 | EXHIBIT 1 |
YEAR 2006 / 1stQUARTER
RESULTS OF OPERATIONS
OF GLOBAL SOURCES LTD.
RESULTS OF OPERATIONS
OF GLOBAL SOURCES LTD.
The following discussion of our financial condition and results of operations should be read in conjunction with the accompanying financial statements.
Overview
We are a leading business-to-business (B2B) media company and a primary facilitator of two-way trade with Greater China. We provide sourcing information to volume buyers and integrated marketing services to suppliers. Our mission is to facilitate global trade between buyers and suppliers by providing the right information, at the right time, in the right format. Although our range of media has grown, for more than 35 years we have been in the same basic business of helping buyers worldwide find products and suppliers in Asia.
We believe we offer the most extensive range of media and export marketing services to our suppliers in the industries we serve through our four primary channels — online marketplaces, magazines, trade shows and direct online sales.
We were originally incorporated under the laws of Hong Kong in 1970. In 1971, we launchedAsian Sources, a trade magazine to serve global buyers importing products in volume from Asia. Realizing the importance of the Internet, we became one of the first providers of business to business online services by launchingAsian Sources Onlinein 1995. In 1999, we changed the name ofAsian Sources OnlinetoGlobal Sources Online.
In April 2000, we completed a share exchange with a publicly traded company based in Bermuda, and our shareholders became the majority shareholders of the Bermuda corporation. As a result of the share exchange, we became incorporated under the laws of Bermuda and changed our name to Global Sources Ltd.
Revenue
We derive revenue from three principal sources.
Online services — Our primary service is creating and hosting marketing websites that present suppliers’ product and company information in a consistent and easily searchable manner onGlobal Sources Online. We also derive revenue from banner advertising fees.
Other media services — We publish trade magazines, which consist primarily of product advertisements from suppliers and our independent editorial reports and product surveys. We publish our core trade magazines monthly, and a host of specialized magazines seasonally. Suppliers pay for advertising in our trade magazines to promote their products and companies. We also derive revenue from buyers that subscribe to our trade publications.
We recognize revenue from our Online and other media services ratably over the period in which the advertisement is displayed. Our advertising contracts do not exceed one year.
Exhibitions — trade shows and seminars —Our China Sourcing Fairs offer international buyers direct access to China and other Asian manufacturers. The first China Sourcing fair was held during the fourth quarter of 2003. We held two series of three China Sourcing fairs each in the second quarter and fourth quarter of 2004 and a series of two China Sourcing fairs in the second quarter of 2005. Future China Sourcing fairs will be held mainly in the second quarter and fourth quarter of each financial year. International IC China Conferences and Exhibitions were held in March 2006 in current year and these same exhibitions were held in April 2005 last year. We derive revenue from exhibit space rental, advertising and sponsorship fees for advertisements in show guide, on billboards and banners and other forms of advertisements at and around our event venues. We also receive fees from attendees to our conferences held during the events. We recognize exhibitor services revenue at the conclusion of the related events. As a result, second quarter and fourth quarter revenue will be higher than the first and third quarter revenue. Revenue from exhibitions will grow as a percentage of total revenue in future years as we hold more China Sourcing Fairs.
Results of Operations
The following table sets forth the results of our operations:
| Three months ended | ||||||||
| March 31 | ||||||||
| 2006 | 2005 | |||||||
| (Unaudited) | (Unaudited) | |||||||
Revenue: | ||||||||
| Online and other media services (Note 1) | $ | 26,090 | $ | 22,636 | ||||
| Exhibitions | 3,712 | — | ||||||
| Miscellaneous | 229 | 131 | ||||||
| 30,031 | 22,767 | |||||||
Operating Expenses: | ||||||||
| Sales | 9,712 | 7,716 | ||||||
| Event production | 619 | — | ||||||
| Community | 4,642 | 3,741 | ||||||
| General and administrative | 8,850 | 7,531 | ||||||
| Online services development | 995 | 984 | ||||||
| Non-cash compensation expense | 566 | 529 | ||||||
| Amortization of software cost | 302 | 296 | ||||||
Total Operating Expenses | 25,686 | 20,797 | ||||||
Income from Operations | 4,345 | 1,970 | ||||||
Net Income | $ | 4,407 | $ | 2,000 | ||||
Income from Operations: | ||||||||
| Online and other media services | $ | 3,286 | $ | 3,101 | ||||
| Exhibitions | 1,024 | (1,259 | ) | |||||
| Miscellaneous | 35 | 128 | ||||||
Consolidated | $ | 4,345 | $ | 1,970 | ||||
Note: 1. Online and other media services consists of:
| Three months ended | ||||||||
| March 31 | ||||||||
| 2006 | 2005 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Online services | $ | 15,094 | $ | 13,093 | ||||
| Print services | 10,996 | 9,543 | ||||||
| $ | 26,090 | $ | 22,636 | |||||
The following table represents our revenue by geographical areas:
| Three months ended | |||||||||||
| March 31 | |||||||||||
| 2006 | 2005 | ||||||||||
| (Unaudited) | (Unaudited) | ||||||||||
| Asia | $ | 27,754 | $ | 21,221 | |||||||
| United States | 1,960 | 1,235 | |||||||||
| Europe | 201 | 145 | |||||||||
| Others | 116 | 166 | |||||||||
| Total revenue | $ | 30,031 | $ | 22,767 | |||||||
Consolidated Results
Revenue
Our online and other media services revenue grew by 15% from $22.6 million during the three months ended March 31, 2005 to $26.1 million during the three months ended March 31, 2006 resulting from a 26% growth in our online and other media services revenue in our China market and the growth in our Hong Kong, Taiwan and United States markets off-set by drop in some of our other markets during the quarter. China represented 50% of Online and other media services revenue during the first quarter of 2006 compared to 46% during the first quarter of 2005. Our exhibitions revenue grew from $NIL million during the three months ended March 31, 2005 to $3.7 million during the three months ended March 31, 2006, as our International IC China Conferences and Exhibitions were held in March 2006 in current year while these same exhibitions were held in April 2005 last year . Our total revenue grew by 32% to $30.0 million during the three months ended March 31, 2006 from $22.8 million during the three months ended March 31, 2005.
We have made substantial progress in developing our customer base in China, our largest market. Total revenue from China grew by 37% during the three months ended March 31, 2006 compared to three months ended March 31, 2005. China accounted for 47% of total revenue during the three months ended March 31, 2006 compared to 46% of total revenue during the three months ended March 31, 2005. We expect China’s percent of the total to continue to grow and China revenue overall to continue to grow.
Our objective is to be the preferred provider of essential information and integrated marketing solutions in the markets we serve. Our primary strategy to achieve this objective is by serving industry sectors with each of online, trade publication and trade show media. This range of media enables suppliers to reach their prospective markets in multiple ways. It may also give us a competitive advantage over media companies who do not offer a full range of media.
Our growth strategy has six key components: continue to expand in China; expand our trade show business; develop new or related verticals; cross-sell services to existing customers; developGlobal Sources Direct; and seek acquisitions, joint ventures and alliances.
| • | Continue to Expand in China.We are expanding our sales representation, marketing and infrastructure in China to enable us to grow our revenue along with the anticipated growth of China trade in the industry sectors we serve. |
| • | Expand Trade Show Business.We are focused on expanding our trade show business and in particular our China Sourcing Fairs. Throughout 2005, substantial progress was made in establishing trade shows as a powerful addition to our online and print media — and in building the foundation to operate a much larger trade show business. We are also considering shows for new product categories and shows in new locations, such as our recent announcement of a China Sourcing Fair in Dubai in 2007. | ||
| • | Develop New or Related Verticals.We continue to develop new and related verticals. We launched two new verticals last year. Garments & Textiles and Auto Parts & Accessories. In 2006, we launched Electronics Design — China in March and we recently announced the upcoming 2006 launch of a magazine and online marketplace titled Baby & Children’s Products. | ||
| • | Cross-Sell Services to Existing Customers.We believe that we can increase our revenues by cross-selling our existing products and services to suppliers who are already customers. We see significant potential to convince more of our online marketplace and trade publication customers to also exhibit in our trade shows; and to convince more of our trade show exhibitors to also become customers of our online marketplaces and trade publications. For example, we have many trade show exhibitors who are new customers to Global Sources — who are now primary prospects for our online marketplaces and magazines. | ||
| • | Develop Global Sources Direct.In 2006, the focus will include expanding and training the sales team, adding products to the website, expanding online marketing and developing the systems required to sell to multiple countries. | ||
| • | Seek Acquisitions, Joint Ventures and Alliances.We intend to selectively pursue acquisitions, joint ventures and alliances to help us accelerate achievement of our strategic goals and maintain and achieve market-leading positions. Specific objectives include: gaining greater penetration into existing or adjacent industry sectors, expanding into new industry sectors, and gaining access to a larger number of potential users. |
At the core of our strategy is one basic goal: to steadily increase the usage of our media. As we do this, we expect to increase the size and loyalty of the communities we serve. Our belief is that as our community of active buyers increases, our products and services become increasingly attractive to suppliers. As the number of buyers and sellers using our products and services grows, our offerings become incrementally more attractive to additional buyers and sellers, which we believe will drive revenue growth through further adoption of our online, publication and trade show products and services.
Operating expenses
Sales.We utilize independent sales representatives employed by independent sales representative organizations in various countries and territories to promote our products and services. Under these arrangements, the sales representative organizations are entitled to commissions as well as marketing fees. Commission expense is recorded when the associated revenue is recognized or when the associated accounts receivable are paid, whichever is earlier, and is included in sales expenses.
Sales costs consist of the commissions and marketing fees paid and incentives provided to our independent sales representative organizations, as well as sales support fees
for processing sales contracts. These representative organizations sell online services, advertisements in our trade magazines and exhibitor services and earn a commission as a percentage of revenue generated. Sales costs increased from $7.7 million during the three months ended March 31, 2005 to $9.7 million during the three months ended March 31, 2006, an increase of 26% due mainly to increase in sales commission resulting from an increase in revenue and increases in sales marketing costs and sales promotions for exhibitions.
Event Production.Event production costs consist of the costs incurred for hosting the exhibition or trade show and seminar events. The event production costs include venue rental charges, booth construction costs, travel costs incurred for the event hosting and other event organizing costs. The event production costs are deferred and recognized as an expense when the related event occurs.
Event production costs increased from $NIL million during the three months ended March 31, 2005 to $0.6 million during the three months ended March 31, 2006, as our International IC China Conferences and Exhibitions were held in March 2006 in current year while these same exhibitions were held in April 2005 during last year.
Community.Community costs consist of the costs incurred for servicing our buyer community and for marketing our products and services to the global buyer community. Community costs also include costs relating to our trade magazine publishing business and marketing inserts business, specifically printing, paper, bulk circulation, magazine subscription promotions, promotions for our on-line services, customer services costs, payroll costs relating to staff working on these activities and the event specific promotions costs incurred for promoting the China Sourcing Fairs events and the technical conferences, exhibitions and seminars to the buyer community. The event specific promotion costs for the exhibition events incurred in the interim quarterly periods are deferred and recognized as expenses when the related events are held during the financial year. The event specific promotion costs incurred for events to be held in the future financial years are expensed by the year-end in which the expenses are incurred.
Community costs increased from $3.7 million during the three months ended March 31, 2005 to $4.6 million during the three months ended March 31, 2006, an increase of 24%. This increase was due mainly to increase in bulk mailing costs, printing charges, paper costs, fees paid to consultants and promotion costs for our exhibitions events. In addition, we increased our participation in third party trade shows to promote our products and services to buyer community. We also incurred promotions for our online services and magazine subscriptions and these are expensed as incurred.
General and Administrative.General and administrative costs consist mainly of corporate staff compensation, information technology support services, content management services, marketing costs, office rental, depreciation, communication and travel costs. General and administrative costs increased from $7.5 million during the three months ended March 31, 2005 to $8.9 million during the three months ended March 31, 2006, an increase of 19%, due mainly to the increase in fees paid to consultants, content management services costs, marketing costs, information technology services costs, depreciation on new office premises that we purchased and the depreciation on leasehold improvements there on, and payroll costs.
Online Services Development.Online services development costs consist mainly of payroll, office rental and depreciation costs relating to the updating and maintenance of
Global Sources Online. Online services development costs to fund the updating and maintenance of our online services remained at $1.0 million during the three months ended March 31, 2005 and during the three months ended March 31, 2006
Non-Cash Compensation Expense.We have issued share awards under several equity compensation plans (ECP) to both employees and team members. We also recognize non-cash compensation expenses relating to the shares purchased by our directors under Directors Purchase Plan. The total non-cash compensation expense, resulting from the ECP and the Directors Purchase Plan, recorded by us during the three months ended March 31, 2006 was $0.6 million compared to $0.5 million recorded during the three months ended March 31, 2005. The increase is due mainly to re-measurement of equity compensation expense based on our prevailing share price.
The corresponding amounts for the non-cash compensation expenses are credited to shareholders’ equity.
Amortization of software cost.Amortization of software cost was $0.3 million during the three months ended March 31, 2006 and during three months ended March 31, 2005.
Income From Operations.The total income from operations during the three months ended March 31, 2006 was $4.3 million as compared to $2.0 million during the three months ended March 31, 2005. The growth in total income from operations resulted mainly from increase in revenue off-set partially by increases in sales costs, event production costs, community costs and general and administrative costs. Income from operations for online and other media services increased from $3.1 million during the three months ended March 31, 2005 to $3.3 million during the three months ended March 31, 2006, resulting from increase in online and other media services revenue off-set partially by increases in sales costs, community costs and general and administrative costs.
Gain on Sale of Available-for-sale Securities.We recorded a gain of $0.07 million arising from sale of available-for-sale securities and an interest and dividend income of $1.0 million arising mainly from available-for-sale securities during the three months ended March 31, 2006 compared to a gain of $0.04 million and an interest income of $0.05 million during the three months ended March 31, 2005.
Income Taxes.We and certain of our subsidiaries operate in the Cayman Islands and other jurisdictions where there are no taxes imposed on companies. Certain of our subsidiaries operate in Hong Kong SAR, Singapore and China and are subject to income taxes in their respective jurisdictions. Also, we are subject to withholding taxes for revenue earned in certain other countries.
We reported a tax provision of $0.2 million during the three months ended March 31, 2006 and $0.1 million during the three months ended March 31, 2005.
Net Income.Net income was $4.4 million during the three months ended March 31, 2006, compared to $2.0 million during the three months ended March 31, 2005. This growth in net income resulted mainly from increases in revenue and interest and dividend income offset partially by increases in sales costs, event production costs, community costs, general and administrative costs, tax provision, share of profits attributable to a minority shareholder during the first quarter of 2006 and decline in foreign exchange gains
Liquidity and Capital Resources
We financed our activities for the three months ended March 31, 2006 using cash generated from our operations.
Net cash generated from operating activities was $8.1 million during the three months ended March 31, 2006, compared to $9.4 million cash generated from operating activities during the three months ended March 31, 2005. The primary source of cash from operating activities was collections from our customers received through our independent sales representative organizations.
Advance payments received from customers were $62.0 million as of March 31, 2006, compared to $53.0 million as at December 31, 2005, improving our liquidity. A majority of our customers in China pay us in advance for our Online and other media services business. Our Exhibitions business collections generally are all advance payments. We expect the growth in our revenues from China to continue and we plan to launch more Exhibition events in the future. As a result, we expect that the advance payments received from customers to continue to increase in the future as our revenue increases.
Receivable from sales representatives increased from $5.7 million as of December 31, 2005 to $10.2 million as of March 31, 2006 due to the growth in our China business and our exhibitions business. Though the receivable from sales representatives may decline in near future as the collections are transferred to our bank account, we expect the receivable from sales representatives to slightly increase in the long term due to expected growth in our China business and our Exhibitions business.
We continuously monitor collections from our customers and maintain an adequate allowance for doubtful accounts. While credit losses have historically been within our expectations and the allowances established, if the bad debts significantly exceed our provisions, additional allowances may be required in future.
Net cash used in investing activities was $6.6 million during the three months ended March 31, 2006, resulting from the net purchases of available-for-sale securities of $5.9 million and $0.7 million cash used for capital expenditures mainly for computers, software, office furniture, leasehold improvements and software development. Net cash used in investing activities during the three months ended March 31, 2005 was $2.1 million, resulting from net purchase of available-for-sale securities of $1.5 million and $0.6 million cash used for capital expenditures mainly on office premises, for computers, softwares, reusable tradeshow booths and leasehold improvements.
We invest our excess cash in available-for—sale securities to generate income from interest received as well as capital gains, while the funds are held to support our business. The majority of the available-for-sale securities have maturities of less than 3 months.
Generally, we hold the securities with specified maturity dates such as Treasury Bills until their maturity but the securities managed by high quality institutions that do not have fixed maturity dates are generally sold on a quarterly basis and proceeds reinvested in similar securities. The net purchase of available-for-sales securities of $5.9 million was mainly from the cash we generated from our operations.
We do not engage in buying and selling of securities with the objective of generating profits on short-term differences in price.
Net cash generated from financing activities was $0.4 million during the three months ended March 31, 2006, which represents the amount received from directors for the shares subscribed by them in the Directors Purchase Plan. Net cash generated from financing activities was $38.4 million during the three months ended March 31, 2005, resulting from $38.3 million proceeds from the issue of common shares, net of share issue expenses and $0.1 million received from directors for the shares subscribed by them in the Directors Purchase Plan.
On March 23, 2005, we issued 3,000,000 common shares of par value $0.01 at US$13.50 per share. The total proceeds received from this issue was approximately $38.3 million, net of the offering expenses of $2.2 million. Out of the total proceeds, $0.03 million was included in the common share capital and the balance approximately $38.27 million was included in additional paid in capital.
We intend to use the net proceeds from the sale of the common shares of approximately $38.3 million after deducting placement agency fees and expenses, for working capital, general corporate purposes and strategic acquisitions.
We hold a Documentary Credit facility with the Hongkong and Shanghai Banking Corporation Limited, for providing documentary credits to our suppliers. This facility has a maximum limit of approximately $0.6 million. As at March 31, 2006, the unutilized amount under this facility was approximately $0.3 million. Hongkong and Shanghai Banking Corporation Limited has also provided a guarantee on our behalf to our suppliers. As at March 31, 2006, such guarantee amounted to $0.003 million.
We recorded a full valuation allowance for the deferred tax assets of $7.4 million as at March 31, 2006 as it was more likely than not that they would not be realized. These deferred tax assets resulted from the net operating losses in some of our subsidiaries.
During the first quarter of 2004, we entered into a number of license agreements for our exhibition events amounting to $29.7 million in payments over five years. The agreements are cancelable under Force Majeure conditions, and with the consent of the other party but may be subject to a payment penalty. As of March 31, 2006, we paid $7.1 million under these agreements. The amounts paid will be expensed when the related events are held.
We also entered into several agreements for the event specific promotion of our exhibition events amounting to $4.0 million, in payments over four years. As of March 31, 2006, we paid $1.7 million under these agreements.
In August 2005, one of our subsidiaries, eMedia Asia Limited (“eMedia”) entered into an agreement with Penton Media Inc, (“Penton”) to publish and distribute, in certain Asian territories, local language editions of Penton’s “Electronic Design” publication, relating to the electronic design industry. The first such edition to be launched is a simplified Chinese edition in mainland China entitled “ Electronic Design-China”, the online website of which was launched in January 2006, and the first monthly issue of which was launched in March 2006. Under the agreement eMedia pays Penton forty per cent of the net after-tax profits of the business and also an annual content license fee for usage of Penton’s editorial material.
On March 6, 2006, we announced a one for ten bonus share issue on our outstanding common shares. Shareholders of record on March 15, 2006 received one additional common share for every ten common shares held, of face value of $0.01 each. The bonus share issue
was distributed on April 17, 2006. All common shares and per-share amounts in the consolidated financial statements have been retroactively adjusted to reflect the one for ten bonus share issue for all periods presented. In addition, we have reclassified $0.035 million and $0.032 million from additional paid in capital to common share capital as of December 31, 2005 and March 31, 2006 respectively, in connection with the bonus share issue.
We have no bank debt as at March 31, 2006.
We anticipate that our cash and securities on hand and expected positive cash-flows from our operations will be adequate to satisfy our working capital, capital expenditure requirements and cash commitments based on the current levels of our operations.
Recent Accounting Pronouncements
In March 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” EITF 03-1 provides guidance on other-than-temporary impairment models for marketable debt and equity securities accounted for under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and SFAS No. 124, “Accounting for Certain Investments Held by Not-for-Profit Organizations,” and non-marketable equity securities accounted for under the cost method. The EITF developed a basic three-step model to evaluate whether an investment is other-than-temporarily impaired. The provisions of EITF 03-1 will be effective for interim or annual reporting periods beginning after June 15, 2004 and will be applied prospectively to all current and future investments. Quantitative and qualitative disclosures for investments accounted for under SFAS No. 115 are effective for the first annual reporting period after December 15, 2003. In September, 2004, the FASB issued FSP EITF Issue “03-1-1”, “Effective Date of Paragraphs 10-20 of EITF 03-1, The Meaning of Other Than Temporary Impairment”, delaying the effective date for the recognition and measurement guidance of EITF 03-1, as contained in paragraphs 10-20, until certain implementation issues are addressed and a final FSP providing implementation guidance is issued. The disclosure requirements of the consensus remain in effect. In November, 2005 the FASB issued FSP FAS 115-1 and FAS 124-1. The FSP FAS 115-1 and FAS 124-1 nullifies certain requirements of EITF 03-1 and is applicable for reporting periods beginning after December 15, 2005. The adoption of EITF 03-1 does not have a material effect on our results of operations and financial condition.
In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”), a revision of SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS 123R requires, among other things, measurement of all employee stock-based compensation awards using a fair value method and recording such expense in the consolidated financial statements. In April 2005, the Securities and Exchange Commission adopted a new rule that allows implementation of SFAS 123R at the beginning of next fiscal year beginning after June 15, 2005. We adopted Statement 123R effective January 1, 2006. The adoption of SFAS 123R does not have a material effect on our financial statements of position, results of operations or cash flows.
In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of Accounting Principles Board (“APB”) Opinion No. 20 and FASB Statement No. 3.” (“SFAS 154”). SFAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle. It also requires that the changes in accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be
made to the opening balance of retained earnings for that period rather than being reported in an income statement. The statement will be effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We do not expect the adoption of SFAS 154 to have a material impact on our consolidated financial statements.
Qualitative and Quantitative Disclosures about Market Risk
We operate internationally and foreign exchange rate fluctuations may have a material impact on our results of operations. Historically, currency fluctuations have been minimal on a year to year basis in the currencies of the countries where we have operations. As a result, foreign exchange gains or losses in revenue and accounts receivable have been offset by corresponding foreign exchange losses or gains arising from expenses. However, during the Asian economic crisis of 1997 to 1998, both advertising sales and the value of Asian currencies declined, which caused a significant decline in revenue that was not fully offset by lower expense levels in Asian operations.
This decline in revenue occurred due to contracts being denominated and priced in foreign currencies prior to devaluations in Asian currencies. The conversion of these contract proceeds to U.S. dollars resulted in losses and reflects the foreign exchange risk assumed by us between contract signing and the conversion of cash into U.S. dollars. We believe this risk is mitigated because historically a majority (ranging between 55% to 60%) of our revenue is denominated in U.S. dollars or is received in the Hong Kong currency which is currently pegged to the U.S. dollar and the Chinese currency, which is informally pegged to the U.S. dollar. Correspondingly, a majority (approximately 85%) of our expenses are denominated in Asian currencies. To the extent significant currency fluctuations occur in the New Taiwan dollar, the Chinese Renminbi or other Asian currencies, or if the Hong Kong dollar is no longer pegged to the U.S. dollar, our revenue and expenses fluctuate in tandem thus reducing the net impact on our profits.
During the three months ended March 31, 2006 and the three months ended March 31, 2005, we have not engaged in foreign currency hedging activities.
In the three months ended March 31, 2006 and the three months ended March 31, 2005, we derived more than 90% of our revenue from customers in the Asia-Pacific region. We expect that a majority of our future revenue will continue to be generated from customers in this region. Future political or economic instability in the Asia-Pacific region could negatively impact our business.
Forward-looking Statements Disclaimer
Except for any historical information contained herein, the matters discussed in this report contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. These statements relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “project,” “plan,” “predict,” “strategy,” “forecast,” “will” and similar terms and phrases, including references to assumptions.
These forward-looking statements include current trend information, projections for deliveries, business growth strategies and plans, projected capital expenditure, expansion plans and liquidity. These forward looking statements involve risks and uncertainties that may cause our actual future activities and results of operations to be materially different from those suggested or described in this report on Form 6-K. These risks include but are not limited to: product demand; customer satisfaction and quality issues; labor disputes; competition, changes in technology and the marketplace; our ability to achieve and execute internal business plans; the success of our business partnerships and alliances; worldwide political instability and economic growth; changes in regulatory and tax legislation in the countries in which we operate; and the impact of any weakness in the currencies in Asia in which we operate.
In addition to the foregoing factors, certain other risks and uncertainties, which could cause actual results to differ materially from those expected, estimated or projected can be found in the section “Risk Factors” in our Annual Report on Form 20-F filed with the United States Securities and Exchange Commission.
If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected. Given these uncertainties, users of the information included in this report on Form 6-K, including investors and prospective investors, are cautioned not to place undue reliance on such forward-looking statements. We do not intend to update the forward-looking statements included in this report.