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Highpower International Inc. was founded in 2001 as a clean energy group dedicated to R&D, production and sales of rechargeable Ni-MH / Lithium batteries, power source and energy storage systems. In June 2008, Highpower listed in NASDAQ.

Highpower International, Inc. Reports Third Quarter 2010 Financial Results

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NEW YORK, NY and SHENZHEN, CHINA -- (MARKET WIRE) -- 11/10/10 -- Highpower International, Inc. (NASDAQ: HPJ), a developer, manufacturer and marketer of nickel-metal hydride (Ni-MH) and lithium-ion (Li-ion) batteries and related products, today announced financial results for the third quarter ended September 30, 2010.

Business Highlights

  • Achieved 32% increase in net sales to $27.8 million for third quarter 2010 from $21.1 million in third quarter 2009;
  • Gross profit grew 13% year-over-year to $5.9 million for third quarter 2010 from $5.2 million in third quarter 2009;
  • Generated gross margin of 21.1% for the third quarter 2010; up sequentially from 18.6% for the second quarter of 2010;
  • Li-ion battery production exceeded 1.2 million units and continued making steady improvement in operations;
  • Successfully changed company name to Highpower International, Inc. to reflect global brand.

"The third quarter proved to be another strong quarter of year-over-year revenue growth," said Mr. George Pan, Chairman and Chief Executive Officer of Highpower International. "We also accomplished an important corporate branding milestone this quarter by changing our name to Highpower International. Our new name helps position us for further worldwide growth in the years ahead. Highpower International better reflects our global initiatives to continue to expand our sales and marketing efforts worldwide and advance our position as a leading, profitable, eco-friendly focused solution provider of green energy."

Mr. Henry Ngan, Chief Financial Officer of Highpower International, added, "We are pleased with the continued revenue strength we saw in the third quarter. We remain optimistic that these revenue trends will continue throughout the end of the year. Despite our net income being down year-over-year in the third quarter, will still anticipate that our overall profitability in FY 2010 will exceed the record profitability levels we saw in 2009, which remains consistent with our commentary from earlier this year."

Third Quarter 2010 Financial Results

Net sales for the third quarter ended September 30, 2010 totaled $27.8 million, a year-over-year increase of 32% compared with $21.1 million for the third quarter ended September 30, 2009. The increase in sales for the third quarter was primarily due to an increase in the average selling price of our batteries and contributions from the New Material business segment.

Third quarter 2010 gross profit increased 13% to $5.9 million, compared with $5.2 million for the third quarter 2009. Gross margin was 21.1% for the third quarter 2010, compared with 24.8% for the third quarter 2009. The increase year-over-year in gross profit for the third quarter 2010 was primarily due to the increase in average selling price of our batteries and the improvement in our Li-ion operations.

Selling and distribution costs were $1.1 million for the third quarter 2010, compared with $767,194 for the comparable period in 2009. The increase was primarily due to the expansion of our salesforce and marketing efforts.

General and administrative expenses, including stock-based compensation, were $2.6 million or 9.5% of net sales for the third quarter 2010, compared to $1.5 million, or 7.0% of net sales for the third quarter 2009. The increase was due to both an increase in labor costs and research & development expenses.

The Company reported a loss on the exchange rate difference between the U.S. Dollar ("USD") and the Renminbi ("RMB") of $329,000 for the third quarter ended September 30, 2010. This compares with losses on the exchange rate difference of $7,000 for the third quarter 2009. The increase in losses on exchange rate was due to the devaluation of the U.S. Dollar relative to the RMB over the respective periods resulting from recent policies implemented by the Chinese government.

The Company recorded a provision for income taxes of $280,000 for the third quarter 2010, compared with provisions for income taxes of $530,000 for the third quarter 2009.

Net income for the third quarter of 2010 was $1.4 million or $0.11 per diluted share, based on 13.6 million weighted average shares outstanding. This compares with a particularly strong third quarter 2009 net income of $2.4 million, or $0.18 per diluted share, based on 13.6 million weighted average shares outstanding.

Balance Sheet

At September 30, 2010, Highpower International had cash and cash equivalents and restricted cash totaling $13 million, total assets of $71.4 million, working capital of $8.7 million and stockholders' equity of $25.9 million. Bank credit facilities totaled $35.0 million at September 30, 2010, of which $13.3 million was available as unused credit.

Conference Call and Webcast

Management of Highpower International, Inc. will host a conference call tomorrow, Thursday, November 11, 2010 at 8:00 a.m. Pacific time/11:00 a.m. Eastern time to discuss third quarter 2010 financial results and answer questions.

Individuals interested in participating in the conference call may do so by dialing 888-799-5026 from the U.S., or 973-409-9693 from outside the U.S and referencing the reservation code 20769802. Those interested in listening to the conference call live via the Internet may do so by visiting the Investor Relations section of the Company's Web site at www.haopengbattery.com or www.InvestorCalendar.com.

A telephone replay will be available for 48 hours following the conclusion of the call by dialing 800-642-1687 from the U.S., or 706-645-9291 from outside the U.S., and entering reservation code 20769802. A webcast replay will be available for one year.

About Highpower International, Inc.

Highpower International, Inc. develops, manufactures and markets rechargeable nickel metal hydride (Ni-MH) and lithium-ion (Li-ion) batteries and related products for use in a variety of electronic devices. The majority of Highpower International's products are distributed worldwide to markets in the United States, Europe, China, Hong Kong, Southeast Asia and Taiwan. For more information, visit http://www.haopengbattery.com

To be added to the Company's email distribution for future news releases, please send your request to HPJ@finprofiles.com. Company news can also be found at http://ir.haopengbattery.com/en/introduce028.html

Forward-Looking Statement

This press release contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and the Company's future performance, operations and products. Such statements involve known and unknown risks, uncertainties and other factors that could cause the Company's actual results to differ materially from the results expressed or implied by such statements. For a discussion of these and other risks and uncertainties see "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's public filings with the SEC. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.

                        -financial tables to follow-


               HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                           (Stated in US Dollars)


                         Three months ended           Nine months ended
                            September 30,               September 30,
                     --------------------------  --------------------------
                             2010          2009          2010          2009
                      (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                                $             $             $             $

Net sales              27,774,213    21,056,149    76,975,699    47,811,438
Cost of sales         (21,900,312)  (15,835,110)  (61,456,057)  (37,120,495)
                     ------------  ------------  ------------  ------------

Gross profit            5,873,901     5,221,039    15,519,642    10,690,943
Depreciation              (57,638)      (50,120)     (196,599)     (169,309)
Selling and
 distributing costs    (1,132,812)     (767,194)   (2,995,314)   (1,879,001)
General and
 administrative
 costs, including
 stock-based
 compensation          (2,625,900)   (1,464,392)   (6,247,610)   (3,613,654)
Loss on exchange
 rate difference         (328,921)       (6,813)     (481,405)      (62,402)
Loss from associate        (6,780)                     (6,780)
                     ------------  ------------  ------------  ------------

Income from
 operations             1,721,850     2,932,520     5,591,934     4,966,577
Change in fair value
 of currency
 forwards                       -        (7,483)            -      (117,106)
Other income               83,490       289,843       286,890       378,432
Interest expenses         (89,669)     (199,125)     (257,113)     (279,622)
Other expenses                  -       (52,878)            -      (223,963)
                     ------------  ------------  ------------  ------------

Income before taxes     1,715,671     2,962,877     5,621,711     4,724,318
Income taxes             (280,062)     (529,201)   (1,020,055)     (919,020)
                     ------------  ------------  ------------  ------------

Net income for the
 period                 1,435,609     2,433,676     4,601,656     3,805,298
                     ============  ============  ============  ============

Earnings per share
 of common stock
  - Basic                    0.11          0.18          0.34          0.28
                     ============  ============  ============  ============

  - Diluted                  0.11          0.18          0.34          0.28
                     ============  ============  ============  ============

Weighted average
 number of common
 stock
  - Basic              13,582,106    13,562,597    13,582,106    13,621,466
                     ============  ============  ============  ============

  - Diluted            13,732,096    13,615,096    13,732,096    13,673,966
                     ============  ============  ============  ============



               HIGHPOWER INTERNATIONAL, INC. AND SUBSIDIARIES

               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                           (Stated in US Dollars)


                                                            As of
                                                ----------------------------
                                                  September 30, December 31,
                                                           2010         2009
                                                    (Unaudited)    (Audited)
                                                              $            $
ASSETS
  Current Assets:
    Cash and cash equivalents                         5,385,507    2,967,586
    Restricted cash                                   7,579,676    5,478,418
    Accounts receivable                              19,459,847   14,896,503
    Notes receivable                                  1,979,551      596,795
    Prepaid expenses and other receivables            4,958,306    2,366,734
    Inventories                                      14,773,060   10,633,566
                                                --------------- ------------

  Total Current Assets                               54,135,947   36,939,602
  Plant and equipment, net                           13,242,801   10,284,873
 Leasehold land, net                                  2,978,606    3,019,509
 Intangible asset, net                                  812,500      850,000
 Investment securities                                   52,843       52,732
 Investment in an associate                             135,735            -
                                                --------------- ------------

TOTAL ASSETS                                         71,358,432   51,146,716
                                                =============== ============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Current Liabilities:
    Non-trading foreign currency derivatives
     liabilities                                         11,065       11,041
    Accounts payable                                 17,798,596   10,738,714
    Other payables and accrued liabilities            5,051,365    3,563,308
    Income taxes payable                                855,227      876,739
    Bank borrowings                                  21,704,893   14,787,714
                                                --------------- ------------

  Total Current Liabilities                          45,421,146   29,977,516
                                                --------------- ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
    Preferred Stock
    Par value: $0.0001
  Authorized: 10,000,000 shares
  Issued and outstanding: none                                -            -

    Common stock
    Par value : $0.0001
    Authorized: 100,000,000 shares
    Issued and outstanding: 2010 -
     13,582,106 shares (2009 - 13,582,106
     shares)                                              1,358        1,358
    Additional paid-in capital                        5,173,097    5,065,426
    Accumulated other comprehensive income            2,082,617    2,023,858
    Retained earnings                                18,680,214   14,078,558
                                                --------------- ------------

TOTAL STOCKHOLDERS' EQUITY                           25,937,286   21,169,200
                                                --------------- ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           71,358,432   51,146,716
                                                =============== ============

<b>Media and Investor Inquiries:
</b>Henry H. Ngan
Chief Financial Officer
+1-917-887-0614
Email Contact

Financial Profiles, Inc.
Tricia Ross
(310) 478-2700
Email Contact