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Financial Statements and Supplementary Data The following is an index to the consolidated financial statements: Page Number Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Changes in Stockholders’ Equity (Deficit) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Ciena Corporation: In our opinion, the accompanying consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Ciena Corporation and its subsidiaries (the “Company”) at October 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2016 in conformity with accounting principles generally accepted in the United States of America. |
On January 8, 2016, Ciena amended the ABL Credit Facility to, among other things: • increase the total commitment from $200 million to $250 million, of which $200 million is available for issuances of letters of credit; • extend the maturity date from December 31, 2016 to December 31, 2020, provided an earlier maturity date would apply in the event that Ciena and its subsidiaries are unable to satisfy a minimum liquidity test 90 days prior to the maturity date of any debt equal to $100 million or greater; • reduce the minimum aggregate amount of unrestricted cash and cash equivalents that Ciena and its domestic subsidiaries are required to maintain at all times from $150 million to $100 million; and • reduce the interest rate by 0.25% on borrowings to either (a) LIBOR plus a margin ranging from 1.25% to 1.75% (instead of the previous 1.50% to 2.0%) or (b) a base rate plus a margin ranging from 0.25% to 0.75% (instead of the previous 0.50% to 1.0%), in each case with the actual margin determined according to the Ciena’s utilization of the facility. |
Additional factors that contribute to fluctuations in our revenue and operating results include: • broader macroeconomic conditions, including weakness and volatility in global markets, that affect our customers; • changes in capital spending by large communications service providers; • order timing, volume and cancellations; • backlog levels; • the level of competition and pricing pressure in our industry; • the impact of commercial concessions or unfavorable commercial terms required to maintain incumbency or secure new opportunities with key customers; • our level of success in achieving cost reductions and efficiencies in our supply chain; • our incurrence of start-up costs required to support initial deployments, gain new customers or enter new markets; • the timing of revenue recognition on sales, particularly relating to large orders; • the mix of revenue by product segment, geography and customer in any particular quarter; • installation service availability and readiness of customer sites; • adverse impact of foreign exchange; and • seasonal effects in our business. |
Our international sales and operations are subject to inherent risks, including: • the impact of economic conditions in countries outside the United States; • effects of adverse changes in currency exchange rates; • greater difficulty in collecting accounts receivable and longer collection periods; • difficulty and cost of staffing and managing foreign operations; • less protection for intellectual property rights in some countries; • adverse tax and customs consequences, particularly as related to transfer-pricing issues; • social, political and economic instability; • compliance with certain testing, homologation or customization of products to conform to local standards; • higher incidence of corruption or unethical business practices that could expose us to liability or damage our reputation; • trade protection measures, export compliance, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements; and • natural disasters, epidemics and acts of war or terrorism. |
Specifically, the following issues, among others, must be addressed in integrating our operations with those of Cyan in order to realize the anticipated benefits of the merger so the combined company performs as expected: • combining our business with Cyan’s business in a manner that permits us to achieve the cost savings or revenue synergies anticipated to result from the merger; • integrating the companies’ technologies and unifying the hardware and software solutions offerings and services available to customers; • identifying and eliminating redundant costs; • harmonizing the companies’ operating practices, employee-related policies and compensation programs, internal controls and other policies, procedures and processes; • maintaining existing agreements with customers, distributors and vendors and avoiding delays in entering into new agreements with prospective customers, distributors and vendors; • addressing possible differences in business backgrounds, corporate cultures and management philosophies; and • coordinating distribution and marketing efforts. |
The following table sets forth changes in our cash and cash equivalents and investments in marketable debt securities (in thousands): The change in total cash and cash equivalents and investments in marketable debt securities during fiscal 2015 was primarily related to the following: • $262.1 million cash provided by operations, consisting of $274.9 million provided by net income adjusted for non-cash charges offset by $12.8 million used in working capital; • $62.1 million used for purchases of equipment, furniture, fixtures and intellectual property; • $24.1 million provided by the settlement of foreign currency forward contracts, net; • $8.0 million used to pay capital lease obligations; • $2.0 million used for the purchase of a cost method investment; • $37.2 million from the acquisition of Cyan, net of cash acquired; • $29.9 million used for the repayment of long-term debt; • $30.3 million from proceeds of stock issuances under our employee stock purchase plan and the exercise of stock options; and • $6.7 million decrease due to the effect of exchange rate changes on cash and cash equivalents. |
Financial Statements and Supplementary Data The following is an index to the consolidated financial statements: Page Number Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Changes in Stockholders’ Equity (Deficit) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Ciena Corporation: In our opinion, the accompanying consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Ciena Corporation and its subsidiaries (the “Company”) at October 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2015 in conformity with accounting principles generally accepted in the United States of America. |
Additional factors that contribute to fluctuations in our revenue and operating results include: • broader macroeconomic conditions, including weakness and volatility in global markets, that affect our customers; • changes in capital spending by large communications service providers; • order volume, cancellations and timing; • backlog levels and the percentage of a given quarter's revenue generated from orders placed during that quarter; • the level of competition and pricing pressure we encounter; • the impact of commercial concessions or unfavorable commercial terms required to maintain incumbency or secure new opportunities with key customers; • the level of start-up costs we incur to support initial deployments, gain new customers or enter new markets; • the timing of revenue recognition on sales, particularly relating to large orders; • the mix of revenue by product segment, geography and customer in any particular quarter; • manufacturing capacity; • installation service availability and readiness of customer sites; • seasonal effects in our business; and • our level of success in improving manufacturing efficiencies and achieving cost reductions in our supply chain. |
Our international sales and operations are subject to inherent risks, including: • the impact of economic conditions in countries outside the United States; • effects of changes in currency exchange rates; • greater difficulty in collecting accounts receivable and longer collection periods; • difficulty and cost of staffing and managing foreign operations; • less protection for intellectual property rights in some countries; • adverse tax and customs consequences, particularly as related to transfer-pricing issues; • social, political and economic instability; • compliance with certain testing, homologation or customization of products to conform to local standards; • higher incidence of corruption or unethical business practices that could expose us to liability or damage our reputation; • trade protection measures, export compliance, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements; and • natural disasters, epidemics and acts of war or terrorism. |
Financial Statements and Supplementary Data The following is an index to the consolidated financial statements: Page Number Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Changes in Stockholders’ Equity (Deficit) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Ciena Corporation: In our opinion, the accompanying consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Ciena Corporation and its subsidiaries (the “Company”) at October 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2014 in conformity with accounting principles generally accepted in the United States of America. |
The following table sets forth changes in our cash and cash equivalents and investments in marketable debt securities (in thousands): The change in total cash and cash equivalents and investments in marketable debt securities during fiscal 2013 was primarily related to the following: • $216.2 million used to pay our 0.25% convertible senior notes at maturity; • $44.7 million cash generated by operations, consisting of $161.4 million from net losses adjusted for non-cash charges and $116.7 million for changes in working capital; • $43.8 million for purchases of equipment, furniture, fixtures and intellectual property, partially offset by $2.3 million transferred from restricted cash as a result of reductions in cash collateral required to support our standby letters of credit; • $3.7 million used for transaction costs for the private exchange offers relating to our 2015 Notes completed during the first quarter of fiscal 2013 as described in "Overview" above; • $3.3 million used relating to payment of capital lease obligations; and • $15.9 million from proceeds of stock issuances under our employee stock purchase plan and the exercise of stock options. |
Financial Statements and Supplementary Data The following is an index to the consolidated financial statements: Page Number Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Changes in Stockholders’ Equity (Deficit) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Ciena Corporation In our opinion, the accompanying consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Ciena Corporation and its subsidiaries (the “Company” ) at October 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended October 31, 2013 in conformity with accounting principles generally accepted in the United States of America. |
To address these opportunities and realize our network vision, our current development efforts are focused upon: • Extending our leadership in 40G and 100G long-haul transport, and making metropolitan network applications more cost effective for network operators; • Continued development of our high-capacity optical transport technology and our WaveLogic coherent optical processor to further improve network capacity, transmission speed, spectral efficiency and reach; • Expanding packet networking capabilities and features for our high-capacity Ethernet aggregation switches, for metro and service aggregation applications, mobile backhaul and business Ethernet services; • Enhancing our data-optimized, switching solutions to enable an end-to-end Optical Transport Network (OTN) architecture that offers improved cost per bit, flexibility and reliability; • Interoperability and enhancing our control plane and integrated network management software platform to enable service level management across our solutions; and • Development of network level applications that automate various network functions and support new service introduction. |
This valuation increased marketable inventory carrying value by $62.3 million, of which $48.0 million and $14.3 million were recognized in cost of goods sold during fiscal 2010 and 2011, respectively; • Our operating expense increased materially after the MEN Acquisition, reflecting: ◦ the addition of approximately 2,000 employees, nearly doubling our headcount; ◦ increased operating costs associated with a significantly expanded, global business; ◦ increased amortization costs relating to the acquisition of $492.4 million in intangible assets; ◦ transition service expense for services performed by a Nortel affiliate through the second quarter of fiscal 2011, relating to finance and accounting functions, supply chain and logistics management, maintenance and product support, order management and fulfillment, trade compliance, and information technology; and ◦ integration-related costs, including transaction, consulting and third party service fees, severance and purchases of capitalized information technology equipment of $122.3 million and $59.6 million for fiscal 2010 and 2011, respectively. |
Additional factors that contribute to fluctuations in our revenue and operating results include: • broader macroeconomic conditions, including weakness and volatility in global markets, affecting our customers and their consumer and enterprise end users; • changes in capital spending by large communications service providers; • seasonal effects in our business, including the timing and size of customer orders; • the amount of backlog orders we have and our ability to recognize revenue relating to these sales; • the mix of revenue by product segment, geography and customer in any particular quarter; • the level of pricing pressure we encounter, particularly for our Packet-Optical Transport products which comprise a significant concentration of our revenue; • the transition of product sales to new, next-generation technology platforms across our segments; and • changes in material and labor costs, including our ability to optimize our resources, improve manufacturing efficiencies and achieve cost reductions in our supply chain. |
See “Critical Accounting Policies and Estimates- Long-lived Assets” and Note 2 of the Consolidated Financial Statements found under Item 8 of Part II of this annual report; • Our operating expense increased materially compared to periods prior to the MEN Acquisition, reflecting: ◦ the addition of approximately 2,000 employees, nearly doubling our headcount; ◦ increased operating costs associated with a significantly expanded, global business; ◦ increased amortization costs relating to the acquisition of $492.4 million in intangible assets; ◦ transition service expense for services performed by a Nortel affiliate through the second quarter of fiscal 2011, relating to finance and accounting functions, supply chain and logistics management, maintenance and product support, order management and fulfillment, trade compliance, and information technology; ◦ integration-related costs, including transaction, consulting and third party service fees, severance and purchases of capitalized information technology equipment of $122.3 million and $59.6 million for fiscal 2010 and 2011, respectively; and ◦ restructuring costs during fiscal 2010 and fiscal 2011of approximately $8.5 million and $6.6 million, respectively, largely related to our efforts to better align our workforce and operating costs with the market opportunities, product development initiatives and business strategies for the combined operations. |
Successful integration involves numerous risks, including: • assimilating product offerings and sales and marketing operations; • coordinating and implementing a combined research and development strategy; • retaining and attracting customers following a period of significant uncertainty associated with the acquired business; • diversion of management attention from business and operational matters; • identifying and retaining key personnel; • maintaining and transitioning relationships with key vendors, including component providers, manufacturers and service providers; • integrating accounting, information technology, enterprise management and administrative systems which may be difficult or costly; • making significant cash expenditures that may be required to retain personnel or eliminate unnecessary resources; • managing tax costs or liabilities for acquired or acquiring corporate entities; • coordinating a broader and more geographically dispersed organization; • maintaining uniform standards, procedures and policies to ensure efficient and compliant administration of the organization; and • making any necessary modifications to internal control to comply with the Sarbanes-Oxley Act of 2002 and related rules and regulations. |
(18) INCOME TAXES For the periods indicated, the provision (benefit) for income taxes consists of the following (in thousands): For the periods indicated, income (loss) before provision (benefit) for income taxes consists of the following (in thousands): For the periods indicated, the tax provision (benefit) reconciles to the amount computed by multiplying income or loss before income taxes by the U.S. federal statutory rate of 35% as follows: The significant components of deferred tax assets and liabilities were as follows (in thousands): A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands): As of October 31, 2009 and 2010, Ciena had accrued $1.2 million and $1.4 million of interest, respectively, and some minor penalties related to unrecognized tax benefits within other long-term liabilities in the Consolidated Balance Sheets, of which $0.1 million and $0.2 million of interest was recorded to the provision for income taxes during fiscal 2009 and 2010, respectively. |
Successful integration involves numerous risks, including: • assimilating product offerings and sales and marketing operations; • coordinating research and development efforts; • retaining and attracting customers following a period of significant uncertainty associated with the acquired business; • diversion of management attention from business and operational matters; • identifying and retaining key personnel; • maintaining and transitioning relationships with key vendors, including component providers, manufacturers and service providers; • integrating accounting, information technology, enterprise management and administrative systems which may be difficult or costly; • making significant cash expenditures that may be required to retain personnel or eliminate unnecessary resources; • managing tax costs or liabilities; • coordinating a broader and more geographically dispersed organization; • maintaining uniform standards, procedures and policies to ensure efficient and compliant administration of the organizaton; and • making any necessary modifications to internal control to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder. |
(17) INCOME TAXES For the periods indicated, the provision (benefit) for income taxes consists of the following (in thousands): For the periods indicated, income (loss) before provision (benefit) for income taxes consists of the following (in thousands): For the periods indicated, the tax provision (benefit) reconciles to the amount computed by multiplying income or loss before income taxes by the U.S. federal statutory rate of 35% as follows: The significant components of deferred tax assets and liabilities were as follows (in thousands): A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands): As of October 31, 2008 and 2009, Ciena had accrued $1.1 million and $1.2 million of interest, respectively, and some minor penalties related to unrecognized tax benefits within other long-term liabilities in the Consolidated Balance Sheets, of which $0.1 million and $0.1 million of interest was recorded to the provision for income taxes during fiscal 2008 and 2009, respectively. |
The following table summarizes share-based compensation expense under SFAS 123(R) for fiscal 2006; and share-based compensation expense under APB 25, as interpreted by FIN 44 for fiscal 2005 and fiscal 2004, which was allocated as follows (in thousands): Pro Forma Share-Based Compensation under SFAS 123 for Fiscal 2005 and Fiscal 2004 Had (i) compensation expense for Ciena’s stock option plans and employee stock purchase plan been determined based on the Black-Scholes option-pricing model; and (ii) the fair value at the grant date for awards in fiscal 2004 and fiscal 2005 been determined consistent with the provisions of SFAS 123, “Accounting for Stock Based Compensation” as amended by SFAS 148, “Accounting for Stock Based Compensation-Transition and Disclosure,” Ciena’s net loss and net loss per share for the fiscal 2004 and fiscal 2005 would have changed by the pro forma amounts indicated below (in thousands, except per share data): Fair Value and Assumptions Used to Calculate Fair Value under SFAS 123(R) and SFAS 123 Assumptions for Option-Based Awards under SFAS 123(R) The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model, with the following weighted average assumptions: Consistent with SFAS 123(R) and SAB 107, Ciena considered the implied volatility and historical volatility of its stock price in determining its expected volatility, and, finding both to be equally reliable, determined that a combination of both would result in the best estimate of expected volatility. |
Other factors contribute to fluctuations in our revenue and operating results, including: • fluctuations in demand for our products and the timing and size of customer orders, particularly from our telecommunications service provider customers; • satisfaction of contractual customer acceptance criteria and related revenue recognition issues, particularly in the case of multi-vendor or multi-technology network builds where the achievement of certain performance thresholds for acceptance may involve the readiness and performance of the customer and other providers; • changes in customers’ requirements, including changes or cancellations to orders from customers; • the introduction of new products by us or our competitors; • readiness of customer sites for installation; • manufacturing and shipment delays and deferrals; • actual events, outcomes and amounts that differ from our assumptions and estimates used in our determination of the value of certain assets (including goodwill and other intangible assets), liabilities and other items reflected in our financial statements; • any significant payment by us associated with the resolution of pending legal proceedings; • changes in accounting rules; and • changes in general economic conditions as well as those specific to our market segments. |
This strategy entails taking steps to: • Expand our addressable market by adding new broadband service and delivery capabilities to our portfolio through internal development, acquisition and strategic relationships; • Increase our market share within our existing markets by enhancing the features and functions of current products and reducing their cost; • Increase our effort to develop, market and sell products and services focused on optimizing access and edge networks for broadband communication and enhanced enterprise data services; • Realign our resources to better reflect our market opportunities and focus on reducing ongoing operating expenses; • Broaden and diversify our customer base by expanding the range of solutions we provide and developing new sales channels and distribution arrangements to increase our exposure to enterprises and government customers; and • Increase sales to existing major customers by leveraging our new features, products and strategic relationships to establish Ciena as a strategic supplier. |
Other factors can also contribute to fluctuations in our revenue and operating results, including: • variations and the mix between higher and lower margin products and services; • fluctuations in demand for our products; • changes in our pricing policies or the pricing policies of our competitors; • the timing and size of orders from customers, including the impact of, and our ability to recognize revenue from, a significant customer contract; • changes in customers’ requirements, including changes or cancellations to orders from customers; • the introduction of new products by us or our competitors; • changes in the price or availability of components for our products; • readiness of customer sites for installation; • satisfaction of contractual customer acceptance criteria and related revenue recognition issues; • manufacturing and shipment delays and deferrals; • increased service, installation, warranty or repair costs; • the timing and amount of employer payroll tax to be paid on employee gains on stock options exercised; and • changes in general economic conditions as well as those specific to our market segments. |
Other factors can also contribute to fluctuations in our revenue and operating results, including: • variations and the mix between higher and lower margin products and services; • fluctuations in demand for our products; • changes in our pricing policies or the pricing policies of our competitors; • the timing and size of orders from customers; • changes in customers’ requirements, including changes or cancellations to orders from customers; • the introduction of new products by us or our competitors; • changes in the price or availability of components for our products; • readiness of customer sites for installation; • satisfaction of contractual customer acceptance criteria and related revenue recognition issues; • manufacturing and shipment delays and deferrals; • increased service, installation, warranty or repair costs; • the timing and amount of employer payroll tax to be paid on employee gains on stock options exercised; and • changes in general economic conditions as well as those specific to the telecommunications industry. |
We expect the factors described above to continue to affect our business for an indeterminate period, in several significant ways: • our markets will be characterized by reduced capital expenditures by our customers; • we will continue to have only limited ability to forecast the volume and product mix of our sales; • managing our expenditures will be difficult in light of the uncertainties surrounding our business; • increased competition resulting from reduced demand will put substantial downward pressures on the pricing of our products, tending to reduce our profit margins; • increased competition will enable customers to insist on more favorable terms and conditions for sales, including extended payment terms or other financing assistance, as a condition of procuring their business; and • the bankruptcies or weakened financial condition of some of our customers may require us to write off The result of any one or a combination of these factors could lead to further reduced revenues and increased operating losses. |
Our results can fluctuate unpredictably In general, our revenues and operating results in any reporting period may fluctuate significantly due to a variety of factors including: • fluctuations in demand for our products; • changes in our pricing policies or the pricing policies of our competitors; • the timing and size of orders from customers; • changes in customers’ requirements, including changes or cancellations to orders from customers; • the introduction of new products by us or our competitors; • changes in the price or availability of components for our products; • readiness of customer sites for installation; • satisfaction of contractual customer acceptance criteria and related revenue recognition issues; • manufacturing and shipment delays and deferrals; • increased service, installation, warranty or repair costs; • the timing and amount of employer payroll tax to be paid on employee gains on stock options exercised; and • changes in general economic conditions as well as those specific to the telecommunications and intelligent optical networking industries. |
CUSTOMERS CIENA has announced publicly relationships with the following forty-seven customers: AFN Communications, LLC (US) Alltel Corporation (US) AT&T Corp. (US) Beijing IDN Telecom Corporation Ltd.,(CEC/IDN) (China) Bell South Telecommunications, Inc. (US) Broadwing Communications Services, Inc. (US) Cable & Wireless Communications Services Limited (UK) Cable & Wireless USA, Inc. (US) CompleTel SAS (France) Crosswave Communications, Inc. (Japan) Daini Deuden Inc. (Japan) Digital Teleport, Inc. (US) Dynegy Inc. (Europe) EAccess, Ltd.. (Japan) Ebone (formerly GTS Network Limited) (Belgium) El Paso Global Networks (US) Enron Communications, Inc. (US) ESAT Telecom (Ireland) FLAG Telecom Holdings Ltd. (Global) Genuity Solutions Inc. (US) Global Crossing Limited (UK) HanseNet GmbH (Germany) Intermedia Communications Inc. (US) Interoute Telecommunications Limited(Europe) Japan Telecom(Japan) KDD Network Systems Co. Ltd. (Japan) Korea Telecom (Korea) Level 3 Communications, Inc. (US) McLeod USA, Inc. (US) MetroRed Telecomunicacoes Ltda. |
We expect the factors described above to affect our business, for at least several quarters if not longer, in several significant ways compared to the recent past: • it is likely that our markets will be characterized by reduced capital expenditures by our customers; • our ability to forecast the volume and product mix of our sales will be substantially reduced; • managing our expenditures will be significantly more difficult in light of the uncertainties surrounding in our business; • increased competition resulting from reduced demand will put substantial downward pressures on the pricing of our products, tending to reduce our profit margins; • increased competition has also enabled customers to insist on more favorable terms and conditions for sales, including extended payment terms or other financing assistance, as a condition of procuring their business; and • the result in any or combination of these factors could be reduced revenues and profitability and perhaps losses in particular periods or for the entire year. |
Our Results Can Fluctuate Unpredictably In general, our revenues and operating results in any reporting period may fluctuate significantly due to a variety of factors including: • fluctuations in demand for our products; • changes in our pricing policies or the pricing policies of our competitors; • the timing and size of orders from customers; • changes in customers’ requirements, including changes or cancellations to orders from customers; • the introduction of new products by us or our competitors; • changes in the price or availability of components for our products; • readiness of customer sites for installation; • satisfaction of contractual customer acceptance criteria and related revenue recognition issues; • manufacturing and shipment delays and deferrals; • increased service, installation, warranty or repair costs; • the timing and amount of employer payroll tax to be paid on employee gains on stock options exercised; and • changes in general economic conditions as well as those specific to the telecommunications and intelligent optical networking industries. |
During the last several years carriers have faced several challenges resulting from a combination of factors, including: - Unprecedented traffic growth - Changing traffic demands - Growing competition - Increased demand for reliability - Network scalability challenges - Escalating operational costs Unprecedented Traffic Growth Service providers have seen dramatic network traffic growth caused by factors such as: - the escalating use of the Internet, as well as increased use of electronic commerce, distributed computing, electronic mail, facsimile transmission, electronic transaction processing, video conferencing, remote access telecommuting and local and wide area networking; - growing capacity and processing speed of data communications equipment such as Asynchronous Transfer Mode (ATM) switches and Internet Protocol (IP) routers; and - development of high-bandwidth network access technologies, such as cable modems, hybrid fiber coaxial architectures and digital subscriber lines, that permit commercial and consumer users to transmit and receive high volumes of information. |
The following are representative of the types of risks that could result in the event of one or more major failures of CIENA's information systems, factories or facilities to be Year 2000 ready, or similar major failures by one or more major third party suppliers to CIENA: (1) information systems - could include interruptions or disruptions of business and transaction processing such as customer billing, payroll, accounts payable and other operating and information processes, until systems can be remedied or replaced; (2) factories and facilities - could include interruptions or disruptions of manufacturing processes and facilities with delays in delivery of products, until non-compliant conditions or components can be remedied or replaced; and (3) major suppliers to CIENA - could include interruptions or disruptions of the supply of raw materials, supplies and Year 2000 ready components which could cause interruptions or disruptions of manufacturing and delays in delivery of products, until the third party supplier remedied the problem or contingency measures were implemented. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● the effects of COVID-19; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● the effects of COVID-19; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: ● our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; ● unanticipated costs, litigation and other contingent liabilities; ● diversion of management’s attention from our core business; ● adverse effects on existing business relationships with suppliers and customers; ● incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; ● inability to retain key customers, distributors, vendors and other business partners of the acquired business; and ● potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: ● receipt of substantial orders or order cancellations of products; ● quality deficiencies in services or products; ● international developments, such as technology mandates, political developments or changes in economic policies; ● changes in recommendations of securities analysts; ● shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; ● government regulations, including stock option accounting and tax regulations; ● energy blackouts; ● acts of terrorism and war; ● widespread illness; ● proprietary rights or product or patent litigation; ● strategic transactions, such as acquisitions and divestitures; ● rumors or allegations regarding our financial disclosures or practices; or ● earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and ● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Remediation of Material Weaknesses During the year ended December 31, 2012, we started to implement the following measures to remediate the material weaknesses identified ● Developed a formal plan to provide applicable training for our financial and accounting staff to enhance our understanding of U.S. GAAP and internal control over financial reporting; ● Engaged outside consultants to assist in the application of U.S. GAAP to complex transactions, including the accounting for derivatives; ● Engaged an external consultant with experience in U.S. GAAP and knowledge of financial reporting of U.S. listed public companies to supervise and review our financial reporting process; ● Developed a formal timetable for regular meetings involving our Audit Committee, management and our internal control manager, to review our internal audit plans, testing and results in connection with our assessment of the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act; Despite the above measures which were intended to address the identified material weaknesses as well as to enhance our overall internal control environment, management concluded that as of December 31, 2012, the material weaknesses identified above had not been fully remediated. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: ● overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; ● a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; ● total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; ● the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and ● executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: · our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; · unanticipated costs, litigation and other contingent liabilities; · diversion of management’s attention from our core business; · adverse effects on existing business relationships with suppliers and customers; · incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; · inability to retain key customers, distributors, vendors and other business partners of the acquired business; and · potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: · receipt of substantial orders or order cancellations of products; · quality deficiencies in services or products; · international developments, such as technology mandates, political developments or changes in economic policies; · changes in recommendations of securities analysts; · shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; · government regulations, including stock option accounting and tax regulations; · energy blackouts; · acts of terrorism and war; · widespread illness; · proprietary rights or product or patent litigation; · strategic transactions, such as acquisitions and divestitures; · rumors or allegations regarding our financial disclosures or practices; or · earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with international financial reporting standards and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with international financial reporting standards, and that a company’s receipts and expenditures are being made only in accordance with authorizations of a company’s management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a company’s assets that could have a material effect on the consolidated financial statements. |
We then adopted several measures to address these material weaknesses as described below: Remediation of Material Weaknesses During the year ended December 31, 2011, we finalized and implemented the fore going remediation efforts, which included some of the following measures to remediate the material weaknesses identified: · Developed a formal plan to provide applicable training for our financial and accounting staff to enhance our understanding of US GAAP and internal control over financial reporting; · Engaged outside consultants to assist in the application of US GAAP to complex transactions, including the accounting for derivatives; · Engaged a qualified external consultant with experience in US GAAP and knowledge in financial reporting of US listed public companies to supervise and review our financial reporting process; · Developed a formal timetable for regular meetings involving our Audit Committee, management and our internal control manager, to review our internal audit plans, testing and results in connection with our assessment of the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act; Management has tested the effectiveness of these newly implemented controls and found them to be operating effectively for a sufficient period of time to reduce the possibility of a material misstatement to less than a reasonably possible likelihood. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: · overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; · a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; · total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; · the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and · executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: · our inability to integrate the purchased operations, technologies, personnel or products into our existing operations and/or over geographically disparate locations; · unanticipated costs, litigation and other contingent liabilities; · diversion of management’s attention from our core business; · adverse effects on existing business relationships with suppliers and customers; · incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; · inability to retain key customers, distributors, vendors and other business partners of the acquired business; and · potential loss of our key employees or the key employees of an acquired organization; If we are not be able to integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: · receipt of substantial orders or order cancellations of products; · quality deficiencies in services or products; · international developments, such as technology mandates, political developments or changes in economic policies; · changes in recommendations of securities analysts; · shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; · government regulations, including stock option accounting and tax regulations; · energy blackouts; · acts of terrorism and war; · widespread illness; · proprietary rights or product or patent litigation; · strategic transactions, such as acquisitions and divestitures; · rumors or allegations regarding our financial disclosures or practices; or · earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: l Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; l Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and l Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
When finalized and implemented, the plan is expected to include some of the following measures to remediate the material weaknesses identified: · Develop a formal plan to provide applicable training for our financial and accounting staff to enhance our understanding of US GAAP and internal control over financial reporting; · Engage outside consultants to assist in the application of US GAAP to complex transactions, including the accounting for derivatives; · Hire additional financial reporting personnel or engage a qualified external consultant with experience in US GAAP and knowledge in financial reporting of US listed public companies to supervise and review our financial reporting process; · Develop a formal timetable for regular meetings involving the Audit Committee, management and our internal control manager, to review our internal audit plans, testing and results in connection with our assessment of the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act; These measures are intended both to address the identified material weaknesses and to enhance our overall internal control environment. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: · overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; · a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; · total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; · the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and · executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
(3) Exhibits EXHIBIT INDEX Number Description 3.1 Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 of our Annual Report on Form 10-KSB, filed March 29, 2006); 3.2 Articles of Amendment as filed with the Department of State of Florida, effective November 20, 2007 (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K, filed November 29, 2007); 3.3 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of our Current Report Form 8-K filed on April 22, 2008); 10.1 Land Development Agreement between Jiangsu Ever-Glory International Group Corp. and Nanjing Goldenway Garment Co., Ltd. (incorporated by reference to Exhibit 10.23 of our Annual Report on Form 10-K, filed March 31, 2009); 10.2 Lease Agreement between Jiangsu Ever-Glory International Group Co. and Nanjing New-Tailun Garment Co., Ltd. (incorporated by reference to Exhibit 10.24 of our Annual Report on Form 10-K, filed March 31, 2009); 10.3 Revolving Line of Credit Agreement between Goldenway Nanjing Garment Co., Ltd, and Bank of Nanjing Co. Ltd. dated August 2, 2010 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 4, 2010); 10.4 Guaranty Agreement between Jiangsu Ever-Glory International Group Corporation. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: · unsuccessfully integrating the purchased operations, technologies, personnel or products over geographically disparate locations; · unanticipated costs, litigation and other contingent liabilities; · diversion of management’s attention from our core business; · adverse effects on existing business relationships with suppliers and customers; · incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; · inability to retain key customers, distributors, vendors and other business partners of the acquired business; and · potential loss of our key employees or the key employees of an acquired organization; If we are not be able to successfully integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: · receipt of substantial orders or order cancellations of products; · quality deficiencies in services or products; · international developments, such as technology mandates, political developments or changes in economic policies; · changes in recommendations of securities analysts; · shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; · government regulations, including stock option accounting and tax regulations; · energy blackouts; · acts of terrorism and war; · widespread illness; · proprietary rights or product or patent litigation; · strategic transactions, such as acquisitions and divestitures; · rumors or allegations regarding our financial disclosures or practices; or · earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: l Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; l Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and l Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
Involvement in Certain Legal Proceedings No director, person nominated to become a director, executive officer, promoter or control person of the Company has, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto; (iv) been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (a) Any Federal or State securities or commodities law or regulation; or (b) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; nor (v) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. |
In order to implement such compensation principles, we have developed the following objectives for our executive compensation program: · overall compensation levels must be sufficiently competitive to attract and retain talented leaders and motivate those leaders to achieve superior results; · a portion of total compensation should be contingent on, and variable with, achievement of objective corporate performance goals, and that portion should increase as an executive’s position and responsibility increases; · total compensation should be higher for individuals with greater responsibility and greater ability to influence our achievement of operating goals and strategic initiatives; · the number of elements of our compensation program should be kept to a minimum, and those elements should be readily understandable by and easily communicated to executives, shareholders, and others; and · executive compensation should be set at responsible levels to promote a sense of fairness and equity among all employees and appropriate stewardship of corporate resources among shareholders. |
Under the terms of the notes, the full-ratchet anti-dilution adjustments do not apply to (i) full or partial consideration in connection with a merger, acquisition, consolidation or purchase of substantially all of the securities or assets of Ever-Glory or any other entity which the holders of such securities or debt are not at any time granted registration rights, (ii) issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights, (iii) issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants , not to exceed, in the aggregate, 816,102 shares as compensation for services, (iv) as a result of the exercise of Warrants or conversion of Notes which are granted or issued pursuant to this Agreement, (v) the Company’s issuance of Common Stock in connection with an acquisitions of an entity other than an affiliate, having a fair market value not less than US$8,000,000, (vi) the Company’s issuance of Common Stock to non-affiliates in connection with services rendered or to be rendered to the Company, not to exceed, in the aggregate, 816,102 shares and (vii) the Company’s issuance of securities in connection with a bona fide underwritten public offering resulting in gross proceeds in excess of US$5,000,000. |
Similar to the notes, under the terms of the warrants, full-ratchet anti-dilution adjustments do not apply to (i) full or partial consideration in connection with a merger, acquisition, consolidation or purchase of substantially all of the securities or assets of Ever-Glory or any other entity which holders of such securities or debt are not at any time granted registration rights, (ii) issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights, (iii) issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants , not to exceed, in the aggregate, 816,102 shares as compensation for services, (iv) as a result of the exercise of Warrants or conversion of Notes which are granted or issued pursuant to this Agreement, (v) the Company’s issuance of Common Stock in connection with an acquisitions of an entity other than an affiliate, having a fair market value not less than US$8,000,000, (vi) the Company’s issuance of Common Stock to non-affiliates in connection with services rendered or to be rendered to the Company, not to exceed, in the aggregate, 816,102 shares and (vii) the Company’s issuance of securities in connection with a bona fide underwritten public offering resulting in gross proceeds in excess of US$5,000,000. |
We may not realize the anticipated benefits of these or any other acquisitions or strategic investments, which involve numerous risks, including: · unsuccessfully integrating the purchased operations, technologies, personnel or products over geographically disparate locations; · unanticipated costs, litigation and other contingent liabilities; · diversion of management’s attention from our core business; · adverse effects on existing business relationships with suppliers and customers; · incurrence of acquisition-related costs or amortization costs for acquired intangible assets that could impact our operating results; · inability to retain key customers, distributors, vendors and other business partners of the acquired business; and · potential loss of our key employees or the key employees of an acquired organization; If we are not be able to successfully integrate businesses, products, technologies or personnel that we acquire, or to realize expected benefits of our acquisitions or strategic investments, our business and financial results may be adversely affected. |
Other factors, in addition to the risks included in this section, that may have a significant impact on the market price of our common stock include, but are not limited to: · receipt of substantial orders or order cancellations of products; · quality deficiencies in services or products; · international developments, such as technology mandates, political developments or changes in economic policies; · changes in recommendations of securities analysts; · shortfalls in our backlog, sales or earnings in any given period relative to the levels expected by securities analysts or projected by us; · government regulations, including stock option accounting and tax regulations; · energy blackouts; · acts of terrorism and war; · widespread illness; · proprietary rights or product or patent litigation; · strategic transactions, such as acquisitions and divestitures; · rumors or allegations regarding our financial disclosures or practices; or · earthquakes or other natural disasters in Nanjing or Shanghai, China where a significant portion of our operations are based. |
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