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): |
May 12, 2014 |
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 May 12, 2014, Highpower International, Inc. (the “Company”)
issued a press release announcing its financial results for the three months ended March 31, 2014.
A copy of the May 12, 2014 press release is attached to this
Current Report on Form 8-K as Exhibit 99.1 and the information therein is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On May 12, 2014, Highpower International, Inc. (the “Company”)
issued a press release announcing its financial results for the three months ended March 31, 2014.
A copy of the May 12, 2014 press release is attached to this
Current Report on Form 8-K as Exhibit 99.1 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 Exhibit 99.1 attached hereto, 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 |
Highpower International, Inc. Press Release dated May 12, 2014. |
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.
|
Highpower International, Inc. |
|
|
|
Dated: May 12, 2014 |
/s/ |
Henry Sun |
|
By: |
Henry Sun |
|
Its: |
Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. |
Description |
99.1 |
Highpower International, Inc. Press Release dated May 12, 2014. |
![](image_001.jpg)
FOR IMMEDIATE RELEASE
Highpower International, Inc. Reports
First Quarter 2014 Financial Results
San Francisco, USA & Shenzhen, China–
May 12, 2014 – Highpower International, Inc. (NasdaqGM: HPJ), 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 financial
results for the first quarter ended March 31, 2014.
First Quarter 2014 Highlights
| · | Net sales increased 19.5% year-over-year to $29.2 million |
| · | Robust growth in lithium battery segment – lithium battery net sales up 44.7% in the first
quarter of 2014 over the first quarter of 2013; total lithium battery pieces sold increased 15.2%; and a 22.5% increase in volume
per ampere hour, reflecting more sales of large format lithium batteries used in areas such as electric buses |
| · | Gross margin of 20.3%, improved 80 basis points over the first quarter of 2013 |
| · | Net loss of $0.9 million, or $0.07 per diluted share including stock based expenses of $0.4 million. |
Management Commentary
“The first quarter was transformational
in Highpower’s corporate evolution,” said Mr. George Pan, Chief Executive Officer and Chairman of Highpower International.
“We have achieved a number of important milestones since beginning the year, including: we received our first ever electric
vehicle order for large format lithium polymer batteries to be used in electric buses; we became an approved supplier for two Fortune
500 companies, Philips from Europe and SONY from Asia; we began shipping product from our new Huizhou facility; we continued to
grow into new innovative markets such as wearable products, mobile payment, and electric lawn mowers; we initiated the roll-out
of our solar compatible energy storage system line of products; and we successfully accessed the capital markets to strengthen
our balance sheet by over $5 million. We accomplished all of this while executing on our sales initiatives and delivering solid
financial performance in what is typically our weakest quarter seasonally.
“We are excited that Highpower’s
value and potential was acknowledged by institutional investors. This is the first time since we went public in 2008 that we raised
capital in the equity markets. Over the past six years, we have experienced strong growth in terms of the breadth of our product
offerings, technological advancements and global customer expansion. We have been disciplined on the timing of issuing new equity,
with the goal of maximizing shareholder value. At present, our lithium battery business is experiencing robust growth and we believe
this new capital will help us fund that growth and enable us to continue executing on our strategy of strengthening our global
leadership position in the clean energy industry,” concluded Mr. Pan.
“We are pleased with our revenue
growth and gross margin level during the first quarter as our business continues to expand with the ramp up of our new Huizhou
facility. Our first quarter’s results have been on track with our forecast,” said Mr. Henry Sun, Chief Financial Officer
of Highpower International. “With our recent key customer additions and other accounts we are working on in the pipeline,
we believe that we are well positioned for growth throughout 2014.”
First Quarter 2014 Financial Results
Net sales for the first quarter ended March
31, 2014 totaled $29.2 million, a year-over-year increase of 19.5% compared with $24.4 million for the first quarter ended March
31, 2013. The increase in sales for the first quarter was primarily due to a $4.1 million increase in net sales of our lithium
batteries and a $0.4 million increase in net sales of our Ni-MH batteries. The increase in the volume of lithium batteries sold
during the quarter was primarily attributable to growth in global demand for mobile and portable products, and electrical vehicles,
and the increase in the number of Ni-MH battery units sold was attributable to increased orders from our new customers.
First quarter 2014 gross profit increased
to $5.9 million, as compared with $4.8 million for the first quarter of 2013. Gross profit margin was 20.3% of net sales for the
first quarter of 2014, as compared with 19.5% for the first quarter of 2013. The year-over-year increase in gross profit margin
for the first quarter of 2014 was primarily attributable to increasesin the average selling price of lithium batteries sold for
the comparable period.
R&D spending was $1.8 million for the
first quarter of 2014, as compared with $1.1 million for the comparable period in 2013, reflecting the expansion of our workforce
to expand our research and development in lithium batteries, particularly in the area of new product development for the electrical
vehicles and energy storage sectors.
Selling and distribution expenses were
$1.5million for the first quarter of 2014, as compared with $1.4 million for the comparable period in 2013. The year-over-year
increase in selling and distribution expenses was due to the expansion of our sales force and marketing activities, participation
in industry trade shows, and international travel to promote and sell our products globally.
General and administrative expenses were
$3.6 million for the first quarter of 2014, as compared with $2.8 million for the first quarter of 2013. The increase was due to
the expansion of our workforce at our Huizhou facility. Included in this amount was non-cash share-based compensation expense of
$0.4 million, up from $49,000 in the first quarter of 2013.
Net loss attributable to the Company for
the first quarter of 2014 was $0.9 million, or $0.07per diluted share, based on 14.0 million weighted average shares outstanding.
This compares with first quarter 2013 net loss attributable to the company of $0.6 million or $0.04 per diluted share, based on
13.6 million weighted average shares outstanding. The increase in net loss attributable to the Company is primarily attributable
to the $0.4 million increase in non-cash share-based compensation expense between periods, and the $0.7 million increase in R&D
spending on future products.
Balance Sheet
As of March 31, 2014, Highpower International
had cash, cash equivalents and restricted cash totaling $26.6 million, total assets of $138.2 million, and stockholders’
equity of $34.0 million. Bank credit facilities totaled $54.1million at March 31, 2014, of which $28.9 million was utilized and
$25.2 million was available as unused credit.
Subsequent to the end of the quarter, the
Company completed a registered direct offering of 1,000,000 common stock sold to institutional investors at a price of $5.05 per
share, including warrants to purchase an additional 500,000 shares of common stock with an exercise price of $6.33 per share. Net
proceeds from the offering of approximately $4.7 million, after deducting the placement agent fees but prior to offering expenses,
will used be for general corporate purposes, including research and development, sales and marketing, general and administrative,
manufacturing, and capital expenditures.
Outlook
Based on our current expectations for global
demand in the rechargeable battery market in 2014 and our continued shift toward mobile power sources, higher-value energy storage
systems and transportation products, we are reaffirming our 2014 guidance of revenues to range between $150 million to $170 million
and net income in the range of $2.5 million to $4.0 million.
Conference Call and Webcast
The Company will host a conference call
today at 7:00 a.m. Pacific time/10:00 a.m. Eastern time to discuss these results and answer questions.
Individuals interested in participating
in the conference call may do so by dialing 877-941-0843 from the U.S. or 480-629-9819 from outside the U.S. and referencing the
reservation code 4682633. Those interested in listening to the conference call live via the Internet may do so by visiting the
Investor Relations section of the Company's Web site at www.highpowertech.com or
www.InvestorCalendar.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, etc. 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
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.
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 and involve risks and uncertainties, including,
without limitation, the current economic downturn and uncertainty in the European economy 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; our ability to manage the new facility
and control both operating expenses and additional capital expenditures on equipment; the devaluation of the U.S. Dollar relative
to the Renminbi; our dependence on the growth in demand for portable electronic devices 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.
Financial Profiles, Inc.
Tricia Ross
+1-310-622-8226
HPJ@finprofiles.com
– financial tables to follow –
HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(Stated in US Dollars except
Number of Shares)
| |
Three months ended March 31, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
$ | | |
$ | |
| |
| | |
| |
Net sales | |
| 29,160,314 | | |
| 24,399,372 | |
Cost of sales | |
| (23,229,369 | ) | |
| (19,636,192 | ) |
Gross profit | |
| 5,930,945 | | |
| 4,763,180 | |
| |
| | | |
| | |
Research and development expenses | |
| (1,811,952 | ) | |
| (1,102,468 | ) |
Selling and distribution expenses | |
| (1,537,160 | ) | |
| (1,395,402 | ) |
General and administrative expenses, including share-based compensation | |
| (3,571,280 | ) | |
| (2,805,391 | ) |
Gain (loss) on exchange rate difference | |
| 102,593 | | |
| (39,947 | ) |
Gain (loss) on derivative instruments | |
| (137,281 | ) | |
| 109,948 | |
Total operating expenses | |
| (6,955,080 | ) | |
| (5,233,260 | ) |
| |
| | | |
| | |
Loss from operations | |
| (1,024,135 | ) | |
| (470,080 | ) |
| |
| | | |
| | |
Other income | |
| 541,420 | | |
| 216,149 | |
Interest expenses | |
| (595,381 | ) | |
| (336,266 | ) |
| |
| | | |
| | |
Loss before taxes | |
| (1,078,096 | ) | |
| (590,197 | ) |
| |
| | | |
| | |
Income taxes benefit (expenses) | |
| 92,151 | | |
| (48,219 | ) |
Netloss | |
| (985,945 | ) | |
| (638,416 | ) |
| |
| | | |
| | |
Less: netloss attributable to non-controlling interest | |
| (50,796 | ) | |
| (29,536 | ) |
Net loss attributable to the Company | |
| (935,149 | ) | |
| (608,880 | ) |
| |
| | | |
| | |
Comprehensive loss | |
| | | |
| | |
Net loss | |
| (985,945 | ) | |
| (638,416 | ) |
Foreign currency translation loss | |
| (341,186 | ) | |
| (228,054 | ) |
Comprehensive loss | |
| (1,327,131 | ) | |
| (866,470 | ) |
| |
| | | |
| | |
Less: comprehensive loss attributable to non-controlling interest | |
| (61,433 | ) | |
| (34,218 | ) |
Comprehensive loss attributable to the Company | |
| (1,265,698 | ) | |
| (832,252 | ) |
| |
| | | |
| | |
Loss per share of common stock attributable to the Company | |
| | | |
| | |
- Basic and diluted | |
| (0.07 | ) | |
| (0.04 | ) |
| |
| | | |
| | |
Weighted average number of common shares outstanding | |
| | | |
| | |
- Basic and diluted | |
| 13,978,106 | | |
| 13,582,106 | |
HIGHPOWER INTERNATIONAL, INC.AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars except Number of Shares)
| |
March 31, | | |
December 31, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
| |
| |
$ | | |
$ | |
ASSETS | |
| | | |
| | |
Current Assets: | |
| | | |
| | |
Cash and cash equivalents | |
| 5,137,477 | | |
| 7,973,459 | |
Restricted cash | |
| 21,470,419 | | |
| 28,586,121 | |
Accounts receivable, net | |
| 28,048,843 | | |
| 33,961,014 | |
Notes receivable | |
| 1,526,360 | | |
| 1,014,891 | |
Prepayments | |
| 5,448,693 | | |
| 4,969,743 | |
Other receivables | |
| 1,079,497 | | |
| 1,063,656 | |
Inventories | |
| 20,066,716 | | |
| 19,739,360 | |
| |
| | | |
| | |
Total Current Assets | |
| 82,778,005 | | |
| 97,308,244 | |
| |
| | | |
| | |
Property, plant and equipment, net | |
| 49,173,769 | | |
| 48,548,203 | |
Land use right, net | |
| 4,356,203 | | |
| 4,421,415 | |
Intangible asset, net | |
| 637,500 | | |
| 650,000 | |
Deferred tax assets | |
| 1,213,139 | | |
| 802,225 | |
Foreign currency derivatives assets | |
| - | | |
| 63,289 | |
| |
| | | |
| | |
TOTAL ASSETS | |
| 138,158,616 | | |
| 151,793,376 | |
| |
| | | |
| | |
LIABILITIES AND EQUITY | |
| | | |
| | |
| |
| | | |
| | |
LIABILITIES | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Foreign currency derivatives liabilities | |
| 73,980 | | |
| - | |
Accounts payable | |
| 43,402,418 | | |
| 40,026,698 | |
Deferred revenue | |
| 1,677,967 | | |
| 675,521 | |
Short-term loan | |
| 25,453,672 | | |
| 36,142,105 | |
Notes payable | |
| 19,113,705 | | |
| 25,271,256 | |
Other payables and accrued liabilities | |
| 7,502,113 | | |
| 7,801,431 | |
Income taxes payable | |
| 1,587,134 | | |
| 1,279,658 | |
Current portion of long-term loan | |
| 1,951,124 | | |
| 1,967,536 | |
| |
| | | |
| | |
Total Current Liabilities | |
| 100,762,113 | | |
| 113,164,205 | |
| |
| | | |
| | |
Long-term loan | |
| 3,414,468 | | |
| 3,935,071 | |
| |
| | | |
| | |
TOTAL LIABILITIES | |
| 104,176,581 | | |
| 117,099,276 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| - | | |
| - | |
HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Stated in US Dollars
except Number of Shares)
| |
March 31, | | |
December 31, | |
| |
2014 | | |
2013 | |
| |
(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, 13,978,106 shares issued and outstanding at March 31, 2014 and December 31, 2013) | |
| 1,398 | | |
| 1,398 | |
Additional paid-in capital | |
| 6,626,371 | | |
| 6,011,305 | |
Statutory and other reserves | |
| 3,142,411 | | |
| 3,142,411 | |
Retained earnings | |
| 17,455,726 | | |
| 18,390,875 | |
Accumulated other comprehensive income | |
| 5,518,310 | | |
| 5,848,859 | |
| |
| | | |
| | |
Total equity for the Company’s stockholders | |
| 32,744,216 | | |
| 33,394,848 | |
| |
| | | |
| | |
Non-controlling interest | |
| 1,237,819 | | |
| 1,299,252 | |
| |
| | | |
| | |
TOTAL EQUITY | |
| 33,982,035 | | |
| 34,694,100 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND EQUITY | |
| 138,158,616 | | |
| 151,793,376 | |
HIGHPOWER INTERNATIONAL, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in US Dollars)
| |
Three months ended March 31, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
$ | | |
$ | |
Cash flows from operating activities | |
| | | |
| | |
Netloss | |
| (985,945 | ) | |
| (638,416 | ) |
Adjustments to reconcile netlossto net cash provided by operating activities | |
| | | |
| | |
Depreciation and amortization | |
| 1,011,081 | | |
| 568,719 | |
Allowancefor doubtful accounts | |
| - | | |
| (4,252 | ) |
Loss on disposal of property, plant and equipment | |
| 37,244 | | |
| 36,903 | |
Loss on derivative instruments | |
| 137,281 | | |
| 129,749 | |
Deferred income tax | |
| (418,906 | ) | |
| (111,704 | ) |
Share based payment | |
| 400,946 | | |
| 49,039 | |
Changes in operating assets and liabilities | |
| | | |
| | |
Accounts receivable | |
| 5,681,371 | | |
| 2,583,851 | |
Notes receivable | |
| (521,988 | ) | |
| (244,230 | ) |
Prepayments | |
| (519,476 | ) | |
| (694,174 | ) |
Other receivable | |
| (24,811 | ) | |
| 35,795 | |
Inventories | |
| (493,677 | ) | |
| 505,048 | |
Accounts payable | |
| 3,911,914 | | |
| 1,698,223 | |
Deferred revenue | |
| 1,012,063 | | |
| - | |
Other payables and accrued liabilities | |
| (237,561 | ) | |
| 876,198 | |
Income taxes payable | |
| 319,409 | | |
| (254,421 | ) |
Net cash flowsprovided by operating activities | |
| 9,309,665 | | |
| 4,536,328 | |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Acquisition of plant and equipment | |
| (2,403,047 | ) | |
| (3,025,300 | ) |
Net cash flows used in investing activities | |
| (2,403,047 | ) | |
| (3,025,300 | ) |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from short-term bank loans | |
| 295,426 | | |
| 9,339,810 | |
Repayment of short-term bank loans | |
| (10,824,720 | ) | |
| (5,786,540 | ) |
Repayment of long-term bank loans | |
| (489,708 | ) | |
| (477,981 | ) |
Proceeds from notes payable | |
| 6,192,247 | | |
| 5,474,476 | |
Repayment of notes payable | |
| (12,159,236 | ) | |
| (13,083,414 | ) |
Increase in restricted cash | |
| 6,920,453 | | |
| 945,392 | |
Net cash flows used in financing activities | |
| (10,065,538 | ) | |
| (3,588,257 | ) |
Effect of foreign currency translation on cash and cash equivalents | |
| 322,938 | | |
| 155,681 | |
Net decrease in cash and cash equivalents | |
| (2,835,982 | ) | |
| (1,921,548 | ) |
Cash and cash equivalents - beginning of period | |
| 7,973,459 | | |
| 6,627,334 | |
Cash and cash equivalents - end of period | |
| 5,137,477 | | |
| 4,705,786 | |
| |
| | | |
| | |
Supplemental disclosures for cash flow information: | |
| | | |
| | |
Cash paid for: | |
| | | |
| | |
Income taxes | |
| 7,346 | | |
| 414,343 | |
Interest expenses | |
| 595,381 | | |
| 336,266 | |
Non-cash transactions | |
| | | |
| | |
Accounts payable for construction in progress | |
| 797,753 | | |
| 2,189,363 | |
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