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| HPJ > SEC Filings for HPJ > Form 8-K on 5-Nov-2007 | All Recent SEC Filings |
5-Nov-2007
Entry into a Material Definitive Agreement, Completion of Ac
See Item 2.01, below, regarding the discussion of the Subscription Agreement relating to the private placement of 2,836,364 shares of our common stock. The Subscription Agreement is attached hereto as Exhibit 10.1. See Item 2.01, below, regarding the discussion of the Share Exchange Agreement dated October 20, 2007, which is attached hereto as Exhibit 2.1.
OVERVIEW
As used in this report, unless otherwise indicated, the terms "we", "Company" and "Highpower" refer to Hong Kong Highpower Technology, Inc., a Delaware corporation, formerly known as SRKP 11, Inc. ("SRKP 11"), and its wholly-owned subsidiary, Hong Kong Highpower Technology Company Limited., a Hong Kong corporation ("HKHT"), and its wholly-owned subsidiary Shenzhen Highpower Technology Co., Ltd., a company organized under the laws of the People's Republic of China ("Shenzhen Highpower"). "China" or "PRC" refers to the People's Republic of China. "RMB" or "Renminbi" refers to the legal currency of China and "$" or "U.S. Dollars" refers to the legal currency of the United States.
SRKP 11 was incorporated in the State of Delaware on January 3, 2006. SRKP 11 was originally organized as a "blank check" shell company to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation.
On November 2, 2007, SRKP 11 (i) closed a share exchange transaction, described below, pursuant to which SRKP 11 became the 100% parent of HKHT, (ii) assumed the operations of HKHT and its subsidiary, and (iii) changed its name from SRKP 11, Inc. to Hong Kong Highpower Technology, Inc.
Highpower specializes in the development, manufacturing and marketing of Nickel Metal Hydride rechargeable batteries and related products primarily in China. Our batteries are used in a variety of electronic devices, including:
· 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
Our manufacturing and products development facilities are located in the PRC, which enables us to produce cost-effective products and increases our competitiveness in the rechargeable battery market. Most of our products are distributed worldwide to markets in Europe, the United States, China, Hong Kong, Southeast Asia, Taiwan and emerging markets, such as India, Latin America, and Russia.
Shenzhen Highpower and HKHT were founded in founded in 2001 and 2003, respectively. Our corporate offices are located at Building A1, Luoshan Industrial Zone, Shanxia, Pinghu, Longgang, Shenzhen, Guangdong, 518111, China.
PRINCIPAL TERMS OF THE SHARE EXCHANGE
On October 20, 2007, SRKP 11 entered into a share exchange agreement (the "Exchange Agreement") with HKHT and all of the shareholders of HKHT. Pursuant to the Exchange Agreement, SRKP 11 agreed to issue an aggregate of 14,798,328 shares of its common stock in exchange for all of the issued and outstanding securities of HKHT (the "Share Exchange"). The Share Exchange closed on November 2, 2007. . . .
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion relates to a discussion of the financial condition and results of operations of Hong Kong Highpower Technology Co., Ltd.'s (referred to herein as "HKHT"). This management's discussion and analysis of financial condition and results of operations should be read in conjunction with its financial statements and the related notes, and the other financial information included in this information statement.
Forward-Looking Statements
This filing contains forward-looking statements. The words "anticipated," "believe," "expect, "plan," "intend," "seek," "estimate," "project," "could," "may," and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management's current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, general economic and business conditions, changes in foreign, political, social, and economic conditions, regulatory initiatives and compliance with governmental regulations, the ability to achieve further market penetration and additional customers, and various other matters, many of which are beyond our control. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this filing are qualified by these cautionary statements and there can be no assurance of the actual results or developments.
Overview
HKHT was incorporated in Hong Kong in 2003. HKHT operates its business primarily through its wholly-owned subsidiary Shenzhen Highpower Technology Co., Ltd., a company organized under the laws of the PRC. Shenzhen Highpower was founded in 2001.
On October 20, 2007, SRKP 11, Inc., a Delaware corporation ("SRKP 11"), entered into a share exchange agreement (the "Exchange Agreement"), with HKHT and its shareholders, pursuant to which these shareholders would transfer all of the issued and outstanding securities of HKHT to SRKP 11 in exchange for 14,798,328 shares of SRKP 11's common stock. On November 2, 2007, the Share Exchange closed and we became a wholly-owned subsidiary of SRKP 11, which immediately changed its name to "Hong Kong Highpower Technology, Inc." A total of 14,798,328 shares were issued to the former shareholders of HKHT.
. . .
On November 2, 2007, pursuant to the terms of the Exchange Agreement entered into by and between SRKP 11, Inc. ("SRKP 11"), Hong Kong Highpower Technology Co., Ltd. ("HKHT") and the shareholders of HKHT (as described in Item 2.01 above), SRKP 11 issued 14,798,328 shares of common stock to the shareholders of HKHT in exchange for all of the issued and outstanding securities of HKHT. The securities were offered and issued in reliance upon an exemption from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder. The shareholders of HKHT qualified as accredited investors (as defined by Rule 501 under the Securities Act of 1933, as amended).
On November 2, 2007, we conducted an initial closing of a private placement (the "Private Placement"). We received gross proceeds of $3.12 million in a private placement transaction. Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 2,836,364 shares of Common Stock at a price of $1.10 per share. The securities were offered and sold to investors in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder. Each of the persons and/or entities receiving our securities qualified as an accredited investor (as defined by Rule 501 under the Securities Act of 1933, as amended).
THIS CURRENT REPORT IS NOT AN OFFER OF SECURITIES FOR SALE. ANY SECURITIES SOLD IN THE PRIVATE PLACEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION.
SRKP 11 issued 5,400,000 shares of common stock on January 3, 2006 to seven persons for an aggregate cash consideration of $2,000. SRKP 11 sold these shares of common stock under the exemption from registration provided by Section 4(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. Prior to the closing of the Share Exchange and Private Placement, the shareholders of SRKP 11 agreed to the cancellation of an aggregate of 2,556,602 shares held by them such that there were 2,843,398 shares of common stock outstanding immediately prior to the Share Exchange and Private Placement.
POST-SHARE EXCHANGE DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 100,000,000 shares of common stock, $.0001 par value per share, of which 20,478,090 shares are issued and outstanding as of the close of the Share Exchange. Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the stockholders.
Holders of our common stock
(i) have equal ratable rights to dividends from funds legally available therefore, if declared by our Board of Directors;
. . .
On November 2, 2007, Hong Kong Highpower Technology, Inc. (the "Company") dismissed AJ. Robbins, PC ("AJ Robbins") as its independent registered public accounting firm following the change in control of the Company on the closing of the Share Exchange. The Company engaged AJ Robbins to audit its financial statements for the year ended December 31, 2006. The decision to change accountants was approved and ratified by the Company's Board of Directors. The report of AJ Robbins on the financial statements of the Company for the fiscal year ended December 31, 2006 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principle, except for an explanatory paragraph relative to the Company's ability to continue as a going concern. Additionally, during the Company's two most recent fiscal years and any subsequent interim period, there were no disagreements with AJ Robbins on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
While AJ Robbins was engaged by the Company, there were no disagreements with AJ Robbins on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure with respect to the Company, which disagreements if not resolved to the satisfaction of AJ Robbins would have caused it to make reference to the subject matter of the disagreements in connection with its report on the Company's financial statements for the fiscal year ended December 31, 2006.
The Company provided AJ Robbins with a copy of the disclosures to be included in Item 4.01 of this Current Report on Form 8-K and requested that AJ Robbins furnish the Company with a letter addressed to the Commission stating whether or not AJ Robbins agrees with the foregoing statements. A copy of the letter from AJ Robbins to the Commission, dated November 2, 2007, is attached as Exhibit 16.1 to this Current Report on Form 8-K.
The Company engaged Dominic K.F. Chan & Co. as the Company's independent registered public accounting firm as of November 2, 2007. Dominic K.F. Chan & Co. served as HKHT's independent registered certified public accountants for the fiscal year ended December 31, 2007.
OVERVIEW
On October 20, 2007, SRKP 11, Inc. ("SRKP") entered into a share exchange agreement with Hong Kong Highpower Technology Company Limited Inc. ("HKHT") and its sole shareholders holding 100% of the issued and outstanding securities of HKHT. Pursuant to the share exchange agreement (the "Exchange Agreement"), SRKP 11 issued 14,798,328 shares of its common stock to these shareholders in exchange for all of the issued and outstanding securities of HKHT (the "Share Exchange"). The Share Exchange closed on November 2, 2007. Upon the closing of the Share Exchange, SRKP 11 (i) became the 100% parent of HKHT, (ii) assumed the operations of HKHT and its subsidiary and (iii) changed its name from SRKP 11, Inc. to Hong Kong Highpower Technology, Inc.
On November 2, 2007, concurrently with the close of the Share Exchange, we closed a private placement transaction (the "Private Placement"). We received gross proceeds of $3.12 million in the Private Placement. Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 2,836,364 shares of our Common Stock at a price of $1.10 per share.
We agreed to file a registration statement covering the common stock sold in the private placement within 30 days of the closing of the Share Exchange pursuant to the subscription agreement with each investor. Immediately following the closing of the Share Exchange and the Private Placement, the former shareholders of HKHT beneficially owned approximately 72.3% of our issued and outstanding common stock, the pre-existing shareholders of SRKP 11 owned approximately 13.9% and investors in the Private Placement (described below) that closed concurrently with the Share Exchange (assuming full conversion of the shares) owned 13.8%. Prior to the closing of the Share Exchange and Private Placement, the stockholders of SRKP 11 agreed to the cancellation of an aggregate of 2,556,602 shares held by them such that there were 2,843,398 shares of common stock outstanding immediately prior to the Share Exchange and Private Placement. We issued no fractional shares in connection with the Share Exchange.
Pursuant to the terms of the Share Exchange, we agreed to register a total of 2,843,398 shares of common stock held by stockholders of SRKP 11 immediately prior to the Share Exchange. Of these shares, 1,307,963 shares would be covered by the registration statement filed in connection with the Private Placement and 1,535,435 shares will be included in a subsequent registration statement filed by us within 10 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.
The shares of our common stock are not currently listed or quoted for trading on any national securities exchange or national quotation system. We intend to apply for the listing of its common stock on the American Stock Exchange.
The shares of our common stock issued to the shareholders of HKHT in connection . . .
At the consummation of the Share Exchange, SRKP 11's board of directors immediately prior to the Share Exchange, which consisted of Richard A. Rappaport and Anthony C. Pintsopoulos, appointed Dang Yu Pan and Wen Liang Li to the board of directors of our company, with Mr. Pan serving as Chairman. The directors and officers of SRKP 11 prior to the Share Exchange then resigned as officers and directors of our company upon the closing of the Share Exchange. In addition, concurrent with the closing of the Share Exchange, our board appointed George Pan as Chief Executive Officer and Yu Zhi Qiu as Chief Financial Officer.
For complete information regarding our new officers and directors, refer to "Executive Officers, Directors and Key Employees" under Item 5.01, above.
Immediately after the closing of the Share Exchange, SRKP 11 changed its corporate name from "SRKP 11, Inc." to "Hong Kong Highpower Technology, Inc." by the filing of Articles of Merger with the Delaware Secretary of State's Office on November 2, 2007. SRKP 11 effected the name change to better reflect the nature of its new business operations following the Share Exchange. The Articles of Merger are attached hereto as Exhibit 3.3. Holders of stock certificates bearing the name "SRKP 11, Inc." may continue to hold them and will not be required to exchange them for new certificates or take any other action.
Prior to the closing of the Share Exchange, SRKP 11 was a "shell company" as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act. As described in Item 2.01 above, which is incorporated by reference into this Item 5.06, SRKP 11 ceased being a shell company upon completion of the Share Exchange.
(a) Financial Statements of Business Acquired.
We are providing financial and other information for informational purposes only. It does not necessarily represent or indicate what the financial position and results of operations of our company will be now that the Share Exchange is concluded.
FINANCIAL STATEMENTS OF SHENZHEN HIGHPOWER
The financial statements of Hong Kong Highpower Technology Co., Ltd., a Hong Kong corporation, for the years ended December 31, 2006, 2005 and 2004 and the six months ended June 30, 2007 (unaudited) are provided below. You are encouraged to review the financial statements and related notes.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Hong Kong Highpower Technology Company Limited
We have reviewed the accompanying condensed consolidated balance sheet of Hong Kong Highpower Technology Company Limited (the "Company") and its subsidiary (hereinafter collectively referred to as the "Group") as of June 30, 2007, and the related condensed consolidated statements of income and cash flows for the six months ended June 30, 2007 and 2006, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Hong Kong Highpower Technology Company Limited.
A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed financial statements in order for them to be in conformity with generally accepted accounting principles.
/s/ Dominic Chan
Dominic K.F. Chan & Co
Certified Public Accountants
August 23, 2007
HONG KONG HIGHPOWER TECHNOLOGY COMPANY LIMITED
CONDENSED CONSOLIDATED INCOME STATEMENT
(Stated in US Dollars)
Six months ended June 30,
2007 2006
(Unaudited) (Unaudited)
$ $
Net sales 31,322,103 17,639,215
Cost of sales (28,262,830 ) (14,190,284 )
Gross profit 3,059,273 3,448,931
Depreciation - Note 11 (54,044 ) (35,490 )
Selling and distributing costs (948,288 ) (581,660 )
Administrative and other operating expenses (2,002,353 ) (818,947 )
Income from operations 54,588 2,012,834
Other income - Note 4 918,279 30,265
Interest expenses - Note 5 (248,640 ) (91,507 )
Income before taxes 724,227 1,951,592
Income taxes - Note 6 (52,800 ) (136,969 )
Net income 671,427 1,814,623
Earnings per share of common stock
- Basic and dilutive - Note 8 1.34 3.63
Weighted average number of common stock
- Basic and dilutive - Note 8 500,000 500,000
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See notes to condensed consolidated financial statements
HONG KONG HIGHPOWER TECHNOLOGY COMPANY LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET
(Stated in US Dollars)
As of
June 30, December 31,
2007 2006
(Unaudited) (Audited)
$ $
ASSETS
Current Assets :
Cash and cash equivalents 1,244,948 488,070
Restricted cash 1,710,382 1,010,580
Accounts receivable 11,685,478 8,127,170
Notes receivable 67,977 76,764
Prepaid expenses and other receivables - Note 9 2,151,278 2,612,091
Advance to related parties - Note 15 649,127 634,161
Tax prepayment 4,962 -
Inventories, net - Note 10 14,898,965 15,623,791
Prepaid lease payments - Note 12 54,756 -
Total Current Assets 32,467,873 28,572,627
Deferred tax assets - Note 6 22,016 8,443
Plant and equipment, net - Note 11 3,479,510 3,154,660
Leasehold land - Note 12 2,683,032 -
Intangible asset - Note 13 975,000 -
TOTAL ASSETS 39,627,431 31,735,730
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LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Current Liabilities : Accounts payable 19,805,889 17,327,402 Other payables accrued liabilities - Note 14 2,381,088 1,170,275 Income tax payable - 122,710 Bank borrowings - Note 16 9,340,841 5,950,626 Total Current Liabilities 31,527,818 24,571,013 TOTAL LIABILITIES 31,527,818 24,571,013 |
COMMITMENTS AND CONTINGENCIES - Note 19
HONG KONG HIGHPOWER TECHNOLOGY COMPANY LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET (Cont'd)
(Stated in US Dollars)
As of
June 30, December 31,
2007 2006
(Unaudited) (Audited)
$ $
STOCKHOLDERS' EQUITY
Common stock - Note 17
Par value: 2007 - US$0.1286 (2006 - US$0.1286)
Authorized: 2007 - 500,000 shares (2006 - 500,000)
Issued and outstanding: 2007 - 500,000 shares (2006 -
500,000) 64,317 64,317
Additional paid-in capital (75,229 ) (75,229 )
Accumulated other comprehensive income 733,852 470,383
Retained earnings 7,376,673 6,705,246
TOTAL STOCKHOLDERS' EQUITY 8,099,613 7,164,717
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 39,627,431 31,735,730
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See notes to condensed consolidated financial statements
HONG KONG HIGHPOWER TECHNOLOGY COMPANY LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Stated in US Dollars)
Six months ended June 30,
2007 2006
(Unaudited) (Unaudited)
$ $
Cash flows from operating activities
Net income 671,427 1,814,623
Adjustments to reconcile net income to net cash flows
provided by operating activities:
Amortisation of intangible asset 25,000 -
Bad debts written off 21,121 22,406
Depreciation 262,222 135,619
Loss on disposal of plant and equipment 2,340 2,335
Income taxes 52,800 136,969
Changes in operating assets and liabilities :
Accounts receivable (3,335,419 ) (1,172,134 )
Notes receivable 8,395 678,228
Prepaid expenses and other receivables 528,679 26,210
Inventories 1,106,129 (2,670,792 )
Accounts payable 2,017,519 1,337,998
Other payables and accrued liabilities 1,184,369 6,925
Income tax payable (195,487 ) (188,214 )
Net cash flows provided by operating activities 2,349,095 130,173
Cash flows from investing activities
. . .
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