Delaware | 33-0885775 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification number) |
Issuer’s telephone number: (86) 716- 832- 9196 | Issuer’s fax number: (86) 716-832-9298 |
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer (Do not check if a smaller reporting company) | Smaller reporting company x |
Page | |||
Part I — Financial Information | |||
Item 1. Financial Statements | |||
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months and Six Months Ended | |||
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months and Six Months Ended | |||
Condensed Consolidated Balance Sheets at | |||
Consolidated Statements of Stockholders’ Equity for the | |||
Condensed Consolidated Statements of Cash Flows (Unaudited) for the | |||
Notes to Condensed Consolidated Financial Statements (Unaudited) for the Three Months and Six Months Ended | |||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |||
Item 4. Controls and Procedures | |||
Part II — Other Information | |||
Item 1. Legal Proceedings | |||
Item 1A. Risk Factors | |||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||
Item 3. Defaults Upon Senior Securities | |||
Item 4. | |||
Item 5. Other Information | |||
Item 6. Exhibits | |||
Signatures |
Three Months Ended March 31, | Three Months Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net product sales, including $1,660,393 and $559,011 to related parties for the three months ended March 31, 2010 and 2009 | $ | 84,232,689 | $ | 44,697,446 | ||||||||||||
Cost of product sold, including $4,347,288 and $2,126,737 purchased from related parties for the three months ended March 31, 2010 and 2009 | 61,697,672 | 33,794,101 | ||||||||||||||
Net product sales, including $2,941,718 and $1,314,247 to related parties for the three months ended June 30, 2010 and 2009 | $ | 85,081,138 | $ | 62,484,279 | ||||||||||||
Cost of product sold, including $5,248,896 and $2,812,741 purchased from related parties for the three months ended June 30, 2010 and 2009 | 65,270,878 | 46,178,351 | ||||||||||||||
Gross profit | 22,535,017 | 10,903,345 | 19,810,260 | 16,305,928 | ||||||||||||
Add: Gain on other sales | 451,610 | 66,879 | 681,999 | 172,747 | ||||||||||||
Less: Operating expenses- | ||||||||||||||||
Selling expenses | 1,867,803 | 1,064,680 | 2,903,125 | 1,620,497 | ||||||||||||
General and administrative expenses | 3,604,784 | 1,801,702 | 1,846,421 | 2,246,330 | ||||||||||||
R&D expenses | 1,301,758 | 439,922 | 1,741,405 | 444,226 | ||||||||||||
Depreciation and amortization | 321,793 | 571,413 | 288,352 | 507,341 | ||||||||||||
Total Operating expenses | 7,096,138 | 3,877,717 | 6,779,303 | 4,818,394 | ||||||||||||
Income from operations | 15,890,489 | 7,092,507 | 13,712,956 | 11,660,281 | ||||||||||||
Add: Other income, net (note 21) | 15,528 | - | 250,851 | - | ||||||||||||
Financial income (expenses) net (note 22) | (368,011 | ) | (439,480 | ) | (413,349 | ) | (478,228 | ) | ||||||||
Gain (loss) on change in fair value of derivative (note 23) | 149,028 | (1,560,848 | ) | 94,264 | (977,435 | ) | ||||||||||
Income before income taxes | 15,687,034 | 5,092,179 | 13,644,722 | 10,204,618 | ||||||||||||
Less: Income taxes (note 24) | 2,285,522 | 1,449,670 | 2,291,292 | 1,474,618 | ||||||||||||
Net income | $ | 13,401,512 | $ | 3,642,509 | $ | 11,353,430 | $ | 8,730,000 | ||||||||
Net income attributable to noncontrolling interest | 3,066,343 | 1,383,697 | 2,811,362 | 2,653,651 | ||||||||||||
Net income attributable to parent company | $ | 10,335,169 | $ | 2,258,812 | $ | 8,542,068 | $ | 6,076,349 | ||||||||
Net income per common share attributable to parent company– | ||||||||||||||||
Basic (note 25) | $ | 0.38 | $ | 0.08 | $ | 0.32 | $ | 0.23 | ||||||||
Diluted (note 25) | $ | 0.34 | $ | 0.08 | $ | 0.28 | $ | 0.21 | ||||||||
Weighted average number of common shares outstanding – | ||||||||||||||||
Basic | 27,046,244 | 26,983,244 | 27,075,607 | 26,983,244 | ||||||||||||
Diluted | 31,564,462 | 31,947,823 | 31,541,281 | 31,466,402 |
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Net income | $ | 13,401,512 | $ | 3,642,509 | ||||
Other comprehensive income: | ||||||||
Foreign currency translation gain (loss) | 45,340 | (14,579 | ) | |||||
Comprehensive income | $ | 13,446,852 | $ | 3,627,930 | ||||
Comprehensive income attributable to non-controlling interest | 3,073,906 | 1,379,281 | ||||||
Comprehensive income attributable to parent company | $ | 10,372,946 | $ | 2,248,649 |
March 31, 2010 | December 31, 2009 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 51,075,033 | $ | 43,480,176 | ||||
Pledged cash deposits (note 3) | 13,976,353 | 12,742,187 | ||||||
Accounts and notes receivable, net, including $1,526,905 and $1,441,939 from related parties at March 31, 2010 and December 31, 2009 (note 4) | 168,252,346 | 154,863,292 | ||||||
Advance payments and other, including $1,080,591 and $0 to related parties at March 31, 2010 and December 31, 2009 | 7,549,606 | 2,413,556 | ||||||
Inventories (note 6) | 35,383,898 | 27,415,697 | ||||||
Current deferred tax assets (note 9) | 1,555,114 | 1,381,868 | ||||||
Total current assets | $ | 277,792,350 | $ | 242,296,776 | ||||
Long-term Assets: | ||||||||
Property, plant and equipment, net (note 7) | $ | 60,605,816 | $ | 60,489,798 | ||||
Intangible assets, net (note 8) | 516,052 | 561,389 | ||||||
Other receivables, net, including $332,955 and $65, 416 from related parties at March 31, 2010 and December 31, 2009 (note 5) | 1,950,782 | 1,064,224 | ||||||
Advance payments for property, plant and equipment, including $1,962,472 and $2,579,319 to related parties at March 31, 2010 and December 31, 2009 | 8,323,825 | 6,369,043 | ||||||
Long-term investments | 79,106 | 79,084 | ||||||
Non-current deferred tax assets (note 9) | 2,447,578 | 2,172,643 | ||||||
Total assets | $ | 351,715,509 | $ | 313,032,957 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Bank loans (note 10) | $ | 4,394,767 | $ | 5,125,802 | ||||
Accounts and notes payable, including $2,685,916 and $1,537,827 to related parties at March 31, 2010 and December 31, 2009 (note 11) | 124,659,294 | 107,495,833 | ||||||
Convertible notes payable (note 12) | 28,747,192 | 28,640,755 | ||||||
Compound derivative liabilities (note 13) | 730,981 | 880,009 | ||||||
Customer deposits | 6,894,977 | 1,918,835 | ||||||
Accrued payroll and related costs | 3,039,446 | 3,040,705 | ||||||
Accrued expenses and other payables(note 14) | 22,381,164 | 17,708,681 | ||||||
Accrued pension costs (note 15) | 3,859,241 | 3,778,187 | ||||||
Taxes payable (note 16) | 12,899,736 | 11,365,016 | ||||||
Amounts due to shareholders/directors (note 17) | 186,888 | - | ||||||
Total current liabilities | $ | 207,793,686 | $ | 179,953,823 | ||||
Long-term liabilities: | ||||||||
Advances payable (note 18) | 234,007 | 233,941 | ||||||
Total liabilities | $ | 208,027,693 | $ | 180,187,764 | ||||
Significant concentrations (note 26) | ||||||||
Related party transactions (note 27 ) | ||||||||
Commitments and contingencies (note 28 ) | ||||||||
Stockholders' equity: | ||||||||
Preferred stock, $0.0001 par value - Authorized - 20,000,000 shares Issued and outstanding – None | $ | $ | ||||||
Common stock, $0.0001 par value - Authorized - 80,000,000 shares Issued and Outstanding – 27,046,244 shares at March 31, 2010 and December 31, 2009 (note 19) | 2,704 | 2,704 | ||||||
Additional paid-in capital (note 19) | 27,515,064 | 27,515,064 | ||||||
Retained earnings- | ||||||||
Appropriated | 8,324,533 | 8,324,533 | ||||||
Unappropriated | 68,977,192 | 58,642,023 | ||||||
Accumulated other comprehensive income | 11,225,521 | 11,187,744 | ||||||
Total parent company stockholders' equity | 116,045,014 | 105,672,068 | ||||||
Non-controlling interests (note 20) | 27,642,802 | 27,173,125 | ||||||
Total stockholders' equity | $ | 143,687,816 | $ | 132,845,193 | ||||
Total liabilities and stockholders' equity | $ | 351,715,509 | $ | 313,032,957 |
Accumulated | Total parent | |||||||||||||||||||||||||||||||
Additional | Other | company | Total | |||||||||||||||||||||||||||||
Common | Paid-in | Retained Earnings | Comprehensive | stockholders ' | Non-controlling | stockholders' | ||||||||||||||||||||||||||
Stock | Capital | Appropriated | Unappropriated | Income (Loss) | Equity | interests | equity | |||||||||||||||||||||||||
Balance at January 1, 2009 | $ | 2,698 | $ | 26,648,154 | $ | 7,525,777 | $ | 36,026,516 | $ | 11,127,505 | $ | 81,330,650 | $ | 23,222,566 | $ | 104,553,216 | ||||||||||||||||
Foreign currency translation gain | – | – | – | – | 60,239 | 60,239 | 22,365 | 82,604 | ||||||||||||||||||||||||
Exercise of stock options | 6 | 420,234 | – | – | – | 420,240 | – | 420,240 | ||||||||||||||||||||||||
Issuance of stock options to independent directors and management | - | 446,676 | – | – | – | 446,676 | – | 446,676 | ||||||||||||||||||||||||
Appropriation of retained earnings | - | - | 798,756 | (798,756 | ) | – | – | (3,944,619 | ) | (3,944,619 | ) | |||||||||||||||||||||
Net income for the year ended December 31, 2009 | – | – | – | 23,414,263 | – | 23,414,263 | 7,872,813 | 31,287,076 | ||||||||||||||||||||||||
Balance at December 31, 2009 | $ | 2,704 | $ | 27,515,064 | $ | 8,324,533 | $ | 58,642,023 | $ | 11,187,744 | $ | 105,672,068 | $ | 27,173,125 | $ | 132,845,193 | ||||||||||||||||
Foreign currency translation gain | – | – | – | – | 37,777 | 37,777 | 7,563 | 45,340 | ||||||||||||||||||||||||
Appropriation of retained earnings | – | – | – | – | – | – | (2,604,229 | ) | (2,604,229 | ) | ||||||||||||||||||||||
Net income for the period ended March 31, 2010 | – | – | – | 10,335,169 | – | 10,335,169 | 3,066,343 | 13,401,512 | ||||||||||||||||||||||||
Balance at March 31, 2010 | $ | 2,704 | $ | 27,515,064 | $ | 8,324,533 | $ | 68,977,192 | $ | 11,225,521 | $ | 116,045,014 | $ | 27,642,802 | $ | 143,687,816 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Net product sales, including $4,602,111 and $1,873,258 to related parties for the six months ended June 30, 2010 and 2009 | $ | 169,313,827 | $ | 107,181,725 | ||||
Cost of product sold, including $9,596,184 and $4,986,222 purchased from related parties for the six months ended June 30, 2010 and 2009 | 126,968,550 | 79,972,452 | ||||||
Gross profit | 42,345,277 | 27,209,273 | ||||||
Add: Gain on other sales | 1,133,609 | 239,626 | ||||||
Less: Operating expenses- | ||||||||
Selling expenses | 4,770,928 | 2,685,177 | ||||||
General and administrative expenses | 5,451,205 | 4,048,032 | ||||||
R&D expenses | 3,043,163 | 884,148 | ||||||
Depreciation and amortization | 610,145 | 1,078,754 | ||||||
Total Operating expenses | 13,875,441 | 8,696,111 | ||||||
Income from operations | 29,603,445 | 18,752,788 | ||||||
Add: Other income, net (note 21) | 266,379 | - | ||||||
Financial income (expenses) net (note 22) | (781,360 | ) | (917,708 | ) | ||||
Gain (loss) on change in fair value of derivative (note 23) | 243,292 | (2,538,283 | ) | |||||
Income before income taxes | 29,331,756 | 15,296,797 | ||||||
Less: Income taxes (note 24) | 4,576,814 | 2,924,288 | ||||||
Net income | $ | 24,754,942 | $ | 12,372,509 | ||||
Net income attributable to noncontrolling interest | 5,877,705 | 4,037,348 | ||||||
Net income attributable to parent company | $ | 18,877,237 | $ | 8,335,161 | ||||
Net income per common share attributable to parent company– | ||||||||
Basic (note 25) | $ | 0.70 | $ | 0.31 | ||||
Diluted (note 25) | $ | 0.62 | $ | 0.29 | ||||
Weighted average number of common shares outstanding – | ||||||||
Basic | 27,060,925 | 26,983,244 | ||||||
Diluted | 31,527,040 | 31,719,477 |
Three Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Net income | $ | 11,353,430 | $ | 8,730,000 | ||||
Other comprehensive income: | ||||||||
Foreign currency translation gain (loss) | 882,488 | (187,750 | ) | |||||
Comprehensive income | $ | 12,235,918 | $ | 8,542,250 | ||||
Comprehensive income attributable to non-controlling interest | 2,955,460 | 2,667,188 | ||||||
Comprehensive income attributable to parent company | $ | 9,280,458 | $ | 5,875,062 |
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 13,401,512 | $ | 3,642,509 | ||||
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 2,358,266 | 2,026,816 | ||||||
Allowance for doubtful accounts (Recovered) | 218,944 | (650,590 | ) | |||||
Deferred income taxes assets | (447,191 | ) | 112,451 | |||||
Amortization for discount of convertible note payable | 106,437 | 122,347 | ||||||
(Gain) loss on change in fair value of derivative | (149,028 | ) | 1,560,848 | |||||
Other operating adjustments | 99 | (1,234 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Pledged deposits | (1,230,619 | ) | (1,102,026 | ) | ||||
Accounts and notes receivable | (13,455,446 | ) | (6,482,746 | ) | ||||
Advance payments and other | (5,135,625 | ) | (779,329 | ) | ||||
Inventories | (7,960,570 | ) | (1,379,040 | ) | ||||
Accounts and notes payable | 17,133,541 | 7,069,389 | ||||||
Customer deposits | 4,976,051 | 280,763 | ||||||
Accrued payroll and related costs | (2,105 | ) | 90,811 | |||||
Accrued expenses and other payables | 2,063,614 | 690,931 | ||||||
Accrued pension costs | 80,002 | (91,254 | ) | |||||
Taxes payable | 1,531,557 | 3,779,564 | ||||||
Net cash provided by operating activities | $ | 13,489,439 | $ | 8,890,210 | ||||
Cash flows from investing activities: | ||||||||
(Increase) decrease in other receivables | (979,428 | ) | (111,395 | ) | ||||
Cash received from equipment sales | 237,457 | 34,020 | ||||||
Cash paid to acquire property, plant and equipment | (4,616,312 | ) | (4,296,391 | ) | ||||
Cash paid to acquire intangible assets | (2,504 | ) | (292,573 | ) | ||||
Net cash (used in) investing activities | $ | (5,360,787 | ) | $ | (4,666,339 | ) | ||
Cash flows from financing activities: | ||||||||
Proceeds from (repayment of) bank loans | (732,462 | ) | (2,194,298 | ) | ||||
Dividends paid to the non-controlling interest holders of Joint-venture companies | - | (1,550,637 | ) | |||||
Increase in amounts due to shareholders/directors | 186,845 | - | ||||||
Net cash provided by (used in) financing activities | $ | (545,617 | ) | $ | (3,744,935 | ) | ||
Cash and cash equivalents affected by foreign currency | $ | 11,822 | $ | (7,020 | ) | |||
Net increase in cash and cash equivalents | 7,594,857 | 471,916 | ||||||
Cash and cash equivalents at beginning of period | 43,480,176 | 37,113,375 | ||||||
Cash and cash equivalents at end of period | $ | 51,075,033 | $ | 37,585,291 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Net income | $ | 24,754,942 | $ | 12,372,509 | ||||
Other comprehensive income: | ||||||||
Foreign currency translation gain (loss) | 927,828 | (202,329 | ) | |||||
Comprehensive income | $ | 25,682,770 | $ | 12,170,180 | ||||
Comprehensive income attributable to non-controlling interest | 6,029,366 | 4,046,468 | ||||||
Comprehensive income attributable to parent company | $ | 19,653,404 | $ | 8,123,712 |
June 30, 2010 | December 31, 2009 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 45,246,219 | $ | 43,480,176 | ||||
Pledged cash deposits (note 3) | 19,340,337 | 12,742,187 | ||||||
Accounts and notes receivable, net, including $3,386,976 and $1,441,939 from related parties at June 30, 2010 and December 31, 2009 (note 4) | 180,688,519 | 154,863,292 | ||||||
Advance payments and other, including $930,007 and $0 to related parties at June 30, 2010 and December 31, 2009 | 3,246,037 | 2,413,556 | ||||||
Inventories (note 6) | 39,595,346 | 27,415,697 | ||||||
Current deferred tax assets (note 9) | 2,617,570 | 1,381,868 | ||||||
Total current assets | $ | 290,734,028 | $ | 242,296,776 | ||||
Long-term Assets: | ||||||||
Property, plant and equipment, net (note 7) | $ | 62,645,020 | $ | 60,489,798 | ||||
Intangible assets, net (note 8) | 506,158 | 561,389 | ||||||
Other receivables, net, including $218,699 and $65,416 from related parties at June 30, 2010 and December 31, 2009 (note 5) | 1,644,413 | 1,064,224 | ||||||
Advance payments for property, plant and equipment, including $5,676,085 and $2,579,319 to related parties at June 30, 2010 and December 31, 2009 | 13,508,244 | 6,369,043 | ||||||
Long-term investments | 79,518 | 79,084 | ||||||
Non-current deferred tax assets (note 9) | 1,351,409 | 2,172,643 | ||||||
Total assets | $ | 370,468,790 | $ | 313,032,957 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Bank loans (note 10) | $ | 8,835,353 | $ | 5,125,802 | ||||
Accounts and notes payable, including $2,570,035 and $1,537,827 to related parties at June 30, 2010 and December 31, 2009 (note 11) | 136,129,101 | 107,495,833 | ||||||
Convertible notes payable (note 12) | 28,854,024 | 28,640,755 | ||||||
Compound derivative liabilities (note 13) | 636,717 | 880,009 | ||||||
Customer deposits | 2,370,888 | 1,918,835 | ||||||
Accrued payroll and related costs | 3,022,380 | 3,040,705 | ||||||
Accrued expenses and other payables(note 14) | 15,375,965 | 17,708,681 | ||||||
Accrued pension costs (note 15) | 3,814,440 | 3,778,187 | ||||||
Taxes payable (note 16) | 10,582,698 | 11,365,016 | ||||||
Amounts due to shareholders/directors (note 17) | 112,209 | - | ||||||
Total current liabilities | $ | 209,733,775 | $ | 179,953,823 | ||||
Long-term liabilities: | ||||||||
Other long-term liabilities (note 18) | 4,986,459 | 233,941 | ||||||
Total liabilities | $ | 214,720,234 | $ | 180,187,764 | ||||
Significant concentrations (note 26) | ||||||||
Related party transactions (note 27 ) | ||||||||
Commitments and contingencies (note 28 ) | ||||||||
Stockholders' equity: | ||||||||
Preferred stock, $0.0001 par value - Authorized - 20,000,000 shares Issued and outstanding – None | $ | – | $ | – | ||||
Common stock, $0.0001 par value - Authorized - 80,000,000 shares Issued and Outstanding – 27,110,693 and 27,046,244 shares at June 30, 2010 and December 31, 2009 (note 19) | 2,711 | 2,704 | ||||||
Additional paid-in capital (note 19) | 28,024,559 | 27,515,064 | ||||||
Retained earnings- | ||||||||
Appropriated | 8,767,797 | 8,324,533 | ||||||
Unappropriated | 77,075,996 | 58,642,023 | ||||||
Accumulated other comprehensive income | 11,963,911 | 11,187,744 | ||||||
Total parent company stockholders' equity | 125,834,974 | 105,672,068 | ||||||
Non-controlling interests (note 20) | 29,913,582 | 27,173,125 | ||||||
Total stockholders' equity | $ | 155,748,556 | $ | 132,845,193 | ||||
Total liabilities and stockholders' equity | $ | 370,468,790 | $ | 313,032,957 |
Accumulated | Total parent | |||||||||||||||||||||||||||||||
Additional | Other | company | Total | |||||||||||||||||||||||||||||
Common | Paid-in | Retained Earnings | Comprehensive | stockholders ' | Non-controlling | stockholders' | ||||||||||||||||||||||||||
Stock | Capital | Appropriated | Unappropriated | Income (Loss) | Equity | interests | equity | |||||||||||||||||||||||||
Balance at January 1, 2009 | $ | 2,698 | $ | 26,648,154 | $ | 7,525,777 | $ | 36,026,516 | $ | 11,127,505 | $ | 81,330,650 | $ | 23,222,566 | $ | 104,553,216 | ||||||||||||||||
Foreign currency translation gain | – | – | – | – | 60,239 | 60,239 | 22,365 | 82,604 | ||||||||||||||||||||||||
Shares issued for stock options exercised | 6 | 420,234 | – | – | – | 420,240 | – | 420,240 | ||||||||||||||||||||||||
Share-based compensation | - | 446,676 | – | – | – | 446,676 | – | 446,676 | ||||||||||||||||||||||||
Appropriation of retained earnings | - | - | 798,756 | (798,756 | ) | – | – | (3,944,619 | ) | (3,944,619 | ) | |||||||||||||||||||||
Net income for the year ended December 31, 2009 | – | – | – | 23,414,263 | – | 23,414,263 | 7,872,813 | 31,287,076 | ||||||||||||||||||||||||
Balance at December 31, 2009 | $ | 2,704 | $ | 27,515,064 | $ | 8,324,533 | $ | 58,642,023 | $ | 11,187,744 | $ | 105,672,068 | $ | 27,173,125 | $ | 132,845,193 | ||||||||||||||||
Foreign currency translation gain | – | – | – | – | 776,167 | 776,167 | 151,661 | 927,828 | ||||||||||||||||||||||||
Shares issued for stock options exercised | 7 | 259,469 | – | – | – | 259,476 | – | 259,476 | ||||||||||||||||||||||||
Share-based compensation | – | 250,026 | – | – | – | 250,026 | – | 250,026 | ||||||||||||||||||||||||
Appropriation of retained earnings | – | – | 443,264 | (443,264 | ) | – | – | (3,288,909 | ) | (3,288,909 | ) | |||||||||||||||||||||
Net income for the period ended June 30, 2010 | – | – | – | 18,877,237 | – | 18,877,237 | 5,877,705 | 24,754,942 | ||||||||||||||||||||||||
Balance at June 30, 2010 | $ | 2,711 | 28,024,559 | 8,767,797 | 77,075,996 | 11,963,911 | 125,834,974 | 29,913,582 | 155,748,556 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 24,754,942 | $ | 12,372,509 | ||||
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: | ||||||||
Stock-based compensation | 250,026 | 125,013 | ||||||
Depreciation and amortization | 4,909,679 | 3,886,332 | ||||||
Allowance for doubtful accounts (Recovered) | (599,863 | ) | (1,117,881 | ) | ||||
Deferred income taxes assets | (392,613 | ) | (253,521 | ) | ||||
Amortization for discount of convertible note payable | 213,269 | 506,985 | ||||||
(Gain) loss on change in fair value of derivative | (243,292 | ) | 2,538,283 | |||||
Other operating adjustments | 14,275 | (227,474 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Pledged deposits | (6,521,746 | ) | (1,537,010 | ) | ||||
Accounts and notes receivable | (24,024,295 | ) | (23,776,920 | ) | ||||
Advance payments and other | (814,827 | ) | (813,196 | ) | ||||
Inventories | (11,987,567 | ) | (171,352 | ) | ||||
Accounts and notes payable | 27,953,517 | 19,639,466 | ||||||
Customer deposits | 448,291 | 21,744 | ||||||
Accrued payroll and related costs | (35,015 | ) | 170,135 | |||||
Accrued expenses and other payables | 737,146 | 1,512,206 | ||||||
Accrued pension costs | 15,083 | (13,754 | ) | |||||
Taxes payable | (852,725 | ) | 2,901,849 | |||||
Net cash provided by operating activities | $ | 13,824,285 | $ | 15,763,414 | ||||
Cash flows from investing activities: | ||||||||
(Increase) decrease in other receivables | (830,493 | ) | (55,386 | ) | ||||
Cash received from equipment sales | 374,399 | 458,950 | ||||||
Cash paid to acquire property, plant and equipment | (14,134,717 | ) | (6,341,035 | ) | ||||
Cash paid to acquire intangible assets | (38,498 | ) | (321,671 | ) | ||||
Net cash (used in) investing activities | $ | (14,629,309 | ) | $ | (6,259,142 | ) | ||
Cash flows from financing activities: | ||||||||
Proceeds from bank loans | 3,685,215 | 1,465,006 | ||||||
Dividends paid to the non-controlling interest holders of Joint-venture companies | (1,744,982 | ) | (3,768,668 | ) | ||||
Repayment of convertible note payable | - | (5,000,000 | ) | |||||
Shares issued for stock options exercised | 259,476 | |||||||
Increase in amounts due to shareholders/directors | 110,271 | 226,717 | ||||||
Net cash provided by (used in) financing activities | $ | 2,309,980 | $ | (7,076,945 | ) | |||
Cash and cash equivalents affected by foreign currency | $ | 261,087 | $ | 14,607 | ||||
Net increase in cash and cash equivalents | 1,766,043 | 2,441,934 | ||||||
Cash and cash equivalents at beginning of period | 43,480,176 | 37,113,375 | ||||||
Cash and cash equivalents at end of period | $ | 45,246,219 | $ | 39,555,309 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Cash paid for interest | $ | 407,296 | $ | 989,247 | ||||
Cash paid for income taxes | $ | 3,972,306 | $ | 1,403,715 |
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Cash paid for interest | $ | 174,783 | $ | 702,501 | ||||
Cash paid for income taxes | $ | 1,559,519 | $ | 294,494 |
1. | Organization and Business |
Percentage Interest | Percentage Interest | |||||||||||||||
Name of Entity | March 31, 2010 | March 31, 2009 | June 30, 2010 | June 30, 2009 | ||||||||||||
Shashi Jiulong Power Steering Gears Co., Ltd., “Jiulong” | 81.00 | % | 81.00 | % | 81.00 | % | 81.00 | % | ||||||||
Jingzhou Henglong Automotive Parts Co., Ltd., “Henglong” | 80.00 | % | 80.00 | % | 80.00 | % | 80.00 | % | ||||||||
Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., “Shenyang” | 70.00 | % | 70.00 | % | 70.00 | % | 70.00 | % | ||||||||
Zhejiang Henglong & Vie Pump-Manu Co., Ltd., “Zhejiang” | 51.00 | % | 51.00 | % | 51.00 | % | 51.00 | % | ||||||||
Universal Sensor Application Inc., “USAI” | 83.34 | % | 83.34 | % | 83.34 | % | 83.34 | % | ||||||||
Wuhan Jielong Electric Power Steering Co., Ltd., “Jielong” | 85.00 | % | 85.00 | % | 85.00 | % | 85.00 | % | ||||||||
Wuhu HengLong Automotive Steering System Co., Ltd., “Wuhu” | 77.33 | % | 77.33 | % | 77.33 | % | 77.33 | % | ||||||||
Jingzhou Hengsheng Automotive System Co., Ltd, “Hengsheng” | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Jingzhou Henglong Automotive Technology (Testing) Center, “Testing Center” | 80.00 | % | - | % | 80.00 | % | - | % |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Accounts receivable | $ | 122,018,900 | $ | 104,120,926 | $ | 109,097,616 | $ | 104,120,926 | ||||||||
Notes receivable | 51,664,801 | 56,062,744 | 75,954,136 | 56,062,744 | ||||||||||||
173,683,701 | 160,183,670 | 185,051,752 | 160,183,670 | |||||||||||||
Less: allowance for doubtful accounts | (5,431,355 | ) | (5,320,378 | ) | (4,363,233 | ) | (5,320,378 | ) | ||||||||
Balance at the end of the period | $ | 168,252,346 | $ | 154,863,292 | $ | 180,688,519 | $ | 154,863,292 |
June 30, 2010 | December 31, 2009 | |||||||
Balance at beginning of period | $ | 5,320,378 | $ | 4,910,478 | ||||
Amounts provided (recovered) during the period | (876,872 | ) | 406,228 | |||||
Foreign currency translation gain (loss) | (80,273 | ) | 3,672 | |||||
Balance at the end of the period | $ | 4,363,233 | $ | 5,320,378 |
March 31, 2010 | December 31, 2009 | |||||||
Balance at beginning of period | $ | 5,320,378 | $ | 4,910,478 | ||||
Amounts provided during the period | 109,496 | 406,228 | ||||||
Foreign currency translation gain | 1,481 | 3,672 | ||||||
Balance at the end of the period | $ | 5,431,355 | $ | 5,320,378 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Other receivables | $ | 2,784,256 | $ | 1,804,334 | $ | 2,556,150 | $ | 1,804,334 | ||||||||
Less: allowance for doubtful accounts | (833,474 | ) | (740,110 | ) | (911,737 | ) | (740,110 | ) | ||||||||
Balance at the end of the period | $ | 1,950,782 | $ | 1,064,224 | $ | 1,644,413 | $ | 1,064,224 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Balance at beginning of the period | $ | 740,110 | $ | 659,837 | $ | 740,110 | $ | 659,837 | ||||||||
Amounts provided during the period | 93,158 | 79,618 | 260,720 | 79,618 | ||||||||||||
Foreign currency translation gain | 206 | 655 | ||||||||||||||
Foreign currency translation gain (loss) | (89,093 | ) | 655 | |||||||||||||
Balance at the end of the period | $ | 833,474 | $ | 740,110 | $ | 911,737 | $ | 740,110 |
March 31, 2010 | December 31, 2009 | |||||||
Raw materials | $ | 13,387,709 | $ | 10,683,448 | ||||
Work in process | 8,339,074 | 6,824,137 | ||||||
Finished goods | 15,742,057 | 12,017,195 | ||||||
37,468,840 | 29,524,780 | |||||||
Less: provision for loss | (2,084,942 | ) | (2,109,083 | ) | ||||
Balance at the end of the period | $ | 35,383,898 | $ | 27,415,697 |
June 30, 2010 | December 31, 2009 | |||||||
Raw materials | $ | 15,154,343 | $ | 10,683,448 | ||||
Work in process | 8,231,247 | 6,824,137 | ||||||
Finished goods | 18,356,069 | 12,017,195 | ||||||
41,741,659 | 29,524,780 | |||||||
Less: provision for loss | (2,146,313 | ) | (2,109,083 | ) | ||||
Balance at the end of the period | $ | 39,595,346 | $ | 27,415,697 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Land use rights and buildings | $ | 33,485,052 | $ | 33,100,702 | $ | 33,659,604 | $ | 33,100,702 | ||||||||
Machinery and equipment | 64,626,551 | 62,982,885 | 68,538,569 | 62,982,885 | ||||||||||||
Electronic equipment | 5,192,997 | 5,054,502 | 5,299,803 | 5,054,502 | ||||||||||||
Motor vehicles | 2,655,218 | 2,634,696 | 2,773,265 | 2,634,696 | ||||||||||||
Construction in progress | 2,175,749 | 1,939,256 | 2,564,378 | 1,939,256 | ||||||||||||
108,135,567 | 105,712,041 | 112,835,619 | 105,712,041 | |||||||||||||
Less: Accumulated depreciation | (47,529,751 | ) | (45,222,243 | ) | (50,190,599 | ) | (45,222,243 | ) | ||||||||
Balance at the end of the period | $ | 60,605,816 | $ | 60,489,798 | $ | 62,645,020 | $ | 60,489,798 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Costs: | ||||||||||||||||
Patent technology | $ | 1,384,422 | $ | 1,384,037 | $ | 1,391,639 | $ | 1,384,037 | ||||||||
Management software license | 440,985 | 438,359 | 476,134 | 438,359 | ||||||||||||
1,825,407 | 1,822,396 | 1,867,773 | 1,822,396 | |||||||||||||
Less: Amortization | (1,309,355 | ) | (1,261,007 | ) | (1,361,615 | ) | (1,261,007 | ) | ||||||||
Balance at the end of the period | $ | 516,052 | $ | 561,389 | $ | 506,158 | $ | 561,389 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Losses carryforward (U.S.) | $ | 4,097,046 | $ | 3,855,426 | $ | 4,298,005 | $ | 3,855,426 | ||||||||
Losses carryforward (PRC) | 480,084 | 421,629 | 485,924 | 421,629 | ||||||||||||
Product warranties and other reserves | 2,595,000 | 2,313,728 | 2,757,268 | 2,313,728 | ||||||||||||
Property, plant and equipment | 2,898,292 | 2,818,497 | 2,930,637 | 2,818,497 | ||||||||||||
Bonus accrual | 345,329 | 306,030 | 190,687 | 306,030 | ||||||||||||
Other | 444,098 | 395,649 | 382,300 | 395,649 | ||||||||||||
10,859,849 | 10,110,959 | 11,044,821 | 10,110,959 | |||||||||||||
Valuation allowance * | (6,857,157 | ) | (6,556,448 | ) | (7,075,842 | ) | (6,556,448 | ) | ||||||||
Total deferred tax assets** | $ | 4,002,692 | $ | 3,554,511 | $ | 3,968,979 | $ | 3,554,511 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Accounts payable | $ | 84,639,902 | $ | 69,454,231 | $ | 91,399,792 | $ | 69,454,231 | ||||||||
Notes payable | 40,019,392 | 38,041,602 | 44,729,309 | 38,041,602 | ||||||||||||
Balance at the end of the period | $ | 124,659,294 | $ | 107,495,833 | $ | 136,129,101 | $ | 107,495,833 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Convertible notes payable, face value | $ | 30,000,000 | $ | 30,000,000 | $ | 30,000,000 | $ | 30,000,000 | ||||||||
Less: discount of Convertible notes payable | (1,252,808 | ) | (1,359,245 | ) | (1,145,976 | ) | (1,359,245 | ) | ||||||||
Balance at the end of the period | $ | 28,747,192 | $ | 28,640,755 | $ | 28,854,024 | $ | 28,640,755 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Balance at beginning of year | $ | 1,359,245 | $ | 2,077,923 | $ | 1,359,245 | $ | 2,077,923 | ||||||||
Less: amortization | (106,437 | ) | (718,678 | ) | ||||||||||||
Less: amortization during the period | (213,269 | ) | (718,678 | ) | ||||||||||||
Balance at the end of the period | $ | 1,252,808 | $ | 1,359,245 | $ | 1,145,976 | $ | 1,359,245 |
0-6 months: | 125 | % | ||
6-12 months: | 125 | % | ||
12-18 months: | 135 | % | ||
18-24 months: | 135 | % | ||
24-30 months: | 145 | % | ||
30-36 months: | 145 | % | ||
36-42 months: | 155 | % | ||
42-48 months: | 155 | % |
December 31, 2008 | March 31, 2009 | Comments | ||||
Default put : | 0.00% | 0.00% | ||||
Service default | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Bankruptcy/liquidation | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Material judgments | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Suspension of listing* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Non-registration events: | 0.50% | 0.50% | ||||
Filing* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Effectiveness* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Continuous Effectiveness* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Share non-delivery | 0.50% | 0.50% | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Mandatory redemption put: | 15.0% | 100.00% | ||||
Maintenance of share price at a certain level** | 15.0% | 100.00% | This is not within the Company’s control. This put is only available subsequent to February 15, 2009 and only if the stock price is <45% of the conversion price for 20 trading days. On December 31, 2008, the stock price has maintained a value barely above 45% of the adjusted conversion price, so the risk of mandatory redemption was high. On March 31, 2009, the Company has a “WAP default”, and then received a mandatory redemption notice form the Convertible Note holder. Thus, the possibility of mandatory redemption was 100%. | |||
Suspension of listing and non-registration events* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Annual Redemption Rights: | 30.0% | 0.00% | ||||
Allows for redemption rights on specific dates** | 30.0% | 0.00% | This is not within the Company’s control. On December 31, 2008, the stock prices were below the adjusted conversion price, so the risk of annual redemption was high. On March 31, 2009, the Company has a “WAP default”, and then received a mandatory redemption notice form the Convertible Note holder. Thus, the possibility of annual redemption was zero. | |||
Allows for redemption if < 10% of note is outstanding | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Henglong Make Whole Amount and Redemption Right | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Change in Control Put: | 0.50% | 0.50% | ||||
Change in control** | 0.50% | 0.50% | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. |
December 31, 2008 | June 30, 2009 | Comments | ||||
Default put : | 0.00% | 0.00% | ||||
Service default | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Bankruptcy/liquidation | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Material judgments | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Suspension of listing* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Non-registration events: | 0.50% | 0.50% | ||||
Filing* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Effectiveness* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Continuous Effectiveness* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Share non-delivery | 0.50% | 0.50% | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Mandatory redemption put: | 15.0% | 100.00% | ||||
Maintenance of share price at a certain level** | 15.0% | 100.00% | This is not within the Company’s control. This put is only available subsequent to February 15, 2009 and only if the stock price is <45% of the conversion price for 20 trading days. On December 31, 2008, the stock price has maintained a value barely above 45% of the adjusted conversion price, so the risk of mandatory redemption was high. On March 16, 2009, the Company has a “WAP default”, and then received a mandatory redemption notice form the Convertible Note holder. Thus, the possibility of mandatory redemption was 100%. | |||
Suspension of listing and non-registration events* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Annual Redemption Rights: | 30.0% | 0.00% | ||||
Allows for redemption rights on specific dates** | 30.0% | 0.00% | This is not within the Company’s control. On December 31, 2008, the stock prices were below the adjusted conversion price, so the risk of annual redemption was high. On June 30, 2009, the Company had a “WAP default”, and then received a mandatory redemption notice form the Convertible Note holder. Thus, the possibility of annual redemption was zero. | |||
Allows for redemption if < 10% of note is outstanding | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Henglong Make Whole Amount and Redemption Right | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | |||
Change in Control Put: | 0.50% | 0.50% | ||||
Change in control** | 0.50% | 0.50% | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. |
December 31, 2009 | March 31, 2010 | Comments | December 31, 2009 | June 30, 2010 | Comments | |||||||
Default put: | 0.00% | 0.00% | 0.00% | 0.00% | ||||||||
Service default | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Bankruptcy/liquidation | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Material judgments | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Suspension of listing* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Non-registration events: | 0.50% | 0.50% | 0.50% | 0.50% | ||||||||
Filing* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Effectiveness* | Low | Low | Please see Financial Statements Notes 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Notes 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Continuous Effectiveness* | Low | Low | Please see Financial Statements Notes 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Notes 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Share non-delivery | 0.50% | 0.50% | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | 0.50% | 0.50% | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Mandatory redemption put: | 1.50% | 1.50% | 1.50% | 1.50% | ||||||||
Maintenance of share price at a certain level** | 1.50% | 1.50% | This is not within the Company’s control. This put is only available subsequent to February 15, 2009 and only if the stock price is <45% of the conversion price for 20 trading days. On December 31, 2009 and March 31, 2010, the stock price was 164% and 226% above the adjusted conversion price. Moreover the Company received an revocation of such mandatory redemption notice, so the risk of mandatory redemption was low. | 1.50% | 1.50% | This is not within the Company’s control. This put is only available subsequent to February 15, 2009 and only if the stock price is <45% of the conversion price for 20 trading days. On December 31, 2009 and June 30, 2010, the stock price was 164% and 149% above the adjusted conversion price ($7.0822). Moreover the Company received a revocation of such mandatory redemption notice, so the risk of mandatory redemption was low. | ||||||
Suspension of listing and non-registration events* | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Annual Redemption Rights: | 11.7% | 9.28% | 11.7% | 7.84% | ||||||||
Allows for redemption rights on specific dates** | 11.7% | 9.28% | This is not within the Company’s control. On December 31, 2009 and March 31, 2010, the stock price was 164% and 226% above the adjusted conversion price, so the risk of annual redemption was low. | 11.7% | 7.84% | This is not within the Company’s control. On December 31, 2009 and June 30, 2010, the stock price was 164% and 149% above the adjusted conversion price, so the risk of annual redemption was low. | ||||||
Allows for redemption if < 10% of note is outstanding | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | Low | Low | Please see Financial Statements Note 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | ||||||
Henglong Make Whole Amount and Redemption Right | Low | Low | Please see the Financial Statements Notes 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with SEC. | Low | Low | Please see the Financial Statements Notes 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with SEC. | ||||||
Change in Control Put: | 0.50% | 0.50% | 0.50% | 0.50% | ||||||||
Change in control** | 0.50% | 0.50% | Please see Financial Statements Notes 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. | 0.50% | 0.50% | Please see Financial Statements Notes 14 incorporated in the Company’s Form 10-K for the year ended December 31, 2009 filed with the SEC. |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Accrued expenses | $ | 4,531,182 | $ | 4,160,433 | $ | 2,747,434 | $ | 4,160,433 | ||||||||
Other payables | 3,086,801 | 2,694,447 | 2,458,415 | 2,694,447 | ||||||||||||
Warranty reserves* | 10,397,124 | 9,092,462 | 6,841,601 | 9,092,462 | ||||||||||||
Dividend payable to non-controlling interest shareholders of Joint-ventures | 4,366,057 | 1,761,339 | 3,328,515 | 1,761,339 | ||||||||||||
Balance at the end of the period | $ | 22,381,164 | $ | 17,708,681 | $ | 15,375,965 | $ | 17,708,681 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Balance at the beginning of period | $ | 9,092,462 | $ | 6,335,613 | $ | 9,092,462 | $ | 6,335,613 | ||||||||
Additions during the period- | 2,919,304 | 10,192,749 | 5,765,935 | 10,192,749 | ||||||||||||
Settlement within period, by cash or actual material | (1,617,173 | ) | (7,442,984 | ) | (3,322,294 | ) | (7,442,984 | ) | ||||||||
Foreign currency translation gain | 2,531 | 7,084 | ||||||||||||||
Foreign currency translation gain (loss) | 56,730 | 7,084 | ||||||||||||||
Balance at end of period | $ | 10,397,124 | $ | 9,092,462 | $ | 11,592,833 | $ | 9,092,462 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Balance at beginning of the period | $ | 3,778,187 | $ | 3,806,519 | $ | 3,778,187 | $ | 3,806,519 | ||||||||
Amounts provided during the period | 1,182,448 | 3,738,373 | 2,391,155 | 3,738,373 | ||||||||||||
Settlement during the period | (1,102,446 | ) | (3,770,220 | ) | (2,376,072 | ) | (3,770,220 | ) | ||||||||
Foreign currency translation gain | 1,052 | 3,515 | ||||||||||||||
Foreign currency translation gain (loss) | 21,170 | 3,515 | ||||||||||||||
Balance at end of period | $ | 3,859,241 | $ | 3,778,187 | $ | 3,814,440 | $ | 3,778,187 |
June 30, 2010 | December 31, 2009 | |||||||
Value-added tax payable | $ | 2,702,079 | $ | 9,290,149 | ||||
Income tax payable | 7,711,055 | 1,733,942 | ||||||
Other tax payable | 169,564 | 340,925 | ||||||
Balance at end of the period | $ | 10,582,698 | $ | 11,365,016 |
March 31, 2010 | December 31, 2009 | |||||||
Value-added tax payable | $ | 9,830,999 | $ | 9,290,149 | ||||
Income tax payable | 2,907,617 | 1,733,942 | ||||||
Other tax payable | 161,120 | 340,925 | ||||||
Balance at end of the period | $ | 12,899,736 | $ | 11,365,016 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Balance at the beginning of period | $ | - | $ | 337,370 | $ | - | $ | 337,370 | ||||||||
Increase (decrease) during the period | 186,845 | (337,915 | ) | 110,271 | (337,915 | ) | ||||||||||
Foreign currency translation gain | 43 | 545 | ||||||||||||||
Foreign currency translation gain (loss) | 1,938 | 545 | ||||||||||||||
Balance at end of period | $ | 186,888 | $ | - | $ | 112,209 | $ | - |
June 30, 2010 | December 31, 2009 | |||||||
Advances payable* | $ | 235,227 | $ | 233,941 | ||||
Warranty reserves | 4,751,232 | - | ||||||
Balance at end of the period | $ | 4,986,459 | $ | 233,941 |
Share Capital | ||||||||||||
Shares | Par Value | Additional paid-in capital | ||||||||||
Balance at January 1, 2009 | 26,983,244 | $ | 2,698 | $ | 26,648,154 | |||||||
Shares issued for stock options exercised | 63,000 | 6 | 420,234 | |||||||||
Share-based compensation* | - | - | 446,676 | |||||||||
Balance at December 31, 2009 | 27,046,244 | $ | 2,704 | $ | 27,515,064 | |||||||
Shares issued for stock options exercised | 64,449 | 7 | 259,469 | |||||||||
Share-based compensation* | - | - | 250,026 | |||||||||
Balance at June 30, 2010 (unaudited) | 27,110,693 | $ | 2,711 | $ | 28,024,559 |
Share Capital | ||||||||||||
Shares | Par Value | Additional paid-in capital | ||||||||||
Balance at January 1, 2009 | 26,983,244 | $ | 2,698 | $ | 26,648,154 | |||||||
Exercise of stock option by independent directors and management | 63,000 | 6 | 420,234 | |||||||||
Issuance of stock options to independent directors and management* | - | - | 446,676 | |||||||||
Balance at December 31, 2009 | 27,046,244 | $ | 2,704 | $ | 27,515,064 | |||||||
Balance at March 31, 2010 | 27,046,244 | $ | 2,704 | $ | 27,515,064 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Balance at beginning of the period | $ | 27,173,125 | $ | 23,222,566 | $ | 27,173,125 | $ | 23,222,566 | ||||||||
Add: Additions during the period – | ||||||||||||||||
Income attributable to non-controlling interests | 3,066,343 | 7,872,813 | 5,877,705 | 7,872,813 | ||||||||||||
Less: Decreases during the period | ||||||||||||||||
Dividends declared to the non-controlling interest holders of Joint-venture companies | (2,604,229 | ) | (3,944,619 | ) | (3,288,909 | ) | (3,944,619 | ) | ||||||||
Foreign currency translation gain | 7,563 | 22,365 | 151,661 | 22,365 | ||||||||||||
Balance at end of period | $ | 27,642,802 | $ | 27,173,125 | $ | 29,913,582 | $ | 27,173,125 |
Three Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Interest expenses, net | $ | 241,193 | $ | 229,137 | ||||
Foreign exchange (gain) loss, net | 57,571 | (257,484 | ) | |||||
(Income) loss of note discount, net | (28,268 | ) | 94,545 | |||||
Amortization for discount of convertible note payable | 106,832 | 384,638 | ||||||
Bank charges | 36,021 | 27,392 | ||||||
Total | $ | 413,349 | $ | 478,228 |
Three Months Ended March 31, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Interest expenses, net | $ | 211,960 | $ | 288,279 | $ | 453,153 | $ | 517,417 | ||||||||
Foreign exchange loss, net | 9,821 | 14,568 | ||||||||||||||
Loss of note discount, net | 15,191 | 110 | ||||||||||||||
Foreign exchange (gain) loss, net | 67,393 | (242,916 | ) | |||||||||||||
(Income) loss of note discount, net | (13,077 | ) | 94,655 | |||||||||||||
Amortization for discount of convertible note payable | 106,437 | 122,347 | 213,269 | 506,985 | ||||||||||||
Handling charge | 24,602 | 14,176 | ||||||||||||||
Bank charges | 60,622 | 41,567 | ||||||||||||||
Total | $ | 368,011 | $ | 439,480 | $ | 781,360 | $ | 917,708 |
Three Months Ended March 31, | Three Months Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Income (loss) from adjustment of fair value of liabilities in connection with warrants | $ | - | $ | 1,977 | ||||||||||||
Income (loss) from adjustment of fair value of compound derivative liabilities | 149,028 | (1,562,825 | ) | 94,264 | (977,435 | ) | ||||||||||
Total | $ | 149,028 | $ | (1,560,848 | ) | $ | 94,264 | $ | (977,435 | ) |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Income (loss) from adjustment of fair value of liabilities in connection with warrants | $ | - | $ | 1,977 | ||||
Income (loss) from adjustment of fair value of compound derivative liabilities | 243,292 | (2,540,260 | ) | |||||
Total | $ | 243,292 | $ | (2,538,283 | ) |
Three Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Numerator: | ||||||||
Net income attributable to Parent company | $ | 8,542,068 | $ | 6,076,349 | ||||
Add: interest expenses of convertible notes payable, net of tax | 195,000 | 262,500 | ||||||
Add: Amortization for discount of convertible notes payable, net of tax | 69,441 | 384,638 | ||||||
$ | 8,806,509 | $ | 6,723,487 | |||||
Denominator: | ||||||||
Weighted average shares outstanding | 27,075,607 | 26,983,244 | ||||||
Effect of dilutive securities | 4,465,674 | 4,483,158 | ||||||
31,541,281 | 31,466,402 | |||||||
Net income per common share attributable to Parent company – basic* | $ | 0.32 | $ | 0.23 | ||||
Net income per common share attributable to Parent company – diluted | $ | 0.28 | $ | 0.21 |
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Numerator: | ||||||||
Net income attributable to Parent company | $ | 10,335,169 | $ | 2,258,812 | ||||
Add: interest expenses of convertible notes payable, net of tax | 182,813 | 284,375 | ||||||
Add: Amortization for discount of convertible notes payable, net of tax | 69,184 | 122,347 | ||||||
$ | 10,587,166 | $ | 2,665,534 | |||||
Denominator: | ||||||||
Weighted average shares outstanding | 27,046,244 | 26,983,244 | ||||||
Effect of dilutive securities | 4,518,218 | 4,964,579 | ||||||
31,564,462 | 31,947,823 | |||||||
Net income per common share attributable to Parent company - basic | $ | 0.38 | $ | 0.08 | ||||
Net income per common share attributable to Parent company - diluted | $ | 0.34 | $ | 0.08 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Numerator: | ||||||||
Net income attributable to Parent company | $ | 18,877,237 | $ | 8,335,161 | ||||
Add: interest expenses of convertible notes payable, net of tax | 377,813 | 546,875 | ||||||
Add: Amortization for discount of convertible notes payable, net of tax | 138,625 | 506,985 | ||||||
$ | 19,393,675 | $ | 9,389,021 | |||||
Denominator: | ||||||||
Weighted average shares outstanding | 27,060,925 | 26,983,244 | ||||||
Effect of dilutive securities | 4,466,115 | 4,736,233 | ||||||
31,527,040 | 31,719,477 | |||||||
Net income per common share attributable to Parent company – basic | $ | 0.70 | $ | 0.31 | ||||
Net income per common share attributable to Parent company – diluted* | $ | 0.62 | $ | 0.29 |
Three Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Merchandise Sold to Related Parties | $ | 2,941,718 | $ | 1,314,247 |
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Merchandise Sold to Related Parties | $ | 1,660,393 | $ | 559,011 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Merchandise Sold to Related Parties | $ | 4,602,111 | $ | 1,873,258 |
Three Months Ended June 30 , | ||||||||
2010 | 2009 | |||||||
Materials Purchased from Related Parties | $ | 5,248,896 | $ | 2,812,741 | ||||
Technology Purchased from Related Parties | 132,530 | 29,274 | ||||||
Equipment Purchased from Related Parties | 207,646 | 427,391 | ||||||
Total | $ | 5,589,072 | $ | 3,269,406 |
Three Months Ended March 31 , | Six Months Ended June 30 , | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Materials Purchased from Related Parties | $ | 4,347,288 | $ | 2,126,737 | $ | 9,596,184 | $ | 4,986,222 | ||||||||
Technology Purchased from Related Parties | 43,948 | 43,886 | 176,478 | 73,186 | ||||||||||||
Equipment Purchased from Related Parties | 1,127,302 | 1,076,335 | 1,334,947 | 1,503,726 | ||||||||||||
Total | $ | 5,518,538 | $ | 3,246,958 | $ | 11,107,609 | $ | 6,563,134 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Accounts receivable | $ | 1,526,905 | $ | 1,441,939 | $ | 3,386,976 | $ | 1,441,939 | ||||||||
Other receivables | 332,955 | 65,416 | 218,699 | 65,416 | ||||||||||||
Total | $ | 1,859,860 | $ | 1,507,355 | $ | 3,605,675 | $ | 1,507,355 |
March 31, 2010 | December 31, 2009 | June 30, 2010 | December 31, 2009 | |||||||||||||
Advanced Equipment Payment to Related Parties | $ | 1,962,472 | $ | 2,579,319 | $ | 5,676,085 | $ | 2,579,319 | ||||||||
Advanced Expenses and Others to Related Parties | 1,080,591 | - | 930,007 | - | ||||||||||||
Total | $ | 3,043,063 | $ | 2,579,319 | $ | 6,606,092 | $ | 2,579,319 |
March 31, 2010 | December 31, 2009 | |||||||
Accounts payable | $ | 2,685,916 | $ | 1,537,827 |
June 30, 2010 | December 31, 2009 | |||||||
Accounts payable | $ | 2,570,035 | $ | 1,537,827 |
Payment Obligations by Period | Payment Obligations by Period | |||||||||||||||||||||||||||||||||||||||||||||||
2010 (a) | 2011 | 2012 | 2013 | Thereafter | Total | 2010 (a) | 2011 | 2012 | 2013 | Thereafter | Total | |||||||||||||||||||||||||||||||||||||
Obligations for service agreements | $ | 110,000 | $ | 110,000 | $ | - | $ | - | $ | - | $ | 220,000 | $ | 110,000 | $ | 110,000 | $ | - | $ | - | $ | - | $ | 220,000 | ||||||||||||||||||||||||
Obligations for purchasing agreements | 11,508,669 | 2,053,634 | $ | - | $ | - | - | 13,562,303 | 14,238,674 | 3,557,421 | $ | - | $ | - | - | 17,796,095 | ||||||||||||||||||||||||||||||||
Total | $ | 11,618,669 | $ | 2,163,634 | $ | - | $ | - | $ | - | $ | 13,782,303 | $ | 14,348,674 | $ | 3,667,421 | $ | - | $ | - | $ | - | $ | 18,016,095 |
Henglong | Jiulong | Shenyang | Zhejiang | Wuhu | Other sector | Other * | Total | |||||||||||||||||||||||||
For the Three Months Ended June 30, 2010 (unaudited): | ||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||
Net product sales – external | $ | 39,261,293 | $ | 25,214,971 | $ | 7,361,646 | $ | 5,502,059 | $ | 5,470,844 | $ | 2,270,325 | $ | - | $ | 85,081,138 | ||||||||||||||||
Net product sales – internal | 8,692,999 | 753,536 | 1,875,804 | 596,088 | - | 9,585,467 | (21,503,894 | ) | - | |||||||||||||||||||||||
Gain on other sales | 826,419 | 155,544 | (64,842 | ) | 22,359 | 23,914 | (279,881 | ) | (1,514 | ) | 681,999 | |||||||||||||||||||||
Total revenue | $ | 48,780,711 | $ | 26,124,051 | $ | 9,172,608 | $ | 6,120,506 | $ | 5,494,758 | $ | 11,575,911 | $ | (21,505,408 | ) | $ | 85,763,137 | |||||||||||||||
Net income | $ | 6,702,000 | $ | 1,770,217 | $ | 1,322,131 | $ | 1,181,519 | $ | (54,561 | ) | $ | 1,113,638 | $ | (681,514 | ) | $ | 11,353,430 | ||||||||||||||
Net income attributable to non-controlling interests | 1,340,400 | 336,342 | 396,639 | 578,944 | (12,369 | ) | 28,741 | 142,665 | 2,811,362 | |||||||||||||||||||||||
Net income attributable to Parent company | $ | 5,361,600 | $ | 1,433,875 | $ | 925,492 | $ | 602,575 | $ | (42,192 | ) | $ | 1,084,897 | $ | (824,179 | ) | $ | 8,542,068 |
Henglong | Jiulong | Shenyang | Zhejiang | Wuhu | Other sector | Other * | Total | |||||||||||||||||||||||||
For the Three Months Ended June 30, 2009 (unaudited): | ||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||
Net product sales – external | $ | 29,646,904 | $ | 14,633,240 | $ | 5,754,286 | $ | 5,990,956 | $ | 6,328,539 | $ | 130,354 | $ | - | $ | 62,484,279 | ||||||||||||||||
Net product sales – internal | 8,259,236 | 844,645 | 2,002,403 | 191,829 | - | 24,034 | (11,322,147 | ) | - | |||||||||||||||||||||||
Gain on other sales | 72,310 | 36,818 | 55,021 | (2,417 | ) | 14,275 | (1,755 | ) | (1,505 | ) | 172,747 | |||||||||||||||||||||
Total revenue | $ | 37,978,450 | $ | 15,514,703 | $ | 7,811,710 | $ | 6,180,368 | $ | 6,342,814 | $ | 152,633 | $ | (11,323,652 | ) | $ | 62,657,026 | |||||||||||||||
Net income | $ | 7,113,281 | $ | 1,508,358 | $ | 906,653 | $ | 1,182,756 | $ | 152,018 | $ | (434,812 | ) | $ | (1,698,254 | ) | $ | 8,730,000 | ||||||||||||||
Net income attributable to non-controlling interests | 1,422,656 | 286,588 | 271,996 | 579,551 | 34,462 | (169 | ) | 58,567 | 2,653,651 | |||||||||||||||||||||||
Net income attributable to Parent company | $ | 5,690,625 | $ | 1,221,770 | $ | 634,657 | $ | 603,205 | $ | 117,556 | $ | ( 434,643 | ) | $ | ( 1,756,821 | ) | $ | 6,076,349 |
Henglong | Jiulong | Shenyang | Zhejiang | Wuhu | Other sector | Other * | Total | Henglong | Jiulong | Shenyang | Zhejiang | Wuhu | Other sector | Other * | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2010 (unaudited): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended June 30, 2010 (unaudited):: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net product sales – external | $ | 41,160,453 | $ | 19,610,124 | $ | 8,128,135 | $ | 5,656,532 | $ | 8,447,995 | $ | 1,229,450 | $ | - | $ | 84,232,689 | $ | 80,421,745 | $ | 44,825,095 | $ | 15,489,781 | $ | 11,158,591 | $ | 13,918,839 | $ | 3,499,775 | $ | 0 | $ | 169,313,826 | ||||||||||||||||||||||||||||||||
Net product sales – internal | 13,274,199 | 553,227 | 1,893,176 | 975,628 | - | 3,297,365 | (19,993,595 | ) | - | 21,967,198 | 1,306,763 | 3,768,980 | 1,571,716 | - | 12,882,832 | (41,497,489 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||
Gain on other sales | 52,271 | 121,657 | 104,070 | 10,592 | 62,250 | 102,277 | (1,507 | ) | 451,610 | 878,690 | 277,201 | 39,227 | 32,952 | 86,164 | (177,604 | ) | (3,021 | ) | 1,133,609 | |||||||||||||||||||||||||||||||||||||||||||||
Total revenue | $ | 54,486,923 | $ | 20,285,008 | $ | 10,125,381 | $ | 6,642,752 | $ | 8,510,245 | $ | 4,629,092 | $ | (19,995,102 | ) | $ | 84,684,299 | $ | 103,267,633 | $ | 46,409,059 | $ | 19,297,988 | $ | 12,763,259 | $ | 14,005,003 | $ | 16,205,003 | $ | (41,500,510 | ) | $ | 170,447,435 | ||||||||||||||||||||||||||||||
Net income | $ | 9,513,142 | $ | 1,536,163 | $ | 463,019 | $ | 1,035,165 | $ | 389,325 | $ | 264,986 | $ | 199,712 | $ | 13,401,512 | $ | 16,215,143 | $ | 3,306,381 | $ | 1,785,150 | $ | 2,216,685 | $ | 334,764 | $ | 1,378,624 | $ | (481,805 | ) | $ | 24,754,942 | |||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | 1,902,628 | 291,871 | 138,906 | 507,231 | 88,260 | (5,081 | ) | 142,528 | 3,066,343 | 3,243,029 | 628,212 | 535,545 | 1,086,176 | 75,891 | 23,660 | 285,192 | 5,877,705 | |||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Parent company | $ | 7,610,514 | $ | 1,244,292 | $ | 324,113 | $ | 527,934 | $ | 301,065 | $ | 270,067 | $ | 57,184 | $ | 10,335,169 | $ | 12,972,114 | $ | 2,678,169 | $ | 1,249,605 | $ | 1,130,509 | $ | 258,873 | $ | 1,354,964 | $ | (766,997 | ) | $ | 18,877,237 |
Henglong | Jiulong | Shenyang | Zhejiang | Wuhu | Other sector | Other * | Total | Henglong | Jiulong | Shenyang | Zhejiang | Wuhu | Other sector | Other * | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2009 (unaudited): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six Months Ended June 30, 2009 (unaudited): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net product sales – external | $ | 18,075,293 | $ | 9,764,562 | $ | 6,405,993 | $ | 5,422,811 | $ | 4,828,229 | $ | 200,558 | $ | — | $ | 44,697,446 | $ | 47,722,197 | $ | 24,397,802 | $ | 12,160,279 | $ | 11,413,767 | $ | 11,156,768 | $ | 330,912 | $ | - | $ | 107,181,725 | ||||||||||||||||||||||||||||||||
Net product sales – internal | 8541,592 | 214,904 | 502,829 | 120,086 | — | — | (9,379,411 | ) | - | 16,800,829 | 1,059,548 | 2,505,233 | 311,914 | - | 24,034 | (20,701,558 | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||
Gain on other sales | 42,460 | (13,040 | ) | 14,530 | 3,420 | 18,135 | 2,878 | (1,504 | ) | 66,879 | 114,770 | 23,779 | 69,551 | 1,003 | 32,410 | 1,123 | (3,010 | ) | 239,626 | |||||||||||||||||||||||||||||||||||||||||||||
Total revenue | $ | 26,659,345 | $ | 9,966,426 | $ | 6,923,352 | $ | 5,546,317 | $ | 4,846,364 | $ | 203,436 | $ | (9,380,915 | ) | $ | 44,764,325 | $ | 64,637,796 | $ | 25,481,129 | $ | 14,735,063 | $ | 11,726,684 | $ | 11,189,178 | $ | 356,069 | $ | ( 20,704,568 | ) | $ | 107,421,351 | ||||||||||||||||||||||||||||||
Net income | $ | 4,865,838 | $ | 426,272 | $ | 763,816 | $ | 505,084 | $ | (190,181 | ) | $ | (336,051 | ) | $ | (2,392,269 | ) | $ | 3,642,509 | $ | 11,979,119 | $ | 1,934,630 | $ | 1,670,469 | $ | 1,687,840 | $ | (38,164 | ) | $ | (770,863 | ) | $ | (4,090,522 | ) | $ | 12,372,509 | ||||||||||||||||||||||||||
Net income attributable to noncontrolling interests | 973,167 | 80,992 | 229,144 | 247,491 | (43,114 | ) | (37,144 | ) | (66,839 | ) | 1,383,697 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | 2,395,824 | 367,580 | 501,141 | 827,041 | ( 8,652 | ) | ( 37,314 | ) | ( 8,272 | ) | 4,037,348 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Parent company | $ | 3,892,671 | $ | 345,280 | $ | 534,672 | $ | 257,593 | $ | (147,067 | ) | $ | (298,907 | ) | $ | (2,325,430 | ) | $ | 2,258,812 | $ | 9,583,295 | $ | 1,567,050 | $ | 1,169,328 | $ | 860,799 | $ | (29,512 | ) | $ | ( 733,549 | ) | $ | ( 4,082,250 | ) | $ | 8,335,161 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Percentage Interest | Percentage Interest | |||||||||||||||
Name of Entity | March 31, 2010 | March 31, 2009 | June 30, 2010 | June 30, 2009 | ||||||||||||
Shashi Jiulong Power Steering Gears Co., Ltd., “Jiulong” | 81.00 | % | 81.00 | % | 81.00 | % | 81.00 | % | ||||||||
Jingzhou Henglong Automotive Parts Co., Ltd., “Henglong” | 80.00 | % | 80.00 | % | 80.00 | % | 80.00 | % | ||||||||
Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., “Shenyang” | 70.00 | % | 70.00 | % | 70.00 | % | 70.00 | % | ||||||||
Zhejiang Henglong & Vie Pump-Manu Co., Ltd., “Zhejiang” | 51.00 | % | 51.00 | % | 51.00 | % | 51.00 | % | ||||||||
Universal Sensor Application Inc., “USAI” | 83.34 | % | 83.34 | % | 83.34 | % | 83.34 | % | ||||||||
Wuhan Jielong Electric Power Steering Co., Ltd., “Jielong” | 85.00 | % | 85.00 | % | 85.00 | % | 85.00 | % | ||||||||
Wuhu HengLong Automotive Steering System Co., Ltd., “Wuhu” | 77.33 | % | 77.33 | % | 77.33 | % | 77.33 | % | ||||||||
Jingzhou Hengsheng Automotive System Co., Ltd, “Hengsheng” | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||
Jingzhou Henglong Automotive Technology (Testing) Center, “Testing Center” | 80.00 | % | - | % | 80.00 | % | - | % |
Balance Sheet Caption | Critical Estimate Item | Nature of Estimates Required | Assumptions/Approaches Used | Key Factors | ||||
Accrued liabilities and other long-term Liabilities | Warranty Obligations | Estimating warranty requires the Company to forecast the resolution of existing claims and expected future claims on products sold. VMs are increasingly seeking to hold suppliers responsible for product warranties, which may impact the Company’s exposure to these costs. | The Company bases its estimate on historical trends of units sold and payment amounts, combined with its current understanding of the status of existing claims and discussions with its customers. | • VM (Vehicle Manufacturer) sourcing • VM policy decisions regarding warranty claims VMs | ||||
Property, plant and equipment, intangible assets and other long-term assets | Valuation of long- lived assets and investments | The Company is required from time-to-time to review the recoverability of certain of its assets based on projections of anticipated future cash flows, including future profitability assessments of various product lines. | The Company estimates cash flows using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments. | • Future Production estimates • Customer preferences and decisions | ||||
Accounts and notes receivables | Provision for doubtful accounts and notes receivable | Estimating the provision for doubtful accounts and notes receivable require the Company to analyze and monitor each customer’s credit standing and financial condition regularly. The Company grants credit to its customers, generally on an open account basis. It will have material adverse effect on the Company’s cost disclosure if such assessment were improper. | The Company grants credit to its customers for three to four months based on each customer’s current credit standing and financial data. The Company assesses an allowance on an individual customer basis, under normal circumstances; the Company does not record any provision for doubtful accounts for those accounts receivable amounts which were in credit terms. For those receivables out of credit terms, certain proportional provision, namely 25% to 100%, will be recorded based on respective overdue terms. | • Customers’ credit standing and financial condition | ||||
Deferred income taxes | Recoverability of deferred tax assets | The Company is required to estimate whether recoverability of the Company’s deferred tax assets is more likely than not based on forecasts of taxable earnings in the related tax jurisdiction. | The Company uses historical and projected future operating results, based upon approved business plans, including a review of the eligible carryforward period, tax planning opportunities and other relevant considerations. | • Tax law changes • Variances in future projected profitability, including by taxing entity |
Convertible notes payable, discount of convertible note payable, warrant liabilities, compound derivative liabilities | Warrant liabilities and compound derivative liabilities | The Company is required to estimate the fair value of warrant liabilities and compound derivative liabilities at conception and completion of each reporting period | The Company uses Black-Scholes option pricing model to determine fair value of warrant; uses forward cash-flow valuation techniques to determine fair value of compound derivative liabilities | • Expected term • Expected volatility • Risk-free rate or market interest rate similar with such instrument •Dividend distribution •Common stock trading price and exercise price •Credit risk • Probability of certain default event occurred • Derivative liabilities redeemed on a price of exercise plus premium |
Net Sales | Cost of sales | Net Sales | Cost of sales | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Henglong | $ | 54,434,652 | $ | 26,616,886 | $ | 27,817,766 | 104.5 | % | $ | 40,182,809 | $ | 19,017,920 | $ | 21,164,889 | 111.3 | % | $ | 47,954,292 | $ | 37,906,141 | $ | 10,048,151 | 26.5 | % | $ | 36,908,428 | $ | 27,292,298 | $ | 9,616,130 | 35.2 | % | ||||||||||||||||||||||||||||||||
Jiulong | 20,163,351 | 9,979,466 | 10,183,885 | 102.0 | 17,233,519 | 8,678,011 | 8,555,508 | 98.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jiulong* | 25,968,507 | 15,477,885 | 10,490,622 | 67.8 | 22,439,931 | 13,317,460 | 9,122,471 | 68.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shenyang | 10,021,311 | 6,908,822 | 3,112,489 | 45.1 | 8,648,897 | 5,772,726 | 2,876,171 | 49.8 | 9,237,450 | 7,756,689 | 1,480,761 | 19.1 | 8,089,099 | 6,332,064 | 1,757,035 | 27.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
Zhejiang | 6,632,160 | 5,542,896 | 1,089,264 | 19.7 | 4,892,768 | 4,345,978 | 546,790 | 12.6 | 6,098,147 | 6,182,784 | (84,637 | ) | (1.4 | ) | 4,316,533 | 4,558,225 | (241,692 | ) | (5.3 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Wuhu | 8,447,995 | 4,828,229 | 3,619,766 | 75.0 | 8,189,548 | 4,816,214 | 3,373,334 | 70.0 | 5,470,844 | 6,328,539 | (857,695 | ) | (13.6 | ) | 4,979,949 | 6,015,715 | (1,035,766 | (17.2 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Other Sectors | 4,526,815 | 200,558 | 4,326,257 | 2157.1 | 3,639,291 | 232,410 | 3,406,881 | 1465.9 | 11,855,792 | 154,388 | 11,701,404 | 7579.2 | 9,726,875 | 230,261 | 9,496,614 | 4124.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other * | (19,993,595 | ) | (9,379,411 | ) | (10,614,184 | ) | 113.2 | (21,089,160 | ) | (9,069,158 | ) | (12,020,002 | ) | 132.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other * * | (21,503,894 | ) | (11,322,147 | ) | (10,181,747 | ) | 89.9 | (21,189,937 | ) | (11,567,672 | ) | (9,622,265 | ) | 83.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 84,232,689 | $ | 44,697,446 | $ | 39,535,243 | 88.5 | % | $ | 61,697,672 | $ | 33,794,101 | $ | 27,903,571 | 82.6 | % | $ | 85,081,138 | $ | 62,484,279 | $ | 22,596,859 | 36.2 | % | $ | 65,270,878 | $ | 46,178,351 | $ | 19,092,527 | 41.3 | % |
Three Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Before reclassification : | ||||||||
Net sales | $ | 85,081,138 | $ | 62,484,279 | ||||
Cost of goods sold before reclassification | 62,424,246 | 43,982,547 | ||||||
Gross profit before reclassification | $ | 22,656,892 | $ | 18,501,732 | ||||
Gross margin before reclassification | 26.6 | % | 29.6 | % | ||||
After reclassification: | ||||||||
Net sales | $ | 85,081,138 | $ | 62,484,279 | ||||
Cost of goods sold add Warranty expenses | 65,270,878 | 46,178,351 | ||||||
Gross profit after reclassification | $ | 19,810,260 | $ | 16,305,928 | ||||
Gross margin after reclassification | 23.3 | % | 26.1 | % | ||||
Selling expenses before reclassification | $ | 5,749,757 | $ | 3,816,301 | ||||
Minus: Warranty expenses | 2,846,632 | 2,195,804 | ||||||
Selling expenses after reclassification | $ | 2,903,125 | $ | 1,620,497 |
Net Sales | Cost of sales | |||||||||||||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||||||||||
Henglong | $ | 102,388,944 | $ | 64,523,027 | $ | 37,865,917 | 58.7 | % | $ | 77,091,237 | $ | 46,310,218 | $ | 30,781,019 | 66.5 | % | ||||||||||||||||
Jiulong | 46,131,858 | 25,457,351 | 20,674,507 | 81.2 | 39,673,450 | 21,995,471 | 17,677,979 | 80.4 | ||||||||||||||||||||||||
Shenyang | 19,258,761 | 14,665,511 | 4,593,250 | 31.3 | 16,737,996 | 12,104,790 | 4,633,206 | 38.3 | ||||||||||||||||||||||||
Zhejiang | 12,730,307 | 11,725,680 | 1,004,627 | 8.6 | 9,209,301 | 8,904,203 | 305,098 | 3.4 | ||||||||||||||||||||||||
Wuhu | 13,918,839 | 11,156,768 | 2,762,071 | 24.8 | 13,169,497 | 10,831,929 | 2,337,568 | 21.6 | ||||||||||||||||||||||||
Other Sectors | 16,382,607 | 354,946 | 16,027,661 | 4515.5 | 13,366,166 | 462,671 | 12,903,495 | 2788.9 | ||||||||||||||||||||||||
Other * | (41,497,489 | ) | (20,701,558 | ) | (20,795,931 | ) | 100.5 | (42,279,097 | ) | (20,636,830 | ) | (21,642,267 | ) | 104.9 | ||||||||||||||||||
Total | $ | 169,313,827 | $ | 107,181,725 | $ | 62,132,102 | 58.0 | % | $ | 126,968,550 | $ | 79,972,452 | $ | 46,996,098 | 58.8 | % |
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Warranty expenses | 2,919,302 | 1,294,486 | ||||||
Before reclassification: | ||||||||
Net sales | 84,232,689 | 44,697,446 | ||||||
Cost of goods sold before reclassification | 58,778,370 | 32,499,615 | ||||||
Gross profit before reclassification | 25,454,319 | 12,197,831 | ||||||
Gross margin before reclassification | 30.2 | % | 27.3 | % | ||||
After reclassification: | ||||||||
Net sales | 84,232,689 | 44,697,446 | ||||||
Cost of goods sold add Warranty expenses | 61,697,672 | 33,794,101 | ||||||
Gross profit after reclassification | 22,535,017 | 10,903,345 | ||||||
Gross margin after reclassification | 26.8 | % | 24.4 | % | ||||
Selling expenses before reclassification | 4,787,105 | 2,359,166 | ||||||
Minus: Warranty expenses | 2,919,302 | 1,294,486 | ||||||
Selling expenses after reclassification | 1,867,803 | 1,064,680 |
Six Months Ended June 30, | ||||||||
2010 | 2009 | |||||||
Before reclassification: | ||||||||
Net sales | 169,313,827 | 107,181,725 | ||||||
Cost of goods sold before reclassification | 121,202,616 | 76,482,162 | ||||||
Gross profit before reclassification | 48,111,211 | 30,699,563 | ||||||
Gross margin before reclassification | 28.4 | % | 28.6 | % | ||||
After reclassification: | ||||||||
Net sales | 169,313,827 | 107,181,725 | ||||||
Cost of goods sold add Warranty expenses | 126,968,550 | 79,972,452 | ||||||
Gross profit after reclassification | 42,345,277 | 27,209,273 | ||||||
Gross margin after reclassification | 25.0 | % | 25.4 | % | ||||
Selling expenses before reclassification | 10,536,862 | 6,175,467 | ||||||
Minus: Warranty expenses | 5,765,934 | 3,490,290 | ||||||
Selling expenses after reclassification | 4,770,928 | 2,685,177 |
(a) | Bank loans |
Bank | Due Date | Amount available | Amount Borrowed | Bank | Due Date | Amount available | Amount Borrowed | |||||||||||||||||
Comprehensive credit facilities | Bank of China | Oct -10 | $ | 8,057,073 | $ | 7,156,894 | Bank of China | Oct -10 | $ | 7,510,050 | $ | 2,208,838 | ||||||||||||
Comprehensive credit facilities | China Construction Bank | Oct-10 | 8,789,535 | 4,385,978 | China Construction Bank | Oct-10 | 8,835,353 | 4,315,083 | ||||||||||||||||
Comprehensive credit facilities | Shanghai Pudong Development Ban | Oct-10 | 6,592,151 | - | Shanghai Pudong Development Bank | Oct-10 | 6,626,515 | 5,141,292 | ||||||||||||||||
Comprehensive credit facilities | Jingzhou Commercial Bank | Oct-10 | 9,521,996 | 5,483,205 | Jingzhou Commercial Bank | Oct-10 | 11,690,350 | 11,690,350 | ||||||||||||||||
Comprehensive credit facilities | Industrial and Commercial Bank of China | Sep-10 | 2,929,845 | 873,231 | Industrial and Commercial Bank of China | Sep-10 | 11,780,471 | 2,529,995 | ||||||||||||||||
Comprehensive credit facilities | Bank of Communications Co., Ltd | Sep-10 | 3,340,023 | 3,049,189 | Bank of Communications Co., Ltd | Sep-10 | 3,357,434 | 1,892,238 | ||||||||||||||||
Comprehensive credit facilities | China Merchants Bank | Sep -10 | 3,456,307 | 3,456,307 | China Merchants Bank | Sep -10 | 2,945,118 | 357,832 | ||||||||||||||||
Comprehensive credit facilities | China CITIC Bank | Jul -10 | 12,450,648 | 12,450,648 | China CITIC Bank | Jul -10 | 19,585,033 | 18,048,716 | ||||||||||||||||
Comprehensive credit facilities | China Hua Xia Bank | Oct-10 | 7,324,612 | 5,691,224 | China Hua Xia Bank | Oct-10 | 7,362,794 | 5,770,958 | ||||||||||||||||
Comprehensive credit facilities | Guangdong Development Bank | Oct-10 | 2,599,944 | 2,599,944 | China Everbright Bank | Mar-11 | 2,945,118 | 995,450 | ||||||||||||||||
Comprehensive credit facilities | Guangdong Development Bank | Oct-10 | 613,910 | 613,910 | ||||||||||||||||||||
Total | $ | 65,062,134 | $ | 45,146,620 | $ | 83,252,146 | $ | 53,564,662 |
(b) | Financing from investors: |
Payment Due Dates | Payment Due Dates | |||||||||||||||||||||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 Years | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 Years | |||||||||||||||||||||||||||||||
Short-term bank loan | $ | 4,394,767 | $ | 4,394,767 | $ | - | $ | - | $ | - | $ | 8,835,353 | $ | 8,835,353 | $ | - | $ | - | $ | - | ||||||||||||||||||||
Notes payable | 40,019,392 | 40,019,392 | - | - | 44,729,309 | 44,729,309 | - | - | - | |||||||||||||||||||||||||||||||
Convertible notes payable | 30,000,000 | 30,000,000 | - | - | - | 30,000,000 | 30,000,000 | - | - | - | ||||||||||||||||||||||||||||||
Other contractual purchase commitments, including information technology | 13,782,303 | 11,618,669 | 2,163,634 | - | - | 18,016,095 | 14,348,674 | 3,667,421 | - | - | ||||||||||||||||||||||||||||||
Total | $ | 88,196,462 | $ | 86,032,828 | $ | 2,163,634 | $ | - | $ | - | $ | 101,580,757 | $ | 97,913,336 | $ | 3,667,421 | $ | - | $ | - |
Bank | Purpose | Borrowing Date | Borrowing Term (Year) | Annual Percentage Rate | Date of Interest Payment | Date of Payment | Amount Payable on Due Date | Purpose | Borrowing Date | Borrowing Term (Year) | Annual Percentage Rate | Date of Interest Payment | Date of Payment | Amount Payable on Due Date | ||||||||||||||||||||||||
Bank of China | Working Capital | Nov 10, 09 | 1 | 5.31 | % | Pay monthly | Nov 10, 10 | $ | 2,197,383 | Working Capital | Nov 10, 09 | 1 | 5.31 | % | Pay monthly | Nov 10, 10 | $ | 2,208,838 | ||||||||||||||||||||
China Merchants Bank | Working Capital | May 5, 09 | 0.9 | 5.31 | % | Pay monthly | Apr 5, 10 | 2,197,384 | ||||||||||||||||||||||||||||||
China CITIC Bank | Working Capital | May 26, 10 | 1 | 5.31 | % | Pay monthly | May 26, 11 | 2,208,838 | ||||||||||||||||||||||||||||||
Industrial and Commercial Bank of China | Working Capital | May 14, 10 | 0.5 | 4.86 | % | Pay monthly | Nov 14, 10 | 1,472,559 | ||||||||||||||||||||||||||||||
China Construction Bank | Working Capital | Jun 17, 10 | 1 | 5.31 | % | Pay monthly | Jun 17, 11 | 2,945,118 | ||||||||||||||||||||||||||||||
Total | $ | 4,394,767 | $ | 8,835,353 |
Purpose | Term (Month) | Due Date | Amount Payable on Due Date | Term (Month) | Due Date | Amount Payable on Due Date | ||||||||||
Working Capital | 3-6 | Apr - 10 | $ | 5,594,314 | 3-6 | Jul - 10 | $ | 8,039,877 | ||||||||
Working Capital | 3-6 | May -10 | 6,937,874 | 3-6 | Aug- 10 | 1,421,019 | ||||||||||
Working Capital | 3-6 | Jun-10 | 10,814,805 | 3-6 | Sep - 10 | 7,848,292 | ||||||||||
Working Capital | 3-6 | Jul - 10 | 7,933,727 | 3-6 | Oct - 10 | 8,732,274 | ||||||||||
Working Capita | 3-6 | Aug- 10 | 1,413,650 | 3-6 | Nov - 10 | 10,778,247 | ||||||||||
Working Capital | 3-6 | Sep - 10 | 7,325,022 | 3-6 | Dec - 10 | 7,909,600 | ||||||||||
Total | $ | 40,019,392 | $ | 44,729,309 |
(a) | Operating activities |
(b) | Investing activities |
(c) | Financing activities |
Payment Obligations by Period | Payment Obligations by Period | |||||||||||||||||||||||||||||||||||||||||||||||
2010 (a) | 2011 | 2012 | 2013 | Thereafter | Total | 2010 (a) | 2011 | 2012 | 2013 | Thereafter | Total | |||||||||||||||||||||||||||||||||||||
Obligations for service agreements | $ | 110,000 | $ | 110,000 | $ | - | $ | - | $ | - | $ | 220,000 | $ | 110,000 | $ | 110,000 | $ | - | $ | - | $ | - | $ | 220,000 | ||||||||||||||||||||||||
Obligations for purchasing agreements | 11,508,669 | 2,053,634 | $ | $ | - | - | 13,562,303 | 14,238,674 | 3,557,421 | $ | - | $ | - | - | 17,796,095 | |||||||||||||||||||||||||||||||||
Total | $ | 11,618,669 | $ | 2,163,634 | $ | - | $ | - | $ | - | $ | 13,782,303 | $ | 14,348,674 | $ | 3,667,421 | $ | - | $ | - | $ | - | $ | 18,016,095 |
(a) | Remaining |
ITEM 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4 | CONTROLS AND PROCEDURES |
( a ) | EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES |
( b ) | CHANGES IN INTERNAL CONTROLS |
ITEM 1 | LEGAL PROCEEDINGS |
ITEM 1A | RISK FACTORS |
Exhibit Number | Description | |
3.1(i) | Certificate of Incorporation (incorporated by reference from the filing on Form 10KSB File No. 000-33123.) | |
3.1(ii) | Bylaws (incorporated by reference from the Form 10KSB for the year ended December 31, 2002.) | |
10.1 | Joint-venture Agreement, dated March 31, 2006, as amended on May 2, 2006, between Great Genesis Holdings Limited and Wuhu Chery Technology Co., Ltd. (incorporated by reference to the exhibit 10.8 to the Company’s Form 10Q Quarterly Report on May 10, 2006 ) | |
10.2 | Securities Purchase Agreement dated February 1, 2008 among us, Lehman Brothers Commercial Corporation Asia Limited, and YA Global Investments, L.P. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
10.3 | Securities Purchase Agreement dated February 15, 2008 between us and the investors. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
10.4 | Escrow Agreement dated February 15, 2008 among us, U.S. Bank National Association, Lehman Brothers Commercial Corporation Asia Limited, and YA Global Investments, L.P. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
10.5 | Registration Rights Agreement dated February 15, 2008 among us, Lehman Brothers Commercial Corporation Asia Limited, and YA Global Investments, L.P. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
10.6 | Senior Convertible Note dated February 15, 2008 in the original principal amount of $8,571,429 issued by us in favor of TFINN & CO. as nominee for Lehman Brothers Commercial Corporation Asia Limited. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
10.7 | Senior Convertible Note dated February 15, 2008 in the original principal amount of $6,428,571 issued by us in favor of TFINN & CO. as nominee for Lehman Brothers Commercial Corporation Asia Limited. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
10.8 | Senior Convertible Note dated February 15, 2008 in the original principal amount of $15,000,000 issued by us in favor of TFINN & CO. as nominee for Lehman Brothers Commercial Corporation Asia Limited. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
10.9 | Closing Warrant to purchase 564,799 shares of common stock at $8.8527 per share, dated February 15, 2008, issued by us in favor of TFINN & CO. as nominee for Lehman Brothers Commercial Corporation Asia Limited. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
10.10 | Escrow Warrant to purchase 564,799 shares of common stock at $8.8527 per share, dated February 15, 2008, issued by us in favor of TFINN & CO. as nominee for Lehman Brothers Commercial Corporation Asia Limited. (incorporated by reference to the Company’s Form 10-K for the year ended December 31, 2007.) | |
31.1 | Rule 13a-14(a) Certification* | |
31.2 | Rule 13a-14(a) Certification* | |
32.1 | Section 1350 Certification* | |
32.2 | Section 1350 Certification* |
CHINA AUTOMOTIVE SYSTEMS, INC. | ||
(Registrant) | ||
Date: | By: | /s/ Qizhou Wu |
Qizhou Wu | ||
President and Chief Executive Officer | ||
Date: | By: | /s/ Jie Li |
Jie Li | ||
Chief Financial Officer |