UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C.
20549
FORM
10-K/A
(Amendment
No. 1)
[Mark
One]
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
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SECURITIES
EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2007
OR
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
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SECURITIES
EXCHANGE ACT OF 1934
For
the transition period from
____________
to
____________
Commission
File Number: 0-024828
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SORL
AUTO PARTS, INC.
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(Exact
Name of Registrant as Specified in Its
Charter)
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Delaware
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30-0091294
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(State
or other jurisdiction of
incorporation or
organization)
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(I.R.S.
Employer
Identification
No.)
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No.
1169
Yumeng
Road
Ruian
Economic Development District
Ruian
City, Zhejiang Province 325200
People’s
Republic of China
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
86-577-65817720
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Securities
registered pursuant to section 12(b) of the Act:
None
Securities
registered pursuant to section 12(g) of the Act:
Common
Stock
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act.
Yes
o
No
x
Indicate
by check mark if the registrant is not required to file reports pursuant
to
Section 13 or Section 15(d) of the Act.
Yes
o
No
x
Indicate
by check mark whether the Registrant:
(1)
has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period
that the Registrant was required to file such reports) and (2) has been
subject
to such filing requirements for the past 90 days.
Yes
x
No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment
to this
Form 10-K.
x
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
o
Accelerated
filer
o
Non-accelerated
filer
o
Smaller
reporting company
x
Indicate
by check mark whether the Registrant is a shell company (as defined in
Rule
12b-2 of the Exchange Act).
Yes
o
No
x
State
issuer’s revenues for its most recent fiscal year December 31, 2007:
$115,760,070.
State
the
aggregate market value of the voting and non-voting common equity held
by
non-affiliates computed by reference to the price at which the common equity
was
sold, or the average bid and asked price of such common equity as of the
last
business day or registrant’s most recently completed second fiscal quarter. As
of June 30, 2007, the value was approximately $49,822,927.
State
the
number of shares outstanding of each of the issuer’s classes of common equity:
18,279,254 as of March 17, 2008.
EXPLANATORY
NOTE
This
report on Form 10-K/A is filed to amend and restate the following items
of our
Form 10-K filed on March 27, 2008 (the “Initial Report”) and
includes
the complete text of each amended and restated item:
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Part
II, Item 5 (“Market For Registrant’s Common Equity, Related Stockholder
Matters And Issuer Purchases of Equity Securities”). The table under the
sub-heading “Securities Authorized For Issuance Under Equity Compensation
Plans” is amended and restated to
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(i)
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add
the title of “Equity Compensation Plan Information” to the
table;
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(ii)
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add
the row of “Equity Compensation plans approved by security holders” to the
table;
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(iii)
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add
the weighted average exercise price of outstanding options, warrants
and
rights to the table.
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The
Initial Report disclosed, in Part II, Item 8, Note 17, the exercise price
for
60,000 outstanding options issued on March 1, 2006, as well as the exercise
price for 4,128 outstanding options issued on June 20, 2007. The two exercise
prices are $4.79 and $7.25, respectively, but the weighted average exercise
price of the aggregate amount of options was not included in the Equity
Compensation Plan Information table in the Initial Report.
and;
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(iv)
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add,
in the narratives below the table, a cross reference to Part
III Item 11
that contains
information
about the major terms of the 2005 Stock Compensation
Plan.
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·
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Part
III, Item 11 (“Executive Compensation”). The Summary Compensation Table
and the notes thereto have been revised to add the 2006 compensation
information to the table and the introductory narratives and add 2007
compensation information to the notes. On the Director Compensation
Table
,
note (3) is revised to include a brief description of the options
granted
to non-employee directors (originally in the narratives under
the notes),
and
notes (4) and (5) are revised by changing the year 2006
to
2007. Also, under the sub-heading of “Equity Benefit Plans,” in the brief
paragraph “Administration,” add “as are permitted therein” to the end of
the sentence describing the Compensation Committee’s discretion in
administering the plan (“The Compensation committee of our board of
directors administers the 2005 Compensation Plan and has complete
discretion to make all decisions relating to our 2005 Compensation
Plan.”). Finally, delete the last sentence in the brief paragraph
“Administration” (“Our compensation committee may also re-price
outstanding options and modify outstanding awards in other
ways.”).
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·
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Part
III, Item 15 (“Exhibits and Financial Statement Schedules”). An Auditor’s
Consent, which was not included in the Initial Report, is added
hereto as
Exhibit 23. According to the Consent, the auditor consents to
the
incorporation by reference of the consolidated financial statements
in the
Initial Report into the previously filed Registration Statement
(Form S-8;
filed on October 19, 2005).
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TABLE
OF CONTENTS
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PART
II
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ITEM
5.
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MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
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4
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PART
III
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ITEM
11.
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EXECUTIVE
COMPENSATION
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6
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ITEM
15.
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EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
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11
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SIGNATURES
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12
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PART
II
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Price
Range of Common Stock
On
April
18, 2006, SORL Auto Parts, Inc. was approved for listing its common shares
on
the NASDAQ Capital Market and commence trading its shares on NASDAQ under
the
symbol “SORL”. The Company was further approved for listing on NASDAQ Global
Market on November 21, 2006. High and low sales prices per share of our
Common
Shares for each quarter ended during 2007 and 2006 are as follows:
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Quarter
Ended
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High
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Low
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2007
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First
Quarter
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9.88
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7.37
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Second
Quarter
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8.96
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6.75
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Third
Quarter
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8.30
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6.01
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Forth
Quarter
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9.46
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6.07
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2006
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First
Quarter
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5.95
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4.16
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Second
Quarter
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12.00
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5.65
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Third
Quarter
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8.21
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5.81
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Forth
Quarter
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12.00
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5.77
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Stockholders
At
March
12, 2008, we had approximately 848 registered stockholders of record of
our
common stock. This number does not include shares held by brokerage clearing
houses, depositories or otherwise in unregistered form.
Dividend
We
have
not historically declared or paid any cash dividends on our common stock
and do
not anticipate paying any cash dividends in the foreseeable future. Payment
of
cash dividends, if any, in the future will be at the discretion of our
board of
directors and will depend upon our debt and equity structure, earnings
and
financial condition, need for capital in connection with possible future
acquisitions and other factors including economic conditions, regulatory
restrictions and tax considerations. Additionally, amounts available for
dividends are dependent on the profits available for distribution from
our PRC
joint venture. Under current PRC law, our PRC joint venture is regarded
as a
foreign invested enterprise in China. Although dividends paid by foreign
invested enterprises are not subject to any PRC corporate withholding tax,
PRC
law permits payment of dividends only out of net income as determined in
accordance with PRC accounting standards and regulations. Determination
of net
income under PRC accounting standards and regulations may differ from
determination under U.S. GAAP in significant aspects, such as the use of
different principles for recognition of revenues and expenses. Under PRC
law,
our PRC joint venture is required to set aside a portion of its net income
each
year to fund designated statutory reserve funds. These reserves are not
distributable as cash dividends. As a result, our primary internal source
of
funds for dividend payments is subject to these and other legal and contractual
restrictions and uncertainties, which in turn may limit or impair our ability
to
pay dividends to our shareholders although we do not presently anticipate
paying
any dividends. Moreover, any transfer of funds from us to our PRC joint
venture,
either as a shareholder loan or as an increase in registered capital, is
subject
to registration with or approval by PRC governmental authorities. These
limitations on the flow of funds between us and our PRC joint venture could
restrict our ability to act in response to changing market conditions.
Additionally to date, our PRC Joint Venture has not distributed any profits
and
does not anticipate doing so for the near term.
Securities
Authorized For Issuance under Equity Compensation Plans
The
following table summarizes the securities authorized for issuance under
our 2005
Stock Compensation Plan, the number of shares of our common stock issuable
upon
the exercise of outstanding options, warrants and rights, the weighted
average
exercise of such options and the number of additional shares of our common
stock
remaining available for issuance.
Equity
Compensation Plan Information
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Plan
Category
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Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
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Weighted
average exercise price of outstanding option warrants and
rights
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Number
of securities available for future issuance under equity compensation
plans
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Equity
Compensation plans
approved
by security holders
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--
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--
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--
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Equity
Compensation plans not approved by security holders
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64,128
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$
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4.95
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1,582,244
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Total
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64,128
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$
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4.95
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1,582,244
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Our
2005
Stock Compensation Plan was adopted by our board of directors in July 2005.
We
have reserved 1,700,000 shares for issuance under the 2005 Stock Compensation
Plan of which options to purchase 64,128 shares have been granted and 53,628
shares have been awarded to date. Material terms of the 2005 Stock Compensation
Plan are described in Part III Item 11 under “Equity Benefit
Plans.”
Recent
Sales of Registered Securities; Use of Proceeds from Registered
Securities.
On
November 30, 2006, SORL completed its follow-on public offering of 4,285,714
shares of common stock at $7.25 per share. Maxim Group LLC and Chardan
Capital
Markets, LLC acted as representatives of the underwriters. Gross proceeds
were
approximately $31.1 million. Net proceeds after approximately $2.2 million
of
underwriters’ commissions and approximately $0.7 million of related offering
expenses were approximately $28.2 million. On December 13, 2006, Maxim
Group
LLC, the lead underwriter of the follow-on offering, exercised the
over-allotment option in full to purchase an additional 642,857 shares
of common
stock. After deduction of the underwriter’s discount of $0.3 million,
approximately $4.3 million was received by the Company. The aggregate net
proceeds to the Company of this offering were approximately US$32.5 million,
which included $4.3 million as a result of the exercise of the over-allotment
option.
As
of
December 31, 2006, the Company used approximately $22.7 million out of
the net
proceeds for working capital or new projects, including approximately $16.6
million for temporary repayment of short-term bank loan and $6.1 million
as
capital expenditures for the purchase of the land use right from the Ruili
Group
(a related party) and for the construction of the new plant. The Company
had
reached agreement with a local bank to temporarily repay its outstanding
obligations when it had sufficient cash in account before spending the
funds
according to its business plan.
During
the first and second quarter of 2007, approximately $3.5 million, $2.1
million,
and $0.6 million out of the net offering proceeds were used for new machinery
purchase, construction of the new plant, and R&D efforts, respectively.
Also, the Joint Venture once again incurred bank a debt position with
approximately $1.5 million in short term bank loans occurring in the second
quarter of 2007.
On
September 28, 2007, Ruili Group Ruian Auto Parts Co. Ltd., a subsidiary
of the
Company purchased land rights, a manufacturing plant, and an office building
from Ruili Group Co. Ltd., a related party, for an aggregate purchase price
of
approximately RMB152 million (approximately US$20.2 million). DTZ Debenham
Tie Leung Ltd., an internationally recognized appraiser, appraised the
total
asset value at RMB154 million (approximately US$20.5 million). The purchase
price was paid by the Company by transferring to Ruili Group the Company’s $9
million investment in an existing project that includes a
new-facility-in-progress and prepayment of land use rights. The remaining
balance of $11 million was paid by the cash generated from operations and
a bank
credit line.
Other
than the payments to Ruili Group as mentioned above, none of the net offering
proceeds were paid, directly or indirectly, to directors, officers and
persons
who beneficially own ten percent or more of our equity securities.
PART
III
Item
11. EXECUTIVE COMPENSATION
Compensation
Discussion and Analysis
Overview
of Executive Compensation Program
The
Compensation Committee of our board of directors has responsibility for
establishing, implementing and monitoring our executive compensation program
philosophy and practices. The Compensation Committee seeks to ensure that
the
total compensation paid to our named executive officers is fair, reasonable
and
competitive. Generally, the types of compensation and benefits provided
to named
executive officers are similar to those provided to our other officers.
Throughout
this Annual Report, the individuals who served as our Chief Executive Officer
and Chief Financial Officer during fiscal 2007, and who are included in
the
Summary Compensation Table are referred to as the “named executive
officers.”
Compensation
Philosophy and Objectives
The
Compensation Committee believes that an effective executive compensation
program
should provide base annual compensation that is reasonable in relation
to
individual executive’s job responsibilities and reward the achievement of both
annual and long-term strategic goals of our company.
Because
of the size of our company, the small number of executive officers in our
company, and our company’s financial priorities, the Committee has decided not
to implement or offer any retirement plans, pension benefits, deferred
compensation plans, or other similar plans for our executive officers.
Accordingly, the components of the executive compensation currently consist
of
cash salary. The Compensation Committee will consider using stock option
grants
to provide executives with longer-term incentives.
As
a
manufacturing company operating in Zhejiang Province, China, the Compensation
Committee also takes the local average executives’ salary level into account in
its compensation decisions. The Compensation Committee may reassess the
proper
level of equity and cash compensation in light of the company’s improved
profitability and working capital situation.
Role
of Executive Officers in Compensation Decisions
The
Compensation Committee makes all compensation decisions for the named executive
officers and approves recommendations regarding equity awards to all of
our
officers. Decisions regarding the non-equity compensation of other officers
are
made by the Chief Executive Officer.
The
Compensation Committee and the Chief Executive Officer annually review
the
performance of each named executive officer (other than the Chief Executive
Officer, whose performance is reviewed only by the Committee). The conclusions
reached and recommendations based on these reviews, including with respect
to
salary adjustments and annual award amounts, are presented to the Committee.
The
Committee can exercise its discretion in modifying any recommended adjustments
or awards to executives.
Setting
Executive Compensation
Based
on
the foregoing objectives, the Committee has structured the Company’s annual cash
and incentive-based cash and non-cash executive compensation to motivate
executives to achieve the business goals set by the Company, to reward
the
executives for achieving such goals, and to retain the executives. In doing
so,
the Committee does not employ outside compensation consultants. The Compensation
Committee utilized this data to set compensation for our executive officers
at
levels targeted at or around the average of the compensation amounts provided
to
executives at comparable local companies considering, for each individual,
their
individual experience level related to their position with us. There is
no
pre-established policy or target for the allocation between either cash
and
non-cash incentive compensation.
2007
Executive Compensation Components
For
2007,
the sole component of compensation for the named executive officers was
base
salary.
The
Company provides named executive officers and other employees with a base
salary
to compensate them for services rendered during the fiscal year. Base salary
ranges for the named executive officers are determined for each executive
based
on his or her position and responsibility.
During
its review of base salaries for executives, the Committee primarily considers:
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the
negotiated terms of each executive employment
agreement;
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internal
review of the executive’s compensation, both individually and relative to
other executive officers; and
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individual
performance of the executive.
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Salary
levels are typically considered annually as part of the company’s performance
review process, as well as upon a change in job responsibility. Merit-based
increases to salaries are based on the Compensation Committee’s assessment of
the individual’s performance. Base salaries for the named executive officers in
2007 have not been changed from the base salaries in effect during the
prior
year.
Compensation
Committee Report
The
Compensation Committee has reviewed and discussed with management the
“Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K
and, based on such review and discussions, has recommended to our board
of
directors that the foregoing “Compensation Discussion and Analysis” be included
in this Annual Report.
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Yi
Guang Huo
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Zhi
Zhong Wang
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Jiang
Hua Feng
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Summary
Compensation Table
The
following table presents summary information concerning all compensation
paid or
accrued by us for services rendered in all capacities during 2006 and 2007
by
Mr. Xiao Ping Zhang and Ms. Zong Yun Zhou, who are the only individuals
who
served as our principal executive and financial officers during the years
ended
December 31, 2007 and 2006. No other executive officer received compensation
in
excess of $100,000 for each of the fiscal years then ended.
Summary
Compensation Table
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Name
and Position
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Year
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Salary
($)
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Bonus
($)
(1)
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Option
Awards
($)
(2)
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Total
($)
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Mr.
Xiao Ping Zhang, CEO (1)
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2007
2006
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50,000
50,000
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—
—
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—
—
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50,000
50,000
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Ms.
Zong Yun Zhou, CFO (2)
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2007
2006
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20,000
20,000
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—
—
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—
—
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20,000
20.000
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______________________
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(1)
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Mr.
Zhang is also employed by the Ruili Group which makes separate
payments to
him for his services to that company. Mr. Zhang did not receive
any
compensation other than the cash salary of $50,000 listed herein
from the
Company in each of 2006 and 2007;
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(2)
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Ms.
Zhou did not receive any of compensation other than the cash
salary of
$20,000 listed herein from the Company in each of 2006 and
2007.
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Employment
Agreements
Effective
May 1, 2006, the Company entered into employment agreements with Mr. Xiao
Ping
Zhang, our Chief Executive Officer, Mr. Xiao Feng Zhang, our Chief Operating
Officer, and Ms. Zong Yun Zhou, our Chief Financial Officer. The term of
their
employment with the Company is for a period of five years with an additional
one
year period unless the Company decides not to renew. Their compensation
is
subject to an annual review by the Compensation Committee of the Board
of
Directors. The agreements also set forth their respective duties and
confidentiality responsibilities.
Severance
and Change of Control Arrangements
There
is
no severance or change of control arrangements.
Equity
Benefit Plans
Our
2005
Stock Compensation Plan was adopted by our board of directors in July 2005.
Share
Reserve. We have reserved 1,700,000 shares for issuance under the 2005
Stock
Compensation Plan of which options to purchase 64,128 shares have been
granted
and 53,628 shares have been awarded to date.
Administration
. The Compensation Committee of our board of directors administers the
2005
Compensation Plan and has complete discretion to make all decisions relating
to
our 2005 Compensation Plan as are permitted therein.
Eligibility.
Employees, non-employee members of our board of directors, advisors and
consultants are eligible to participate in our 2005 Stock Compensation
Plan.
Types
of
Awards. Our 2005 Stock Compensation Plan provides for awards of stock options
to
purchase shares of our common stock and awards of restricted shares of
our
common stock, stock appreciation rights and performance shares.
Change
in
Control . If we are merged or consolidated with another company, and such
merger
or consolidation results in a change in control, an award under the 2005
Stock
Compensation Plan will be subject to the terms of the merger agreement,
which
may provide that the option continues, is assumed or substituted, fully
vests or
is settled for the full value of such option in cash, followed by the
cancellation of such option.
Amendments
or Termination. Our board of directors may amend, suspend or terminate
the 2005
Stock Compensation Plan at any time. If our board amends the plan, it does
not
need to seek stockholder approval of the amendment unless required to comply
with any applicable tax or regulatory environment. No award may be made
under
the 2005 Stock Compensation Plan after the tenth anniversary of the effective
date of the Plan.
Options.
The Board may determine the number of shares covered by each option, the
exercise price therefore, the conditions and limitations on the exercise
and any
restrictions on the shares issuable. Optionees may pay the exercise price
by
using cash, shares of common stock that the optionee already owns or, at
the
election of the Board, a promissory note, an immediate sale of the option
shares
through a broker designated by us, or other property.
Performance
Shares . The Board may make performance share awards entitling recipients
to
acquire shares of Common Stock upon the attainment of specified performance
goals.
Stock
Appreciation Rights . A participant who exercises a stock appreciation
right
receives the increase in fair market value of our common stock over the
fair
market value on the date of grant.
Restricted
Shares . Restricted shares may be awarded under the 2005 Stock Compensation
Plan. Restricted shares vest at the times and payment terms therefor shall
be
determined by our compensation committee.
Adjustments
. If there is a subdivision of our outstanding shares of common stock,
a
dividend declared in stock or a combination or consolidation of our outstanding
shares of common stock into a lesser number of shares, corresponding adjustments
will be automatically made in each of the following: (a) the number of
shares of
common stock available for future awards under the 2005 Stock Compensation
Plan;
(b) any limitation on the maximum number of shares of common stock that
may be
subject to awards in a fiscal year; (c) the number of shares of common
stock
covered by each outstanding option or stock appreciation right, as well
as the
exercise price under each such award; (d) the number of shares of common
stock
covered by the options to be granted under the automatic option grant program;
or (e) the number of stock units included in any prior award that has not
yet
been settled.
Stock
Option Grants
None
of
the Company’s executive officers have received any grant of stock options or
stock awards.
Limitation
of Liability and Indemnification of Officers and Directors
As
permitted by Delaware law, we have adopted provisions in our amended and
restated certificate of incorporation and bylaws, both of which will become
effective upon the closing of this offering, that limit or eliminate the
personal liability of our directors and officers to the fullest extent
permitted
by Delaware law, as it now exists or may in the future be amended, and
against
all expenses and liabilities reasonably incurred in connection with their
service for or on behalf of SORL. In addition, the new amended and restated
certificate of incorporation provides that our directors will not be personally
liable for monetary damages to us for breaches of their fiduciary duty
as
directors, unless they violated their duty of loyalty to us or our stockholders,
acted in bad faith, knowingly or intentionally violated the law, authorized
illegal dividends or redemptions or derived an improper personal benefit
from
their action as directors. We maintain liability insurance which insures
our directors and officers against certain losses and which insures us
against
our obligations to indemnify our directors and officers.
In
addition, we have entered into separate indemnification agreements with
each of
our directors and officers. These agreements, among other things, require
us to
indemnify each director and officer to the fullest extent permitted by
Delaware
law, including indemnification of expenses such as attorneys’ fees, judgments,
fines and settlement amounts incurred by the director or officer in any
action
or proceeding, including any action or proceeding by or in right of us,
arising
out of the person’s services as a director or officer. At present, we are not
aware of any pending or threatened litigation or proceeding involving any
of our
directors, officer, employees or agents in which indemnification would
be
required or permitted. We believe provisions in our new amended and restated
certificate of incorporation and indemnification agreements are necessary
to
attract and retain qualified persons as directors and officers.
Compensation
of Directors
The
following table sets forth the compensation paid to our directors other
than our
Chief Executive Officer for 2007:
Director
Compensation Table
|
Name
(1)
|
|
Fees
Earned or
Paid
in Cash
($)
(2)
|
|
Option
Awards
($)
(3)
|
|
All
other compensation
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xiao
Feng Zhang (4)
|
|
|
—
|
|
|
—
|
|
|
30,000
|
|
|
30,000
|
|
|
COO
& Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jung
Kang Chang (5)
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
15,000
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Li
Min Zhang
|
|
|
10,000
|
|
|
14,909
|
|
|
|
|
|
24,909
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhi
Zhong Wang
|
|
|
10,000
|
|
|
14,909
|
|
|
|
|
|
24,909
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yi
Guang Huo
|
|
|
10,000
|
|
|
14,909
|
|
|
|
|
|
24,909
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jiang
Hua Feng
|
|
|
10,000
|
|
|
14,909
|
|
|
|
|
|
24,909
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
|
(1)
|
Mr.
Xiaoping Zhang does not receive additional compensation for
his role as a
Director. For information relating to Mr. Xiaoping Zhang’s compensation as
Chairman and Chief Executive Officer, see the Summary Compensation
Table
above.
|
|
(2)
|
The
amounts in this column represent cash payments made to Non-Employee
Directors for attendance at meetings during the
year.
|
|
(3)
|
The
amounts in this column represent the compensation cost of stock
options
awarded by the Compensation Committee granted in 2006, except
that these
amounts do not include any estimate of forfeitures. On March
1, 2006, the
Board of Directors approved a total of 60,000 options (See
Note
17 of the Notes to Consolidated Financial Statements in Part
II Item
8
) to be issued to the four non-employee directors. Each
non-employee director received options to purchase 15,000 shares
of common
stock with an exercise price of $4.79 per share. The contractual
term of
the options was three years. The grant date fair value of option
awards granted were determined in accordance with Statement
of Financial
Accounting Standards No. 123R (SFAS123(R)) and are recognized
as
compensation cost over the requisite service period. The amount
recognized
for these awards was calculated using the Black Scholes option-pricing
model, and our 2005 Compensation Plan is described under this
Item
11.
|
|
(4)
|
Mr.
Xiao Feng Zhang is not a non-employee director and did not
receive cash
compensation for attending board meetings or other stock options
in 2007.
However, he received cash compensation of $30,000 as salary
for his
managerial role with the Company. Mr. Zhang is also employed
by the Ruili
Group which makes separate payments to him for his services
to that
company.
|
|
(5)
|
Mr.
Jung Kang Chang is not a non-employee director and did not
receive cash
compensation for attending board meetings or other stock options
in 2007.
However, he received cash compensation of $15,000 as salary
for his
managerial role with the Company.
|
We
use a
combination of cash and stock-based compensation to attract and retain
qualified
candidates to serve on our board of directors. Directors who also are employees
of our company currently receive no compensation for their service as directors
or as members of board committees. In setting director compensation, we
consider
the significant amount of time that directors dedicate to the fulfillment
of
their director responsibilities, as well as the competency and skills required
of members of our board. The directors’ current compensation schedule has been
in place since March 2007. The directors’ annual compensation year begins with
the annual election of directors at the annual meeting of shareholders.
The
annual retainer year period has been in place for directors since 2007.
Periodically, our board of directors reviews our director compensation
policies
and, from time to time, makes changes to such policies based on various
criteria
the board deems relevant.
Non-employee
directors are reimbursed for travel, lodging and other reasonable out-of-pocket
expenses incurred in attending meetings of our board of directors and for
meetings of any committees of our board of directors on which they serve.
During
2007, our non-employee directors had each received or earned cash compensation
for attending board or committee meetings of $10,000.
Compensation
Committee Interlocks and Insider Participation
As
noted
above, the compensation committee of our board of directors consists of
Messrs.
Wang, Feng and Huo. None of our executive officers serve as a member of
the
board of directors or compensation committee of any entity that has one
or more
executive officers who serve on our board of directors or compensation
committee.
ITEM
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
EXHIBIT
NO.
|
|
DOCUMENT
DESCRIPTION
|
|
|
|
|
|
3.1
(1)
|
|
Articles
of Incorporation
|
|
|
|
|
|
3.2
(1)
|
|
Bylaws
|
|
|
|
|
|
10.1
(2)
|
|
Share
Exchange Agreement and Plan of Reorganization
|
|
|
|
|
|
10.2
(3)
|
|
Joint
Venture Agreement (revised)
|
|
|
|
|
|
10.3
(4)
|
|
Employment
Agreement—Xiao Ping Zhang
|
|
|
|
|
|
10.4
(4)
|
|
Employment
Agreement—Xiao Feng Zhang
|
|
|
|
|
|
10.5
(4)
|
|
Employment
Agreement—Zong Yun Zhou
|
|
|
|
|
|
23
(5)
|
|
Consent
of Independent Auditors
|
|
|
|
|
|
31.1
(3)
|
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a) and
Rule
15d-14(a), promulgated under the Securities and Exchange Act
of 1934, as
amended.
|
|
31.2
(3)
|
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14(a) and
Rule
15d-14(a), promulgated under the Securities and Exchange Act
of 1934, as
amended.
|
|
|
|
|
|
31.3
(6)
31.4
(6)
|
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a) and
Rule
15d-14(a), promulgated under the Securities and Exchange Act
of 1934, as
amended, with respect to the Form 10-K/A.
Certification
of Principal Financial Officer pursuant to Rule 13a-14(a) and
Rule
15d-14(a), promulgated under the Securities and Exchange Act
of 1934, as
amended, with respect to the Form 10-K/A.
|
|
|
|
|
|
32.1
(7)
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer).
|
|
|
|
|
|
32.2
(7)
|
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 (Chief Financial
Officer).
|
___________
|
(1)
|
Incorporated
herein by reference from the Registrant’s Form 10-QSB filed with the
Securities and Exchange Commission, on May 28,
2003.
|
|
(2)
|
Incorporated
herein by reference from the Registrant’s Form 8-K Current Report and
amendment thereto as filed with the Securities and Exchange Commission,
on
May 24, 2004.
|
|
|
|
|
(3)
|
Previously
filed in and incorporated herein by reference to Form 10-K filed
on March
27, 2008.
|
|
(4)
|
Incorporated
herein by reference from the Registrant’s Form S-1 as filed with the
Securities and Exchange Commission on August 31,
2006.
|
|
(5)
|
Filed
herewith.
|
|
|
|
|
(6)
|
Filed
herewith.
|
|
(7)
|
Previously
furnished in and incorporated by reference to Form 10-K filed
on March 27,
2008. In accordance with Item 601(b)(32) of Regulation S-K, this
Exhibit
is not deemed “filed” for purposes of Section 18 of the Exchange Act or
otherwise subject to the liabilities of that section. Such certifications
will not be deemed incorporated by reference into any filing
under the
Securities Act of 1933, as amended, or the Exchange Act, except
to the
extent that the registrant specifically incorporates it by
reference.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange
Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorized, on this 22
th
day of
July, 2008.
|
|
|
|
|
|
SORL
AUTO PARTS, INC.
|
|
|
|
|
|
|
By:
|
/s/
Xiao Ping Zhang
|
|
|
Xiao
Ping Zhang
|
|
|
Chief
Executive Officer and Chairman
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report
has been
signed below by the following person on behalf of the Registrant and in
the
capacities.
|
Name
|
|
Position
|
|
Date
|
|
|
|
|
|
|
|
/s/
Xiao Ping Zhang
|
|
Chief
Executive Officer, and Chairman
|
|
July
22, 2008
|
|
Xiao
Ping Zhang
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Xiao Feng Zhang
|
|
Chief
Operating Officer and Director
|
|
July
22, 2008
|
|
Xiao
Feng Zhang
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Zong Yun Zhou
|
|
Chief
Financial Officer
|
|
July
22, 2008
|
|
Zong
Yun Zhou
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Li Min Zhang
|
|
Director
|
|
July
22, 2008
|
|
Li
Min Zhang
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Zhi Zhong Wang
|
|
Director
|
|
July
22, 2008
|
|
Zhi
Zhong Wang
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Yi Guang Huo
|
|
Director
|
|
July
22, 2008
|
|
Yi
Guang Huo
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Jiang Hua Feng
|
|
Director
|
|
July
22, 2008
|
|
Jiang
Hua Feng
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Jung
Kang Chang
|
|
Director
|
|
July
22, 2008
|
|
Jung
Kang Chang
|
|
|
|
|