |
Intangible
asset
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Cost
|
|||||||
Consumer
battery license fee
|
1,000,000
|
-
|
|||||
Accumulated
amortization
|
37,500
|
-
|
|||||
Net
|
962,500
|
-
|
12. |
Other
payables and accrued
liabilities
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Accrued
expenses
|
685,963
|
622,010
|
|||||
Accrued
staff welfare
|
-
|
111,749
|
|||||
Royalty
payable
|
1,231,229
|
112,579
|
|||||
Sales
deposits received
|
153,920
|
86,182
|
|||||
Other
payables
|
320,032
|
237,755
|
|||||
2,391,144
|
1,170,275
|
13. |
Advance
to related parties
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Advance
to shareholders
|
-
|
634,161
|
14. |
Bank
borrowings
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Secured:
|
|||||||
Repayable
within one year
|
|||||||
Non-recurring
bank loans
|
665,106
|
896,964
|
|||||
Other
bank borrowings
|
14,497,066
|
5,053,662
|
|||||
15,162,172
|
5,950,626
|
(a)
|
charge
over bank deposits of $4,053,585;
|
(b) |
corporate
guarantee executed by a third party and the Shenzhen Science and
Technology
Bureau; and
|
(c)
|
personal
guarantees executed by the directors of the
Company;
|
15. |
Pension
plans
|
16. |
Commitments
and contingencies
|
Period
ending September 30
|
$
|
|||
2008
|
531,065
|
|||
2009
|
492,690
|
|||
2010
|
469,877
|
|||
2011
|
103,111
|
|||
1,596,743
|
$
|
||||
Purchase
of plant and equipment
|
1,490
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|
||
|
|
$
|
|
$
|
|||
Bills
discounted
|
422,697
|
1,323,442
|
17. |
Related
party transactions
|
Nine
months ended
September
30,
|
|||||||
2007
|
|
2006
|
|
||||
|
|
(Unaudited)
|
|
(Unaudited)
|
|
||
|
|
$
|
|
$
|
|||
Management
fee paid to Canhold International Limited
|
15,617
|
11,402
|
18. |
Segment
Information
|
Nine
months ended
September
30,
|
|||||||
2007
|
|
2006
|
|
||||
|
|
(Unaudited)
|
|
(Unaudited)
|
|||
Net
revenue
|
$
|
|
$
|
||||
Hong
Kong and China
|
21,433,716
|
20,434,138
|
|||||
Asia
|
4,356,175
|
2,225,364
|
|||||
Europe
|
17,314,386
|
4,817,798
|
|||||
North
America
|
8,568,668
|
3,463,866
|
|||||
South
America
|
213,233
|
265,610
|
|||||
Others
|
-
|
3,742
|
|||||
51,886,178
|
31,210,518
|
18. |
Segment
information (Continued)
|
As
of
|
|||||||
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
|
|
(Unaudited)
|
|
(Audited)
|
|||
Accounts
receivable
|
$
|
|
$
|
|
|||
Hong
Kong and China
|
3,789,289
|
5,545,244
|
|||||
Asia
|
736,762
|
262,743
|
|||||
Europe
|
6,903,057
|
1,857,294
|
|||||
North
America
|
3,051,043
|
461,889
|
|||||
South
America
|
9,184
|
-
|
|||||
14,489,335
|
8,127,170
|
19. |
Dividends
|
Nine
months ended
September
30,
|
|||||||
2007
|
|
2006
|
|
||||
|
|
(Unaudited)
|
|
(Unaudited)
|
|||
Dividends
|
$
|
$
|
|||||
Interim
dividend declared and paid :
HK$1.33
per share
|
664,348
|
-
|
20. |
Subsequent
event
|
21. |
Restatement
|
21. |
Restatement
(Continued)
|
2007
|
|
2007
|
|
2007
|
||||||
(As
originally
|
|
(As
restated)
|
|
(Effect
of
|
|
|||||
|
|
Reported)
|
|
|
|
adjustments)
|
|
|||
|
|
$
|
|
$
|
|
$
|
||||
Net
sales
|
19,574,160
|
19,879,829
|
305,669
|
|||||||
Cost
of sales
|
(17,269,784
|
)
|
(17,269,784
|
)
|
-
|
|||||
Gross
profit
|
2,304,376
|
2,610,045
|
305,669
|
|||||||
Depreciation
|
(31,532
|
)
|
(31,532
|
)
|
-
|
|||||
Selling
and distributing costs
|
(631,203
|
)
|
(631,203
|
)
|
-
|
|||||
Administrative
and other operating expenses
|
(920,690
|
)
|
(920,690
|
)
|
-
|
|||||
Income
from operations
|
720,951
|
1,026,620
|
305,669
|
|||||||
Other
income
|
364,530
|
58,861
|
(305,669
|
)
|
||||||
Interest
expenses
|
(189,446
|
)
|
(189,446
|
)
|
-
|
|||||
Income
before taxes
|
896,035
|
896,035
|
-
|
|||||||
Income
taxes
|
(57,916
|
)
|
(57,916
|
)
|
-
|
|||||
Net
income for the period
|
838,119
|
838,119
|
-
|
|||||||
Other
comprehensive income
|
||||||||||
-
Foreign currency translation gain
|
127,959
|
127,959
|
-
|
|||||||
Comprehensive
income
|
966,078
|
966,078
|
-
|
|||||||
Earnings
per share of common stock
|
||||||||||
-
Basic and diluted
|
1.68
|
0.07
|
1.61
|
|||||||
Weighted
average number of common shares outstanding
|
||||||||||
-
Basic and diluted
|
500,000
|
14,798,328
|
14,298,328
|
21. |
Restatement
(Continued)
|
2006
|
|
2006
|
|
2006
|
|
|||||
|
|
(As
originally
|
|
(As
restated)
|
|
(Effect
of
|
|
|||
|
|
Reported)
|
|
|
|
adjustments)
|
|
|||
|
|
$
|
|
$
|
|
$
|
||||
Net
sales
|
13,571,303
|
13,571,303
|
-
|
|||||||
Cost
of sales
|
(11,956,237
|
)
|
(11,956,237
|
)
|
-
|
|||||
Gross
profit
|
1,615,066
|
1,615,066
|
-
|
|||||||
Depreciation
|
(19,347
|
)
|
(19,347
|
)
|
-
|
|||||
Selling
and distributing costs
|
(468,283
|
)
|
(468,283
|
)
|
-
|
|||||
Administrative
and other operating expenses
|
(639,736
|
)
|
(639,736
|
)
|
-
|
|||||
Income
from operations
|
487,700
|
487,700
|
-
|
|||||||
Other
income
|
13,555
|
13,555
|
-
|
|||||||
Interest
expenses
|
(77,336
|
)
|
(77,336
|
)
|
-
|
|||||
Income
before taxes
|
423,919
|
423,919
|
-
|
|||||||
Income
taxes
|
(31,785
|
)
|
(31,785
|
)
|
-
|
|||||
Net
income for the period
|
392,134
|
392,134
|
-
|
|||||||
|
||||||||||
Other
comprehensive income
|
||||||||||
-
Foreign currency translation gain
|
58,119
|
58,119
|
-
|
|||||||
Comprehensive
income
|
450,253
|
450,253
|
-
|
|||||||
Earnings
per share of common stock
|
||||||||||
-
Basic and diluted
|
0.78
|
0.03
|
0.75
|
|||||||
Weighted
average number of common shares outstanding
|
||||||||||
-
Basic and diluted
|
500,000
|
14,798,328
|
14,298,328
|
21. |
Restatement
(Continued)
|
2007
|
|
2007
|
|
2007
|
|
|||||
|
|
(As
originally
|
|
(As
restated)
|
|
(Effect
of
|
|
|||
|
|
Reported)
|
|
|
|
adjustments)
|
|
|||
|
|
$
|
|
$
|
|
$
|
||||
Net
sales
|
50,896,263
|
51,886,178
|
989,915
|
|||||||
Cost
of sales
|
(45,532,614
|
)
|
(45,372,444
|
)
|
160,170
|
|||||
Gross
profit
|
5,363,649
|
6,513,734
|
1,150,085
|
|||||||
Depreciation
|
(85,576
|
)
|
(85,576
|
)
|
-
|
|||||
Selling
and distributing costs
|
(1,579,491
|
)
|
(1,579,491
|
)
|
-
|
|||||
Administrative
and other operating expenses
|
(2,923,043
|
)
|
(2,923,043
|
)
|
-
|
|||||
Income
from operations
|
775,539
|
374,549
|
1,150,085
|
|||||||
Other
income
|
1,282,809
|
292,894
|
(1,150,085
|
)
|
||||||
Interest
expenses
|
(438,086
|
)
|
(438,086
|
)
|
-
|
|||||
Income
before taxes
|
1,620,262
|
1,620,262
|
-
|
|||||||
Income
taxes
|
(110,716
|
)
|
(110,716
|
)
|
-
|
|||||
Net
income for the period
|
1,509,546
|
1,509,546
|
-
|
|||||||
Other
comprehensive income
|
||||||||||
-
Foreign currency translation gain
|
391,428
|
391,428
|
-
|
|||||||
Comprehensive
income
|
1,900,974
|
1,900,974
|
-
|
|||||||
Earnings
per share of common stock
|
||||||||||
-
Basic and diluted
|
3.02
|
0.13
|
(2.89
|
)
|
||||||
Weighted
average number of common shares outstanding
|
||||||||||
-
Basic and diluted
|
500,000
|
14,798,328
|
14,298,328
|
21. |
Restatement
(Continued)
|
2006
|
|
2006
|
|
2006
|
|
|||||
|
|
(As
originally
|
|
(As
restated)
|
|
(Effect
of
|
|
|||
|
|
Reported)
|
|
|
|
adjustments)
|
|
|||
|
|
$
|
|
$
|
|
$
|
||||
Net
sales
|
31,210,518
|
31,210,518
|
-
|
|||||||
Cost
of sales
|
(26,146,521
|
)
|
(26,146,521
|
)
|
-
|
|||||
Gross
profit
|
5,063,997
|
5,063,997
|
-
|
|||||||
Depreciation
|
(54,837
|
)
|
(54,837
|
)
|
-
|
|||||
Selling
and distributing costs
|
(1,049,943
|
)
|
(1,049,943
|
)
|
-
|
|||||
Administrative
and other operating expenses
|
(1,458,683
|
)
|
(1,458,683
|
)
|
-
|
|||||
Income
from operations
|
2,500,534
|
2,500,534
|
-
|
|||||||
Fees
and costs related reverse merger
|
(75,229
|
)
|
(75,229
|
)
|
||||||
Other
income
|
43,820
|
43,820
|
-
|
|||||||
Interest
expenses
|
(168,843
|
)
|
(168,843
|
)
|
-
|
|||||
Income
before taxes
|
2,375,511
|
2,300,282
|
(75,229
|
)
|
||||||
Income
taxes
|
(168,754
|
)
|
(168,754
|
)
|
-
|
|||||
Net
income for the period
|
2,206,757
|
2,131,528
|
(75,229
|
)
|
||||||
Other
comprehensive income
|
||||||||||
-
Foreign currency translation gain
|
122,552
|
122,552
|
-
|
|||||||
Comprehensive
income
|
2,329,309
|
2,254,080
|
(75,229
|
)
|
||||||
Earnings
per share of common stock
|
||||||||||
-
Basic and diluted
|
4.41
|
0.15
|
(4.26
|
)
|
||||||
Weighted
average number of common shares outstanding
|
||||||||||
-
Basic and diluted
|
500,000
|
14,798,328
|
14,298,328
|
21. |
Restatement
(Continued)
|
2007
|
|
2007
|
|
2007
|
|
|||||
|
|
(As
originally
|
|
(As
restated)
|
|
(Effect
of
|
|
|||
|
|
Reported)
|
|
|
|
Adjustments)
|
|
|||
|
|
$
|
|
$
|
|
$
|
||||
ASSETS
|
||||||||||
Current
Assets :
|
||||||||||
Cash
and cash equivalents
|
1,576,035
|
1,576,035
|
-
|
|||||||
Restricted
cash
|
4,053,585
|
4,053,585
|
-
|
|||||||
Accounts
receivable
|
14,489,335
|
14,489,335
|
-
|
|||||||
Notes
receivable
|
-
|
-
|
||||||||
Prepaid
expenses and other receivables
|
2,779,502
|
2,779,502
|
-
|
|||||||
Advance
to related parties
|
-
|
-
|
||||||||
Inventories,
net
|
14,939,809
|
14,939,809
|
-
|
|||||||
Prepaid
lease payments
|
55,443
|
55,443
|
-
|
|||||||
Total
Current Assets
|
37,893,709
|
37,893,709
|
-
|
|||||||
Deferred
tax assets
|
25,929
|
25,929
|
-
|
|||||||
Plant
and equipment, net
|
3,639,172
|
3,639,172
|
-
|
|||||||
Leasehold
land
|
2,716,724
|
2,716,724
|
-
|
|||||||
Intangible
asset
|
962,500
|
962,500
|
-
|
|||||||
TOTAL
ASSETS
|
45,238,034
|
45,238,034
|
-
|
|||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
LIABILITIES
|
||||||||||
Current
Liabilities :
|
||||||||||
Accounts
payable
|
19,241,449
|
19,241,449
|
-
|
|||||||
Other
payables accrued liabilities
|
2,391,144
|
2,391,144
|
-
|
|||||||
Income
tax payable
|
41,927
|
41,927
|
-
|
|||||||
Bank
borrowings
|
15,162,172
|
15,162,172
|
-
|
|||||||
Total
Current Liabilities
|
36,836,692
|
36,836,692
|
-
|
|||||||
TOTAL
LIABILITIES
|
36,836,692
|
36,836,692
|
-
|
|||||||
COMMITMENTS
AND CONTINGENCIES
|
21. |
Restatement
(Continued)
|
2007
|
2007
|
2007
|
||||||||
(As
originally
|
|
(As
restated)
|
|
(Effect
of
|
|
|||||
|
|
Reported)
|
|
|
|
Adjustments)
|
|
|||
|
|
$
|
|
$
|
|
$
|
||||
STOCKHOLDERS’
EQUITY
|
||||||||||
Common
stock
|
||||||||||
Par
value : US$0.0001
|
||||||||||
Authorized:
100,000,000 shares
|
||||||||||
Issued
and outstanding: 14,798,328 shares
|
64,317
|
1,480
|
(62,837
|
)
|
||||||
Additional
paid-in capital
|
(75,229
|
)
|
62,837
|
138,066
|
||||||
Accumulated
other comprehensive income
|
861,811
|
861,811
|
-
|
|||||||
Retained
earnings
|
7,550,443
|
7,475,214
|
75,229
|
|||||||
TOTAL
STOCKHOLDERS’ EQUITY
|
8,401,342
|
8,401,342
|
-
|
|||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
45,238,034
|
45,238,034
|
-
|
21. |
Restatement
(Continued)
|
2006
|
|
2006
|
|
2006
|
|
|||||
|
|
(As
originally
|
|
(As
restated)
|
|
(Effect
of
|
|
|||
|
|
Reported)
|
|
|
|
Adjustments)
|
|
|||
|
|
$
|
|
$
|
|
$
|
||||
ASSETS
|
||||||||||
Current
Assets :
|
||||||||||
Cash
and cash equivalents
|
488,070
|
488,070
|
-
|
|||||||
Restricted
cash
|
1,010,580
|
1,010,580
|
-
|
|||||||
Accounts
receivable
|
8,127,170
|
8,127,170
|
-
|
|||||||
Notes
receivable
|
76,764
|
76,764
|
||||||||
Prepaid
expenses and other receivables
|
2,612,091
|
2,612,091
|
-
|
|||||||
Advance
to related parties
|
634,161
|
634,161
|
||||||||
Inventories,
net
|
15,623,791
|
15,623,791
|
-
|
|||||||
Prepaid
lease payments
|
-
|
-
|
-
|
|||||||
Total
Current Assets
|
28,572,627
|
28,572,627
|
-
|
|||||||
Deferred
tax assets
|
8,443
|
8,443
|
-
|
|||||||
Plant
and equipment, net
|
3,154,660
|
3,154,660
|
-
|
|||||||
Leasehold
land
|
-
|
-
|
-
|
|||||||
Intangible
asset
|
-
|
-
|
-
|
|||||||
TOTAL
ASSETS
|
31,735,730
|
31,735,730
|
-
|
|||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
LIABILITIES
|
||||||||||
Current
Liabilities :
|
||||||||||
Accounts
payable
|
17,327,402
|
17,327,402
|
-
|
|||||||
Other
payables accrued liabilities
|
1,170,275
|
1,170,275
|
-
|
|||||||
Income
tax payable
|
122,710
|
122,710
|
-
|
|||||||
Bank
borrowings
|
5,950,626
|
5,950,626
|
-
|
|||||||
Total
Current Liabilities
|
24,571,013
|
24,571,013
|
-
|
|||||||
TOTAL
LIABILITIES
|
24,571,013
|
24,571,013
|
-
|
21. |
Restatement
(Continued)
|
2006
|
|
2006
|
|
2006
|
|
|||||
|
|
(As
originally
|
|
(As
restated)
|
|
(Effect
of
|
|
|||
|
|
Reported)
|
|
|
|
Adjustments)
|
|
|||
|
|
$
|
|
$
|
|
$
|
||||
STOCKHOLDERS’
EQUITY
|
||||||||||
Common
stock
|
||||||||||
Par
value : US$0.0001
|
||||||||||
Authorized:
100,000,000 shares
|
||||||||||
Issued
and outstanding: 14,798,328 shares
|
64,317
|
1,480
|
(62,837
|
)
|
||||||
Additional
paid-in capital
|
(75,229
|
)
|
62,837
|
138,066
|
||||||
Accumulated
other comprehensive income
|
470,383
|
861,811
|
391,428
|
|||||||
Retained
earnings
|
6,705,246
|
7,475,214
|
769,968
|
|||||||
TOTAL
STOCKHOLDERS’ EQUITY
|
7,164,717
|
8,401,342
|
1,236,625
|
|||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
31,735,730
|
45,238,034
|
13,502,304
|
21. |
Restatement
(continued)
|
2006
|
2006
|
2006
|
||||||||
(As
originally
|
(As
restated)
|
(Effect
of
|
||||||||
reported)
|
Adjustments)
|
|||||||||
$
|
|
$
|
|
$
|
||||||
Cash
flows from operating activities
|
||||||||||
Net
income
|
2,206,757
|
2,131,528
|
(75,229
|
)
|
||||||
Adjustments
to reconcile net income to net cash flows
|
||||||||||
provided
by operating activities :
|
||||||||||
Amortisation
of intangible asset
|
-
|
-
|
-
|
|||||||
Bad
debts written off
|
22,425
|
22,425
|
-
|
|||||||
Depreciation
|
217,266
|
217,266
|
-
|
|||||||
Loss
on disposal of plant and equipment
|
3,986
|
3,986
|
-
|
|||||||
Income
taxes
|
168,754
|
168,754
|
-
|
|||||||
Changes
in operating assets and liabilities :
|
||||||||||
Accounts
receivable
|
(3,698,299
|
)
|
(3,698,299
|
)
|
-
|
|||||
Notes
receivable
|
517,713
|
517,713
|
-
|
|||||||
Prepaid
expenses and other receivables
|
(634,879
|
)
|
(634,879
|
)
|
-
|
|||||
Inventories
|
(4,799,694
|
)
|
(4,799,694
|
)
|
-
|
|||||
Accounts
payable
|
5,111,468
|
5,111,468
|
-
|
|||||||
Other
payables and accrued liabilities
|
(212,197
|
)
|
(212,197
|
)
|
-
|
|||||
Income
tax payable
|
(213,125
|
)
|
(213,125
|
)
|
-
|
|||||
Net
cash flows used in operating activities
|
(1,309,825
|
)
|
(1,385,054
|
)
|
(75,229
|
)
|
||||
Cash
flows from investing activities
|
||||||||||
Acquisition
of plant and equipment
|
(1,257,677
|
)
|
(1,257,677
|
)
|
-
|
|||||
Acquisition
of leasehold land
|
-
|
-
|
-
|
|||||||
Acquisition
of intangible asset
|
-
|
-
|
||||||||
Proceeds
from disposal of plant and equipment
|
5,163
|
5,163
|
||||||||
Cost
of reorganization
|
(75,211
|
)
|
-
|
75,211
|
||||||
Net
cash flows used in investing activities
|
(1,327,725
|
)
|
(1,252,514
|
)
|
75,211
|
|||||
Cash
flows from financing activities
|
||||||||||
Proceeds
from new short-term bank loans
|
498,859
|
498,859
|
-
|
|||||||
Repayment
of short-term bank loans
|
(904,182
|
)
|
(904,182
|
)
|
-
|
|||||
Net
advancement of other bank borrowings
|
4,368,526
|
4,368,526
|
-
|
|||||||
Increase
in restricted cash
|
(611,750
|
)
|
(611,750
|
)
|
-
|
|||||
Advance
to related parties
|
(41,766
|
)
|
(41,766
|
)
|
-
|
|||||
Net
cash flows provided by financing activities
|
3,309,687
|
3,309,687
|
-
|
|||||||
Net
increase in cash and cash equivalents
|
672,137
|
672,119
|
(18
|
)
|
||||||
Effect
of foreign currency translation on cash and cash
equivalents
|
(1,081
|
)
|
(1,063
|
)
|
18
|
|||||
Cash
and cash equivalents - beginning of period
|
467,440
|
467,440
|
-
|
|||||||
Cash
and cash equivalents - end of period
|
1,138,496
|
1,138,496
|
-
|
— |
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.
|
— |
levying
fines;
|
— |
revoking
our
business license, other licenses or
authorities;
|
— |
requiring
that we
restructure our ownership or operations;
and
|
— |
requiring
that we
discontinue any portion or all of 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.
|
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:
April 24, 2008
|
/s/
|
Dang
Yu Pan
|
By:
|
Dang
Yu Pan
|
|
Its:
|
Chairman
of the Board and Chief Executive
Officer
|