SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrantx
Filed by a Party other than the Registrant¨
Check the appropriate box:
SECURITIES AND EXCHANGE COMMISSION | |||
Washington, D.C. 20549 | |||
SCHEDULE 14A | |||
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) | |||
Filed by the Registrant [X] | |||
Filed by a Party other than the Registrant [ ] | |||
Check the appropriate box: | |||
[X] | Preliminary Proxy Statement | ||
Confidential, for Use of the Commission Only (as permitted by Rule | |||
Definitive Proxy Statement | |||
Definitive Additional Materials | |||
Soliciting Material |
ACL Semiconductors Inc.
(Name of Registrant as Specified In Its Charter)
N.A.
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
EAGLE MOUNTAIN CORPORATION | |||
(Name of Registrant as Specified In Its Charter) | |||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | |||
Payment of Filing Fee (Check the appropriate box): | |||
[X] | No fee required. |
Fee computed on table below per Exchange Act Rules 14a-6(i) |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
[ ] | Fee paid previously with preliminary materials. |
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
Amount Previously Paid: | |||
(2) | Form, Schedule or Registration Statement No.: | ||
(3) | Filing Party: | ||
(4) | Date Filed: |
ACL Semiconductors Inc.
Room 1701, 17/F, Tower 1
Enterprise Square, 9 Sheung Yuet Road
Kowloon Bay, Kowloon, Hong Kong
OctoberSTOCKHOLDERS
NOTICE IS HEREBY GIVEN2015
1) | To approve an amendment to the Company’s Certificate of Incorporation to effectuate a reverse stock split of the Company’s issued and outstanding shares of common stock at the ratio of one-for-eighteen; |
2) | To approve an amendment to the Company’s Certificate of Incorporation to increase the authorized number of shares of common stock from 50,000,000 shares to 500,000,000 shares; |
3) | To authorize the adjournment of the Special Meeting if necessary or appropriate, including to solicit additional proxies in the event that there are not sufficient votes at the time of the Special Meeting or adjournment or postponement thereof to approve any of the foregoing proposals; and |
4) | To transact other business that may properly come before the meeting and any postponement(s) or adjournment(s) thereof. |
(1) The election of six directors to serve until the next annual meeting of shareholders and until their successors are elected and qualified;
(2) The approvalbylaws of the amendment to our certificateCompany, the Board of incorporation, as amended (the “Certificate of Incorporation”), to change our corporate name from ACL Semiconductors Inc. to USmart Mobile Device Inc.; and
(3) The transaction of such other business as may properly come before the meeting.
The board of directorsDirectors has fixed the close of business on October 10, 2012June 8, 2015 as the record date (the “Record Date”) for the determination of shareholdersstockholders entitled to notice and to vote at the Special Meeting and any adjournment thereof. Holders of the Company’s common stock as of the Record Date are entitled to vote at the Special Meeting. This notice, the Proxy Statement and proxy card will be first sent or made available to stockholders on June 19, 2015.
1) | To approve an amendment to the Company’s Certificate of Incorporation to effectuate a reverse stock split of the Company’s issued and outstanding shares of common stock at the ratio of one-for-eighteen (the “Reverse Stock Split”); |
2) | To approve an amendment to the Company’s Certificate of Incorporation to increase the authorized number of shares of common stock from 50,000,000 shares to 500,000,000 shares; |
3) | To authorize the adjournment of the Special Meeting if necessary or appropriate, including to solicit additional proxies in the event that there are not sufficient votes at the time of the Special Meeting or adjournment or postponement thereof to approve any of the foregoing proposals; and |
4) | To transact other business that may properly come before the meeting and any postponement(s) or adjournment(s) thereof. |
The enclosed proxy statement contains information pertaining to theone vote per share on all matters to be voted on at the annual meeting.
Hong Kong , China
October 9, 2012
THIS MEETING IS VERY IMPORTANT TO US AND TO OUR SHAREHOLDERS. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PRE-ADDRESSED POSTAGE-PAID ENVELOPE AS DESCRIBED ON THE ENCLOSED PROXY CARD. YOUR PROXY, GIVEN THROUGH THE RETURN OF THE ENCLOSED PROXY CARD, MAY BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH OUR CORPORATE SECRETARY PRIOR TO THE MEETING A WRITTEN NOTICE OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
The Proxy Statementby stockholders. Holders of Series B Preferred Stock, Series C Preferred Stock and our Annual Report on Form 10-K for the fiscal year ended December 31, 2011Series D Preferred Stock are available on the Internet at http://www.acl-semicon.com/
ACL Semiconductors Inc.
Room 1701, 17/F, Tower 1
Enterprise Square, 9 Sheung Yuet Road
Kowloon Bay, Kowloon, Hong Kong
PROXY STATEMENT
Annual Meeting of Shareholders
November 16, 2012
The accompanying proxy and this proxy statement have been prepared by our management for the board of directors. Your proxy is being solicited by the board of directors for use at the 2012 Annual Meeting of Shareholders to be held at our office, located at Room 1703, 17/F., Tower 1, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong, on Friday, November 16, 2012 at 3:00 P.M., local time, or at any adjournment thereof. This proxy statement contains information about the matters to be considered at the meeting or any adjournments or postponements of the meeting and is first being mailed to shareholders, on or about October 19, 2012.
ABOUT THE MEETING
What is being considered at the meeting?
You will be voting for:
Who is soliciting your proxy?
Your proxy is being solicited by our board of directors.
Who is entitled to vote at the meeting?
You may vote if you owned stock asnumber of the close of business on October 10, 2012, which is the record date for determining who is eligible to vote at the annual meeting. Each share of common stock is entitled to one vote.
How do I vote?
You can vote either by attending the meeting and voting at the meeting or by completing, signing and returning the enclosed proxy card.
Can I change my mind after I vote?
Yes, you may change your mind at any time before the polls close at the meeting. You can change your vote by signing another proxy with a later date and returning it to us priorvotes equal to the meeting or by voting againnumber of shares of Common Stock such shares of preferred stock are convertible into at such time. On the meeting. Record Date, there were 39,684,495 shares of Common Stock outstanding, 8,000,000 shares of Series B Preferred Stock outstanding convertible into 720,000,000 shares of Common Stock, 2,050,000 shares of Series C Preferred Stock outstanding convertible into 3,690,000,000 shares of Common Stock, and 638,509 shares of Series D Preferred Stock outstanding convertible into 1,149,316,200 shares of Common Stock.
What if I sign and return my proxy card but I do not include voting instructions?
If you sign your proxy card and return it to us but you do not include voting instructions as to any proposal, your proxy will be voted FOR the election of the board of directors’ nominees for directors and FOR the approval of the amendment to our Certificate of Incorporation to change our corporate name from ACL Semiconductors Inc. to USmart Mobile Device Inc.
What does it mean if I receive more than one proxy card?
It means that you have multiple accounts with brokers and/or our transfer agent. Please vote all of these shares. We recommend that you contact your broker and/or our transfer agent, to consolidate as many accounts as possible under the same name and address. Our transfer agent is American Stock Transfer, American Stock Transfer & Trust Company, 6201 15th Avenue, Brooklyn, NY 11219.
Will my shares be voted if I do not provide my proxy?
LLC, you are the “record holder” of those shares. If you are a record holder, these proxy materials have been provided directly to you by the Company.
1. | Vote by Internet. The website address for Internet voting is on your vote instruction form. |
2. | Vote by mail. Mark, date, sign and mail promptly the enclosed proxy card (a postage-paid envelope is provided for mailing in the United States). |
3. | Vote by telephone. You may vote by proxy by calling the toll free number found on the vote instruction form. |
4. | Vote in person. Attend and vote at the Special Meeting. |
1. | Vote by Internet. The website address for Internet voting is on your vote instruction form. |
2. | Vote by mail. Mark, date, sign and mail promptly your vote instruction form (a postage-paid envelope is provided for mailing in the United States). |
3. | Vote by telephone. You may vote by proxy by calling the toll free number found on the vote instruction form. |
4. | Vote in person. Obtain a valid legal proxy from the organization that holds your shares and attend and vote at the Special Meeting. |
If you hold your shares directly in your own name, they will only be voted if you either sign and deliver a proxy or attend and vote at the meeting.
How many votes must be present to hold the meeting?
In order for us to conduct our meeting, we must have a quorum. We will have a quorum, and be able to conduct the meeting, if a majority of our outstanding shares as of October 10, 2012, are present at the meeting. Your shares will be counted as being present at the meeting if you attend the meeting or if you properly return a proxy by mail or if you give your broker voting instructions and the broker votes your shares.
On the record date, October 10, 2012, we had[ · ]shares of common stock outstanding. This number of shares does not include treasury stock. We will have a quorum if[ · ] shares of common stock are present and voting at the annual meeting.
What vote is required to elect directors?
Directors are elected by a plurality of the votes cast, which means that, as long as a quorum is present, the six nominees for director who receive the most votes will be elected. Abstentions will have no effect on the voting outcome with respect to the election of directors.
What vote is required for the approval of the amendment to our Certificate of Incorporation to change our corporate name from ACL Semiconductors Inc. to USmart Mobile Device Inc.?
The approval of the proposed amendment to our Certificate of Incorporation to change our corporate name from ACL Semiconductors Inc. to USmart Mobile Device Inc. requires the affirmative vote of a majority of our outstanding shares of common stock.
How are broker non-votes treated at the meeting?
Broker non-votes are proxies signed by brokers without voting on the election of directors or the amendment to our Certificate of Incorporation to change our corporate name from ACL Semiconductors Inc. to USmart Mobile Device Inc. Broker non-votes are treated as present at the meeting for purposes of determining whether we have a quorum. However, since directors are elected by a plurality, and broker non-votes will not be voted for any nominees, as long as we have a quorum, including shares represented by broker non-votes, the six nominees for directors who receive the most votes will be elected. Since the amendment to our Certificate of Incorporation to change our corporate name from ACL Semiconductors Inc. to USmart Mobile Device Inc. requires the votes of a majority of our outstanding shares of common stock, broker non-votes will be similar to negative votes.
Who is paying the cost of the meeting?
We will pay for preparing, printing and mailing this proxy statement. Proxies may be solicited on our behalf by our directors, officers or employees in person or by telephone, electronic transmission and facsimile transmission. We will reimburse banks, brokers and other custodians, nominees and fiduciaries for their out-of-pocket costs of sending the proxy materials to our beneficial owners. We estimate our costs at approximately $10,000.
PROPOSAL 1
RE-ELECTION OF DIRECTORS
At the Annual Meeting, six individuals will be elected to serve as directors until the next annual meeting or until their successors are duly elected, appointed and qualified. The Company’s Board of Directors currently consists of six persons. Five of six individuals who are nominated for re-election to the Board of Directors are existing directors of the Company. Unless a shareholder WITHHOLDS AUTHORITY, a properly signed and dated Proxy will be voted “FOR ALL” of the six persons named below to serve as directors, unless the Proxy contains contrary instructions. Management has no reason to believe that any of the nominees will not be a candidate or will be unable to serve as a director. However, in the event any nominee is not a candidate or is unable or unwilling to serve as a director at the time of the re-election, unless the shareholder WITHHOLDS AUTHORITY from voting, the proxies will be voted “FOR” any nominee who shall be designated by the present Board of Directors to fill such vacancy.
The six current Directors to be considered for re-election are Chung-Lun Yang, Kenneth Lap Yin Chan,Man Sing Lai,Ho Man Yeung, Wing Sun Leung and Ben Wong.
Each of our Directors will generally serve one-year terms and shall hold office until the 2013 annual meeting of shareholders and until his successor has been duly elected, appointed and qualified. If all the nominees are elected, the Board of Directors will consist of six Directors.
Unless Proxy Cards are otherwise marked, the persons named as proxies will vote all proxies received FOR the re-election of each nominee named in this section.
At each annual meeting of shareholders, directors will be elected by the holders of Common Stock to succeed those directors whose terms are expiring. Directors will be elected annually and will serve until their successors are duly elected and qualified or until a director’s earlier death, resignation or removal. Our bylaws provide thatincrease the authorized number of directors may be changed by actionshares of Common Stock are considered non-routine for which brokers are not permitted to vote shares without customer direction.
The following table sets forth certain information concerning the board of directors’ nominees for directors:
Broker Discretionary Vote Allowed | ||||
A majority of outstanding shares of Common Stock and a majority of oustanding shares of Series B Preferred Stock and a majority of outstanding shares of Series C Preferred Stock and a majority of outstanding shares of Series D Preferred Stock. | ||||
Approval of an amendment to the Company’s Certificate of Incorporation to increase the authorized number of shares of Common Stock from 50,000,000 shares to 500,000,000 shares | A majority of outstanding shares of Common Stock and a majority of oustanding shares of Series B Preferred Stock and a majority of outstanding shares of Series C Preferred Stock and a majority of outstanding shares of Series D Preferred Stock. | No | ||
Adjournment of the | ||||
A majority of the votes cast | ||||
Chung-Lun Yang, Chairman of the Board and Chief Executive Officer. Mr. Yang became a Director on September 30, 2003. Mr. Yang is the founder of Atlantic and has been a director of Atlantic since 1991. Mr. Yang graduated from The Hong Kong Polytechnic University in 1982 with a degree in electronic engineering. From October 1982 until April 1985, he was a sales engineer of Karin Electronics Supplies Ltd. From June 1986 until September 1991, he was Director of Sales (Samsung Components Distribution) of Evertech Holdings Limited, a Hong Kong based company. Mr. Yang has over 15 years of extensive experience in the electronics distribution business. The breadth of Mr. Yang’s sales and operational experience led the Board of Directors to believe this individual is qualified to serve as a director of the Company. Mr. Yang is also a member of The Institution of Electrical Engineers, United Kingdom.
Yes |
Kenneth Lap Yin Chan, Director
Man Sing Lai, Director. Mr. Lai became an Independent Director on December 1, 2010. As a memberrecommendations of the Board of DirectorsDirectors. Thus, where no choice is specified, the proxies will be voted for the approval of the Reverse Stock Split, for the approval of an amendment to the Company,Company’s Certificate of Incorporation to increase the Company approved a monthly compensationauthorized number of $1,282 (HK$10,000). Mr. Lai has been Chief Financial Officershares of Mainland Headwear Holdings Limited since 2008, a headwear manufacturer whose shares are publicly traded onCommon Stock and for the main boardadjournment of the Hong Kong Stock Exchange. From 2007Special Meeting.
Ho Man Yeung, Director. Mr. Yeung became an Independent Director on December 1, 2010. As a member of the Board of Directorsvoted by giving written notice to the Company, the Company approved a monthly compensation of $1,282 (HK$10,000). Mr. Yeung has been a Director of Avnet Sunrise Ltd. since 2002. Avnet Sunrise Ltd. is a subsidiary of Avnet, Inc. [NYSE: AVT] a global distributor of electronic components and devices. Mr. Yeung has over twenty-five years of experience in the electronic distribution industry. It is these experiences and qualifications for which Mr. Yeung was chosen to be a member of our board. Mr. Yeung graduated from University of Salford with a BSc in Electronics and earned a Certified Diploma of Accounting at Manchester Polytechnic University.
Wing Sun Leung, Director. Mr. Leung became an Independent Director on December 1, 2010. As a member of the Board of Directors to the Company, the Company approved a monthly compensation of $1,282 (HK$10,000). Mr. Leung has been Project Director since April 2010 at German Alternative Investment (Shenzhen) Company Co. Ltd. an investment and advisory services firm. From 2007 to 2009, Mr. Leung was Vice President and Senior Consultant at Shenzhen Everich Industrial Co. Ltd., an importer and exporter of electronics. Prior to that, Mr. Leung was Sales Director at Sigmatel Asia Inc., a distributor of electronic components in China and Hong Kong. Mr. Leung has over twenty years of experience in the electronics distribution industry in the United States, China and Hong Kong. Mr. Leung graduated from the Chinese University of Hong Kong with a BSc in Social Science. Based on such professional experience, Mr. Leung was chosen to be a member of the board.
Ben Wong. Since 2006, Mr. Wong has been the Chief Executive Officer and Director of USmart Electronic Products Limited, a provider ofODM (Original Design Manufacturing) and OEM (Original Equipment Manufacturing) services for various electronic products. Mr. Wong graduated from the Chinese Culture University of Taiwan in 1986 with a Bachelor’s Degree of Science in Mechanical Engineering. The breadth of Mr. Wong’s managerial experience led the Board of Directors to believe this individual is qualified to serve as a director of the Company.
Each director holds office (subject to our By-Laws) until the next annual meeting of shareholders and until such director’s successor has been elected and qualified. There are no family relationships between any of our directors and executive officers.
There have been no events under any bankruptcy act, no criminal proceedings and no judgments, orders or decrees material to the evaluation of the ability and integrity of any director or executive officerSecretary of the Company, duringby delivering a properly completed, later-dated proxy card or vote instruction form or by voting in person at the past five years.
Board Meetings
During
Committeesrecord by such persons, and we may reimburse such persons for reasonable out of pocket expenses incurred by them in so doing.
On January 20, 2011,Company with respect to the Boardmatters to be voted upon at the Special Meeting.
Codeexecutive officers of Business Conduct and Ethics
Wethe Company do not have any interest in any proposal that is not shared by all other stockholders of the Company.
Shareholder Communications
Shareholders and other interested parties may contact the Board of Directors or the non-management directors as a group at the following address: Board of Directors or Independent Directors, ACL Semiconductor, Inc., Room 1701, 17/F., Tower 1, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong. All communications received at the above address will be relayed to the Board of Directors or the non-management directors, respectively. Communications regarding accounting, internal accounting controls or auditing matters may also be reported to the Board of Directors using the above address.
Typically, we do not forward to our directors communications from our shareholders or other communications which are of a personal nature or not related to the duties and responsibilities of the Board, including:
Compliance with
Section 16(a)12(g) of the Securities Exchange Act of 1934, as amended requires our directors(“Exchange Act”), and executive officersthe Company is subject to the periodic reporting and persons who own more than ten percentother requirements of a registered class of our equity securities (collectively, “Reporting Person”) to file with the SEC initial reports of ownership and reports of changes in ownershipExchange Act. The proposed Reverse Stock Split will not affect the registration of our Common Stock and other equity securities ofor the Company. Reporting Persons are required byCompany’s reporting obligations under the SEC regulation to furnish the Company with copies of all Section 16(a) forms that they file. ToExchange Act. We will obtain a new CUSIP number for our knowledge, based solely on a review of the copies of such reports furnished to us, we believe that during fiscal year ended December 31, 2011 all Reporting Persons complied with all applicable filing requirements.
Involvement in Certain Legal Proceedings
None of our directors has been, during the past ten years:
(i) involved in any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer, eitherCommon Stock effective at the time of the bankruptcyReverse Stock Split.
(ii) named ineffective time will be, automatically and without any action on the part of the stockholders, reclassified as, and combined and changed into, one share of Common Stock.
(iii) convictedsame manner as registered stockholders whose shares are registered in their names. Banks, brokers or plead nolo contendereother nominees will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. Stockholders who hold shares of our Common Stock with a bank, broker or other nominee and who have any criminal proceedingquestions in this regard are encouraged to contact their banks, brokers or is subjectother nominees.
(iv) subjectfactors detailed from time to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoined, barred, suspended or otherwise limited from involvementtime in any type of business, securities, futures, commodities or banking activities;
(iv) found by a court of competent jurisdiction (in a civil action),the Company’s reports filed with the Securities and Exchange Commission or(“SEC”). If the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law,Reverse Stock Split is accomplished and the judgment has not been reversed, suspended, or vacated;
(v) involved in any judicial or administrative proceeding resulting from involvement in mail or wire fraud or fraud in connection with any business entity;
(vi) involved in any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions ( other than settlements of civil proceedings among private parties);
(vii) involved in any disciplinary sanction or orders imposed by a stock, commodities or derivatives exchange or other similar self- regulatory organization.
Board Leadership Structure and Risk Oversight Role
Our Chief Executive Officer also serves as Chairmanmarket price of our Board of Directors. Our Board of Directors contains 7 Directors,Common Stock declines, the percentage decline as an absolute number and 4as a percentage of the Directors are Independent Directors. We believe that suchCompany’s overall market capitalization may be greater than would occur in the absence of a leadership structure is suitable forReverse Stock Split.
As a matter of regular practice, and as part of its oversight function, our Board of Directors undertakes a review of the significant risks in respect to our business. Such review is supplemented as necessary by outside professionals with expertise in substantive areas germane to our business. With our current governance structure, our Board of Directors and senior executives, there is not a significant division of oversight and operational responsibilities in managing the material risks facing the Company.
· The reduced number of outstanding shares of Common Stock resulting from a Reverse Stock Split could adversely affect the liquidity of our Common Stock. Although the Board believes that a higher stock price may help generate investor interest, there can be no assurance that the Reverse Stock Split will result in a per share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our Common Stock may not necessarily improve. |
· A Reverse Stock Split could result in a significant devaluation of the Company’s market capitalization and the trading price of our Common Stock, on an actual or an as-adjusted basis, based on the experience of other companies that have accomplished reverse stock splits. |
Director Independence
The Company has adopted the independence definitions of NASDAQ in determining whether our directors are independent. The discussion below reflects such standards of independence.
Our Board of Directors has determined that four of our directors qualify as “independent” as the term is used in Item 407 of Regulation S-K as promulgated by the SEC and as that term is defined under NASDAQ Rule 4200(a) (15).
Audit Committee
Our Audit Committee established on January 20, 2011, acts pursuant to our Audit Committee Charter. A copy of our audit committee charter is available at http://www.acl-semicon.com
Man Sing Lai, Ho Man Yeung and Wing Sun Leung currently serve on our audit committee. Messrs. Lai, Yeung and Leung are each independent directors as required by Section 301 of the Sarbanes-Oxley Act of 2002, Rule 10A(3)(b)(1) of the Securities Exchange Act of 1934 and Section 5605 of the NASDAQ Corporate Governance Rules. Mr. Lai serves as the Chairman of our audit committee and qualifies as an audit committee financial expert. Our audit committee, among other things:
The audit committee has the sole and direct responsibility for appointing, evaluating and retaining our independent auditors and for overseeing their work.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the board of directors is comprised entirely of independent directors who meet the independence requirements of NASDAQ and the SEC. The Committee operates pursuant to a charter that is available on the Management Team section of our website.
The Audit Committee oversees the Company’s financial reporting process on behalf of the board of directors. Management is responsible for the preparation, presentation, and integrity of the financial statements, including establishing accounting and financial reporting principles and designing systems of internal controls over financial reporting. The Company’s independent auditors are responsible for expressing an opinion as to the conformity of the Company’s consolidated financial statements with generally accepted accounting principles and auditing management’s assessment of the effectiveness of internal control over financial reporting.
· A Reverse Stock Split may leave certain stockholders with one or more “odd lots,” which are stock holdings in amounts of fewer than 100 shares of Common Stock. These odd lots may be more difficult to sell than shares of Common Stock in even multiples of 100. Additionally, any reduction in brokerage commissions resulting from the Reverse Stock Split, as discussed above, may be offset, in whole or in part, by increased brokerage commissions required to be paid by stockholders selling odd lots created by the Reverse Stock Split. |
In performing its responsibilities, the Audit Committee has reviewed and discussed, with management and the independent auditors, the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The Audit Committee has also discussed with the independent auditors matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (Codification of Statements on Auditing Standards, AU 380), as adopted by the Public Company Accounting Oversight Board (the “PCAOB”) in Rule 3200T.
Pursuant to the applicable requirements of the PCAOB regarding the independent auditors’ communications with the Audit Committee concerning independence, the Audit Committee received written disclosures and the letter from the independent auditors, and discussed with the auditors their independence.
Based on the reviews and discussions referred to above, the Audit Committee unanimously recommended to the board of directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.
AUDIT COMMITTEE
Man Sing Lai
Ho Man Yeung
Wing Sun Leung
Compensation Committee
Our Compensation Committee established on January 20, 2011, acts pursuant to our Compensation Committee Charter. A copy of our compensation committee charter is available at http://www.acl-semicon.com
Man Sing Lai, Ho Man Yeung and Wing Sun Leung currently serve on our compensation committee. Messrs. Lai, Yeung and Leung are independent directors as required by SEC Rules and as defined in Section 5605 of NASDAQ Corporate Governance Rules. Mr. Lai serves as the Chairman of our compensation committee. Our compensation committee, among other things:
��• recommends to the board of directors the compensation level of the executive officers;
• reviews and makes recommendations to our board of directors with respect to our equity incentive plans;
• establishes and reviews general policies relating to compensation and benefits of our employees.
Nominations of Directors
Our Nominating Committee established on January 20, 2011, acts pursuant to our Nominating Committee Charter. A copy of our nominating committee charter is available at http://www.acl-semicon.com
Man Sing Lai, Ho Man Yeung, Wing Sun Leung and Hung Ming Joseph Chu (not up for reelection at the Annual Meeting) currently serve on our nominating committee. Messrs. Lai, Yeung, Leung and Chu are independent directors as required by SEC Rules and as defined in Section 5605 of NASDAQ Corporate Governance Rules. Mr. Lai serves as the Chairman of our nominating committee. The nominating committee is charged with the responsibility of reviewing our corporate governance policies and with proposing potential director nominees to the board of directors for consideration.
The nominating committee will consider director nominees recommended by security holders. To recommend a nominee please write to the Nominating Committee of ACL Semiconductors Inc. c/o Kenneth Chan, Room 1701, 17/F., Tower 1, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong. During 2010, we did not pay any fees to any third parties to assist in the identification of nominees. During 2010, we did not receive any director nominee suggestions from stockholders.
· There can be no assurance that the market price per share of Common Stock after the Reverse Stock Split will increase in proportion to the reduction in the number of shares of Common Stock outstanding before the Reverse Stock Split. |
The nominating committee, (1) has no policy with regard to the nomination of candidates recommended by security holders; (2) has developed no specific minimum qualifications that it believes must be met by a Board-recommended nominee for a position on the Board; (3) has developed no specific qualities or skills that it believes are necessary for a member of the Board to possess; (4) has no specific process for identifying and evaluating nominees for director and (5) does not have a policy with regard to the consideration of diversity in identifying director nominees.
Code of Ethics
We have adopted a written code of business conduct and ethics, known as our Code of Business Conduct and Ethics which applies to all of our directors, officers, and employees, including our principal executive officer and our principal financial and accounting officer. Our Code of Business Conduct and Ethics is posted at www.acl-semicon.com. To receive a copy of our Code of Business Conduct and Ethics, at no cost, requests should be directed to the Secretary, ACL Semiconductor, Inc., Room 1701, 17/F., Tower 1, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong. We intend to disclose any amendment to, or waiver of, a provision of the Code of Business Conduct and Ethics in a report filed under the Securities Exchange Act of 1934, as amended, within four business days of the amendment or waiver.
Required Vote
Directors are elected by a plurality of the votes cast. Abstentions and broker “non-votes” will have no effect on the vote for re-election of directors.
No Appraisal Rights
Shareholders will not have dissenters’ or appraisal rights under the Delaware General Corporation Law or under the Company’s certificate of incorporation in connection with the re-election of directors.
· The total market capitalization of our Common Stock after the proposed Reverse Stock Split may be lower than the total market capitalization before the proposed Reverse Stock Split and, in the future, the market price of our Common Stock following the Reverse Stock Split may not exceed or remain higher than the market price prior to the proposed Reverse Stock Split. |
PROPOSAL 2
APPROVAL
· The increase in the ratio of authorized but unissued shares of Common Stock to issued shares of Common Stock resulting from the Reverse Stock Split may be construed as having an anti-takeover effect by permitting the issuance of shares to purchasers who might oppose a hostile takeover bid or oppose any efforts to amend or repeal certain provisions of our certificate of incorporation or bylaws. |
Our board of directors has proposed that we amend our certificate of incorporation to change our corporate name to USmart Mobile Device Inc. As previously disclosed in our current report in Form 8-K filed with the SEC on September 28, 2012, we have acquired 100% of the outstanding equity of Jussey Investments Limited, which owns (i) 100% equity interest in eVision Telecom Limited, a Hong Kong based solution house that specializes in CDMA2000 (also known as Evolution-Data Optimized or “EV-DO”) platform, and (ii) 80% equity interest in USmart Electronic Products Limited, a provider ofTHE SHAREHOLDER OF A REVERSE STOCK SPLIT.
Our Certificate of Incorporation will be amended to change Article FIRST to read as follows:
“FIRST: The name of the corporation is USmart Mobile Device Inc. (the “Corporation”)”.
Vote Required
each of the Common Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock on the Record Date is required to approve the Reverse Stock Split. Abstentions and “broker non-votes” will not be counted as having been voted on the proposals, and therefore will have the same effect as negative votes.
The board of directors recommends a vote FOR the approval of the proposal to amend our certificate of incorporation to change our corporate name to USmart Mobile Device Inc.
Other Information
AND RELATED SHAREHOLDER MATTERS [TO BE UPDATED]
shown.
Name and Address of | Shares of Common Stock | Percentage of Class | ||||||
Beneficial Owner | Beneficially Owned | Beneficially Owned(1) | ||||||
Chung-Lun Yang (2) (3) No. 78, 5th Street, Hong Lok Yuen, Tai Po, New Territories, Hong Kong | 26,622,000 | 76.4 | % | |||||
Kun Lin Lee (2) (3) 7F, No 16 Huan-her East Road Sec 4, Yuan Ho City, Taipei, Taiwan | 60,000 | 0.2 | % | |||||
Kenneth Lap Yin Chan (2) (3) Flat B, 8/F., Block 19, South Horizons, Aplei Chau, Hong Kong | 0 | 0.0 | % | |||||
Ming Yan Leung (2) G/F., 11 Ka Fuk Lane, Tuen Mun, New Territories, Hong Kong | 0 | 0.0 | % | |||||
Man Sing Lai (3) Flat B, 23/F., Block 31, Laguna City, Cha Kwo Ling Road, Kwun Tong, Kowloon, Hong Kong | 0 | 0.0 | % | |||||
Ho Man Yeung (3) Block 4, 7/F. Unit B, The Grand Panorama, 10 Robinson Road, Central, Hong Kong | 0 | 0.0 | % | |||||
Wing Sun Leung (3) 5658 Owens Drive, #202, Pleasanton, CA 94588, USA | 0 | 0.0 | % | |||||
Hung Ming Joseph Chu (3) 8D, Block 6, The Sherwood, Tuen Mun, New Territories, Hong Kong | 0 | 0.0 | % | |||||
All Directors and Officers as a Group | 26,682,000 | 76.6 | % |
| Shares of Common Stock Beneficially Owned | Percentage of Class Beneficially Owned(1) | ||||||
5% Stockholder | ||||||||
Chung-Lun Yang No. 78, 5th Street, Hong Lok Yuen, Tai Po, New Territories, Hong Kong | 26,622,000 | 67.1 | % | |||||
Farburn Holdings Limited (2) 1601 Beverly House, 93-107 Lockhart Road, Wanchai, Hong Kong. | 3,600,000 | 9.1 | % | |||||
Ho Fun Cheng (2) 1601 Beverly House, 93-107 Lockhart Road, Wanchai, Hong Kong. | 3,600,000 | 9.1 | % | |||||
Directors and Officers | ||||||||
Ronald Cormick | 1,620,000,000 (3) | 97.6 | % | |||||
Ehud Amir | 2,340,000,000 (4) | 98.3 | % | |||||
Larry Eastland | 450,000,000 (5) | 91.9 | % | |||||
Haley Manchester | 0 | 0 | % | |||||
All Directors and Officers as a Group | 4,410,000,000 | 99.1 | % |
(1) | Applicable percentage of ownership is based on | |
(2) | The shares are owned directly by Farburn Holdings Limited (“Farburn”) and indirectly by Ho Fun Cheng (“Mr. Cheng”) through his equity ownership in Farburn. In addition, Mr. Cheng is the sole director of Farburn, and may be deemed as beneficial owner of these shares. Farburn acquired these shares from the Company pursuant to certain Amended and Restated Finder and Consulting Agreement dated October 15, 2012. | |
(3) | Represents 1,620,000,000 shares of Common Stock |
(4) | Includes (i) 720,000,000 shares of Common Stock issuable upon conversion of 8,000,000 shares of Series B Preferred Stock held by Amir Holdings Limited, over which Ehud Amir holds voting and dispositive power; and (ii) 1,620,000,000 shares of Common Stock issuable upon conversion of 900,000 shares of Series C Preferred Stock. |
(5) | Represents 450,000,000 shares of Common Stock issuable upon conversion of 250,000 shares of Series C Preferred Stock held by EDLA Family Trust LLC over which Larry Eastland holds voting and dispositive power. |
COMPENSATION DISCUSSION AND ANALYSIS
Summary
Our approach
Named Executive Officers
The named executive officers for the fiscal year ended December 31, 2011 are: Chung-Lun Yang, our Chief Executive Officer; Kun Lin Lee, our Chief Financial Officer; Kenneth Lap Yin Chan, our Chief Operating Officer; and Ming Yan Leung, our Chief Technology Officer. These individuals are referred to collectively herein as the “Named Executive Officers.”
OUR EXECUTIVE COMPENSATION PROGRAM
Overview
The primary elementsconversion of our executive compensation program are base salary, incentive cash and stock bonus opportunities and equity incentives typically in the form of stock option grants. Although we provide other types of compensation, these three elements are the principal means by which we provide the Named Executive Officers with compensation opportunities.
The emphasis on the annual bonus opportunity and equity compensation componentsSeries D Preferred Stock shall not occur before September 1, 2015. As of the executive compensation program reflect our belief that a large portion of an executive’s compensation should be performance-based. This compensation is performance-based because payment is tied to the achievement of corporate performance goals. To the extent that performance goals are not achieved, executives will receive a lesser amount of total compensation. We have entered into employment agreements with four of our Named Executive Officers. Such employment agreements set forth base salaries, bonuses and stock option grants. Such stock option grants are predicated on our achievement of corporate performance goals as set forth in such agreements.
ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM
Base Salary
We pay a base salary to certainresult of the Named Executive Officers. In general, base salaries for the Named Executive Officers are determined by evaluating the responsibilitiesissuance of the executive’s position,Preferred Shares, the executive’s experience and the competitivenessCompany is committed to issue an aggregate of the marketplace. Base salary adjustments are considered and take into account changes in the executive’s responsibilities, the executive’s performance and changes in the competitiveness5,559,316,200 shares of the marketplace. We believe that the base salaries of the Named Executive Officers are appropriate within the context of the compensation elements provided to the executives and because they are at a level which remains competitive in the marketplace.
Bonuses
Common Stock. The Board of Directors may authorize usbelieves that the increase in our authorized Common Stock is required to give discretionary bonuses, payableremain in cash orcompliance with the reserve requirements of our outstanding convertible preferred stock.
Stock Options
Stock options constitute performance-based compensation because they have valuevoting rights of persons seeking to obtain control of the recipient onlyCompany, even if the pricepersons seeking to obtain control of the Company offer an above-market premium that is favored by a majority of the independent stockholders. Similarly, the issuance of additional shares to certain persons allied with the Company's management could have the effect of making it more difficult to remove the Company's current management by diluting the stock ownership or voting rights of persons seeking to cause such removal. The Company does not have any other provisions in its charter, bylaws, employment agreements, credit agreements or any other documents that have material anti-takeover consequences. Additionally, the Company has no plans or proposals to adopt other provisions or enter into other arrangements that may have material anti-takeover consequences. The Board is not aware of any attempt, or contemplated attempt, to acquire control of the Company, and this proposal is not being presented with the intent that it be utilized as a type of anti-takeover device.
Retirement and Deferred Compensation Benefits
We do not have any arrangements with the Named Executive Officers to provide them with retirement and/or deferred compensation benefits.
Perquisites
There were no perquisites providedamendment to the Named Executive Officers.
Post-Termination/ChangeCompany’s Articles of Control Compensation
We do not have any arrangements withIncorporation to increase the Named Executive Officers to provide them with compensation following terminationauthorized number of employment.
Tax Implicationsshares of Executive Compensation
Our aggregate deductions for each Named Executive Officer compensation are potentially limited by Section 162(m) of the Internal Revenue Code to the extent the aggregate amount paid to an executive officer exceeds $1 million, unless it is paid under a predetermined objective performance plan meeting certain requirements, or satisfies one of various other exceptions specified in the Internal Revenue Code. At our 2011 Named Executive Officer compensation levels, we did not believe that Section 162(m) of the Internal Revenue Code wouldCommon Stock will be applicable, and accordingly, we did not consider its impact in determining compensation levels for our Named Executive Officers in 2011.
Hedging Policy
We do not permit the Named Executive Officers to “hedge” ownership by engaging in short sales or trading in any options contracts involving our securities.
Option Exercises and Stock Vested
No options have been exercised by our Named Executive Officers during the fiscal year ended December 31, 2011.
Pension Benefits
Under the Mandatory Provident Fund (“MPF”) Scheme Ordinance in Hong Kong, the Company is required to set up or participate in an MPF scheme to which both the Company and employees must make continuous contributions throughout their employment based on 5% of the employees’ earnings, subject to maximum and minimum level of income. For those earning less than the minimum level of income, they are not required to contribute but may elect to do so. However, regardless of the employees’ election, their employers must contribute 5% of the employees’ income. Contributions in excess of the maximum level of income are voluntary. All contributions to the MPF scheme are fully and immediately vested with the employees’ accounts. The contributions must be invested and accumulated until the employees’ retirement.
Nonqualified Deferred Compensation
We do not have any defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified.
Employment Agreements
We have entered into employment agreements with our Mr. Yang, which sets the base salarysubstantially as set forth in our summary compensation table.
Executive Officer Compensation
The following table sets forth the annual and long-term compensationon Appendix B (“Certificate of our Named Executive Officers for services in all capacities to the Company for the last two fiscal years ended December 31, 2011 and December 31, 2010.
Summary Compensation Table
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non-qualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||
Chung-Lun Yang, | 2011 | $ | 492,308 | 1,000,000 | — | — | — | — | — | $ | 1,492,308 | |||||||||||||||||||||||||
Chairman of the Board and Chief Executive Officer | 2010 | $ | 443,590 | 800,000 | — | — | — | — | — | $ | 1,243,590 |
Outstanding equity awards at fiscal year-end
None.
Compensation of Directors
The following table sets forth the Director compensation for service on the Board of Directors of the Company for the fiscal year ended December 31, 2011.
Compensation of Directors
The following table sets forth the Director compensation for service on the Board of Directors of the Company for the fiscal year ended December 31, 2011.
Name (a) | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($)* | Non-Equity Incentive Plan Compensation ($) | Non-qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Man Sing Lai | $ | 15,385 | — | — | — | — | — | $ | 15,385 | |||||||||||||||||||
Ho Man Yeung | $ | 15,385 | — | — | — | — | — | $ | 15,385 | |||||||||||||||||||
Wing Sun Leung | $ | 15,385 | — | — | — | — | — | $ | 15,385 | |||||||||||||||||||
Hung Ming Joseph Chu | $ | 15,385 | — | — | — | — | — | $ | 15,385 | |||||||||||||||||||
Kun Lin Lee | — | — | — | — | — | — | — | |||||||||||||||||||||
Kenneth Lap Yin Chan | — | — | — | — | — | — | — |
We compensate our independent directors an amount of HK$10,000 (US$1,282) per month for serving on our board of directors, in addition to reimbursement for out of pocket expenses incurred in attending director meetings. We do not compensate our executive directors for serving on the board of directors.
CERTAIN RELATED PERSON TRANSACTIONS
All related person transactions are reviewed and, as appropriate, may be approved or ratified by the Board of Directors. Related person transactions are If approved by the Boardstockholders, the Certificate of Directors only if, based on allAmendment will become effective upon filing with the Delaware Secretary of State as required by the General Corporation Law of Delaware. It is anticipated that this will occur promptly following the date of the factsSpecial Meeting.
In the case of a transaction presented to the Board of Directors for ratification, the Board of Directors may ratify the transaction or determine whether rescission of the transaction is appropriate.
Transactions with Aristo Technologies Limited / Mr. Yang
This represented Aristo transactions with various related parties of Mr. Yang.
As of December 31, 2011 and 2010, we had an outstanding receivable from Aristo / Mr. Yang, the President and Chairmansole discretion of our Board of Directors, totaling $5,780,400including to solicit additional proxies in the event that there are not sufficient votes at the time of the Special Meeting or any adjournment or postponement of the Special Meeting to approve any of the other proposals.
Foradjournment proposal if, in its sole discretion, it determines that it is necessary or appropriate for any reason to adjourn the years ended December 31, 2011Special Meeting to a later date and 2010, we recorded compensationtime. In that event, the Company will ask its stockholders to Mr. Yang of $1,492,308vote only upon the adjournment proposal and $1,243,590 respectively,not any other proposal.
Transactions with Solution Semiconductor (China) Limited
Mr. Yang is a director and the sole beneficial owneradjourned meeting), other than by an announcement made at the Special Meeting of the equity interests of Solution Semiconductor (China) Ltd. (“Solution”). On April 1, 2009, we entered into a lease agreement with Solution pursuant to which we lease one facility. The lease agreement for this facility expired on April 30, 2011. The monthly lease payment for this lease is $1,090. We incurredtime, date and paid an aggregate rent expense of $4,359 and $13,077 to Solution during the year ended December 31, 2011 and 2010.
During the years ended December 31, 2011 and 2010, we purchased inventories of $49,421 and $43,123 respectively from Solution. As of December 31, 2011 and 2010, there were no outstanding accounts payable to Solution.
Two facilities located in Hong Kong owned by Solution were used by the Company as collateral for loans from DBS Bank (Hong Kong) Limited (“DBS Bank”) (formerly Overseas Trust Bank Limited) and The Bank of East Asia, Limited (“BEA Bank”) respectively.
Transactions with Systematic Information Limited
Mr. Yang, the Company’s Chief Executive Officer, majority shareholder and a director, is a director and shareholder of Systematic Information Ltd. (“Systematic Information”) with a total of 100% interest. On September 1, 2010, we entered into a lease agreement with Systematic Information pursuant to which we lease one facility. The lease agreement for this facility expired on April 30, 2011. The monthly lease payment for this lease totals $641. We incurred and paid an aggregate rent expense of $2,564 and $7,692to Systematic Information during the years ended December 31, 2011 and 2010.
During the years ended December 31, 2011 and 2010, we received service charges of $8,154 and $8,154 respectively from Systematic Information. The service fee was charged for back office support for Systematic Information.
During the years ended December 31, 2011 and 2010, we sold products for $1,347,148 and $767,981 respectively, to Systematic Information. As of December 31, 2011 and 2010, there were no outstanding accounts receivables from Systematic Information.
A workshop located in Hong Kong owned by Systematic Information was used by the Company as collateral for loans from BEA Bank.
Transactions with Global Mega Development Limited
Mr. Yang is the sole beneficial ownerplace of the equity interests of Global Mega Development Ltd. (“Global”). During the years ended December 31, 2011and 2010, we sold products for $3,325 and $8,292 respectively, to Global. As of December 31, 2011 and 2010, there were no outstanding accounts receivables from Global.
During the years ended December 31, 2011 and 2010, we purchased inventories of $0 and $2,308 respectively from Global. As of December 31, 2011 and 2010, there were no outstanding accounts payable to Global.
Transactions with Systematic Semiconductor Limited
Mr. Yang is a director and sole beneficial owneradjourned meeting.
Transactions with Atlantic Storage Devices Limited
Mr. Yang is a director and 40% shareholder of Atlantic Storage Devices Ltd. (“Atlantic Storage”). The remaining 60% of Atlantic Storage is owned by a non-related party. Duringnew record date, only the years ended December 31, 2011 and 2010, we sold products for $361,698 and $9,589 respectively,stockholders who were eligible to Atlantic Storage. As of December 31, 2011 and 2010, there were no outstanding accounts receivables from Atlantic Storage.
Duringvote at the years ended December 31, 2011 and 2010, we purchased inventories of $101,790 and $28,800 respectively, from Atlantic Storage. As of December 31, 2011 and 2010, there were no outstanding accounts payable to Atlantic Storage.
Transactions with City Royal Limited
Mr. Yang, the Company’s Chief Executive Officer, majority shareholder and a director, is a 50% shareholder of City Royal Limited (“City”). The remaining 50% of City is owned by the wife of Mr. Yang. A residential property located in Hong Kong owned by City was used by the Company as collateral for loans from DBS Bank.
Transactions with Kasontech Electronics Limited
Mr. Kenneth Lap Yin Chan, the Company’s Director and Chief Operating Officer, is a 33% shareholder of Kasontech Electronics Limited (“Kasontech”). During the years ended December 31, 2011 and 2010, we received a management fee of $7,949 and $12,821 respectively from Kasontech. The management fee was charged for back office support for Kasontech. As of December 31, 2011 and 2010, there were no outstanding accounts receivables from Kasontech.
Transactions with Aristo Components Limited
Mr. Ben Wong resigned from his director position with the Company effective on June 11, 2010. He is a 90% shareholder of Aristo Components Ltd. (“Aristo Comp”). The remaining 10% of Aristo Comp is owned by a non-related party. After the date of his resignation, all companies under his personal control will no longer be a related party and will not enjoy privileged treatment andoriginal meeting will be subjectpermitted to vote at the same trading terms as other ordinary outside parties. Duringadjourned meeting.
During the years ended December 31, 2011 and 2010, we sold products for $1,403,064 and $120,282 respectively, to Aristo Comp. As of December 31, 2011 and 2010, there were no outstanding accounts receivables from Aristo Comp.
During the years ended December 31, 2011 and 2010, we purchased inventories of $39,107 and $276 respectively from Aristo Comp. As of December 31, 2011 and 2010, there were no outstanding accounts payable to Aristo Comp.
Transactions with Smart Global Industrial Limited
Mr. Yang is a director and 50% shareholder of Smart Global Industrial Limited (“Smart”). During the years ended December 31, 2011 and 2010, we sold products for $26,886 and $0 respectively to Smart. As of December 31, 2011 and 2010, there were no outstanding accounts receivables from Smart.
Acquisition of Jussey Investment Limited
On September 28, 2012, ACL International Holdings Limited (“ACL Holdings” or the “Purchaser”), a Hong Kong incorporated company wholly owned by the Company, entered into an Agreement of Sale and Purchase (the “SPA”), pursuant to which it acquired (the “Acquisition”) 100% of the outstanding equity of Jussey Investments Limited (“Jussey”), a company incorporated in British Virgin Islands and which owns (i) 100% equity interest in eVision Telecom Limited (“eVision”), a Hong Kong incorporated company, and (ii) 80% equity interest in USmart Electronic Products Limited (“USmart”), a Hong Kong incorporated company, which owns 100% equity interest in Dongguan Kezheng Electronics Limited, a wholly foreign-owned enterprise organized under the laws of the People's Republic of China (the “PRC”).
Under the terms of the SPA, the Company, through ACL Holdings, purchased from Mr. Zhiming Li, a PRC resident (the “Shareholder” or “Seller”) who owned 100% of the outstanding equity (the “Shares”) of Jussey. Pursuant to the SPA, the purchase price toSpecial Meeting will be paid by ACL Holdingsrequired for the Shares is approximately US$2,200,000 in the aggregate (the “purchase price”). The purchase price is payable in cash in full within 5 business days after the completion of the Acquisition.
Ben Wong, a nominee for director at the Annual Meeting, is the Chief Executive Officer of USmart.
FINANCIAL STATEMENTS
Our audited financial statements, which include our consolidated balance sheets at December 31, 2011 and 2010, and the related consolidated statements of income and comprehensive income, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2011, and the notes to our consolidated financial statements, are included in our Form 10-K for the year ended December 31, 2011. A copy of our Form 10-K for the year ended December 31, 2011, either accompanied or preceded the deliveryapproval of this proxy statement.
CopiesProposal 3.
INDEPENDENT PUBLIC ACCOUNTANTS
Albert Wong & Co. was appointed as independent auditors for the Company for the fiscal year ending December 31, 2011. Albert Wong & Co. continued to be engaged by the Company in the current fiscal year as
Principal Accounting Fees and Services
The following table presents fees, including reimbursements for expenses, professional audit services and other services rendered by Albert Wong & Co. CPA firms during the years ended December 31, 2011 and 2010. Albert Wong & Co. audited our annual financial statements for the year ended December 31, 2011 and 2010.
Fiscal 2011 | Fiscal 2010 | |||||||
Audit Fees (1) | $ | 70,000 | $ | 58,000 | ||||
Audit Related Fees (2) | $ | — | $ | — | ||||
Tax Fees (3) | $ | — | $ | — | ||||
All Other Fees (4) | $ | — | $ | — | ||||
Total | $ | 70,000 | $ | 58,000 |
Policy on Board of Directors Pre-Approval of Audit and Non-Audit Services of Independent Auditor
The Company’s audit committee appoints, sets the compensation for and oversees the workmanagement of the independent auditor. On an ongoing basis, management communicates specific projects and categoriesCompany has no knowledge of service for which approval of the audit committee is requested. The audit committee reviews these requests and advises management if it approves the engagement of the independent auditor. Management reports to the audit committee regarding the actual spending for such projects. The projects and categories of serviceany business that may include any or all of the following:
Audit- Annual audit fees relate to services rendered in connection with the audit of the Company’s consolidated financial statements and the quarterly reviews of financial statements included in the Company’s Forms 10-Q.
Audit Related Services- Audit related services include fees for SEC registration statement services and consultation on accounting standards or transactions.
Tax-Tax services include fees for tax compliance, tax advice and tax planning.
OTHER MATTERS
Other Matters to be Submitted
Our board of directors does not intend to present to the meeting any matters not referred to in the form of proxy. If any proposal not set forth in this proxy statement should be presented for actionconsideration at the meeting, and is a matter which shouldSpecial Meeting, other than that described above. As to other business, if any, that may properly come before the meeting,Special Meeting, or any adjournment thereof, it is intended that the shares represented by proxiesProxy hereby solicited will be voted within respect toof such mattersbusiness in accordance with the judgment of the persons voting them.
Deadline for Submission of Shareholder Proposals for the 2013 Annual Meeting
Shareholders may present proposals for inclusion in the Proxy Statement for the 2013 Annual Meeting of Shareholders provided that such proposals are received by the Company’s Chairman and Chief Executive Officer, Mr. Chung-Lun Yang, ACL Semiconductors, Inc., Room 1701, 17/F., Tower 1, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong no later than July 16, 2013. The use of certified mail, return receipt requested, is advised. To be eligible for inclusion, a proposal must comply with our Bylaws, Rule 14a-8 and all other applicable provisions of Regulation 14A under the Securities Exchange Act of 1934. Proposals submitted not in accordance with such regulations will be deemed untimely or otherwise deficient; however, the Company will have discretionary authority to include such proposals in the 2013 Proxy Statement.
|
Preliminary Copy
ACL SEMICONDUCTORS INC.
ANNUAL MEETING PROXY CARD
, declaring said amendments to be advisable and directing that said amendments be submitted to the stockholders of the Corporation for consideration thereof. The resolutions setting forth the proposed amendments are as follows:THIS PROXY IS BEING SOLICITED ON BEHALFOURTHE BOARD OF DIRECTORS FORTHE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 16, 2012 The undersigned hereby appoints Chung-Lun Yang and Kenneth Lap Yin Chan, each and together as proxies and each with full power of substitution, to represent and to vote all shares of Common Stock of ACL Semiconductors Inc. (the “Company” or “ACL”) at the annual meeting of shareholdersCompany to be held on Friday, November 16, 2012 at 3:00P.M. Hong Kong Time, and at any adjournment or postponement thereof, hereby revoking any and all proxies heretofore given.1.Proposal 1: To elect six Directors for a term expiring at the Company’s next annual meeting or until their successors are duly elected and qualified.INSTRUCTION: To withhold authority to vote for any individual nominee, mark “For All Except” and write that nominee’s name in the space provided below.Nominees: Chung-Lun Yang, Kenneth Lap Yin Chan,Man Sing Lai,Ho Man Yeung, Wing Sun Leung and Ben Wong
Board of Directors£ FOR ALL£ WITHHOLD£ FOR ALL EXCEPT2.Proposal 2: To authorize the Board of Directors to amend our Certificate of Incorporation to change our corporate name to USmart Mobile Device Inc.£ FOR£ AGAINST£ ABSTAINOur Board of Directors believes that Proposal 1 and Proposal 2 are fair to, and in the best interests of, all of our shareholders. Accordingly, our Board of Directors unanimously recommends that you vote “FOR” these nominees in Proposal 1 and “FOR” Proposal 2.In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the special meeting or any adjournments thereof. If you wish to vote in accordance with our Board of Directors’ recommendations, just sign below. You need not mark any boxes.Dated:2012Signature of ShareholderSignature of Shareholder (if held jointly)NOTES:1. Please sign your name exactly as your name appears hereon. If the shares are owned by more than one person, all owners should sign. Persons signing as executors, administrators, trustees or in similar capacities should so indicate. If a corporation, please sign the full corporate name by the president or other authorized officer. If a partnership, please sign in the partnership name by an authorized person.2. To be valid, the enclosed form of Proxy for the annual meeting, together with the power of attorney or other authority, if any, under which it is signed, must be received by 8:00 A.M. Eastern Time, on November 16, 2012 at the offices of our transfer agent, American Stock Transfer & Trust Company, LLC, 6201 15th AvenueBrooklyn, NY 11219. Tel: 718.921.82613. Returning the enclosed form of Proxy will not prevent you from attending and voting in person at the annual meeting or any adjournment or postponement thereof.PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARDPROMPTLY TO AMERICAN STOCK TRANSFER & TRUST COMPANY, LLCEXHIBITTHE ACL SEMICONDUCTORS INC.Pursuant to Sections 228 and 242 ofthe GeneralLaw of theState of Delaware ACL SEMICONDUCTORS, INC.(the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware, (the “Corporation”), does hereby certifycertifies as follows:1.The name of the corporation is (hereinafter called the “Corporation”) is ACL Semiconductors Inc.2.The certificate of incorporation of the Corporation, as amended, is hereby amended by deleting Article FIRST thereof and by substituting in lieu of said Article the following new Article:FIRST.corporationCorporation is USmart Mobile Device Inc.Eagle Mountain Corporation. The date of filing of the Corporation’s original Certificate of Incorporation with the Secretary of State of the State of Delaware was September 17, 2002.“Corporation”“Certificate of Incorporation”).3.The amendment of the certificate of incorporation herein certified has been duly adopted at the annual meeting of the stockholders in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.the duly authorized officer of the Corporation whose name appears below on the[ · ]Ronald Cormick, its Chief Executive Officer, this ____ day of [ · ], 2012.______, 2015 By:/s/ Chung-Lun Yang Name: Chung-Lun YangBy: Name: Ronald Cormick Title: Chief Executive Officer Title: President, CEO and Chairman By: Name: Ronald Cormick Title: Chief Executive Officer