x
|
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
NEW ENERGY SYSTEMS GROUP
|
||
(Name of small business issuer in its charter)
|
Nevada
|
91-2132336
|
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer Identification No.)
|
|
116 West 23rd St., 5th FL
New York, NY
|
10011
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class registered:
|
Name of each exchange on which registered:
|
|
None
|
None
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
|
Non-accelerated filer
(Do not check if a smaller reporting company)
|
o
|
Smaller reporting company
|
x
|
Page | ||
|
PART I
|
|
ITEM 1.
|
Business
|
1 |
ITEM1A.
|
Risk Factors
|
13 |
ITEM 1B.
|
Unresolved Staff Comments
|
13 |
ITEM 2.
|
Properties
|
13 |
ITEM 3.
|
Legal Proceedings
|
14 |
ITEM 4.
|
(Removed and Reserved)
|
14 |
PART II
|
||
ITEM 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
14 |
ITEM 6.
|
Selected Financial Data
|
15 |
ITEM 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation
|
16 |
ITEM7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
21 |
ITEM 8.
|
Financial Statements and Supplementary Data
|
21 |
ITEM 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
21 |
ITEM 9A.
|
Controls and Procedures
|
22 |
ITEM 9B.
|
Other Information
|
24 |
PART III
|
||
ITEM 10.
|
Directors, Executive Officers and Corporate Governance
|
24 |
ITEM 11.
|
Executive Compensation
|
28 |
ITEM 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
29 |
ITEM 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
31 |
ITEM 14.
|
Principal Accounting Fees and Services
|
31 |
PART IV
|
||
ITEM 15.
|
Exhibits, Financial Statement Schedules
|
32 |
SIGNATURES
|
34 |
·
|
Successfully integrate recent acquisitions.
|
|
·
|
Improve sales and profitability of all companies.
|
·
|
Increasing our international presence and expand international focus.
|
·
|
Achieving deeper penetration of our existing customer base through continued innovation and high quality production and maximize cross-selling opportunities and synergies of recent acquisitions.
|
|
·
|
Expanding our product offerings and in particular, focusing on the end-user consumer market.
|
|
·
|
Targeting higher margin OEM customers and retail partners, through private label offerings.
|
·
|
Low Pressure. It can be used under low pressure condition. The pressure is affected by the thickness of the aluminum sheet and the diameter of holes within the caps.
|
·
|
Strong Resistance. The aluminum material will not become stiff or rigid and therefore the product will not crack if it is hit.
|
·
|
Expanding the Gas Releasing Volume. When the safety value is on the gas will be released.
|
·
|
Cell Phone Series. Through a universal connector, Anytone’s mobile power backup products can charge most major cell phones currently in the market. In addition, Anytone’s products support the “Made for iPhone, iPod and iPad” devices.
|
·
|
Digital Camera and Camcorder Series. This series has a higher capacity to be used for digital cameras, camcorders and similar devices. This series of products also combines a universal connector which can support most major brand digital devices currently in the market.
|
·
|
Solar Energy Series. As an environmentally friendly company, Anytone also provides green energy products through its solar energy series. These products recharge itself by absorbing solar energy through universal connectors to provide most digital devices currently in the market extra battery life.
|
·
|
Laptop Series. This series has sufficient power capacity to support small digital mobile devices and the power needed by most of the laptops currently in the market.
|
Vendor name
|
Percentage of Total
Purchased amount in 2009
|
Percentage of Total
Purchased amount in 2010(1)
|
||||||
Shenzhen Da Ke Battery Co., Ltd.
|
24
|
%
|
-
|
%
|
||||
Shenzhen Tian Lu Battery Co., Ltd.
|
23
|
%
|
-
|
%
|
||||
Shenzhen Di Kai Te Battery Electronic Tech. Co., Ltd.
|
19
|
%
|
-
|
%
|
||||
Shenzhen Beiterui New Energy Material Co., Ltd.
|
-
|
%
|
10
|
%
|
||||
Shenzhen Guanghaoyu Electronic Co., Ltd.
|
-
|
%
|
10
|
%
|
||||
Shenzhen NewPower Technology Co., Ltd.
|
-
|
%
|
10
|
%
|
||||
Shenzhen BAK Battery Co., Ltd
|
-
|
%
|
9
|
%
|
(1)
|
Percentages are based on total purchases of 2010, including intercompany purchases from Shenzhen NewPower Technology Co., Ltd., our subsidiary and one of our largest suppliers.
|
Customer Name
|
Type of Product Sold
|
Percentage of Total Revenue for 2009
|
Percentage of Total Revenue for 2010
|
||||||
Shenzhen Hua Yin Tong Battery Electronic Tech. Co., Ltd.
|
Finished batteries
|
49
|
%
|
6
|
%
|
||||
China Electronics Shenzhen Company
|
Finished batteries and Portable mobile power devices
|
15
|
%
|
13
|
%
|
||||
Shenzhen Huanyuda Battery Electronic Tech. Co., Ltd.
|
Battery shells and covers
|
3
|
%
|
1
|
%
|
||||
Shenzhen Hui Yang Da Electronic Co., Ltd.
|
Battery shells and covers
|
3
|
%
|
1
|
%
|
||||
Shenzhen BAK Battery Co., Ltd.
|
Battery shells and covers
|
3
|
%
|
0
|
%
|
||||
Shenzhen Ping Bu Tech., Co., Ltd.
|
Battery shells and covers
|
3
|
%
|
1
|
%
|
Order
|
Model
|
Patent's
Category
|
Received Date
(Application Date)
|
Received
Notice Number
|
Authorization Date (Patent Effective Date)
|
Patent
Number
|
1
|
APC-B100N
|
Appearance Design
|
1/9/2009
|
200930066794.1
|
1/6/2010
|
ZL 200930066794.1
|
2
|
APC-B300(APC-300)
|
Appearance Design
|
9/29/2007
|
200730313479.5
|
Pending
|
|
3
|
APC-M400A(APC-M400)
|
Appearance (non-embossed)
|
1/11/2008
|
200830039905.5
|
5/6/2009
|
ZL 200830039905.5
|
4
|
APC-M400B (iPhone external battery)
|
Appearance Design
|
4/30/2008
|
200830047718.1
|
9/9/2009
|
ZL 200830047718.1
|
5
|
APC-M400BS
|
Appearance Design
|
4/7/2009
|
200930072601.3
|
1/27/2010
|
ZL 200930072601.3
|
6
|
APC-M400C
|
Appearance Design (iPhone battery)
|
10/22/2008
|
200830252240.6
|
4/14/2010
|
ZL 200830252240.6
|
Utility Model (Cell phone rechargeable battery)
|
11/6/2008
|
200820202979.0
|
8/26/2009
|
ZL 200820202979.0
|
||
7
|
APC-M400E
|
Appearance Design
|
12/3/2008
|
200830220996.2
|
1/13/2010
|
ZL 200830220996.2
|
Utility Model ( a digital transmission mobile power)
|
12/31/2008
|
200820206741.5
|
Pending
|
|||
8
|
APC-M400G
|
Appearance Design
|
12/3/2008
|
200830220955.8
|
12/9/2009
|
ZL 200830220995.8
|
9
|
APC-M400I
|
Appearance Design
|
3/4/2009
|
200930069332.5
|
5/5/2010
|
ZL 200930069332.5
|
10
|
APC-M100(APC-1100)
|
Appearance Design
|
11/5/2007
|
200730317248.1
|
2/18/2009
|
ZL 200730317248.1
|
11
|
APC-M200
|
Appearance Design
|
11/5/2007
|
200730317249.6
|
2/18/2009
|
ZL 200730317249.6
|
12
|
APC-8800B
|
Appearance Design
|
4/7/2009
|
200930072603.2
|
5/26/2010
|
ZL 200930072603.2
|
13
|
APC-20000
|
Appearance Design
|
9/29/2007
|
200730313482.7
|
Pending
|
|
14
|
APC-20000N3
|
Appearance Design
|
9/29/2007
|
200730313480.8
|
6/3/2009
|
ZL 200730313480.8
|
15
|
APC-S300
|
Appearance Design
|
1/9/2009
|
200930066792.2
|
12/9/2009
|
ZL 200930066792.2
|
16
|
A Solar Energy Mobile Power device (S300N)
|
Utility Model
|
12/31/2008
|
200820206742.X
|
12/2/2009
|
ZL 200820206742.X
|
17
|
APC-S400
|
Appearance Design
|
1/9/2009
|
200930066793.7
|
1/27/2010
|
ZL 200930066793.7
|
18
|
APC-2200
|
Appearance Design
|
3/14/2006
|
200630054453.9
|
1/31/2007
|
ZL 200630054453.9
|
19
|
ABT-001 (Bluetooth headsets)
|
Appearance Design
|
6/5/2009
|
200930079197.2
|
4/7/2010
|
ZL 200930079197.2
|
Utility Model
|
7/17/2009
|
200920060692.3
|
5/5/2010
|
ZL 200920060692.3
|
||
20
|
APC-AC100 ( a portable mobile power)
|
Utility Model
|
7/17/2009
|
200920060693.8
|
5/5/2010
|
ZL 200920060693.8
|
21
|
APC-4500
|
Appearance Design
|
3/14/2006
|
200630054455.8
|
1/31/2007
|
ZL 200630054455.8
|
22
|
APC-M400D(L400)
|
Appearance Design
|
1/22/2008
|
200830040521.5
|
9/23/2009
|
ZL 200830040521.5
|
23
|
APC-M400H
|
Appearance Design
|
12/12/2008
|
200830221850.X
|
12/9/2009
|
ZL 200830221850.X
|
24
|
APC-B200
|
Appearance Design
|
11/5/2007
|
200730317250.9
|
2/17/2010
|
ZL 200730317250.9
|
25
|
APC-M400CS
|
Appearance Design
|
7/22/2009
|
200930083356.6
|
8/18/2010
|
ZL 200930083356.6
|
26
|
APC-M200E
|
Appearance Design
|
7/22/2009
|
200930083358.5
|
4/14/2010
|
ZL 200930083358.5
|
27
|
Digital Battery
|
Utility Model
|
8/7/2006
|
200620062658.6
|
9/12/2007
|
ZL 200620062658.6
|
28
|
APC-H001 (Hand Heater)
|
Utility Model
|
8/24/2009
|
200920193225.8
|
10/13/2010
|
ZL 200920193225.8
|
29
|
APC-S600
|
Appearance Design
|
11/27/2009
|
200930341309.7
|
8/18/2010
|
ZL 200930341309.7
|
30
|
APC-M400U
|
Utility Model
|
12/30/2009
|
200920295823.6
|
10/13/2010
|
ZL 200920295823.6
|
31
|
APC-400B
|
Appearance Design
|
3/4/2009
|
200930069331.0
|
12/30/2009
|
ZL 200930069331.0
|
32
|
APC-13200B
|
Appearance Design
|
6/9/2010
|
201030206375.6
|
1/19/2011
|
ZL 201030206375.6
|
33
|
APC-M400F
|
Appearance Design
|
6/9/2010
|
201030206322.4
|
1/9/2011
|
ZL 201030206322.4
|
34
|
APC-M400V8A
|
Appearance Design
|
6/9/2010
|
201030206350.6
|
Pending
|
|
35
|
APC-M400G+
|
Appearance Design
|
6/9/2010
|
201030206340.2
|
Pending
|
|
36
|
APC-M400LS1
|
Appearance Design
|
6/9/2010
|
20100206394.9
|
Pending
|
|
37
|
APC-M400LS2
|
Appearance Design
|
6/25/2010
|
201030218041.0
|
Pending
|
|
38
|
APC-M400A4+
|
Appearance Design
|
7/2/2010
|
201030227117.6
|
7/2/2010
|
ZL 201030227117.6
|
39
|
APC-M400A4
|
Appearance Design
|
7/2/2010
|
201030227083.0
|
7/2/2010
|
ZL 201030227083.0
|
40
|
APC-M400G4A
|
Appearance Design
|
7/2/2010
|
201030227116.1
|
7/2/2010
|
ZL 201030227116.1
|
41
|
APC-M600
|
Utility Model
|
9/1/2010
|
201020514690.x
|
Pending
|
|
42
|
APC-M400D7
|
Appearance Design
|
11/29/2010
|
201030647433.2
|
Pending
|
|
43
|
APC-M400D7S
|
Appearance Design
|
11/29/2010
|
201030647433.9
|
Pending
|
|
44
|
APC-M400D9
|
Appearance Design
|
11/29/2010
|
201030647419.9
|
Pending
|
|
45
|
APC-M500B
|
Appearance Design
|
11/29/2010
|
201030647358.6
|
Pending
|
|
46
|
APC-M500BS
|
Appearance Design
|
11/29/2010
|
201030647372.6
|
Pending
|
|
47
|
APC-M400G4S
|
Appearance Design
|
11/29/2010
|
201030647390.4
|
Pending
|
|
48
|
APC-M400G4AS
|
Appearance Design
|
11/29/2010
|
201030647404.2
|
Pending
|
|
49
|
APC-AC400
|
Appearance Design
|
11/29/2010
|
201030647343.3
|
Pending
|
Applicant
|
Model
|
Category
|
Application Number
|
Application Date
|
Authorization Date
|
Term
|
Due Date
|
Shenzhen NewPower Technology Co., Ltd
|
Lithium ion battery cell (053442AR)
|
Appearance Design
|
200930086058.2
|
8/19/2009
|
8/20/2009
|
10 years
|
8/19/2019
|
Shenzhen NewPower Technology Co., Ltd
|
A Lithium ion cell's battery for cell phone
|
Utility Model
|
200920062606.2
|
8/19/2009
|
8/20/2009
|
10 years
|
8/19/2019
|
Shenzhen NewPower Technology Co., Ltd
|
A Lithium ion cell's battery for cell phone
|
Utility Model
|
200920062604.3
|
8/19/2009
|
8/20/2009
|
10 years
|
8/19/2019
|
Shenzhen NewPower Technology Co., Ltd
|
Lithium ion battery cell (053450AK)
|
Appearance Design
|
200930086057.8
|
8/19/2009
|
8/20/2009
|
10 years
|
8/19/2019
|
Order
|
Trademark |
Applicant
|
Area
|
Application Date
|
Application Number/ Trademark Number
|
Current Status
|
Agency
|
1
|
Anytone
|
PRC
|
2006.03.24
|
5236842
|
Processing
|
Beijing Xintong United Trademark Office
|
|
2
|
Anytone
|
PRC
|
2007.10.09
|
6312960
|
Processing
|
Shenzhen Longcheng Intellectual Property Agency Co., Ltd.
|
|
4
|
Anytone
|
PRC
|
2010.05.12
|
8290006
|
Processing
|
Shenzhen Guangtong Intellectual Property Agency Co., Ltd.
|
|
Anytone
|
USA
|
2010.05.27
|
85045902
|
Processing
|
Shenzhen Guangtong Intellectual Property Agency Co., Ltd.
|
||
5
|
Anytone
|
PRC
|
2010.05.12
|
8290028
|
Processing
|
Shenzhen Guangtong Intellectual Property Agency Co., Ltd.
|
|
Anytone
|
USA
|
2010.05.27
|
85045900
|
Processing
|
Shenzhen Guangtong Intellectual Property Agency Co., Ltd.
|
||
6
|
Anytone
|
PRC
|
2010.5.13
|
8295124
|
Processing
|
Shenzhen Guangtong Intellectual Property Agency Co., Ltd.
|
|
7
|
NewPower
|
PRC
|
2010.08.02
|
8535073
|
Processing
|
Shenzhen Goodwill and Trademark Office Co., Ltd.
|
|
8
|
NewPower
|
PRC
|
2010.08.02
|
8535105
|
Processing
|
Shenzhen Goodwill and Trademark Office Co., Ltd.
|
|
9
|
Anytone (H.K.)
|
HK
|
2010.05.17
|
301615860
|
Public
|
Tianbiao Intellectual Property Agency Co., Ltd.
|
2009
|
2010
|
|||||||
Kim Fai
|
$
|
44,783.28
|
$
|
54,112.93
|
||||
E’Jenie
|
$
|
28,691.04
|
$
|
45,703.49
|
||||
Anytone
|
$
|
98,852.36
|
$
|
152,344.97
|
||||
NewPower
|
$
|
131,744.59
|
$
|
130,766.83
|
·
|
We will be able to capitalize on economic reforms.
|
·
|
The Chinese government will continue its pursuit of economic reform policies.
|
·
|
The economic policies, even if pursued, will be successful.
|
·
|
Economic policies will not be significantly altered from time to time.
|
·
|
Business operations in China will not become subject to the risk of nationalization.
|
2009
|
High
|
Low
|
||||||
First Quarter
|
$
|
0.05
|
$
|
0.02
|
||||
Second Quarter
|
$
|
0.24
|
$
|
0.03
|
||||
Third Quarter
|
$
|
7.50
|
$
|
0.13
|
||||
Fourth Quarter
|
$
|
10.00
|
$
|
5.40
|
2010
|
High
|
Low
|
||||||
First Quarter
|
$
|
9.32
|
$
|
6.20
|
||||
Second Quarter
|
$
|
8.72
|
$
|
6.12
|
||||
Third Quarter
|
$
|
7.60
|
$
|
4.60
|
||||
Fourth Quarter
|
$
|
9.20
|
$
|
5.73
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
Weighted-average exercise price of outstanding options, warrants and rights
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
(c)
|
|||
Equity compensation plans approved by security holders
|
1,000,000
|
$8.81
|
0
|
|||
Equity compensation plans not approved by security holders
|
10,000
|
$0.53
|
0
|
|||
Total
|
1,010,000
|
$8.73
|
0
|
|
||||||||||||||||
2010
|
% of Sales
|
2009
|
% of Sales
|
|||||||||||||
Revenue, net
|
||||||||||||||||
Battery
|
$
|
79,814,242
|
84
|
%
|
$
|
19,918,846
|
76
|
%
|
||||||||
Battery shell and cover
|
11,758,403
|
13
|
%
|
6,457,044
|
24
|
%
|
||||||||||
Solar
|
3,089,012
|
3
|
%
|
-
|
-
|
|||||||||||
Total
|
94,661,657
|
100
|
%
|
26,375,890
|
100
|
%
|
||||||||||
Cost of revenue
|
||||||||||||||||
Battery
|
58,170,005
|
73
|
%
|
13,735,160
|
69
|
%
|
||||||||||
Battery shell and cover
|
8,170,779
|
69
|
%
|
4,596,379
|
71
|
%
|
||||||||||
Solar
|
2,104,528
|
68
|
%
|
-
|
-
|
|||||||||||
Total
|
68,445,312
|
72
|
%
|
18,331,539
|
70
|
%
|
||||||||||
Gross profit
|
26,216,345
|
28
|
%
|
8,044,351
|
30
|
%
|
||||||||||
Operating expenses
|
||||||||||||||||
Selling
|
422,491
|
1
|
%
|
124,845
|
0
|
%
|
||||||||||
General and administrative
|
5,940,666
|
6
|
%
|
1,213,783
|
5
|
%
|
||||||||||
Total
|
6,363,157
|
7
|
%
|
1,338,628
|
5
|
%
|
||||||||||
Income from operations
|
19,853,188
|
21
|
%
|
6,705,723
|
25
|
%
|
||||||||||
Other income (expenses), net
|
74,682
|
0
|
%
|
(55,230)
|
0
|
%
|
||||||||||
Income before income taxes
|
19,927,870
|
21
|
%
|
6,650,493
|
25
|
%
|
||||||||||
Provision for income taxes
|
4,738,485
|
5
|
%
|
813,098
|
3
|
%
|
||||||||||
Net income
|
$
|
15,189,385
|
16
|
%
|
$
|
5,837,395
|
22
|
%
|
2010
|
2009
|
|||||||
Cash provided by (used in):
|
||||||||
Operating Activities
|
$
|
21,520,537
|
$
|
4,564,944
|
||||
Investing Activities
|
(5,976,338)
|
(5,598,172)
|
||||||
Financing Activities
|
(6,373,809)
|
(2,270,729)
|
Furniture and Fixtures
|
5 years
|
Equipment
|
5 years
|
Computer Hardware and Software
|
5 years
|
Building
|
30 years
|
·
|
Lack of periodic review of our accounting manual, policy, and procedures; and
|
·
|
Lack of periodic review of the accounting books.
|
·
|
The Company has set up an audit committee and held two committee meetings to review our quarterly financial reports; and
|
·
|
The Company has hired three independent directors, which enhanced our Board of Directors’ right to review and determine the Company’s major capital expense.
|
·
|
The Company intends to hire a new CFO who is familiar with Chinese accounting regulation, U.S. GAAP, and SEC regulations;
|
·
|
The Company intends to hire more employees for its financial department who are familiar with U.S. GAAP;
|
·
|
The Company intends to educate and further train their current employees to enhance their knowledge about U.S. GAAP;
|
·
|
The Company will conduct periodic reviews of the Company’s accounting manual, policy and procedures, and accounting books; and
|
·
|
The Company will use the financial statement disclosure lists in accordance with the U.S. GAAP to review all the future financial data.
|
Name
|
Age
|
Position
|
Date of Appointment
|
|||
Nian Chen
|
38
|
Chief Executive Officer
|
May 14, 2010
|
|||
Jufeng Chen
|
32
|
Chief Financial Officer and Secretary
|
August 3, 2009
|
|||
Weihe Yu
|
34
|
Chairman of the Board of Directors
|
December 10, 2009
|
Elan Yaish
|
41
|
Director
|
June 11, 2010
|
Shuxian Cui
|
74
|
Director
|
June 9, 2010
|
Li Liu
|
42
|
Director
|
May 18, 2010
|
Fushun Li
|
48
|
Director
|
May 11, 2009(1)
|
(1)
|
As reported in our Current Report on Form 8-K filed with the SEC on March 24, 2011, effective March 18, 2011, Mr. Fushun Li resigned as a director of the Company.
|
·
|
Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.
|
·
|
Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses.
|
·
|
Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities.
|
·
|
Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
|
·
|
Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
Non-
|
Nonqualified
|
|||||||||||||||||||||||||||||||||
Name |
Equity
|
Deferred
|
All
|
|||||||||||||||||||||||||||||||
and |
Stock
|
Option
|
Incentive
|
Compensation
|
Other
|
|||||||||||||||||||||||||||||
Principal |
Salary
|
Bonus
|
Awards
|
Awards
|
Plan
|
Earnings
|
Compensation
|
Total
|
||||||||||||||||||||||||||
Position |
Year
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
|||||||||||||||||||||||||
(a) |
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||||||||||||||
Nian Chen |
2010
|
$ | 11,147 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 11,147 | |||||||||||||||||||||||
CEO (1) |
2009
|
$ | - | - | - | - | - | - | $ | - | ||||||||||||||||||||||||
Fushun Li |
2010
|
$ | 7,298 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 7,298 | |||||||||||||||||||||||
Former CEO (2) |
2009
|
$ | 5,882 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 5,882 | |||||||||||||||||||||||
Zhongnan Xu |
2010
|
$ | - | - | - | - | - | - | - | $ | - | |||||||||||||||||||||||
Former CEO (3) |
2009
|
$ | 0 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 0 | |||||||||||||||||||||||
Jugen Chen |
2010
|
$ | 17,647 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 17,647 | |||||||||||||||||||||||
CFO |
2009
|
$ | 10,294 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 10,294 | |||||||||||||||||||||||
Weihe Yu |
2010
|
$ | 26,470 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 26,470 | |||||||||||||||||||||||
Chairman |
2009
|
$ | 1,523 | 0 | 0 | 0 | 0 | 0 | 0 | $ | 1,523 |
(1)
|
Mr. Nian Chen has been our CEO since May 14, 2010.
|
(2)
|
Mr. Fushun Li was our CEO from May 5, 2009 and resigned as our CEO on May 14, 2010.
|
(3)
|
Mr. Zhongnan Xu was our CEO from January 4, 2007 and resigned as our CEO on May 5, 2009.
|
Name and
Principal Position
|
Year
|
Fees
Earned
or Paid
in Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)(5)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings($)
|
All Other
Compensation
($)
|
Total
($)
|
||||||||||||||||||||||
Elan Yaish
|
2010
|
$
|
30,000
|
-
|
25,000
|
-
|
-
|
-
|
55,000
|
|||||||||||||||||||||
Director (1) |
2009
|
$
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Shuxian Cui
|
2010
|
$
|
9,139
|
-
|
-
|
-
|
-
|
-
|
9,139
|
|||||||||||||||||||||
Director (2) |
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
Li Liu,
|
2010
|
$
|
762
|
-
|
-
|
-
|
-
|
-
|
762
|
|||||||||||||||||||||
Director(3) |
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||
Ronqui Dai,
|
2010
|
$
|
0
|
-
|
-
|
-
|
-
|
0
|
||||||||||||||||||||||
Director(4) |
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Amount and Nature of Beneficial Ownership (1)
|
||||||||||||||||||||||||||||
Name and Address of
Beneficial Owner
|
Common
Stock
|
Options
|
Preferred
Shares (2)
|
Total
|
Percentage of
Common
Stock (%)(1)(2)
|
Percentage of Preferred Shares
(%)(3)
|
Percentage of
Voting Power
(%)(2)
|
|||||||||||||||||||||
Owner of More than 5% of Class
|
||||||||||||||||||||||||||||
Huoqing Yang
Haoyuan Chemical Company Limited
Chengming Industrial Park, Shouguang City, Shandong Province, PRC
|
228,890
|
0
|
2,553,030
|
484,193(4)
|
3.2
|
%
|
100
|
%
|
56.27
|
%
|
||||||||||||||||||
Gold River Industrial Holding Limited (4)
Room 806, Decheng Building, No 20, Queens E. Blvd., Hong Kong, China
|
1,078,182
|
0
|
0
|
1,078,182
|
7.5
|
%
|
-
|
3.35
|
%
|
|||||||||||||||||||
Directors and Executive Officers
|
||||||||||||||||||||||||||||
Nian Chen
Chief Executive Officer
|
0
|
0
|
0
|
0
|
-
|
-
|
-
|
|||||||||||||||||||||
Junfeng Chen
Chief Financial Officer
|
0
|
0
|
0
|
0
|
-
|
-
|
-
|
|||||||||||||||||||||
Weihe Yu (5)
Chairman
|
1,078,182
|
0
|
0
|
1,078,182
|
7.5
|
%
|
-
|
3.35
|
%
|
|||||||||||||||||||
Elan Yaish
|
12,500
|
25,000
|
0
|
12,500
|
0.1
|
% |
-
|
0.04
|
% | |||||||||||||||||||
Shuxian Cui
|
0
|
0
|
0
|
0
|
-
|
-
|
-
|
|||||||||||||||||||||
Li Lui
|
0
|
0
|
0
|
0
|
-
|
-
|
-
|
|||||||||||||||||||||
Fushun Li(6)
|
0
|
0
|
0
|
0
|
-
|
-
|
-
|
|||||||||||||||||||||
All Directors and Executive Officers (7 persons)
|
1,090,682
|
25,000
|
0
|
1,090,682
|
7.6
|
%
|
-
|
3.39
|
%
|
2010
|
2009
|
|||||||
Audit Fees(1)
|
$ | 185,000 | $ | 60,000 | ||||
Audit-Related Fees(2)
|
4,750 | 20,000 | ||||||
Tax Fees(3)
|
- | - | ||||||
All Other Fees
|
- | - | ||||||
Total
|
$ | 189,750 | $ | 80,000 |
|
(1) Audit fees relate to professional services rendered in connection with the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings.
|
|
(2) Audit-related fees relate to professional services rendered in connection with assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements, including due diligence.
|
|
(3) Tax fees relate to professional services rendered for tax compliance, tax advice and tax planning for the Company. The Company does not engage GKM to perform personal tax services for its executive officers.
|
Exhibit No.
|
Title of Document
|
Location
|
2.1
|
Share Exchange Agreement, dated February 14, 2006, between us, UPE Limited (Far East), Shenzhen Zhuo Tong Power Supply Industry Co., Ltd., and the shareholders of UPE Limited
|
Incorporated by reference as Exhibit 2.1 to Form 8-K filed February 21, 2006
|
2.2
|
Amended and Restated Share Exchange Agreement, dated March 22, 2006, between us, Galaxy View International Ltd., Shenzhen Sono, and the shareholders of Galaxy View International Ltd.
|
Incorporated by reference as Exhibit 2.1 to Form 8-K filed March 24, 2006
|
2.3
|
Share Exchange Agreement and Plan or Reorganization
|
Incorporated by reference as Exhibit 10.1 to Form 8-K filed September 29, 2004
|
3.1.1
|
Articles of Incorporation
|
Incorporated by reference as Exhibit 3(i)(1) to Form 8-K filed September 16, 2004
|
3.1.2
|
Amendment to Articles of Incorporation
|
Incorporated by reference as Exhibit 3(i)(2) to Form 8-K filed September 16, 2004
|
3.1.3
|
Amendment to Articles of Incorporation
|
Incorporated by reference as Exhibit 3(i)(3) to Form 8-K filed September 16, 2004
|
3.1.4
|
Certificate of Designation of Series A Convertible Preferred Stock
|
Incorporated by reference as Exhibit 3(i) to Form 8-K filed July 28, 2006
|
3.1.5
|
Certificate of Amendment to Articles of Incorporation
|
Incorporated by reference as Exhibit 3.1 to Form 8-K filed on November 19, 2009
|
3.1.6
|
Amendment to the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock
|
Incorporated by reference as Exhibit 3.1 to Form 8-K filed on October 21, 2010.
|
3.2
|
Bylaws
|
Incorporated by reference as Exhibit 3.4 to Form SB-2/A filed March 22, 2002
|
4.1
|
Form of Stock Certificate
|
Incorporated by reference as Exhibit 4.1 to Form SB-2/A filed March 22, 2002
|
4.2
|
2004 Equity Incentive Plan
|
Incorporated by reference as Exhibit 4.1 to Form S-8 filed March 2, 2004
|
4.3
|
Form of Class A, B and C Warrants
|
Incorporated by reference as Exhibit 4.3 to Form 10-KSB filed March 30, 2006
|
4.4
|
Form of Subscription Agreement dated March 17, 2004 by and among Jasmine's Garden and the Investors
|
Incorporated by reference as Exhibit 4.1 to Form 8-K filed March 22, 2004
|
10.1
|
Sales Contract dated April 21, 2005 between Shenzhan E'Jenine Science & Technology Co., LTD. and Shenzhen Gao Yi Electonics Co. LTD.
|
Incorporated by reference as Exhibit 10.1 to Form 8-K filed April 22, 2005
|
10.2
|
Sales Contract dated July 12, 2005 between Shenzhan E'Jenine Science & Technology Co., LTD. and Wuhan Jie Xin Communication Development Co., LTD.
|
Incorporated by reference as Exhibit 2.1 to Form 8-K filed July 14, 2005
|
10.3
|
Sales Contract dated December 31, 2005 between Shenzhan E'Jenine Science & Technology Co., LTD. and Yin Si Qi Electronics Co.
|
Incorporated by reference as Exhibit 2.1 to Form 8-K filed January 6, 2006
|
10.4
|
Loan Agreement dated March 10, 2006, between New Energy Systems Group and United Private Equity (The Pacific) Limited
|
Incorporated by reference as Exhibit 2.1 to Form 8-K filed March 15, 2006
|
10.5
|
Employment Agreement dated December 10, 2009 between New Energy Systems Group and Weihe Yu
|
Incorporated by reference as Exhibit 21.1 to Form 10-K filed April 15, 2010
|
10.6
|
Employment Agreement dated July 1, 2009 between New Energy Systems Group and Fushun Li
|
Incorporated by reference as Exhibit 21.1 to Form 10-K filed April 15, 2010
|
10.7
|
Employment Agreement dated September 1, 2009 between New Energy Systems Group and Junfeng Chen
|
Incorporated by reference as Exhibit 21.1 to Form 10-K filed April 15, 2010
|
10.8
|
Share Exchange Agreement, dated November 10, 2010, by and among Shenzhen Anytone Technology Co. Ltd, Shenzhen Kim Fai Solar Energy Technology Co., Ltd., and the Company.
|
Incorporated by reference as Exhibit 10.1 to Form 8-K filed November 12, 2010
|
10.9
|
Letter of Appointment, dated June 11, 2010, by and between Mr. Elan Yaish and the Company.
|
Incorporated by reference as Exhibit 10.1 to Form 8-K filed June 17, 2010
|
10.10
|
Lease Agreement, dated August 28, 2009, by and between Shenzhen Longgang District Tailian Industrial Development Co., Ltd. and Shenzhen NewPower Technology Co., Ltd.
|
Filed herewith
|
10.11
|
Lease Agreement, dated January 1, 2009, by and between China Great wall calculator Shenzhen Co., Ltd. And Shenzhen Anytone Technology Co., Ltd.
|
Filed herewith
|
10.12
|
2004 Equity Incentive Plan
|
Incorporated by reference to the Registration Statement on Form S-8 filed on March 2, 2004
|
10.13
|
China Digital Communication Group 2009 Equity Incentive Plan
|
Incorporated by reference to the Registration Statement on Form S-8 filed on October 28, 2009
|
10.14
|
Employment Agreement, dated September 1, 2008, by and between Nian Chen and Shenzhen Anytone Technology Co., Ltd.
|
Filed herewith
|
10.15
|
Lease Agreement, dated December 23, 2005, by and between Kim Fai
|
Filed herewith
|
14.1
|
Code of Ethics
|
Incorporated by reference as Exhibit 14.1 to Form 8-K filed June 17, 2010
|
21.1
|
Subsidiaries
|
Filed herewith
|
23.1
|
Consent of Kabani & Company, Inc.
|
Incorporated by reference s Exhibit 23.1 to the Registration Statement on Form S-8 filed on October 28, 2009
|
23.2
|
Consent of Berkman, Henoch, Peterson & Peddy, P.C.
|
Incorporated by reference s Exhibit 23.2 to the Registration Statement on Form S-8 filed on October 28, 2009
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
NEW ENERGY SYSTEMS GROUP
|
|||
Date: March 28, 2011
|
By:
|
/s/ Nian Chen
|
|
Nian Chen
|
|||
Chief Executive Officer
|
|||
Name
|
Capacity
|
Date
|
||
/s/ Nian Chen
|
||||
Nian Chen
|
Chief Executive Officer
(Principal Executive Officer)
|
March 28, 2011
|
||
/s/ Jufeng Chen
|
||||
Jufeng Chen
|
Chief Financial Officer
(Principal Financial Officer and
|
March 28, 2011
|
||
Principal Accounting Officer)
|
||||
/s/ Weihe Yu
|
||||
Weihe Yu
|
Director - Chairman of the Board of Directors
|
March 28, 2011
|
||
/s/ Elan Yaish
|
||||
Elan Yaish
|
Director
|
March 28, 2011
|
||
/s/ Shuxuan Cui
|
||||
Shuxian Cui
|
Director
|
March 28, 2011
|
||
/s/ Li Liu
|
||||
Li Liu
|
Director
|
March 28, 2011
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets
|
F-3
|
Consolidated Statements of Income and Comprehensive Income
|
F-4
|
Consolidated Statements of Cash Flow
|
F-5
|
Consolidated Statements of Changes in Stockholders’ Equity
|
F-6
|
Notes to Consolidated Financial Statements
|
F-7-21
|
NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
December 31, 2010
|
December 31, 2009
|
|||||||
(Restated)
|
||||||||
Current assets
|
|
|
||||||
Cash and equivalents
|
$ | 13,065,008 | $ | 3,651,990 | ||||
Accounts receivable
|
11,192,150 | 9,776,041 | ||||||
Inventory
|
2,420,009 | 502,702 | ||||||
Other receivables
|
47,249 | 433,804 | ||||||
Due from shareholders
|
270,522 | 262,380 | ||||||
Deferred compensation
|
675,000 | 675,000 | ||||||
Total current assets
|
27,669,938 | 15,301,917 | ||||||
Noncurrent assets
|
||||||||
Prepayment for Newpower acquisition
|
- | 2,999,473 | ||||||
Deposits
|
- | 37,626 | ||||||
Plant, property & equipment, net
|
1,134,029 | 699,790 | ||||||
Deferred compensation-noncurrent
|
1,098,493 | 1,773,493 | ||||||
Goodwill
|
60,555,607 | 19,775,939 | ||||||
Intangible assets, net
|
19,969,021 | 15,772,344 | ||||||
Total noncurrent assets
|
82,757,150 | 41,058,665 | ||||||
Total assets
|
$ | 110,427,088 | $ | 56,360,582 | ||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 6,655,592 | $ | 3,579,714 | ||||
Accrued expenses
|
7,453,118 | 5,515,909 | ||||||
Taxes payable
|
1,553,206 | 762,430 | ||||||
Loan payable to related party
|
543,585 | 527,225 | ||||||
Total current liabilities
|
16,205,501 | 10,385,278 | ||||||
Deferred tax liability
|
4,798,822 | 3,001,584 | ||||||
Total Liabilities
|
21,004,323 | 13,386,862 | ||||||
Commitements and Contingencies | - | - | ||||||
Stockholders' equity
|
||||||||
Preferred stock, $.001 par value, 2,553,030 and
7,575,757 shares authorized, issued and
outstanding as of December 31, 2010 and 2009
|
2,553 | 7,576 | ||||||
Common stock, $.001 par value, 140,000,000
shares authorized, 14,278,928 and 11,863,390
shares issued and outstanding as of December
31, 2010 and 2009
|
14,279 | 11,863 | ||||||
Additional paid in capital
|
73,171,435 | 42,697,186 | ||||||
Statutory reserves
|
2,323,603 | 2,070,081 | ||||||
Other comprehensive income
|
1,834,341 | 1,225,986 | ||||||
Retained earnings (Accumulated deficit)
|
12,076,554 | (3,038,972 | ) | |||||
Total stockholders' equity
|
89,422,765 | 42,973,720 | ||||||
Total liabilities and stockholders' equity
|
$ | 110,427,088 | $ | 56,360,582 |
NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES
|
||||||||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
||||||||
YEARS ENDED DECEMBER 31, 2010 AND 2009
|
||||||||
2010
|
2009
|
|||||||
|
|
|||||||
Revenue, net
|
||||||||
Battery
|
$ | 79,814,242 | $ | 19,918,846 | ||||
Battery shell and cover
|
11,758,403 | 6,457,044 | ||||||
Solar
|
3,089,012 | - | ||||||
Total revenue
|
94,661,657 | 26,375,890 | ||||||
Cost of sales
|
||||||||
Battery
|
58,170,005 | 13,735,160 | ||||||
Battery shell and cover
|
8,170,779 | 4,596,379 | ||||||
Solar
|
2,104,528 | - | ||||||
Total cost of sales
|
68,445,312 | 18,331,539 | ||||||
Gross profit
|
26,216,345 | 8,044,351 | ||||||
Operating expenses
|
||||||||
Selling
|
422,491 | 124,845 | ||||||
General and administrative
|
5,940,666 | 1,213,783 | ||||||
Total operating expenses
|
6,363,157 | 1,338,628 | ||||||
Income from operations
|
19,853,188 | 6,705,723 | ||||||
Other income (expenses)
|
||||||||
Other expense
|
(735 | ) | (5,794 | ) | ||||
Interest income (expense)
|
75,417 | (49,436 | ) | |||||
Total other income (expense), net
|
74,682 | (55,230 | ) | |||||
Income before income taxes
|
19,927,870 | 6,650,493 | ||||||
Provision for income taxes
|
4,738,485 | 813,098 | ||||||
Net income
|
15,189,385 | 5,837,395 | ||||||
Other comprehensive income
|
||||||||
Foreign currency translation
|
608,355 | 81,816 | ||||||
Comprehensive income
|
$ | 15,797,740 | $ | 5,919,211 | ||||
Net income per share
|
||||||||
Basic
|
$ | 1.25 | $ | 0.91 | ||||
Diluted
|
$ | 1.18 | $ | 0.82 | ||||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
12,191,008 | 6,393,067 | ||||||
Diluted
|
12,896,826 | 7,150,642 |
NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES
|
||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||||||||||
YEARS ENDED DECEMBER 31, 2010 AND 2009
|
||||||||||||||||||||||||||||||||||||
Other | Retained Earnings | Total | ||||||||||||||||||||||||||||||||||
Common Stock
|
Preferred Stock
|
Additional Paid
|
Comprehensive
|
Statutory
|
(Accumulated
|
Stockholders'
|
||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
in Capital
|
Income
|
Reserve
|
Deficit)
|
Equity
|
||||||||||||||||||||||||||||
Balance at January 1, 2009
|
5,446,105 | 5,446 | 7,575,757 | 7,576 | 16,999,362 | 1,144,170 | 593,445 | (8,115,489 | ) | 10,634,510 | ||||||||||||||||||||||||||
Shares issued for capital contribution
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Net income for the year
|
- | - | - | - | - | - | - | 5,837,395 | 5,837,395 | |||||||||||||||||||||||||||
Stock issued for service
|
1,000,000 | 1,000 | - | - | 2,699,000 | - | - | - | 2,700,000 | |||||||||||||||||||||||||||
Common stock issued for acquisitions
|
5,417,285 | 5,417 | - | - | 22,998,824 | - | 715,758 | - | 23,719,999 | |||||||||||||||||||||||||||
Transfer to statutory reserve
|
- | - | - | - | - | - | 760,878 | (760,878 | ) | - | ||||||||||||||||||||||||||
Foreign currency translation gain
|
- | - | - | - | - | 81,816 | - | - | 81,816 | |||||||||||||||||||||||||||
Balance at December 31, 2009 (Restated)
|
11,863,390 | 11,863 | 7,575,757 | 7,576 | 42,697,186 | 1,225,986 | 2,070,081 | (3,038,972 | ) | 42,973,720 | ||||||||||||||||||||||||||
Preferred stock convert to common stock
|
502,273 | 502 | (5,022,727 | ) | (5,023 | ) | 4,520 | - | - | - | - | |||||||||||||||||||||||||
Net income for the year
|
- | - | - | - | - | - | - | 15,189,386 | 15,189,386 | |||||||||||||||||||||||||||
Common stock issued for acquisitions
|
1,913,265 | 1,913 | - | - | 30,335,097 | - | 179,662 | - | 30,516,672 | |||||||||||||||||||||||||||
Compensation expenses related to stock options
|
- | - | - | 103,047 | - | - | - | 103,047 | ||||||||||||||||||||||||||||
Compensation expenses related to warrants
|
- | - | - | 31,585 | - | - | - | 31,585 | ||||||||||||||||||||||||||||
Transfer to statutory reserve
|
- | - | - | - | - | - | 73,860 | (73,860 | ) | - | ||||||||||||||||||||||||||
Foreign currency translation gain
|
- | - | - | - | - | 608,355 | - | - | 608,355 | |||||||||||||||||||||||||||
Balance at December 31, 2010
|
14,278,928 | $ | 14,279 | 2,553,030 | $ | 2,553 | $ | 73,171,435 | $ | 1,834,341 | $ | 2,323,603 | $ | 12,076,554 | $ | 89,422,765 |
NEW ENERGY SYSTEMS GROUP AND SUBSIDIARIES
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
YEARS ENDED DECEMBER 31, 2010 AND 2009
|
||||||||
2010
|
2009
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net Income
|
$ | 15,189,385 | $ | 5,837,395 | ||||
Adjustments to reconcile net income to net cash
|
||||||||
provided by operating activities:
|
||||||||
Depreciation and amortization
|
3,043,808 | 468,514 | ||||||
Deferred tax liability
|
(597,768 | ) | (31,916 | ) | ||||
Deferred compensation expense
|
675,000 | - | ||||||
Loss on disposal of fixed asset
|
1,534 | 7,794 | ||||||
Stock options expense
|
103,047 | 251,507 | ||||||
Warrants expense
|
31,585 | - | ||||||
(Increase) / decrease in current assets:
|
||||||||
Accounts receivable
|
3,505,551 | (1,730,909 | ) | |||||
Inventory
|
(1,321,906 | ) | 2,572,107 | |||||
Prepaid expenses, deposits and other receivables
|
613,733 | 1,670 | ||||||
Increase/(Decrease) in current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
(332,945 | ) | (3,326,375 | ) | ||||
Taxes payable
|
609,513 | 515,157 | ||||||
Net cash provided by operating activities
|
21,520,537 | 4,564,944 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Investment in subsidiaries
|
(6,529,286 | ) | - | |||||
Prepayment for Newpower acquisition
|
- | (2,998,244 | ) | |||||
Cash acquired in acquisition
|
- | 2,401,140 | ||||||
Acquisition of Anytone
|
- | (5,000,000 | ) | |||||
Cash acquired in acquisition of Newpower
|
705,514 | - | ||||||
Proceeds from sale of property and equipment
|
2,370 | - | ||||||
Acquisition of property and equipment
|
(154,936 | ) | (1,068 | ) | ||||
Net cash used in investing activities
|
(5,976,338 | ) | (5,598,172 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Repayment of acquisition liability for Anytone
|
(5,000,000 | ) | - | |||||
Repayment of loan payable
|
- | (2,195,872 | ) | |||||
Receivable from related party
|
(74,857 | ) | ||||||
Repayment to related party
|
(1,373,809 | ) | - | |||||
Net cash used in financing activities
|
(6,373,809 | ) | (2,270,729 | ) | ||||
Effect of exchange rate changes on cash and equivalents
|
242,628 | (13,507 | ) | |||||
Net increase (decrease) in cash and equivalents
|
9,413,018 | (3,317,464 | ) | |||||
Cash and equivalents, beginning
|
3,651,990 | 6,969,454 | ||||||
Cash and equivalents, ending
|
$ | 13,065,008 | $ | 3,651,990 | ||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
Cash paid during the year for:
|
||||||||
Income taxes
|
$ | 4,534,300 | $ | 748,306 | ||||
Interest
|
$ | - | $ | 91,260 |
2010
|
2009
|
|||||||
Raw Materials
|
$
|
1,713,403
|
$
|
133,358
|
||||
Work-in-process
|
219,379
|
44,250
|
||||||
Finished goods
|
487,227
|
334,095
|
||||||
2,420,010
|
511,703
|
|||||||
Less: reserve for impairment of inventory
|
-
|
(9,001
|
)
|
|||||
$
|
2,420,009
|
$
|
502,702
|
Furniture and Fixtures
|
5 years
|
Equipment
|
5 years
|
Computer Hardware and Software
|
5 years
|
Building
|
30 years
|
2010
|
2009
|
|||||||
Machinery
|
$
|
1,456,268
|
$
|
936,049
|
||||
Automobile
|
25,972
|
25,189
|
||||||
Office equipment
|
115,504
|
81,674
|
||||||
Building
|
607,726
|
589,436
|
||||||
Subtotal
|
2,205,470
|
1,632,348
|
||||||
Accumulated depreciation
|
(1,071,441
|
)
|
(932,558
|
)
|
||||
Plant, Property & Equipment, Net
|
$
|
1,134,029
|
$
|
699,790
|
2010
|
2009
|
|||||||
Customer relationships
|
$
|
2,691,445
|
$
|
2,691,445
|
||||
Designs
|
366,850
|
366,850
|
||||||
Proprietary technology
|
270,850
|
270,850
|
||||||
Land use rights
|
607,726
|
589,436
|
||||||
Patents
|
22,176,943
|
15,167,497
|
||||||
Totals
|
26,113,814
|
19,086,078
|
||||||
Impairment in 2007
|
(1,972,598
|
)
|
(1,972,598
|
)
|
||||
Accumulated amortization
|
(4,033,845
|
)
|
(1,341,136
|
)
|
||||
Intangible assets, net
|
$
|
19,969,021
|
$
|
15,772,344
|
December 31, 2011
|
$
|
2,806,000
|
||
December 31, 2012
|
2,806,000
|
|||
December 31, 2013
|
2,806,000
|
|||
December 31, 2014
|
2,806,000
|
|||
December 31, 2015
|
2,806,000
|
|||
Thereafter
|
5,939,021
|
|||
Total
|
$
|
19,969,021
|
2010
|
2009
|
|||||||
Income tax
|
$
|
1,357,108
|
$
|
526,043
|
||||
VAT tax
|
185,072
|
224,137
|
||||||
Other
|
11,026
|
12,250
|
||||||
Total
|
$
|
1,553,206
|
$
|
762,430
|
2010
|
2009
|
|||||||
Accounts payable
|
$
|
6,655,592
|
$
|
3,579,714
|
||||
Payable of purchase of Anytone (Note 14)
|
-
|
5,000,000
|
||||||
Payable for expense reimbursement
|
721,732
|
297,318
|
||||||
Accrued payroll
|
237,469
|
137,316
|
||||||
Other
|
167,932
|
81,275
|
||||||
Payable of purchase of Kim Fai (Note 14)
|
6,325,985
|
-
|
||||||
Total
|
$
|
14,108,710
|
$
|
9,095,623
|
Risk-free interest rate
|
4.00 %
|
Expected life
|
5 years
|
Expected volatility
|
58.0 %
|
Expected dividend yield
|
0 %
|
Risk-free interest rate
|
4.77 %
|
Expected life
|
3 years
|
Expected volatility
|
126.76 %
|
Expected dividend yield
|
0 %
|
Number of Shares
|
||||
Outstanding at January 01, 2009
|
25,000
|
|||
Granted
|
-
|
|||
Exercised
|
-
|
|||
Expired
|
(15,000
|
)
|
||
Outstanding at December 31, 2009
|
10,000
|
|||
Exercisable at December 31, 2009
|
10,000
|
|||
Granted
|
25,000
|
|||
Exercised
|
-
|
|||
Expired
|
10,000
|
|||
Outstanding at December 31, 2010
|
25,000
|
|||
Exercisable at December 31, 2010
|
12,500
|
Exercise Price
|
Total
Options
Outstanding
|
Weighted
Average
Remaining
Life
(Years)
|
Total
Weighted
Average
Exercise
Price
|
Options
Exercisable
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||
$
|
$6.55
|
25,000
|
2.44
|
$
|
6.55
|
12,500
|
$
|
6.55
|
2010
|
2009
|
|||||||
US statutory rates
|
34 | % | 34 | % | ||||
Tax rate difference
|
(10 | )% | (10 | )% | ||||
Effect of tax holiday
|
(3 | )% | (15 | )% | ||||
Valuation allowance on deferred tax on US NOL
|
3 | % | 3 | % | ||||
Tax expense at actual rate
|
24 | % | 12 | % |
2010
|
2009
|
|||||||
Income tax expense – current
|
$ | 5,336,253 | $ | 845,014 | ||||
Income tax benefit – deferred
|
(597,768 | ) | (31,916 | ) | ||||
Total income tax expense
|
$ | 4,738,485 | $ | 813,098 |
i)
|
Making up cumulative prior years' losses, if any;
|
ii)
|
Allocations to the "Statutory surplus reserve" of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;
|
iii)
|
Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's "Statutory common welfare fund", which is established for the purpose of providing employee facilities and other collective benefits to the Company's employees; and statutory common welfare fund is no longer required per the new cooperation law executed in 2006.
|
iv)
|
Allocations to the discretionary surplus reserve, if approved in the shareholders' general meeting.
|
2010
|
2009
|
|||||||
Revenues from unaffiliated customers:
|
||||||||
Battery
|
$ | 79,814,242 | $ | 19,918,846 | ||||
Battery shell and cover
|
11,758,403 | 6,457,044 | ||||||
Solar
|
3,089,012 | - | ||||||
Consolidated
|
$ | 94,661,657 | $ | 26,375,890 | ||||
Operating income (loss):
|
||||||||
Battery
|
$ | 17,487,125 | $ | 5,955,072 | ||||
Battery shell and cover
|
3,164,895 | 1,529,223 | ||||||
Solar
|
873,233 | - | ||||||
Corporation
|
(1,672,065 | ) | (778,572 | ) | ||||
Consolidated
|
$ | 19,853,188 | $ | 6,705,723 | ||||
Net income (loss) :
|
||||||||
Battery
|
$ | 13,833,045 | $ | 5,357,261 | ||||
Battery shell and cover
|
2,438,685 | 1,258,986 | ||||||
Solar
|
590,522 | - | ||||||
Corporation
|
(1,672,867 | ) | (778,852 | ) | ||||
Consolidated
|
$ | 15,189,385 | $ | 5,837,395 | ||||
Depreciation and amortization:
|
||||||||
Battery
|
$ | 2,790,106 | $ | 160,578 | ||||
Battery shell and cover
|
156,596 | 215,176 | ||||||
Solar
|
4,346 | - | ||||||
Corporation
|
92,760 | 92,760 | ||||||
Consolidated
|
$ | 3,043,808 | $ | 468,514 |
Cash
|
$ | 2,401,140 | ||
Accounts receivable
|
651,062 | |||
Other receivables
|
842,463 | |||
Due from shareholder
|
262,396 | |||
Inventory
|
2,316,835 | |||
Property and equipment
|
42,209 | |||
Intangible assets
|
15,167,497 | |||
Goodwill
|
20,449,737 | |||
Accounts payable
|
(4,178,789 | ) | ||
Deferred tax liability
|
(3,707,297 | ) | ||
Loan payable
|
(527,256 | ) | ||
Purchase price
|
$ | 33,719,997 |
Cash
|
$ | 24,550 | ||
Accounts receivable
|
2,809,600 | |||
Tax receivable
|
100,584 | |||
Inventory
|
240,262 | |||
Property and equipment
|
327,354 | |||
Intangible assets
|
7,009,446 | |||
Goodwill
|
13,564,691 | |||
Accounts payable
|
(2,410,017 | ) | ||
Other payable and accrued expenses
|
(66,589 | ) | ||
Loan payable to related party
|
(1,361,999 | ) | ||
Deferred tax liability
|
(1,721,208 | ) | ||
Purchase price
|
$ | 18,516,674 |
Cash
|
$ | 680,964 | ||
Accounts receivable
|
1,775,936 | |||
Other receivable
|
8,369 | |||
Inventory
|
313,481 | |||
Property and equipment
|
139,409 | |||
Goodwill
|
26,541,178 | |||
Accounts payable
|
(1,317,263 | ) | ||
Other payable and accrued expenses
|
(58,234 | ) | ||
Taxes payable
|
(83,842 | ) | ||
Purchase price
|
$ | 27,999,998 |
2009
|
||||
Net revenue
|
$ | 82,873,125 | ||
Cost of revenue
|
63,283,067 | |||
Gross profit
|
19,590,058 | |||
Total operating expenses
|
5,962,418 | |||
Income from operations
|
13,627,640 | |||
Total non-operating expenses
|
(93,098 | ) | ||
Income before income tax
|
13,534,542 | |||
Income tax
|
1,908,531 | |||
Net income
|
$ | 11,626,011 | ||
Weighted average shares outstanding
|
13,723,617 | |||
Earnings per share
|
$ | 0.85 |
2010
|
||||
Net revenue
|
$ | 109,350,186 | ||
Cost of revenue
|
78,448,566 | |||
Gross profit
|
30,901,620 | |||
Total operating expenses
|
6,846,706 | |||
Income from operations
|
24,054,914 | |||
Total non-operating income
|
81,928 | |||
Income before income tax
|
24,136,842 | |||
Income tax
|
5,573,995 | |||
Net income
|
$ | 18,562,847 | ||
Weighted average shares outstanding
|
14,104,273 | |||
Earnings per share
|
$ | 1.32 |
2011
|
$ | 160,000 | ||
2012
|
150,000 | |||
2013
|
150,000 | |||
$ | 460,000 |
A.
|
Materials Needed for Lease Registration
|
1.
|
Deed or other valid certificates of land use rights (show the original and submit a copy)
|
2.
|
Identification of the leaser and leasee
|
i.
|
Entity
|
ii.
|
Individual Person
|
3.
|
If the leased real estate is entrusted to person(s) other than the owner, authorization, the ID card of the authorized person(s)
|
4.
|
If the leased real estate is jointly owned, approval of and authorization from all the owners
|
5.
|
Lease
|
B.
|
Instructions to the Lease Registration Notes
|
Leaser:
|
Xu Zhongnan
|
Address:
|
69 Huajiazhuang Fenghuang Village, Tingzu Town, Echen District, Echuan City, Hubei Province
|
Zip code:
|
|
Telephone:
|
13902951367
|
Authorized Person:
|
Xiong Chunrong
|
Address:
|
Hongdianxincun Zhenchennan Road, Echen District, Echuan City, Hubei Province
|
Zip code:
|
|
Telephone:
|
13823595609
|
ID No.:
|
420700196808064000
|
Leasee:
|
Shenzhen LibaohuaTechnology Co., Ltd.
|
Address:
|
Dongjinghaiyuan Building Gupaotai Road, Suite 602B, Nanshan District, Shenzhen
|
Zip code:
|
|
Telephone:
|
13760153683
|
Business License No.:
|
440301104188342
|
Authorized Person:
|
Wang Biaobiao
|
Address:
|
Xuezhuang Village, Xuezhuang Xiang, Xinhua District, Pingdingshan City, Heibei Province
|
Zip code:
|
|
Telephone:
|
13632976040
|
ID No.:
|
410402198509245000
|
1.
|
If performance under the lease is impossible due to Force Majeure,
|
2.
|
If the government expropriates, purchases, takes back or takes down the Rental Property, or
|
3.
|
Consented by the Leaser and the Leasee.
|
1.
|
If the Leasee misses rent payment for more than N/A,
|
2.
|
If the arrears may cause the Leaser to lose more than N/A,
|
3.
|
The Leasee conducts illegal activities that interferes with public or private interest on the Rental Property,
|
4.
|
The Leasee modifies the structure or the purposes of the Rental Property,
|
5.
|
The Leasee does not make or pay for the repairs and causes the Rental Property or the equipment to be severely damaged in violation of Article 14,
|
6.
|
The Leasee renovates the Rental Property without the Leaser’s consent or the relevant agency’s approval, or
|
7.
|
The Leasee transfers the lease to third party without authorization.
|
1.
|
The Leaser delivers the Rental Property more than N/A later than agreed upon,
|
2.
|
The Leaser does not perform under Provision 1 of Article 11 and causes the Leasee to be unable to achieve the rental purposes,
|
3.
|
The Leaser does not perform under Article 13 and does not make or pay for the repairs, or
|
4.
|
The Leaser modify, expand or renovate the Rental Property without consent from the Leasee,
|
1.
|
Before signing the contract, the parties should review carefully, negotiate the terms and modify the provisions accordingly. The parties can choose, supplement, fill in and modify the form. Once the contract is signed, the unchanged content and the content written in should be deemed the content of the contract (with the parties’ signatures or seals). The content that is chosen, supplemented, filled in and modified should prevail over the form.
|
2.
|
Before signing the contract, the leaser should show the leasee its deed or other proof of land use rights, and proof of the leaser’s legal identity. If there is an authorized person, authorization should be provided. If the real estate is jointly owned, consent and authorization from all the owners should be provided. The leasee should provide the leaser proof of its legal identity.
|
3.
|
The contract should be signed and performed according to the laws. It should not violate the procedural laws or agree on illegal matters.
|
4.
|
Once signed, the contract is binding to both parties. The parties should perform their obligations according to the contract. They should not amend or cancel the contract without legal reason or mutual consent.
|
5.
|
The blanks should be filled in by the parties with pen or writing brush with black or blue ink. The contract should be signed and sealed.
|
6.
|
The blanks in the contract are for the parties to negotiate and the boxes are for the parties to check.
|
7.
|
After signing the contract, the parties should register with the real estate rental agency together.
|
8.
|
The parties can decide the number of the original copies according to their needs. They should review carefully to make sure the copies are the same before signing them. Under any condition, each party should have at least one original copy.
|
9.
|
If there are any major changes in the contract, or the contract is cancelled or lost, the parties should go through the relevant procedures.
|
10.
|
The parties can agree on the attached pages as to how to dispose the objects in the rental property after the lease expires or if the lease is cancelled.
|
11.
|
Article 6 “The purposes of the Rental Property” of the agreement shall be one of the following fives: Commercial, Office, Factory, Warehouse or Multiple.
|
1.
|
The leaser and the leasee of the buildings for production and operation purposes (including markets, stalls and counters), offices, residence and other real estate are responsible for the safety of the rental properties.
|
2.
|
The Leaser shall possess the deed or other proof of ownership of the real estate according to the municipal regulations. If the real estate is entrusted to others, the owner shall sign a written authorization with the authorized person, which shall provide for the safety responsibilities of the parties. The subleaser and other leaser as a matter of fact shall have the safety responsibilities and the leaser.
|
3.
|
The leaser shall make sure that the building and its exits, passages, fire safety, gas and electricity equipment meet the requirements of the rule and regulations and other safety standards by the administrative department. If permit or approval is required by rules and regulations before the real estate can be leased, the leaser shall obtain such permit or approval first.
|
4.
|
If the leasee is to conduct production or operation activities in the rental property, the leaser shall require proof of fire safety procedure and its business licence.
|
5.
|
The leaser shall conduct at least one safety and use of the rental property inspection and record the result in writing every quarter. The leasee shall corporate and sign. If the leaser is unable to make such inspection due to objective reasons, it shall authorize other person to do so.
|
6.
|
If the leaser discovers hidden danger in the rental property or that the leasee has changed use of the rental property, it should submit such discovery to the real estate rental management agencies or other relevant government agencies.
|
7.
|
The leasee shall use the rental property safely and reasonably according to the provisions of the rules, regulations and the lease. It shall not change the structure and use of the rental property. If the leasee discovers hidden dangers in the rental property, it shall notify the leaser immediately and report to the real estate rental management agencies and other relevant government agencies.
|
8.
|
The leasee shall not change the use of the rental property at will. If it uses the rental property to conduct hotel, restaurant, entertainment, internet café, workshop businesses, its activities should comply with the relevant rules.
|
9.
|
The leaser and the leasee shall cooperate with and assist the real estate rental management agency in safety inspections and management and provide relevant materials truthfully.
|
10.
|
If the leaser or the leasee does not carry out its responsibilities and causes personal injuries or monetary loss to a third party, the third party shall have the right to seek damages from the leaser or the leasee.
|
A.
|
Materials Needed for Lease Registration
|
1.
|
Deed or other valid certificates of land use rights (show the original and submit a copy)
|
2.
|
Identification of the leaser and leasee
|
i.
|
Entity
|
ii.
|
Individual Person
|
3.
|
If the leased real estate is entrusted to person(s) other than the owner, authorization, the ID card of the authorized person(s); if the leased real estate is jointly owned, approval of and authorization from all the owners
|
4.
|
Lease
|
B.
|
Instructions to the Lease Registration Notes
|
Leaser:
|
China Great Wall Computer Shenzhen Co., Ltd.
|
Address:
|
3 Kefa Road, Technology Garden Nanshan District, Shenzhen
|
Zip code:
|
518057
|
Authorized Person:
|
Guoxin Diao (General Manager of Property Service Department)
|
Address:
|
|
Zip code:
|
|
Leasee:
|
Hainatong Technology Co., Ltd.
|
Address:
|
|
Zip code:
|
|
Business License No.:
|
|
Authorized Person:
|
|
Address:
|
|
Zip code:
|
1.
|
If performance under the lease is impossible due to Force Majeure,
|
2.
|
If the government expropriates, purchases, takes back or takes down the Rental Property, or
|
3.
|
Consented by the Leaser and the Leasee.
|
1.
|
If the Leasee misses rent payment for more than 30 days,
|
2.
|
If the arrears may cause the Leaser to lose more than RMB 90,000,
|
3.
|
The Leasee conducts illegal activities that interferes with public or private interest on the Rental Property,
|
4.
|
The Leasee modifies the structure or the purposes of the Rental Property,
|
5.
|
The Leasee does not make or pay for the repairs and causes the Rental Property or the equipment to be severely damaged in violation of Article 14,
|
6.
|
The Leasee renovates the Rental Property without the Leaser’s consent or the relevant agency’s approval, or
|
7.
|
The Leasee transfers the lease to third party without authorization.
|
1.
|
The Leaser delivers the Rental Property more than 30 days later than agreed upon,
|
2.
|
The Leaser does not perform under Provision 1 of Article 11 and causes the Leasee to be unable to achieve the rental purposes,
|
3.
|
The Leaser does not perform under Article 13 and does not make or pay for the repairs, or
|
4.
|
The Leaser modify, expand or renovate the Rental Property without consent from the Leasee,
|
I.
|
Building 51’s Location and Layout
|
a.
|
Technology Garden Building 51 is jointly owned by three owners. The Rental Property is legally owned by China Great Wall Computer Shenzhen Co., Ltd.. The nature of the property is real estate. The address of the building is 5 Qiongyu Road Technology Garden Nanshan District. The name of the building is Technology Garden Building 51. The Leasee is renting the fifth floor (2564.2 square meters), among which, 1000 square meters have been approved by the Gaoxin Office. The Leasee shall seek approval on the other 1564.2 square meters from Gaoxin Office in the future.
|
b.
|
The Leaser represents: the equipment in the leased area, which are the electricity, the central air conditioning system, the fire safety system, the water supply and drainage system and the lighting system satisfy the needs of normal office (research). The fire safety system complies with the requirements in the relevant fire safety rules and regulations. If the Leasee renovates the Rental Property (including changes to the original fire safety layout), it shall report such changes pursuant to fire safety rules and regulations.
|
c.
|
The Leaser shall give the Leasee a 2-month renovation period without rent from January 1, 2009 to February 28, 2009. The utility fees (including sewage and waste disposal fees) shall be borne by the Leasee. The Leaser shall not seek to collect any other fees.
|
d.
|
During the term of the contract, the Leasee shall have the right to rename the building, the lobby and the front desk (not including the change of the legal name and the address) and the right to install signs. Outdoor signs and billboard shall comply with the relevant rules and regulations of the central and local governments.
|
e.
|
The Leasee shall not engage is any activities that may interfere with public order or third party interest in the Rental Property and its vicinity. If such activities have occurred, the Leaser shall have the right to request the Leasee to stop such activities. If such activities cause any damage to the Leaser or any third party, the party that engages in the activities shall be liable for the damage.
|
II.
|
The purposes of the Rental
|
a.
|
Before the execution of this agreement, the Leasee conducted a preliminary inspection of the Rental Property and understood that the intended use of Building 51 is an industrial warehouse. The Leaser and the Leasee agree that the Leasee’s intended use of the Rental Property as a research and experiment space does not conflict with the intended use of the building. If policies and regulations require the Leaser to modify the intended use of the Rental Property to ensure the Leasee’s intended use of it as a research/experiment space, the Leaser shall be responsible for the procedure and all the fees arising out of it.
|
b.
|
The Leasee intends to use the Rental Property as a research/experiment space and partial office space.
|
III.
|
Rent, Utility and Property Management Fee
|
a.
|
The Leaser shall pay for the periphery property management fee of Building 51 and the municipal facilities maintenance fee to the Technology Garden Management Company.
|
b.
|
The air conditioning maintenance fee (not including the maintenance fee for the equipment installed by the Leasee)
|
c.
|
The fire safety system maintenance fee. The Leaser shall be responsible for the original automatic alarming system, the automatic spray system, the fire hydrant maintenance fee (not including the maintenance fee for the fire safety system installed by the Leasee)
|
d.
|
The labor cost for the elevator operator, the annual inspection and maintenance fee of the elevator (not including the electricity fee and overtime fees of the elevator)
|
e.
|
The taxes and fees arising out of the lease
|
f.
|
Water (including sewage and waste disposal fees), electricity fee shall be collected from the Leasee according to photocopies of the bills issued by the government agencies to the Leaser.
|
g.
|
The Leaser shall provide legal invoice for the utility fees it collects for the government (for water and electricity fees, it shall provide value-added tax invoices).
|
h.
|
The use, maintenance and payment of fees of the elevator shall be included in a separate management agreement between the Power Engineering Department of the Leaser and the Leasee. If there are any inconsistencies between this agreement and the management agreement, the management agreement shall prevail.
|
IV.
|
The Building Management Fee
|
a.
|
At the time of the execution, the periphery, municipal and public space cleaning and management is provided by Shenzhen Technology Garden Management Company. The fees are borne by the Leaser. The Leasee shall be responsible for the interior safety and cleaning.
|
b.
|
The Leasee shall be responsible for maintenance of the indoor equipment and facilities (not including those for which the Leaser shall be responsible under III).
|
V.
|
Term of the Lease
|
a.
|
The term of the lease is 5 years from January 1, 2009 to December 31, 2013. The parties agree to renegotiate the rent after three years (December 31, 2011) according to the rent of similar rental properties at similar locations published at the time by the government. The increase (or decrease) of the rent shall be within 10% of the current rent. Before an agreement on the new rent is reached, the lease shall be performed with the current rent. After a new rent is determined, the Leaser shall return to the Leasee the extra amount of the rent paid to it if the new rent is lower than the current rent and shall seek from the Leasee the insufficient amount of the rent if the new rent is higher than the current rent.
|
b.
|
During the term of the lease, the Leaser has the right to transfer all or part of the Rental Property with prior notice to the Leasee.
|
i.
|
If the Leaser transfers all or part of the Rental Property, the Leaser shall assign all the rights and obligations of the Leaser under the lease to the transferee at the time of transfer and ensure the Leasee’s rights and obligations as the Leasee.
|
ii.
|
The Leaser shall notify the Leasee in writing of the transfer of part or all of Building 51 3 month in advance.
|
iii.
|
The Leasee shall have the right of first refusal. If the Leasee does not notify the Leaser in writing of its intent to exercise its right of first refusal within 7 business days after receipt of the Leaser’s notice, the Leasee is deemed to give up the right.
|
VI.
|
Payment Method
|
a.
|
Within 5 business days after the agreement becomes effective, the Leasee shall pay to the Leaser a deposit of RMB 16,237.2, which equals to 2 month rent. (The Leaser has already paid a deposit of RMB 84618.00).
|
b.
|
Table of Payments
|
Time of payment
|
Construction area
|
Unit rent
|
Monthly rent
|
1/1/2009 – 2/28/2009 (free period)
|
2564.2
|
0
|
0
|
3/1/2009 – 12/30/2011
|
2564.2
|
33.00
|
84618.60
|
1/1/2012 – 12/30/2013
|
2564.2
|
To be determined
|
|
c.
|
The Leaser shall send bills and invoices for the rent and utility fees to the Leasee before the 5th day of every month (the Leasee shall appoint a person to accept such bills and invoices).
|
VII.
|
Renovations
|
a.
|
The Leaser shall not, for any reason, appoint contractors for the Leasee’s water, electricity, air conditioning, fire safety and internet communication projects. The Leasee shall obtain contractors that satisfy the government’s requirements of relevant qualifications. It they do not satisfy such qualifications, the Leaser shall have the right to require the Leasee to switch to other qualified contractors.
|
b.
|
After the execution of the agreement, the Leasee shall make the deposit to the Leaser in a timely manner. After receipt of the deposit, the Leasee shall obtain from the property management department of the Leaser (the Great Wall Group), the keys to the Rental Property and the complete the procedures to renovate the Rental Property.
|
c.
|
The Leaser shall permit the Leasee to install independent monitoring, locking, patrolling and other security systems. If the Leasee needs to increase, decrease or relocate any fire safety facilities, including temperature detector, smoke detector, water sprinkler, manual alarm, sound and light alarm or fire safety broadcaster, it has to obtain a company with fire safety construction qualifications to conduct such change. The Leaser shall cooperate by connecting the building fire safety system, helping to adjust and at a late stage, include the new equipment into the building fire safety system (but the Leasee shall be responsible for the maintenance of the new equipment). If the Leasee’s project requires drainage of water supply for firefighting, the water fee shall be borne by the Leasee.
|
d.
|
The Leasee shall notify the Leaser 2 days before it moves into the building. The Leasee shall be responsible to require the moving company to make necessary precautions to protect the floor and the elevator of t the building.
|
e.
|
If, due to the Leasee’s inappropriate renovation or poor quality control, the adjacent floors or the adjacent areas are damaged, the Leasee shall be responsible to make repairs and compensate.
|
VIII.
|
Building Management
|
a.
|
During the term of the lease, the Leaser shall have the right to supervise and restrict the Leasee’s pipeline distribution and readjustment in the Rental Property. If the Leasee renovates or adds power equipment, its renovation plan has to be approved by the Leaser before it starts the project. The Leasee shall be responsible for the reporting, quality inspecting, using, updating and maintaining cost.
|
b.
|
The Leaser has obtained qualified elevator/fire safety professional company to maintain the elevator and the fire safety systems in the building. The Leaser shall be responsible for the cost.
|
c.
|
During the term of the lease, the Leaser shall be responsible for the maintenance of the body of building 51 and other public facilities such as the power distribution system, the air conditioning system, the fire safety system and the drainage system (not including the facilities added by the Leasee).
|
IX.
|
Expiration of the Lease and Return of the Deposit
|
a.
|
After the lease expires, this agreement shall cease. The Leasee shall deliver the Rental Property to the Leaser as provided in the lease. After both parties confirm that there is no damage to the Rental Property and that there are no outstanding fees for the Leasee, the Leaser shall return to the Leasee the deposit without interest within 5 business days of the return of the keys. The rent shall be calculated until the day the Rental Property is delivered and the utility fees shall be calculated until the day of the meter reading.
|
b.
|
The Leasee shall not have the obligation to restore the Rental Property to its original condition but the Leasee shall not remove any of the facilities and decorations (according to the list of transfer) except the monitors, locks and air conditioners installed by it.
|
X.
|
Conditions
|
Content
|
Condition
|
Face
|
Floor
|
Current condition (electrostatic proof)
|
|
Wall
|
Current condition
|
|
Weight bearing of the floors
|
5.0 KN/m2
|
|
Electricity
|
Switch capacity
|
AC 400A, power & lighting 150A
|
Lighting
|
Current condition
|
|
Water supply
|
Current condition
|
|
Ground
|
Current condition
|
|
Central air conditioning
|
Cooling capacity
|
2 water cooling machines, 170KW/machine
|
Elevator
|
2 ton freight elevator
|
2 shared ones (freight/passenger in East Zone)
|
Fire safety
|
Current condition
|
Passed inspection
|
XI.
|
Liabilities for Breach of the Lease
|
a.
|
The Leaser shall send the bill and invoice to the Leasee before the 5th day of every month and the Leasee shall, within 10 business days of receipt, wire the money to the account the Leaser appoints. If the Leasee does not pay the rent or utility fees on time, for every day it is in arrears, it shall pay damages which equals to 0.3% of the arrears. If the Leasee is in arrears for more than 2 months, the Leaser shall stop the water and electricity supply and other services included in the agreement with written notice to the Leasee. The Leasee shall be responsible for all the consequences.
|
b.
|
If the Leaser does not send the bill and invoice on time, the Leasee shall have the right to delay the payment accordingly without breaching the agreement.
|
c.
|
At the expiration or cancellation of the agreement, the Leasee shall deliver the Rental Property to the Leaser in good condition (including cleaning the Rental Property). The Leasee shall deliver all the wood structure and its fixture and equipment intact (not including normal wear)
|
XII.
|
Other
|
a.
|
All three owners of Building 51 consent to transform the periphery public area to a parking space. The parking lots are distributed according to the area each owner owns.
|
b.
|
During the term of the agreement, the Leasee shall have free use of the Leaser’s current strong electric tube well, weak electric tube well and drainage well.
|
c.
|
During the term of the agreement, if a party wishes to cancel the agreement before it expires, it shall notify the other party 3 month in advance without any liabilities.
|
d.
|
At the execution of the agreement, the parties shall also sign a Safety Responsibility Agreement. During the term of the agreement, the Leasee shall be responsible for the production safety and fire safety in the Rental Property. The parties shall perform their respective safety obligations under the Safety Responsibility Agreement.
|
e.
|
This Supplemental Agreement is an indivisible part of the Lease Agreement regarding Building 51. If there is any inconsistency between the Supplemental Agreement and the form Lease Agreement, this agreement shall prevail.
|
f.
|
After the parties sign the agreement, the Leasee shall provide to the Leaser all the relevant documents required for rental registration according to Shenzhen Real Estate Rental Registration Agency’s requirements for the relevant corporate qualifications, certificate of authorized representative. The Leaser shall complete the registration procedure within 3 business days of receipt of such documents.
|
XIII.
|
Effect of the Lease
|
1.
|
This form contract is drafted according to the Contract Law of PRC, Real Estate Rental Regulations of Shenzhen Special Economic Zone and its implementation rules and other relevant rules and regulations. The parties can adopt the form by consent.
|
2.
|
Before signing the contract, the parties should review carefully, negotiate the terms and modify the provisions accordingly.
|
3.
|
Before signing the contract, the leaser should show the leasee its deed or other proof of land use rights, and proof of the leaser’s legal identity. If there is an authorized person, authorization should be provided. If the real estate is jointly owned, consent and authorization from all the owners should be provided. The leasee should provide the leaser proof of its legal identity.
|
4.
|
The parties should enter into the contract based on a voluntary, fair and honest basis. No party should force its will on the other. No third party should interfere illegally.
|
5.
|
The contract should be signed and performed according to the laws. It should not violate the procedural laws or agree on illegal matters.
|
6.
|
Once signed, the contract is binding to both parties. The parties should perform their obligations according to the contract. They should not amend or cancel the contract without legal reason or mutual consent.
|
7.
|
The blanks should be filled in by the parties with pen or writing brush. The contract should be signed and sealed.
|
8.
|
The blanks in the contract are for the parties to negotiate and the boxes are for the parties to check.
|
9.
|
This is a form contract. The parties can choose, supplement, fill in and modify the form. Once the contract is signed, the unchanged content and the content written in should be deemed the content of the contract (with the parties’ signatures or seals).
|
10.
|
The content that is chosen, supplemented, filled in and modified should prevail over the form.
|
11.
|
After signing the contract, the parties should register with the real estate rental agency together.
|
12.
|
The parties can decide the number of the original copies according to their needs. They should review carefully to make sure the copies are the same before signing them. Under any condition, each party should have at least one original copy.
|
13.
|
If there are any major changes in the contract, or the contract is cancelled or lost, the parties should go through the relevant procedures.
|
Party A (Employer)
|
Party B (Employee)
|
||
Name
|
Shenzhen Anytone Technology Co., Ltd.
|
Name
|
Nian Chen
|
Address
|
Sex
|
Male
|
|
Legal (Major) Representative
|
Dongrong Xu
|
ID Number
|
420204197212176515
|
Contactor
|
Weihe Yu
|
Address
|
|
Phone Number
|
26500128
|
Phone Number
|
1.
|
Term of agreement
|
A.
|
Party A and Party B agreed the following method _a_ to determine the term of this agreement.
|
a.
|
Fixed term: From September 1, 2008 to August 31, 2011.
|
b.
|
No limited term: Start from _____________________.
|
c.
|
Term will be due when project finished: Start from ______________ till project is completed.
|
B.
|
Probation: __1~3 months__
|
2.
|
Job description and location
|
3.
|
Working hours and vacation
|
A.
|
Party A and Party B agreed the following method _ _ to determine Party B’s working hours.
|
a.
|
Standard working hours: __ hours a day (no more than 8 hours); __ hours per week (no more than 40 hours); at least one holiday per week.
|
b.
|
No fixed working hours: After approved by Labor and Social Security Administration Department, Party B’s job implements no fixed working hours.
|
c.
|
Comprehensive working hours: After approved by Labor and Social Administration Department, Party B’s job implements comprehensive working hours.
|
B.
|
If Party A needs to extend working hours due to operation, the process should comply with the regulation No.41 of Labor Law.
|
C.
|
Party B is entitled to have national holiday, marriage leave, maternity leave, bereavement leave and other holidays.
|
D.
|
Other holidays or vacation arrangement: ________________________________.
|
4.
|
Compensation
|
A.
|
Party A set up compensation regulation in accordance with law and inform Party B. The compensation Party A pay to Party B could not lower than the lowest limit required by the government.
|
B.
|
Party B’s compensation: RMB$ 10,000 per month.
|
C.
|
Party A will pay on 25th in each month and need to pay to Party B at least one time per month.
|
D.
|
Party B’s compensation for extra working hours, paid vacation, and special situation will be implemented in accordance with the relevant law and regulations.
|
E.
|
Other agreement for compensation: Corporation’s governance systems and Promotion plan and prize.
|
5.
|
Social insurance and benefit
|
A.
|
Party A and Party B comply with national, province, and city’s regulation to apply social insurance and pay social insurance premium.
|
B.
|
If Party B got sick or hurt but not related to work, Party B should be entitled treat period and payment for treat period by Party A in accordance with national, province, and city’s relevant regulations.
|
C.
|
If Party B got occupational disease and hurt due to his job, Party A should process this situation in accordance with Occupational Disease Prevention, Business Insurance Regulation and other relevant laws.
|
D.
|
Party A provides Party B the following benefits: Other benefits described in Corporation governance systems.
|
6.
|
Labor protection, working condition, Protection against occupational hazards
|
A.
|
Party A provides a clean and safe working environment and necessary protection supplies in accordance with the relevant regulations to protect Party B’s safety and health.
|
B.
|
Party A provides special protection for female employees and un-adult employees in accordance with the relevant regulations.
|
C.
|
Party B engages in___________ which may cause ____________occupational hazards, Party A implement ______________________ protection process and provide healthy check for Party B 1 time per year.
|
D.
|
Party B is entitled to refused Party A’s illegal comments to work in the dangerous situation. Party B is entitled to ask for change or report to relevant department.
|
7.
|
Regulation
|
A.
|
Party A set regulation in accordance with the law and should inform Party B.
|
B.
|
Party B should comply with national relevant laws and Party A’s regulation; complete assigned project on time; improve career skills; obey safety operation regulation and professional Ethics.
|
C.
|
Party B should comply with the relevant regulation regarding to birth control by him or herself.
|
8.
|
Amendment of agreement
|
9.
|
Cancellation and termination of agreement
|
A.
|
The agreement could be cancelled after agreed by both sides.
|
B.
|
Party B should have written notice to Party A 30 days in advance.
|
C.
|
If Party A have the following situation, Part B could notice Party A to terminate the agreement:
|
a.
|
Did not provide labor protection and condition in accordance with the agreement;
|
b.
|
Did not full pay compensation on time;
|
c.
|
Did not pay social insurance premium for Party B in accordance with the law;
|
d.
|
Party A’s regulation against the law and regulations which damage Party B’s right and benefits;
|
e.
|
Party A enforce or cheat Party B to sign or modify this agreement under unwilling situation which make this agreement has no legal effect;
|
f.
|
Party A escapes its legal responsibilities and omit Party B’s rights;
|
g.
|
Party A against law and other relevant administrative regulations;
|
h.
|
Other situations which allow Party B to terminate this agreement in accordance with the law and relevant regulations.
|
D.
|
If Party A enforces Party B to work by illegal methods such as violation and threaten, Party B could terminate this agreement immediately without informing Party A in advance.
|
E.
|
If Party B has the following situations, Party A could cancel the agreement:
|
a.
|
Being approved unsuitable during probation;
|
b.
|
Violate Party A’s regulation seriously;
|
c.
|
Seriously missed job duty and violated professional Ethic to cause Party A’s huge lost;
|
d.
|
Party B works for others at same time which caused seriously effect on his or her job duty with Party A;
|
e.
|
Party B enforce or cheat Party A to sing or modify this agreement under unwilling situation which make this agreement has no legal effect;
|
f.
|
Being invested criminal responsibility.
|
F.
|
Under the following situation, Party A could terminate the agreement by sending a written notice 30 days in advance to Party B or paying Party B additional one month compensation:
|
a.
|
Party B got sick or hurt but not due to job and cannot implement the same job after regulated treat period is due and cannot implement the other job which Party A assigned;
|
b.
|
Party B cannot fulfill his or her job duty, even after training and job adjustment, still cannot handle;
|
c.
|
The environment has significant change which causes the employment agreement could not be implemented. After negotiation, both sides still cannot achieve agreement;
|
G.
|
Under any one of the following situation, Party A needs to downsize more than 20 employees or fire less than 20 employees but more than 10% of total Party A’s employees, Party A should explain the situation to Union or all employees 30 days in advance. After listening the opinion from Union or employees and reporting to Labor and Social Security Administration Department, Party A could downsize:
|
a.
|
Restructure in accordance with the bankruptcy law;
|
b.
|
Operation meet significant difficulties;
|
c.
|
Change of business’ direction, important technical change and adjustment of operation, downsizing still need after amended the agreement;
|
d.
|
The environment has significant change which causes the employment agreement could not be implemented.
|
H.
|
Employment agreement should be terminated under any of the following situation:
|
a.
|
Employment agreement’s term is expired;
|
b.
|
Party B starts to be entitled to have retirement benefit;
|
c.
|
Party B dead or is announced dead or missing by the local Court;
|
d.
|
Party A is announced bankruptcy;
|
e.
|
Party A’s business become ineffective and was force to closed or dismissed;
|
f.
|
Other situations in accordance with the laws and regulations.
|
10.
|
Economic compensation
|
A.
|
Under any one of the following situation, Party A could ask economic compensation from Party B:
|
a.
|
Party A informs Party B and achieve agreement to cancel the agreement in accordance with the term 9-A of this agreement;
|
b.
|
Party B requests to cancel the agreement in accordance with the term 9-C and 9-D of this agreement;
|
c.
|
Party A requests to cancel the agreement in accordance with the term 9-F of this agreement;
|
d.
|
Party A requests to cancel the agreement in accordance with the term 9-G of this agreement;
|
e.
|
Except the situation which Party A maintains or increases the terms of the agreement to extend this agreement but refused by Party B, the agreement is cancelled in accordance with the term 9-H of this agreement;
|
f.
|
The agreement is cancelled in accordance with the term 9-F-d and 9-F-e of this agreement;
|
g.
|
Other situations in accordance with the laws and regulations.
|
B.
|
When the agreement is cancelled or terminated, the offering of the economic compensation should comply with the Labor Agreement Law and other relevant regulations. If Party A need to pay to Party B, it should be paid when Party B implements the transfer of the job.
|
11.
|
Process of cancellation of the agreement
|
12.
|
Controversy process
|
13.
|
Other additional terms which both sides would like to add:
|
14.
|
Others
|
A.
|
Any insufficient terms or any current term violated with current laws and regulations should comply with the current laws and regulation.
|
B.
|
This agreement will enter into force once signed by both sides. Any modify or unauthorized signature will cause this agreement ineffective.
|
C.
|
This agreement has two copies and both sides keep one.
|
September 1, 2008 | September 1, 2008 | ||
Leaser:
|
Shenzhen East Jianfu Real Estate Co., Ltd.
|
|
|
Address:
|
East Jianfu Building 7th Floor, Ziyou Road, Baoanxin Disctrict
|
||
Zip code:
|
518133
|
||
Telephone:
|
27587411
|
||
Authorized Person:
|
Yang Hanjun
|
||
Address:
|
|||
Zip code:
|
|||
Telephone:
|
|||
ID No.:
|
|||
Leasee:
|
Shenzhen Ruiyitaihe Technology Co., Ltd. |
|
|
Address:
|
Xingyunge 5G Zhongfu Building Fumin Street, Futian District, Shenzhen
|
||
Zip code:
|
518048
|
||
Telephone:
|
33699370
|
||
Business License No.:
|
|||
Authorized Person:
|
|||
Address:
|
|||
Zip code:
|
|||
Telephone:
|
|||
ID No.:
|
1.
|
If performance under the lease is impossible due to Force Majeure,
|
2.
|
If the government expropriates, purchases, takes back or takes down the Rental Property, or
|
3.
|
Consented by the Leaser and the Leasee.
|
1.
|
If the Leasee misses rent payment for more than N/A,
|
2.
|
If the arrears may cause the Leaser to lose more than N/A,
|
3.
|
The Leasee conducts illegal activities that interferes with public or private interest on the Rental Property,
|
4.
|
The Leasee modifies the structure or the purposes of the Rental Property,
|
5.
|
The Leasee does not make or pay for the repairs and causes the Rental Property or the equipment to be severely damaged in violation of Article 14,
|
6.
|
The Leasee renovates the Rental Property without the Leaser’s consent or the relevant agency’s approval, or
|
7.
|
The Leasee transfers the lease to third party without authorization.
|
1.
|
The Leaser delivers the Rental Property more than N/A later than agreed upon,
|
2.
|
The Leaser does not perform under Provision 1 of Article 11 and causes the Leasee to be unable to achieve the rental purposes,
|
3.
|
The Leaser does not perform under Article 13 and does not make or pay for the repairs, or
|
4.
|
The Leaser modify, expand or renovate the Rental Property without consent from the Leasee,
|
1.
|
Before signing the contract, the parties should review carefully, negotiate the terms and modify the provisions accordingly. The parties can choose, supplement, fill in and modify the form. Once the contract is signed, the unchanged content and the content written in should be deemed the content of the contract (with the parties’ signatures or seals). The content that is chosen, supplemented, filled in and modified should prevail over the form.
|
2.
|
Before signing the contract, the leaser should show the leasee its deed or other proof of land use rights, and proof of the leaser’s legal identity. If there is an authorized person, authorization should be provided. If the real estate is jointly owned, consent and authorization from all the owners should be provided. The leasee should provide the leaser proof of its legal identity.
|
3.
|
The contract should be signed and performed according to the laws. It should not violate the procedural laws or agree on illegal matters.
|
4.
|
Once signed, the contract is binding to both parties. The parties should perform their obligations according to the contract. They should not amend or cancel the contract without legal reason or mutual consent.
|
5.
|
The blanks should be filled in by the parties with pen or writing brush with black or blue ink. The contract should be signed and sealed.
|
6.
|
The blanks in the contract are for the parties to negotiate and the boxes are for the parties to check.
|
7.
|
After signing the contract, the parties should register with the real estate rental agency together.
|
8.
|
The parties can decide the number of the original copies according to their needs. They should review carefully to make sure the copies are the same before signing them. Under any condition, each party should have at least one original copy.
|
9.
|
If there are any major changes in the contract, or the contract is cancelled or lost, the parties should go through the relevant procedures.
|
10.
|
The parties can agree on the attached pages as to how to dispose the objects in the rental property after the lease expires or if the lease is cancelled.
|
11.
|
Article 6 “The purposes of the Rental Property” of the agreement shall be one of the following fives: Commercial, Office, Factory, Warehouse or Multiple.
|
1.
|
The leaser and the leasee of the buildings for production and operation purposes (including markets, stalls and counters), offices, residence and other real estate are responsible for the safety of the rental properties.
|
2.
|
The Leaser shall possess the deed or other proof of ownership of the real estate according to the municipal regulations. If the real estate is entrusted to others, the owner shall sign a written authorization with the authorized person, which shall provide for the safety responsibilities of the parties. The subleaser and other leaser as a matter of fact shall have the safety responsibilities and the leaser.
|
3.
|
The leaser shall make sure that the building and its exits, passages, fire safety, gas and electricity equipment meet the requirements of the rule and regulations and other safety standards by the administrative department. If permit or approval is required by rules and regulations before the real estate can be leased, the leaser shall obtain such permit or approval first.
|
4.
|
If the leasee is to conduct production or operation activities in the rental property, the leaser shall require proof of fire safety procedure and its business licence.
|
5.
|
The leaser shall conduct at least one safety and use of the rental property inspection and record the result in writing every quarter. The leasee shall corporate and sign. If the leaser is unable to make such inspection due to objective reasons, it shall authorize other person to do so.
|
6.
|
If the leaser discovers hidden danger in the rental property or that the leasee has changed use of the rental property, it should submit such discovery to the real estate rental management agencies or other relevant government agencies.
|
7.
|
The leasee shall use the rental property safely and reasonably according to the provisions of the rules, regulations and the lease. It shall not change the structure and use of the rental property. If the leasee discovers hidden dangers in the rental property, it shall notify the leaser immediately and report to the real estate rental management agencies and other relevant government agencies.
|
8.
|
The leasee shall not change the use of the rental property at will. If it uses the rental property to conduct hotel, restaurant, entertainment, internet café, workshop businesses, its activities should comply with the relevant rules.
|
9.
|
The leaser and the leasee shall cooperate with and assist the real estate rental management agency in safety inspections and management and provide relevant materials truthfully.
|
10.
|
If the leaser or the leasee does not carry out its responsibilities and causes personal injuries or monetary loss to a third party, the third party shall have the right to seek damages from the leaser or the leasee.
|
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