The following summary financial information contains consolidated statement of income data for the three months ended March 31, 2010 and 2009 and each of the years in the four-year period ended December 31, 2009 and the period from July 6, 2005 (date of inception of our operating company) to December 31, 2005 and the consolidated balance sheet data as of March 31, 2010 and the yearend dates for each of the years in the four-year period ended December 31, 2009 and as of December 31, 2005.  The consolidated statement of income data and balance sheet data were derived from the audited consolidated financial statements, except for data for the for the three months ended March 31, 2010 and 2009 and the period from July 6, 2005 (date of inception of our operating company) to December 31, 2005 and as of March 31, 2010 and December 31, 2005. Such financial data should be read in conjunction with the consolidated financial statements and the notes to the consolidated financial statements starting on page F-1 and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”   Share and per share information has been adjusted to reflect a reverse stock split that was effected on May 12, 2010 pursuant to which every 2 shares of our common stock was converted into 1 share of our common stock.

(in thousand US dollars)		Three Months ended March 31,								Years ended December 31,																Period from July 6, 2005 (date of inception) to December 31,
		2010				2009				2009				2008				2007				2006				2005
Revenue		$	14,857			$	11,987			$	59,261			$	42,944			$	16,552			$	2,517			$	33
Gross profit		$	3,399			$	2,538			$	13,573			$	9,990			$	4,105			$	699			$	1
Income from operations		$	1,157			$	1,662			$	8,681			$	6,045			$	2,238			$	271			$	(11	)
Net income		$	871			$	1,459			$	7,580			$	5,768			$	2,209			$	243			$	(11	)
Earnings per share—basic		$	0.09			$	0.21			$	1.07			$	0.81			$	0.31			$	0.03			$	(0.002	)
Weighted average shares outstanding – basic			9,458,778				7,097,748				7,097,748				7,097,748				7,097,748				7,097,748				7,097,748
Earnings per share—diluted		$	0.09			$	0.21			$	1.07			$	0.81			$	0.31			$	0.03			$	(0.002	)
Weighted average shares outstanding –diluted			10,126,191				7,097,748				7,097,748				7,097,748				7,097,748				7,097,748				7,097,748

(in thousand US dollars)		As of March 31,				As of December 31,
		2010				2009				2008				2007				2006				2005
Cash and cash equivalents		$	2,609			$	469			$	264			$	1,502			$	117			$	94
Total assets		$	27,414			$	24,158			$	13,906			$	5,489			$	1,787			$	336
Long-term debt		$	-			$	-			$	-			$	-			$	-			$	-

 

The acquisition of China Intelligent BVI by us on January 15, 2010 pursuant to the Share Exchange was accounted for as a recapitalization by us. The recapitalization was, at the time of the Share Exchange, the merger of a private operating company (China Intelligent BVI) into a non-operating public shell corporation (us) with nominal net assets and as such is treated as a capital recapitalization, rather than a business combination. As a result, the assets of the operating company are recorded at historical cost. The transaction is the equivalent to the issuance of stock by the private company for the net monetary assets of the shell corporation. The pre-acquisition financial statements of China Intelligent BVI are treated as the historical financial statements of the consolidated companies. The financial statements presented will reflect the change in capitalization for all periods presented, therefore the capital structure of the consolidated enterprise, being the capital structure of the legal parent, is different from that appearing in the financial statements of China Intelligent BVI in earlier periods due to this recapitalization.

 

36

---

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and the other financial information included in this prospectus.

This prospectus contains forward-looking statements.  The words “anticipated,” “believe,” “expect, “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may,” and similar expressions are intended to identify forward-looking statements.  These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow.  Such statements reflect our management’s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, the current economic downturn adversely affecting demand for the our products; our reliance on our major customers for a large portion of our net sales; our ability to develop and market new products; our ability to raise additional capital to fund our operations; our ability to accurately forecast amounts of supplies needed to meet customer demand; market acceptance of our products; exposure to product liability and defect claims; fluctuations in the availability of raw materials and components needed for our products; protection of our intellectual property rights; changes in the laws of the PRC that affect our operations; inflation and fluctuations in foreign currency rates and various other matters, many of which are beyond our control.  Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated.  Consequently, all of the forward-looking statements made in this prospectus are qualified by these cautionary statements and there can be no assurance of the actual results or developments.

Overview

Through Hyundai Light, we engage in the design, manufacture, sales and marketing of high-quality Light Emitting Diode (“LED”) lighting products and other products for the household, commercial and outdoor lighting industries.  We operate in the LED lighting business sector, and the core technology of our business is based on the all-solid-state semiconductor white light technology, in addition to general lighting products, sold throughout China and in select international markets.  Our branded products, marketed under the brand-name Hyundai™, have become a recognized brand name in China, which we expect will assist us in growing our business over the course of the next few years, assuming we reach an agreement with the licensor to extend the license agreement past the July 2010 expiration date. We anticipate that the license agreement will be renewed in July 2010 because Hyundai Corporation has signed a non-binding memorandum of cooperation effective January 1, 2009 that indicates that Hyundai Corporation intends to renew our license agreement until December 31, 2018.  However, the memorandum is not binding on Hyundai Corporation and we have no control over Hyundai Corporation’s decision whether to continue to license its trademark to us.  If such trademark license is discontinued, we would lose the right to use the Hyundai™ name in connection with our business.  Because the trademark license agreement prohibits us from selling our Hyundai™ branded products outside of the PRC, our international expansion efforts will primarily be executed through our OEM products, which are not directly affected by the Hyundai agreement.  

The lighting industry is affected by a number of general business and economic factors such as gross domestic product growth, employment, credit availability and commodity costs. Construction spending on infrastructure projects such as highways, streets, and urban developments also has a material impact on the demand for infrastructure-focused products. The market is also subject to rapid technology changes, highly fragmented, and cyclical.  The industry is characterized by the short life cycle of products, requiring continuous design and development efforts, which necessitates large capital and time investments.

We sell our products through a network of distributors and resellers allowing us to penetrate customer markets.  Our products are sold domestically in China and, to a lesser extent, internationally through numerous channels, including independent specialty retailers, international and regional chains, mass merchants, and distributors.

A small number of customers account for a significant percentage of our revenue. For the three months ended March 31, 2010, we had one customer that accounted for at least 5% of the revenues that we generated. This one customer accounted for a total of approximately 5.16% of our revenue for that period.  For the year ended December 31, 2009, none of our customer accounted for more than 5% of the revenues that we generated.  During the year ended December 31, 2008, we had one customer that generated revenues of at least 5% of our revenues, with our largest customer accounting for 29.2% of our revenue for the year. For the year ended December 31, 2007, we had four customers that accounted for at least 5% of revenue, for an aggregate of approximately 50.1% of our revenue.

 

37

---

 

Most of our revenues are derived from sales to OEMs, or Original Equipment Manufacturers, followed by sales of Hyundai™ branded products and other products.  The OEM sales are mainly decided by our manufacturing capability and are not affected by the Hyundai trademark license agreement.  OEMs contract with us to build their products or to obtain services related to product development and prototyping, volume manufacturing or aftermarket support.  Our services include engineering, design, materials, management, assembly, testing, distribution, and after-market services.  We believe that we are able to provide quality OEM services that meet unique requirements within customer timeframes, unique styling, product simplicity, price targets, and consistent quality with low defect rates.  As a result of efficiently managing costs and assets, we believe we are able to offer our customers an outsourcing solution that represents a lower total cost of acquisition than that typically provided by the OEM’s own manufacturing operation. OEM sales accounted for approximately 60%, 68%, 51%, and 23% of our revenues for the three months ended March 31, 2010 and for the years ended December 31, 2009, 2008 and 2007, respectively, and sales of products with our Hyundai™ brand products and other products accounted for 40%, 32%, 49%, and 77% of our revenues for the same periods, respectively.  Because the trademark license agreement between us and Hyundai Corporation prohibits us from selling our Hyundai™ branded products outside of the PRC, our international expansion efforts will primarily be executed through our OEM products, which are not directly affected by the Hyundai agreement.

Our primary suppliers of raw materials are located in Huizhou, Shenzhen and Zhongshan.  Our top three suppliers accounted for a total of approximately 23.4%, 23.3%, 13.8%, and 61.4% of our raw material purchases for the three months ended March 31, 2010 and for the years ended December 31, 2009, 2008, and 2007.  These suppliers are unrelated parties.  Other than these suppliers, no other supplier accounted for more than 10% of our total purchases in these periods. Presently, our relationships with our suppliers are good and we expect that our suppliers will be able to meet the anticipated demand for our products in the future.  However, due to our dependence on a small number of suppliers for certain raw materials, we could experience delays in development and/or the ability to meet our customer demand for new products. Moreover, we may purchase quantities of supplies and materials from time to time that are greater than required by customer orders to secure more favorable pricing, delivery or credit terms.  These purchases can expose us to losses from cancellation costs, inventory carrying costs or inventory obsolescence, and hence adversely affect our business and operating results.

In addition, we have a limited number of long-term contracts with our suppliers, and we believe that alternative suppliers are available. Although we have not been subject to shortages for any of our components, we may be subject to cutbacks and price increases which we may not be able to pass on to our customers in the event that the demand for components generally exceeds the capacity of our suppliers.  We believe the manufacturing facility that we use in Huizhou, China, due to its location, provides us with flexibility in our supply chain, to better manage inventories and to reduce delays and long-term costs for our products.

Companies in our industry are under pressure to develop new designs and product innovations to support changing consumer tastes and regulatory requirements.  We have engaged in research and development activities and we believe that substantial additional research and development activities are necessary to allow us to offer technologically-advanced products in the long term. We expect that our research and development budget will significantly increase as we attempt to create new products and as we have access to additional working capital to fund these activities.  We intend to use approximately one-third of the net proceeds from this offering for research and development focused on LED technologies and an additional one-third for expansion of our manufacturing and production of LED components.  However, research and development and investments in new technology are inherently speculative and commercial success depends on many factors including technological innovation, novelty, service and support, and effective sales and marketing.   We may not achieve significant revenue from new product and service investments for a number of years, if at all. As a result, we may not achieve significant revenue from these investments for a number of years, if at all.

Recent Events

Reverse Stock Split

On March 30, 2010, our Board of Directors and shareholders approved an amendment to our Certificate of Incorporation to effect a 1-for-2 reverse stock split of all of our issued and outstanding shares of common stock (the “Reverse Stock Split”). On May 12, 2010 we effected the Reverse Stock Split by filing the amendment to the Certificate of Incorporation with the Secretary of the State of Delaware. The par value and number of authorized shares of our common stock remained unchanged. All references to number of shares and per share amounts included in this prospectus gives effect to the Reverse Stock Split. The number of shares and per share amounts included in the consolidated financial statements and the accompanying notes, starting on page F-1, have been adjusted to reflect the Reverse Stock Split retroactively.

 

38

---

 

Share Exchange

On October 20, 2009, we entered into a share exchange agreement, as amended on November 25, 2009 (the “Exchange Agreement”), with China Intelligent BVI and its sole shareholder.  On January 15, 2010, the Share Exchange closed in accordance with the terms of the Exchange Agreement and we issued 7,097,748 shares to the former sole shareholder of China Intelligent BVI and her designees for all of the issued and outstanding securities of China Intelligent BVI.  As a result, China Intelligent BVI became our wholly-owned subsidiary.  We also changed our name from SRKP 22, Inc. to “China Intelligent Lighting and Electronics, Inc.”  We paid a total of $600,000 in connection with the Share Exchange to acquire the SRKP 22, Inc. shell corporation, where such fee consisted of $350,000 paid to WestPark Capital, Inc., which is the placement agent in the Private Placement, described below, and $250,000 paid to a third party unaffiliated with China Intelligent BVI, Hyundai Light, or WestPark Capital in connection with the third party’s services as an advisor to the Company, including assisting in preparations for the share exchange and the Company’s listing of securities in the United States.  In addition, we paid a $140,000 success fee to WestPark Capital for services provided in connection with the Share Exchange, including coordinating the share exchange transaction process, interacting with the principals of the shell corporation and negotiating the definitive purchase agreement for the shell, conducting a financial analysis of China Intelligent BVI, conducting due diligence on China Intelligent BVI and its subsidiaries and managing the interrelationship of legal and accounting activities.  We also reimbursed Westpark Capital $80,000 for expenses related to its due diligence. All of the fees due to WestPark Capital and to the unaffiliated third party in connection with the Share Exchange have been paid as of the date of this prospectus, and have been charged to expense as incurred.

Private Placement

On January 15, 2010, concurrently with the close of the Share Exchange, we conducted a private placement transaction (the “Private Placement”) pursuant to which we sold an aggregate of 1,377,955 shares of common stock at $2.54 per share.   As a result, we received gross proceeds in the amount of approximately $3.5 million.  WestPark Capital was paid a placement agent commission equal to 8% of the gross proceeds from the financing and a 4% non-accountable expense allowance.  We are also retaining WestPark Capital for a period of six months following the closing of the Private Placement to provide us with financial consulting services for which we will pay WestPark Capital $6,000 per month.

Critical Accounting Policies, Estimates and Assumptions

The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates.

The discussion and analysis of our financial condition and results of operations is based upon our financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities. On an on-going basis, we evaluate our estimates including the allowance for doubtful accounts, the salability and recoverability of inventory, income taxes and contingencies. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

Trade receivables

Trade receivables are recognized and carried at original invoiced amount less an allowance for uncollectible accounts, as needed.  Generally, the aging of invoice is from 30 days to 120 days except for contracts with specified payment dates.  For any unpaid invoices over the payment date and as a result of bankruptcy or other unforeseen circumstances, we adjust the bad debts for trade receivables.  Approximately 21%, 14%, 16%, and 38% of our trade receivables were over sixty days old as of March 31, 2010 and December 31, 2009, 2008 and 2007, respectively, and 9%, 1%, 13% and 31% of our trade receivables were over ninety days old as of March 31, 2010 and December 31, 2009, 2008 and 2007, respectively.  We carry a high volume of trade receivables as a result of increased customer purchases on credit, in addition to our rapid expansion and increase in sales in recent years.

 

39

---

 

We have specific provisions for evaluating bad debts every quarter.  We adjust the valuation allowance balance for trade receivables per quarter as a result of the aging of invoices. We estimate the valuation allowance for anticipated uncollectible receivable balances based on historical experience and current economic climate.  The allowance for bad debts on trade receivables reflects management’s best estimate of probable losses determined principally on the basis of historical experience. The allowance for bad debt is determined primarily on the basis of management’s best estimate of probable losses, including specific allowances for known troubled accounts. All accounts or portions thereof deemed to be uncollectible or to require an excessive collection cost are written off to the allowance for bad debt. When facts subsequently become available to indicate that the amount provided as the allowance to date has been inadequate, an adjustment to the estimate is made at that time.  When facts subsequently become available to indicate that the amount provided as the allowance to the date has been inadequate, an adjustment to the estimate will be made at that time. Allowance for doubtful accounts were $0, $0, $136,974, and $104,889 as of March 31, 2010 and December 31, 2009, 2008, and 2007, respectively.

 

Inventories

Inventories are stated at the lower of cost, as determined on a weighted average basis, or market. Costs of inventories include purchase and related costs incurred in bringing the products to our location and proper condition. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. We write down the inventories to market value if it is below cost. We also regularly evaluate the composition of its inventories to identify slow-moving and obsolete inventories to determine if a valuation allowance is required.

Inventory levels are based on projections of future demand and market conditions.  Any sudden decline in demand and/or rapid product improvements and technological changes can result in excess and/or obsolete inventories.  There is a risk that we will forecast inventory needs incorrectly and purchase or produce excess inventory.  As a result, actual demand may differ from forecasts, and such differences, if not managed, may have a material adverse effect on future results of operations due to required write-offs of excess or obsolete inventory.

Revenue Recognition

We generate revenue from the sales of lighting and electronic equipment. Sales revenues are recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured. Sales are presented net of value added tax (VAT). No return allowance is made as products returns have been insignificant in all periods.

Orders are placed by both the distributors and OEMs and the products are delivered to the customers within 30 to 45 days of order, we do not provide price protection or right of return to the customers. The price of the products are predetermined and fixed based on contractual agreements, therefore the customers would be responsible for any loss if the customers are faced with sales price reductions and rapid technology obsolescence in the industry. We do not allow any discounts, credits, rebates or similar privileges.

We do not provide warranty for the products sold to customers since the majority of the customers are wholesalers and distributors. We specify the delivery terms (usually 30 days after the order is placed) and the liability for breach of the contract. If we cannot fulfill the order terms, the customers have the right to recoup their deposit. If the products delivered do not meet the quality specifications or need to be reworked, we are responsible for the rework and the related expenses. If the customers decided to rework the products themselves, we will compensate its customers for the expenses incurred. We did not incur any costs related to breach of contract or product quality issues for sales during the three months ended March 31, 2010 and the years ended December 31, 2009, 2008, 2007 and 2006.

Value Added Tax

Enterprises which manufacture and sell products such as ours are typically required under Chinese law to pay the Chinese government value added tax (“VAT”) in an amount equal to 17% of gross sales of certain products sold and used in the PRC.  In 2007, through our subsidiary Hyundai Light, we received an approval from the local agent of national taxation authority, the State Taxation Bureau of Huicheng District, Huizhou, Guangdong (the "Huicheng Taxation Bureau"), to pay a 4% simplified VAT for fiscal years 2008, 2009, and 2010 for sales of certain products in the PRC. As a result of this approval, our total tax savings for fiscal 2008 and 2009 was more than approximately $7.0 million; there will be additional tax savings in fiscal 2010. If a tax audit is conducted by a higher tax authority and it was determined that such local approval was improper or unauthorized and that we should in fact have been paying VAT at the rate of 17% on all sales in the PRC, we may be required to make up all of the underpaid taxes.

 

40

---

In addition, under the accounting standards with respect to accounting for uncertainty in income taxes, certain tax contingencies are recognized when they are determined to be more likely than not to occur, and we believe this accounting interpretation applies by analogy to VAT.  Based on approvals that we have received on the use of the simplified VAT rate, we believe that the likelihood that a higher tax authority will determine that local approval of the reduced rate was improper or unauthorized does not reach a “more likely than not” level.  We believe our judgments in this area are reasonable and correct, but there is no guarantee that we will be successful if such approvals are challenged by a higher tax authority.  If our use of the simplified VAT rate is challenged successfully by a higher taxing authority, we may be required to pay additional taxes or we may seek to enter into settlements with the taxing authorities, which could require significant payments or otherwise have a material adverse effect on our business, results of operations and financial condition.

Due to the possibility that the grant of the reduced VAT tax rate to us by the Huicheng Taxation Bureau may be overturned by higher levels of the PRC government and the potential negative effects on our results of operations and financial position if such event were to occur, we believed that investors may be reluctant to participate in the Private Placement that we conducted concurrently with the Share Exchange.  Li Xuemei, our Chief Executive Officer and Chairman of the Board, believes that the revocation of the reduced VAT rate is remote, as does our management.  The reasons that Ms. Li and our management believe that the revocation of the reduced VAT rate is remote are:

 

·

the VAT reduction was granted by a governmental unit with authority to do so;

	·	the rate reduction was done with all facts known by all parties;

	·	we have no knowledge of similar revocations, nor are there any known court cases or administrative matters of which we are aware in which a revocation has taken place; and

	·	the issuance of the rate reduction by local authorities was by an appropriately sanctioned administrative procedure.

 

Ms. Li did not have a material relationship to our company’s receipt of approval for 4% simplified VAT from the local agent of Huicheng Taxation Bureau; however, she desired that the Private Placement and Share Exchange be completed and she volunteered to indemnify us against our losses if such revocation occurred.  In January 2010, we entered into an Indemnification Agreement and Security Agreement with Ms. Li pursuant to which Ms. Li agreed to indemnify and pay to us amounts that would make us whole for any tax liability, penalty, loss, or other amounts expended as a result of any removal of our reduced 4% simplified VAT rate, including any requirement to make up all of the underpaid taxes.  In addition, pursuant to the terms of the Indemnification Agreement and Security Agreement, if Ms. Li is unable to or fails to pay all such amounts due to us under the agreement, we would have the right to obtain the proceeds from a forced sale of the real estate property secured under the Security Agreement.  Based on a review of valuation documents, we believe that the value of the collateral that Ms. Li provided to secure her indemnification to us is sufficient to cover any losses that we would incur from a revocation of our reduced simplified VAT rate.  However, if such sale proceeds were insufficient to cover amounts due to us, we would be able to cancel a number of shares of common stock in our company held by Ms. Li in an amount equal any shortfall.  Any such prospective change to the aforementioned tax approval would have a material adverse effect on our liquidity and profitability to the extent that we are unable to collect such deficiency from the related customers and to the extent that we are not able to collect any shortfall from Ms. Li under the Indemnification Agreement and Security Agreement. While we believe it is a remote contingency the clarification of the indemnity to potential investors was considered appropriate.

Recently Issued Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued a standard that established the FASB Accounting Standards Codification (ASC) and amended the hierarchy of generally accepted accounting principles (GAAP) such that the ASC became the single source of authoritative nongovernmental U.S. GAAP. The ASC did not change current U.S. GAAP, but was intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All previously existing accounting standard documents were superseded and all other accounting literature not included in the ASC is considered non-authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through Accounting Standards Updates (ASUs). The Company adopted the ASC on July 1, 2009. This standard did not have an impact on the Company’s consolidated results of operations or financial condition. However, throughout the notes to the consolidated financial statements references that were previously made to various former authoritative U.S. GAAP pronouncements have been changed to coincide with the appropriate section of the ASC.

 

41

---

 

In December 2007, the FASB issued and, in April 2009, amended a new business combinations standard codified within ASC 805, which changed the accounting for business acquisitions. Accounting for business combinations under this standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. The Company adopted the standard for business combinations for its business combination during the period ended June 30, 2009.

 

In April 2009, the FASB issued an accounting standard which provides guidance on (1) estimating the fair value of an asset or liability when the volume and level of activity for the asset or liability have significantly declined and (2) identifying transactions that are not orderly. The standard also amended certain disclosure provisions for fair value measurements and disclosures in ASC 820 to require, among other things, disclosures in interim periods of the inputs and valuation techniques used to measure fair value as well as disclosure of the hierarchy of the source of underlying fair value information on a disaggregated basis by specific major category of investment. The standard was effective prospectively beginning April 1, 2009. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial condition.

In April 2009, the FASB issued an accounting standard which modifies the requirements for recognizing other-than-temporarily impaired debt securities and changes the existing impairment model for such securities. The standard also requires additional disclosures for both annual and interim periods with respect to both debt and equity securities. Under the standard, impairment of debt securities will be considered other-than-temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell). The standard further indicates that, depending on which of the above factor(s) causes the impairment to be considered other-than-temporary, (1) the entire shortfall of the security’s fair value versus its amortized cost basis or (2) only the credit loss portion would be recognized in earnings while the remaining shortfall (if any) would be recorded in other comprehensive income. The standard requires entities to initially apply its provisions to previously other-than-temporarily impaired debt securities existing as of the date of initial adoption by making a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The cumulative-effect adjustment potentially reclassifies the noncredit portion of a previously other-than-temporarily impaired debt security held as of the date of initial adoption from retained earnings to accumulated other comprehensive income. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial condition.

In April 2009, the FASB issued an accounting standard regarding interim disclosures about fair value of financial instruments. The standard essentially expands the disclosure about fair value of financial instruments that were previously required only annually to also be required for interim period reporting. In addition, the standard requires certain additional disclosures regarding the methods and significant assumptions used to estimate the fair value of financial instruments. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial condition.

In May 2009, the FASB issued a new accounting standard regarding subsequent events. This standard incorporates into authoritative accounting literature certain guidance that already existed within generally accepted auditing standards, with the requirements concerning recognition and disclosure of subsequent events remaining essentially unchanged. This guidance addresses events which occur after the balance sheet date but before the issuance of financial statements. Under the new standard, as under previous practice, an entity must record the effects of subsequent events that provide evidence about conditions that existed at the balance sheet date and must disclose but not record the effects of subsequent events which provide evidence about conditions that did not exist at the balance sheet date. This standard added an additional required disclosure relative to the date through which subsequent events have been evaluated and whether that is the date on which the financial statements were issued. For the Company, this standard was effective beginning April 1, 2009.

 In June 2009, the FASB issued a new standard regarding the accounting for transfers of financial assets amending the existing guidance on transfers of financial assets to, among other things, eliminate the qualifying special-purpose entity concept, include a new unit of account definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarify and change the derecognition criteria for a transfer to be accounted for as a sale, and require significant additional disclosure. The standard is effective for new transfers of financial assets beginning January 1, 2010. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial condition.

 

In June 2009, the FASB issued an accounting standard that revised the consolidation guidance for variable-interest entities. The modifications include the elimination of the exemption for qualifying special purpose entities, a new approach for determining who should consolidate a variable-interest entity, and changes to when it is necessary to reassess who should consolidate a variable-interest entity. The standard is effective January 1, 2010. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial condition.

 

42

---

In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, a entity may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value. This ASU is effective October 1, 2009. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial condition.

In January 2010, the FASB issued ASU No. 2010-6, Improving Disclosures About Fair Value Measurements, that amends existing disclosure requirements under ASC 820 by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. This ASU is effective for the first quarter of 2010, except for the requirement to provide level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective beginning the first quarter of 2011. Since this standard impacts disclosure requirements only, its adoption will not have a material impact on the Company’s consolidated results of operations or financial condition.

In September 2009, the FASB issued ASU No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), that amends ASC 820 to provide guidance on measuring the fair value of certain alternative investments such as hedge funds, private equity funds and venture capital funds. The ASU indicates that, under certain circumstance, the fair value of such investments may be determined using net asset value (NAV) as a practical expedient, unless it is probable the investment will be sold at something other than NAV. In those situations, the practical expedient cannot be used and disclosure of the remaining actions necessary to complete the sale is required. The ASU also requires additional disclosures of the attributes of all investments within the scope of the new guidance, regardless of whether an entity used the practical expedient to measure the fair value of any of its investments. This ASU is effective October 1, 2009. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial condition.

In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions.  The ASU is effective beginning January 1, 2011. The Company is currently evaluating the impact of this standard on the Company’s consolidated results of operations and financial condition.

In October 2009, the FASB issued ASU No. 2009-14, Certain Revenue Arrangements That Include Software Elements—a consensus of the FASB Emerging Issues Task Force, that reduces the types of transactions that fall within the current scope of software revenue recognition guidance. Existing software revenue recognition guidance requires that its provisions be applied to an entire arrangement when the sale of any products or services containing or utilizing software when the software is considered more than incidental to the product or service. As a result of the amendments included in ASU No. 2009-14, many tangible products and services that rely on software will be accounted for under the multiple-element arrangements revenue recognition guidance rather than under the software revenue recognition guidance. Under the ASU, the following components would be excluded from the scope of software revenue recognition guidance:  the tangible element of the product, software products bundled with tangible products where the software components and non-software components function together to deliver the product’s essential functionality, and undelivered components that relate to software that is essential to the tangible product’s functionality. The ASU also provides guidance on how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). The ASU is effective beginning January 1, 2011. The Company is currently evaluating the impact of this standard on the Company’s consolidated results of operations and financial condition.

 

43

---

Results of Operations

The following table sets forth information from our statements of income for the three months ended March 31, 2010 and 2009 and for the years ended December 31, 2009, 2008 and 2007 in dollars and as a percentage of revenue:

		(Dollar Amounts in Thousands)
		Three Months Ended March 31,																Years Ended December 31,
		2010								2009								2009								2008								2007
Revenues		$	14,857				100.0	%		$	11,987				100.0	%		$	59,261				100.0	%		$	42,944				100.0	%		$	16,552				100.0	%
Cost of goods sold			(11,459	)			77.1	%			(9,450	)			78.8	%			(45,688	)			77.1	%			(32,954	)			76.7	%			(12,447	)			75.2	%
Gross profit			3,398				22.9	%			2,537				21.2	%			13,573				22.9	%			9,990				23.3	%			4,105				24.8	%
Selling expenses			(627	)			4.2	%			(551	)			4.6	%			(2,533	)			4.3	%			(2,072	)			4.8	%			(1,047	)			6.3	%
Research and development			(280	)			1.9	%			(104	)			0.9	%			(895	)			1.5	%			(742	)			1.7	%			(322	)			1.9	%
Other general and administrative			(1,334	)			9.0	%			(220	)			1.8	%			(1,464	)			2.5	%			(1,131	)			2.6	%			(498	)			3.0	%
Income from operations			1,157				7.8	%			1,662				13.9	%			8,681				14.6	%			6,045				14.1	%			2,238				13.5	%
Other (expenses) / income			(12	)			0.1	%			1				0	%			(18	)			0.0	%			(277	)			0.6	%			(29	)			0.0	%
Income before income taxes			1,145				7.7	%			1,663				13.9	%			8,663				14.8	%			5,768				13.4	%			2,209				13.3	%
Provision for income taxes			(274	)			1.8	%			(204	)			1.7	%			(1,083	)			1.8	%			-				0.0	%			-				0.0	%
Net income		$	871				5.9	%		$	1,459				12.2	%		$	7,580				12.8	%		$	5,768				13.4	%		$	2,209				13.3	%

 

The following table sets forth information of revenues for the three months ended March 31, 2020 and for the years ended December 31, 2009, 2008, and 2007.

		(Dollar Amounts in Thousands)
		Three Months ended March 31,																Years Ended December 31,
		2010								2009								2009								2008								2007
Household lighting products		$	11,614				78.2	%		$	10,155				84.7	%		$	50,600				85.4	%		$	34,104				79.4	%		$	7,420				44.8	%
Lighting holders			1,723				11.6	%			141				1.2	%			4,347				7.3	%			942				2.2	%			634				3.8	%
Illuminant devices			220				1.5	%			7				0.1	%			278				0.5	%			280				0.7	%			66				0.4	%
Power distribution transformers			32				0.2	%			11				0.1	%			36				0.1	%			2,694				6.3	%			2,005				12.1	%
Ballast devices			206				1.4	%			143				1.1	%			512				0.9	%			876				2.0	%			165				1.0	%
Other products			1,062				7.1	%			1,530				12.8	%			3,488				5.9	%			4,048				9.4	%			6,262				37.8	%
Total revenues		$	14,857				100	%		$	11,987				100	%		$	59,261				100	%		$	42,944				100	%		$	16,552				100	%

Three months ended March 31, 2010 and 2009

Revenues were $14.86 million for the three months ended March 31, 2010, an increase of $2.87 million, or 23.94%, compared to $11.99 million for the same period in 2009. The increase in revenue was attributed mainly to the increase in sales of household lighting products, which resulted from the expanding of our market and sales volume.  Additionally, growth of the lighting industry, recent improvement in the economy, and the expansion of our manufacturing capacity have been material drivers of our revenue growth.   OEM sales have been increasing as a percentage of our total revenues because OEM sales have directly benefited from the expansion of our manufacturing capabilities leading to reduced unit cost of goods from the economies of scale.  While branded product sales have been increasing, branded sales decreased as a percentage of total revenue as compared to OEM sales because branded sales are not as closely tied to manufacturing efficiencies as OEM sales.  We anticipate branded product sales to increase as a result of an increased investment in the brand and an increase in the construction efforts of franchise stores, as well as the addition of brand sale networks.  However, since we believe that our manufacturing efficiencies will continue to benefit our OEM sales, we anticipate that OEM sales will continue to increase as a percentage of total revenue as compared to branded products.

 

44

---

Cost of sales were $11.46 million for the three months ended March 31, 2010, an increase of $2.01 million, or 21.27% compared to $9.45 million for the same period in 2009. The increase of costs of sales was primarily a result of an increase in sales.  As a percentage of net revenue, cost of sales for the three months ended March 31, 2010 and 2009 was 77.13% and 78.83%, respectively.

Gross profit for the three months ended March 31, 2010 was $3.40 million, or 22.87% of revenues, compared to $2.54 million, or 21.17% of revenues, for the comparable period in 2009. Management considers gross profit to be a key performance indicator in managing our business. The normal gross profit rate in our industrial is between 20 to 25%, which will be influenced by various factors, such as cost of sales, product mix, size of the manufacturer and product demand.

Selling expenses, which mainly include wages and commissions, advertising, promotion and exhibition expenses, freighting expenses and related travel expenses, were $0.63 million for the three months ended March 31, 2010, an increase of $0.08 million, or 14.55%, compared to $0.55 million for the same period in 2009. The increase was primarily due to an increase in wages and commissions, which primarily resulted from an increase in sales. We expect that our selling expenses will be at approximately 5% of our sales.

Research and development expenses were approximately $0.28 million for the three months ended March 31, 2010, an increase of approximately $0.18 million, or 180%, compared to $0.10 million for the same period in 2009. We believe that our focus on research and development contributed to the increase in our total sales. In the future, we expect our research and development expenses to increase as we intend to increase our research and development efforts to enable us to manufacture wider lines of products.  We intend to use approximately one-third of the net proceeds from our proposed public offering for research and development focused on LED technologies and an additional one-third for expansion of our manufacturing and production of LED components.  However, research and development and investments in new technology are inherently speculative and commercial success depends on many factors including technological innovation, novelty, service and support, and effective sales and marketing.  As a result, we may not achieve significant revenue from these investments for a number of years, if at all.

General and administrative expenses, which include wages, office expenses, lease and rental expenses, depreciation expenses and professional fees, were $1.3 million for the three months ended March 31, 2010, an increase of $1.08 million, or 491%, compared to $0.22 million for the same period in 2009. The increase was primarily due to accounting, legal and other fees and expenses in the amount of approximately $1 million related to the share exchange transaction and private placement that we closed on January 15, 2010.  We expect our general and administrative expenses to increase as a result of professional fees incurred resulting from being a publicly reporting company in the United States.

Interest expenses were $12,000 and nil for the three months ended March 31, 2010 and 2009, respectively. The increase was due to a short term bank loans obtained commencing in April 2009.

Provision for income tax for the three months ended March 31, 2010 was approximately $0.27 million, as compared to $0.20 million for the comparable period in 2009. The increase was primarily due to the expiration of our preferential tax treatment resulting from recent effectiveness of PRC tax laws. The expired preferential tax treatment will have a negative impact on our net income after income taxes.

Net income was $0.87 million for the three months ended March 31, 2010, a decrease of $0.59 million, or 40.41%, compared to $1.46 million for the same period in 2009.

Years ended December 31, 2009 and 2008

Revenues were $59.3 million for the year ended December 31, 2009, an increase of $16.4 million, or 38.2%, compared to $42.9 million for the same period in 2008. The increase in revenue was attributed mainly to the increase in sales of household lighting products, which resulted from the expanding of our market and sales volume.  Additionally, growth of the lighting industry, recent improvement in the economy, and the expansion of our manufacturing capacity have been material drivers of our revenue growth.   OEM sales have been increasing as a percentage of our total revenues because OEM sales have directly benefited from the expansion of our manufacturing capabilities leading to reduced unit cost of goods from the economies of scale.  While branded product sales have been increasing, branded sales decreased as a percentage of total revenue as compared to OEM sales because branded sales are not as closely tied to manufacturing efficiencies as OEM sales.  We anticipate branded product sales to increase as a result of an increased investment in the brand and an increase in the construction efforts of franchise stores, as well as the addition of brand sale networks.  However, since we believe that our manufacturing efficiencies will continue to benefit our OEM sales, we anticipate that OEM sales will continue to increase as a percentage of total revenue as compared to branded products.

 

45

---

Costs of sales were $45.7 million for the year ended December 31, 2009, an increase of $12.7 million, or 38.5%, compared to $33.0 million for the same period in 2008. The increase of costs of sales was primarily a result of an increase in sales. As a percentage of net revenue, cost of sales for the year ended December 31, 2009 and 2008 was 77.1% and 76.7%, respectively.

Gross profit for the year ended December 31, 2009 was $13.6 million, or 22.9% of revenues, compared to $10.0 million, or 23.3% of revenues, for the comparable period in 2008. Management considers gross profit to be a key performance indicator in managing our business. The normal gross profit rate in our industrial is between 20 to 25 percent, which will be influenced by various factors, such as cost of sales, product mix, size of the manufacturer and product demand. The decrease in our gross profit margin for the year ended December 31, 2009 is primarily due to the negative impact of the recent global financial downturn, a decrease in the export price of our products and the increase in our cost of goods sold. We expect that our gross profit margin will be at approximately 22 and 23 percent level, though there can be no guarantees.

Selling expenses were $2.5 million for the year ended December 31, 2009, an increase of $0.4 million, or 19%, compared to $2.1 million for the same period in 2008. The increase was primarily due to an increase in wages and commissions, which primarily resulted from an increase in sales. We expect that our selling expenses will be at approximately five percent of our sales.

Research and development expenses were approximately $0.89 million for the year ended December 31, 2009, an increase of approximately $0.15 million, or 20.3%, compared to $0.74 million for the same period in 2008. We believe that our focus on research and development contributed to the increase in our total sales. In the future, we expect our research and development expenses to increase as we intend to increase our research and development efforts to enable us to manufacture wider lines of products.  We intend to use approximately one-third of the net proceeds from this offering for research and development focused on LED technologies and an additional one-third for expansion of our manufacturing and production of LED components.  However, research and development and investments in new technology are inherently speculative and commercial success depends on many factors including technological innovation, novelty, service and support, and effective sales and marketing.  As a result, we may not achieve significant revenue from these investments for a number of years, if at all.

General and administrative expenses were $1.46 million for the year ended December 31, 2009, an increase of $0.33 million, or 29.2%, compared to $1.13 million for the same period in 2008. The increase was primarily a result of our increase in sales and increase in professional fees.  We expect our general and administrative expenses to increase as a result of professional fees incurred resulting from of being a publicly reporting company in the United States.

Interest expenses were approximately $0.04 million for the year ended December 31, 2009, a decrease of approximately $0.25 million, or 86.2%, compared to $0.29 million for the same period in 2008. The decrease was mainly due to repayment of short term bank loans in 2008.

Provision for income tax for the ended December 31, 2009 was approximately $1.1 million, as compared to nil for the comparable period in 2008. The increase was primarily due to the expiration of our preferential tax treatment resulting from recent effectiveness of PRC tax laws. Our income tax rate will be 12.5% for the years ended December 31, 2009, 2010 and 2011 and 25% for the years beginning after December 31, 2011. The expired preferential tax treatment will have a negative impact on our net income after income taxes.

Net income was $7.6 million for the year ended December 31, 2009, an increase of $1.8 million, or 31.0%, compared to $5.8 million for the same period in 2008.

Years ended December 31, 2008 and 2007

Revenues were $42.9 million for the year ended December 31, 2008, an increase of $26.3 million, or 158%, compared to $16.6 million for the same period in 2007. The increase in revenue was attributed mainly to the increase in sales of household lighting products resulted from the expanding of our market and sales volume.

Costs of sales were $33.0 million for the year ended December 31, 2008, an increase of $20.6 million, or 166%, compared to $12.4 million for the same period in 2007. The increase of costs of sales was primarily a result of increase in sales. As a percentage of net revenue, cost of sales for the years ended December 31, 2008 and 2007 were 76.7% and 75.2%, respectively.

 

46

---

Gross profit for the year ended December 31, 2008 was $10.0 million, or 23.3% of revenues, compared to $4.1 million, or 24.8% of revenues, for the comparable period in 2007. The decrease in our gross profit margin for the year ended December 31, 2008 is primarily due to the increase of cost of household lighting products, which caused gross profit margin rate of our household lighting products decreased to 23.6% in 2008 from 26.6% in 2007.

Selling expenses were $2.1 million for the year ended December 31, 2008, an increase of $1.1 million, or 110%, compared to $1.0 million for the same period in 2007. The increase primarily resulted from our expanding sales efforts and was in line with the increase of our sales.

Research and development expenses were approximately $0.74 million for the year ended December 31, 2008, an increase of approximately $0.42 million, or 131%, compared to $0.32 million for the same period in 2007.

General and administrative expenses were $1.1 million for the year ended December 31, 2008, an increase of $ 0.61 million, or 122 %, compared to $0.50 million for the same period in 2007. The increase was primarily a result of an increase in our sales and an increase in professional fees.

Interest expenses were approximately $0.29 million and $0.03 million for the year ended December 31, 2008 and 2007, respectively. The increase was due to the interest payment to a short term loan which was acquired and repaid in fourth quarter 2008.

There is no provision for income tax for the year ended December 31, 2008 and 2007 due to the preferential tax treatment granted by the local government. However, this preferential tax treatment expired by December 31, 2008 due to recent effectiveness of PRC tax laws. Our new income tax rate is 12.5% for the years ended December 31, 2009, 2010 and 2011 and 25% for the years beginning after December 31, 2011.

Net income was $5.8 million for the year ended December 31, 2008, an increase of $3.6 million, or 164%, compared to $2.2 million for the same period in 2007.

Liquidity and Capital Resources

We had cash and cash equivalents of approximately $2.61 million as of March 31, 2010, as compared to $0.47 million as of December 31, 2009 and $0.26 million as of December 31, 2008. Our funds are kept in financial institutions located in China, which do not provide insurance for amounts on deposit.  Moreover, we are subject to the regulations of the PRC which restrict the transfer of cash from China, except under certain specific circumstances. Accordingly, such funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC.

In the past, our financing activities were substantially dependent upon loans from affiliated parties, including Mr.  Tianfu Li, our founder and a former owner, officer, and director of Hyundai Light and Electric (HZ) Co., Ltd. (“Hyundai HZ”) and Korea Hyundai Light & Electric (Intl) Holding Limited (“Hyundai HK”), and other companies controlled by Mr. Li, such as NIVS IntelliMedia Technology Group, Inc. (“NIVS”) and its subsidiaries.  During 2008, NIVS provided a loan of $5.7 million to one of our suppliers for our purchases. In addition, NIVS provided approximately $1.8 million in short term loans to us as a working capital. On November 28, 2008, we, NIVS and certain companies related to Mr. Li (collectively, the “Related Companies”) entered into a Debt Repayment and Set-Off Agreement (the “Set-off Agreement”) with Mr. Li. According to this agreement, all parties agreed to have all the related party loans repaid in full and set off against all debts that were owed to Mr. Li. We repaid and settled in full the amount due to NIVS in accordance with the Set-off Agreement. We ceased to enter into such related party loan transactions after November 2008 and had no similar loan proceeds during the three months ended March 31, 2010 and for the year ended December 31, 2009.

In April 2009, we obtained a one-year term loan of approximately $1.17 million from Pudong Development Bank bearing interest at approximately equal to the prevailing prime rate (approximately 5.4%). Pursuant to the loan contract, the monthly payment is RMB 200,000, or approximately $29,000, plus monthly interest and the balance will be repaid in April 2010. As of March 31, 2010, the loan balance due to Pudong Development Bank was approximately $0.9 million. In connection with the loan, we also entered into a guarantee agreement with the bank and six different companies pursuant to which all of the companies, including us, cross guarantee each others’ loans.  According to the terms of the guarantee, in the event one company defaults on its loan, the other companies are required to pay a penalty to the bank based on the percentage of the defaulted loan such that the bank can recoup its losses on the defaulted loan through such penalty.  Additionally, we and the other companies were required to deposit 30% of its respective loan amount in an account held at the bank to be used as collateral for the loans, guarantee, and any potential penalty that may result from another company’s default.  We deposited RMB 2,400,000, or approximately $352,000, in the bank and accounted for it as restricted cash as of March 31, 2010.  Our cross guarantee under the loan is limited to the restricted cash held at the bank.

 

47

---

In 2009, we obtained a one-time grant in the amount of $16,300 from the local Huizhou government; the grant was designed to encourage the business activities of local businesses.  We do not currently expect to receive or apply for additional grants of this nature.

On January 15, 2010, we received gross proceeds of approximately $3.5 million in the closing of a private placement transaction (the “Private Placement”). Pursuant to Subscription Agreements entered into with the investors, we sold an aggregate of 1,377,955 shares of Common Stock at $2.54 per share.  The placement agent was paid a commission equal to 8% of the gross proceeds from the financing and a 4% non-accountable expense allowance.  We are also retaining WestPark Capital for a period of six months following the closing of the Private Placement to provide us with financial consulting services for which we will pay WestPark Capital $6,000 per month.

In connection with the Share Exchange that closed concurrently with the Private Placement, we paid a total of $600,000 to acquire the SRKP 22, Inc. shell corporation, where such fee consisted of $350,000 paid to WestPark Capital, Inc., which is the placement agent in the Private Placement, and $250,000 paid to a third party unaffiliated with China Intelligent BVI, Hyundai Light, or WestPark Capital in connection with the third party’s services as an advisor to the Company, including assisting in preparations for the share exchange and the Company’s listing of securities in the United States.  In addition, we paid a $140,000 success fee to WestPark Capital for services provided in connection with the Share Exchange and we reimbursed Westpark Capital $80,000 for expenses related to due diligence.

 

Our trade receivables have been an increasingly significant portion of our current assets, representing $14.86 million as of March 31, 2010 as compared to $13.4 million and $3.5 million as of December 31, 2009 and 2008, respectively.  If customers responsible for a significant amount of trade receivables were to become insolvent or otherwise unable to pay for our products, or to make payments in a timely manner, our liquidity and results of operations could be materially adversely affected. An economic or industry downturn could materially adversely affect the servicing of these trade receivables, which could result in longer payment cycles, increased collections costs and defaults in excess of management’s expectations. A significant deterioration in our ability to collect on trade receivables could affect our cash flow and working capital position and could also impact the cost or availability of financing available to us.

We provide our major customers with payment terms ranging from 15 to 90 days. Additionally, our production lead time is approximately one to two weeks, from the inspection of incoming materials, to production, testing and packaging. We need to keep a large supply of raw materials and work in process and finished goods inventory on hand to ensure timely delivery of our products to our customers. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Allowance for doubtful accounts is based on our assessment of the collectability of specific customer accounts, the aging of trade receivables, our history of bad debts, and the general condition of the industry. If a major customer’s credit worthiness deteriorates, or our customers’ actual defaults exceed historical experience, our estimates could change and impact our reported results. We have not experienced any significant amount of bad debt since the inception of our operations.

As of March 31, 2010, inventories amounted to $3.90 million, compared to inventories of $3.92 million and $4.5 million as of December 31, 2009 and 2008, respectively.

We are required to contribute a portion of our employees’ total salaries to the Chinese government’s social insurance funds, including pension insurance, medical insurance, unemployment insurance, and job injuries insurance, and maternity insurance, in accordance with relevant regulations. Total contributions to the funds were approximately $0.40 million, $0.33 million, $146,000, $119,000, and $56,000 for the three months ended March 31, 2010 and 2009 and for the years ended December 31, 2009, 2008, and 2007, respectively. We expect that the amount of our contribution to the government’s social insurance funds will increase in the future as we expand our workforce and operations and commence contributions to an employee housing fund.

Net cash used in operating activities was $0.74 million for the three months ended March 31, 2010, compared to net cash provided by operating activities of $0.30 million for the three months ended March 31, 2009. The $1.04 million difference was primarily attributable to the decrease in net income, which was primarily due to fees and expenses related to our share exchange transaction, in addition to the reduction in our inventories and increase in VAT and corporate tax.  Net cash used in operating activities was $0.3 million for the year ended December 31, 2009, compared to net cash provided by operating activities of $1.0 million for the year ended December 31, 2008. The $1.3 million difference was primarily attributable to the amount of increase in trade receivables and advances to suppliers for the year ended December 31, 2009 being less. Net cash provided by operating activities was $1.0 million and $1.6 million for the year ended December 31, 2008 and 2007, respectively.  The decrease in cash provided by operating activities was primarily due to an increase in trade receivables and an increase in inventories.

 

48

---

Net cash used in investing activities amounted to approximately $0 and $1,172 for three months ended March 31, 2010 and 2009, respectively. The amount used for the three months ended March 31, 2009 was due to purchase of molds. Net cash used in investing activities amounted to approximately $0.5 million and $3.0 million for the year ended December 31, 2009 and 2008 respectively, and $0.6 million for the year ended December 31, 2007. The amount of net cash used during the year ended December 31, 2009 was mainly due to $0.35 million of restricted cash deposited into the bank in relation to a short term loan and the amount used for the year ended December 31, 2008 was due to molds of approximately $3.0 million that we purchased during the year.

Net cash provided by financing activities amounted to $2.91 million for the three months ended March 31, 2010, compared to $0 for the three months ended March 31, 2009.  The increase in cash provided was the result of net proceeds from private placement that we conducted on January 15, 2010 concurrently with the closing of the share exchange transaction. Net cash provided by financing activities amounted to $0.9 million for the year ended December 31, 2009, which resulted from $1.17 million short term loan from Shanghai Pudong Development Bank and partially offset by the payment of $0.2 million. Net cash provided by financing activities was $0.6 million for the year ended December 31, 2008, which represented net proceeds from related parties after repayments and settlements. Net cash provided by financing activities was $0.2 million for the year ended December 31, 2007, which represented net proceeds received from related parties.

Based upon our present plans, we believe that our working capital together with cash flow from operations and funds available to us through financing will be sufficient to fund our capital needs for at least the next 12 months. We raised approximately $2.9 million from the private placement that we closed in January 2009, and assuming our sale of 3,500,000 shares of common stock at an assumed public offering price of $4.50 per shares of common stock, which is the mid-point of the estimated initial offering price range set forth on the cover of this prospectus, we currently intend this offering to be in an amount equal to approximately $15.8 million, before deducting the underwriting discount and commissions and estimated offering expenses.  We intend to use approximately one-third of the net proceeds from this offering for research and development focused on LED technologies and an additional one-third for expansion of our manufacturing and production of LED components.  Although we have used cash in operations for the three months ended March 31, 2010 and fiscal year 2009 and may expect increased expenses after this offering, we hope that results of our operations will provide additional funding going forward, which will be dependent on our ability to achieve anticipated levels of revenue, while continuing to control costs.  Therefore, we believe that we will have sufficient cash available to fund our operations in the next 12 months.  After 12 months, we may need to seek additional debt or equity financing through other external sources, which may not be available on acceptable terms, or at all. Failure to maintain financing arrangements on acceptable terms would have a material adverse effect on our business, results of operations and financial condition.

Contractual obligations

The following table describes our contractual commitments and obligations within the periods as indicated below from March 31, 2010:

		Payments due by Period
Contractual Obligations		Total				Less Than 1 Year				1 - 3 Years				3 - 5 Years				More Than 5 Years
Lease Agreement		$	11,603			$	11,603			$	-			$	-			$	-
Total		$	11,603			$	11,603			$	-			$	-			$	-

Seasonality

Our business exhibits some seasonality, with net sales being affected by the impact of weather and seasonal demand on construction and installation programs, such as a slow-down in projects in Northeast China during the winter and nationally during Chinese Spring Festival, after which we traditionally experience relatively higher sales during the second half of the fiscal year.

 

49

---

Quarterly Information

The table below presents selected results of operations for the quarters indicated.  All amounts are in thousands.

		Quarter Ended
		March 31,
		2010				Total
Revenues		$	14,857			$	14,857
Gross Profit		$	3,399			$	3,399
Net Income		$	871			$	871

 

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,
		2009				2009				2009				2009				Total
Revenues		$	18,652			$	14,835			$	13,787			$	11,987			$	59,261
Gross Profit		$	4,472			$	3,384			$	3,179			$	2,538			$	13,573
Net Income		$	2,611			$	1,956			$	1,560			$	1,453			$	7,580

 

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,
		2008				2008				2008				2008				Total
Revenues		$	8,294			$	15,305			$	9,657			$	9,688			$	42,944
Gross Profit		$	1,821			$	3,884			$	1,853			$	2,432			$	9,990
Net Income		$	489			$	3,071			$	652			$	1,556			$	5,768

Off-Balance Sheet Arrangements

We have no material off-balance sheet transactions.

 Quantitative and Qualitative Disclosure Regarding Market Risk

Interest Rate Risk

We may face some risk from potential fluctuations in interest rates, although our debt obligations are primarily short-term in nature, but some bank loans have variable rates. If interest rates have great fluctuations, our financing cost may be significantly affected.

Foreign Currency Risk

A substantial portion of our operations are conducted in the PRC and our primary operational currency is Chinese Renminbi (“RMB”). As a result, currently the effect of the fluctuations of RMB exchange rates only has minimum impact on our business operations, but will be increasingly material as we introduce our products widely into new international markets. Substantially all of our revenues and expenses are denominated in RMB. However, we use the United States dollar for financial reporting purposes. Conversion of RMB into foreign currencies is regulated by the People’s Bank of China through a unified floating exchange rate system. Although the PRC government has stated its intention to support the value of the RMB, there can be no assurance that such exchange rate will not again become volatile or that the RMB will not devalue significantly against the U.S. dollar. Exchange rate fluctuations may adversely affect the value, in U.S. dollar terms, of our net assets and income derived from our operations in the PRC.

 

50

---

Country Risk

The substantial portion of our assets and operations are located and conducted in China. While the PRC economy has experienced significant growth in the past twenty years, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall economy of China, but may also have a negative effect on us. For example, our operating results and financial condition may be adversely affected by government control over capital investments or changes in tax regulations applicable to us. If there are any changes in any policies by the Chinese government and our business is negatively affected as a result, then our financial results, including our ability to generate revenues and profits, will also be negatively affected.

Change in Auditors

Kempisty & Company

On January 15, 2010, we dismissed AJ. Robbins, PC (“AJ. Robbins”) as our independent registered public accounting firm following the change in control of our company on the closing of the Share Exchange.  We engaged AJ. Robbins to audit the financial statements of SRKP 22, Inc. for the year ended December 31, 2009.  The decision to change accountants was approved and ratified by our Board of Directors.  The report of AJ. Robbins on our financial statements for the fiscal year ended December 31, 2009 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principle, except for an explanatory paragraph relative to our ability to continue as a going concern.  Additionally, during our two most recent fiscal years and any subsequent interim period, there were no disagreements with AJ. Robbins on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

While we engaged AJ. Robbins, there were no disagreements with AJ. Robbins on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure with respect to our company, which disagreements if not resolved to the satisfaction of AJ. Robbins would have caused it to make reference to the subject matter of the disagreements in connection with its report on our financial statements for the fiscal year ended December 31, 2009.

We engaged Kempisty & Company Certified Public Accountants PC (“Kempisty”) as our independent registered public accounting firm as of January 15, 2010, the closing date of the Share Exchange.  Kempisty is and has been China Intelligent BVI’s independent registered public accounting firm prior to the closing of the Share Exchange.

MaloneBailey, LLP

On March 10, 2010, we dismissed Kempisty as our independent registered public accounting firm and appointed MaloneBailey, LLP (“MaloneBailey”) as our independent registered public accounting firm as of March 10, 2010. We were notified by Kempisty that it intended to cease auditing services for public companies and that certain employees of Kempisty would be providing services for MaloneBailey.

 

While we engaged Kempisty, there were no disagreements with Kempisty on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure with respect to our company, which disagreements if not resolved to the satisfaction of Kempisty would have caused it to make reference to the subject matter of the disagreements in connection with its report on our financial statements for the fiscal years ended December 31, 2008 and 2007.

We engaged MaloneBailey as our independent registered public accounting firm to conduct the audit for the year ended December 31, 2009 for China Intelligent Lighting and Electronics, Inc. as of March 10, 2010.  During our fiscal year ended December 31, 2009, neither the we, nor anyone acting on our behalf, consulted with MaloneBailey regarding the application of accounting principles to a specific completed or proposed transaction or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided that MaloneBailey concluded was an important factor considered by us in reaching a decision as to any such accounting, auditing or financial reporting issue.

 

51

---

DESCRIPTION OF BUSINESS

 

Overview

We provide a full range of lighting solutions, including the design, manufacture, sales and marketing of high-quality LED and other lighting products for the household, commercial and outdoor lighting industries in China and internationally.  The primary industry in which we conduct business is the LED lighting industry, and the core technology of our business is based on the all-solid-state semiconductor white light technology, in addition to general lighting products.

Corporate Information

We were incorporated in the State of Delaware on October 11, 2007.  We were originally organized as a “blank check” shell company to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation.  On January 15, 2010, we (i) closed a share exchange transaction, described below, pursuant to which we became the 100% parent of China Intelligent BVI, (ii) assumed the operations of China Intelligent BVI and its subsidiaries, and (iii) changed our name from SRKP 22, Inc. to China Intelligent Lighting and Electronics, Inc.  China Intelligent BVI is primarily a holding company.

Our principal corporate offices are located in the PRC at No. 29 & 31 Huanzhen West Road, Shuikou Town, Huizhou City, Guangdong, China 516005.  Our telephone number is 86-0752-3138511.

We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended.  Our shares of common stock are not currently listed or quoted for trading on any national securities exchange or national quotation system. We have commenced the application process for the listing of our common stock on the NYSE Amex.

Recent Events

Reverse Stock Split

On March 30, 2010, our Board of Directors and shareholders approved an amendment to our Certificate of Incorporation to effect a 1-for-2 reverse stock split of all of our issued and outstanding shares of common stock (the “Reverse Stock Split”). On May 12, 2010 we effected the Reverse Stock Split by filing the amendment to the Certificate of Incorporation with the Secretary of the State of Delaware. The par value and number of authorized shares of our common stock remained unchanged. All references to number of shares and per share amounts included in this prospectus gives effect to the Reverse Stock Split. The number of shares and per share amounts included in the consolidated financial statements and the accompanying notes, starting on page F-1, have been adjusted to reflect the Reverse Stock Split retroactively.

Share Exchange

On October 20, 2009, we entered into a share exchange agreement with China Intelligent BVI and the sole shareholder of China Intelligent BVI.  Pursuant to the share exchange agreement, as amended by Amendment No. 1 dated November 25, 2009 and Amendment No. 2 dated January 15, 2010 (collectively, the “Exchange Agreement”), we agreed to issue an aggregate of 7,097,748 shares of its common stock in exchange for all of the issued and outstanding share capital of China Intelligent BVI (the “Share Exchange”).  On January 15, 2010, the Share Exchange closed and China Intelligent BVI became our wholly-owned subsidiary, and we immediately changed our name from “SRKP 22, Inc.” to “China Intelligent Lighting and Electronics, Inc.”  We issued a total of 7,097,748 shares to Li Xuemei, the sole shareholder of China Intelligent BVI, and her designees in exchange for all of the issued and outstanding capital stock of China Intelligent BVI.

Prior to the closing of the Share Exchange and the Private Placement, as described below, our stockholders cancelled an aggregate of 2,130,195 shares such that there were 1,418,001 shares of common stock outstanding immediately prior to the Share Exchange.  Our stockholders also canceled an aggregate of 2,757,838 warrants to purchase shares of common stock held by them such that they held an aggregate of 790,358 warrants immediately prior to the Share Exchange.  Each warrant is entitled to purchase one share of our common stock at $0.0002.  No consideration was paid to the stockholders for the cancellation of the shares and warrants.  The cancellation of the shares and warrants was accounted for as a contribution to capital.

The number of shares and warrants cancelled was determined based on negotiations with the security holders of SRKP 22, Inc. and China Intelligent BVI.  As indicated in the Share Exchange Agreement, the parties to the transaction acknowledged that a conflict of interest existed with respect to the negotiations for the terms of the Share Exchange due to, among other factors, the fact that WestPark Capital, Inc. was advising China Intelligent BVI in the transaction.  As further discussed below in “Recent Events—Private Placement”, certain of the controlling stockholders and control persons of WestPark Capital, Inc. were also, prior to the completion of the Share Exchange, controlling stockholders and control persons of SRKP 22, Inc.  Under these circumstances, the sole shareholder of China Intelligent BVI and the shareholders of SRKP 22 negotiated an estimated value of China Intelligent BVI and its subsidiaries, an estimated value of the shell company (based on similar recent public shell transactions), and the mutually desired capitalization of the company resulting from the Share Exchange.

 

52

---

With respect to the determination of the amounts of shares and warrants cancelled, the value of the shell company was derived primarily from its utility as a public company platform, including its good corporate standing and its timely public reporting status, which was expected to allow us to list our stock on a national securities exchange and raise capital at an appropriate price per share; the services provided by WestPark Capital, Inc. were not a consideration in determining this aspect of the transaction.  Under these circumstances and based on these factors, the sole shareholder of China Intelligent BVI and the shareholders of SRKP 22 agreed upon the amount of shares and warrants to be cancelled.  Further to such negotiations, we paid a total of $600,000 in connection with the Share Exchange to acquire the SRKP 22, Inc. shell corporation, such fee consisting of $350,000 paid to WestPark Capital, Inc., which is the placement agent in the Private Placement as described below, and $250,000 paid to a third party unaffiliated with China Intelligent BVI, Hyundai Light or WestPark Capital, Inc. in connection with the third party’s services as an advisor to the Company, including assisting in preparations for the Share Exchange and the Company’s listing of securities in the United States.  In addition, we paid a $140,000 success fee to WestPark Capital, Inc. for services provided in connection with the Share Exchange, including coordinating the Share Exchange transaction process, interacting with the principals of the shell corporation and negotiating the definitive purchase agreement for the shell, conducting a financial analysis of China Intelligent BVI, conducting due diligence on China Intelligent BVI and its subsidiaries, and managing  the interrelationship between legal and accounting activities.  We also reimbursed WestPark Capital, Inc. a total of $80,000 for expenses related to its due diligence.  All of the fees due to WestPark Capital, Inc. and to the unaffiliated third party in connection with the Share Exchange have been paid as of the date of this prospectus.

Based on the $2.54 per share offering price of the common shares issued in the private placement on January 15, 2010, as described below, the 1,418,001 shares retained by the SRKP 22 shareholders had an implied monetary value of approximately $3.6 million.  Assuming exercise of the 790,358 warrants also retained by the SRKP 22 shareholders, 2,208,359 shares would have been retained by the SRKP 22 shareholders with an implied monetary value of approximately $5.6 million.  The implied monetary value of the retained shares was calculated based on the $2.54 per share offering price, without regard to liquidity, marketability, or legal or resale restrictions; accordingly, such amounts should not be considered as an indication of the fair value of the retained shares.

The transactions contemplated by the Exchange Agreement, as amended, were intended to be a “tax-free” contribution and/or reorganization pursuant to the provisions of Sections 351 and/or 368(a) of the Internal Revenue Code of 1986, as amended.

Private Placement

On January 15, 2010, concurrently with the close of the Share Exchange, we closed a private placement of shares of common stock (the “Private Placement”).  The purpose of the Private Placement was to increase our working capital, and the net proceeds from the Private Placement will be used for working capital.  Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 1,377,955 shares of common stock at $2.54 per share, for gross proceeds of approximately $3.5 million.  We paid WestPark Capital, Inc. a placement agent commission equal to 8% of the gross proceeds from the financing and a 4% non-accountable expense allowance.  We also agreed to retain WestPark Capital, Inc. for a period of six months following the closing of the Private Placement to provide us with financial consulting services, for which we will pay WestPark Capital, Inc. $6,000 per month.

We agreed to file a registration statement covering the common stock sold in the private placement within 30 days of the closing of the private placement pursuant to the subscription agreement entered into with each investor and to cause such registration statement to be declared effective by the SEC no later than 150 days from the date of filing or 180 days from the date of filing if the registration statement is subject to a full review by the SEC.  We filed the registration statement on February 16, 2010.

The investors in the Private Placement also entered into a lock-up agreement pursuant to which they agreed that (i) if the proposed public offering that we expect to conduct is for $10 million or more, then the investors would not be able to sell or transfer their shares until at least six months after the completion of the public offering, and (ii) if the offering is for less than $10 million, then one-tenth of the investors’ shares would be released from the lock-up restrictions ninety days after the offering and there would be a pro rata release of the shares thereafter every 30 days over the following nine months.  WestPark Capital, Inc., in its discretion, may also release some or all the shares from the lock-up restrictions earlier.  Assuming our sale of 3,500,000 shares of common stock at an assumed public offering price of $4.50 per share of common stock, which is the mid-point of the estimated initial offering price range set forth on the cover of this prospectus, we currently intend this offering to be in an amount equal to approximately $15.8 million.  Accordingly, the investors would be subject to lock-up restrictions such that they would be able to sell and/or transfer all of their shares six months after the public offering’s completion, subject to early release by WestPark Capital, Inc. 

 

53

---

Some of the controlling stockholders and control persons of WestPark Capital, Inc. were also, prior to the completion of the Share Exchange, controlling stockholders and control persons of SRKP 22, Inc., our predecessor, including Richard Rappaport, who is the Chief Executive Officer of WestPark Capital, Inc. and was the President and a significant stockholder of SRKP 22, Inc. prior to the Share Exchange, and Anthony C. Pintsopoulos, who is President and Treasurer of WestPark Capital, Inc. and was one of the controlling stockholders and an officer and director of SRKP 22, Inc. prior to the Share Exchange.  Kevin DePrimio and Jason Stern, each employees of WestPark Capital, Inc., were also stockholders of SRKP 22, Inc. and are also our stockholders.  Each of Messrs. Rappaport and Pintsopoulos resigned from all of their executive and director positions with us upon the closing of the Share Exchange.  Mr. Rappaport beneficially owns approximately 16.8% of our outstanding shares as of the date of this prospectus, and Messrs. Rappaport, Pintsopoulos, DePrimio and Stern collectively beneficially own approximately 18.5% of our outstanding shares as of the date of this prospectus.

Industry

General

The global lighting industry is largely influenced by the development of new lighting technologies, including LEDs, electronic ballasts, embedded controls, and design technologies addressing sustainability, in addition to federal and state requirements for updated energy codes.  Product selection among the varying lighting technologies is determined by a number of factors, including overall cost, and visual and physical product features, as well as regulatory and environmental factors. Moreover, demand for lighting products sold are highly dependent on economic drivers such as consumer spending and discretionary income, along with housing construction and home improvement spending.

 

LEDs, or “Light Emitting Diodes,” are semiconductor-based devices that generate light. An LED consists of one LED electrode semiconductor, positioned on a wire rack and sealed by epoxy resin to protect the internal core line.  LEDs produce light by passing electricity between thin layers of semiconductors.  Over the years, the luminous efficiency of the LED has significantly increased and the range of colors available has continued to broaden to the full spectrum.  Advancements in LED technology have enabled LEDs to become a viable alternative to traditional lighting solutions for applications in residential, industrial and commercial markets.

LED lights provide many benefits over traditional incandescent, halogen and fluorescent light sources, including lower energy consumption, longer life span, absence of hazardous materials, shock-resistance, fast response, and cold light source, in addition to a wide range of colors, dynamics, miniaturization, and greater design flexibility.  As a result, common general uses of LED lighting include battery-powered flashlights, security lights, indoor and outdoor road and stair lights, as well as building and sign lights, display screens, and landscape lighting.

Regulatory restrictions on inefficient uses of lighting are resulting in an increase in use of more energy efficient lighting solutions, including LEDs.  Many countries have enacted legislation requiring an increase in the use of energy-efficient lighting.  For example, as of September 2009, the European Union banned the importation of most incandescent bulbs, and the United States is moving to enact a similar ban that is scheduled to commence as early as 2012.  In addition, the adoption of industry-wide international standards for lighting products provide guidelines for efficiency and performance, allowing manufacturers that meet the guidelines to promote their energy-efficient products and consumers to better understand energy efficiency.

Legislation and energy efficiency standards have led to increased demand for LED lighting products, as governments, industry organizations, and commercial and residential consumers adopt lighting solutions that conform to efficiency standards and present a reduced threat to the environment.  As a result, we believe that the lighting industry will experience a general transition from its widespread use of incandescent lamps to energy-efficient light sources in the next several years, in addition to a shift to solid-state lighting technology as compared to the more traditional vacuum-based technologies.

With rising energy prices and increased awareness of climate change, consumer demand for energy-saving lighting has been growing.  Consumers interested in purchasing more efficient lighting products with lower energy consumption have increasingly turned to LED lighting as a viable alternative to incandescent bulbs.  Consumers have become more aware of the positive impact of the use of LED lighting.  For example, more than 425 million 60-watt incandescent light bulbs are sold each year in the United States, according to the U.S. Department of Energy as reported in 2008, and replacing the incandescent bulbs with LEDs could save enough electricity in one year to power as much as 17.4 million homes and save approximately 5.6 million metric tons of carbon emissions annually.  As a result, we believe that the LED lighting market will be one of the fastest-growing segments over the next decade.

 

54

---

China Lighting Market

China’s market for lighting solutions has been growing, due in part to the country’s rapid economic growth and position as one of the world’s largest consumer markets.  Economic growth in China has led to greater levels of personal disposable income and increased spending among China’s expanding middle-class consumer base. 

Notwithstanding China’s economic growth, with a population of approximately 1.3 billion people, China’s economic output and consumption rates are still small on a per capita basis compared to developed countries.  As China’s economy develops, we believe that disposable income and consumer spending levels are expected to continue to become closer to those of developed countries like the United States.  We also believe that Shanghai’s successful bid for the 2010 World Expo will promote a new round of Shanghai urban development construction, which may provide business opportunities for the lighting industry.

Furthermore, the production of lighting products has moved to China in recent years and China’s market share of the manufacturing of lighting products is expected to increase.  China has a number of benefits in the manufacturing of lighting products that are expected to drive this growth, including:

 

·

Low costs.  Though there have been recent changes in labor laws, China continues to have a relatively low cost of raw materials, land and labor, which is especially important given the labor-intensive nature of the manufacture of our lighting products.

·

Proximity to supply chain.  Manufacturing of consumer products in general continues to shift to China, giving China-based manufacturers a further cost and cycle time advantage.

·

Proximity to end-markets.  China has focused in recent years on building its research, development and engineering skill base in all aspects of higher end manufacturing.

 

Competitive Strengths

We believe the following strengths contribute to our competitive advantages and differentiate us from our competitors in the lighting industry:

Core technology

The primary industry in which we conduct business is the LED lighting industry, and the core technology of our business is based on the all-solid-state semiconductor white light technology.  With rapid advancements in the performance, efficiency and cost of energy-efficient lighting such as LED-based solutions, traditional light sources such as incandescent lamps are beginning to be replaced by advanced technologies with lower operating costs over their useful lives. In addition, the energy efficient nature of LED technology makes it an environmentally friendly light source and the compact size of LEDs has created new possibilities in lighting fixture design.  As a result, we believe that the market for innovative and efficient lighting solutions is and will continue to grow.

Established brand awareness

Our lighting products, marketed under the brand-name Hyundai™, have become a recognized brand name in China and internationally, which we expect will assist us in growing our business over the course of the next few years, assuming we reach an agreement with the licensor to extend the license agreement past the July 2010 expiration date.  South Korean Hyundai is one of the world’s largest 500 companies and is involved in diverse areas of operations, including automobile, shipbuilding, digital electronics, and heavy industrial machinery, and Hyundai Corporation has licensed to us the right to use the trademark of HYUNDAI™ to manufacture, sell and market wiring accessories and lighting products within the PRC. We believe that the Hyundai™ name provides us with high brand name recognition and visibility.  We anticipate that the license agreement will be renewed in July 2010 because Hyundai Corporation has signed a non-binding memorandum of cooperation effective January 1, 2009 that indicates that Hyundai Corporation intends to renew our license agreement until December 31, 2018.  However, the memorandum is not binding on Hyundai Corporation and we have no control over Hyundai Corporation’s decision whether to continue to license its trademark to us.

 

55

---

Market position

Since our inception, we have focused on the research, development and manufacture of various types of lighting products, including increasingly efficient LEDs.  Our manufacturing operations, centrally located in Huizhou, Guangdong, utilize a modern manufacturing building with approximately 53,820 square feet and 16 advanced automated production lines with a monthly production capability of approximately 2.5 million units.   In addition to manufacturing facilities, we lease separate warehouse space.  We have developed significant expertise in the key technologies and large-scale manufacturing that enable us to improve the quality of our products, reduce costs, and keep pace with current standards of the rapidly evolving lighting industry.  We are able to bring to the market well-differentiated products that perform well against competitive offerings based on price, innovation, energy efficiency, and brand recognition.  Our specific Hyundai™ LED technology has a growing application base in the lighting industry and has allowed us to distinguish our products from those of our competitors.

Design and manufacturing capabilities

We design and manufacture high quality and reliable lighting products with significant performance features.   To deliver cost competitive solutions, we invest in technology advancements, capitalize on strategic relationships, and utilize our automated manufacturing process. We employ a senior design team that develops and tracks new technologies, concepts and ideas from a variety of sources, including direct customer feedback, trade shows, and industry conferences.  We utilize a 53,820 square-foot factory, which includes a large-scale production area, and more than 600 full-time employees, including approximately 500 employees in production.  Our modernized production lines include 16 pieces of automated processing equipment and procedures that we can rapidly modify to accommodate new customer requests, designs and specifications.  Our use of manual labor during the production process benefits from the availability of relatively low-cost, skilled labor in China. We have also received several accreditations, including The International Organization for Standardization (ISO) 9001: 2000, ISO 14000, and RoHS certification, attesting to our quality management requirements, manufacturing safety, controls, procedures and environmental performance.

Well-established distribution channels

Our products are sold at more than 2,200 distribution outlets, including over 500 second- and third-level sales outlets located in smaller cities and rural areas, across 23 provinces and cities throughout China.  Internationally, our products are sold through numerous channels, including independent specialty retailers, international and regional chains, mass merchants, and distributors.  We have also built strong relationships with many large national and regional retailers, and we have well-established relationships with independent retailers.

Experienced management team

Our senior management team has extensive business and industry experience, including an understanding of changing market trends, consumer needs, lighting technologies and our ability to capitalize on the opportunities resulting from these market changes.  Members of our senior management team also have significant experience with respect to key aspects of our operations, including research and development, product design, manufacturing, and sales and marketing.

Diversified customer base and end markets

 

For the three months ended March 31, 2010 and year ended December 31, 2009, our products were sold to approximately 60 OEMs and 73 distributors across a wide variety of end markets.  We believe that the different purchasing patterns among our customers in the various end markets allow us to reduce the overall sensitivity of demand of our products due to changes in the economy.

 

56

---

Strategy

Our goal is to become a leader in the development, manufacture, and distribution of LED and other lighting products in China and internationally.  We intend to achieve this goal by implementing the following strategies:

Expand offering of highly efficient LED products

We seek to introduce new LED lighting products as we believe there exists significant opportunities to grow market share.  We currently offer over 1,000 products and we expect to expand our LED product offerings to include white light solutions for a wide range of applications.  We intend to continue to shift from traditional technologies to energy-efficient and solid-state lighting technologies, while expanding the applications and markets of LED products in an attempt to penetrate new markets such as general lighting, vehicle lighting, and LCD backlighting source products. We intend to use approximately one-third of the net proceeds from this offering for research and development focused on LED technologies and an additional one-third for expansion of our manufacturing and production of LED components. By introducing new products and expanding sales of existing LED products, we believe that we can significantly improve operational efficiency by reducing our cost of materials, components and manufacturing.

Augment marketing and promotion efforts to increase brand awareness

During the past several years, we have carried out a brand development strategy based on product innovation, quality, and efficiency.  We have recently increased our marketing and promotion expenditures to further develop our brand, “Hyundai Lights,” and utilize marketing concepts in an attempt to strengthen the marketability of our products.  We have also participated and intend to continue to participate in various exhibitions and similar promotional events to promote our products and brand.

Expand sales network and distribution channels

We believe that the Chinese markets are underserved and there exist vast opportunities to expand market presence, including possible openings of specialty stores.  We intend to expand our sales network in China and develop relationships with a broader set of wholesalers, distributors and resellers, all in order to expand the market availability of our products in China.  We expect our industry relationships will assist us in introducing and distributing new products into additional markets and will allow us to diversify our customer base and significantly increase the availability and exposure of our LED and other lighting products.

Build partnerships with new and existing clients

Our strategy is to establish partnerships with our current clients whereby we develop and manufacture new products based on client needs.  We intend to strengthen relationships with our existing clients and explore opportunities for product expansion with new and existing customers.  We also intend to enter into arrangements with established participants in various market segments to provide outsourced product design and engineering capabilities. We believe that this strategy will allow us to capitalize on the strengths of the segment participant’s brand equity and market presence to penetrate existing and emerging markets.

Expand global presence

Nearly one-third of our products are OEM sales that are exported to countries and areas outside of Mainland China, primarily to Southeast Asia and Middle East countries such as Hong Kong, the Philippines, the United Arab Emirates, Malaysia and Singapore.  We intend to further expand our international resources outside of China to better serve our global customers and business associates and to leverage opportunities in certain markets.

 

57

---

Products

We produce a wide variety of lighting and related products used in the following areas:

·

Commercial and Industrial — We produce lighting products for stores, hotels, offices, schools, hospitals, and government and public buildings, in addition to products for warehouses and manufacturing facilities.  These settings require high performance light solutions, and we believe the largest market segment for the development of high-power white LED lighting is general commercial and industrial lighting.  Our products in this area include metal halide lamps, grille spot lights, LED lights, down lights, recessed lights, grille light plates, frames, and LED wall lamps.  We also provide a range of LED lights designed to replace, or seamlessly integrate into, existing lighting systems and fixtures, which can reduce energy consumption by as much as 80% while providing lighting performance equal to traditional incandescent technology.

·

Outdoor — Influenced by the 2008 Beijing Olympic Games and the 2010 Shanghai World Expo, Beijing and Shanghai and other locations have increased the pace of landscape lighting usage. Because of its low energy consumption, LED lighting has an advantage as compared to other high energy consuming products in the landscape lighting industry.  Our products include area and flood lighting, decorative site lighting, landscape lighting, shed lights, and other spot lighting products.

·

Residential — We provide residential products that are designed to be functional, decorative, and scene-setting.  Products include our line of ceiling lights, kitchen and bathroom lights, bedside lamps, fluorescent lights, and other down lighting products.

·

Infrastructure — We address the lighting requirements of highways, tunnels, airports, railway yards, and ports with products that include street, area, high-mast, off-set roadway, and sign lighting.

·

Other Products — Other products that we produce include our super electric transformer, which provides anti-lightning surge protection adaptable to China’s power grid, and lighting control systems.

 

We currently offer more than 1,000 products that we manufacture and distribute, including appliance lights, ceiling lights, grille spot lights, grille light plates, down lights, recessed lighting, kitchen lighting, lamps, framed lighting, and metal halide lights.  Our notable products include the Hyundai™ LED, long life-span T4/T5 frame, ceiling light, metal halide light, and super electric transformer.

·

Hyundai™ LEDs – Hyundai™ LEDs are products that provide high efficiency, long life span, low energy loss, vibration-resistance, and quick response.  Hyundai™ LEDs include a semiconductor chip unit that is approximately 3 to 5 square millimeters, permitting it to be used in a variety of environments.  Hyundai™ LEDs, which have a life of up to 10,000 hours, consume substantially less energy than traditional incandescent lamps and are suitable for public area uses because they use low voltage.  Hyundai™ LEDs do not contain toxic material, as compared to, for example, incandescent lamps that contain mercury.

 

·

Long Life-Span T4/T5 Framed Fluorescent Lamps – Our T4/T5 framed fluorescent lamps are straight double-fluorescent lamps with diameters of 13 mm and 16 mm.  These lamps are widely used at home and in public areas, and have higher efficiency rates and longer life spans than many other straight fluorescent lamps.

 

·

Ceiling Lights – Our ceiling lights consist of a lamp holder, lamp shade, light source, and a base concealed inside the ceiling.  Common light source options for ceiling lights are round energy-saving fluorescent lamps, 2D energy-saving fluorescent lamps, straight fluorescent lamps, and incandescent lamps.  Our ceiling light products come in a wide variety of shapes, sizes, and materials, in addition to a variety of shade types that include glass and plexi-glass.  Our ceiling lights have an extended life span, low-maintenance, low-power consumption, high brightness, over-heating protection, low-voltage circuitry, and are UV-, infrared-, and flicker-free.

 

·

Metal Halide Lights – Our metal halide lights are high-power lighting options with the benefits of a long lifespan and smaller amounts of mercury, approximately 1/10th that of incandescent lights.  We install microcomputer electronic ballasts in our metal halide lights that are designed to suppress sound, facilitate preheating to extend lamp lifespan, protect the main circuit’s functionality, and absorb and control unexpected high-voltage pulses from China’s power grids.  Our research and development has resulted in improvements in light structure, filling material, light technology, and electronic ballast aspects, and we currently focus our development efforts on halide lights on the ends of the power spectrums, specifically high output (1KW – 2KW) and low output (35W – 75W) products.

 

58

---

 

·

Super Electric Transformers – Our super electric transformer products provide anti-lightning surge protection adaptable to China’s power grid while providing a sufficient power output to maintain our lighting products and comply with local standards.

 

A majority of our products sold are household lighting products, which include energy-saving lights, ceiling lights, kitchen lights, projection lights, fixtures and other lighting products.  Net sales for each of our product categories as a percentage of net sales are set forth below:

	Three Months Ended March 31, 2010			Years Ended December 31,
				2009				2008				2007
Household lighting products	78.4	%			85.1	%			79.4	%			44.9	%
Lighting holders	11.6	%			7.3	%			2.2	%			3.8	%
Illuminant devices	1.5	%			0.5	%			0.7	%			0.4	%
Power distribution transformer	0.2	%			0.1	%			6.3	%			12.1	%
Ballast devices	1.3	%			0.9	%			2.0	%			1.0	%
Lighting control boards	0	%			0	%			0	%			34.7	%
Other misc. lighting products or materials	7.0	%			6.1	%			9.4	%			3.1	%
Total	100	%			100	%			100	%			100	%

Supply of Raw Materials

We believe that our location in China provides us with comparative regional advantages in purchasing raw materials.  China’s LED manufacturing industry can be divided into four primary regions:

 

·

Pearl River Delta,

·

Yangtze River Delta,

·

South-Eastern region, and

·

Beijing / Dalian Northern area.

 

Each region has a relatively complete industrial supply and demand chain, with a higher level of industrialization in the Southern area and a stronger research and development focus in the Northern area due to its proximity to numerous universities and research institutions.  A higher concentration of LED-related businesses is located in the Pearl River Delta and Yangtze River Delta, including LED manufacturers and distributors, in addition to LED-related equipment and raw material suppliers.

Our production facilities are located in Huizhou, Guangdong, which is located in the Pearl River Delta, and adjacent to Shenzhen and Hong Kong, is one of the major electronic manufacturing bases in China.  As a result, we believe that we benefit from a well-developed network of LED-related businesses that facilitate our acquisition of raw materials and production and sale of LED products.

The primary raw materials used in our products include integrated circuits, plastic materials, hardware materials, diodes, backlight boards, light bulbs, various LED capacitance and other resistance materials.  Pricing and availability of raw materials can be volatile, attributable to numerous factors beyond our control, including general economic conditions, currency exchange rates, industry cycles, production levels or a supplier’s limited supply. To the extent that we experience cost increases we may seek to pass such cost increases on to our customers but cannot provide any assurance that we will be able to do so successfully or that our business, results of operations and financial condition would not be adversely affected by increased volatility of the cost and availability of raw materials.

We generally have supply agreements that are no longer than one year.  Our primary suppliers of raw materials are located in Huizhou, Zhongshan and Shenzhen.  Our top three suppliers accounted for a total of approximately 23.4%, 23.3%, 51.4%, and 61.4% of our raw material purchases for the three months ended March 31, 2010 and for the years ended December 31, 2009, 2008, and 2007, respectively.  Our largest supplier accounted for approximately 8.7%, 11%, 26.5%, and 31.0% of our raw material purchases for the three months ended March 31, 2010 and for years ended December 31, 2009, 2008 and 2007, respectively.  Other than these suppliers, no other supplier accounted for more than 10% of our total purchases in these periods.

 

59

---

Presently, our relationships with our suppliers are good and we expect that our suppliers will be able to meet the anticipated demand for our products in the future.  However, due to our dependence on a small number of suppliers for certain raw materials, we could experience delays in development and/or the ability to meet our customer demand for new products.

Manufacturing

We utilize both internal and outsourced manufacturing processes and capabilities in order to fulfill our customers’ needs in the most cost-effective manner. We internally produce at our facilities household lighting products, power distribution transformers, ballast resistors and illuminant devices, while components such as ceiling lighting, street lighting and flat lighting products are purchased primarily from outside vendors.

We have selected suppliers based on their ability to consistently produce these products per our specifications. We believe that the integration of local suppliers’ factories and warehouses also provides us an opportunity to lower our component inventory while maintaining high service levels through frequent and rapid deliveries.  Because we have our own factory and capabilities to produce a large number of the important components needed for our products, as such, we believe that we have a solid foundation for our overall competition.

LED and other lighting products that we manufacture require coordinated use of machinery and raw materials at various stages of manufacturing.  Our manufacturing operations are conducted in Huizhou, Guangdong, where we utilize a modern manufacturing building with approximately 215,000 square feet and 16 advanced automated production lines with a monthly production capability of approximately 2.5 million units.  Six of the production lines are primarily dedicated to the production of specialized LED products.  Our production facilities include product and semi-product assembly, office, showroom, and warehouse functions.

We implement a computerized automated quality monitoring system that is designed to track and verify the quality of our raw materials, product components, products, and processes from the stages of supply, research and development, production, and sales.  Our production facilities utilize modern machinery such as molding injectors, mounting machinery, magnetic component separators, electronic ballast performance analysis systems, soldering modules, tin stoves, computerized aging (life span testers), intelligent AC power testers, oscilloscopes, and other assembly machinery.

We structure our design and manufacturing systems to rapidly design, produce, and deliver our products in an attempt to secure business from customers that require immediate design and delivery of lighting products.  We strive to deliver our general products in approximately two business days, engineer and deliver our standard products in approximately seven business days, and engineer and deliver customized products in approximately 10 to 15 business days.  We intend to further streamline our production process and continue investing in our manufacturing infrastructure to further increase our manufacturing capacity, helping us to control the per unit cost of our products.

Quality Control

We consider quality control an important element of our business practices. We have stringent quality control systems that are implemented by approximately 45 company-trained staff members to ensure quality control over each phase of the production process, from the purchase of raw materials through each step in the manufacturing process. Supported by advanced equipment, we utilize a scientific management system and precision inspection measurement, capable of ensuring our products are of high quality.

Our quality control department executes the following functions:

·

setting internal controls and regulations for semi-finished and finished products;

·

testing samples of raw materials from suppliers;

·

implementing sampling systems and sample files;

·

maintaining quality of equipment and instruments; and

·

articulating the responsibilities of quality control staff.

 

We have obtained certifications and accreditations that we believe exhibit our ability to efficiently manufacture quality products. We first obtained ISO9001:2000 quality system accreditation in May 2006 and ISO14000 environmental management system accreditation in September 2006.  The International Organization for Standardization (ISO) defines the ISO 9000 quality management system as one of international references for quality management requirements in business-to-business dealings.   ISO 14000 is an environmental management system in which the organization being accredited has to (i) minimize harmful effects on the environment caused by its activities, and (ii) achieve continual improvement of its environmental performance.

 

60

---

In September 2006, we obtained certification for compliance with the Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment, which is commonly referred to as the Restriction of Hazardous Substances Directive, or RoHS.  RoHS restricts the use of various hazardous materials in the manufacture of electronic and electrical equipment.

Sales and Marketing

Our lighting products are sold primarily throughout China and Hong Kong, but also internationally in other countries such as the United States, United Arab Emirates, and Malaysia, using a combination of regional sales managers, independent sales representatives and distributors. Headquartered in Huizhou, we have a comprehensive sales network in China that includes six regional sales centers located in Southern China, North China, Eastern China, Southwest China, Northwest China and Northeast China. We have approximately 40 branches and 60 specialty stores across over 30 provinces, cities and autonomous regions.

We have established a standard of sales procedures covering before-sales consultation, preliminary design, final design, sample confirmation, production, product testing, sales, and after-sales services and technical support.  Through these procedures, our products are sold at more than 2,200 distribution outlets, including major home improvement retailers and home building material distributors, including over 500 second- and third-level sales outlets located in smaller cities and rural areas, across 23 provinces and cities throughout China, including Sichuan, Hunan, Jiangxi, Fujian, Zhejiang, Hubei, Liaoning, Inner Mongolia, Xinjiang, Hebei, Shandong, Jiangsu, and Jilin.  Moreover, we have also been engaged by numerous companies to fully design and install the lighting solutions for their retail chain store locations, providing full design service for the chain stores to display and sell our lighting products.

Most of our revenues are derived from sales to OEMs, or Original Equipment Manufacturers, followed by sales of Hyundai™ brand and other products.  OEMs contract with us to build their products or to obtain services related to product development and prototyping, volume manufacturing or aftermarket support.  Our services include engineering, design, materials, management, assembly, testing, distribution, and after-market services.  We believe that we are able to provide quality OEM services that meet unique requirements within customer timeframes, unique styling, product simplicity, price targets, and consistent quality with low defect rates.  Most of our revenues are derived from sales to OEMs followed by sales of Hyundai™ brand and other products.  Because the trademark license agreement between us and Hyundai Corporation prohibits us from selling our Hyundai™ branded products outside of the PRC, our international expansion efforts will primarily be executed through our OEM products, which are not directly affected by the Hyundai agreement.

The table below shows our revenue categorized by geographic locations, which is based on the geographic areas in which our customers are located.

	Three Months Ended March 31, 2010			Years Ended December 31,
				2009				2008				2007
China and Hong Kong	90.3	%			88.1	%			82.5	%			99.1	%
Other Asian countries	7.8	%			8.2	%			5.8	%			0	%
North America	0	%			1.4	%			2.2	%			0.5	%
Australia	0.6	%			0.1	%			1.3	%			0	%
Europe	0	%			2.2	%			5.5	%			0.3	%
Others	1.3	%			0	%			2.7	%			0.1	%
	100	%			100	%			100	%			100	%

 

61

---

 

A small number of customers account for a very significant percentage of our revenue.  The table below illustrates the number of customers that accounted for 5% or more of our sales for the periods presented.

	Three Months Ended March 31, 2010			Years Ended December 31,
				2009				2008				2007
Number of customers accounting for 5% or more	1				0				2				4
Percentage of largest customer	5.16	%			4.63	%			16.77	%			16.1	%
Total percentage of sales attributable to customers with 5% or more	5.16	%			0	%			26.71	%			50.13	%

The loss of any of these customers could have a material adverse effect upon our revenue and net income.

We market our products to a variety of end users through a broad spectrum of marketing and promotional methods, such as direct customer contact, trade shows, print advertising, product brochures, and other literature, as well as the Internet and other electronic media.  In addition, we have received numerous honors and awards that include the title as the best lighting company in Shanghai 2007 Exhibition, Hyundai Group’s best strategic partner in 2007, and one of the top 50 lighting companies in Guangzhou province.  We have also received various governmental awards with respect to our brand.

Research and Development

Our research and development is focused on enhancing our lighting technology by improving the performance of our current products and developing new products, in addition to developing related and alternative technologies.

We have made investments in capital and time to develop intellectual property and industry expertise in LED and other lighting technologies that we believe provide us with a competitive advantage in the markets where we compete. We intend to increase our research and development expenditures to advance, among other things, our LED technology and trial production for partial patented projects.  We expect to advance our LED lighting products to surpass the brightness of traditional lighting systems while being offered at reasonable prices, increasing energy efficiency, and providing a higher performance-to-cost ratio.  For example, we have invested significant amounts in the study and development of LED, electronic halide light, solar light, and nanometer luminous materials in an attempt to improve and expand upon our product portfolio.  We intend to use approximately one-third of the net proceeds from this offering for research and development focused on LED technologies and an additional one-third for expansion of our manufacturing and production of LED components.

We also take an innovative approach to creating new and exciting products that are designed to appeal to a certain demographic.  For example, in 2006, we developed three series of new lighting products that were designed to provide a healthy and environmentally-friendly lighting function for users.  These products were designed to appeal to those potential customers that were environmentally and health conscious.

We conduct substantially all of our research and development with an in-house staff.  We have approximately 40 engineers that work in our research and development department.   A majority of our research and development staff hold a bachelor degree or higher, in addition to a majority having more than five years of research and development experience.  We have also established a collaborative relationship with a number of academic institutions, including the Chinese Academy of Sciences and the Hong Kong Semiconductor Lighting Laboratory.

For the three months ended March 31, 2010 and for the years ended December 31, 2009, 2008, and 2007, we expended approximately $281,000, $895,000, $742,000, and $322,000, respectively, in research and development.

In an attempt to avoid product obsolescence, we will continue to monitor technological changes, as well as users’ demands for new technologies. Failure to keep pace with future technological changes in the lighting industry could adversely affect our revenues and operating results in the future.  Although we have attempted to determine the specific needs of the various segments of the lighting market in which we compete, there can be no assurance that the markets will, in fact, materialize or that our existing and future products designed for these markets will gain market acceptance.

 

62

---

Backlog

We have historically shipped the majority of our products within one month of the time that the order confirmation occurs.  Due to the short-cycle nature of our business, we do not sustain significant backlogs and had no backlog of unfilled orders as of March 31, 2010 and December 31, 2009, 2008 and 2007.

Warranties and Return Policy

We do not generally provide a warranty for the products sold to customers since the majority of our customers are wholesalers and distributors. However, if the products that we deliver do not meet the agreed upon quality specifications or require reworking, we are responsible for the work and the related expenses. If the customers decide to rework the products themselves, we will compensate our customers for the expenses incurred.

Product Liability and Insurance

We do not have product liability insurance.  Because of the nature of the lighting products sold by us, we may be periodically subject to product liability claims resulting from personal injuries, including the risk of our lighting products causing fire or burns. As a result, we may become involved in various lawsuits incidental to our business.  To date, we have not been subject to products liability litigation.  Product liability insurance is expensive, restrictive and difficult to obtain. Accordingly, there can be no assurance that we will have capital sufficient to cover any successful product liability claims made against us in the future, which could have a material adverse effect on our financial condition and results of operations.

Competition

The lighting equipment industry is highly competitive, with the largest suppliers serving many of the same markets and competing for the same customers. Competition is based on numerous factors, including brand name recognition, price, product quality, product design, energy efficiency, customer relationships, and service capabilities. We face competition from many other lighting manufacturers, most of which have significantly greater name recognition and financial, technical, manufacturing, personnel, marketing, and other resources than we have.  Our domestic competitors include Leishi Lighting, Guangdong Opple Lighting, and Philips (China) Lighting, while our international competitors include Nichia Chemical and Lumileds Lighting.  We compete primarily on the basis of quality, price, brand recognition, product diversity, design, reliability, customization, and quality service and support to our customers.

Market and competition volatility is also affected by a number of general business and economic factors, such as gross domestic product growth, employment, credit availability and commodity costs. Construction spending on infrastructure projects such as highways, streets, and urban developments also has a material impact on the demand for infrastructure-focused products. The market is also subject to rapid technology changes, highly fragmented, and cyclical.  The industry is characterized by the short life cycle of products, requiring continuous design and development efforts, which necessitates large capital and time investments. Our competitors may be able to respond more rapidly than we can to new or emerging technologies or changes in customer requirements.

Intellectual Property

We rely on a combination of patent, trade secret, and licensing rights to protect our intellectual property rights and to maintain and enhance our competitiveness in the lighting industry.  We intend to make strategic investments in intellectual property through engineering expenditures, partnerships, and licensing arrangements. These initiatives are designed to enhance our technology, improve existing products, rapidly introduce new products to fill identified needs, and address new applications and markets. We believe our ability to successfully develop and produce new products will allow us to open market opportunities and enhance our market position.

We are able to use our brand name, Hyundai™, pursuant to licensing rights that we have obtained from Hyundai Corporation. We entered into a Trademark License Agreement dated July 31, 2005 with Hyundai Corporation pursuant to which Hyundai Corporation agreed to license the trademark of HYUNDAI™ on wiring accessories and lighting products that we manufacture.  The agreement had provisions that provided for expiration of our rights on July 31, 2015.

The July 31, 2005 Trademark License Agreement was superseded by a new trademark license agreement dated September 10, 2008 entered into by us and Hyundai Corporation.  Pursuant to the new Trademark Agreement, Hyundai Corporation granted us a license to use its trademark in connection with manufacturing, selling, and marketing wiring accessories and lighting products (the “Licensed Products”) within the People’s Republic of China. The Trademark Agreement contains two terms, with one term from August 1, 2008 to July 31, 2009 and the other term from August 1, 2009 to July 31, 2010. Any additional term or renewal of the Trademark Agreement is contingent upon further written agreement of the parties.

 

63

---

Pursuant to the Trademark Agreement, during each term, we are required to pay Hyundai Corporation minimum royalty, and we are also not permitted to sell or distribute any product similar to or in competition with the Licensed Products. The Trademark Agreement also sets forth minimum sales amounts for the Licensed Products for each term, in addition to providing for a percentage royalty rate such that, if our aggregate sales during a term exceeds the minimum sales amount, we will pay the royalty to Hyundai Corporation equal to the amount of aggregate sales in excess of the minimum sales amount, multiplied by the royalty rate. The Trademark Agreement also requires us to provide Hyundai Corporation with sales and marketing reports for the Licensed Products for certain periods and contains other customary general provisions, including provisions related to a prohibition of assignment or sub-licensing, confidentiality, indemnification, and the scope of our use of Hyundai Corporation’s trademark. Under the Trademark Agreement, Hyundai Corporation may terminate the Trademark Agreement for, among other reasons, failure to pay the royalties or failure to rectify any injury to the brand image of Hyundai Corporation’s trademark within 30 days of receipt of written notification of such injury.

We anticipate that the license agreement will be renewed in July 2010 because Hyundai Corporation has signed a non-binding memorandum of cooperation effective January 1, 2009 that indicates that Hyundai Corporation intends to renew our license agreement until December 31, 2018.  However, the memorandum is not binding on Hyundai Corporation and we have no control over Hyundai Corporation’s decision whether to continue to license its trademark to us.  If such trademark license is discontinued, we would lose the right to use the Hyundai™ name in connection with our business.  Because the trademark license agreement prohibits us from selling our Hyundai™ branded products outside of the PRC, our international expansion efforts will primarily be executed through our OEM products, which are not affected by the Hyundai agreement.

We currently utilize five patents that were transferred to us from a third party, Tianfu Li, our founder and a former owner, officer, and director.  The patent transfer certificates related to the patents have been filed and registered with the Bureau of Intellectual Property in the PRC. Mr. Li did not receive any consideration for the transfer and assignment of the intellectual property rights to Hyundai HZ.

We also rely on unpatented technologies to protect the proprietary nature of our product and manufacturing processes. We require that our management team and key employees enter into confidentiality agreements that require the employees to assign the rights to any inventions developed by them during the course of their employment with us. All of the confidentiality agreements include non-competition and non-solicitation provisions that remain effective during the course of employment and for periods following termination of employment, which vary depending on position and location of the employee.

Our success will depend in part on our ability to obtain patents and preserve other intellectual property rights covering the design and operation of our products. We intend to continue to seek patents on our inventions when we deem it commercially appropriate. The process of seeking patent protection can be lengthy and expensive, and there can be no assurance that patents will be issued for currently pending or future applications or that our existing patents or any new patents issued will be of sufficient scope or strength or provide meaningful protection or any commercial advantage to us. We may be subject to, or may initiate, litigation or patent office interference proceedings, which may require significant financial and management resources. The failure to obtain necessary licenses or other rights or the advent of litigation arising out of any such intellectual property claims could have a material adverse effect on our operations.

Seasonality

Our business exhibits some seasonality, with net sales being affected by the impact of weather and seasonal demand on construction and installation programs, such as a slow-down in projects in Northeast China during the winter and nationally during Chinese Spring Festival, after which we traditionally experience relatively higher sales during the second half of the fiscal year.

Employees

As of March 31, 2010, we had approximately 654 full-time employees, including approximately 539 employees in production, approximately 40 employees in research and development and approximately 80 employees in sales and marketing. All of our employees are based inside China.  Our employees are not represented by any labor union and are not organized under a collective bargaining agreement, and we have never experienced a work stoppage. We believe that our relationships with our employees are generally good.

 

64

---

We also provide housing facilities for our employees. At present, approximately 80% of our employees live in company-provided housing facilities.  According to the relevant PRC regulations on housing provident funds, PRC enterprises are required to contribute housing provident funds for their employees. The monthly contributions must be at least 5% of each employee’s average monthly income in the previous year. Hyundai Light has not paid such funds for its employees since its establishment.  We may be exposed to monetary fines by the local housing authority and claims from our employees in connection with Hyundai Light’s non-compliance with regulations with respect to contribution of housing provident funds for employees.

PRC Government Regulations

Business license

Any company that conducts business in the PRC must have a business license that covers a particular type of work. Our business license covers our present business to design, develop, produce and sell lighting and electric products and accessories, with 30% of products sold overseas and 70% sold domestically.  Prior to expanding our business beyond that of our business license, we are required to apply and receive approval from the PRC government.

Employment laws

We are subject to laws and regulations governing our relationship with our employees, including: wage and hour requirements, working and safety conditions, citizenship requirements, work permits and travel restrictions. These include local labor laws and regulations, which may require substantial resources for compliance.   China’s National Labor Law, which became effective on January 1, 1995, and China’s National Labor Contract Law, which became effective on January 1, 2008, permit workers in both state and private enterprises in China to bargain collectively.  The National Labor Law and the National Labor Contract Law provide for collective contracts to be developed through collaboration between the labor union (or worker representatives in the absence of a union) and management that specify such matters as working conditions, wage scales, and hours of work.  The laws also permit workers and employers in all types of enterprises to sign individual contracts, which are to be drawn up in accordance with the collective contract.

Environmental regulations

We are subject to various federal, state, local and foreign environmental laws and regulations, including those governing the use, discharge and disposal of hazardous substances in the ordinary course of our manufacturing process. The major environmental regulations applicable to us include the PRC Environmental Protection Law, the PRC Law on the Prevention and Control of Water Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Air Pollution and its Implementation Rules, the PRC Law on the Prevention and Control of Solid Waste Pollution, and the PRC Law on the Prevention and Control of Noise Pollution.

In addition, we have complied with European Union Directives on Restrictions on certain Hazardous Substances on electrical and electronic equipment (“RoHS”).  We believe that our current manufacturing operations comply in all material respects with applicable environmental laws and regulations. Although we believe that our current manufacturing operations comply in all material respects with applicable environmental laws and regulations, it is possible that future environmental legislation may be enacted or current environmental legislation may be interpreted to create environmental liability with respect to our other facilities, operations, or products.

The manufacturing facilities in which we operate are subject to the PRC’s environmental laws and requirements. Our landlord, Huizhou NIVS Audio & Video Technology Company Limited, that leases the factory to us is required to and has obtained a Guangdong Province Pollution Discharge Certificate issued by Huizhou Environment Protection Bureau and is responsible for the disposal of the waste in accordance with applicable environmental regulations. If our landlord fails to comply with the provisions of the permit and environmental laws, our landlord could be subject to sanctions by regulators, including the suspension or termination of its Certificate, which would result in the suspension or termination of our manufacturing operations.

Patent protection in China

The PRC’s intellectual property protection regime is consistent with those of other modern industrialized countries. The PRC has domestic laws for the protection of rights in copyrights, patents, trademarks and trade secrets.

 

65

---

The PRC is also signatory to most of the world’s major intellectual property conventions, including:

 

—

Convention establishing the World Intellectual Property Organization (WIPO Convention) (June 4, 1980);

 

—

Paris Convention for the Protection of Industrial Property (March 19, 1985);

 

—

Patent Cooperation Treaty (January 1, 1994); and

 

—

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) (November 11, 2001).

 

Patents in the PRC are governed by the China Patent Law and its Implementing Regulations, each of which went into effect in 1985. Amended versions of the China Patent Law and its Implementing Regulations came into effect in 2001 and 2003, respectively.

The PRC is signatory to the Paris Convention for the Protection of Industrial Property, in accordance with which any person who has duly filed an application for a patent in one signatory country shall enjoy, for the purposes of filing in the other countries, a right of priority during the period fixed in the convention (12 months for inventions and utility models, and 6 months for industrial designs).

The Patent Law covers three kinds of patents--patents for inventions, utility models and designs. The Chinese patent system adopts the principle of first to file; therefore, where more than one person files a patent application for the same invention, a patent can only be granted to the person who first filed the application. Consistent with international practice, the PRC only allows the patenting of inventions or utility models that possess the characteristics of novelty, inventiveness and practical applicability. For a design to be patentable, it cannot be identical with or similar to any design which, before the date of filing, has been publicly disclosed in publications in the country or abroad or has been publicly used in the country, and should not be in conflict with any prior right of another.

PRC law provides that anyone wishing to exploit the patent of another must conclude a written licensing contract with the patent holder and pay the patent holder a fee. One broad exception to this rule, however, is that, where a party possesses the means to exploit a patent but cannot obtain a license from the patent holder on reasonable terms and in reasonable period of time, the PRC State Intellectual Property Office, or SIPO, is authorized to grant a compulsory license. A compulsory license can also be granted where a national emergency or any extraordinary state of affairs occurs or where the public interest so requires. SIPO, however, has not granted any compulsory license to date. The patent holder may appeal such decision within three months from receiving notification by filing a suit in a people’s court.

PRC law defines patent infringement as the exploitation of a patent without the authorization of the patent holder. Patent holders who believe their patent is being infringed may file a civil suit or file a complaint with a PRC local Intellectual Property Administrative Authority, which may order the infringer to stop the infringing acts.  A preliminary injunction may be issued by the People’s Court upon the patentee’s or the interested parties’ request before instituting any legal proceedings or during the proceedings. Damages in the case of patent infringement is calculated as either the loss suffered by the patent holder arising from the infringement or the benefit gained by the infringer from the infringement. If it is difficult to ascertain damages in this manner, damages may be reasonably determined in an amount ranging from one or more times the license fee under a contractual license. The infringing party may be also fined by the Administration of Patent Management in an amount of up to three times the unlawful income earned by such infringing party. If there is no unlawful income so earned, the infringing party may be fined in an amount of up to RMB500,000, or approximately $73,200.

Value added tax

Pursuant to the Provisional Regulation of China on Value Added Tax and their implementing rules, all entities and individuals that are engaged in the sale of goods, the provision of repairs and replacement services and the importation of goods in China are generally required to pay VAT at a rate of 17.0% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayer. Further, when exporting goods, the exporter is entitled to a portion or all of the refund of VAT that it has already paid or borne. Our imported raw materials that are used for manufacturing export products and are deposited in bonded warehouses are exempt from import VAT.

In 2007, through our subsidiary Hyundai Light, we received an approval from the local agent of the national taxation authority, the State Taxation Bureau of Huicheng District, Huizhou, Guangdong (the "Huicheng Taxation Bureau"), to pay a 4% simplified VAT for fiscal years 2008, 2009, and 2010 for sales of certain products in the PRC.  As a result of this approval, our total tax savings for fiscal 2008 and 2009 was more than approximately $7.0 million; there will be additional tax savings in fiscal 2010. If a tax audit is conducted by a higher tax authority and it was determined that such local approval was improper or unauthorized and that we should in fact have been paying VAT at the rate of 17% on all sales in the PRC, we may be required to make up all of the underpaid taxes.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Value Added Tax” for additional information.

 

66

---

Foreign currency exchange

Under the PRC foreign currency exchange regulations applicable to us, the Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Conversion of Renminbi for capital account items, such as direct investment, loan, security investment and repatriation of investment, however, is still subject to the approval of the PRC State Administration of Foreign Exchange, or SAFE. Foreign-invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from the SAFE. Capital investments by foreign-invested enterprises outside of China are also subject to limitations, which include approvals by the Ministry of Commerce, the SAFE and the State Reform and Development Commission.  We currently do not hedge our exposure to fluctuations in currency exchange rates.

Mandatory statutory reserve and dividend distributions

Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10.0% of its after-tax profit based on PRC accounting standards each year for its general reserves until the cumulative amount of such reserves reaches 50.0% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

Properties

We do not own any real property.  We lease our manufacturing facilities, which consist of our factory space and dormitories of approximately 5,000 square meters, pursuant to a written lease agreement entered between us and NIVS.  The lease agreement, which has a term that commenced on July 1, 2008 and ends on July 1, 2010, provides that we pay a monthly fee of RMB 25,000, or $3,700, to the lessor, Huizhou NIVS Audio & Video Technology Company Limited.

In addition, we leased factory space of approximately 1,200 square meters under a lease agreement dated March 30, 2007.  Pursuant to the lease agreement that we entered into with Zhongshan Guzhen Shunkand Store, the monthly rent was set at RMB 8,640, or $1,300, per month.  The term of the lease was from April 15, 2007 to April 14, 2009.  On April 8, 2009, we entered into an agreement to extend the lease term until April 2010 on the same terms.

Our principal corporate offices are located in the PRC at No. 29 & 31 Huanzhen West Road, Shuikou Town, Huizhou City, Guangdong, People’s Republic of China 516005.

Legal Proceedings

We are not involved in any material legal proceedings.

 

67

---

 

MANAGEMENT

 

Executive Officers, Directors and Key Employees

The following individuals constitute our board of directors and executive management as of the date of this prospectus.

Name		Age			Position
Li Xuemei			45		Chief Executive Officer, President, and Chairman of the Board
Dong Bin			41		Chief Operating Officer
Wu Shiliang			40		Executive Vice President, Sales and Marketing and Director
Kui (Kevin) Jiang			42		Chief Financial Officer and Corporate Secretary
Michael Askew			61		Director
Zhang Hongfeng			45		Director
Su Yang			41		Director

 

Ms. Li Xuemei was appointed as our Chief Executive Officer, President, and Chairman of the Board upon the close of the Share Exchange in January 2010.  Ms. Li has served as the Executive Director of Hyundai Lighting Electric (Huizhou) Co., Ltd. since July 2008. From February 2009 to the present, Ms. Li served as sole director of China Intelligent Electronic Holding Limited. From March 2008 to June 2009, Ms. Li served as general manager of Hyundai Lighting Electric (Huizhou) Co., Ltd., and from July 2005 to July 2008, Ms. Li served as director of Hyundai Lighting Electric (Huizhou) Co., Ltd., a company in the business of manufacturing and distributing lighting products and accessories.  Ms. Li received an associate’s degree from Zhejiang Industry & Trade Polytechnic in 1987.  We believe that Ms. Li’s knowledge of all aspects of the Company’s business and her historical understanding of its operations, combined with her years of experience in the lighting industry and her drive for innovation and excellence, position her well to serve as our Chairman and Chief Executive Officer.

Mr. Dong Bin was appointed as our Chief Operating Officer upon the close of the Share Exchange in January 2010.  Mr. Dong has served as general manager of Hyundai Lighting Electric (Huizhou) Co., Ltd. since June 2009. From February 2006 to May 2009, Mr. Dong served as secretary-general of Huizhou Lighting Association as a consultant for various lighting enterprises. Mr. Dong received a bachelor’s degree in radio, film and television from Communication University of China in 2001.

Mr. Wu Shiliang was appointed as our Executive Vice President, Sales and Marketing and Director upon the close of the Share Exchange in January 2010.  Mr. Wu has served as vice general manager of Hyundai Lighting Electric (Huizhou) Co., Ltd. since March 2008. From July 2005 to March 2008, Mr. Wu served as sales director of Hyundai Lighting Electric (Huizhou) Co., Ltd, and from March 2008 to July 2008, Mr. Wu served as director of Hyundai Lighting Electric (Huizhou) Co., Ltd. From March 1999 to May 2005, Mr. Wu served as vice sales director in Rhine Hong Kong Electronics (Huizhou) Co., Ltd., which focused on the business of lighting products and accessories. Mr. Wu received an associate’s degree of industry and business administration from Huizhou Radio & TV University in 1998.  We believe Mr. Wu’s qualifications to sit on our Board of Directors include his extensive sales and marketing experience in the lighting industry, as well as his executive leadership and management experience.

Mr. Kui (Kevin) Jiang was appointed as our Chief Financial Officer and Corporate Secretary in May 2010.  Mr. Jiang served as a senior auditor and audit supervisor at Davidson & Company, LLP, a full service chartered accountancy firm, from November 2005 to November 2009.  Prior to that, Mr. Jiang was a senior tax associate at Mah & Associates, LLP, a CPA firm, from September 2002 to September 2005, and was an accountant with Odenberg Ullakko Muranishi & Co., LLP, a CPA firm, from July 1999 to August 2002. From September 1989 to April 1992, Mr. Jiang served as the chief auditor at the Bureau of Auditing at the government of Liuzhou, China. Mr. Jiang is a certified public accountant in the United States.  He received a bachelor’s degree in auditing from Central-South University of Business and Economics in 1989 and a master’s degree in accounting from Golden Gate University in 1999.

 

68

---

Mr. Michael Askew was appointed as a director of our company in March 2010.  Mr. Askew served as the President and CEO of United Commercial Bank (China) Ltd. from January 2008 to December 2008, when he retired from the bank.  From April 2003 to December 2007, he served as the vice president of business development and risk management before becoming the president of Business Development Bank (“BDB”), a foreign invested commercial bank incorporated in China that is based in Shanghai and serves exclusively the national SME sector.   In 2007, Mr. Askew assisted in the sale of the bank to its present US shareholder.  Prior to 2003, Mr. Askew led the Asia operations of the Banco Exterior de Espana (now BBVA) in Hong Kong and later the PRC banking activities of Belgium’s KBC and accumulated considerable international experience as a commercial and investment banker in the UK, Sweden, USA, Brazil and Spain.  Mr. Askew practiced for five years as a chartered accountant and auditor with the London firm of Peat Marwick Mitchell & Co.  He obtained his Chartered Accountant license in 1973 and a Modern Languages degree from the University of London in 1970.  We believe that Mr. Askew’s background as a chartered accountant, along with his more than 40 years of experience in the financial and banking industry and as the founding director and President of a foreign-owned PRC Bank, provides a unique perspective to the Board.

Mr. Zhang Hongfeng was appointed as a director of our company in March 2010.  Since October 1999, Mr. Zhang has served as the vice general manager of Huizhou Dawei Electronics Co., Ltd., a company specialized in automobile electronics.  From July 1996 to September 1999, Mr. Zhang served as vice general manager of Huizhou Jinlong Electronics Co., Ltd., a company specialized in electronics products.  From April 1992 to June 1996, Mr. Zhang served as manager of Huizhou Duopu Technology Co., Ltd., a company specialized in computer.  From October 1988 to March 1992, Mr. Zhang served as chief of Material Department of Zhongou Electronics Co., Ltd., a company specialized in automobile electronics.  Mr. Zhang received a bachelor degree in computer science from Guilin University of Electronic Technology in 1988. We believe that Mr. Zhang’s broad knowledge of the electronics industry, as well as his experience in marketing and research and development, well qualifies Mr. Zhang to serve on our Board.

Mr. Su Yang was appointed as a director of our company in April 2010. Since March 2008, Mr. Su has served as the managing partner of Wuzhou Songde Certified Public Accountants.  From December 2004 to February 2008, Mr. Su served as the managing partner of Shenzhen Taiyang Certified Public Accountants.  Mr. Su has extensive experience in providing audit, appraisal and managerial advisory services to Chinese enterprises that are seeking to list in China or overseas.  He also currently serves as the independent non-executive director of Jutal Offshore Oil Services Co. Limited and Edan Instruments, Inc.   Mr. Su is a certified public accountant practicing in China.  He received a bachelor degree in Accounting from Hunan University in 1992 and a master degree in Business Management from Cheung Kong Graduate School of Business in 2010.  We believe that Mr. Su’s qualifications to sit on our Board of Directors include his 15 years of experience as a certified public accountant and his extensive knowledge of the capital markets.

Family Relationships

 

There are no family other relationships among any of the officers and directors.

Involvement in Certain Legal Proceedings

There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of the Company during the past ten years.

The Company is not aware of any legal proceedings in which any director, nominee, officer or affiliate of the Company, any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any associate of any such director, nominee, officer, affiliate of the Company, or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

The Board of Directors and Committees

Under the listing standards of the NYSE Amex, a listed company’s board of directors must consist of a majority of independent directors. Certain exceptions are available for this requirement but we do not qualify for any such exception. Currently, our board of directors has determined that each of the non-management directors, Michael Askew, Su Yang, and Zhang Hongfeng is an “independent” director as defined by the listing standards of NYSE Amex currently in effect and approved by the U.S. Securities and Exchange Commission (“SEC”) and all applicable rules and regulations of the SEC. All members of the Audit, Compensation and Nominating Committees satisfy the “independence” standards applicable to members of each such committee. The board of directors made this affirmative determination regarding these directors’ independence based on discussions with the directors and on its review of the directors’ responses to a standard questionnaire regarding employment and compensation history; affiliations, family and other relationships; and transactions with the Company. The board of directors considered relationships and transactions between each director or any member of his immediate family and the Company and its subsidiaries and affiliates. The purpose of the board of director’s review with respect to each director was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent under the NYSE Amex rules.

 

69

---

 

Audit Committee

We established our Audit Committee in March 2010. The Audit Committee consists of Michael Askew, Su Yang, and Zhang Hongfeng, each of whom is an independent director. Michael Askew, Chairman of the Audit Committee, is an “audit committee financial expert” as defined under Item 407(d) of Regulation S-K. The purpose of the Audit Committee is to represent and assist our board of directors in its general oversight of our accounting and financial reporting processes, audits of the financial statements and internal control and audit functions. The Audit Committee’s responsibilities include:

 

—

The appointment, replacement, compensation, and oversight of work of the independent auditor, including resolution of disagreements between management and the independent auditor regarding financial reporting, for the purpose of preparing or issuing an audit report or performing other audit, review or attest services.

 

—

Reviewing and discussing with management and the independent auditor various topics and events that may have significant financial impact on our company or that are the subject of discussions between management and the independent auditors.

 

The board of directors has adopted a written charter for the Audit Committee. A copy of the Audit Committee Charter is posted on our corporate website at http://hyundai-elc.com/english/.

Compensation Committee

We established our Compensation Committee in March 2010. The Compensation Committee consists of Su Yang and Zhang Hongfeng, each of whom is an independent director.  Su Yang is the Chairman of the Compensation Committee. The Compensation Committee is responsible for the design, review, recommendation and approval of compensation arrangements for our directors, executive officers and key employees, and for the administration of our equity incentive plans, including the approval of grants under such plans to our employees, consultants and directors. The Compensation Committee also reviews and determines compensation of our executive officers, including our Chief Executive Officer. The board of directors has adopted a written charter for the Compensation Committee. A current copy of the Compensation Committee Charter is posted on our corporate website at: http://hyundai-elc.com/english/.

Nominating Committee

The Nominating Committee consists of Zhang Hongfeng and Su Yang, each of whom is an independent director. Zhang Hongfeng is the Chairman of the Nominating Committee. The Nominating Committee assists in the selection of director nominees, approves director nominations to be presented for stockholder approval at our annual general meeting and fills any vacancies on our board of directors, considers any nominations of director candidates validly made by stockholders, and reviews and considers developments in corporate governance practices. The board of directors has adopted a written charter for the Nominating Committee. A current copy of the Nominating Committee Charter is posted on our corporate website at: http://hyundai-elc.com/english/.

Code of Business Conduct and Ethics

 

Our board of directors has adopted a Code of Business Conduct and Ethics, which applies to all directors, officers and employees. The purpose of the Code is to promote honest and ethical conduct. The Code is posted on our corporate website located at http://hyundai-elc.com/english/, and is available in print, without charge, upon written request to us at China Intelligent Lighting and Electronics, Inc., No. 29 & 31 Huanzhen West Road, Shuikou Town, Huizhou City, Guangdong, China 516005.  We intend to post promptly any amendments to or waivers of the Code on our corporate website.

 

70

---

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Compensation Before the Share Exchange

Prior to the closing of the Share Exchange on January 15, 2010, we were a “blank check” shell company named SRKP 22, Inc. that was formed to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation.  The only officers and directors of SRKP 22, Inc., Richard Rappaport and Anthony Pintsopoulos, SRKP 22’s President and Chief Financial Officer, respectively, did not receive any compensation or other perquisites for serving in such capacities.  Messrs. Rappaport and Pintsopoulos resigned from all of their executive and director positions with SRKP 22 upon the closing of the Share Exchange and are no longer employed by or affiliated with our company. 

Prior to the closing of the Share Exchange, our current named executive officers were compensated by Hyundai Light until the closing of the Share Exchange, including for the years ended December 31, 2008 and 2009.  The Chairman of the Board of Hyundai Light, Li Xuemei, determined the compensation for herself and the other executive officers of Hyundai Light that was earned in fiscal 2008 and 2009 after consulting with the board members of Hyundai Light.  In addition, the Board of Directors of Hyundai Light approved the compensation.  During the fiscal years of 2009, 2008 and 2007, the compensation for Hyundai Light’s named executive officers consisted solely of each executive officer’s salary and cash bonus.  The Board of Directors of Hyundai Light believe that the salaries paid to our executive officers during 2008 and 2009 are indicative of the objectives of its compensation program and reflect the fair value of the services provided to Hyundai Light, as measured by the local market in China.

Compensation After the Share Exchange

Upon the closing of the Share Exchange, the executive officers of Hyundai Light were appointed as our executive officers and we adopted the compensation policies of Hyundai Light, as modified for a company publicly reporting in the United States.  Compensation for our current executive officers is determined with the goal of attracting and retaining high quality executive officers and encouraging them to work as effectively as possible on our behalf.  Compensation is designed to reward executive officers for successfully meeting their individual functional objectives and for their contributions to our overall development.  For these reasons, the elements of compensation of our executive officers have traditionally been salary and bonus.  Salary is paid to cover an appropriate level of living expenses for the executive officers and the bonus is paid to reward the executive officer for individual and company achievement.

Salary is designed to attract, as needed, individuals with the skills necessary for us to achieve our business plan, to motivate those individuals, to reward those individuals fairly over time, and to retain those individuals who continue to perform at or above the levels that we expect.  When setting and adjusting individual executive salary levels, we consider the relevant established salary range, the named executive officer’s responsibilities, experience, potential, individual performance and contribution.  We also consider other factors such as our overall corporate budget for annual merit increases, unique skills, demand in the labor market and succession planning.

We determine the levels of salary as measured primarily by the local market in China.  We determine market rate by conducting a comparison with the local geographic area averages and industry averages in China.  In determining market rate, we review statistical data collected and reported by the Huizhou Labor Bureau which is published monthly.  The statistical data provides the high, median, low and average compensation levels for various positions in various industry sectors.  In particular, we use the data for the manufacturing sector as our benchmark to determine compensation levels because we operate in Huizhou City as a lighting products manufacturer.  Our compensation levels are at roughly the 80th-90th percentile of the compensation spectrum for the manufacturing sector.

Corporate performance goals include sales targets, research and development targets, production yields, and equipment utilization.  Additional key areas of corporate performance taken into account in setting compensation policies and decisions are cost control, profitability, and innovation.  The key factors may vary depending on which area of business a particular executive officer’s work is focused.  Individual performance goals include subjective evaluation, based on an employee’s team-work, creativity and management capability, and objective goals such as sales targets.  We have not paid bonuses to our executive officers in the past.  If we successfully complete our proposed listing of our common stock on the NYSE Amex, we expect to pay bonuses to our executive officers based if corporate and individual performance goals are met.  Generally, the amount of a bonus, when awarded, will be equal to one month’s salary plus 5% to 25% of the individual’s annual salary.  If the corporate and individual goals are fully met, the bonus will be closer to the top end of the range.  If the goals are only partially met, the amount of the bonus will be closer to the bottom end of the range.  In no event will there be a bonus equal to more than one month’s salary if the corporate goals are not met by at least 50%.

 

71

---

 

We established a compensation committee comprised of independent directors in March 2010.  The compensation committee will perform, at least annually, a strategic review of the compensation program for our executive officers to determine whether it provides adequate incentives and motivation to our executive officers and whether it adequately compensates our executive officers relative to comparable officers in other companies with which we compete for executives.  Those companies may or may not be public companies or companies located in the PRC or even, in all cases, companies in a similar business.  Prior to the formation of the compensation committee in March 2010, Li Xuemei, upon consulting with our board members, determined the compensation for our current executive officers.  We have established a compensation program for executive officers for 2010 that is designed to attract, as needed, individuals with the skills necessary for us to achieve our business plan, to motivate those individuals, to reward those individuals fairly over time, and to retain those individuals who continue to perform at or above the levels that we expect.  If paid, bonuses for executive officers in 2010 will be based on company and individual performance factors, as described above.

If we successfully complete our proposed listing on NYSE Amex in 2010, we intend to adjust our compensation evaluations upwards in 2010, including through the payment of bonuses.  However, in such case, we do not intend to increase compensation by more than 10%.  We believe that adopting higher compensation in the future may be based on the increased amount of responsibilities and the expansion of our business to be assumed by each of the executive officers after we become a publicly listed company. 

We also intend to expand the scope of our compensation, such as the possibility of granting options to executive officers and tying compensation to predetermined performance goals.  In connection with the appointment of Kui (Kevin) Jiang as our Chief Financial Officer in May 2010, we agreed to grant to Mr. Jiang options to purchase 25,000 shares of our common stock at an exercise price equal to the offering price of the shares sold in this public offering.  The grant will be made on the pricing date of this public offering.  The options will have a term of 5 years and will vest in equal installments every three months over a period of 12 months.  We also intend to adopt an equity incentive plan after the completion of this public offering and issue additional stock-based awards under the plan to aid our company’s long-term performance, which we believe will create an ownership culture among our named executive officers that fosters beneficial, long-term performance by our company.  We do not currently have a general equity grant policy with respect to the size and terms of grants that we intend to make in the future, but we expect that our compensation committee will evaluate our achievements for each fiscal year based on performance factors and results of operations such as revenues generated, cost of revenues, and net income.

 

72

---

 

 

Summary Compensation Table

The following table sets forth information concerning the compensation for the three fiscal years ended December 31, 2009 of the principal executive officer, principal financial officer, in addition to our three most highly compensated officers whose annual compensation exceeded $100,000, and up to two additional individuals, as applicable, for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer of the registrant at the end of the last fiscal year.

Name and Position		Year		Salary				Bonus				Total
Li Xuemei		2009		$	19,354			$	1,613			$	20,967
Chief Executive Officer and		2008			17,143				1,429				18,572
President		2007			14,795				-				14,795
Chi-wai (Gabriel) Tse (1)		2009		$	665			$	-			$	665
Chief Financial Officer		2008			-				-				-
		2007			-				-				-
Xialong Zhou (2)		2009		$	5,752			$	-			$	5,752
Former Chief Financial Officer		2008			-				-				-
		2007			-				-				-
Richard Rappaport (3)		2009		$	-			$	-			$	-
Former President		2008			-				-				-
and Former Director		2007			-				-				-
Anthony Pintsopoulos (3)		2009		$	-			$	-			$	-
Former Secretary, Former Chief		2008			-				-				-
Financial Officer, and Former		2007			-				-				-
Director

 

---

(1)	Chi-wai (Gabriel) Tse served as our Chief Financial Officer from December 2009 to May 2010. His annual compensation package is HKD 480,000, or approximately $61,900, plus a discretionary year end bonus.

 

(2)	Xialong Zhou served as our Chief Financial Officer in November and December 2009.  Prior to Xialong Zhou joining our company, Li Xuemi was our principal financial officer.

 

(3)	Upon the close of the Share Exchange on January 15, 2010, Messrs. Rappaport and Pintsopoulos resigned from all positions with the Company, which they held from the Company’s inception.

Grants of Plan-Based Awards in 2009

There were no option grants in 2009.

Outstanding Equity Awards at 2009 Fiscal Year End

There were no option exercises or options outstanding in 2009.

Option Exercises and Stock Vested in Fiscal 2009

There were no option exercises or stock vested in 2009.

Pension Benefits

There were no pension benefit plans in effect in 2009.

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

There was no nonqualified defined contribution or other nonqualified deferred compensation plans in effect in 2009.

 

73

---

 

 

Employment Agreements

Through China Intelligent BVI, we entered into an employment agreement dated November 23, 2009 with Xialong Zhou.  Mr. Zhou served as our Chief Financial Officer until he resigned in December 2009.  Pursuant to the employment agreement, it was originally intended for Mr. Zhou to serve for an initial period of one year at an annual salary of $50,000, in addition to issuance 10,000 shares of common stock that was to be issued on June 1, 2010.  On December 31, 2009, we entered a separation agreement pursuant to which we agreed that no shares were to be issued.

In December 2009, we, through China Intelligent BVI, entered into an employment agreement with Tse Wai Chi to serve as our Chief Financial Officer.  Mr. Tse served as our Chief Financial Officer until he resigned in May 2010.  According to the agreement, Mr. Tse was entitled to HKD480,000, or approximately US$61,900 annually, in addition to a grant of securities that is equal to HKD1,000,000, or approximately US$129,000 after one year of employment.  Mr. Tse resigned in May 2010, prior to the completion of his one year of employment, and therefore no shares will be issued pursuant to the agreement.

On May 5, 2010, we entered into an employment agreement with Kui (Kevin) Jiang regarding his employment as our Chief Financial Officer.  Pursuant to the employment agreement, Mr. Jiang will be entitled to an annual base salary of $48,873, as well as reimbursement for business travel expenses.  The initial term of the employment agreement will be 12 months, with automatic 12-month extensions, unless either party provides 30 days written notice of termination prior to the expiration of a term.  We may terminate the employment agreement with 30 days prior written notice or payment in lieu thereof.  In the event Mr. Jiang’s employment with us is terminated, we will pay Mr. Jiang on the date of termination the amount of his salary that is earned but unpaid as of the date of termination.  Pursuant to the employment agreement, Mr. Jiang will also be granted options to purchase 25,000 shares of our common stock at an exercise price equal to the offering price of the shares sold in this public offering.  The grant will be made on the pricing date of this public offering.  The options will vest in equal installments every three months over a period of 12 months.  The options will expire five years from the date of grant, provided, however, that Mr. Jiang remains continuously employed by the Company during the applicable five-year period.   If Mr. Jiang is terminated without cause, as defined in the employment agreement, or Mr. Jiang terminates his employment for good reason, as defined in the employment agreement, then all of the options that are not vested will immediately vest on the date of termination.  All options that are vested at the time of termination of employment must be exercised within 30 days of termination, provided, however, that the options may be immediately cancelled by us if Mr. Jiang’s employment is terminated for cause.

Dong Bin and Wu Shiliang are parties to employment agreements with Hyundai Light that have a term that continues through December 31, 2010.  The employment agreements are entered into on an annual basis.  Under their respective agreements, Wu Shiliang was paid a monthly salary of RMB 9,700, which is approximately US$1,422, for 2009 and will be paid RMB 10,185, or approximately US$1,490, per month for 2010, and Dong Bin was paid a monthly salary of RMB10,000, which is approximately US$1,466, for 2009 and will be paid RMB 10,500, or approximately US$1,540, per month in 2010.  Pursuant to the agreements, each employee is provided with standard holidays and leave and receives a salary as specified in the agreements. In the event an employee works overtime that has been approved by Hyundai Light, each employee will be offered compensation leave or overtime salary in accordance with the Labor Law of China. Under the employment agreements, the employees have certain obligations to maintain confidential information about the Company. Each agreement may be renewed or other changes to the agreements may be made upon the written agreement of both parties. The employment agreements provide for termination upon the occurrence of termination conditions stipulated in the agreements and in accordance with the Law of Labor Contract in China and other regulations.

 

74

---

 

 

Director Compensation

The following table shows information regarding the compensation earned during the fiscal year ended December 31, 2009 by members of board of directors.

Name

Fees Earned  or Paid in  Cash  ($)

Stock  Awards  ($)

Option  Awards ($)

Non-Equity  Incentive Plan  Compensation  ($)

Change in  Pension Value and  Nonqualified  Deferred  Compensation  Earnings

All Other  Compensation ($)

Total ($)

Li Xuemei(1)

-

-

-

-

-

-

-

Wu Shiliang(1)

-

-

-

-

-

-

-

Michael Askew(2)

-

-

-

-

-

-

-

Su Yang(2)

-

-

-

-

-

-

-

Zhang Hongfeng(2)

-

-

-

-

-

-

-

Richard Rappaport(3)

-

-

-

-

-

-

-

Anthony Pintsopoulos(3)

-

-

-

-

-

-

-

 

---

(1)	Upon the close of the Share Exchange on January 15, 2010, Li Xuemei and Wu Shiliang were appointed as directors of the Company.  They did not receive any compensation for their directorial services for China Intelligent BVI during 2009.

(2)	Michael Askew and Zhang Hongfeng were appointed as directors of the Company in March 2010.  Su Yang was appointed as director of the Company in April 2010.  They did not receive any compensation from China Intelligent BVI during 2009.

(3)	Upon the close of the Share Exchange on January 15, 2010, Messrs. Rappaport and Pintsopoulos resigned from all positions with the Company, which they held from the Company’s inception.

We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity.  We intend to develop such a policy in the near future.

Indemnification of Directors and Executive Officers and Limitations of Liability

Under Section 145 of the General Corporation Law of the State of Delaware, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors’ fiduciary duty of care to us and our stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of the law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.

Our bylaws provide for the indemnification of our directors to the fullest extent permitted by the Delaware General Corporation Law. Our bylaws further provide that our Board of Directors has discretion to indemnify our officers and other employees. We are required to advance, prior to the final disposition of any proceeding, promptly on request, all expenses incurred by any director or executive officer in connection with that proceeding on receipt of an undertaking by or on behalf of that director or executive officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified under the bylaws or otherwise. We are not, however, required to advance any expenses in connection with any proceeding if a determination is reasonably and promptly made by our Board of Directors by a majority vote of a quorum of disinterested Board members that (i) the party seeking an advance acted in bad faith or deliberately breached his or her duty to us or our stockholders and (ii) as a result of such actions by the party seeking an advance, it is more likely than not that it will ultimately be determined that such party is not entitled to indemnification pursuant to the applicable sections of our bylaws.

We have been advised that in the opinion of the Securities and Exchange Commission, insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

We may enter into indemnification agreements with each of our directors and officers that are, in some cases, broader than the specific indemnification provisions permitted by Delaware law, and that may provide additional procedural protection. As of the date of the Share Exchange, we have not entered into any indemnification agreements with our directors or officers, but may choose to do so in the future. Such indemnification agreements may require us, among other things, to:

·

indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors;

·

advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or

·

obtain directors’ and officers’ insurance.

At present, there is no pending litigation or proceeding involving any of our directors, officers or employees in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

China Intelligent BVI

China Intelligent BVI and Hyundai Light are either directly or indirectly wholly-owned subsidiaries of China Intelligent Lighting and Electronics, Inc. and each of which has interlocking executive and director positions with us and with each other.

Share Exchange

On January 15, 2010, SRKP 22 completed the Share Exchange with China Intelligent BVI and the former sole shareholder of China Intelligent BVI.  At the closing, China Intelligent BVI became a wholly-owned subsidiary of SRKP 22 and 100% of the issued and outstanding securities of China Intelligent BVI were exchanged for securities of SRKP 22.  An aggregate of 7,097,748 shares of common stock were issued to the sole shareholder of China Intelligent BVI and her designees.  As of the close of the Share Exchange, the sole shareholder and her designees owned approximately 71.7% of the issued and outstanding stock of SRKP 22.  Prior to the closing of the Share Exchange and the closing of the Private Placement, the stockholders of SRKP 22 agreed to the cancellation of an aggregate of 2,130,195 shares and 2,757,838 warrants to purchase shares of common stock held by them such that there were 9,893,704 shares of common stock and warrants to purchase 790,358 shares of common stock owned by them immediately after the Share Exchange and Private Placement.  The Board resigned in full and appointed Li Xuemei and Wu Shiliang to the board of directors of our company, with Li Xuemei serving as Chairman.  The Board also appointed Li Xuemei as our Chief Executive Officer and President, Chi-wai (Gabriel) Tse as our Chief Financial Officer and Corporate Secretary, Wu Shiliang as our Executive Vice President, Sales and Marketing, and Dong Bin as Chief Operating Officer.  Each of these executives and directors were executives and/or directors of China Intelligent BVI and/or its subsidiaries.

The number of shares and warrants cancelled was determined based on negotiations with the security holders of SRKP 22, Inc. and China Intelligent BVI.  As indicated in the Share Exchange Agreement, the parties to the transaction acknowledged that a conflict of interest existed with respect to the negotiations for the terms of the Share Exchange due to, among other factors, the fact that WestPark Capital, Inc. was advising China Intelligent BVI in the transaction.  Certain of the controlling stockholders and control persons of WestPark Capital, Inc. were also, prior to the completion of the Share Exchange, controlling stockholders and control persons of SRKP 22, Inc.  Under these circumstances, the sole shareholder of China Intelligent BVI and the shareholders of SRKP 22 negotiated an estimated value of China Intelligent BVI and its subsidiaries, an estimated value of the shell company (based on similar recent public shell transactions), and the mutually desired capitalization of the company resulting from the Share Exchange.

 

75

---

 

With respect to the determination of the amounts of shares and warrants cancelled, the value of the shell company was derived primarily from its utility as a public company platform, including its good corporate standing and its timely public reporting status, which was expected to allow us to list our stock on a national securities exchange and raise capital at an appropriate price per share; the services provided by WestPark Capital, Inc. were not a consideration in determining this aspect of the transaction.  Under these circumstances and based on these factors, the sole shareholder of China Intelligent BVI and the shareholders of SRKP 22 agreed upon the amount of shares and warrants to be cancelled.  Further to such negotiations, we paid a total of $600,000 in connection with the Share Exchange to acquire the SRKP 22, Inc. shell corporation, such fee consisting of $350,000 paid to WestPark Capital, Inc., which is the placement agent in the Private Placement as described below, and $250,000 paid to a third party unaffiliated with China Intelligent BVI, Hyundai Light or WestPark Capital, Inc. in connection with the third party’s services as an advisor to the Company, including assisting in preparations for the Share Exchange and the Company’s listing of securities in the United States.  In addition, we paid a $140,000 success fee to WestPark Capital, Inc. for services provided in connection with the Share Exchange, including coordinating the Share Exchange transaction process, interacting with the principals of the shell corporation and negotiating the definitive purchase agreement for the shell, conducting a financial analysis of China Intelligent BVI, conducting due diligence on China Intelligent BVI and its subsidiaries, and managing  the interrelationship between legal and accounting activities.  We also reimbursed WestPark Capital, Inc. a total of $80,000 for expenses related to its due diligence.  All of the fees due to WestPark Capital, Inc. and to the unaffiliated third party in connection with the Share Exchange have been paid as of the date of this prospectus.

Based on the $2.54 per share offering price of the common shares issued in the private placement on January 15, 2010, as described below, the 1,418,001 shares retained by the SRKP 22 shareholders had an implied monetary value of approximately $3.6 million.  Assuming exercise of the 790,358 warrants also retained by the SRKP 22 shareholders, 2,208,359 shares would have been retained by the SRKP 22 shareholders with an implied monetary value of approximately $5.6 million.  The implied monetary value of the retained shares was calculated based on the $2.54 per share offering price, without regard to liquidity, marketability, or legal or resale restrictions; accordingly, such amounts should not be considered as an indication of the fair value of the retained shares.

WestPark Capital, Inc.

Some of the controlling stockholders and control persons of WestPark Capital, Inc., our placement agent in the Private Placement and an underwriter in this offering, were also, prior to the completion of the Share Exchange, controlling stockholders and control persons of SRKP 22, Inc., our predecessor.  These persons include Richard Rappaport, who is the Chief Executive Officer of WestPark Capital, Inc. and who indirectly holds a 100% interest in WestPark Capital and who also was the President and a significant stockholder of SRKP 22, Inc. prior to the Share Exchange.  Anthony C. Pintsopoulos, who is the President and Treasurer of WestPark Capital, Inc. and who was also one of the significant stockholders and an officer and director of SRKP 22, Inc. prior to the Share Exchange. Kevin DePrimio and Jason Stern, each employees of WestPark Capital, Inc., were also stockholders of SRKP 22, Inc.  In addition, Richard Rappaport is the sole owner of the membership interests of the parent of the placement agent.  Each of Messrs. Rappaport and Pintsopoulos resigned from all of their executive and director positions with the Company upon the closing of the Share Exchange.  Mr. Rappaport beneficially owned 16.8% of our common stock immediately after the Share Exchange. Collectively Messrs. Rappaport, Pintsopoulos, DePrimio and Stern beneficially own 18.5% of our common stock immediately after the Share Exchange and Private Placement. The placement agent was paid a commission equal to 8% of the gross proceeds from the financing and a 4% non-accountable expense allowance.  We are also retaining WestPark Capital, Inc. for a period of six months following the closing of the Private Placement to provide us with financial consulting services for which we will pay WestPark Capital, Inc. $6,000 per month.

WestPark Capital, Inc. is also one of the Underwriters in this offering.  Subject to the terms and conditions of the underwriting agreement dated [_________], 2010, WestPark Capital, Inc. has agreed to purchase from us the number of shares set forth in the “Underwriting” section of this prospectus at the public offering price less the underwriting discounts and commissions indicated in the “Underwriting” section.  In addition, we have agreed to pay the Underwriters an aggregate non-accountable expense allowance of 2.5% of the gross proceeds of this offering.  Based on the mid-range point of the per share offering price of $4.50 and the sale by us of 3,500,000 shares of common stock offered in this offering, we will pay the Underwriters a non-accountable fee to underwriters equal to approximately $393,750.  The Underwriters will also receive warrants to purchase a number of share equal to 5% of the shares of our common stock sold in connection with this offering excluding the shares sold in the over-allotment option.  The warrants will be exercisable at a per share price equal to 120% of the offering price of this offering.

The Underwriters have a 60-day option to purchase up to 525,000 additional shares of common stock at the public offering price solely to cover over-allotments, if any, if the Underwriters sell more than 3,500,000 shares of common stock in this offering. The Underwriters agreed to purchase 58.6% of the over-allotment shares from the selling stockholders identified in this prospectus and the remaining shares from us.  We will not receive any proceeds from the sale of the shares, if any, by the selling stockholders.  If the Underwriters exercise this option in full, the total underwriting discounts and commissions will be $[__], and total proceeds, before expenses, to the selling stockholders will be $[__] and the total proceeds to us, before expenses, from the over-allotment option exercise will be $[__].  

 

See “Underwriting” on page 90 of this prospectus for more information.

 

76

---

 

Tianfu Li and the NIVS Group

Li Tianfu is the founder and a former owner, officer, and director of Hyundai Light and Electric (HZ) Co., Ltd. (“Hyundai HZ”) and Korea Hyundai Light & Electric (Intl) Holding Limited (“Hyundai HK”). Mr. Li’s ownership of Hyundai Light was held through China Intelligent Electric Holding Limited (“China Intelligent”), of which Mr. Li was the 100% owner. In March 2007, Mr. Li transferred his entire equity interest to Ms. Jing Xiangying. After the transfer, Mr. Li ceased to serve as a director of Hyundai HK and Hyundai HZ, and Mr. Li’s sister, Ms. Li Xuemei, became the executive director and general manager of Hyundai HZ. Ms. Li Xuemei is our Chief Executive Officer, President, and Chairman of the Board. Mr. Li is also the founder, largest shareholder, and Chief Executive Officer and Chairman of the Board of NIVS IntelliMedia Technology Group, Inc., which is a company with which we conduct business.

Rental of Manufacturing Facilities

We lease our manufacturing facilities, which consist of our factory space and dormitories of approximately 5,000 square meters, pursuant to a written lease agreement entered between us and Huizhou NIVS Audio & Video Technology Company Limited, which is a subsidiary of NIVS IntelliMedia Technology Group, Inc. The lease agreement, which has a term that commenced on July 1, 2008 and ends on July 1, 2010, provides that we pay a monthly fee of RMB 25,000, or $3,700. In addition, Huizhou NIVS Audio & Video Technology Company Limited, that leases the factory to us is required to and has obtained a Guangdong Province Pollution Discharge Certificate issued by Huizhou Environment Protection Bureau and is responsible for the disposal of the waste in accordance with applicable environmental regulations.

Loan Transactions

From June 2005 to November 2008, Hyundai HZ and Hyundai HK would enter into loan transactions with the NIVS Group and/or Mr. Li pursuant to which we would loan and borrow funds from each other. The loans were for temporary funding of our business operations. The aggregate amount that was due to (from) NIVS Group and/or Mr. Li for the years ended December 31, 2009, 2008 and 2007 was $0, $0, and $0.5 million, respectively. Other than a loan to the supplier of Hyundai HZ, as described below, all of the loans were unsecured with no fixed repayment date. The loans were borrowed and repaid frequently. Normally, it was agreed that the loan amounts were to be paid back within three to six months from the date of the loan transaction. We ceased to enter into the loan transactions in November 2008.

Our loans from NIVS Group and Mr. Li included a loan to a supplier of Hyundai HZ in the amount of 38,474,900RMB, which is equal to approximately U.S. $5.5 million, in March 2008. The note carried an interest rate of 1.5% per month and was guaranteed by Hyundai HZ. If the note was not repaid on time, a penalty of 0.5% was to be assessed on the total note amount. On June 16, 2008, a supplemental agreement was signed by the parties to amend the note’s maturity date to December 31, 2008. Hyundai HZ repaid to the NIVS Group the principal amount under the loan on November 24, 2008, in the amount of RMB 38,039,000. Hyundai HZ effected the repayment by borrowing the principal from a third party with interest expense of RMB 1,086,478. On November 28, 2008, Hyundai HZ repaid the interest amount due, which was RMB 3,719,611. After effecting the repayment of the loan that was made by its supplier, Hyundai HZ offset the repayment amounts against amounts that Hyundai HZ owed to the supplier for lighting products that supplier had provided to Hyundai HZ.

Other than the loan to the supplier of Hyundai HZ, all of the loans were unsecured with no fixed repayment date. The loans were borrowed and repaid frequently. Normally, it was agreed that the loan amounts were to be paid back within three to six months from the date of the loan transaction. We ceased to enter into the loan transactions in November 2008.

At the time of the loans, Mr. Li was the 100% owner of Hyundai HK, which was the 100% owner of Hyundai HZ. He was also a director of the entities. On July 18, 2008, Mr. Li sold his 100% ownership in Hyundai HK to China Intelligent Electronic Holding Company Limited., which was transferred to Ms. Jin Xiang Ying and obtained by us on January 15, 2010 upon the closing of the Share Exchange.

 

In November 2008, we ceased to enter into the loan transactions with Mr. Li and NIVS Group. On November 28, 2008, Hyundai HZ and Hyundai HK entered into a Debt Repayment and Set-Off Agreement with Mr. Li. Pursuant to the Agreement, as it was amended on December 22, 2008, Hyundai HZ and Hyundai HK agreed to completely and immediately repay all outstanding loan amounts that owed by them. Pursuant to the Debt Repayment and Set-Off Agreement, Hyundai HZ and Hyundai HK repaid an aggregate of $996,433 to Mr. Li and the NIVS Group such that Hyundai HZ and Hyundai HK no longer owed any loan amounts to Mr. Li or the NIVS Group.

 

77

---

 

In October and December 2008, Hyundai HK and China Intelligent entered into a debt forgiveness agreement with Mr. Li pursuant to which Mr. Li agreed to waive approximately $0.9 million and $0.2 million owed to Mr. Li by the parties, respectively. As of December 31, 2008, we and our subsidiaries had no debt owed to Mr. Li and the resulting contributed capital from such debt forgiveness from Mr. Li was approximately $1.2 million.

Sale of Raw Materials

From time to time, we sell raw materials to the NIVS Group. For the years ended December 31, 2008 and 2007, we sold an aggregate amount of approximately $898,000 and $519,000, respectively, of raw materials to the NIVS Group, from which we received approximately $214,000 and $54,000, in net profit, respectively. We had no such sales during the three months ended March 31, 2010 and for the year ended December 31, 2009.

We believe that sales transactions are at fair market value and are on terms comparable to those that would have been reached in arm’s-length negotiations had the parties been unaffiliated at the time of the negotiations.

Transfer of Intellectual Property Rights

Tianfu Li was the original owner of five patents in China that we rely on in the operation of our business. Pursuant to two patent transfer certificates dated June 1, 2008 Mr. Li transferred the patents to Hyundai HZ. Mr. Li did not receive any consideration for the transfer and assignment of the intellectual property rights to Hyundai HZ.

Indemnification Agreement for Value Added Tax

In 2007, through our subsidiary Hyundai Light, we received an approval from the local agent of national taxation authority, the State Taxation Bureau of Huicheng District, Huizhou, Guangdong (the “Huicheng Taxation Bureau”), to pay a 4% simplified VAT for fiscal years 2008, 2009, and 2010 for sales of certain products in the PRC. As a result of this approval, our total tax savings for fiscal 2008 and 2009 was more than approximately $7.0 million; there will be additional tax savings in fiscal 2010.

In January 2010, we entered into an Indemnification Agreement and Security Agreement with Li Xuemei, our Chief Executive Officer and Chairman of the Board, pursuant to which Ms. Li agreed to indemnify and pay to us amounts that would make us whole for any tax liability, penalty, loss, or other amounts expended as a result of any removal of our reduced 4% simplified VAT rate, including any requirement to make up all of the underpaid taxes. The primary reason that Ms. Li entered into the agreement was due to the possibility that the grant of the reduced VAT tax rate to us by the Huicheng Taxation Bureau may be overturned by higher levels of the PRC government and the potential negative effects on our results of operations and financial position if such event were to occur. We believed that investors may be reluctant to participate in the Private Placement that we conducted concurrently with the Share Exchange.  Ms. Li believed that the revocation of the reduced VAT rate is remote, as does our management.  The reasons that Ms. Li and our management believe that the revocation of the reduced VAT rate is remote are:

·

the VAT reduction was granted by a governmental unit with authority to do so;

·

the rate reduction was done with all facts known by all parties;

·

we have no knowledge of similar revocations, nor are there any known court cases or administrative matters of which we are aware in which a revocation has taken place; and

·

the issuance of the rate reduction by local authorities was by an appropriately sanctioned administrative procedure.

Ms. Li did not have a material relationship to our company’s receipt of approval for 4% simplified VAT from the local agent of Huicheng Taxation Bureau; however, she desired that the Private Placement and Share Exchange be completed and she volunteered to indemnify us against our losses if such revocation occurred.   Pursuant to the terms of the Indemnification Agreement and Security Agreement, if Ms. Li is unable to or fails to pay all such amounts due to us under the agreement, we would have the right to obtain the proceeds from a forced sale of the real estate property secured under the Security Agreement; and if such sale proceeds were insufficient to cover amounts due to us, we would be able to cancel a number of shares of common stock in our company held by Ms. Li in an amount equal any shortfall.

 

78

---

 

 

Policy for Approval of Related Party Transactions

In March 2010, we established an Audit Committee and adopted an Audit Committee Charter.  The Charter contains our policy for approval of related party transactions.  Our policy is to have our Audit Committee review and pre-approve any related party transactions and other matters pertaining to the integrity of management, including potential conflicts of interest, trading in our securities, or adherence to standards of business conduct as required by our policies.

 

BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT,

AND SELLING STOCKHOLDERS

 

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of common stock subject to options and warrants held by that person that are currently exercisable or become exercisable within 60 days of the date of this prospectus are deemed outstanding even if they have not actually been exercised. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

The following table sets forth certain information with respect to beneficial ownership of our common stock based on issued and outstanding shares of common stock before and after the offering, by:

·

Each person known to be the beneficial owner of 5% or more of our outstanding common stock;

·

Each executive officer;

·

Each director;

·

All of the executive officers and directors as a group; and

·

Each selling stockholder.

The number of shares of our common stock outstanding as of the date of this prospectus, excludes up to 3,500,000 shares of our common stock to be offered by us in a firm commitment public offering concurrently herewith.  Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable.  Unless otherwise indicated, the address of each beneficial owner listed in the table is c/o China Intelligent Lighting and Electronics, Inc., No. 29 & 31, Huanzhen Road, Shuikou Town, Huizhou, Guangdong, China.

 

79

---

 

				Beneficial Ownership Before the Offering								Number of				Beneficial Ownership After the Offering
Name and Address of Beneficial Owner		Title		Shares of Common Stock				Percent of Class(1)				Shares Being Offered(2)				Shares of Common Stock				Percent of Class(3)
Directors and Executive Officers
Li Xuemei		Chief Executive Officer, President, and Chairman of the Board			3,809,348				38.5	%			-				3,809,348				28.4	%
Kui (Kevin) Jiang		Chief Financial Officer and Corporate Secretary			-				-				-				-				-
Wu Shiliang		Executive Vice President, Sales and Marketing and Director			-				-				-				-				-
Dong Bin		Chief Operating Officer			-				-				-				-				-
Michael Askew		Director			-				-				-				-				-
Su Yang		Director			-				-				-				-				-
Zhang Hongfeng		Director			-				-				-				-				-
Officers and Directors as a Group (total of 7 persons)					3,809,348				38.5	%			-				3,809,348				28.4	%
5% or More Owners
Richard A. Rappaport(4) 1900 Avenue of the Stars, Suite 310 Los Angeles, CA 90067					1,774,435				16.8	%			-				1,774,435				12.6	%
WestPark Capital Financial Services, LLC(5) 1900 Avenue of the Stars, Suite 310 Los Angeles, CA 90067					1,472,346				14.0	%			-				1,472,346				10.5	%

 

---

(1)	Based on 9,893,704 shares of common stock issued and outstanding as of May 14, 2010.

(2)	Up to 525,000 shares may be sold by the selling stockholders and us if the Underwriters exercise the over-allotment option.  See “Selling Stockholders” table that follows.

(3)

Based on 13,393,704 shares of common stock, which consists of (i) 9,893,704 shares of common stock issued and outstanding as of May 14, 2010, and (ii) 3,500,000 shares of common stock issued in the public offering.  This amount (i) excludes the 217,548 shares of our common stock that we may issue upon the Underwriters’ over-allotment option exercise, (ii) excludes 790,358 shares of common stock underlying warrants that are exercisable at $0.0002 per share, and (iii) is not affected by the 307,452 shares that the Underwriters may be purchased from selling stockholders named below.

(4)

Richard A. Rappaport served as President and director of the Company prior to the Share Exchange.  Includes 146,880 shares of common stock and a warrant to purchase 46,457 shares of common stock owned by Mr. Rappaport, in addition to the shares of common stock and warrants to purchase common stock owned by the Amanda Rappaport Trust and the Kailey Rappaport Trust (together, the “Rappaport Trusts”) and WestPark Capital Financial Services, LLC, which totals 941,466 shares and 639,632 warrants.  Mr. Rappaport, as Trustee of the Rappaport Trusts and CEO and Chairman of WestPark Capital Financial Services, LLC, may be deemed the indirect beneficial owner of these securities and disclaims beneficial ownership of the securities except to the extent of his pecuniary interest in the securities.

(5)

Consists of 858,846 shares and a warrant to purchase 613,500 shares owned by WestPark Capital Financial Services, LLC, of which Mr. Rappaport is CEO and Chairman. Mr. Rappaport may be deemed the indirect beneficial owner of these securities and disclaims beneficial ownership of the securities except to the extent of his pecuniary interest in the securities.

 

Selling Stockholders

 

The Underwriters have a 60-day option to purchase up to 525,000 additional shares of common stock at the public offering price solely to cover over-allotments, if any, if the Underwriters sell more than 3,500,000 shares of common stock in this offering (the “Over-allotment Shares”).  The Underwriters agreed to purchase 58.6% of the Over-allotment Shares, or 307,452 shares, from the selling stockholders identified in this prospectus and the remaining 41.4%, or 217,548 shares, will be purchased from us.  We will not receive any proceeds from the sale of the shares, if any, by the selling stockholders.  The selling stockholders acquired their shares in the private placement that we conducted on January 15, 2010 pursuant to which we sold we sold an aggregate of 1,377,955 shares of common stock for a total of $3.5 million.

80

---

 

Except as indicated below, no selling stockholder is the beneficial owner of any additional shares of common stock or other equity securities issued by us or any securities convertible into, or exercisable or exchangeable for, our equity securities. Except as indicated below, no selling security holder is a registered broker-dealer or an affiliate of a broker-dealer.

Except as described below, none of the selling stockholders, to our knowledge, has had a material relationship with our company other than as a shareholder at any time within the past three years.

 

		Beneficial Ownership Before the Offering									Number of				Beneficial Ownership After the Offering
Name of Selling Stockholder		Shares of Common Stock					Percent of Class(1)				Shares Being Offered(2)				Shares of Common Stock				Percent of Class(3)
MidSouth Investor Fund LP			137,795	(4	)			1.4	%			36,751				101,044				*
Micro PIPE Fund I, LLC			75,000	(5	)			*				20,003				54,997				*
Berg, Howard			69,685					*				18,586				51,099				*
J&N Invest LLC			68,268	(6	)			*				18,208				50,060				*
Kuber, Douglas			50,000					*				13,335				36,665				*
Stellar Capital Fund LLC			50,000	(7	)			*				13,335				36,665				*
Delaware Charter , Tax Id #51-0099493, FBO David H Clarke R/O IRA #2056-8346, C/O Legent Clearing, 9300 Underwood Sutie 400, Omaha, NE 68114			40,354	(8	)			*				10,762				29,592				*
Colman, Frederic			35,236					*				9,397				25,839				*
Daybreak Special Situations Mater Fund, Ltd.			30,000	(9	)			*				8,001				21,999				*
S. Gerlach & L. Gerlach, TTEE FBO Stanley Wayne Gerlach, Jr. & Linda Bozarth Gerlach			29,528	(10	)			*				7,875				21,653				*
Clarke,  David H.			29,291					*				7,812				21,479				*
Rothstein, Norman			25,000					*				6,667				18,333				*
Metsch, Richard			23,622					*				6,300				17,322				*
Merkel, Charles M.			22,441					*				5,985				16,456				*
Donald, Linda Lou			19,685					*				5,250				14,435				*
Jordon, David L.			19,685					*				5,250				14,435				*
Tangiers Investors LP			19,685	(11	)			*				5,250				14,435				*
Tedesco, Joseph and Gino			15,700					*				4,187				11,513				*
Pawliger, Richard			15,000					*				4,000				11,000				*
Antin, Norman B.			12,500					*				3,334				9,166				*
Boyer, David L.			11,811					*				3,150				8,661				*
Blisko, Solomon			11,795					*				3,146				8,649				*
Hoefer, Richard and Donna			11,024					*				2,940				8,084				*
BDB Irrevocable Family Trust D/T/D 7/20/07 Duane H. Butcher TTEE			10,236	(12	)			*				2,730				7,506				*
Antunes, Louis Philippe			10,000					*				2,667				7,333				*
Kendall, Peter M.			10,000	(13	)			*				2,667				7,333				*
Mickelson Living Trust			10,000					*				2,667				7,333				*
Rothstein, Steven			10,000					*				2,667				7,333				*
Silverberg, Lawrence			10,000					*				2,667				7,333				*
Gordon, Morton			9,843					*				2,625				7,218				*
Lefkowitz, Harold			9,843					*				2,625				7,218				*
Woolam, Gerald L.			9,843					*				2,625				7,218				*
Frederic Colman C/F Daniela Colman			8,858	(14	)			*				2,362				6,496				*
Frederick and Karen Stahl TTEE			7,874	(15	)			*				2,100				5,774				*
McCartney, Timothy			7,874					*				2,100				5,774				*
Ulrich, Max			7,874	(16	)			*				2,100				5,774				*
Miriam S. Mooney Trust F/B/O David Forrer			7,717	(17	)			*				2,058				5,659				*
Miriam S. Mooney Trust F/B/O Joan Connolly			7,677					*				2,047				5,630				*
Darwin, Charles Barnes II			7,500					*				2,000				5,500				*
Forrer, John O.			7,008					*				1,869				5,139				*
Chazanovitz, David A.			7,000					*				1,867				5,133				*
Grossman, Martin			6,294					*				1,679				4,615				*
Seidenfeld, Steven			6,000					*				1,600				4,400				*
Miriam S. Mooney Trust F/B/O Catherine Sotto			5,984	(18	)			*				1,596				4,388				*

 

81

---

 

			Beneficial Ownership Before the Offering							Number of				Beneficial Ownership After the Offering
Name of Selling Stockholder			Shares of Common Stock			Percent of Class(1)				Shares Being Offered(2)				Shares of Common Stock				Percent of Class(3)
Katz, David C.			5,906			*				1,575				4,331				*
Lurie, William and Rita			5,906			*				1,575				4,331				*
Perry, Frank			5,906			*				1,575				4,331				*
Zeev Tafel and Yehouda Chehebar			5,750			*				1,534				4,216				*
Borell, Martin H.			5,000			*				1,333				3,667				*
Jerkins, Ken M.			5,000			*				1,333				3,667				*
Kiening, James S.			5,000			*				1,333				3,667				*
Magalnick, Daniel			5,000			*				1,333				3,667				*
Mauser, Joseph T.			5,000			*				1,333				3,667				*
Paul, Melvyn			5,000			*				1,333				3,667				*
Steenhoek, Loren			5,000			*				1,333				3,667				*
Teitelbaum, Jay			5,000			*				1,333				3,667				*
Whittle, Brian A.			5,000			*				1,333				3,667				*
Frederic Colman C/F Samuel Colman			4,921	(19	)	*				1,312				3,609				*
Weissler, Alan			4,500			*				1,200				3,300				*
Blair, Chris & Julie			4,000			*				1,067				2,933				*
Jelcada, LP			3,937	(20	)	*				1,050				2,887				*
Mitchell J. Lipcon Profit Sharing Keough Plan			3,937	(21	)	*				1,050				2,887				*
Vanhook, Benjamin			3,750			*				1,000				2,750				*
Tyson, Darryl J.			3,346			*				892				2,454				*
Cooke, Carl G.			3,189			*				851				2,338				*
Scher, Leslie			3,170			*				845				2,325				*
Izes, Bernard and Selma			2,953			*				788				2,165				*
Yablonsky, Mitchell			2,953			*				788				2,165				*
Dolen, William J. Jr. and Louise M.			2,500			*				667				1,833				*
Feltri, Donald and Jean			2,500			*				667				1,833				*
Getz, Norman			2,500			*				667				1,833				*
Goldstein, Gary			2,500			*				667				1,833				*
Helsley, Charles			2,500			*				667				1,833				*
Huber, Raymond & Joan			2,500			*				667				1,833				*
Krauser, Jack T.			2,500			*				667				1,833				*
Matt, Jamie Michael			2,500			*				667				1,833				*
Palmatier, Steven Jon			2,500			*				667				1,833				*
Quave, Gerald J. Jr.			2,500			*				667				1,833				*
Simon, Steve			2,500			*				667				1,833				*
Stancil, Donald R.			2,500			*				667				1,833				*
Stange, David W.			2,500			*				667				1,833				*
Tafel, Zeev			2,500			*				667				1,833				*
Berry, Allan and Susan			2,100			*				560				1,540				*
Delaware Charter, Tax id #51-0099493, FBO James A DeCotis IRA #3059-4716, C/O Legent Clearing, 9300 Underwood, Suite 400, Omaha, NE 68114			2,000	(22	)	*				533				1,467				*
Sasson Joury IRA			1,550			*				413				1,137				*
Cohen, Robert and Debbie			1,500			*				400				1,100				*
Delaware Charter, Tax id #51-0099493, FBO Lynita C DeCotis IRA #7537-9018, C/O Legent Clearing, 9300 Underwood, Suite 400, Omaha, NE 68114			1,000	(23	)	*				267				733				*

 

---

(1)	Based on 9,893,704 shares of common stock issued and outstanding as of May 14, 2010.

(2)	This column consists of 307,452 shares that may be sold by the selling stockholders if the Underwriters exercise the over-allotment option in full.

(3)

Based on 13,393,704 shares of common stock, which consists of (i) 9,893,704 shares of common stock issued and outstanding as of May 14, 2010, and (ii) 3,500,000 shares of common stock issued in the public offering.  This amount (i) excludes the 217,548 shares of our common stock that we may issue upon the Underwriters’ over-allotment option exercise, (ii) excludes 790,358 shares of common stock underlying warrants that are exercisable at $0.0002 per share, and (iii) is not affected by the 307,452 shares that the Underwriters may be purchased from selling stockholders named above.

 

82

---

 

(4)	Lyman O. Heidtke, as general partner has voting and investment control over the shares owned by this entity.

 

(5)	David F. Mickelson, as managing member, has voting and investment control over the shares owned by this entity.

 

(6)	Jeffrey Rubin, as manager, has voting and investment control over the shares owned by this entity.

 

(7)	Richard Schmidt, as managing member of the general partner, has voting and investment control over the shares owned by this entity.

 

(8)	David H. Clarke has voting and investment control over the shares owned by this entity.

 

(9)	Larry Butz as managing partner of the general partner has voting and investment control over the shares owned by this entity.

 

(10)	Stanley Wayne Gerlach, Jr. and Linda B. Gerlach, as trustees, president and secretary, have voting and investment control over the shares owned by this entity.

 

(11)	Justin Ederle, as managing member of the general partner, has voting and investment control over the shares owned by this entity.

 

(12)	Duane H. Butcher, as Trustee has voting and investment control over the shares owned by this entity.

 

(13)	David F. Mickelson as Trustee has voting and investment control over the shares owned by this entity.

 

(14)	Frederic Colman  as Custodian has voting and investment control over the shares owned by this entity.

 

(15)	Frederic Colman  as Custodian has voting and investment control over the shares owned by this entity.

 

(16)	John O. Forrer, as trustee, has voting and investment control over the shares owned by this entity.

 

(17)	John O. Forrer, as trustee, has voting and investment control over the shares owned by this entity.

 

(18)	John O. Forrer, as trustee, has voting and investment control over the shares owned by this entity.

 

(19)	Frederic Colman as Custodian has voting and investment control over the shares owned by this entity.

 

(20)	John O Forrer as general partner has voting and investment control over the shares owned by this entity.

 

(21)	Mitchell J. Lipcon, as Trustee, has voting and investment control over the shares owned by this entity.

 

(22)	James Anthony DeCotis has voting and investment control over the shares owned by this entity.

 

(23)	Lynita Carla DeCotis is has voting and investment control over the shares owned by this entity.

 

DESCRIPTION OF SECURITIES

 

Common Stock

We are authorized to issue 100,000,000 shares of common stock, $0.0001 par value per share, of which 9,893,704 shares are issued and outstanding as of the date of this prospectus.  Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the stockholders.

Holders of our common stock:

(i)

have equal ratable rights to dividends from funds legally available therefore, if declared by our Board of Directors;

(ii)

are entitled to share ratably in all of our assets available for distribution to holders of common stock upon our liquidation, dissolution or winding up;

(iii)

do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions; and

(iv)

are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of our stockholders.

The holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than fifty percent (50%) of outstanding shares voting for the election of directors can elect all of our directors if they so choose and, in such event, the holders of the remaining shares will not be able to elect any of our directors.

 

83

---

 

Li Xuemei, our former shareholder of China Intelligent BVI, and her designees that received shares in the Share Exchange beneficially own or control approximately 71.7% of our outstanding shares immediately prior to the closing of our public offering.  Accordingly, Ms. Li and the designees are in a position to control all of our affairs.

Preferred Stock

We may issue up to 10,000,000 shares of our preferred stock, par value $0.0001 per share, from time to time in one or more series. No shares of Preferred Stock have been issued.

Our Board of Directors, without further approval of our stockholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights, liquidation preferences and other rights and restrictions relating to any series. Issuances of shares of preferred stock, while providing flexibility in connection with possible financings, acquisitions and other corporate purposes, could, among other things, adversely affect the voting power of the holders of our common stock and prior series of preferred stock then outstanding.

Warrants

Prior to the Share Exchange, our stockholders held an aggregate of 3,548,196 warrants to purchase shares of our common stock.  Our stockholders cancelled an aggregate of 2,757,838 warrants in conjunction with the closing of the Share Exchange. As of the date of this prospectus, the stockholders held an aggregate of 790,358 warrants with an exercise price of $0.0002 per share.  The warrants are currently exercisable. According to the terms of the warrant agreement, the warrants expire on the earlier of October 11, 2017 or five years from the date we consummate a merger or other business combination with an operating business or any other event pursuant to which we cease to be a “shell company,” as defined by Rule 12b-2 under the Securities Exchange Act of 1934 and a “blank check company,” as defined by Rule 419 of the Securities Act of 1933.  As a result of the close of the Share Exchange on January 15, 2010, the warrants will expire on January 15, 2015.

In addition, we plan to issue a warrant to the Underwriters as partial compensation for underwriting services in connection with this offering.  The Underwriters will be able to purchase up to 175,000 shares of common stock at an exercise price equal to 120% of the per share offering price of our shares of common stock in this offering.  The warrants will have a term of five years.  The warrants will be subject to standard anti-dilution adjustments for stock splits and similar transactions, and will become exercisable 180 days after the date of this prospectus and expire five years from the effective date of the registration statement of which this prospectus forms a part.

Market Price of Our Common Stock

The shares of our common stock are not currently listed or quoted for trading on any national securities exchange or national quotation system. We have commenced the application process for the listing of our common stock on the NYSE Amex.  If and when our common stock is listed or quoted for trading, the price of our common stock will likely fluctuate in the future. The stock market in general has experienced extreme stock price fluctuations in the past few years. In some cases, these fluctuations have been unrelated to the operating performance of the affected companies. Many companies have experienced dramatic volatility in the market prices of their common stock. We believe that a number of factors, both within and outside our control, could cause the price of our common stock to fluctuate, perhaps substantially. Factors such as the following could have a significant adverse impact on the market price of our common stock:

·

Our financial position and results of operations;

	·	Concern as to, or other evidence of, the reliability and safety of our products and services or our competitors’ products and services;

	·	Our ability to obtain additional financing and, if available, the terms and conditions of the financing;

	·	Announcements of innovations or new products or services by us or our competitors;

	·	Federal and state regulatory actions and the impact of such requirements on our business;

	·	The development of litigation against us;

	·	Changes in estimates of our performance by any securities analysts;

	·	The issuance of new equity securities pursuant to a future offering or acquisition;

	·	Changes in interest rates;

	·	Competitive developments, including announcements by competitors of new products or services or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

	·	Period-to-period fluctuations in our operating results;

 

84

---

 

·

Investor perceptions of us; and

	·	General economic and other national conditions.

Delaware Anti-Takeover Law and Charter Bylaws Provisions

We are subject to Section 203 of the Delaware General Corporation Law.  This provision generally prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date the stockholder became an interested stockholder, unless:

·

prior to such date, the Board of Directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

·

upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

·

on or subsequent to such date, the business combination is approved by the Board of Directors and authorized at an annual meeting or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

Section 203 defines a business combination to include:

 

·

any merger or consolidation involving the corporation and the interested stockholder;

·

any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

·

subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

·

any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or

·

the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an “interested stockholder” as any entity or person beneficially owning 15% or more of the outstanding voting stock of a corporation, or an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of a corporation at any time within three years prior to the time of determination of interested stockholder status; and any entity or person affiliated with or controlling or controlled by such entity or person.

Our certificate of incorporation and bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control of our company, including changes a stockholder might consider favorable.  In particular, our certificate of incorporation and bylaws, as applicable, among other things, will:

·

provide our board of directors with the ability to alter our bylaws without stockholder approval; and

·

provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum.

85

---

 

Such provisions may have the effect of discouraging a third-party from acquiring us, even if doing so would be beneficial to our stockholders.  These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by them, and to discourage some types of transactions that may involve an actual or threatened change in control of our company.  These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used in proxy fights.  We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging such proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.

However, these provisions could have the effect of discouraging others from making tender offers for our shares that could result from actual or rumored takeover attempts.  These provisions also may have the effect of preventing changes in our management.

Transfer Agent

The transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc.

Listing

We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol “CIL”.  If we fail to obtain a listing on the NYSE Amex, we will not complete this offering.

 

86

---

 

SHARES ELIGIBLE FOR FUTURE SALE

 

Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of our common stock in the public market could adversely affect market prices. Upon completion of this offering, we will have outstanding an aggregate of 13,393,704 shares of common stock, assuming no exercise of the Underwriters’ over-allotment option.  The 3,500,000 shares sold in this offering, in addition to the 1,377,955 shares of our common stock that we are concurrently registering under a separate prospectus for resale by the selling stockholders named under such prospectus, will be freely tradable without restriction or further registration under the Securities Act, except that any shares purchased by our “affiliates,” as that term is defined in Rule 144 of the Securities Act, may generally only be sold in compliance with the limitations of Rule 144 described below.

All other outstanding shares not sold in this offering will be deemed “restricted securities” as defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 promulgated under the Securities Act, which rules are summarized below. Our stockholders will not be eligible to utilize Rule 144 until January 19, 2011, at the earliest, which is 12 months from the date we filed our Form 10 information, as required under Rule 144. Subject to the lock-up agreements described below and the provisions of Rules 144, additional shares will be available for sale in the public market as follows (excluding 790,358 shares of common stock underlying previously issued warrants that are exercisable at $0.0002 per share and up to 175,000 shares of common stock that may underlie the Underwriters’ warrants).

Approximate Number of Shares Eligible for Future Sale		Date
3,500,000		After the date of this prospectus, freely tradable shares sold in this offering, excluding the 525,000 additional shares that the Underwriters have a 60-day option to purchase from us and the selling stockholders identified in this prospectus.
1,377,955		After the date of this prospectus, these shares will have been registered under a separate prospectus (“Resale Prospectus”) and will be freely tradable by selling stockholders listed in the Resale Prospectus, subject to the lock-up arrangement described below.  These shares consist of all of the shares of common stock registered under the Resale Prospectus.  The selling stockholders have agreed that (i) if this offering is for $10 million or more, then the selling stockholders would not be able to sell or transfer their shares until at least six months after this offering’s completion, and (ii) if this offering is for less than $10 million, then one-tenth of the selling stockholders’ shares would be released from the lock-up restrictions ninety days after this offering and there would be a pro rata release of the shares thereafter every 30 days over the following nine months.  WestPark Capital, Inc., in its discretion, may also release some or all the shares from the lock-up restrictions earlier.  Assuming our sale of 3,500,000 shares of common stock at an assumed public offering price of $4.50 per share of common stock, which is the mid-point of the estimated initial offering price range set forth on the cover of this prospectus, we currently intend this offering to be in an amount equal to approximately $15.8 million.  Accordingly, the investors would be subject to lock-up restrictions such that they would be able to sell and/or transfer all of their shares six months after the public offering’s completion, subject to early release by WestPark.
2,208,359		Subject to a lock-up arrangement described below, these shares, which were held by our shareholders prior to the Share Exchange (the “Existing Security holders”), will be freely tradable after the Securities and Exchange Commission declares effective the registration statement that we intend to file on or about August 26, 2010, which is 10 days after the end of the six-month period that immediately follows the date on which we filed the registration statement of which this prospectus is a part.  Included in the 2,208,359 shares are 790,358 shares of common stock underlying warrants that have been previously issued to the Existing Security holders, which are currently exercisable at $0.0002 per share.  The Existing Security holders have agreed that they will not sell any of their shares subject to the same restrictions as that of the selling stockholders, as described above.
7,097,748		On January 19, 2011, which is twelve months after the filing of a current report on Form 8-K reporting the closing of the share exchange transaction, these shares, which were issued in connection with the share exchange transaction, may be sold under and subject to Rule 144.  However, all of the holders of these shares have agreed with the Underwriters not to directly or indirectly sell, offer, contract or grant any option to sell, pledge, transfer (excluding intra-family transfers, transfers to a trust for estate planning purposes or to beneficiaries of officers, directors and shareholders upon their death), or  otherwise dispose of or enter into any transaction which may result in the disposition of any shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock, without the  prior written consent of the Underwriters, for a period of 24 months after the date of this prospectus.

 

87

---

 

Rule 144

In general, under Rule 144 a person, or persons whose shares are aggregated, who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale and who has beneficially owned shares of our common stock for at least nine months, including the holding period of any prior owner, except if the prior owner was one of our affiliates, would be entitled to sell all of their shares, provided the availability of current public information about our company.

 

Sales under Rule 144 may also subject to manner of sale provisions and notice requirements and to the availability of current public information about our company. Any substantial sale of common stock pursuant to any resale registration statement or Rule 144 may have an adverse effect on the market price of our common stock by creating an excessive supply.

Because we were a shell company with no operations prior to the close of the Share Exchange, none of our shares of common stock may not be sold under Rule 144 until January 19, 2011, which is 12 months after the filing of a current report on Form 8-K reporting the closing of the Share Exchange.

Lock-Up Agreements and Registration

The investors in our Private Placement, in which we sold 1,377,955 shares of common stock, entered into lock-up agreements pursuant to which they agreed that (i) if this offering is for $10 million or more, then the investors would not be able to sell or transfer their shares until at least six months after this offering’s completion, and (ii) if this offering is for less than $10 million, then one-tenth of the investors’ shares would be released from the lock-up restrictions ninety days after the offering and there would be a pro rata release of the shares thereafter every 30 days over the following nine months.  WestPark Capital, Inc., in its discretion, may also release some or all the shares from the lock-up restrictions earlier.  Assuming our sale of 3,500,000 shares of common stock at an assumed public offering price of $4.50 per share of common stock, which is the mid-point of the estimated initial offering price range set forth on the cover of this prospectus, we currently intend this offering to be in an amount equal to approximately $15.8 million.  Accordingly, the investors would be subject to lock-up restrictions such that they would be able to sell and/or transfer all of their shares six months after the public offering’s completion, subject to early release by WestPark.

Notwithstanding the foregoing, such investors must provide written confirmation to the WestPark Capital and us (the “Confirmations”) that he, she or it (i) is and has been in compliance with any and all state and federal securities and other laws, statues and regulations regarding his, her or its ownership and/or any sale, transfer or hypothecation of shares of our common stock including but not limited to those rules and regulations promulgated by the SEC, FINRA and any exchange on which the our common stock is listed, and those of federal and state governments and other agencies such as improper short selling of our common stock and failure to properly file all documents required by the SEC or otherwise and (ii) does not wish to have the shares subject to such partial release to continue to bear a lock-up legend, failure to provide such written confirmation being sufficient grounds to allow the placement agent, in its sole discretion, to disallow the automatic release of such shares until the expiration in totality of the referenced lock-up.  Subject to the lock-up agreement, the shares will be freely tradable upon effectiveness of the registration statement that we filed to register the investors’ shares.

We have agreed to register 1,418,001 shares of common stock and the 790,358 shares of common stock underlying the warrants held by our stockholders immediately prior to the Share Exchange (the “Existing Security holders”). The shares will be included in a registration statement that we agreed to file on or about August 26, 2010, which is 10 days after the end of the six-month period that immediately follows the date on which we filed the registration statement of which this prospectus is a part. All of the shares included in an effective registration statement may be freely sold and transferred, subject to a lock-up agreement pursuant to which the Existing Security holders agreed to be subject to the lock-up restrictions that the selling stockholders are subject, as described above.

 

88

---

 

We have agreed with the Underwriters that we will not, without the prior consent of the Underwriters, directly or indirectly sell, offer, contract or grant any option to sell, pledge, transfer, or otherwise dispose of or enter into any transaction which may result in the disposition of any shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock (excluding the exercise of certain warrants and/or options currently outstanding and exercisable) for a period of 24 months after the date of this prospectus.

In addition, each of our executive officers and directors, in addition to all of the stockholders that received shares issued in the Share Exchange holding an aggregate of 7,097,748 shares of common stock, have agreed with the Underwriters not to directly or indirectly sell, offer, contract or grant any option to sell, pledge, transfer (excluding intra-family transfers, transfers to a trust for estate planning purposes or to beneficiaries of officers, directors and stockholders upon their death), or otherwise dispose of or enter into any transaction which may result in the disposition of any shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock, without the prior written consent of the Underwriters, for a period of 24 months after the date of this prospectus. 

We have been advised by the Underwriters that they have no present intention and there are no agreements or understandings, explicit or tacit, relating to the early release of any locked-up shares. The Underwriters may, however, consent to an early release from the lock-up period if, in its opinion, the market for the common stock would not be adversely impacted by sales. The release of any lock-up would be considered on a case-by-case basis. Factors that the Underwriters may consider in deciding whether to release shares from the lock-up restriction include the length of time before the lock-up expires, the number of shares involved, the reason for the requested release, market conditions, the trading price of our securities, historical trading volumes of our securities and whether the person seeking the release is an officer, director or affiliate of us.

 

89

---

 

 

UNDERWRITING

 

Subject to the terms and conditions of the underwriting agreement dated [_________], 2010 Rodman & Renshaw, LLC (“Rodman”) and WestPark Capital, Inc. (“WestPark,” and together with Rodman, the “Underwriters”), have agreed to purchase from us the number of shares of common stock set forth below at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus.  Rodman is acting as Lead Manager and WestPark is acting as the Co-Manager for this offering.

  

Underwriters		Number of Shares
Rodman & Renshaw, LLC		[_____]
WestPark Capital, Inc.		[_____]
Total			3,500,000

The underwriting agreement provides that the agreement may be terminated by the Underwriters at any time prior to delivery of and payment for the shares if, in the Underwriters’ judgment, payment for and delivery of the shares is rendered impracticable or inadvisable by reason of events specified in the underwriting agreement, including but not limited to the state of the financial markets and our financial condition. Subject to the foregoing, the Underwriters are committed to purchase all of the common stock being offered by us if any of such shares are purchased, other than those covered by the over-allotment option described below.

 

The Underwriters propose to offer the common stock directly to the public at the public offering price set forth on the cover page of this prospectus. The Underwriters may offer the common stock to some dealers at that price less a concession not in excess of $[__] per share. Dealers may re-allow a concession not in excess of $[__] per share to some other dealers. After the shares of common stock are released for sale to the public, the Underwriters may vary the offering price and other selling terms.

 

The Underwriters have a 60-day option to purchase up to 525,000 additional shares of common stock at the public offering price solely to cover over-allotments, if any, if the Underwriters sell more than 3,500,000 shares of common stock in this offering (the “Over-allotment Shares”).  The Underwrites agreed to purchase up to 58.6% of the Over-allotment Shares from the selling stockholders identified in this prospectus and the remaining shares from us.  We will not receive any proceeds from the sale of the shares, if any, by the selling stockholders. The Underwriters can exercise this right at any time and from time to time, in whole or in part, within 60 days after the offering.

The following table summarizes the compensation and estimated expenses we and the selling stockholders will pay:

Per Share

Total

Without Over-allotment

With Over-allotment

Without Over-allotment

With Over-allotment

Underwriting Discounts and Commissions paid by us

$

$

$

$

Expenses payable by us

$

$

$

$

Underwriting Discounts and Commissions paid by selling stockholders

$

$

$

$

Expenses payable by the selling stockholders

$

$

$

$

The Underwriters may make offers and sales both inside and outside the United States through its selling agents. Any offers and sales in the United States will be conducted by broker-dealers registered with the SEC.

The Underwriters have entered into an agreement in which they agree to restrictions on where and to whom they and any dealer purchasing from them may offer shares of common stock, as a part of the distribution of the shares. The Underwriters also have agreed that they may sell shares of common stock among themselves.

We have agreed with the Underwriters that we will not, without the prior consent of the Underwriters, directly or indirectly sell, offer, contract or grant any option to sell, pledge, transfer, or otherwise dispose of or enter into any transaction which may result in the disposition of any shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock (excluding the exercise of certain warrants and/or options currently outstanding and exercisable) for a period of 24 months after the date of this prospectus.

 

90

---

 

Each of our executive officers and directors, in addition to all of the stockholders that received shares issued in the Share Exchange holding an aggregate of 7,097,748 shares of common stock, have agreed with the Underwriters not to directly or indirectly sell, offer, contract or grant any option to sell, pledge, transfer (excluding intra-family transfers, transfers to a trust for estate planning purposes or to beneficiaries of officers, directors and stockholders upon their death), or otherwise dispose of or enter into any transaction which may result in the disposition of any shares of our common stock or securities convertible into, exchangeable or exercisable for any shares of our common stock, without the prior written consent of the Underwriters, for a period of 24 months after the date of this prospectus.

 

We have agreed to indemnify the Underwriters against some liabilities, including liabilities under the Securities Act, and to contribute to payments that the Underwriters may be required to make in respect thereof.

 

We have agreed to pay the Underwriters an aggregate non-accountable expense allowance of 2.5% of the gross proceeds of this offering or $[__], based on a public offering price of $[__] per share. In addition, we have agreed to pay the Underwriters’ road show expenses of $10,000 and counsel fees (excluding blue sky fees) of $40,000.

Upon the closing of this offering, we have agreed to sell to the Underwriters warrants to purchase a number of shares equal to 5% of the shares of our common stock sold in this offering, excluding any shares that may be sold pursuant to the Underwriters’ exercise of the over-allotment option.  The warrants will be exercisable at a per share exercise price equal to 120% of the public offering price, subject to standard anti-dilution adjustments for stock splits and similar transactions, and will become exercisable 180 days after the date of this prospectus and expire five years from the effective date of the registration statement date of which this prospectus forms a part. The warrants and the 175,000 shares of common stock underlying the warrants have been deemed compensation by the FINRA and are therefore subject to a 180-day lock-up pursuant to FINRA Rule 5110(g)(1).  The Underwriters (or permitted assignees under the Rule) will not sell, transfer, assign, pledge, or hypothecate the warrants or the securities underlying the warrants, nor will it engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the warrants or the underlying securities for a period of 180 days from the date of this prospectus. Additionally, the warrants may not be sold transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180 day period) following the effective date of the registration statement except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. Although the warrants and the underlying shares of common stock have been registered on the registration statement of which this prospectus forms a part, the warrants grant holders certain demand and “piggy back” registration rights. These rights apply to all of the securities directly and indirectly issuable upon exercise of the warrants. We will bear all fees and expenses attendant to registering the securities issuable on exercise of the warrants, other than underwriting commissions incurred and payable by the holders

The Underwriters may engage in over-allotment, stabilizing transactions, syndicate covering transactions, penalty bids and passive market making in accordance with Regulation M under the Exchange Act. Over-allotment involves syndicate sales in excess of the offering size, which creates a syndicate short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a syndicate covering transaction to cover syndicate short positions. Penalty bids may have the effect of deterring syndicate members from selling to people who have a history of quickly selling their shares. In passive market making, market makers in the common stock who are Underwriters or prospective underwriters may, subject to some limitations, make bids for or purchases of the common stock until the time, if any, at which a stabilizing bid is made. These stabilizing transactions, syndicate covering transactions and penalty bids may cause the price of the common stock to be higher than it would otherwise be in the absence of these transactions. These transactions may be effected on the NYSE Amex or otherwise and, if commenced, may be discontinued at any time.

In connection with the offering, the Underwriters may make short sales of the issuer’s shares and may purchase the issuer’s shares on the open market to cover positions created by short sales. Short sales involve the sale by the Underwriters of a greater number of shares than they are required to purchase in the offering. ‘Covered’ short sales are sales made in an amount not greater than the Underwriters’ over-allotment option to purchase additional shares in the offering. The Underwriters may close out any covered short position by either exercising its overallotment option or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the Underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the overallotment option. ‘Naked’ short sales are sales in excess of the overallotment option. The Underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. Similar to other purchase transactions, the Underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the issuer’s stock or preventing or retarding a decline in the market price of issuer’s stock. As a result, the price of the issuer’s stock may be higher than the price that might otherwise exist in the open market.

 

91

---

 

Prior to this offering, there has been no public market of the common stock. Consequently, the public offering price will be determined by negotiations between us and the Underwriters. Among the factors considered in these negotiations will be prevailing market conditions, the market capitalizations and the stages of development of other companies that we and the Underwriters believe to be comparable to us, estimates of our business potential, our results of operations in recent periods, the present state of our development and other factors deemed relevant.

We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol “CIL”.  If we fail to obtain a listing on the NYSE Amex, we will not complete this offering.

 

We estimate that our out of pocket expenses for this offering will be approximately $1.1 million.

Conflicts of Interest

Affiliates of WestPark beneficially own more than 10% of the Company. Because WestPark is an Underwriter and its affiliates beneficially own more than 10% of the Company, WestPark may be deemed to have a “conflict of interest” and/or be an “affiliate” of us under NASD Conduct Rule 2720(f)(5). Accordingly, this offering is being conducted in accordance with NASD Conduct Rule 2720. This rule requires that a “qualified independent underwriter,” as defined by FINRA, participate in the preparation of the registration statement and prospectus, and exercise the usual standards of due diligence in respect thereto.  Rodman is assuming the responsibilities of acting as the qualified independent underwriter in this offering. The public offering price will be no higher than that recommended by Rodman. We have agreed to indemnify Rodman against any liabilities arising in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act.

Foreign Regulatory Restrictions on Purchase of the Common Stock

No action may be taken in any jurisdiction other than the United States that would permit a public offering of the common stock or the possession, circulation or distribution of this prospectus in any jurisdiction where action for that purpose is required. Accordingly, the common stock may not be offered or sold, directly or indirectly, and neither the prospectus nor any other offering material or advertisements in connection with the common stock may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction.

 

92

---

 

 

LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed upon for us by K&L Gates LLP, Los Angeles, California.  Loeb & Loeb LLP, New York, New York, is acting as counsel for the Underwriters. Legal matters as to PRC law will be passed upon for us by Guangdong Laowei Law Firm.  K&L Gates LLP may rely upon Guangdong Laowei Law Firm with respect to matters governed by PRC law.

EXPERTS

 

The (i) consolidated financial statements of China Intelligent Lighting and Electronics, Inc. as of December 31, 2009 and for the year ended December 31, 2009 (ii) condensed parent-only balance sheet of China Intelligent Lighting and Electronics, Inc. as of December 31, 2009, and the related condensed parent-only statements of income and cash flows for the year ended December 31, 2009 included in footnote 20 to the Consolidated Financial Statements of China Intelligent Lighting and Electronics, Inc., each appearing in this prospectus and registration statement have been audited by MaloneBailey, LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The (i) consolidated financial statements of China Intelligent Lighting and Electronics, Inc. as of December 31, 2008 and 2007 and for the years ended December 31, 2008 and 2007 (ii) and the condensed parent-only balance sheet of China Intelligent Lighting and Electronics, Inc. as of December 31, 2008 and the related condensed parent-only statements of operations and cash flows for the year ended December 31, 2008 and the period October 11, 2007 (inception) to December 31, 2007 included in footnote 20 to the Consolidated Financial Statements of China Intelligent Lighting and Electronics, Inc., each appearing in this prospectus and registration statement have been audited by Kempisty & Company Certified Public Accountants PC, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

 

We filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 for the shares of common stock in this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedule that were filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street, N.E. Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.

We file periodic reports under the Securities Exchange Act of 1934, including annual, quarterly and special reports, and other information with the Securities and Exchange Commission. These periodic reports and other information are available for inspection and copying at the regional offices, public reference facilities and website of the Securities and Exchange Commission referred to above.

We are in the process of establishing a corporate website and expect to have it complete in the near future. We intend to make available free of charge on or through our internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

 

93

---

 

 

3,500,000 Shares of Common Stock

 

China Intelligent Lighting and Electronics, Inc.

 

---

PROSPECTUS

---

 

 

 

 

Rodman & Renshaw, LLC

WestPark Capital, Inc.

 

 

 

 

_________, 2010

 

---

[RESALE PROSPECTUS ALTERNATE PAGE]

 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

MAY 18, 2010

 

1,377,955 Shares
	China Intelligent Lighting and Electronics, Inc.
Common Stock

 

This prospectus relates to the resale by the selling stockholders of up to 1,377,955 shares of our common stock. The selling stockholders may sell common stock from time to time in the principal market on which the stock is traded at the prevailing market price or in negotiated transactions. We will not receive any proceeds from the sales by the selling stockholders.  The selling stockholders named herein may be deemed underwriters of the shares of common stock which they are offering.

Our shares of common stock are not currently listed or quoted for trading on any national securities exchange or national quotation system.  We have commenced the application process for the listing of our common stock on the NYSE Amex under the symbol “CIL”.

Since there is currently no public market established for our securities, the selling security holders will sell at a fixed price that is equal to the price at which we sell shares in our public offering pursuant to the registration statement of which this prospectus is a part. Once, and if, our shares of common stock are quoted on the NYSE Amex and there is an established market for these resale shares, the selling stockholders may sell the resale shares from time to time at the market price prevailing on the NYSE Amex at the time of offer and sale, or at prices related to such prevailing market prices or in negotiated transactions or a combination of such methods of sale directly or through brokers.

The Selling Stockholders have agreed not to sell any of these shares until [_______], 2010, which is six months after closing of the public offering that we conducted on [_______], 2010.  WestPark Capital, Inc., the placement agent in the private placement in which the Selling Stockholders acquired their shares and an underwriter to the public offering, in its discretion, may also release some or all the shares from the lock-up restrictions earlier.

The purchase of the securities involves a high degree of risk. See section entitled “Risk Factors” beginning on page 7.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of anyone’s investment in these securities or determined if this prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.

 

---

The Date of This Prospectus Is: ____________________, 2010

 

---

[RESALE PROSPECTUS ALTERNATE PAGE]

 

TABLE OF CONTENTS

 

PROSPECTUS SUMMARY			1
SUMMARY FINANCIAL DATA			6
RISK FACTORS			7
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			30
USE OF PROCEEDS			32
DIVIDEND POLICY			32
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS			33
SELECTED CONSOLIDATED FINANCIAL DATA			36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS			37
DESCRIPTION OF BUSINESS			52
MANAGEMENT			68
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			75
BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			79
DESCRIPTION OF SECURITIES			83
SHARES ELIGIBLE FOR FUTURE SALE			87
SELLING STOCKHOLDERS			[  ]
PLAN OF DISTRIBUTION			90
LEGAL MATTERS			93
EXPERTS			93
ADDITIONAL INFORMATION			93
INDEX TO FINANCIAL STATEMENTS			F-1
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS		II-1
SIGNATURES		II-9

 

Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision.

You should rely only on information contained in this prospectus.  We have not authorized any other person to provide you with different information.  This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted.  The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.

 

i

---

[RESALE PROSPECTUS ALTERNATE PAGE]

 

The Offering

Common stock offered by selling stockholders		1,377,955 shares
Common stock outstanding		9,893,704 shares(1)
Use of proceeds		We will not receive any proceeds from the sale of the common stock by the selling stockholders.

 

---

(1)

Based on 9,893,704 shares of common stock issued and outstanding as of the date of this prospectus, and excludes (i) 3,500,000 shares of common stock being registered for issuance in a public offering, (ii) the underwriters’ warrants to purchase up to 175,000 shares of common stock, and (iii) 790,358 shares of common stock that are issuable upon the exercise of outstanding warrants, exercisable at $0.0002 per share.

The Selling Stockholders have agreed not to sell any of these shares until [_______], 2010, which is six months after closing of the public offering that we conducted on [_______], 2010.  WestPark Capital, Inc., the placement agent in the private placement in which the Selling Stockholders acquired their shares and an underwriter to the public offering, in its discretion, may also release some or all the shares from the lock-up restrictions earlier.

 

---

 

[RESALE PROSPECTUS ALTERNATE PAGE]

 

USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders.

 

---

 

[RESALE PROSPECTUS ALTERNATE PAGE]

 

SELLING STOCKHOLDERS

 

The following table provides as of the date of this prospectus information regarding the beneficial ownership of our common stock held by each of the selling stockholders, including:

·	the number of shares owned by each stockholder prior to this offering;

·	the percentage owned by each stockholder prior to completion of the offering;

·	the total number of shares that are to be offered for each stockholder;

·	the total number of shares that will be owned by each stockholder upon completion of the offering; and

·	the percentage owned by each stockholder upon completion of the offering.

On January 15, 2010, we received gross proceeds of approximately $3.5 million in the closing of a private placement transaction (the “Private Placement”).  Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 1,377,955 shares of Common Stock at $2.54 per share.   We paid WestPark Capital a placement agent commission equal to 8% of the gross proceeds from the financing and a 4% non-accountable expense allowance.  We also agreed to retain WestPark Capital for a period of six months following the closing of the Private Placement to provide us with financial consulting services for which we will pay WestPark Capital $6,000 per month.

We agreed to file a registration statement covering the common stock sold in the Private Placement within 30 days of the final closing of the Private Placement pursuant to the subscription agreement entered into with each investor. The investors in the Private Placement also entered into a lock-up agreement pursuant to which they agreed that (i) if the proposed public offering that we expect to conduct is for $10 million or more, then the investors would not be able to sell or transfer their shares until at least six months after the public offering’s completion, and (ii) if the offering is for less than $10 million, then one-tenth of the investors’ shares would be released from the lock-up restrictions ninety days after the offering and there would be a pro rata release of the shares thereafter every 30 days over the following nine months.  WestPark Capital, Inc., in its discretion, may also release some or all the shares from the lock-up restrictions earlier.  Assuming our sale of 3,500,000 shares of common stock at an assumed public offering price of $4.50 per share of common stock, which is the mid-point of the estimated initial offering price range in the public offering, the public offering will be equal to approximately $15.8 million.  Accordingly, the investors would be subject to lock-up restrictions such that they would be able to sell and/or transfer all of their shares six months after the public offering’s completion, subject to early release by WestPark.

Except as described below, none of the selling stockholders, to our knowledge, has had a material relationship with our company other than as a shareholder at any time within the past three years.

 

Name of Selling Shareholder		Number of Shares of  Common Stock Beneficially Owned Prior to Offering						Percentage of Shares of Common Stock Beneficially Owned Prior to the Offering(1)				Number of Shares of Common Stock Registered for Sale Hereby				Number of Shares of Common stock Beneficially Owned After Completion of the Offering(2)				Percentage of Shares of Common Stock Beneficially Owned After Completion of the Offering(2)
MidSouth Investor Fund LP			137,795		(3	)			1.4	%			137,795				--				--
Micro PIPE Fund I, LLC			75,000		(4	)			*				75,000				--				--
Berg, Howard			69,685						*				69,685				--				--
J&N Invest LLC			68,268		(5	)			*				68,268				--				--
Kuber, Douglas			50,000						*				50,000				--				--
Stellar Capital Fund LLC			50,000		(6	)			*				50,000				--				--
Continuum Capital Partners, LP			42,705		(7	)			*				42,705				--				--
F. Berdon Defined Benefit Plan			41,732		(8	)			*				41,732				--				--
Delaware Charter , Tax Id #51-0099493, FBO David H Clarke R/O IRA #2056-8346, C/O Legent Clearing, 9300 Underwood Sutie 400, Omaha, NE 68114			40,354		(9	)			*				40,354				--				--
Schwartzberg, Gil N.			243,704		(10	)			2.5	%			39,370				204,334				2.0	%
Colman, Frederic			35,236						*				35,236				--				--
Daybreak Special Situations Mater Fund, Ltd.			30,000		(11	)			*				30,000				--				--
S. Gerlach & L. Gerlach, TTEE FBO Stanley Wayne Gerlach, Jr. & Linda Bozarth Gerlach			29,528		(12	)			*				29,528				--				--

 

[_] A

---

 

[RESALE PROSPECTUS ALTERNATE PAGE]

 

Name of Selling Shareholder		Number of Shares of  Common Stock Beneficially Owned Prior to Offering						Percentage of Shares of Common Stock Beneficially Owned Prior to the Offering(1)				Number of Shares of Common Stock Registered for Sale Hereby				Number of Shares of Common stock Beneficially Owned After Completion of the Offering(2)				Percentage of Shares of Common Stock Beneficially Owned After Completion of the Offering(2)
Clarke,  David H.			29,291						*				29,291				--				--
Rothstein, Norman			25,000						*				25,000				--				--
Metsch, Richard			23,622						*				23,622				--				--
Merkel, Charles M.			22,441						*				22,441				--				--
Rathwell, John Herbert William			20,000						*				20,000				--				--
Donald, Linda Lou			19,685						*				19,685				--				--
Jordon, David L.			19,685						*				19,685				--				--
Sperling, Gerald and Seena			19,685						*				19,685				--				--
Tangiers Investors LP			19,685		(13	)			*				19,685				--				--
Pearson, Eric J.			15,748						*				15,748				--				--
Tedesco, Joseph and Gino			15,700						*				15,700				--				--
Pawliger, Richard			15,000						*				15,000				--				--
Antin, Norman B.			12,500						*				12,500				--				--
Boyer, David L.			11,811						*				11,811				--				--
Blisko, Solomon			11,795						*				11,795				--				--
Hoefer, Richard and Donna			11,024						*				11,024				--				--
BDB Irrevocable Family Trust D/T/D 7/20/07 Duane H. Butcher TTEE			10,236		(14	)			*				10,236				--				--
Antunes, Louis Philippe			10,000						*				10,000				--				--
Kendall, Peter M.			10,000						*				10,000				--				--
Mickelson Living Trust			10,000		(15	)			*				10,000				--				--
Nielsen, Mark			10,000						*				10,000				--				--
Rothstein, Steven			10,000						*				10,000				--				--
Silverberg, Lawrence			10,000						*				10,000				--				--
Dunkin, Arthur			9,843						*				9,843				--				--
Gordon, Morton			9,843						*				9,843				--				--
Lefkowitz, Harold			9,843						*				9,843				--				--
Woolam, Gerald L.			9,843						*				9,843				--				--
Frederic Colman C/F Daniela Colman			8,858		(16	)			*				8,858				--				--
Frederick and Karen Stahl TTEE			7,874		(17	)			*				7,874				--				--
McCartney, Timothy			7,874						*				7,874				--				--
Ulrich, Max			7,874						*				7,874				--				--
Miriam S. Mooney Trust F/B/O David Forrer			7,717		(18	)			*				7,717				--				--
Miriam S. Mooney Trust F/B/O Joan Connolly			7,677		(19	)			*				7,677				--				--
Darwin, Charles Barnes II			7,500						*				7,500				--				--
Reiff, Jerry N.			7,500						*				7,500				--				--
Forrer, John O.			7,008						*				7,008				--				--
Chazanovitz, David A.			7,000						*				7,000				--				--
Grossman, Martin			6,294						*				6,294				--				--
Seidenfeld, Steven			6,000						*				6,000				--				--
Miriam S. Mooney Trust F/B/O Catherine Sotto			5,984		(20	)			*				5,984				--				--
Glantz, Michael			5,906						*				5,906				--				--
Katz, David C.			5,906						*				5,906				--				--
Lurie, William and Rita			5,906						*				5,906				--				--
Perry, Frank			5,906						*				5,906				--				--
Zeev Tafel and Yehouda Chehebar			5,750						*				5,750				--				--
Newton, David K.			5,525						*				5,525				--				--
Borell, Martin H.			5,000						*				5,000				--				--
Jerkins, Ken M.			5,000						*				5,000				--				--
Kiening, James S.			5,000						*				5,000				--				--
Magalnick, Daniel			5,000						*				5,000				--				--
Mauser, Joseph T.			5,000						*				5,000				--				--
Paul, Melvyn			5,000						*				5,000				--				--
Steenhoek, Loren			5,000						*				5,000				--				--
Teitelbaum, Jay			5,000						*				5,000				--				--
Whittle, Brian A.			5,000						*				5,000				--				--

 

[_] B

---

 

[RESALE PROSPECTUS ALTERNATE PAGE]

 

Name of Selling Shareholder		Number of Shares of  Common Stock Beneficially Owned Prior to Offering						Percentage of Shares of Common Stock Beneficially Owned Prior to the Offering(1)				Number of Shares of Common Stock Registered for Sale Hereby				Number of Shares of Common stock Beneficially Owned After Completion of the Offering(2)				Percentage of Shares of Common Stock Beneficially Owned After Completion of the Offering(2)
Frederic Colman C/F Samuel Colman			4,921		(21	)			*				4,921				--				--
Weissler, Alan			4,500						*				4,500				--				--
Blair, Chris & Julie			4,000						*				4,000				--				--
Jelcada, LP			3,937		(22	)			*				3,937				--				--
Mitchell J. Lipcon Profit Sharing Keough Plan			3,937		(23	)			*				3,937				--				--
Vanhook, Benjamin			3,750						*				3,750				--				--
Tyson, Darryl J.			3,346						*				3,346				--				--
Cooke, Carl G.			3,189						*				3,189				--				--
Scher, Leslie			3,170						*				3,170				--				--
Izes, Bernard and Selma			2,953						*				2,953				--				--
Yablonsky, Mitchell			2,953						*				2,953				--				--
Dolen, William J. Jr. and Louise M.			2,500						*				2,500				--				--
Feltri, Donald and Jean			2,500						*				2,500				--				--
Getz, Norman			2,500						*				2,500				--				--
Goldstein, Gary			2,500						*				2,500				--				--
Helsley, Charles			2,500						*				2,500				--				--
Huber, Raymond & Joan			2,500						*				2,500				--				--
Krauser, Jack T.			2,500						*				2,500				--				--
Matt, Jamie Michael			2,500						*				2,500				--				--
Palmatier, Steven Jon			2,500						*				2,500				--				--
Quave, Gerald J. Jr.			2,500						*				2,500				--				--
Simon, Steve			2,500						*				2,500				--				--
Stancil, Donald R.			2,500						*				2,500				--				--
Stange, David W.			2,500						*				2,500				--				--
Tafel, Zeev			2,500						*				2,500				--				--
Taylor, Richard Charles			2,500						*				2,500				--				--
Eric Pearson IRA			2,362		(24	)			*				2,362				--				--
Hall, Warren James			2,275						*				2,275				--				--
Berry, Allan and Susan			2,100						*				2,100				--				--
Delaware Charter, Tax id #51-0099493, FBO James A DeCotis IRA #3059-4716, C/O Legent Clearing, 9300 Underwood, Suite 400, Omaha, nE 68114			2,000		(25	)			*				2,000				--				--
Sasson Joury IRA			1,550						*				1,550				--				--
Cohen, Robert and Debbie			1,500						*				1,500				--				--
Delaware Charter, Tax id #51-0099493, FBO Lynita C DeCotis IRA #7537-9018, C/O Legent Clearing, 9300 Underwood, Suite 400, Omaha, NE 68114			1,000		(26	)			*				1,000				--				--

 

---

* Less than 1%

 

(1)

Based on 9,893,704 shares of common stock outstanding as of the date of this prospectus.  The number of shares of our common stock outstanding excludes (i) up to 3,500,000 shares of our common stock to be offered by us in a firm commitment public offering concurrently herewith and (ii) 790,358 shares of common stock that are issuable upon the exercise of outstanding warrants.  Excludes the 217,548 shares of our common stock that we may issue upon the Underwriters’ over-allotment option exercise in a public offering and is not affected by the 307,452 shares that the Underwriters may be purchased from selling stockholders in such public offering.

(2)

Represents the amount of shares that will be held by the selling stockholders after completion of this offering based on the assumption that all shares registered for sale hereby will be sold. However, the selling stockholders may offer all, some or none of the shares pursuant to this prospectus, and to our knowledge there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares that may be held by the selling stockholders after completion of this offering.

(3)	Lyman O. Heidtke, as general partner has voting and investment control over the shares owned by this entity.

 

[_] C

---

 

[RESALE PROSPECTUS ALTERNATE PAGE]

 

(4)	David F. Mickelson, as managing member, has voting and investment control over the shares owned by this entity.

(5)	Jeffrey Rubin, as manager, has voting and investment control over the shares owned by this entity.

(6)	Richard Schmidt, as managing member of the general partner, has voting and investment control over the shares owned by this entity.

(7)	Gil N. Schwartzberg, as manager of the general partner, has voting and investment control over the shares owned by this entity. Mr. Schwartzberg is the spouse of Debbie Schwartzberg.  Excludes shareholdings discussed under footnote (10), below.

(8)	Frederick Berdon, has voting and investment control over the shares owned by this entity.

(9)	David H. Clarke has voting and investment control over the shares owned by this entity.

(10)

Includes 129,362 shares of common stock and 40,916 shares of common stock issuable upon the exercise of outstanding warrants, each held by Debbie Schwartzberg, who is the spouse of the selling stockholder.  Also includes 12,936 shares of common stock and 4,092 shares of common stock issuable upon the exercise of outstanding warrants held in such amounts by each of the Julie Schwartzberg Trust dated 2/9/2009 and the David N. Sterling Trust dated 2/3/2000.  The selling stockholder is a co-trustee of the foregoing trusts.  As a result, the selling stockholder may be deemed the indirect beneficial owner of these securities and disclaims beneficial ownership of the securities except to of his pecuniary interest in the securities.  Excludes the shares held by Continuum Capital Partners, LP listed in the table above and footnote (7) above.

(11)	Larry Butz as managing partner of the general partner has voting and investment control over the shares owned by this entity.

(12)	Stanley Wayne Gerlach, Jr. and Linda B. Gerlach, as trustees, president and secretary, have voting and investment control over the shares owned by this entity.

(13)	Justin Ederle, as managing member of the general partner, has voting and investment control over the shares owned by this entity.

(14)	Duane H. Butcher, as Trustee has voting and investment control over the shares owned by this entity.

(15)	David F. Mickelson as Trustee has voting and investment control over the shares owned by this entity.

(16)	Frederic Colman  as Custodian has voting and investment control over the shares owned by this entity.

(17)	Frederic Colman  as Custodian has voting and investment control over the shares owned by this entity.

(18)	John O. Forrer, as trustee, has voting and investment control over the shares owned by this entity.

(19)	John O. Forrer, as trustee, has voting and investment control over the shares owned by this entity.

(20)	John O. Forrer, as trustee, has voting and investment control over the shares owned by this entity.

(21)	Frederic Colman as Custodian has voting and investment control over the shares owned by this entity.

(22)	John O Forrer as general partner has voting and investment control over the shares owned by this entity.

(23)	Mitchell J. Lipcon, as Trustee, has voting and investment control over the shares owned by this entity.

(24)	Eric J. Pearson has voting and investment control over the shares owned by this entity.

(25)	James Anthony DeCotis has voting and investment control over the shares owned by this entity.

(26)	Lynita Carla DeCotis is has voting and investment control over the shares owned by this entity.

[_] D

---

 

[RESALE PROSPECTUS ALTERNATE PAGE]

 

PLAN OF DISTRIBUTION

 

The selling stockholders of our common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

 

•    ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

•    block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

•    purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

•    an exchange distribution in accordance with the rules of the applicable exchange;

 

•    privately negotiated transactions;

 

•    settlement of short sales entered into after the date of this prospectus;

 

•    broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 

•    a combination of any such methods of sale;

 

•    through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; or

 

•    any other method permitted pursuant to applicable law.

 

The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Each selling stockholder does not expect these commissions and discounts relating to its sales of shares to exceed what is customary in the types of transactions involved.  The maximum commission or discount to be received by any FINRA member or independent broker-dealer, however, will not be greater than eight (8) percent for the sale of any securities being registered hereunder pursuant to Rule 415 of the Securities Act.

Rodman & Renshaw, LLC (“Rodman”) and WestPark Capital, Inc. (“WestPark”, and together with Rodman, the “Underwriters”) are underwriters of up to 3,500,000 shares of our common stock (excluding an Underwriters’ option to purchase an additional 525,000 shares from us and the selling stockholders to cover over-allotments) to be offered by us in a firm commitment public offering concurrently herewith, may dispose of shares on behalf of its account holders who are also selling stockholders. The maximum commission or discount to be received by Underwriters will not be greater than eight percent (8%) for the sale of any securities being registered hereunder. Additionally, any securities acquired by any participating FINRA members during the 180-day period preceding the date of the filing of the prospectus with the Commission will be subject to lock-up restrictions under FINRA Rule 5110(g), unless an exemption is available under FINRA Rule 5110(g)(2). FINRA Rule 5110(g) provides that such securities shall not be sold during our public offering or sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness of sales of our public offering.

 

[_]

---

 

[RESALE PROSPECTUS ALTERNATE PAGE]

 

In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling stockholder has informed us that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the common stock.

We are required to pay certain fees and expenses incurred by us incident to the registration of the shares. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. Each selling stockholder has advised us that they have not entered into any agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders.

 

We agreed to keep this prospectus effective for twelve (12) months. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to our common stock for a period of two business days prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.

[_]

---

 

[RESALE PROSPECTUS ALTERNATE PAGE]

 

LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed upon for us by K&L Gates LLP, Los Angeles, California. Legal matters as to PRC law will be passed upon for us by Guangdong Laowei Law Firm. K&L Gates LLP may rely upon Guangdong Laowei Law Firm with respect to matters governed by PRC law.

EXPERTS

 

The (i) consolidated financial statements of China Intelligent Lighting and Electronics, Inc. as of December 31, 2009 and for the year ended December 31, 2009 (ii) condensed parent-only balance sheet of China Intelligent Lighting and Electronics, Inc. as of December 31, 2009, and the related condensed parent-only statements of income and cash flows for the year ended December 31, 2009 included in footnote 20 to the Consolidated Financial Statements of China Intelligent Lighting and Electronics, Inc., each appearing in this prospectus and registration statement have been audited by MaloneBailey, LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The (i) consolidated financial statements of China Intelligent Lighting and Electronics, Inc. as of December 31, 2008 and 2007 and for the years ended December 31, 2008 and 2007 (ii) and the condensed parent-only balance sheet of China Intelligent Lighting and Electronics, Inc. as of December 31, 2008 and the related condensed parent-only statements of operations and cash flows for the year ended December 31, 2008 and the period October 11, 2007 (inception) to December 31, 2007 included in footnote 20 to the Consolidated Financial Statements of China Intelligent Lighting and Electronics, Inc., each appearing in this prospectus and registration statement have been audited by Kempisty & Company Certified Public Accountants PC, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

We filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933, as amended, for the shares of common stock in this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and schedule that were filed with the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedule that were filed with the registration statement. Statements contained in this prospectus about the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules that were filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the Securities and Exchange Commission at 100 F Street, N.E. Washington, DC 20549, and copies of all or any part of the registration statement may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov.

We file periodic reports under the Securities Exchange Act of 1934, including annual, quarterly and special reports, and other information with the Securities and Exchange Commission. These periodic reports, and other information, are available for inspection and copying at the regional offices, public reference facilities and website of the Securities and Exchange Commission referred to above.

We are in the process of establishing a corporate website and expect to have it complete in the near future. We intend to make available free of charge on or through our internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

 

[_]

---

PART II

 

INFORMATION NOT REQUIRED IN THE PROSPECTUS

 

Item 13.  Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, if any, payable by the Registrant relating to the sale of common stock being registered.

Securities and Exchange Commission registration fee(1)		$	2,001
FINRA Filing Fee(1)			1,365
NYSE Amex Listing Fee(1)			65,000
Printing and transfer agent fees			90,000
Accounting fees and expenses			175,000
Legal fees and expenses			275,000
Underwriters’ counsel fees and blue sky fees			40,000
Non-accountable fee to underwriters equal to 2.5% of gross proceeds (assuming no exercise of the over-allotment option)			393,750
Roadshow fees and expenses			25,000
Total		$	1,067,116

 

---

(1)	All amounts are estimates other than the Commission’s registration fee, FINRA filing fee and NYSE Amex listing fee.

Item 14. Indemnification of directors and officers

Under Section 145 of the General Corporation Law of the State of Delaware, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors’ fiduciary duty of care to us and our stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of the law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws.

Our bylaws provide for the indemnification of our directors to the fullest extent permitted by the Delaware General Corporation Law. Our bylaws further provide that our Board of Directors has discretion to indemnify our officers and other employees. We are required to advance, prior to the final disposition of any proceeding, promptly on request, all expenses incurred by any director or executive officer in connection with that proceeding on receipt of an undertaking by or on behalf of that director or executive officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified under the bylaws or otherwise. We are not, however, required to advance any expenses in connection with any proceeding if a determination is reasonably and promptly made by our Board of Directors by a majority vote of a quorum of disinterested Board members that (i) the party seeking an advance acted in bad faith or deliberately breached his or her duty to us or our stockholders and (ii) as a result of such actions by the party seeking an advance, it is more likely than not that it will ultimately be determined that such party is not entitled to indemnification pursuant to the applicable sections of our bylaws.

We have been advised that in the opinion of the Securities and Exchange Commission, insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

II-1

---

We may enter into indemnification agreements with each of our directors and officers that are, in some cases, broader than the specific indemnification provisions permitted by Delaware law, and that may provide additional procedural protection. As of the date of the Share Exchange, we have not entered into any indemnification agreements with our directors or officers, but may choose to do so in the future. Such indemnification agreements may require us, among other things, to:

·	indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors;

·	advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or

·	obtain directors’ and officers’ insurance.

At present, there is no pending litigation or proceeding involving any of our directors, officers or employees in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

Item 15. Recent sales of unregistered securities

On January 15, 2010, pursuant to the terms of the Exchange Agreement, as amended, entered into by and between SRKP 22, China Intelligent BVI and the sole shareholder of China Intelligent BVI, SRKP 22 issued 7,097,748 shares of common stock to the shareholder and her designees in exchange for all of the issued and outstanding securities of China Intelligent BVI.  All of the securities were offered and issued in reliance upon an exemption from registration pursuant to Regulation S of the Securities Act of 1933, as amended (“Securities Act”).  We complied with the conditions of Rule 903 as promulgated under the Securities Act including, but not limited to, the following: (i) each recipient of the shares is a non-U.S. resident and has not offered or sold their shares in accordance with the provisions of Regulation S; (ii) an appropriate legend was affixed to the securities issued in accordance with Regulation S; (iii) each recipient of the shares has represented that it was not acquiring the securities for the account or benefit of a U.S. person; and (iv) each recipient of the shares agreed to resell the securities only in accordance with the provisions of Regulation S, pursuant to a registration statement under the Securities Act, or pursuant to an available exemption from registration.  We will refuse to register any transfer of the shares not made in accordance with Regulation S, after registration, or under an exemption.

On January 15, 2010, we received gross proceeds of approximately $3.5 million in the closing of a private placement transaction (the “Private Placement”).  Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 1,377,955 shares of Common Stock at $2.54 per share.   We agreed to pay WestPark Capital, Inc., the placement agent for the Private Placement, a commission equal to 8% of the gross proceeds from the financing, in addition to a $140,000 success fee for the Share Exchange, and an $80,000 due diligence fee.  The securities were offered and sold to investors in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act and Rule 506 promulgated thereunder. Each of the persons and/or entities receiving our securities qualified as an accredited investor (as defined by Rule 501 under the Securities Act).

On October 11, 2007, we offered and sold an aggregate of 3,548,196 shares of our common stock for aggregate proceeds equal to $5,000.12, pursuant to the terms and conditions set forth in those certain common stock purchase agreements (each a “Common Stock Purchase Agreement”), and warrants (the “Warrants”) to purchase an aggregate of 3,548,196 shares of our common stock for aggregate proceeds equal to $2,500.05, pursuant to the terms and conditions set forth in those certain warrant purchase agreement (each a “Warrant Purchase Agreement”). The Warrants have an exercise price equal to $0.0002. The Warrants are immediately exercisable and terminate on the earlier of October 11, 2017 or five years from the date we consummate a merger or other business combination with an operating business or any other event pursuant to which we cease to be a “shell company” and a “blank check company.” This occurred upon the close of the Share Exchange that closed on January 15, 2010.  We sold these shares of Common Stock and Warrants under the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

 

II-2

---

Item 16. Exhibits

Exhibit No.		Exhibit Description
1.1*		Form of Underwriting Agreement.
2.1		Share Exchange Agreement, dated as of October 20, 2009, by and among the Registrant, China Intelligent Electronic Holding Limited, and Li Xuemei (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
2.1(a)		Amendment No. 1 dated November 25, 2009 to the Share Exchange Agreement entered into by and between the Registrant, China Intelligent Electronic Holding Limited, and Li Xuemei (incorporated by reference from Exhibit 2.1(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
2.1(b)		Amendment No. 2 dated January 15, 2010 to the Share Exchange Agreement entered into by and between the Registrant, China Intelligent Electronic Holding Limited, and Li Xuemei (incorporated by reference from Exhibit 2.1(b) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
3.1		Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the Registration Statement on Form 10-SB (File No. 000-53018) filed with the Securities and Exchange Commission on January 16, 2008).
3.2		Bylaws (incorporated by reference from Exhibit 3.2 to the Registration Statement on Form 10-SB (File No. 000-53018) filed with the Securities and Exchange Commission on January 16, 2008).
3.3		Articles of Merger effecting name change filed with the Office of Secretary of State of Delaware on January 15, 2010 (incorporated by reference from Exhibit 3.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
3.4		Certificate of Amendment to the Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2010).
4.1***		Specimen Certificate of Common Stock.
4.2		Form of Warrant dated October 11, 2007 (incorporated by reference from Exhibit 4.1 to the Registration Statement on Form 10-SB (File No. 000-53018) filed with the Securities and Exchange Commission on January 16, 2008).
4.3*		Form of Underwriters Warrant.
5.1*		Opinion of K&L Gates LLP.
10.1		Registration Rights Agreement dated January 15, 2010 entered into by and between the Registrant and Stockholders (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.2		Share and Warrant Cancellation Agreement dated January 15, 2010 entered into by and between the Registrant and Stockholders (incorporated by reference from Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.3		Form of 2009 Employment Agreement dated January 2009 entered into with Dong Bin and Wu Shiliang (translated to English) (incorporated by reference from Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).

 

II-3

---

 

Exhibit No.

Exhibit Description

10.4		Employment Agreement for CFO Position dated November 23, 2009 entered into by and between China Intelligent Electronic Holding Limited and Xialong Zhou (incorporated by reference from Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.4(a)		Mutual Termination Agreement for CFO Position dated December 31, 2009 entered into by and between China Intelligent Electronic Holding Limited and Xialong Zhou (incorporated by reference from Exhibit 10.4(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.5		Factory Premises Lease Rental Agreement entered by and between NIVS (HZ) Audio and Video Tech. Co., Ltd. and Hyundai Light & Electric (HZ) Co., Ltd. with effect through July 1, 2010 (incorporated by reference from Exhibit 10.5 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.6		Floors Lease Agreement dated March 30, 2007 entered into by and between ShunKang Department Store and Hyundai Light & Electric (HZ) Co., Ltd. (incorporated by reference from Exhibit 10.6 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.6(a)		Floor Lease Renewal Agreement dated April 8, 2009 for the Floors Lease Agreement dated March 30, 2007 entered into by and between ShunKang Department Store and Hyundai Light & Electric (HZ) Co., Ltd. (incorporated by reference from Exhibit 10.6(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.7**		Trademark License Agreement dated July 31, 2005 entered into by and between Hyundai Corporation and Hyundai Light and Electric (Huizhou) Co., Ltd. (incorporated by reference from Exhibit 10.7 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.7(a)**		Trademark License Agreement dated September 10, 2008 entered into by and between Hyundai Corporation and Hyundai Light and Electric (Huizhou) Co., Ltd. (incorporated by reference from Exhibit 10.7(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.8		Debt Repayment and Set-Off Agreement dated November 28, 2008, by and between Korea Hyundai Light & Electric (Int’l) Holding and Hyundai Light & Electric (HZ) Co., Ltd. and Tianfu Li, NIVS IntelliMedia Technology Group, Inc., Niveous Holding Company Limited, NIVS (HZ) Audio & Video Tech Company Limited, NIVS International (H.K.) Limited, NIVS (HZ) Audio & Video Tech Company Limited Shenzhen Branch, NIVS Investment (SZ) Co., Ltd., Zhongkena Technology Development, Xentsan Technology (SZ) Co., Ltd. (incorporated by reference from Exhibit 10.8 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.8(a)		Amendment No. 1 to the Debt Repayment and Set-Off Agreement dated December 22, 2008, by and between by and between Korea Hyundai Light & Electric (Int’l) Holding and Hyundai Light & Electric (HZ) Co., Ltd. and Tianfu Li, NIVS IntelliMedia Technology Group, Inc., Niveous Holding Company Limited, NIVS (HZ) Audio & Video Tech Company Limited, NIVS International (H.K.) Limited, NIVS (HZ) Audio & Video Tech Company Limited Shenzhen Branch, NIVS Investment (SZ) Co., Ltd., Zhongkena Technology Development, Xentsan Technology (SZ) Co., Ltd. (incorporated by reference from Exhibit 10.8(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.9		Indemnification Agreement dated January 15, 2010 entered into by and between Li Xuemei, China Intelligent Electronic Holding Limited, Hyundai Light and Electric (Huizhou) Co., Ltd. (incorporated by reference from Exhibit 10.9 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.10		Security Agreement dated January 15, 2010 entered into by and between Li Xuemei, China Intelligent Electronic Holding Limited, Hyundai Light and Electric (Huizhou) Co., Ltd. (incorporated by reference from Exhibit 10.10 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).

 

II-4

---

 

Exhibit No.

Exhibit Description

10.11		Employment Agreement dated December 28, 2009 entered into by and between the China Intelligent Electric Holding Limited and Chi-wai (Gabriel) Tse (English Translation) (incorporated by reference from Exhibit 10.11 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.12		Waiver and Debt Forgiveness Agreement for China Intelligent Electric Holding Limited dated October 1, 2008 executed by Tianfu Li (English Translation) (incorporated by reference from Exhibit 10.12 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.13		Waiver and Debt Forgiveness Agreement for Korea Hyundai Light & Electric (International) Holding Limited dated December 26, 2008 executed by Tianfu Li (English Translation) (incorporated by reference from Exhibit 10.13 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.14***		Form of Subscription Agreement dated January 15, 2010 between investors and the Registrant.
10.15		Employment Agreement dated May 5, 2010 by and between the Registrant and Kui (Kevin) Jiang (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2010).
10.16		Form of Lock Up Agreement executed by SRKP 22, Inc. Shareholders as indicated in Appendix A of this Exhibit.
16.1		Letter from AJ. Robbins, PC to the Securities and Exchange Commission dated January 15, 2010 (incorporated by reference from Exhibit 16.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
16.2		Letter from Kempisty & Company Certified Public Accountants PC to the Securities and Exchange Commission dated March 10, 2010 (incorporated by reference from Exhibit 16.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2010).
21.1		List of Subsidiaries (incorporated by reference from Exhibit 21.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
23.1		Consent of Kempisty & Company Certified Public Accountants PC.
23.2*		Consent of K&L Gates LLP (contained in Exhibit 5.1).
23.3*		Consent of Guangdong Laowei Law Firm.
23.4		Consent of MaloneBailey, LLP.
24.1***		Power of Attorney (included on signature page).

 

---

* To be filed by amendment.

** The Registrant has applied with the Secretary of the Securities and Exchange Commission for confidential treatment of certain information pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.  The Registrant has filed separately with its application a copy of the exhibit including all confidential portions, which may be made available for public inspection pending the Commission’s review of the application in accordance with Rule 24b-2.

*** Previously filed.

Item 17. Undertakings

The undersigned registrant hereby undertakes with respect to the securities being offered and sold in this offering:

 

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

II-5

---

 

	i.	To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

	ii.	To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

iii.

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change in such information in registration statement.

 

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

To remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

For determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to the purchaser:

	i.	in any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

	ii.	any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

	iii.	the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

iv.

any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

 

 

In the event that a claim for indemnification against such liabilities, other than the payment by the registrant of expenses incurred and paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding, is asserted by such director, officer or controlling person in connection with the securities being registered hereby, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

 

The undersigned Registrant hereby undertakes that it will:

 

II-6

---

 

(i)

for determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant under Rule 424(b)(1), or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.

	(ii)	for determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.

For the purpose of determining liability under the Securities Act to any purchaser, the undersigned registrant undertakes that each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

For the purpose of determining liability under the Securities Act to any purchaser, the undersigned registrant undertakes that:

(i) if the undersigned registrant is relying on Rule 430B:

(a) each prospectus filed by the undersigned registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(b) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

 

II-7

---

 

(ii) if the undersigned registrant is subject to Rule 430C:

(a) Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

II-8

---

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Amendment No. 4 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Huizhou, People’s Republic of China, on the 18th day of May, 2010.

 

	China Intelligent Lighting and Electronics, Inc.
	By:	/s/  Li Xuemei
	Name:	Li Xuemei
	Title:	Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

SIGNATURE		TITLE		DATE
		Chief Executive Office, President, and
/s/  Li Xuemei		Chairman of the Board (Principal Executive Officer)		May 18, 2010
Li Xuemei
		Chief Financial Officer and Corporate Secretary
/s/  Kui (Kevin) Jiang		(Principal Financial and Accounting Officer)		May 18, 2010
Kui (Kevin) Jiang
		Executive Vice President, Sales and Marketing
*		and Director		May 18, 2010
Wu Shiliang
*		Director		May 18, 2010
Michael Askew
*		Director		May 18, 2010
Su Yang
*		Director		May 18, 2010
Zhang Hongfeng

*  By:  /s/ Li Xuemei     

---

            Li Xuemei, as Attorney in Fact

 

II-9

---

EXHIBIT INDEX

Exhibit No.		Exhibit Description
1.1*		Form of Underwriting Agreement.
2.1		Share Exchange Agreement, dated as of October 20, 2009, by and among the Registrant, China Intelligent Electronic Holding Limited, and Li Xuemei (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
2.1(a)		Amendment No. 1 dated November 25, 2009 to the Share Exchange Agreement entered into by and between the Registrant, China Intelligent Electronic Holding Limited, and Li Xuemei (incorporated by reference from Exhibit 2.1(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
2.1(b)		Amendment No. 2 dated January 15, 2010 to the Share Exchange Agreement entered into by and between the Registrant, China Intelligent Electronic Holding Limited, and Li Xuemei (incorporated by reference from Exhibit 2.1(b) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
3.1		Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the Registration Statement on Form 10-SB (File No. 000-53018) filed with the Securities and Exchange Commission on January 16, 2008).
3.2		Bylaws (incorporated by reference from Exhibit 3.2 to the Registration Statement on Form 10-SB (File No. 000-53018) filed with the Securities and Exchange Commission on January 16, 2008).
3.3		Articles of Merger effecting name change filed with the Office of Secretary of State of Delaware on January 15, 2010 (incorporated by reference from Exhibit 3.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
3.4		Certificate of Amendment to the Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2010).
4.1***		Specimen Certificate of Common Stock.
4.2		Form of Warrant dated October 11, 2007 (incorporated by reference from Exhibit 4.1 to the Registration Statement on Form 10-SB (File No. 000-53018) filed with the Securities and Exchange Commission on January 16, 2008).
4.3*		Form of Underwriters Warrant.
5.1*		Opinion of K&L Gates LLP.
10.1		Registration Rights Agreement dated January 15, 2010 entered into by and between the Registrant and Stockholders (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.2		Share and Warrant Cancellation Agreement dated January 15, 2010 entered into by and between the Registrant and Stockholders (incorporated by reference from Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.3		Form of 2009 Employment Agreement dated January 2009 entered into with Dong Bin and Wu Shiliang (translated to English) (incorporated by reference from Exhibit 10.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.4		Employment Agreement for CFO Position dated November 23, 2009 entered into by and between China Intelligent Electronic Holding Limited and Xialong Zhou (incorporated by reference from Exhibit 10.4 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.4(a)		Mutual Termination Agreement for CFO Position dated December 31, 2009 entered into by and between China Intelligent Electronic Holding Limited and Xialong Zhou (incorporated by reference from Exhibit 10.4(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).

 

---

 

Exhibit No.

Exhibit Description

10.5		Factory Premises Lease Rental Agreement entered by and between NIVS (HZ) Audio and Video Tech. Co., Ltd. and Hyundai Light & Electric (HZ) Co., Ltd. with effect through July 1, 2010 (incorporated by reference from Exhibit 10.5 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.6		Floors Lease Agreement dated March 30, 2007 entered into by and between ShunKang Department Store and Hyundai Light & Electric (HZ) Co., Ltd. (incorporated by reference from Exhibit 10.6 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.6(a)		Floor Lease Renewal Agreement dated April 8, 2009 for the Floors Lease Agreement dated March 30, 2007 entered into by and between ShunKang Department Store and Hyundai Light & Electric (HZ) Co., Ltd. (incorporated by reference from Exhibit 10.6(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.7**		Trademark License Agreement dated July 31, 2005 entered into by and between Hyundai Corporation and Hyundai Light and Electric (Huizhou) Co., Ltd. (incorporated by reference from Exhibit 10.7 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.7(a)**		Trademark License Agreement dated September 10, 2008 entered into by and between Hyundai Corporation and Hyundai Light and Electric (Huizhou) Co., Ltd. (incorporated by reference from Exhibit 10.7(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.8		Debt Repayment and Set-Off Agreement dated November 28, 2008, by and between Korea Hyundai Light & Electric (Int’l) Holding and Hyundai Light & Electric (HZ) Co., Ltd. and Tianfu Li, NIVS IntelliMedia Technology Group, Inc., Niveous Holding Company Limited, NIVS (HZ) Audio & Video Tech Company Limited, NIVS International (H.K.) Limited, NIVS (HZ) Audio & Video Tech Company Limited Shenzhen Branch, NIVS Investment (SZ) Co., Ltd., Zhongkena Technology Development, Xentsan Technology (SZ) Co., Ltd. (incorporated by reference from Exhibit 10.8 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.8(a)		Amendment No. 1 to the Debt Repayment and Set-Off Agreement dated December 22, 2008, by and between by and between Korea Hyundai Light & Electric (Int’l) Holding and Hyundai Light & Electric (HZ) Co., Ltd. and Tianfu Li, NIVS IntelliMedia Technology Group, Inc., Niveous Holding Company Limited, NIVS (HZ) Audio & Video Tech Company Limited, NIVS International (H.K.) Limited, NIVS (HZ) Audio & Video Tech Company Limited Shenzhen Branch, NIVS Investment (SZ) Co., Ltd., Zhongkena Technology Development, Xentsan Technology (SZ) Co., Ltd. (incorporated by reference from Exhibit 10.8(a) to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.9		Indemnification Agreement dated January 15, 2010 entered into by and between Li Xuemei, China Intelligent Electronic Holding Limited, Hyundai Light and Electric (Huizhou) Co., Ltd. (incorporated by reference from Exhibit 10.9 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.10		Security Agreement dated January 15, 2010 entered into by and between Li Xuemei, China Intelligent Electronic Holding Limited, Hyundai Light and Electric (Huizhou) Co., Ltd. (incorporated by reference from Exhibit 10.10 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.11		Employment Agreement dated December 28, 2009 entered into by and between the China Intelligent Electric Holding Limited and Chi-wai (Gabriel) Tse (English Translation) (incorporated by reference from Exhibit 10.11 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.12		Waiver and Debt Forgiveness Agreement for China Intelligent Electric Holding Limited dated October 1, 2008 executed by Tianfu Li (English Translation) (incorporated by reference from Exhibit 10.12 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).

 

---

 

Exhibit No.

Exhibit Description

10.13		Waiver and Debt Forgiveness Agreement for Korea Hyundai Light & Electric (International) Holding Limited dated December 26, 2008 executed by Tianfu Li (English Translation) (incorporated by reference from Exhibit 10.13 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
10.14***		Form of Subscription Agreement dated January 15, 2010 between investors and the Registrant.
10.15		Employment Agreement dated May 5, 2010 by and between the Registrant and Kui (Kevin) Jiang (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 5, 2010).
10.16		Form of Lock Up Agreement executed by SRKP 22, Inc. Shareholders as indicated in Appendix A of this Exhibit.
16.1		Letter from AJ. Robbins, PC to the Securities and Exchange Commission dated January 15, 2010 (incorporated by reference from Exhibit 16.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
16.2		Letter from Kempisty & Company Certified Public Accountants PC to the Securities and Exchange Commission dated March 10, 2010 (incorporated by reference from Exhibit 16.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2010).
21.1		List of Subsidiaries (incorporated by reference from Exhibit 21.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010).
23.1		Consent of Kempisty & Company Certified Public Accountants PC.
23.2*		Consent of K&L Gates LLP (contained in Exhibit 5.1).
23.3*		Consent of Guangdong Laowei Law Firm.
23.4		Consent of MaloneBailey, LLP.
24.1***		Power of Attorney (included on signature page).

---

* To be filed by amendment.

 

** The Registrant has applied with the Secretary of the Securities and Exchange Commission for confidential treatment of certain information pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.  The Registrant has filed separately with its application a copy of the exhibit including all confidential portions, which may be made available for public inspection pending the Commission’s review of the application in accordance with Rule 24b-2.

*** Previously filed.

 

---