OMB Number: 3235-0288 |
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR | |
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31st, 2011 |
OR | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to ________________ |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report |
Commission file number: 0-12600
Title of each class | Name of each exchange on which registered | |
N/A | N/A |
N/A |
Title of Class |
Common Shares |
Title of Class |
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Part 1 | 5 | |
1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT, AND ADVISERS | 5 |
2. | OFFER STATISTICS AND EXPECTED TIMETABLE | 5 |
3. | KEY INFORMATION | 6 |
A. | SELECTED FINANCIAL DATA | 6 |
B. | CAPITALIZATION AND INDEBTEDNESS | 7 |
C. | REASONS FOR THE OFFER AND USE OF PROCEEDS | 7 |
D. | RISK FACTORS | 7 |
4. | INFORMATION ON THE COMPANY | 13 |
A. | HISTORY AND DEVELOPMENT OF THE COMPANY | 13 |
B. | BUSINESS OVERVIEW | 17 |
C. | ORGANIZATIONAL STRUCTURE | 23 |
D. | PROPERTY, PLANTS AND EQUIPMENT | 24 |
4A. | UNRESOLVED STAFF COMMENTS | 24 |
5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS | 24 |
A. | OPERATING RESULTS | 24 |
B. | LIQUIDITY AND CAPITAL RESOURCES | 36 |
C. | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. | 39 |
D. | TREND INFORMATION | 40 |
E. | OFF-BALANCE SHEET ARRANGEMENTS | 42 |
F. | TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS | 42 |
G. | SAFE HARBOR | 42 |
6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 42 |
A. | DIRECTORS AND SENIOR MANAGEMENT | 42 |
B. | COMPENSATION | 45 |
C. | BOARD PRACTICES | 47 |
D. | EMPLOYEES | 51 |
E. | SHARE OWNERSHIP | 52 |
7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 54 |
A. | MAJOR SHAREHOLDERS | 54 |
B. | RELATED PARTY TRANSACTIONS | 54 |
C. | INTERESTS OF EXPERTS AND COUNSEL | 54 |
8. | FINANCIAL INFORMATION | 55 |
A. | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION | 55 |
9. | THE OFFER AND LISTING | 56 |
10. | ADDITIONAL INFORMATION | 57 |
A. | SHARE CAPITAL | 57 |
B. | MEMORANDUM AND ARTICLES OF ASSOCIATION | 57 |
C. | MATERIAL CONTRACTS | 59 |
D. | EXCHANGE CONTROLS | 60 |
E. | TAXATION | 60 |
F. | DIVIDENDS AND PAYING AGENTS | 64 |
G. | STATEMENTS BY EXPERTS | |
H. | DOCUMENTS ON DISPLAY | 64 |
I. | SUBSIDIARY INFORMATION | 65 |
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11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 65 |
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12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 66 |
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PART II |
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13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | 66 |
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14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF |
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| PROCEEDS | 66 |
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15. | CONTROLS AND PROCEDURES | 67 |
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16A. | AUDIT COMMITTEE FINANCIAL EXPERT | 67 |
16B. | CODE OF ETHICS | 68 |
16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 68 |
16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | 68 |
16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER | 68 |
16F. | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT | 70 |
16G. | CORPORATE GOVERNANCE | 70 |
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PART III |
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17. | FINANCIAL STATEMENTS | 70 |
18. | FINANCIAL STATEMENTS | 70 |
19. | EXHIBITS | 71 |
4
1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT, AND ADVISERS |
2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
3. | KEY INFORMATION |
USD to CAD | 2011 | 2010 |
December 31 | 0.9833 | 0.9946 |
Annual average | 1.0114 | 1.0299 |
Year Ended December 31 | 2011 | 2010 |
$ | $ | |
Sales | 38,355 | 20,233 |
Earnings before income taxes | 1,701 | 2,056 |
Current income tax expense | 811 | 140 |
Deferred income tax expense/(recovery) | 479 | (224) |
Net earnings for the period | 411 | 2,140 |
Net earnings per share – basic | 0.01 | 0.04 |
Net earnings per share – diluted | 0.01 | 0.04 |
# | # | |
Weighted average number of shares – basic | 58,046 | 53,567 |
Weighted average number of shares – diluted | 58,152 | 53,651 |
Dividends per share | - | - |
As at December 31 | ||
$ | $ | |
Total assets, excluding future income tax assets | 39,064 | 18.543 |
Total assets | 40,261 | 20,414 |
Net assets | 18,678 | 15,833 |
Interest bearing loans and borrowings | 9,650 | - |
Promissory note payable | 597 | - |
Issued capital | 39,851 | 37,447 |
4. | INFORMATION ON THE COMPANY |
1. | The Company was incorporated in British Columbia, Canada on October 15, 1982 pursuant to the Company Act (British Columbia). Effective September 27, 1989, the Company changed its name to NII Norsat International, Inc. At the Company’s Annual General Meeting held on June 9, 1999, shareholders passed a special resolution to change the Company’s name back to Norsat International Inc. Since July 2, 1999, the Company has operated under the name Norsat International Inc. (herein “Norsat” or the “Company”). |
2. | Norsat was incorporated under and continues to operate under the laws of the Province of British Columbia, Canada. The Company is administered from British Columbia. The corporate laws pertinent to Norsat are those of the Province of British Columbia, although it is also subject to the securities legislation of British Columbia, Ontario and the United States. |
3. | The Company’s principal business is located at the following address: |
4. | The principal business events in Norsat’s 29 year history are presented below in in chronological order: |
1982 | The Company developed the first commercial-grade satellite receivers. | |
1983 | In March 1983, the Company, based in Surrey, British Columbia, completed its initial public offering on the Vancouver Stock Exchange. | |
The Company broke with industry norm and introduced a gallium arsenide low noise amplifier (LNA) instead of a silicon based LNA | ||
1984 | The Company developed a new series of low noise blocker (LNB) compatible satellite receivers featuring synthesized video, audio, and infrared remote control. | |
1985 | The Company introduced synthesized receivers (JR Series) that enable internal melding of phase and frequency for a very high degree of accuracy; these receivers gain significant traction with private networks. | |
1987 | The Company became a leading provider of Ku band private networks for business television and won a landmark deal to supply GTE Spacenet. | |
The Company also introduced the Microsat, an IBM PC compatible satellite communications expansion card for broadcast data networks, with optional audio/video capability. The Company later applied for a patent on key elements of this technology; the patent was eventually awarded in 1991. | ||
1988 | The Company introduced external reference receivers that provide a stable reference source, by minimizing temperature drift, for very low data rate applications. It also introduced a broadcast satellite data multiplexing network control system and a satellite delivered personal computer bulletin board service. | |
1989 | In September 1989, the Company changed its name to NII Norsat International, Inc. | |
1990 | In August 1990, the Company graduated to the Toronto Stock Exchange. | |
1991 | The Company was issued United States Patent No. 5,019,910 entitled “Apparatus for Adapting Computer for Satellite Communications.” | |
1992 | The Company introduces C-band and Ku-band receivers with noise figures of less than 1.5 dB. | |
1993 | The Company introduced the first digital LNB optimized for low data rate applications. | |
1994 | The Company introduced the Microsat 150 Multimedia PC receiver that enables a personal computer or laptop to capture real time satellite video, listen to and edit directly from the computer keyboard selections of audio programs, and monitor real time data broadcasts. | |
1995 | The European Space Agency extends a grant to the Company to develop portable terminals. | |
1996 | The Company introduced video scrambling technology (N-Code II) for cable distribution networks so authorized cable subscribers may receive telecasts. | |
1997 | The Federal Court of Appeal rules that the use of U.S. based DTH systems in Canada contravened the Radio communication Act. Aurora Distributing, a division of Diamond Pacific Inc., the Company’s consumer products subsidiary, withdrew from the U.S. based DTH receiving market after Norsat settled a lawsuit in which it was a distributor for those systems. | |
1998 | The Company acquired IMT Comsys, a private company and originally the Satellite Communications Division of MPR Teltech. IMT Comsys' products included Ka-band VSATs, solid state power amplifiers and low noise block downconverters (LNBs). The acquiree also had development contracts with the European and Canadian Space Agencies for Ka-band subscriber terminals. | |
The Company’s US Subsidiary, Diamond Pacific, was named the Master Systems Operator by the US Satellite Broadcasting Company, a major supplier of premium movie channels, to support its Multiple Dwelling Unit (MDU) market. | ||
1999 | Norsat introduced a line of C-band and Ku-band TNBs (Two-way Norsat block converters), a critical component for the proliferation of wireless broadband media. | |
Norsat released the NCS-300 Subscriber Management System to enable cable system operators to easily deliver pay-per-view television. | ||
2000 | In April, Norsat acquired Winnipeg-based SpectraWorks, a leading developer of systems and software for broadcasting multimedia broadband content across satellite, terrestrial and digital cable networks. Through this acquisition, Norsat added digital video broadcast (DVB) hubs to manage the flow of content into and out of the Internet backbone and between subscriber terminals; and a 100 Mbps IP encapsulator to enable end-to-end multimedia broadcast solutions. | |
In August, the Company formally exited consumer satellite DBS. The Company discontinued the operations of Norsat America, a distribution business geared towards consumer-oriented, Direct Broadcasting Systems. | ||
Norsat also became a leading provider of Ka-band satellite terminals for various consumer Internet applications through its relationship with SES Astra and Koreasat. | ||
In October 2000, the Company began trading on NASDAQ. It was later de-listed in 2003. | ||
2011 | In June 2001, the Company received a $9.4 million Technology Partnerships Canada investment for the development of satellite interactive terminals. | |
The Company introduced a compact IP encapsulator that enables the transport of Internet content at very high speeds (i.e. 200 Mbps) for both the satellite and cable markets. | ||
2002 | The Company built on its portable terminal experience by introducing a commercial grade flyaway terminal for news gathering organizations. It sold its first NewsLink system to CBS News. | |
2003 | In May 2003, Norsat appointed SEG a master reseller for some if its microwavecomponents. | |
The OmniLink family of portable satellite terminals which includes the NewsLink and SecureLink systems were launched, providing rapidly deployable broadband satellite data and video connectivity for a wide range of applications. | ||
2004 | The Company became a key supplier of newsgathering equipment to the US Army. | |
2005 | The Company launched the GLOBETrekker, a backpack able satellite terminalinitially capable of transmitting and receiving IP-based video and data content. | |
The Company was issued United States Patent No. 6,931,245 entitled “Downconverter for the Combined Reception of Linear and Circular Polarization Signal from Collocated Satellites.” | ||
2006 | In May 2006, the Company was awarded a GSA schedule, facilitating the purchase of its systems by various government agencies. In September 2006, the Company relocated its international headquarters to Richmond, British Columbia. | |
2007 | The Company launched a line of Low Noise Amplifiers, the GlobeTrekker X-band and the Rapid Application Development Environment variant of the GlobeTrekker, which includes an environmentally-controlled baseband enclosure that is compatible with most commercial and specialized modems. | |
In addition, the Company introduced the Extended Ku-Band Transmitter and unveiled the Norsat Rover, a single backpack portable satellite terminal | ||
The Company received a United States patent for the GLOBETrekker TM design and a European patent for its frequency selective surface waveguide filter design. | ||
2008 | The Company announced entry into the marine satellite industry and the Worldwide Interoperability for Microwave Access (WiMAX) network business in 2008. | |
The Company received a repayable contribution from the Canadian government to assist in research and development activities. The funding program was made through the Ministry of Industry’s Strategic and Aerospace Defence Initiative (“SADI”). The total contribution will be a maximum of Canadian $5.97 million through to the year 2011. | ||
In September 2008, the Company was awarded a $5.5 million contract from the U.S. Department of Defence for the delivery of portable satellite systems. | ||
2009 | The Company was awarded a contract to manage a Vessel Monitoring System (“VMS”) in Europe. | |
In December 2009, the Company signed an agreement to invest in an internet service provider in Malawi, Africa. |
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2010 | The Company was awarded a $1.7 million contract with a European military. | |
The Company was named one of BC Business Top 100 companies. | ||
The Company was awarded $4.2 million in contract orders with US Government organizations. | ||
2011 | On January 21, 2011 Norsat acquired Sinclair Technologies Holdings Inc ("Sinclair") for $18.5 million. | |
Norsat obtained a $12 million loan in connection with the acquisition of Sinclair. As of December 31, 2011, the loan balance had been paid down to $9.8 million. | ||
The Company's Satellite Solutions segment was awarded a Cdn$3.5 million sales contract to provide satellite-based communications network and ongoing satellite airtime to the First Nations' Emergency Society of British Columbia ("FNESS"). | ||
Our Satellite Solutions’ segment released a High Definition-capable version of our GLOBETrekkerTM system. | ||
The Company’s Satellite Solutions segment was awarded a new satellite-based communication equipment and services program valued at $1.3 million from the NATO Consultation, Command and Control Agency (“NATO”). | ||
Year ended December 31, | ||
2011 | 2010 | |
$ | $ | |
Canada | 8,562 | 469 |
United States | 21,375 | 12,552 |
Europe and other | 8,419 | 7,212 |
Total | 38,356 | 20,233 |
● | Public sector and military network operators, including several police forces, military and paramilitary organizations (such as the coast guards and navies), and a large set of ambulance and fire dispatch services; |
● | Private Sector Networks including rail, ground and air transportation networks used by natural resource, utility, taxi, trucking, and construction companies as well as other dedicated network operators, generally served through an extensive set of dealers specializing in radio systems; |
● | Mobile radio, public safety, military, cellular, aviation and heavy transport industries; and |
● | OEMs. |
● | Norsat International (America) Inc. incorporated and located in Falls Church city, VA, United States of America; |
● | Norsat International (UK) Ltd. incorporated and located in Lincolnshire, England |
● | Norsat SA, incorporated in Lausanne, Switzerland |
● | Sinclair Technologies Holdings Inc., incorporated in Ontario and located in Aurora, Ontario, Canada. |
4A. | UNRESOLVED STAFF COMMENTS |
Annual Financial Data (Expressed in thousands of dollars, except per share amounts) | 2011 | 2010 |
$ | $ | |
Sales | 38,355 | 20,233 |
Earnings before income taxes | 1,701 | 2,056 |
Current income tax expense | 811 | 140 |
Deferred income tax expense/(recovery) | 479 | (224) |
Net earnings | 411 | 2,140 |
Net earnings per share - basic | 0.01 | 0.04 |
Net earnings per share - diluted | 0.01 | 0.04 |
$ | $ | |
Total assets, excluding future income tax assets | 39,064 | 18,543 |
Total assets | 40,261 | 20,414 |
Interest bearing loans and borrowings | 9,650 | nil |
Promissory note payable | 597 | nil |
Quarterly Financial Data (unaudited) (Expressed in thousands, except per share amounts) | ||||
Three Months Ended (unaudited) | ||||
Mar 31 | Jun 30 | Sep 30 | Dec 31 | |
2011 | $ | $ | $ | $ |
Sales | 8,715 | 8,644 | 11,381 | 9,616 |
Net earnings (loss) for the period | (187) | (285) | 1,102 | (221) |
Net earnings (loss) per share - basic | (0.00) | (0.00) | 0.02 | (0.00) |
Net earnings (loss) per share - diluted | (0.00) | (0.00) | 0.02 | (0.00) |
# | # | # | # | |
Weighted average common shares outstanding - basic | 57,082 | 58,364 | 58,351 | 58,317 |
Weighted average common shares outstanding - diluted | 57,082 | 58,364 | 58,380 | 58,317 |
2010 | $ | $ | $ | $ |
Sales | 4,887 | 5,199 | 4,492 | 5,656 |
Net earnings for the period | 505 | 817 | 609 | 215 |
Net earnings per share - basic | 0.01 | 0.02 | 0.01 | 0.00 |
Net earnings per share - diluted | 0.01 | 0.02 | 0.01 | 0.00 |
# | # | # | # | |
Weighted average common shares outstanding - basic | 53,677 | 53,591 | 53,439 | 53,566 |
Weighted average common shares outstanding - diluted | 53,855 | 53,758 | 53,551 | 53,651 |
Sales ($000’s) | Three Months Ended 2011 (unaudited) | Year Ended Dec 31, | ||||
Mar 31 | Jun 30 | Sep 30 | Dec 31 | 2011 | 2010 | |
$ | $ | $ | $ | $ | $ | |
Sinclair Technologies | 4,346 | 5,218 | 5,414 | 5,240 | 20,218 | - |
Satellite Solutions | 2,358 | 1,322 | 3,270 | 1,913 | 8,863 | 11,344 |
Microwave Products | 1,839 | 1,834 | 2,459 | 2,279 | 8,411 | 8,492 |
Maritime Solutions | 171 | 270 | 238 | 184 | 863 | 396 |
Total | 8,714 | 8,644 | 11,381 | 9,616 | 38,355 | 20,233 |
Gross Margin | Three Months Ended 2010 (unaudited) | Year Ended Dec 31, | ||||
Mar 31 | Jun 30 | Sep 30 | Dec 31 | 2011 | 2010 | |
Sinclair Technologies | 42% | 43% | 47% | 48% | 45% | |
Satellite Solutions | 50% | 33% | 44% | 32% | 41% | 52% |
Microwave Products | 44% | 42% | 40% | 42% | 42% | 42% |
Maritime Solutions | 18% | 54% | 42% | 59% | 44% | 39% |
Total | 44% | 42% | 45% | 44% | 44% | 47% |
Expenses ($000’s) | Three Months Ended 2011 (unaudited) | Year Ended Dec 31, | ||||
Mar 31 | Jun 30 | Sep 30 | Dec 31 | 2011 | 2010 | |
$ | $ | $ | $ | $ | $ | |
Selling and distributing | 1,250 | 1,735 | 1,549 | 1,477 | 6,011 | 3,154 |
General and administrative | 1,738 | 1,482 | 1,689 | 2,288 | 7,195 | 3,280 |
Product development | 355 | 514 | 537 | (111) | 1,295 | 863 |
Other (Income) Expenses | 301 | (15) | (375) | 583 | 496 | 251 |
Total Expenses | 3,644 | 3,716 | 3,400 | 4,238 | 14,997 | 7,548 |
Earnings (in 000’s) except earnings per share | Three Months Ended 2011 (unaudited) | Year Ended Dec 31, | ||||
Mar 31 | Jun 30 | Sep 30 | Dec 31 | 2011 | 2010 | |
Earnings (loss) before income taxes | 200 | (125) | 1,679 | (53) | 1,701 | 2,056 |
Net earnings (loss) for the period | (187) | (285) | 1,104 | (221) | 411 | 2,141 |
Net earnings (loss) per share - basic & diluted | (0.00) | (0.00) | 0.02 | (0.00) | 0.01 | 0.04 |
Assets | Period |
Software | 1 to 3 years |
Customer relationships | 5 to 12 years |
Product designs | 20 years |
Brand | Indefinite |
Other | 1.5 to 15 years |
● | the delivered item(s) has standalone value; and, |
● | when a general right of return exists for the delivered item, the delivery or performance of undelivered item is probable and substantially within our control. |
● | Vendor specific objective evidence (“VSOE”) of selling price, |
● | If VSOE does not exist, third-party evidence of selling price (“TPE”) is used, or |
● | If neither VSOE nor TPE exist, management’s best estimate of selling price for the deliverable is used. |
● | In all cases, selling prices is an entity specific measure that also considers market conditions. |
(‘000s) | Year ended Dec 31, | |
2011 | 2010 | |
$ | $ | |
Short-term employee benefits | 2,586 | 677 |
Share-based payments | 17 | 35 |
Total | 2,603 | 712 |
(‘000s) | Fair value recognized on acquisition |
Assets | $ |
Cash and cash equivalents | 726 |
Short-term investments | 30 |
Trade and other receivables | 2,301 |
Inventories | 4,845 |
Prepaid expenses and other | 153 |
Property and equipment, net | 668 |
Intangible assets | 10,068 |
Deferred tax assets | 67 |
Total Assets | 18,858 |
Liabilities | |
Trade and other payables | 2,065 |
Deferred income tax liabilities | 2,910 |
Taxes payable | 741 |
Total Liabilities | 5,716 |
Total identifiable net assets at fair value | 13,142 |
Goodwill on acquisition of Sinclair | 5,360 |
Purchase consideration transferred | 18,502 |
(‘000s) | |
$ | |
Cash | 15,962 |
Shares issued, at fair value | 2,037 |
Promissory notes payable | 503 |
Total purchase consideration | 18,502 |
Assumptions | |
Risk-free interest rate | 1.70% |
Expected life | 1.57 years |
Vesting period | Immediately |
Expected volatility | 60.4% |
Expected dividends | nil |
● | working capital ratio (current assets divided by current liabilities) cannot be less than 1.25:1.00 – calculated quarterly, |
● | debt to tangible net worth ratio (total liabilities less cash on hand and deferred tax liabilities divided by the sum of share capital, contributed surplus, accumulated other comprehensive income, retained earnings less intangible assets and goodwill) cannot exceed |
● | debt service coverage ratio cannot be less than 1.00. Based on EBITDA less unfunded capital expenditures – calculated annually beginning December 31, 2012, and |
● | funded debt to EBITDA less unfunded capital expenditures (“Debt to EBITDA Ratio”) cannot exceed 5.45:1.00 for the three months ending March 31, 2012 |
● | Public safety and military network operators, including several police forces, military and paramilitary organizations (such as the coast guards and navies), and a large set of ambulance and fire dispatch services; |
● | Private Sector Networks including rail, ground and air transportation networks used by natural resource, utility, taxi, trucking, and construction companies, as well as other dedicated network operators, generally served through an extensive set of dealers specializing in radio systems; |
● | Mobile radio, public safety, military, cellular, aviation and heavy transport industries; and |
● | Original equipment manufacturers. |
● | Limited availability of licensed and unlicensed frequencies is causing governments to re-assign spectrum for public safety networks. As an example, US Broadcasters were recently required to vacate the 700 MHz frequency band to allow spectrum for new public safety networks. |
● | Demand by mobile radio users for more radio channels is causing network operators to reduce channel spacing and increase demand for filter products. |
● | Large competitors are more focused on the larger cellular market and appear to be reducing investment in new product development for the (Note: need to spell out acronym) (PMR) market. |
● | Original equipment manufacturers (OEMs) are driving greater efficiencies and bargaining power by favouring fewer vendors with a broad product portfolio. |
● | There is a growing expectation that organizations and individuals are always “connected” to some type of communications infrastructure, regardless of where they may be positioned geographically. |
● | As companies are increasingly required to look beyond traditional locations to meet the world’s demand for natural resources, there has been a proliferation of remote sites far removed from existing infrastructure. Demand for bandwidth is ever-expanding as users increasingly expect that video and audio files are capable of being transmitted, and that the transmissions will occur in real time. |
● | In the era of 24-hour news coverage, viewers have come to expect media to cover a breaking story nearly instantaneously, regardless of where it occurs around the world. Media outlets need to be able to deploy quickly to meet this expectation. |
● | Major media are experiencing competition from alternative news sources that typically make content available over the Internet. Partly in response, governments and non-governmental organizations are increasingly producing their own content relating to events they deem significant, and making this available to third parties or directly to the public. |
● | The nature of modern military operations is such that mobility and rapid establishment of communication links in the field are increasingly considered vital. |
● | Major organizations that have global operations are increasingly aware of, and plan for, natural or man-made crisis events. Their plans often include establishing communication capabilities that are not dependent on terrestrial infrastructure as part of their contingency or emergency action plans. |
● | A number of large-scale disasters in recent years have proven the critical importance of first responders being able to establish rapid communication links to coordinate recovery efforts. |
● | Experience with information technology and communication equipment in recent decades has conditioned users generally to expect related hardware to become smaller and more portable over time, while offering improved functionality. Providers who are able to meet this expectation can realize competitive advantages. |
● | Applications for satellite technology are becoming ubiquitous. From their traditional role in the broadcast and telecommunications fields, communications satellites have more recently been extended to such applications as broadband services, cellular and Internet backhaul, location-based services and satellite imagery. As a result, a broader base of users has a need for ground-based satellite equipment. |
E. | Off-balance sheet arrangements |
F. | Tabular disclosure of contractual obligations |
Contractual Obligations (‘000s) | 2012 | 2013 | 2014 | 2015 | 2016 and later | Total |
$ | $ | $ | $ | $ | $ | |
Long term debt obligations | 3,000 | 3,000 | 3,000 | 650 | - | 9,650 |
Promissory note payable | - | 750 | - | - | - | 750 |
Inventory purchase obligations | 3,159 | 634 | 109 | - | - | 3,902 |
Operating lease obligations | 486 | 299 | 309 | 288 | 264 | 1,646 |
Total | 6,645 | 4,683 | 3,418 | 938 | 264 | 15,948 |
G. | Safe harbor |
6. | Directors, Senior Management and Employees |
2011 | ||
Chairman of Board of Directors | Cdn$30,000 | |
Chairman of Audit Committee | Cdn$25,000 | |
Other Board Members | Cdn$20,000 |
Name and Principal Position | Fees earned ($) | Share-based awards | Option based awards | Non-Equity Incentive plan compensation ($) | Pension Value ($) | All Other Compensation ($) | Total ($) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) |
Fabio Doninelli (1) | 31,519 | Nil | 70,134 | Nil | Nil | Nil | 101,653 |
Joseph Caprio | 26,549 | Nil | 24,032 | Nil | Nil | 2,919 | 53,500 |
James Topham (2) | 16,651 | Nil | 38,949 | Nil | Nil | Nil | 55,600 |
Andrew Harries (3) | 2,138 | Nil | 25,674 | Nil | Nil | Nil | 27,812 |
Ugo Doninelli (4) | 5,017 | Nil | Nil | Nil | Nil | Nil | 5,017 |
Margaret A. Good (5) | 9,897 | Nil | Nil | Nil | Nil | 2,513 | 12,410 |
Amiee Chan | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
(1) | Mr. Fabio Doninelli joined the board on March 7, 2011 and received a proration of his annual fees as director and chairman of the board. |
(2) | Mr. Topham joined the board on May 12, 2011 and received a proration of his annual fees as director and audit committee chair. |
(3) | Mr. Harries joined the board on November 29, 2011 and received a proration of his annual fees as director. |
(4) | Mr. Ugo Doninelli passed away on February 19, 2011 and received a proration of his annual fees as director and chairman of the board. |
(5) | Ms. Good resigned from the board on May 12, 2011 and received a proration of her annual fees as director and audit committee chair. |
Non-Equity Incentive plan compensation ($) | |||||||||
Name and Principal Position | Year | Salary ($) | Share-based awards | Option based awards (1) | Annual Incentive Plans (2) | Long-term incentive plans | Pension Value ($) | All Other Compensation ($) (6) | Total ($) |
(a) | (b) | (c) | (d) | (e) | (f1) | (f2) | (g) | (h) | (i) |
Dr. Amiee Chan, President and Chief Executive Officer | 2011 | 242,736 | N/A | 48,064 | Nil | N/A | 17,240 | 216,243 | 524,283 |
2010 | 185,382 | N/A | 15,509 | Nil | N/A | 18,064 | N/A | 218,955 | |
2009 | 140,117 | N/A | 18,455 | 110,917 | N/A | 12,552 | N/A | 282,041 | |
Arthur Chin, Chief Financial Officer (3) | 2011 | 176,152 | N/A | 39,817 | Nil | N/A | 8,831 | N/A | 224,800 |
Calven Iwata, President of Sinclair Technologies (4) | 2011 | 284,748 | N/A | N/A | 1,527,544 | N/A | 14,130 | N/A | 1,826,422 |
Trevor Greene, Chief Financial Officer (5) | 2011 | 5,426 | N/A | N/A | Nil | N/A | 885 | 12,221 | 18,532 |
2010 | 104,939 | N/A | 42,223 | Nil | N/A | 5,247 | N/A | 152,409 |
(1) | Amounts for option based awards are valued under the Black-Scholes Options Pricing Model. |
(2) | Amounts paid in the fiscal year related to performance in the prior year. |
(3) | Mr. Chin joined the Company on February 1, 2011. |
(4) | Mr. Iwata joined the Company on January 21, 2011 when Norsat acquired Sinclair Technologies Holdings Inc. |
(5) | Mr. Greene joined the Company on April 1, 2010 and left on January 23, 2011. He received a one-time payment of $12,221. |
(6) | Perquisites under All Other Compensation are not in excess of CDN$50,000 or 10% of the total base salary paid to each Named Executive Officer for the years indicated and thus are not reported. |
● | To assist the Company to attract and retain highly qualified individuals. |
● | To reward employees annually for achieving financial results. |
● | To create among employees a sense of ownership in the Company and to align the interests of the employees with those of the shareholder. |
● | To create a variable component to compensation that is linked to the Company’s business strategy, the Company’s ability to pay and the employee’s ability to influence results. |
● | To ensure competitive compensation that is also financially affordable for the Company. |
● | To provide a rational methodology for incentive compensation and stock option grants that employees understand and support. |
● | To attract and retain talented individuals to lead those functions important to the Company’s success. |
December 31, 2011 | December 31, 2010 | December 31, 2009 | |
Senior Management | 3 | 2 | 2 |
Research and Development | 29 | 13 | 14 |
Sales and Marketing | 27 | 12 | 11 |
Finance | 12 | 6 | 5 |
Other Administration | 8 | 7 | 2 |
Production and Logistics | 80 | 21 | 21 |
Total | 159 | 61 | 55 |
The following table shows the number of employees by geographical location at the end of each period:
December 31, 2011 | December 31, 2010 | December 31, 2009 | |
Canada | 148 | 54 | 45 |
United States | 5 | 3 | 3 |
Other | 6 | 4 | 7 |
Total | 159 | 61 | 55 |
Name, Position, Country of residence | Number of common shares owned (1) | As a % of outstanding common shares | Number of common share purchase warrants owned |
Fabio Doninelli (Director and Chairman of the Board) Switzerland | 2,069,575(2) | 3.54% | Nil |
Joseph Caprio (Director) USA | 165,136 (3) | 0.28% | Nil |
James Topham (Director and Chair of the Audit Committee) Canada | Nil | 0.00% | Nil |
Andrew Harries (Director) Canada | Nil | 0.00% | Nil |
Amiee Chan (Director, President and CEO) Canada | 558,536 | 0.95% | Nil |
Arthur Chin (Chief Financial Officer) Canada | Nil | 0.00% | Nil |
Calven Iwata (President of Sinclair) Canada | 1,842,294 (4) | 3.15% | Nil |
(1) | The information as to common shares beneficially owned or over which a director or nominee exercises control or direction, not being within the knowledge of the Company, has been furnished by the respective directors or nominees individually. |
(2) | Mr. Fabio Doninelli directly owns 84,000 shares of the Company. By virtue of his position as General Manager and Chief Executive Officer of Prismafin S.A., Mr. Fabio Doninelli also exercised direction over 1,985,575 common shares of the Company held by Prismafin S.A, bringing his total ownership to 2,069,575. |
(3) | Mr. Caprio directly owns 155,386 shares of the Company. By virtue of Mr. Caprio’s spouse, he exercises direction over an additional 9,750 shares of the Company, bringing his total ownership to 165,136. |
(4) | Mr. Iwata directly owns 1,490,193 shares of the Company. By virtue of Mr. Iwata’s spouse, he exercises direction over an additional 352,101 shares of the Company, bringing his total ownership to 1,842,294. |
Option - based awards | Share - based awards | |||||
Name | No. of securities underlying unexercised options | Options exercise price (Cdn) | Options expiration date | Value of unexercised in the money options (Cdn) (1) | Number of shares not vested | Market value of share based awards that have not vested |
Fabio Doninelli (Director and Chairman of the Board) | 150,000 | $0.86 | 4-Mar-16 | Nil | N/A | N/A |
James Topham (Director and Chair of the Audit Committee) | 100,000 | $0.73 | 12-May-16 | Nil | N/A | N/A |
Andrew Harries (Director) | 100,000 | $0.51 | 22-Nov-16 | Nil | N/A | N/A |
Joseph Caprio (Director) | 20,000 | $1.37 | 1-Apr-13 | Nil | N/A | N/A |
20,000 | $0.90 | 1-Apr-14 | Nil | N/A | N/A | |
20,000 | $0.70 | 1-Apr-15 | Nil | N/A | N/A | |
100,000 | $0.48 | 14-Dec-16 | $2,000 | N/A | ||
160,000 | $2,000 | |||||
Dr. Amiee Chan, (President and Chief Executive Officer) | 40,000 | $1.37 | 1-Apr-13 | Nil | N/A | N/A |
40,000 | $0.90 | 1-Apr-14 | Nil | N/A | N/A | |
40,000 | $0.70 | 1-Apr-15 | Nil | N/A | N/A | |
200,000 | $0.48 | 14-Dec-16 | $4,000 | N/A | N/A | |
320,000 | $4,000 | |||||
Arthur Chin (Chief Financial Officer) | 100,000 | $0.70 | 1-Feb16 | Nil | N/A | N/A |
Name | Option-based awards - Value vested during the year ($) | Share-based awards – Value vested during the year ($) | Non-equity incentive plan compensation – Value earned during the year($) |
Fabio Doninelli (Director and Chairman of the Board) | Nil | N/A | N/A |
James Topham (Director and Chair of the Audit Committee) | Nil | N/A | N/A |
Andrew Harries (Director) | Nil | N/A | N/A |
Joseph Caprio (Director) | Nil | N/A | N/A |
Dr. Amiee Chan, (President and Chief Executive Officer) | Nil | N/A | N/A |
Arthur Chin (Chief Financial Officer) | Nil | N/A | N/A |
7. | Major Shareholders and Related Party Transactions |
8. | FINANCIAL INFORMATION |
9. | The Offer and Listing |
TSX | OTC BB | ||||||||
(CDN. Dollars) | (U.S. Dollars) | ||||||||
High | Low |
| High | Low | |||||
a) | 2011 | 0.96 | 0.44 | 0.95 | 0.43 | ||||
2010 | 0.84 | 0.50 | 0.80 | 0.42 | |||||
2009 | 1.04 | 0.40 | 0.99 | 0.32 | |||||
2008 | 1.59 | 0.46 | 1.60 | 0.38 | |||||
2007 | 1.09 | 0.59 | 0.98 | 0.49 | |||||
b) | 2011 | ||||||||
Fourth quarter | 0.53 | 0.44 | 0.53 | 0.43 | |||||
Third quarter | 0.62 | 0.49 | 0.65 | 0.50 | |||||
Second quarter | 0.77 | 0.60 | 0.78 | 0.60 | |||||
First Quarter | 0.96 | 0.50 | 0.95 | 0.55 | |||||
2010 | |||||||||
Fourth quarter | 0.67 | 0.60 | 0.66 | 0.42 | |||||
Third quarter | 0.68 | 0.52 | 0.66 | 0.50 | |||||
Second quarter | 0.82 | 0.60 | 0.80 | 0.50 | |||||
First Quarter | 0.87 | 0.67 | 0.95 | 0.62 | |||||
c) | Last 6 Months | ||||||||
February | 2012 | 0.54 | 0.49 | 0.55 | 0.49 | ||||
January | 2012 | 0.53 | 0.47 | 0.50 | 0.48 | ||||
December | 2011 | 0.50 | 0.44 | 0.49 | 0.43 | ||||
November | 2011 | 0.53 | 0.47 | 0.50 | 0.47 | ||||
October | 2011 | 0.53 | 0.50 | 0.53 | 0.48 | ||||
September | 2011 | 0.59 | 0.51 | 0.57 | 0.51 |
10. | Additional Information |
a) | borrow money in any manner or amounts, on any security from any source and upon any terms and conditions that they consider appropriate; |
b) | issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other persons and at such discounts or premiums and on such other terms as the directors consider appropriate; and |
c) | guarantee the repayment of money by any other person or the performance of any obligation of any other person; and |
d) | mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on the whole or any part of the present and future assets and undertaking of the Company. |
11. | Quantitative and Qualitative Disclosures About Market Risk |
12. | Description of Securities Other than Equity Securities |
13. | Defaults, Dividend Arrearages and Delinquencies |
14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
15. | Controls and Procedures |
16A. | Audit Committee Financial Expert |
16B. | Code of Ethics |
16C. | Principal Accountant Fees and Services |
Audit Fees | Audit Related Fees | All Other Fees | Total | |
2011 | $189,263 | $142,275 | $- | $331,538 |
2010 | $170,364 | $73,500 | $- | $243,864 |
16D. | Exemptions from the listing standards for Audit Committees |
16E. | Purchases of Equity Securities by the Issuer |
16F. | Change in Registrant’s Certifying Accountant |
16G. | Corporate Governance |
17. | Financial Statements |
18. | Financial Statements |
19. | Exhibits |
Incorporated by Reference | ||||||
Exhibit No. | Description | Form | Filing Date | Film No. | Exhibit No. | Filed as |
1.1 | Articles of Incorporation | 6K | June 30, 2011 | 11941737 | 99.1 | |
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1.2 | Notice of Change of Articles | 6K | June 30, 2011 | 11941737 | 99.2 | |
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|
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| |||
4.1 | Share Purchase Agreement dated January 18, 2011 for the acquisition of Sinclair Technologies Holdings Inc. | 6K | February 3, 2011 | 11570932 |
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|
|
| |||
4.2 | Letter on Change in Registrant’s Certifying Accountant | 6K | April 13, 2010 | 10746721 | 99.2 | |
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99.1 |
| X | ||||
99.2 | X | |||||
99.3 | X | |||||
99.4 | X |
SIGNATURES | |||
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. | |||
Norsat International Inc. | |||
(Registrant) | |||
“Arthur Chin” | |||
Date: | March 9, 2012 | Arthur Chin, Chief Financial Officer | |