Form 8-K Highpower International, For: Aug 12
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): | August 12, 2016 |
HIGHPOWER INTERNATIONAL, INC.
_____________________________________________________
(Exact name of registrant as specified in its charter)
| Delaware | 001-34098 | 20-4062622 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Building A1, Luoshan Industrial Zone, Shanxia, Pinghu, Longgang, Shenzhen, Guangdong, 518111, China
(Address, including zip code, of principal executive offices)
| Registrant’s telephone number, including area code | (86) 755-89686238 |
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On August 12, 2016, Highpower International, Inc. (the “Company”) issued a press release announcing its financial results for the period ended June 30, 2016. A copy of the press release is attached hereto as Exhibit 99.1 and the information therein is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
The information under Item 2.02 above is incorporated herein by reference.
On August 12, 2016, the Company also issued a press release announcing its acquisition of equity in Huizhou Yipeng Energy Technology Co., Ltd. A copy of the press release is attached hereto as Exhibit 99.2 and the information therein is incorporated herein by reference.
The information reported under Items 2.02 and 7.01 in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, is being "furnished" and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
| 99.1 | Press Release announcing earnings dated August 12, 2016. |
| 99.2 | Press Release regarding Huizhou Yipeng Energy Technology Co., Ltd. dated August 12, 2016 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 12, 2016 | Highpower International, Inc. | |
| /s/ Sunny Pan | ||
| By: Sunny Pan | ||
| Its: Interim Chief Financial Officer | ||
EXHIBIT INDEX
| Exhibit No. |
|
Description |
| 99.1 | Press Release announcing earnings dated August 12, 2016. | |
| 99.2 | Press Release regarding Huizhou Yipeng Energy Technology Co., Ltd. dated August 12, 2016 |
Exhibit 99.1
Highpower International Reports Financial Results
For the Second Quarter And Six Months Ended June 30, 2016
Highlighted By Higher Net Income and EPS
Company to Hold Conference Call on August 12, 2016 at 10:00a.m.Eastern Time /7:00a.m. Pacific Time
SAN FRANCISCO, USA and SHENZHEN, CHINA–August 12, 2016 - Highpower International, Inc. (NASDAQ: HPJ), a developer, manufacturer, and marketer of lithium and nickel-metal hydride (Ni-MH) rechargeable batteries, and battery management systems and battery recycling provider, today announced its financial results for the second quarter and six months ended June 30, 2016.
2016 Second Quarter Financial Highlights (all results are compared to prior year period)
| · | Net sales were $36.7million, compared to $38.6 million, primarily due to exchange rate difference. |
| · | Gross margin was 20.8%, compared to 22.2%, mainly due to lower average selling price. |
| · | EBITDA was $3.7million compared to $3.3 million. |
| · | Net income attributable to the Company was $2.1 million, or $0.14 per diluted share, compared to net income attributable to the Company of $1.9 million, or $0.12 per diluted share; non-GAAP net income attributable to the Company was $2.1 million, or $0.15 per diluted share, compared to non-GAAP net income attributable to the Company of $2.1 million, or $0.13 per diluted share. |
Management Commentary
Mr. George Pan, Chairman and CEO of Highpower International, commented, “We are pleased to announce strong results for the second quarter, especially the overall net income is performing well and lithium battery business has a good momentum of progress since the second quarter. We have maintained a solid gross margin in the competitive battery market. We also indicated that growth would accelerate in the second half of 2016 with the battery sales peak season coming. As we have focused on our corporate objectives, we have also established a lean production culture of continuous improvements, which allows us to provide our customers with the best cost performance products and allows Highpower’s sustainable and healthy growth in the future. ”
2016 Second Quarter Financial Review
Net Sales
Net sales for the second quarter ended June 30, 2016 were $36.7 million compared to $38.6 million for the same period in 2015. The 1.9 million decrease in net sales compared to the same period in 2015 was mainly due to a $3.8 million decrease in sales of Ni-MH Batteries, offset by increases of $1.6 million in sales of lithium batteries and $0.3 million increase in sales of new material business. Without exchange rate change, net sales in Q2 of 2016 increased 1.6% compared to the same period in 2015.
Net sales for the six months ended June 30, 2016 were $65.8 million, compared to $70.8 million for the same prior year period. This $5.0 million decrease was due to a $5.7 million decrease in sales of Ni-MH Batteries, offset by a $0.1 million increase in net sales of lithium batteries and $0.7 million increase in new material business. Without exchange rate change, net sales in first half year of 2016 decreased 0.9% compared to same period in 2015.
Gross Profit
For the second quarter ended June 30, 2016, the Company’s gross profit was $7.6 million, compared to $8.6 million, for the same period in 2015. This decrease was mainly due to the decrease in the average selling price of batteries.
For the six months ended June 30, 2016, the Company’s gross profit was $13.5 million, compared to $14.1 million for the same period in 2015.
Gross Margin
Gross margin was 20.8% for the second quarter ended June 30, 2016, compared to 22.2% for the same period in 2015. The decrease was due to pricing declines from the prior year period as well as product mix, offset by lower costs of sales.
Gross margin for the six months ended June 30, 2016 was 20.5%, as compared with 19.9% for the same period in 2015.
Research and Development (R&D)
R&D expenses were $2.0 million, or 5.5% of net sales, for the second quarter ended June 30, 2016, compared to $2.0 million, 5.2% of net sales for the same period in 2015.
For the six months ended June 30, 2016, R&D expenses were$3.7 million, or 5.6% of net sales, compared to $3.7 million, or 5.2% of net sales, for the same period in 2015.
Selling & Distribution
Selling and distribution expenses were $1.5 million, or 4.2% of net sales, for the second quarter ended June 30, 2016, compared to $1.6 million, or 4.1% of net sales, for the same period in 2015.
For the six months ended June 30, 2016, selling and distribution expenses were $3.1 million, or 4.7% of the net sales, compared to $3.4 million, or 4.8% of net sales, for the same period in 2015.
General & Administrative
General and administrative expenses were $3.2 million, or 8.8% of net sales, for the second quarter ended June 30, 2016, compared to $3.4 million, or 8.9% of net sales, for the same period in 2015.
For the six months ended June 30, 2016, general and administrative expenses were $6.3 million, or 9.6% of net sales, compared to $6.4 million, or 9.1% of net sales, for the same period in 2015.
Net Income
For the second quarter of 2016, net income attributable to the Company was $2.1 million, or $0.14 per diluted share based on 15.1 million weighted average diluted shares outstanding, compared to net income of $1.9 million, or $0.12 per diluted share based on 15.4 million weighted average diluted shares outstanding. Non-GAAP net income attributable to the Company was $2.1 million, or $0.15 per diluted share, compared to a non-GAAP net income of $2.1 million, or $0.13 per diluted share, in the prior year period.
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For the six months ended June 30, 2016, net income attributable to the Company was $1.7 million, or $0.11 per diluted share based on 15.1 million weighted average diluted shares outstanding, compared to net income of $1.7 million, or $0.11 per diluted share based on 15.5 million weighted average diluted shares outstanding. Non-GAAP net income attributable to the Company was $1.8 million, or $0.11 per diluted share, compared to a non-GAAP net income of $1.7 million, or $0.11 per diluted share, in the prior year period.
EBITDA
EBITDA for the second quarter ended June 30, 2016 was $3.7million, compared to $3.3 million in the prior year period.
For the six months ended June 30, 2016, EBITDA was $4.8 million, compared to $4.5 million, in the prior year period.
A table reconciling EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure is included with the Company’s financial information below.
Balance Sheet Highlights
| ($ in millions, except per share data) | June 30, | December 31, | ||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| $ | $ | |||||||
| Cash and Cash Equivalents | $ | 6.8 | $ | 5.8 | ||||
| Total Current Assets | $ | 78.5 | $ | 80.7 | ||||
| Total Assets | $ | 134.2 | $ | 134.2 | ||||
| Total Current Liabilities | $ | 91.5 | $ | 91.2 | ||||
| Total Liabilities | $ | 91.5 | $ | 91.3 | ||||
| Shareholders’ Equity | $ | 42.7 | $ | 42.9 | ||||
| Total Liabilities and Shareholders’ Equity | $ | 134.2 | $ | 134.2 | ||||
| Book Value Per Share | $ | 2.83 | $ | 2.84 | ||||
Conference Call Details
The Company announced that it will discuss financial results in a conference call on August 12, 2016at 10:00a.m.Eastern Time / 7:00a.m. Pacific Time to discuss these results.
The dial-in numbers are:
| Live Participant Dial In (Toll Free): | 877-407-3108 |
| Live Participant Dial In (International): | 201-493-6797 |
To listen to the live webcast, please go to at www.highpowertech.com and click on the conference call link, or go to: http://highpowertech.equisolvewebcast.com/q2-2016. This webcast will be archived and accessible through the Company’s website for approximately 30 days following the call. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference call.
About Highpower International, Inc.
Highpower International was founded in 2001 and produces high-quality Nickel-Metal Hydride (Ni-MH) and lithium-based rechargeable batteries used in a wide range of applications such as electric buses, bikes, energy storage systems, power tools, medical equipment, digital and electronic devices, personal care products, and lighting, etc. Highpower’s target customers are Fortune 500 companies and top 20 companies in each vertical segment. With advanced manufacturing facilities located in Shenzhen, Huizhou, and Ganzhou of China, Highpower is committed to clean technology, not only in the products it makes, but also in the processes of production. The majority of Highpower International's products are distributed to worldwide markets mainly in the United States, Europe, China and Southeast Asia.
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Use of Non-GAAP Measures
The Company has supplemented its reported GAAP (generally accepted accounting principles) financial information with non-GAAP measures. EBITDA was derived by taking earnings before interest expense (net), taxes, depreciation and amortization. Adjusted EBITDA and Non-GAAP (adjusted) net income or (loss) exclude stock-based compensation expense and change of fair value of warrant liability. Adjusted EBITDA, as defined above, may not be similar to Adjusted EBITDA measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. The Company believes these non-GAAP measures are useful to investors as they provide a basis for evaluating the Company's operating results in the ordinary course of its operations.
These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with its results of operations as determined in accordance with U.S. GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with, and not in lieu of, the corresponding GAAP measures. These non-GAAP financial measures are reconciled in the accompanying tables to the most directly comparable measures as reported in accordance with GAAP.
Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and the Company's future performance, operations and products. Such statements involve known and unknown risks, uncertainties and other factors that could cause the Company's actual results to differ materially from the results expressed or implied by such statements, including, without limitation, economic downturn and uncertainty in Asia and Europe adversely affecting demand for our products; fluctuations in the cost of raw materials; our dependence on, or inability to attract additional, major customers for a significant portion of our net sales; our ability to increase manufacturing capabilities to satisfy orders from new customers; our ability to maintain increased margins; changes in the laws of the PRC that affect our operations; the devaluation of the U.S. Dollar relative to the Renminbi; our dependence on the growth in demand for portable electronic devices and energy storage systems and transportation products and the success of manufacturers of the end applications that use our battery products; our responsiveness to competitive market conditions; our ability to successfully manufacture our products in the time frame and amounts expected; the market acceptance of our battery products, including our lithium products; our ability to successfully develop products for and penetrate the electric transportation market; our ability to continue R&D development to keep up with technological changes our exposure to product liability, safety, and defect claims; rising labor costs, volatile metal prices, and inflation; changes in foreign, political, social, business and economic conditions that affect our production capabilities or demand for our products; and various other matters, many of which are beyond our control.. For a discussion of these and other risks and uncertainties see "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's public filings with the SEC. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.
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CONTACT:
Highpower International, Inc.
Sunny Pan
Interim Chief Financial Officer
+86-755-8968-6521
INVESTOR RELATIONS:
The Equity Group Inc.
In China
Katherine Yao, Senior Associate
+86-10-6587-6435
In U.S.
Adam Prior, Senior Vice President
+1 (212) 836-9606
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HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Stated in US Dollars except Number of Shares)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net sales | 36,732,310 | 38,635,801 | 65,829,365 | 70,773,449 | ||||||||||||
| Cost of sales | (29,088,639 | ) | (30,072,041 | ) | (52,308,655 | ) | (56,653,975 | ) | ||||||||
| Gross profit | 7,643,671 | 8,563,760 | 13,520,710 | 14,119,474 | ||||||||||||
| Research and development expenses | (2,035,886 | ) | (1,997,494 | ) | (3,658,769 | ) | (3,671,618 | ) | ||||||||
| Selling and distribution expenses | (1,539,395 | ) | (1,597,564 | ) | (3,074,431 | ) | (3,396,286 | ) | ||||||||
| General and administrative expenses | (3,248,899 | ) | (3,423,770 | ) | (6,318,613 | ) | (6,448,521 | ) | ||||||||
| Foreign currency transaction gain | 600,313 | 73,546 | 509,877 | 443,857 | ||||||||||||
| Total operating expenses | (6,223,867 | ) | (6,945,282 | ) | (12,541,936 | ) | (13,072,568 | ) | ||||||||
| Income from operations | 1,419,804 | 1,618,478 | 978,774 | 1,046,906 | ||||||||||||
| Gain on change of fair value of warrant liability | 7,077 | 84,833 | 126,546 | 431,132 | ||||||||||||
| Other income | 1,055,947 | 357,055 | 1,211,875 | 587,147 | ||||||||||||
| Interest expenses | (435,402 | ) | (275,476 | ) | (710,394 | ) | (544,118 | ) | ||||||||
| Income before taxes | 2,047,426 | 1,784,890 | 1,606,801 | 1,521,067 | ||||||||||||
| Income taxes (expenses) benefit | (174,313 | ) | (18,840 | ) | (209,817 | ) | 76,416 | |||||||||
| Net income | 1,873,113 | 1,766,050 | 1,396,984 | 1,597,483 | ||||||||||||
| Less: net loss attributable to non-controlling interest | (178,669 | ) | (101,074 | ) | (312,190 | ) | (146,283 | ) | ||||||||
| Net income attributable to the Company | 2,051,782 | 1,867,124 | 1,709,174 | 1,743,766 | ||||||||||||
| Comprehensive (loss) income | ||||||||||||||||
| Net income | 1,873,113 | 1,766,050 | 1,396,984 | 1,597,483 | ||||||||||||
| Foreign currency translation (loss) income | (1,964,424 | ) | 206,027 | (1,714,278 | ) | 1,266 | ||||||||||
| Comprehensive (loss) income | (91,311 | ) | 1,972,077 | (317,294 | ) | 1,598,749 | ||||||||||
| Less: comprehensive loss attributable to non-controlling interest | (197,060 | ) | (95,376 | ) | (325,882 | ) | (144,549 | ) | ||||||||
| Comprehensive income attributable to the Company | 105,749 | 2,067,453 | 8,588 | 1,743,298 | ||||||||||||
| Income per share of common stock attributable to the Company | ||||||||||||||||
| - Basic | 0.14 | 0.12 | 0.11 | 0.12 | ||||||||||||
| - Diluted | 0.14 | 0.12 | 0.11 | 0.11 | ||||||||||||
| Weighted average number of common stock outstanding | ||||||||||||||||
| - Basic | 15,101,679 | 15,094,979 | 15,101,679 | 15,091,639 | ||||||||||||
| - Diluted | 15,102,877 | 15,441,576 | 15,103,886 | 15,469,274 | ||||||||||||
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HIGHPOWER INTERNATIONAL, INC.AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars except Number of Shares)
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | 6,798,975 | 5,849,967 | ||||||
| Restricted cash | 9,892,758 | 11,656,204 | ||||||
| Accounts receivable, net | 32,279,032 | 36,139,866 | ||||||
| Accounts receivable, related party | 2,152,054 | - | ||||||
| Notes receivable | 684,697 | 1,757,709 | ||||||
| Prepayments and other receivables | 6,210,666 | 6,060,904 | ||||||
| Inventories, net | 20,502,568 | 19,218,331 | ||||||
| Total Current Assets | 78,520,750 | 80,682,981 | ||||||
| Property, plant and equipment, net | 48,569,186 | 47,464,186 | ||||||
| Land use right, net | 3,830,862 | 3,963,003 | ||||||
| Other assets | 1,000,662 | 550,000 | ||||||
| Deferred tax assets | 1,574,303 | 1,544,314 | ||||||
| Long-term investment | 751,925 | - | ||||||
| TOTAL ASSETS | 134,247,688 | 134,204,484 | ||||||
| LIABILITIES AND EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | 32,803,377 | 36,077,396 | ||||||
| Deferred income | 785,899 | 879,944 | ||||||
| Short-term bank loan | 14,963,306 | 13,839,341 | ||||||
| Non-financial institution borrowings | 4,511,550 | - | ||||||
| Notes payable | 29,003,988 | 30,490,166 | ||||||
| Amount due to a related company | 761,895 | - | ||||||
| Other payables and accrued liabilities | 6,503,604 | 6,292,492 | ||||||
| Income taxes payable | 1,252,743 | 1,783,013 | ||||||
| Current portion of long-term loan | 902,310 | 1,845,245 | ||||||
| Total Current Liabilities | 91,488,672 | 91,207,597 | ||||||
| Warrant Liability | 14,003 | 140,549 | ||||||
| TOTAL LIABILITIES | 91,502,675 | 91,348,146 | ||||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||||
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HIGHPOWER INTERNATIONAL, INC.AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Stated in US Dollars except Number of Shares)
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| $ | $ | |||||||
| EQUITY | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock | ||||||||
| (Par value: $0.0001, Authorized: 10,000,000 shares, Issued and outstanding: none) | - | - | ||||||
| Common stock | ||||||||
| (Par value: $0.0001, Authorized: 100,000,000 shares, 15,101,679 shares issued and outstanding at June 30, 2016 and December 31, 2015) | 1,510 | 1,510 | ||||||
| Additional paid-in capital | 11,433,948 | 11,227,979 | ||||||
| Statutory and other reserves | 4,042,429 | 4,042,429 | ||||||
| Retained earnings | 25,807,349 | 24,098,175 | ||||||
| Accumulated other comprehensive income | 932,176 | 2,632,762 | ||||||
| Total equity for the stockholders of Highpower International Inc. | 42,217,412 | 42,002,855 | ||||||
| Non-controlling interest | 527,601 | 853,483 | ||||||
| TOTAL EQUITY | 42,745,013 | 42,856,338 | ||||||
| TOTAL LIABILITIES AND EQUITY | 134,247,688 | 134,204,484 | ||||||
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HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in US Dollars)
| Six months ended June 30 | ||||||||
| 2016 | 2015 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| $ | $ | |||||||
| Cash flows from operating activities | ||||||||
| Net income | 1,396,984 | 1,597,483 | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 2,486,196 | 2,535,695 | ||||||
| Allowance for doubtful accounts | 4,837 | 896 | ||||||
| Income on disposal of property, plant and equipment | 95,368 | 79,692 | ||||||
| Deferred income tax | (64,671 | ) | (230,050 | ) | ||||
| Share based compensation | 205,969 | 412,304 | ||||||
| Change in fair value of warrant liability | (126,546 | ) | (431,132 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 3,216,097 | (787,672 | ) | |||||
| Notes receivable | 1,051,486 | (1,645,051 | ) | |||||
| Prepayments and other receivables | (770,029 | ) | (2,338,484 | ) | ||||
| Amount due from a related company | (2,187,784 | ) | - | |||||
| Amount due to a related company | 774,545 | - | ||||||
| Inventories | (1,735,486 | ) | (3,386,818 | ) | ||||
| Accounts payable | (2,843,233 | ) | (1,503,555 | ) | ||||
| Deferred revenue | (75,912 | ) | - | |||||
| Other payables and accrued liabilities | 349,026 | 315,942 | ||||||
| Income taxes payable | (499,161 | ) | (573,875 | ) | ||||
| Net cash flows provided by (used in) operating activities | 1,277,686 | (5,954,625 | ) | |||||
| Cash flows from investing activities | ||||||||
| Acquisitions of plant and equipment | (4,415,690 | ) | (4,047,717 | ) | ||||
| Payment for long-term investment | (764,409 | ) | - | |||||
| Net cash flows used in investing activities | (5,180,099 | ) | (4,047,717 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from short-term bank loans | 1,452,377 | - | ||||||
| Repayment of short-term loans | - | (6,062,248 | ) | |||||
| Proceeds from non-financial institution borrowings | 4,586,455 | - | ||||||
| Repayment of long-term bank loans | (917,291 | ) | (978,649 | ) | ||||
| Proceeds from notes payable | 29,485,540 | 30,931,015 | ||||||
| Repayment of notes payable | (30,313,965 | ) | (27,631,861 | ) | ||||
| Proceeds from exercise of employee options | - | 44,534 | ||||||
| Change in restricted cash | 1,531,837 | 2,588,730 | ||||||
| Net cash flows provided by (used in) financing activities | 5,824,953 | (1,108,479 | ) | |||||
| Effect of foreign currency translation on cash and cash equivalents | (973,532 | ) | 238,188 | |||||
| Net increase (decrease) in cash and cash equivalents | 949,008 | (10,872,633 | ) | |||||
| Cash and cash equivalents - beginning of period | 5,849,967 | 14,611,892 | ||||||
| Cash and cash equivalents - end of period | 6,798,975 | 3,739,259 | ||||||
| Supplemental disclosures for cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Income taxes | 773,650 | 727,509 | ||||||
| Interest expenses | 710,394 | 615,363 | ||||||
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HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)
(Stated in US Dollars)
Reconciliation of Net Income to EBITDA
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net income attributable to the Company | 2,051,782 | 1,867,124 | 1,709,174 | 1,743,766 | ||||||||||||
| Non-GAAP Net Income (1) | 2,139,964 | 2,073,234 | 1,788,597 | 1,724,938 | ||||||||||||
| Interest expenses, net | 283,137 | 110,262 | 425,600 | 342,832 | ||||||||||||
| Income tax (expenses) benefit | 174,313 | 18,840 | 209,817 | (76,416 | ) | |||||||||||
| Depreciation and Amortization | 1,229,817 | 1,289,652 | 2,486,196 | 2,535,695 | ||||||||||||
| EBITDA | 3,739,049 | 3,285,878 | 4,830,787 | 4,545,877 | ||||||||||||
| Non-GAAP Adjusted EBITDA(2) | 3,827,231 | 3,491,988 | 4,910,210 | 4,527,049 | ||||||||||||
(1) See table below for reconciliation of net income attributable to the Company to Non-GAAP net income attributable to the Company.
(2) Excludes share-based compensation expense and gain on change of fair value of warrant liabilityas set forth in the following table.
10
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)
(Stated in US Dollars except Number of Shares)
Reconciliation of Net Income Attributable to the Company to Non-GAAP Net Income Attributable to the Company
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income attributable to the Company | 2,051,782 | 1,867,124 | 1,709,174 | 1,743,766 | ||||||||||||
| Stock-based compensation expense | 95,259 | 290,943 | 205,969 | 412,304 | ||||||||||||
| Gain on change of fair value of warrant liability | (7,077 | ) | (84,833 | ) | (126,546 | ) | (431,132 | ) | ||||||||
| Non-GAAP net income attributable to the Company | 2,139,964 | 2,073,234 | 1,788,597 | 1,724,938 | ||||||||||||
| Basic net income per share of common stock attributable to the Company | 0.14 | 0.12 | 0.11 | 0.12 | ||||||||||||
| Stock-based compensation expense | 0.01 | 0.02 | 0.01 | 0.03 | ||||||||||||
| Gain on change of fair value of warrant liability | (0.00 | ) | (0.01 | ) | (0.01 | ) | (0.03 | ) | ||||||||
| Non-GAAP income per share of common stock attributable to the Company | 0.15 | 0.13 | 0.11 | 0.12 | ||||||||||||
| Diluted net income per share of common stock attributable to the Company | 0.14 | 0.12 | 0.11 | 0.11 | ||||||||||||
| Stock-based compensation expense | 0.01 | 0.02 | 0.01 | 0.03 | ||||||||||||
| Gain on change of fair value of warrant liability | (0.00 | ) | (0.01 | ) | (0.01 | ) | (0.03 | ) | ||||||||
| Non-GAAP income per share of common stock attributable to the Company | 0.15 | 0.13 | 0.11 | 0.11 | ||||||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| -Basic | 15,101,679 | 15,094,979 | 15,101,679 | 15,091,639 | ||||||||||||
| -Diluted | 15,102,877 | 15,441,576 | 15,103,886 | 15,469,274 | ||||||||||||
11
Exhibit 99.2
Highpower International Enters Into Equity Purchase Agreement
To Expand Into the Electric Vehicles (EV) Market
SAN FRANCISCO, USA and SHENZHEN, CHINA–August 12, 2016 - Highpower International, Inc. (NASDAQ: HPJ), ("Highpower," or the "Company") a developer, manufacturer, and marketer of lithium and nickel-metal hydride (Ni-MH) rechargeable batteries, and a battery management systems and battery recycling provider, today announced that its wholly-owned subsidiary, Huizhou Highpower Technology Co., Ltd, has entered into an agreement (“Agreement”) to acquire up to 50% equity interest in Huizhou Yipeng Energy Technology Co., Ltd. (“Huizhou Yipeng”), an electric vehicle power battery system solutions provider specializing in the plug-in hybrid electric vehicle (PHEV) and electric vehicle (EV) bus market in China.
Pursuant to the Agreement, the Company will invest RMB114.75 million (approximately $17.3 million) consisting of an aggregate of $5.2 million in cash and $12.1 million of power battery equipment into Huizhou Yipeng for a 50% equity interest. On August 10, 2016, the Company consummated the first purchase of 30.4% for RMB 15 million in cash (approximately $2.3 million) and power equipment equivalent to RMB 45 million (approximately $6.8 million). The purchase of the remaining equity interest of 14.6% for RMB 19.75 million in cash (approximately $2.9 million) and power equipment equivalent to RMB 35 million (approximately $5.3 million) is scheduled to close prior to November 5, 2016 subject to Huizhou Yipeng being approved prior to October 31, 2016 to be listed in the catalogue of industrial Standards of Auto Mobile Power Battery Cell, which is formulated by the Ministry of Industry and Information Technology of the People’s Republic of China. The Company intends to fund the equity purchase with cash on hand, expected future cash flow, and if needed, approximately $2.0 million in borrowings under existing credit arrangements. Prior to entering into the Agreement, Highpower already held an existing 5% equity interest in Huizhou Yipeng. Highpower also has the right to purchase from existing Huizhou Yipeng shareholders additional equity for $0.4, million which would give Highpower a total of 51% equity interest in Huizhou Yipeng.
Huizhou Yipeng was founded in Huizhou City, Guangdong Province in January 2014, and is a new high-tech enterprise focusing on lithium-ion power battery systems in new energy vehicle application. Mr. Hongze Yu, the CEO of Huizhou Yipeng, has over twenty years of experience in driving growth strategy for companies in the Chinese-vehicle industry. Prior to Huizhou Yipeng, Mr. Yu was co-founder of Beijing JAYA Technology Co., Ltd., a company specializing in smart transportation started in 2005.
Management Commentary
Mr. George Pan, Chairman and CEO of Highpower International, commented, “We are pleased to announce our strategic investment in Huizhou Yipeng, which has established an industry leading position in China in the PHEV and EV bus market, which has experienced growth in recent years in power battery system. We have worked with their management team for over two years, as Huizhou Yipeng has been a customer of Highpower and we have collaborated on several projects in past. We had a high degree of comfort after establishing this relationship to move forward and take a position in the company, and believe that our combined resources will allow Huizhou Highpower to expand more rapidly in the PHEV and EV power battery market in China and help extend Highpower’s industrial chain.”
About Huizhou Yipeng Energy Technology Co., Ltd.
Yipeng Energy Technology Co., Ltd. was founded in Huizhou City, Guangdong Province in January 2014, and is a new high-tech enterprise focusing on lithium-ion power battery systems in new energy vehicle application. Huizhou Yipeng is a developer, manufacturer, and marketer of the plug-in hybrid and pure electric vehicle fast charge lithium-ion battery systems. Huizhou Yipeng has obtained the ISO / TS16949: 2009 certification in 2015, and its fast charge battery power system has been widely used in public transportation vehicles across China. Huizhou Yipeng has been recognized by EATON Corporation in the US and has also become the standard power battery system supplier to HIGER, a top brand bus in China. Huizhou Yipeng mainly focuses on the PHEV and fast charge EV bus market, achieving over 50 million kilometers’ safe running record. For more information about Huizhou Yipeng, please go to (in Mandarin):http://www.kyipeng.com/
About Highpower International, Inc.
Highpower International was founded in 2001 and produces high-quality Nickel-Metal Hydride (Ni-MH) and lithium-based rechargeable batteries used in a wide range of applications such as electric buses, bikes, energy storage systems, power tools, medical equipment, digital and electronic devices, personal care products, and lighting. Highpower’s target customers are Fortune 500 companies, and top 10 companies in each vertical segment. With advanced manufacturing facilities located in Shenzhen, Huizhou, and Ganzhou of China, Highpower is committed to clean energy technology, not only in the products it makes, but also in the processes of production. The majority of Highpower International’s products are distributed to worldwide markets mainly in the United States, Europe, Japan, China and Southeast Asia.
Forward Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology, and include discussions of the Company’s future performance, operations and products. Such statements involve known and unknown risks, uncertainties and other factors that could cause the Company’s actual results to differ materially from the results expressed or implied by such statements, including, the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement; the inability to complete the transaction within the expected time period or at all, including due to Huizhou Yipeng’s failure to be approved for listing in the catalogue of industrial Standards of Auto Mobile Power Battery Cell, or the failure to satisfy other conditions to completion of the acquisition; risks related to disruption of management’s attention from the ongoing business operations due to the acquisition; the effect of the announcement of the acquisition on Highpower’sor Huizhou Yipeng’s relationships with their respective customers and lenders or on their operating results and businesses generally, inability to achieve the expected benefits resulting from the acquisition, such as expansion of Huizhou’s Yipeng’s business; our ability to successfully expand sales of our lithium battery product in the mobile device market and our ability to effectively compete in that market. For a discussion of these and other risks and uncertainties see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s public filings with the SEC. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.
CONTACT:
Highpower International, Inc.
Sherry Chen
+86-755-8968-6521
INVESTOR RELATIONS:
The Equity Group Inc.
In China
Katherine Yao, Senior Associate
+86-10-6587-6435
In U.S.
Adam Prior, Senior Vice President
(212) 836-9606
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