Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF
THE
SECURITIES AND EXCHANGE ACT OF 1934
Date
of
Report (Date of Earliest Event Reported): April 2, 2007
CHINA
SECURITY & SURVEILLANCE
TECHNOLOGY,
INC.
(Exact name of registrant as specified in its charter)
|
Delaware
|
000-50917
|
98-0509431
|
|
(State
of Incorporation)
|
(Commission
File No.)
|
(IRS
Employer ID No.)
|
13/F,
Shenzhen Special Zone Press Tower, Shennan Road
Futian
District, Shenzhen, China, 100020
(Address of Principal Executive Offices)
(86)
755-83765666
Registrant’s
Telephone Number, Including Area Code:
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR.425)
o
Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
1.01. Entry into a Material
Definitive Agreement
On
April
2, 2007, China Security & Surveillance Technology, Inc. (the “Company”)
entered into an Equity Transfer Agreement (the “Equity
Transfer Agreement”)
with
China Safetech Holdings Limited, a British Virgin Islands Corporation and a
wholly-owned subsidiary of the Company (“Safetech”),
and
Zheng Huang, the sole owner of Chain Star Investments Limited, a Hong Kong
Corporation (“Chain
Star”)
pursuant to which Safetech purchased 100% ownership of Chain Star from Mr.
Huang. Chain Star is a holding company of Shenzhen Hongtianzhi Electronics
Co.,
Ltd. (“Hongtianzhi”),
a
corporation incorporated in the People’s Republic of China. Hongtianzhi is one
of the top digital camera manufacturers in China and was awarded as one of
the
top 50 enterprises in the Chinese security industry in 2005.
Under
the
Equity Transfer Agreement, the Company will pay a total consideration of RMB
250
million (approximately $32.1 million) in exchange for 100% ownership of Chain
Star, consisting of RMB 125 million (approximately USD$16 million) in cash
and
RMB 125 million (approximately $16 million) in the Company’s shares of common
stock. RMB 12.5 million (approximately $1.6 million) of the purchase price
was
paid as a deposit on October 16, 2006. An additional RMB 112.5 million
(approximately USD$14.4 million) was paid on the date of the execution of the
Equity Transfer Agreement. The number of shares issuable in satisfaction of
the
equity portion of the purchase price is 2,800,711 (based upon the average of
the
closing price of the Company’s common stock on the OTCBB for the 20 trading days
prior to the date of the signing of the letter of intent on October 2, 2006)
which must be issued within 90 days following the signing of the Equity Transfer
Agreement. If Hongtianzhi fails to achieve an audited net income of RMB 15
million (approximately $1.9 million) or a net profit plus returned tax of RMB
20
million (approximately $2.6 million) in the fiscal year of 2006, the total
consideration shall be reduced proportionately.
The
Equity Transfer Agreement also contains certain “make good” provisions. Under
the Equity Transfer Agreement, Mr. Huang pledged to the Company a total of
RMB
30 million (approximately $3.9 million) worth of the Company’s shares of common
stock that he will receive as partial consideration for the acquisition to
secure his make good obligation under the Equity Transfer Agreement. The Equity
Transfer Agreement established minimum net income thresholds in the range of
RMB
25 million (approximately $3.2 million), RMB 28 million (approximately $3.6
million) and RMB 30 million (approximately $3.9 million) for the fiscal year
of
2007 and RMB 35 million (approximately $4.5 million), RMB 38 million
(approximately $4.9 million) and RMB 40 million (approximately $5.1 million)
for
the fiscal year of 2008. If actual audited net income for the 2007 fiscal year
is greater than RMB 25 million, but less than RMB 28 million, then the Company
will return RMB 7 million (approximately $0.9 million) worth of the pledged
stock. If actual audited net income for the 2007 fiscal year is greater than
RMB
28 million, but less than RMB 30 million, then the Company will return RMB
12
million (approximately $1.5 million) worth of the pledged stock. If actual
audited net income for the 2007 fiscal year is greater than RMB 30 million,
then
the Company will return RMB 15 million (approximately $1.9 million) worth of
pledged stock. For fiscal year 2008, if the actual audited net income is greater
than RMB 35 million, but less than RMB 38 million, then the Company will return
RMB 7 million worth of pledged stock. If actual audited net income for the
2008
fiscal year is greater than RMB 38 million, but less than RMB 40 million, then
the Company will return RMB 12 million worth of pledged stock. Finally, if
actual audited net income for the 2008 fiscal year is greater than RMB 40
million, then the Company will return RMB 15 million worth of the pledged stock.
On
April
2, 2007, the Company and Safetech consummated the acquisition of the 100%
ownership of Chain Star which owns 100% of Hongtianzhi, pursuant to the terms
set forth in the Equity Transfer Agreement as described above. The information
set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein
by reference in its entirety.
Item
3.02. Unregistered Sales of
Equity Securities
The
information pertaining to the Company’s shares of common stock in Item 1.01 is
incorporated herein by reference in its entirety. The shares of the Company’s
common stock issuable to Mr. Huang under the Equity Transfer Agreement have
not
been registered under the Securities Act of 1933, as Amended and may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements. This current report on Form 8-K does
not constitute an offer to sell, or a solicitation of an offer to buy, any
security and shall not constitution an offer, solicitation or sale in any
jurisdiction in which such offering would be unlawful.
ITEM
9.01 FINANCIAL
STATEMENTS AND EXHIBITS
| (a) |
Financial
Statements of Businesses
Acquired.
|
The
financial information that is required pursuant to this Item will be filed
by
amendment not later than 71 calendar days after the date that this initial
report on Form 8-K is required to be filed.
| (b) |
Pro-forma
Financial Report.
|
The
financial information that is required pursuant to this Item will be filed
by
amendment not later than 71 calendar days after the date that this initial
report on Form 8-K is required to be filed.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
China
Security & Surveillance Technology, Inc.
Date:
April 2, 2007
/s/
Tu
Guo Shen
Chief
Executive Officer