As filed with the Securities and Exchange Commission on December 3, 2010
Registration No. 333-_________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
China Electric Motor, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 26-1357787 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Sunna Motor Industry Park
Jian’an, Fuyong Hi-Tech Park
Baoan District, Shenzhen, Guangdong, 518103
People’s Republic of China
+(86) 755-8149-9969
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
Corporation Service Company
2711 Centerville Road
Suite 400
Wilmington, DE 19808
(866) 403-5272
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With a Copy to:
| Steven Liu, Esq. | Daniel I. Goldberg, Esq. |
| Jeanie Park, Esq. | DLA Piper LLP (US) |
| DLA Piper UK LLP Beijing Representative Office | 1251 Avenue of the Americas |
| 20th Floor, South Tower, Beijing Kerry Center | New York, New York 10020-1104 |
| 1 Guanghua Road, Chaoyang District | Telephone: (212) 335-4966 |
| Beijing 100020, People’s Republic of China | |
| Telephone: +(86) 10-6561-1788 |
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer x | Smaller reporting company ¨ |
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities To Be Registered (1) | Proposed Maximum Aggregate Offering Price (2)(3) | Amount of Registration Fee | ||||||
| Common Stock, par value $0.0001 per share | ||||||||
| Preferred Stock, par value $0.0001 per share | ||||||||
| Warrants | ||||||||
| Units (5) | ||||||||
| Total | $ | 50,000,000 | $ | 3,565 | (4) | |||
| (1) | There are being registered hereunder such indeterminate number of shares of common stock and preferred stock, such indeterminate number of warrants to purchase common stock and/or preferred stock, and such indeterminate number of units as may be sold by the registrant from time to time, which together shall have an aggregate initial offering price not to exceed $50,000,000 or its equivalent in any other currency, currency units, or composite currency or currencies. The proposed maximum offering price per unit will be determined, from time to time, by the registrant in connection with the issuance by the registrant of the securities registered hereunder. Any securities registered hereunder may be sold separately or as units with the other securities registered hereunder. |
| (2) | Not specified as to each class of securities to be registered hereunder pursuant to General Instruction II.D. to Form S-3 under the Securities Act. |
| (3) | Subject to footnote (1), there are also being registered hereunder an indeterminate principal amount or number of shares of common stock or preferred stock that may be issued upon conversion of, or in exchange for, preferred stock registered hereunder or upon exercise of warrants registered hereunder, as the case may be, or pursuant to the anti-dilution provisions of any such securities. |
| (4) | Calculated pursuant to Rule 457(o) under the Securities Act, which permits the registration fee to be calculated on the basis of the maximum aggregate offering price of all securities listed. |
| (5) | Consisting of some or all of the securities listed above, in any combination, including common stock, preferred stock and warrants. |
The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
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 is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 3, 2010
PROSPECTUS
$50,000,000
Common Stock
Preferred Stock
Warrants
Units
CHINA ELECTRIC MOTOR, INC.
We may offer, issue and sell shares of our common stock, preferred stock, warrants and units from time to time, or any combination of these securities, in one or more issuances. This prospectus provides a general description of offerings of these securities that we may undertake. The aggregate public offering price of securities being offered will not exceed $50,000,000.
We will provide specific terms of these offerings and securities in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement, and any documents incorporated by reference, may also add, update or change information contained in this prospectus. You should read this prospectus, the applicable prospectus supplement, any documents incorporated by reference and any related free writing prospectus carefully before buying any of the securities being offered.
We may offer and sell these securities to or through one or more underwriters, dealers and agents, or directly to purchasers, on a continuous or delayed basis.
Our common stock trades on the NASDAQ Global Market under the symbol “CELM.” On December 2, 2010, the last reported sale price of our common stock on the NASDAQ Global Market was $4.90 per share. As of November 11, 2010, the aggregate market value of our outstanding common stock held by non-affiliates was approximately $78.4 million based on 21,942,243 shares of outstanding common stock, of which 9,761,679 shares are held by affiliates, and a price of $6.44 per share, which was the last reported sale price of our common stock as quoted on the NASDAQ Global Market on that date. The applicable prospectus supplement will contain information, where applicable, as to any other listing, if any, of the securities covered by the applicable prospectus supplement.
The mailing address and telephone number of our principal executive offices is Sunna Motor Industry Park, Jian’an, Fuyong Hi-Tech Park, Baoan District, Shenzhen, Guangdong, 518103, People’s Republic of China; +(86) 755-8149-9969.
INVESTING IN OUR SECURITIES INVOLVES RISKS. YOU SHOULD REVIEW CAREFULLY THE RISKS AND UNCERTAINTIES DESCRIBED UNDER THE HEADING “RISK FACTORS” ON PAGE 2 AND CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT AND ANY RELATED FREE WRITING PROSPECTUS, AND UNDER SIMILAR HEADINGS IN THE OTHER DOCUMENTS THAT ARE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED 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.
TABLE OF CONTENTS
| Page | ||
| ABOUT THIS PROSPECTUS | ii | |
| ABOUT CHINA ELECTRIC MOTOR | 1 | |
| RISK FACTORS | 2 | |
| SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 3 | |
| USE OF PROCEEDS | 4 | |
| DILUTION | 4 | |
| DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK | 4 | |
| DESCRIPTION OF WARRANTS | 9 | |
| DESCRIPTION OF UNITS | 10 | |
| PLAN OF DISTRIBUTION | 11 | |
| LEGAL MATTERS | 13 | |
| EXPERTS | 13 | |
| WHERE YOU CAN FIND MORE INFORMATION | 13 | |
| INCORPORATION OF CERTAIN INFORMATION BY REFERENCE | 13 |
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, or SEC, using a “shelf” registration process. Under this shelf registration process, we may offer shares of common stock, preferred stock, warrants or units described in this prospectus in one or more offerings up to a total dollar amount of $50,000,000. This prospectus provides you with a general description of the securities we may offer. Each time we offer a type or series of securities described in this prospectus, we will provide a prospectus supplement, or information that is incorporated by reference into this prospectus, containing more specific information about the terms of the securities that we are offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings and securities. This prospectus, together with applicable prospectus supplements, any information incorporated by reference and any related free writing prospectuses, includes all material information relating to these offerings and securities. We may also add, update or change in the prospectus supplement any of the information contained in this prospectus or in the documents that we have incorporated by reference into this prospectus, including without limitation, a discussion of any risk factors or other special considerations that apply to these offerings or securities or the specific plan of distribution. If there is any inconsistency between the information in this prospectus and a prospectus supplement or information incorporated by reference having a later date, you should rely on the information in that prospectus supplement or incorporated information having a later date. We urge you to read carefully this prospectus, any applicable prospectus supplement and any related free writing prospectus, together with the information incorporated herein by reference as described under the heading “Where You Can Find More Information,” before buying any of the securities being offered.
You should rely only on the information we have provided or incorporated by reference in this prospectus, any applicable prospectus supplement and any related free writing prospectus. We have not authorized anyone to provide you with different information. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus.
Neither the delivery of this prospectus nor any sale made under it implies that there has been no change in our affairs or that the information in this prospectus is correct as of any date after the date of this prospectus. You should assume that the information in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate only as of the date on the front of the document and that any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus, any applicable prospectus supplement or any related free writing prospectus, or any sale of a security.
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”
Market data and certain industry forecasts used in this prospectus and the documents included in this prospectus were obtained from market research, publicly available information and industry publications. We believe that these sources are generally reliable, but the accuracy and completeness of such information is not guaranteed. We have not independently verified this information, and we do not make any representation as to the accuracy of such information.
In this prospectus, any prospectus supplement and any related free writing prospectus, unless otherwise indicated, the terms “we,” “our,” “us,” the “Company” and “China Electric” refer to China Electric Motor, Inc., formerly known as SRKP 21, Inc., a Delaware corporation, and its subsidiaries. “China” or “PRC” refers to the People’s Republic of China. “RMB” or “Renminbi” refers to the legal currency of China and “$” or “U.S. Dollar” refers to the legal currency of the United States.
ii
ABOUT CHINA ELECTRIC MOTOR, INC.
We conduct our business through our subsidiaries, which include our wholly owned subsidiary, Attainment Holdings Limited, or Attainment Holdings, a British Virgin Islands corporation, Attainment Holdings’ wholly owned subsidiary, Luck Loyal International Investment Limited, or Luck Loyal, a company organized under the laws of Hong Kong and Luck Loyal’s wholly owned subsidiary, Shenzhen YuePengCheng Motor Co., Ltd., or Shenzhen YPC, a company organized under the laws of the PRC, and Shenzhen YPC’s wholly owned subsidiary, Ningbo Heng Bang Long Electrical Equipment Co., Ltd., or HBL Electric, a company organized under the laws of the PRC.
Through Shenzhen YPC, we engage in the design, production, marketing and sale of micro motor products. Our products, which are incorporated into consumer electronics, automobiles, power tools, toys and household appliances, are sold under our “Sunna” brand name. Through HBL Electric, we research and develop, produce, market and sell micro motor products, such as auto electrical equipment, plastic products and other hardware for electrical appliances and accessories. In line with our strategic growth plans, on November 6, 2010, HBL Electric entered into an asset and business purchase agreement with Ningbo Bang Shi Da Electrical Equipment Co., Ltd., a limited liability company organized under PRC law, and Fan Wenda, its chairman of the board to purchase assets used in connection with the production and processing of auto electrical equipment, plastic products, hardware, auto fittings and moulds.
We are focused on providing micro motor products that meet the growing demand for efficient, quiet and compact motors from manufacturers of consumer electronics, automobiles, power tools, toys and household appliances. We produce both direct current, or DC, motors and alternating current, or AC, motors, each of which has different functions and uses. We sell our products directly to original equipment manufacturers and to distributors and resellers both domestically in the PRC and internationally to customers in Korea and Hong Kong. We have two manufacturing facilities in China, one of which is located in Shenzhen, Guangdong, which has approximately 15,000 square meters (approximately 161,000 square feet) of manufacturing space and the other in Ningbo, Zhejiang, which has approximately 5,000 square meters (approximately 54,000 square feet) of manufacturing space. As of September 30, 2010, we had approximately 1,500 full-time employees.
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 May 6, 2009, we (1) closed a share exchange transaction, pursuant to which we became the 100% parent of Attainment Holdings, (2) assumed the operations of Attainment Holdings and its subsidiaries, including Shenzhen YPC, and (3) changed our name from SRKP 21, Inc. to China Electric Motor, Inc. In February 2010, we completed a public offering consisting of 5,000,000 shares of our common stock. Roth Capital Partners, LLC and WestPark Capital, Inc. acted as co-underwriters in the public offering. Our shares of common stock were sold to the public at a price of $4.50 per share, for gross proceeds of approximately $22.5 million.
Shenzhen YPC was incorporated in November 1999 in Shenzhen, Guangdong Province, PRC. Luck Loyal is primarily a holding company and was founded in Hong Kong in October 2004. Attainment Holdings is primarily a holding company founded in the British Virgin Islands in July 2008. HBL Electric was incorporated on July 26, 2010 and is located in Yuyao, Zhejiang Province, PRC.
Our principal executive offices are located in Shenzhen, Guangdong, China. Our corporate offices are located at the Sunna Motor Industry Park, Jian’an, Fuyong Hi-Tech Park, Baoan District, Shenzhen, Guangdong, 518103, People’s Republic of China. Our telephone number is + (86) 755-8149-9969 and our website address is http://www.szmotor.com. Our agent for service of process in the United States is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, DE 19808. Information on our website does not constitute part of this prospectus or any prospectus supplement.
1
RISK FACTORS
You should carefully consider the “Risk Factors” included under Part I, Item 1A, of our annual report on Form 10-K for the fiscal year ended December 31, 2009, filed with the Securities and Exchange Commission on March 31, 2010, Part II, Item 1A, of our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2010, filed with the SEC on May 17, 2010, Part II, Item 1A, of our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2010, filed with the SEC on August 10, 2010, and Part II, Item 1A, of our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2010, filed with the SEC on November 12, 2010, in addition to any subsequent report that we file pursuant to the Exchange Act which will also be filed as a supplement to this prospectus or will be contained in a post-effective amendment to the registration statement of which this prospectus forms a part. You should read the risk factors we include in the reports we file with the Securities and Exchange Commission, including those that are incorporated by reference in this prospectus. The risk factors set forth in such reports are dated as of the date of the particular report to which they relate. Please see “Where You Can Find More Information” beginning on page 13 of this prospectus for more information on these reports. The risks and uncertainties that we describe in these documents are not the only risks and uncertainties that we face. Additional risks and uncertainties not currently known to us or that we currently deem not to be material also may impair our business operations. If any of the risks actually occur, our business, results of operations, stock price and/or financial condition could suffer. In that event, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.
Certain equity transactions occurring in the future could result in dilution to current equity holders.
Future equity transactions, including the sale of shares of common stock or preferred stock, or the exercise of options or warrants or other convertible securities, could result in dilution. From time to time, we may sell restricted stock and warrants to investors in private placements conducted by broker-dealers, or in negotiated transactions. Because the securities may be restricted, the securities may be sold at a greater discount to market prices compared to a public securities offering, and the exercise price of the warrants may be at or even lower than market prices. These transactions cause dilution to existing shareholders. Also, from time to time, options may be issued to employees and third parties, with exercise prices equal to market. Exercise of in-the-money options, warrants and other convertible securities will result in dilution to existing shareholders; the amount of dilution will depend on the spread between market and exercise price, and the number of shares involved.
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this prospectus contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements are based on our current expectations, assumptions, estimates and projections about our business and our industry, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| · | the completion and expected benefits of our planned expansion and acquisitions; |
| · | the success of our growth strategies; |
| · | our ability to raise additional capital to fund our operations; |
| · | our reliance on our major customers for a large portion of our net sales; |
| · | our ability to accurately forecast amounts of supplies needed to meet customer demand; |
| · | exposure to market risk through sales in international markets; |
| · | 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; |
| · | our ability to recruit and retain high-quality employees, officers and directors; |
| · | the strength, effectiveness and commitment of our management; |
| · | the cost of complying with current and future governmental regulations and the impact of any changes in the regulations on our operations; and the current economic environment affecting us and the markets we serve; |
| · | inflation and fluctuations in foreign currency exchange rates; |
| · | our ability to obtain all necessary government certifications, approvals, and/or licenses to conduct our business; |
| · | sources of revenue and anticipated revenue, including the contribution from the growth of new products and markets; and |
| · | the accuracy of our estimates regarding expenses, liquidity, future revenues, capital requirements and needs for additional financing, and our ability to obtain additional financing. |
In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” or the negative of these terms, or other comparable terminology or similar expressions intended to identify forward-looking statements. While we believe that we have a reasonable basis for each forward-looking statement, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. We discuss many of these risks, uncertainties and other factors in greater detail under the heading “Risk Factors” contained in this prospectus and under similar headings in any amendments or supplements to this prospectus. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date such forward-looking statements are made. You should read carefully this prospectus and the information incorporated herein by reference as described under the heading “Incorporation of Certain Information by Reference” in this prospectus completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify all of our forward-looking statements by these cautionary statements.
3
Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying prospectus supplement, information incorporated by reference or free writing prospectus, we will use the net proceeds from the sale of the securities offered hereby for general corporate purposes, which may include working capital, capital expenditures, development costs, strategic investments or possible acquisitions. We have not allocated any portion of the net proceeds for any particular use at this time. The net proceeds may be invested temporarily until they are used for their stated purpose. Specific information concerning the use of proceeds from the sale of any securities will be included in the prospectus supplement relating to such securities.
DILUTION
We will set forth in any prospectus supplement the following information regarding any material dilution of the equity interests of investors purchasing securities in an offering under this prospectus:
| · | the net tangible book value per share of our equity securities before and after the offering; |
| · | the amount of the increase in such net tangible book value per share attributable to the cash payments made by the purchasers in the offering, and |
| · | the amount of the immediate dilution from the public offering price which will be absorbed by such purchasers. |
DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK
The following description of our common stock and preferred stock, together with any additional information we include in any applicable prospectus supplement or any related free writing prospectus, summarizes the material terms and provisions of our common stock and the preferred stock that we may offer under this prospectus. While the terms we have summarized below will apply generally to any future common stock or preferred stock that we may offer, we will describe the particular terms of any class or series of these securities in more detail in the applicable prospectus supplement. For the complete terms of our common stock and preferred stock, please refer to our certificate of incorporation, as amended, and our bylaws that are incorporated by reference into the registration statement of which this prospectus is a part or may be incorporated by reference in this prospectus or any applicable prospectus supplement. The terms of these securities may also be affected by Delaware General Corporation Law. The summary below and that contained in any applicable prospectus supplement or any related free writing prospectus are qualified in their entirety by reference to our certificate of incorporation, as amended, and our bylaws.
Common Stock
We are authorized to issue 100,000,000 shares of common stock, $0.0001 par value per share. As of December 2, 2010, we had approximately 21,942,243 shares of common stock issued and outstanding.
General
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.
4
Holders of our common stock:
| · | have equal ratable rights to dividends from funds legally available therefore, if declared by the board of directors; |
| · | are entitled to share ratably in all our assets available for distribution to holders of common stock upon our liquidation, dissolution or winding up; |
| · | do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions; and |
| · | 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 holder or 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 the our directors.
Securities Exchange Listing
Our common stock is listed on the NASDAQ Global Market under the symbol “CELM.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Corporation Service Company.
Preferred Stock
We are authorized to 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. As of the date of this prospectus, no shares of our preferred stock were outstanding.
Our certificate of incorporation, as amended, authorizes our board of directors to issue preferred stock from time to time in one or more classes or one or more series within any class, with such voting powers, designations, preferences, limitations or restrictions as determined by the board of directors for each class or series of stock subject to the provisions of our certificate of incorporation, as amended. Preferred stock is available for possible future financings or acquisitions and for general corporate purposes without further authorization of stockholders unless such authorization is required by applicable law, the rules of the NASDAQ Global Market or other securities exchange or market on which our stock is then listed or admitted to trading.
Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes could, under some circumstances, have the effect of delaying, deferring or preventing a change in control of China Electric.
A prospectus supplement relating to any series of preferred stock being offered will include specific terms relating to the offering. Such prospectus supplement will include:
| · | the title and stated or par value of the preferred stock; |
| · | the number of shares of the preferred stock offered, the liquidation preference per share and the offering price of the preferred stock; |
5
| · | the dividend rate(s), period(s) and/or payment date(s) or method(s) of calculation thereof applicable to the preferred stock; |
| · | whether dividends shall be cumulative or non-cumulative and, if cumulative, the date from which dividends on the preferred stock shall accumulate; |
| · | the provisions for a sinking fund, if any, for the preferred stock; |
| · | any voting rights of the preferred stock; |
| · | the provisions for redemption, if applicable, of the preferred stock; |
| · | any listing of the preferred stock on any securities exchange; |
| · | the terms and conditions, if applicable, upon which the preferred stock will be convertible into our common stock, including the conversion price or the manner of calculating the conversion price and conversion period; |
| · | if appropriate, a discussion of Federal income tax consequences applicable to the preferred stock; and |
| · | any other specific terms, preferences, rights, limitations or restrictions of the preferred stock. |
The terms, if any, on which the preferred stock may be convertible into or exchangeable for our common stock will also be stated in the preferred stock prospectus supplement. The terms will include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option, and may include provisions pursuant to which the number of shares of our common stock to be received by the holders of preferred stock would be subject to adjustment.
Anti-Takeover Effects of Provisions of our Charter Documents and Delaware Law
The following is a summary of certain provisions of Delaware law, our certificate of incorporation, as amended, and our bylaws. This summary does not purport to be complete and is qualified in its entirety by reference to the corporate law of Delaware and our certificate of incorporation, as amended, and bylaws.
Certificate of Incorporation and Bylaws
Preferred Stock. Under our certificate of incorporation, as amended, our board of directors has the power to authorize the issuance of up to 10,000,000 shares of preferred stock, and to determine the designations, preferences, limitations and restrictions, including voting rights, of those shares without further vote or action by our stockholders. The issuance of preferred stock may:
| · | delay, defer or prevent a change in control; |
| · | discourage bids for our common stock at a premium over the market price of our common stock; |
| · | adversely affect the voting and other rights of the holders of our common stock; and |
| · | discourage acquisition proposals or tender offers for our shares and, as a consequence, inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. |
Special Meeting Requirements. Our bylaws provide that special meetings of our stockholders may only be called at the request of our board of directors or by any officer instructed by the board of directors.
No Cumulative Voting. Our certificate of incorporation, as amended, does not include a provision for cumulative voting for directors.
6
Delaware Anti-Takeover Statute
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, as amended, and bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or tender offers or delaying or preventing a change in control of our company, including changes a stockholder might consider favorable. In particular, our certificate of incorporation, as amended, 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. |
Such provisions may have the effect of discouraging a third-party from acquiring our company, even if doing so would be beneficial to its 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 us outweigh the disadvantages of discouraging such proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.
7
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.
Limitation of Liability
The Delaware General Corporation Law permits Delaware corporations to eliminate or limit the monetary liability of directors for breach of their fiduciary duty of care, subject to limitations. Our certificate of incorporation, as amended, provides that our directors are not liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for: (i) any breach of the director’s duty of loyalty to us or our stockholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv) any transaction from which a director derived an improper personal benefit.
The Delaware General Corporation Law provides for indemnification of directors, officers, employees and agents, subject to limitations. Article 8 of our certificate of incorporation, as amended, provides for indemnification by us, to the fullest extent permitted by Section 145 of the DGCL, as amended from time to time, each person that such section grants us the power to indemnify. Our directors and officers also are insured against certain liabilities for actions taken in such capacities, including liabilities under the Securities Act.
Section 145(a) of the Delaware General Corporation Law provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if such person had no cause to believe the conduct was unlawful.
Section 145(b) of the Delaware General Corporation Law provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted under similar standards to those set forth above, except that no indemnification may be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine that despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to be indemnified for such expenses which the court shall deem proper.
Section 145 of the Delaware General Corporation Law further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsection (a) and (b) or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses actually and reasonably incurred by such person in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that the corporation may purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against such officer or director and incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liabilities under Section 145.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law, our certificate of incorporation provides that none or our directors shall be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. However, this provision does not eliminate or limit the liability of a director for acts or omissions not in good faith or for breaching such person’s duty of loyalty, engaging in intentional misconduct or knowingly violating the law, paying a dividend or approving a stock repurchase which was illegal, or obtaining an improper personal benefit. A provision of this type has no effect on the availability of equitable remedies, such as injunction or rescission, for breach of fiduciary duty.
We have a policy of directors’ liability insurance that insures the directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances.
We believe that the foregoing policies and provisions of our certificate of incorporation, as amended, and bylaws are necessary to attract and retain qualified officers and directors. Insofar as indemnification for liabilities arising under the Securities Act may be permitted with respect to our directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
8
DESCRIPTION OF WARRANTS
General
We may issue warrants to purchase common stock and/or preferred stock. We may issue the warrants independently or together with any underlying securities, and the warrants may be attached or separate from the underlying securities. We may also issue a series of warrants under a separate warrant agreement to be entered into between us and a warrant agent. The warrant agent will act solely as our agent in connection with the warrants of such series and will not assume any obligation or relationship of agency for or with holders or beneficial owners of warrants.
The following description is a summary of selected provisions relating to the warrants that we may issue. The summary is not complete. When warrants are offered in the future, a prospectus supplement, information incorporated by reference or a free writing prospectus, as applicable, will explain the particular terms of those securities and the extent to which these general provisions may apply. The specific terms of the warrants as described in a prospectus supplement, information incorporated by reference, or free writing prospectus will supplement and, if applicable, may modify or replace the general terms described in this section.
This summary and any description of warrants in the applicable prospectus supplement, information incorporated by reference or free writing prospectus is subject to and is qualified in its entirety by reference to all the provisions of any specific warrant document or agreement. We will file each of these documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement of which this prospectus is a part on or before the time we issue a series of warrants. See “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” below for information on how to obtain a copy of a warrant document when it is filed.
When we refer to a series of warrants, we mean all warrants issued as part of the same series under the applicable warrant agreement.
The applicable prospectus supplement, information incorporated by reference or free writing prospectus, may describe the terms of any warrants that we may offer, including but not limited to the following:
| · | the title of the warrants; |
| · | the total number of warrants; |
| · | the price or prices at which the warrants will be issued; |
| · | the price or prices at which the warrants may be exercised; |
| · | the currency or currencies that investors may use to pay for the warrants; |
| · | the date on which the right to exercise the warrants will commence and the date on which the right will expire; |
| · | whether the warrants will be issued in registered form or bearer form; |
| · | information with respect to book-entry procedures, if any; |
| · | if applicable, the minimum or maximum amount of warrants that may be exercised at any one time; |
| · | if applicable, the designation and terms of the underlying securities with which the warrants are issued and the number of warrants issued with each underlying security; |
| · | if applicable, the date on and after which the warrants and the related underlying securities will be separately transferable; |
| · | if applicable, a discussion of material United States federal income tax considerations; |
| · | if applicable, the terms of redemption of the warrants; |
| · | the identity of the warrant agent, if any; |
| · | the procedures and conditions relating to the exercise of the warrants; and |
| · | any other terms of the warrants, including terms, procedures, and limitations relating to the exchange and exercise of the warrants. |
9
DESCRIPTION OF UNITS
We may issue units composed of any combination of our common stock, preferred stock and warrants. We will issue each unit so that the holder of the unit is also the holder of each security included in the unit. As a result, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The following description is a summary of selected provisions relating to units that we may offer. The summary is not complete. When units are offered in the future, a prospectus supplement, information incorporated by reference or a free writing prospectus, as applicable, will explain the particular terms of those securities and the extent to which these general provisions may apply. The specific terms of the units as described in a prospectus supplement, information incorporated by reference, or free writing prospectus will supplement and, if applicable, may modify or replace the general terms described in this section.
This summary and any description of units in the applicable prospectus supplement, information incorporated by reference or free writing prospectus is subject to and is qualified in its entirety by reference to the unit agreement, collateral arrangements and depositary arrangements, if applicable. We will file each of these documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement of which this prospectus is a part on or before the time we issue a series of units. See “Where You Can Find More Information” and “Incorporation of Certain Information by Reference” below for information on how to obtain a copy of a document when it is filed.
The applicable prospectus supplement, information incorporated by reference or free writing prospectus may describe:
| · | the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately; |
| · | any provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities composing the units; |
| · | whether the units will be issued in fully registered or global form; and |
| · | any other terms of the units. |
The applicable provisions described in this section, as well as those described under “Description of Common Stock and Preferred Stock” and “Description of Warrants” above, will apply to each unit and to each security included in each unit, respectively.
10
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus from time to time in one or more transactions, including without limitation:
| · | through agents; |
| · | to or through underwriters; |
| · | through broker-dealers (acting as agent or principal); |
| · | directly by us to purchasers (including our affiliates and stockholders), through a specific bidding or auction process, a rights offering, or otherwise; |
| · | through a combination of any such methods of sale; or |
| · | through any other methods described in a prospectus supplement. |
The distribution of securities may be effected, from time to time, in one or more transactions, including:
| · | block transactions (which may involve crosses) and transactions on the NASDAQ Global Market or any other organized market where the securities may be traded; |
| · | purchases by a broker-dealer as principal and resale by the broker-dealer for its own account pursuant to a prospectus supplement; |
| · | ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers; |
| · | sales “at the market” to or through a market maker or into an existing trading market, on an exchange or otherwise; and |
| · | sales in other ways not involving market makers or established trading markets, including direct sales to purchasers. |
The securities may be sold at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices relating to the prevailing market prices or at negotiated prices. The consideration may be cash or another form negotiated by the parties. Agents, underwriters or broker-dealers may be paid compensation for offering and selling the securities. That compensation may be in the form of discounts, concessions or commissions to be received from us or from the purchasers of the securities. Dealers and agents participating in the distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities may be deemed to be underwriting discounts and commissions under the Securities Act. If such dealers or agents were deemed to be underwriters, they may be subject to statutory liabilities under the Securities Act.
We may also make direct sales through subscription rights distributed to our existing stockholders on a pro rata basis, which may or may not be transferable. In any distribution of subscription rights to our stockholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed securities directly to third parties or may engage the services of one or more underwriters, dealers or agents, including standby underwriters, to sell the unsubscribed securities to third parties.
Some or all of the securities that we offer through this prospectus may be new issues of securities with no established trading market. Any underwriters to whom we sell our securities for public offering and sale may make a market in those securities, but they will not be obligated to do so and they may discontinue any market making at any time without notice. Accordingly, we cannot assure you of the liquidity of, or continued trading markets for, any securities that we offer.
11
Agents may, from time to time, solicit offers to purchase the securities. If required, we will name in the applicable prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, any agent involved in the offer or sale of the securities and set forth any compensation payable to the agent. Unless otherwise indicated, any agent will be acting on a best efforts basis for the period of its appointment. Any agent selling the securities covered by this prospectus may be deemed to be an underwriter of the securities.
If underwriters are used in an offering, securities will be acquired by the underwriters for their own account and may be resold, from time to time, in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale, or under delayed delivery contracts or other contractual commitments. Securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. If an underwriter or underwriters are used in the sale of securities, an underwriting agreement will be executed with the underwriter or underwriters at the time an agreement for the sale is reached. The applicable prospectus supplement will set forth the managing underwriter or underwriters, as well as any other underwriter or underwriters, with respect to a particular underwritten offering of securities, and will set forth the terms of the transactions, including compensation of the underwriters and dealers and the public offering price, if applicable. This prospectus, the applicable prospectus supplement and any applicable free writing prospectus will be used by the underwriters to resell the securities.
If a dealer is used in the sale of the securities, we, or an underwriter, will sell the securities to the dealer, as principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of resale. To the extent required, we will set forth in the prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, the name of the dealer and the terms of the transactions.
We may directly solicit offers to purchase the securities and may make sales of securities directly to institutional investors or others. These persons may be deemed to be underwriters with respect to any resale of the securities. To the extent required, the prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, will describe the terms of any such sales, including the terms of any bidding or auction process, if used.
Agents, underwriters and dealers may be entitled under agreements which may be entered into with us to indemnification by us against specified liabilities, including liabilities incurred under the Securities Act, or to contribution by us to payments they may be required to make in respect of such liabilities. If required, the prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, will describe the terms and conditions of such indemnification or contribution. Some of the agents, underwriters or dealers, or their affiliates may be customers of, engage in transactions with or perform services for us or our subsidiaries or affiliates in the ordinary course of business.
Under the securities laws of some states, the securities offered by this prospectus may be sold in those states only through registered or licensed brokers or dealers.
Any person participating in the distribution of common stock registered under the registration statement that includes this prospectus will be subject to applicable provisions of the Exchange Act, and the applicable SEC rules and regulations, including, among others, Regulation M, which may limit the timing of purchases and sales of any of our common stock by any such person. Furthermore, Regulation M may restrict the ability of any person engaged in the distribution of our common stock to engage in market-making activities with respect to our common stock. These restrictions may affect the marketability of our common stock and the ability of any person or entity to engage in market-making activities with respect to our common stock.
Certain persons participating in an offering may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation M under the Exchange Act that stabilize, maintain or otherwise affect the price of the offered securities. If any such activities will occur, they will be described in the applicable prospectus supplement.
In compliance with the guidelines of the Financial Industry Regulatory Authority, or FINRA, the aggregate maximum discount, commission or agency fees or other items constituting underwriting compensation to be received by any FINRA member or independent broker-dealer will not exceed 8% of any offering pursuant to this prospectus and any applicable prospectus supplement, as the case may be.
To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution.
12
LEGAL MATTERS
The validity of the securities being offered by this prospectus will be passed upon for us by DLA Piper LLP (US), New York, New York. If the validity of any securities is also passed upon by counsel to any underwriters, dealers or agents, that counsel will be named in the prospectus supplement relating to that specific offering.
EXPERTS
The consolidated financial statements of China Electric Motor, Inc. as of December 31, 2009 and for the year ended December 31, 2009, appearing in our annual report on Form 10-K, have been incorporated by reference herein and in the registration statement in reliance upon the report of MaloneBailey, LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of China Electric Motor, Inc. as of December 31, 2008 and 2007 and for the years ended December 31, 2008 and 2007, appearing in our annual report on Form 10-K, have been incorporated by reference herein and in the registration statement in reliance upon the report of Kempisty & Company Certified Public Accountants PC, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information electronically with the SEC. You may read and copy these reports, proxy statements and other information at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. You can request copies of these documents by writing to the SEC and paying a fee for the copying costs. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. The SEC’s Internet site can be found at http://www.sec.gov. In addition, we make available on or through our Internet site copies of these reports as soon as reasonably practicable after we electronically file or furnish them to the SEC. Our Internet site can be found at http://www.szmotor.com. The investor relations page of our Internet site can be found at: http://szmotor.investorroom.com.
We have filed a registration statement on Form S-3 with the SEC with respect to the securities offered in this offering. This prospectus is part of that registration statement and, as permitted by the SEC’s rules, does not contain all of the information included in the registration statement. For further information about us and the securities offered in this offering, you may refer to the registration statement and its exhibits and schedules as well as the documents described herein or incorporated herein by reference. You can review and copy these documents at the public reference room maintained by the SEC or on the SEC’s Internet site as described above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information we incorporate by reference is an important part of this prospectus, and certain information that we will later file with the SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below as well as any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of the initial registration statement and prior to the effectiveness of this registration statement, and any filings made after the date of this prospectus until we sell all of the securities under this prospectus, except that we do not incorporate any document or portion of a document that was furnished and deemed by the rules of the SEC not to have been filed:
| · | our annual report on Form 10-K for the fiscal year ended December 31, 2009, filed with the SEC on March 31, 2010; |
13
| · | the portions of our definitive Proxy Statement on Schedule 14A for our 2010 Annual Meeting of Stockholders, filed with the SEC on July 2, 2010, that are incorporated by reference into our annual report on Form 10-K for the fiscal year ended December 31, 2009; |
| · | our quarterly report on Form 10-Q for the quarter ended March 31, 2010, filed with the SEC on May 17, 2010; |
| · | our quarterly report on Form 10-Q for the quarter ended June 30, 2010, filed with the SEC on August 10, 2010; |
| · | our quarterly report on Form 10-Q/A for quarter ended June 30, 2010, filed with the SEC on August 13, 2010; |
| · | our quarterly report on Form 10-Q for the quarter ended September 30, 2010, filed with the SEC on November 12, 2010; |
| · | our current reports on Form 8-K filed with the SEC on January 8, 2010, January 25, 2010, February 8, 2010, February 17, 2010, June 2, 2010, June 11, 2010, June 28, 2010, August 6, 2010, September 2, 2010, November 9, 2010 and November 29, 2010; and |
| · | the description of our common stock contained in our Registration Statement on Form 8-A (File No. 001-34613), filed with the SEC on January 25, 2010, including any amendment or report filed for the purpose of updating such description. |
Additionally, all reports and other documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act after (i) the date of the initial registration statement and prior to effectiveness of the registration statement; and (ii) the date of this prospectus and prior to the termination or completion of this offering, shall be deemed to be incorporated by reference in this prospectus and to be part hereof from the date of filing of such reports and other documents. Any information that we subsequently file with the SEC that is incorporated by reference as described above will automatically update and supersede any previous information that is part of this prospectus. Notwithstanding the foregoing, unless specifically stated otherwise, none of the information that we disclose under Items 2.02 and 7.01 of any current report on Form 8-K that we may furnish from time to time to the SEC will be incorporated by reference into, or otherwise included in, this prospectus.
We hereby undertake to provide without charge to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, upon written or oral request of any such person, a copy of any and all of the information that has been or may be incorporated by reference in this prospectus, other than exhibits to such documents. Requests should be directed to: China Electric Motor, Inc., Sunna Motor Industry Park, Jian’an, Fuyong Hi-Tech Park, Baoan District, Shenzhen, Guangdong, 518103, People’s Republic of China, Attn: Investor Relations, telephone: +(86) 755-8149-9969.
You should rely only on the information provided in and incorporated by reference into this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front cover of these documents.
14
CHINA ELECTRIC MOTOR, INC.
$50,000,000
Common Stock
Preferred Stock
Warrants
Units
PROSPECTUS
, 2010
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the fees and expenses incurred or expected to be incurred by China Electric Motor, Inc. in connection with the issuance and distribution of the securities being registered hereby, other than underwriting discounts and commissions. All of the amounts shown are estimated except the SEC registration fee. Estimated fees and expenses can only reflect information that is known at the time of filing this registration statement and are subject to future contingencies, including additional expenses for future offerings.
| SEC registration fee | $ | 3,565 | ||
| FINRA filing fee* | 5,000 | |||
| Transfer agent’s fees and expenses* | 6,000 | |||
| Printing expenses* | 5,000 | |||
| Listing fees | ** | |||
| Legal fees and expenses* | 30,000 | |||
| Accounting fees and expenses* | 15,000 | |||
| Miscellaneous fees and expenses* | 2,500 | |||
| Total | $ | 67,065 | ||
* Estimated solely for the purposes of this Item. Actual expenses may vary.
** The listing fee is based upon the principal amount of securities listed, if any, and is therefore not currently determinable.
Item 15. Indemnification of Officers and Directors
We are incorporated under the laws of the State of Delaware. Section 145 (“Section 145”) of the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (the “DGCL”), inter alia, provides that a Delaware corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. Article 8 of our certificate of incorporation, as amended, provides for indemnification by us, to the fullest extent permitted by Section 145 of the DGCL, as amended from time to time, each person that such section grants us the power to indemnify.
Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL (providing for liability of directors for unlawful payments of dividends or unlawful stock repurchases or redemptions), or (iv) for any transaction from which the director derived an improper personal benefit. Our certificate of incorporation, as amended, provides for such limitation of liability to the fullest extent permitted by DGCL.
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. 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; or |
II-1
| · | advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions. |
Our directors and officers are covered under directors’ and officers’ liability insurance policies maintained by us, subject to the limits of the policies, insuring such persons against various liabilities.
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 16. Exhibits
A list of exhibits filed herewith is contained in the exhibit index that immediately precedes such exhibits and is incorporated herein by reference.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(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 SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement,
provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act, 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.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act to any purchaser:
II-2
(i) Each prospectus filed by the 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
(ii) 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.
(5) That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 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 such purchaser:
(i) 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.
(6) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement 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.
(7) To supplement the prospectus, after the expiration of the subscription period to set forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such offering.
II-3
(8) To use its best efforts to distribute prior to the opening of bids, to prospective bidders, underwriters, and dealers, a reasonable number of copies of a prospectus which at that time meets the requirements of Section 10(a) of the Securities Act of 1933, and relating to the securities offered at competitive bidding, as contained in the registration statement, together with any supplements thereto, and to file an amendment to the registration statement reflecting the results of bidding, the terms of the reoffering and related matters to the extent required by the applicable form, not later than the first use, authorized by the issuer after the opening of bids, of a prospectus relating to the securities offered at competitive bidding, unless no further public offering of such securities by the issuer and no reoffering of such securities by the purchasers is proposed to be made.
(9) That, insofar as indemnification for liabilities arising under the Securities Act of 1933 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 Securities Act of 1933 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 or 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, 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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Shenzhen, People’s Republic of China, on the 3rd day of December, 2010.
| CHINA ELECTRIC MOTOR, INC. | ||
| By: | /s/ Yue Wang | |
| Yue Wang | ||
| Chief Executive Officer | ||
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Yue Wang, as his or her true and lawful attorneys-in-fact and agent, with full power of each to act alone, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462 and otherwise), and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their substitute or resubstitute, may lawfully do or cause to be done by virtue hereof.
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 | ||
| /s/ Yue Wang | Chief Executive Officer and Director | December 3, 2010 | ||
| Yue Wang | (Principal Executive Officer) | |||
| /s/ Heung Sang Fong | Chief Financial Officer, Corporate Secretary and Director | December 3, 2010 | ||
| Heung Sang Fong | (Principal Financial and Accounting Officer) | |||
| /s/ Fugui Wang | Chairman of the Board | December 3, 2010 | ||
| Fugui Wang | ||||
| /s/ Guoqiang Zhang | Director | December 3, 2010 | ||
| Guoqiang Zhang | ||||
| /s/ Liang Tang | Director | December 3, 2010 | ||
| Liang Tang | ||||
| /s/ James M. Lee | Director | December 3, 2010 | ||
| James M. Lee | ||||
| /s/ Tony Shen | Director | December 3, 2010 | ||
| Tony Shen |
II-5
Exhibit Index
Exhibit Number | Description | |
| 1.1* | Form of Underwriting Agreement with respect to Common Stock. | |
| 1.2* | Form of Underwriting Agreement with respect to Preferred Stock. | |
| 1.3* | Form of Underwriting Agreement with respect to Warrants. | |
| 1.4* | Form of Underwriting Agreement with respect to Units. | |
| 3.1.1 | Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the Registration Statement on Form 10-SB (File No. 000-53017) filed with the Securities and Exchange Commission on January 16, 2008). | |
| 3.1.2 | 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 January 25, 2010). | |
| 3.2 | Bylaws (incorporated by reference from Exhibit 3.2 to the Registration Statement on Form 10-SB (File No. 000-53017) filed with the Securities and Exchange Commission on January 16, 2008). | |
| 3.3 | Certificate of Ownership and Merger effecting name change filed with the Office of Secretary of State of Delaware on May 6, 2009 (incorporated by reference from Exhibit 3.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on May 12, 2009). | |
| 4.1 | Form of Specimen Certificate of Common Stock (incorporated by reference from Exhibit 4.3 to the Registration Statement on Form S-1/A (File No. 333-162459) filed with the Securities and Exchange Commission on January 11, 2010). | |
| 4.2* | Form of Specimen Preferred Stock Certificate. | |
| 4.3* | Form of Certificate of Designation of Preferred Stock. | |
| 4.4* | Form of Warrant Agreement (including Form of Warrant Certificate) with respect to Warrants to purchase Common Stock. | |
| 4.5* | Form of Warrant Agreement (including Form of Warrant Certificate) with respect to Warrants to purchase Preferred Stock. | |
| 4.6* | Form of Warrant Agreement (including Form of Warrant Certificate) with respect to Warrants to purchase Units. | |
| 4.7* | Form of Unit Agreement (including Form of Unit Certificate). | |
| 4.8 | Form of Warrant to Purchase Common Stock of China Electric Motor, Inc. dated October 11, 2007 (incorporated by reference from Exhibit 4.1 to the Registration Statement on Form 10-SB (File No. 000-53017) filed with the Securities and Exchange Commission on January 16, 2008). | |
| 4.9 | Form of Underwriters’ Warrant to Purchase Common Stock of China Electric Motor, Inc. dated February 3, 2010 (incorporated by reference from Exhibit 4.3 to the Registration Statement on Form S-1/A (File No. 333-162459) filed with the Securities and Exchange Commission on January 20, 2010). | |
| 4.10 | Registration Rights Agreement dated May 6, 2009 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 May 12, 2009). |
| 5.1 | Opinion of DLA Piper LLP (US). | |
| 23.1 | Consent of MaloneBailey, LLP. | |
| 23.2 | Consent of Kempisty & Company Certified Public Accountants PC. | |
| 23.3 | Consent of DLA Piper LLP (US) (included in Exhibit 5.1). | |
| 24.1 | Power of Attorney (included on the signature page to the registration statement). |
* To be filed as an amendment or as an exhibit to a document filed under the Exchange Act and incorporated by reference into this registration statement.