WEB NEWS Auditor trail
Item 4.01 Changes in Registrant’s Certifying Accountant.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Comments & Business Outlook
Three Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
September 30,
2015
2014
2015
2014
$
-
$
-
$
-
$
-
Operating Expenses
Depreciation
270
-
270
-
Exploration expenses
(1,449
)
-
18,590
-
Professional fees
61,392
-
285,892
-
General and administrative expenses
1,304,473
-
1,469,638
-
Total operating expenses
1,364,686
-
1,774,390
-
Income (loss) from continuing operations
(1,364,686
)
-
(1,774,390
)
-
Other Income (expenses)
(1,102,777
)
-
(1,175,863
)
-
Interest income
2,474
-
2,843
-
Impairment of goodwill
-
(604,163,185
)
-
Loss on debt settlement
-
-
(105,233,144
)
-
Other Income (expenses)
(1,100,303
)
-
(710,569,349
)
-
(2,464,989
)
-
(712,343,739
)
-
Net Income (loss) from discontinued operations
-
12,673,201
(151,703
)
12,098,522
Net Income (loss)
$
(2,464,989
)
$
12,673,201
$
)
$
12,098,522
Attributable to:
Non-controlling interest
$
(42,030
)
$
-
$
(49,071
)
$
-
Shareholders of the Company
$
(2,422,959
)
$
12,673,201
$
(712,446,371
)
$
12,098,522
Net Loss Per Common Share – basic and diluted
$
(0.02
)
$
5.75
$
(18.43
)
$
5.49
Weighted average number of shares – basic and diluted
110,329,828
2,205,010
38,642,678
2,205,010
Management Discussion and Analysis
During the three and nine months ended September 30, 2015 the Company incurred $18,599 in exploration expenses (2014- $Nil) with respect to our newly acquired business operations in the oil and gas sector.
Deal Flow
Item 1.01 Entry into a Material Definitive Agreement. Item 3.02 Unregistered Sales of Equity Securities.
On August 7, 2015, Eagle Mountain Corporation (the “Company”) executed an exchange agreement (the “Exchange Agreement”) with Amir Holdings Group Limited, a Belize corporation (the “Amir Holdings”), a stockholder of the Company owning 40,000,000 shares of common stock. Pursuant to the Exchange Agreement, Amir Holdings returned its 40,000,000 shares of common stock to the Company for the issuance of 8,000,000 shares of a newly designated Series E Convertible Preferred Stock, with the preferences, right and limitations as more fully described under Item 5.03 below.
Comments & Business Outlook
EAGLE MOUNTAIN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
2015
2014
2015
2014
$
-
$
-
$
$
-
Operating Expenses
Exploration expenses
20,039
-
20,039
-
Professional fees
224,500
-
224,500
-
General and administrative expenses
165,165
-
165,165
-
Total operating expenses
409,704
-
409,704
-
Income (loss) from continuing operations
(409,704
)
-
(409,704
)
-
Other Income (expenses)
(73,086
)
-
(73,086
)
-
Interest income
369
-
369
-
Impairment of goodwill
)
-
(604,163,185
)
-
(Loss) on debt settlement
(105,233,144
)
-
(105,233,144
)
-
Other Income (expenses)
(709,469,046
)
-
(709,469,046
)
-
(709,878,750
)
-
(709,878,750
)
-
Net Income (loss) from discontinued operations
(1,060
)
(282,104
)
(151,703
)
(574,679
)
Net Income (loss)
$
(709,879,810
)
$
(282,104
)
$
)
$
(574,679
)
Attributable to:
Non-controlling interest
$
(7,041
)
$
-
$
(7,041
)
$
-
Shareholders of the Company
$
(709,879,810
)
$
(282,104
)
$
(710,030,453
)
$
(574,679
)
Net Loss Per Common Share – basic and diluted
$
(0.00
)
$
(0.01
)
$
(0.00
)
$
(0.01
)
Weighted average number of shares – basic and diluted
2,205,010
2,205,010
2,205,010
2,205,010
Deal Flow
Item 3.02 Entry into a Material Definitive Agreement. Unregistered Sales of Equity Securities.
On June 5, 2015, the Company entered into debt exchange agreements (the “Exchange Agreements”) with holders of convertible debentures which the Company assumed from the Assignor. Pursuant to the Exchange Agreements, the holders released the Company in full from the Company’s obligations to them for an aggregate of $1,327,017 in convertible debentures, and the Company cancelled, extinguished and discharged such obligations, in exchange for the issuance to the holders of an aggregate of 538,509 shares of Series D Convertible Preferred Stock.
CFO Trail
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 18, 2015, Ben Wong and Eddy Wong tendered their resignation as Chief Executive Officer and Chief Financial Officer, respectively , of Eagle Mountain Corporation, formerly Usmart Mobile Device Inc. (the “Company”), effective immediately. Their resignation was for personal reasons and was not in connection with any disagreement on any matter relating to the Company’s operations, policies or practices. Mr. Ben Wong remains as a director of the Company.
Comments & Business Outlook
USMART MOBILE DEVICE INC. AND SUBSIDIARIES
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(Stated in US Dollars)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Notes
2014
2013
Net sales
$
1,013,241
$
72,175,289
Costs of sales
(1,113,533
)
(71,949,939
)
Gross profit (loss)
$
(100,292
)
$
225,350
Operating expenses
Sales and marketing expenses
118,365
154,014
General and administrative expenses
447,850
4,906,299
Income (loss) from operations
$
(666,507
)
$
(4,834,963
)
Other expenses (income)
Rental income
-
(167,134
)
Interest expenses
-
1,041,095
Management and service income
(44,362
)
(331,816
)
Interest income
(7
)
(2,000
)
(Profit) on disposals of fixed assets
-
(1,930,234
)
Loss (Profit) on disposals of assets
(12,673,201
)
68,333
Exchange differences
(4,533
)
(28,729
)
Reverse for provision of doubtful account
-
-
Miscellaneous
(4,182
)
(173,079
)
Impairment of goodwill
-
11,341,123
Share result of a jointly-controlled entity
-
(883,199
)
Income (loss) before income taxes
$
12,059,778
$
(13,769,323
)
Income tax (reversal) provision
11
-
21,887
Net income (loss)
$
12,059,778
$
(13,791,210
)
Attributable to :
Non-controlling interest
-
(451,124
)
Shareholders of the Company
12,059,778
(13,340,086
)
12,059,778
(13,791,210
)
Earnings (loss) per share – basic and diluted
$
0.30
$
(0.34
)
Weighted average number of shares – basic and diluted
13
39,684,495
39,562,522
Management Discussion and Analysis
Net Sales
Net sales consist of product sales, net of returns and allowances and any recoveries from sales of previously written down inventories. Net sales are recognized upon the transfer of legal title of the products to the customers. The quantity of products the Company sells fluctuates with changes in demand from its customers. Net sales for the fiscal year 2014 were $1,013,241, down $71,162,048 or 98.6% from $72,175,289 in the 2013 fiscal year. This reduction was due to the Company disposed all of the equity interest held in ACL Holdings on September 30, 2014.
As a result of the foregoing, the Company recorded a consolidated net income of $12,059,778 for the fiscal year 2014, up $25,850,988 or 187.4%, from a net loss of $13,791,210 in the fiscal year 2013. This was resulted by the disposal of the equity interest held in ACL Holdings on September 30, 2014.
CFO Trail
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 30, 2014, Mr Philip Lo resigned as the Chief Financial Officer of USmart Mobile Device Inc. (the “Company”) due to personal reason. Mr Lo confirmed that his resignation was not due to any disagreement with the Company.
On December 30, 2014, the Board of the Company appointed Mr Eddy Wong as the Company’s Chief Financial Officer. Mr Wong will perform the services and duties that are normally and customarily associated with the CFO position as well as other associated duties as our Board and Chief Executive Officer reasonably determine.
There are no family relationships between any of the Company’s directors or officers and Mr Wong.
Related Party Transactions
There are no material plans, contracts or arrangements which Mr Wong is a party or in which he participates nor has there been any material amendment to any plan, contract or arrangement by virtue of Mr Wong’s appointment.
Comments & Business Outlook
PART I – FINANCIAL INFORMATION
USMART MOBILE DEVICE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Notes
Three months ended
Three months ended
Net sales
$
-
$
19,859,776
Costs of sales
-
19,569,973
Gross profit (loss)
$
-
$
289,803
Operating expenses
Selling and distribution costs
-
34,673
General and administrative expenses
-
1,283,968
Income (loss) from operations
$
-
$
(1,028,838
)
Other expenses (income)
Rental income
-
(42,605
)
Interest expenses
-
295,241
Management and service income
-
(75,035
)
Interest income
-
(208
)
(Profit) on disposals of assets
(12,673,201
)
-
Exchange differences
-
(35,214
)
Miscellaneous
-
(13,234
)
Amortization of intangible assets
-
5,670,561
Share result of a jointly-controlled entity
-
(313,142
)
Income (loss) before income taxes
$
12,673,201
$
(6,515,202
)
Income taxes provision (reversal)
-
(68,720
)
Net income (loss)
$
12,673,201
$
(6,446,482
)
Attributable to:
Non-controlling interest
-
(141,586
)
Shareholders of the Company
12,673,201
(6,304,896
)
$
12,673,201
$
(6,446,482
)
Earnings (loss) per share – basic and diluted
$
0.32
$
(0.17
)
Weighted average number of shares – basic and diluted
11
39,684,495
38,591,443
Management Discussion and Analysis
Net sales
Net sales consist of product sales, net of returns and allowances and any recoveries from sales of previously written down inventories. Net sales are recognized upon the transfer of legal title of the products to the customers. The quantity of products the Company sells fluctuates with changes in demand from its customers. As the Company disposed major operating subsidiaries resulted to the significant reduction in the Company’s net sales, down 100% to $Nil for the three months ended September 30, 2014 from $19.9 million for the three months ended September 30, 2013. For the nine months ended September 30, 2014, net sales decreased by $58.3 million or 98.3%, from $59.3 million for the nine months ended September 30, 2013 to $1.0 million.
As a result of the foregoing, the Company recorded a net income $12.7 million for the three months ended September 30, 2014, an increase of $19.1 million or 296.6%, from a net loss of $6.4 million for the three months ended September 30, 2013. The result was due to the disposal of equity interest of ACL holdings in this quarter. For the nine months ended September 30, 2014, net income increased by $18.3 million or 294.9%, to a net income of $12.1 million, from a net loss of $6.2 million for the nine months ended September 30, 2013. This was due to the gain from the disposal of equity interest of ACL holdings in this quarter and the expense on amortization of intangible assets in the nine months period in 2013.
Disposal of Assets
Item 1.01. Entry into a Material Definitive Agreement
No prior material relationship existed between the Purchaser and the Company, any of its affiliates, or any of its directors or officers. Pursuant to the SPA, the purchase consideration to be received by the Company for the Shares is approximately US$129 (HK$1,000) in the aggregate (the “purchase consideration”). The purchase consideration is receivable in cash in full after the completion of the Disposal.
On September 30, 2014, pursuant to the SPA, the Company, completed the Disposal and, as a result, no longer holds any equity interest in ACL Holdings.
After the Disposal, the Company is expected to improve the liquidity position of the Company and will maintain trading operation in mobile device in a moderate size and will also seek for acquisition of other business opportunity.
Comments & Business Outlook
USMART MOBILE DEVICE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Notes
Three months ended
Three months ended
Net sales
$
451,371
$
25,007,918
Costs of sales
526,225
24,828,545
Gross profit (loss)
$
(74,854
)
$
179,373
Operating expenses
Selling and distribution costs
30,990
37,058
General and administrative expenses
196,108
986,758
Income (loss) from operations
$
(301,952
)
$
(844,443
)
Other expenses (income)
Rental income
-
(44,721
)
Interest expenses
-
204,035
Management and service income
(11,681
)
(42,332
)
Interest income
(5
)
(538
)
Loss (profit) on disposals of fixed assets
-
-
Exchange differences
(7,892
)
(6,537
)
Miscellaneous
(270
)
(54,674
)
Share result of a jointly-controlled entity
-
(251,569
)
Income (loss) before income taxes
$
(282,104
)
$
(648,107
)
Income taxes provision (reversal)
-
-
Net income (loss)
$
(282,104
)
$
(648,107
)
Attributable to:
Non-controlling interest
-
(43,679
)
Shareholders of the Company
(282,104
)
(604,428
)
$
(282,104
)
$
(648,107
)
Earnings (loss) per share – basic and diluted
$
(0.01
)
$
(0.02
)
Weighted average number of shares – basic and diluted
11
39,684,495
39,474,495
Management Discussion and Analysis
Net sales
Net sales consist of product sales, net of returns and allowances and any recoveries from sales of previously written down inventories. Net sales are recognized upon the transfer of legal title of the products to the customers. The quantity of products the Company sells fluctuates with changes in demand from its customers. As the Company decided to sell the operating subsidiaries resulted for the major factors contributed to the significant reduction in the Company’s net sales, down 98.2% to $451,371 for the three months ended June 30, 2014 from $25.0 million for the three months ended June 30, 2013. For the six months ended June 30, 2013, net sales decreased by $38.5 million or 97.4%, from $39.5 million for the six months ended June 30, 2013 to $1.0 million.
Net Income (Loss)
As a result of the foregoing, the Company recorded a net loss $282,104 for the three months ended June 30, 2014, a decrease of $366,003 or 56.5%, from a net loss of $648,107 for the three months ended June 30, 2013. The result was due to the decision for disposal of operating subsidiaries in the coming quarter. For the six months ended June 30, 2014, net loss increased by $814,906 or 339.2%, to a loss of $574,679, from an income of $240,227 for the six months ended June 30, 2013. This was due to income from disposing of fixed assets in 2013.
Comments & Business Outlook
USMART MOBILE DEVICE INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
Notes
Three months ended
Three months ended
Net sales
$
561,870
$
14,460,228
Costs of sales
587,308
14,558,743
Gross profit (loss)
$
(25,438
)
$
(98,515
)
Operating expenses
Selling and distribution costs
87,375
32,661
General and administrative expenses
211,448
1,086,856
Income (loss) from operations
$
(324,261
)
$
(1,218,032
)
Other expenses (income)
Rental income
-
(44,038
)
Interest expenses
-
221,469
Management and service income
31,488
(42,332
)
Interest income
3
(530
)
Loss (profit) on disposals of fixed assets
-
(1,872,724
)
Exchange differences
(3,360
)
2,841
Miscellaneous
5,106
(52,562
)
Share result of a jointly-controlled entity
-
(318,488
)
Income (loss) before income taxes
$
(291,024
)
$
888,332
Income taxes provision (reversal)
-
-
Net income (loss)
$
(291,024
)
$
888,332
Attributable to:
Non-controlling interest
-
(93,830
)
Shareholders of the Company
(291,024
)
982,162
$
(291,024
)
$
888,332
Earnings (loss) per share – basic and diluted
$
(0.01
)
$
0.02
Weighted average number of shares – basic and diluted
11
39,684,495
39,474,495
Management Discussion and Analysis
Net sales
Net sales consist of product sales, net of returns and allowances and any recoveries from sales of previously written down inventories. Net sales are recognized upon the transfer of legal title of the products to the customers. The quantity of products the Company sells fluctuates with changes in demand from its customers. As the Company decided to sell the operating subsidiaries resulted for the major factors contributed to the significant reduction in the Company’s net sales, down 96.1% to $561,870 for the first quarter of 2014 from $14,460,228 for the first quarter of 2013.
As a result of the foregoing, the Company recorded a net loss $291,024 for the first quarter of 2014, decrease of $1,179,356 or 132.8%, from a net income $888,332 for the first quarter of 2013. The result was due the abnormal profit of $1,872,724 from disposals of a fixed asset in the first quarter 2013 and also due to the decision for disposal of operating subsidiaries in the coming quarter.
CFO Trail
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of Kun Lin Lee and Man Sing Lai
On August 18, 2013, Messrs Kun Lin Lee and Man Sing Lai resigned as the Chief Financial Officer and Director of USmart Mobile Device Inc. (the “Company”) due to personal reason, respectively. Messrs Lee and Lai confirmed that their resignations were not due to any disagreement with the Company.
The board of directors (the “Board”) of the Company has already begun the process of identifying a qualified independent director candidate to fill Mr. Lai’s seat on the Board and the committees on which he served.
Appointment of Phillip Lo
On August 18, 2013, the Board of the Company appointed Mr. Philip Tsz Fung Lo as the Company’s Chief Financial Officer. Mr. Lo will perform the services and duties that are normally and customarily associated with the CFO position as well as other associated duties as our Board and Chief Executive Officer reasonably determine.
Mr. Lo graduated from the University of Wollongong, NSW Australia in 1992 with a Bachelor of Commerce degree in Accountancy with Merit. In 1994, Mr. Lo received his CPA Programme of Australian Society of CPAs, and currently is a CPA member of the Certified Public Accountants of Australia and a certified public accountant of the Hong Kong Institute of Certified Public Accountants.
Mr. Lo is an independent non-executive director and chairman of Audit Committee of Styland Holdings Limited (211), a company listed on Main Board of The Stock Exchange of Hong Kong Limited, an independent director and chairman of Audit Committee of QKL Stores, Inc., a company listed on NASDAQ (QKLS), and an independent director of Dragon Jade International Limited, a company listed on OTCBB in the United States.
Mr. Lo is also the Managing Director of P&L Financial Consultancy Limited and Shenzhen Xin Wei Management Consultancy Limited, which are a HK private company and a PRC Company in the business of providing financial and management consulting services. From January 2010 to January 2012, Mr. Lo served as the Chief Financial Officer of Wuhan General Group (China) Inc. which produces and manufactures blower and generator in China. Also, from December 2007 to January 2009, Mr. Lo served as the Chief Financial Officer of Wuhan Zhongye Yangluo Heavy Machinery Co., Ltd., which produces and manufactures steel products in China.
Mr. Lo has extensive experience in the areas of corporate management, financial accounting and auditing. He has served as the CFO of USmart Electronic Products Limited, a subsidiary of the Company since July 2013. Mr. Lo is fluent in English, Mandarin and Cantonese.
Mr. Lo had served several public positions. He was a member of the standing committee of the Guangzhou District Committee of CPPCC in Year 2003 to 2007, the vice president of the Council of Guangzhou Association of Enterprises with Foreign Investment in Year 2003, and a Committee member of The Chamber of Guangzhou Foreign Investment Enterprises in Year 2002.
Comments & Business Outlook
First Quarter 2013 Financial Results
Net revenue for the quarter ended March 31, 2013 was $14.5 million, compared to $42.4 million in the same period last year.
Gross loss for the first quarter of 2013 was $98.5 thousand, compared to a gross profit of $364.7 thousand in the same period last year.
Net income for the quarter ended March 31, 2013 was $888.3 thousand compared to a net loss of $865.7 thousand in the same period last year. Earnings per diluted share were $0.02 for the quarter ended March 31, 2013, as compared to $(0.03) in the same period last year.
Mr. Ben Wong , Chief Executive Officer of USmart Mobile Device Inc., commented, "We ended the first quarter of 2013 with a net income of $888.3 thousand thanks to a one-off profit from the disposal of fixed assets in the amount of $1.9 million. The majority of our sales came from selling memory products. With the acquisition of Jussey on September 28, 2012, we have diversified our business interests from a memory components distributor to an IDH (Industrial Design House) focusing on smartphone products. We foresee that our primary business will shift to selling smart phone products."
Mr. Wong continued, "Although the global economic conditions continue to be weak and volatile, there are signs of market recovery for DRAM starting with the second quarter of 2013. Smartphones and tablets are also expected to drive DRAM and NAND flash demands throughout the year which in turn should have a positive impact on our future revenue growth."
Comments & Business Outlook
Fourth Quarter 2012 Results
Net revenue of $38.1 million, compared to $73.2 million in the same period last year.
Gross profit for the fourth quarter of 2012 was $(1.2) million, compared to $0.9 million in the same period last year. Gross profit margin for the fourth quarter of 2012 was (3.2) %, compared to 1.2% in the same period last year.
Net loss for the quarter ended December 31, 2012 was $4 million, compared to net loss of $2.3 million in the same period last year. Loss per diluted share was $0.12 for the quarter ended December 31, 2012, as compared to a loss of $0.08 in the same period last year.
Mr. Ben Wong, Chief Executive Officer of ACL Semiconductors, commented, "2012 was a significant year in the history of ACL and featured the acquisition of Jussey enabling the Company to tap into the lucrative telecommunications industry. As a result of this acquisition, we expect our primary business to shift to selling smartphone products whereas 2012 sales came mostly from selling memory products."
Mr. Wong continued, "Several key factors will continue to differentiate us from competitors in Hong Kong and PRC. Of the five types of 3G wireless standards in the telecommunication industry, three are adopted in China by the major mobile network carriers, China Unicom, China Telecom and China Mobile. The Company, through USmart and eVision, has access to two of the three 3G wireless standards, namely, W-CDMA and CDMA2000 for its smartphones development. Moreover, eVision has a strong R&D team specializing in the CDMA2000 mobile network. Finally, ATMD - the Company's joint venture with Tomen and one of the largest distributors of Samsung's memory products for Hong Kong and Southern China markets - is expected to be in a highly competitive position compared to other U.S., European, Japanese and Taiwanese memory products manufacturers and distributors."
Mr. Wong concluded, "In 2013, we expect universal NAND flash demand to slightly increase driven by applications such as smartphones, tablets and solid-state drives. However, DRAM revenue is expected to continue to be influenced by global economic conditions."
Comments & Business Outlook
Second Quarter 2012 Results
Net revenue for the quarter ended June 30, 2012 was $31.4 million , as compared to revenue of $100.8 million for the same period last year. Second quarter 2012 net sales decreased due to continuation of reduced demand and decreased average selling prices that have impacted many semiconductor companies.
Gross profit for the first quarter 2012 was $389,800, compared to a gross loss of $1.3 million for the second quarter 2011. Gross margin for the second quarter 2012 was 1.2%, compared to a gross margin loss of 1.3% for the second quarter 2011.
Net loss for the quarter ended June 30, 2012 was $1.1 million, compared to a net loss of $2.7 million in the same period last year. The decrease in net loss was achieved by improved operating efficiency. Loss per diluted share was$0.04 for the quarter ended June 30, 2012, compared to loss per diluted share of $0.10 in the same period last year.
Mr. Chung-Lun Yang, Chairman and Chief Executive Officer of ACL Semiconductors Inc., commented, "We are continuing to diversify our business through acquisitions in order to better position our company for future quarters. Our shareholders remain our top priority in this transformational period. We are excited about the progress we are making in the acquisition of 100% equity interest in Jussey Investments Limited, the owner of 80% equity interest in USmart Electronic Products Limited. This acquisition will position ACL to more effectively coordinate resources and activities, while achieving efficient implementation of memory chips and solutions across the three 'C' market."
Mr. Yang continued, "Although market conditions continue to be weak and volatile, we remain optimistic about the Company's prospects for the second half of the year. Looking forward, we expect NAND Flash sales to increase as ultrabooks, smartphones and tablets are expected to drive demand. At the same time, we anticipate that revenues generated from the DRAM sales will continue to be impacted by global economic conditions."
Mr. Yang concluded, "Since the Company's Samsung business will be gradually transferred to ATMD, the Company expects its net sales will continue to decrease in the coming quarters. Eventually, the Company anticipates that approximately 90% of Samsung products sales will be transferred to ATMD, and the Company will receive 30% of ATMD's net income or loss based upon its ownership interest in ATMD."
Acquisition Activity
HONG KONG , July 11, 2012 /PRNewswire-Asia / -- ACL Semiconductors Inc. (OTC Bulletin Board: ACLO) ("ACL"), a leading China -based distributor of memory electronic products in Southern China and Hong Kong , announced today that it expects to enter a definitive sales and purchase agreement within the next few weeks for the acquisition of 100% equity interest in Jussey Investments Limited ("Jussey"), the owner of 80% equity interest in USmart Electronic Products Limited ("USmart") (the "Acquisition"), and expects to complete the Acquisition by early August 2012. As previously announced on April 4, 2012 , ACL entered into a memorandum of understanding ("MOU") for the acquisition of Jussey.
Founded in 2003, USmart is a Hong Kong based ODM manufacturer that specializes in designing, manufacturing and distributing advanced technologies for the three 'C' (computer, customer electronic appliance and communication) market in China .
Mr. Chung-Lun Yang , Chief Executive Officer and Chairman of ACL, stated, "We are on track to complete the acquisition of Jussey, the major shareholder of USmart, within the next couple of weeks. This acquisition would position ACL to more effectively coordinate its resources and activities by avoiding duplication of efforts while achieving speedy implementation of memory chips and solutions to the three 'C' market. USmart already has several confirmed purchase orders on hand from certain telecommunications companies."
Mr. Yang continued, "By acquiring a majority equity interest in USmart, our goal is to improve ACL's top-to-bottom performance within memory chip distribution and to build shareholder value. USmart provides professional services and solutions for high-end smartphone platforms and develops best-of-breed applications for organizations, including telecom and other services providers, seeking to distribute innovative mobile devices. USmart also develops its own concepts, and creates business and consumer applications for this increasingly important digital channel, targeting smartphones, Androids and other devices. The acquisition will strengthen our ability to fulfil ACL's mission to 'maintain a diversified product portfolio by designing, manufacturing and distributing electronic components with different product lifecycles and by leveraging groundbreaking technologies from additional research and development.' The combined company is expected to benefit from ACL's expertise in marketing memory chips and semiconductors, and more effectively advance the shared objective to penetrate the three 'C' market in China ."
Comments & Business Outlook
HONG KONG , June 27, 2012 /PRNewswire-Asia / -- ACL Semiconductors Inc. (ACLO.OB) ("ACL"), a China -based distributor of semiconductor components in Hong Kong and Southern China , announced today that ATMD (Hong Kong ) Limited ("ATMD"), the Company's joint venture with Tomen Devices Corporation ("Tomen"), has executed a distributorship agreement with Shanghai Samsung Semiconductor Co., Ltd. Pursuant to the agreement, ATMD has become a non-exclusive supplier of Samsung's semiconductor and LCD products in the Greater China market, which comprises the People's Republic of China and Hong Kong .
Mr. Chung-Lun Yang , Chairman and Chief Executive Officer of ACL Semiconductors Inc., commented, "ACL is continuing its business transformation and diversification. We are pleased that the distributorship agreement between ATMD and Samsung has been executed. ATMD is the process of setting up its operating systems and is on track to commence business directly with Samsung during the third quarter."
As previously announced, ACL Holdings entered into an agreement on March 9, 2012 with Tomen to create the joint venture ATMD, which became effective as of April 1, 2012 . As a part of that agreement, ATMD issued $10 million in share capital, and is 30% owned by ACL Holdings and 70% owned by Tomen.
Comments & Business Outlook
ACL SEMICONDUCTORS INC. AND SUBSIDIARIES
Co
Notes
Three months
Three months
Net sales
$
42,413,020
$
120,991,594
Costs of sales
(42,048,249
)
(118,051,463
)
Gross profit
$
364,771
$
2,940,131
Selling and distribution costs
(12,883
)
(22,330
)
General and administrative expenses
(1,182,119
)
(1,308,539
)
(Loss) Income from operation
$
(830,231
)
$
1,609,262
Other income (expenses)
Rental income
45,192
31,896
Interest expenses
(133,226
)
(108,781
)
Management and service income
23,193
10,885
Interest income
827
451
Profit on disposals of equipment
256
18,024
Exchange differences
(12,550
)
(5,507
)
Miscellaneous
40,871
8,884
(Loss) Income before income taxes
$
(865,668
)
$
1,565,114
Income taxes
—
(192,308
)
Net (loss) income
$
(865,668
)
$
1,372,806
(Loss) Earnings per share – basic and diluted
$
(0.03
)
$
0.05
Weighted average number of shares – basic and diluted
12
29,025,436
28,779,936
Share Structure
HONG KONG , May 11, 2012 /PRNewswire-Asia / -- ACL Semiconductors Inc. (OTC Bulletin Board: ACLO ) ("ACL"), a China -based distributor of semiconductor components in Hong Kong and Southern China, today announced that the Board of Directors has approved a 20% stock dividend. The dividend will be payable on May 28, 2012 to shareholders of record at the close of business on May 14 , 2012. Fractional shares will be paid in cash, which amount will be calculated by multiplying the fractional share interest by the average closing prices for the 10 trading days ending on (and including) May 23, 2012 , the third trading day prior to the Payment Date.
"We deeply appreciate the loyalty of our investors and are compelled to show our gratitude by declaring a one-for-five stock dividend. This move increases the number of shares outstanding and should contribute to greater liquidity and trading of ACL's stock," said Mr. Chung-Lun Yang , Chairman and Chief Executive Officer of ACL. "Over the next two months, we expect to close the acquisitions that were previously announced for Superb Sino Holdings Limited, the holding company of Systematic Semiconductor Limited and Jussey Investments Limited, the majority shareholder of USmart Electronic Products Limited, both of which are expected to diversify our business with higher margin components. We are confident that these growth drivers will benefit both ACL and our shareholders by ensuring our Company thrives in a constantly changing business environment."
Shareholder Letters
Dear Shareholders,
ACL continues to aggressively seek opportunities in the Asian market to broaden the ACL business model with higher margins, innovative products and an expansion of our geographic footprint. We believe the three recently proposed transactions fit within this strategy and offer excellent vehicles to position ACL for the future. We are diversifying our platform and will no longer predominantly be a distributor business with a major focus on one brand. We are developing into a diversified, more vertically integrated company; spanning manufacturing, design, and distribution. Our strong presence across mainland China , combined with a state-of-the-art electronic components distribution platform, will better position the Company to withstand the industry pressures that we experienced in 2011. I will briefly outline the three transactions and the strategic opportunities they present for ACL:
ATMD Joint Venture with Tomen Devices Corporation: We view this joint venture with Tomen Devices Corporation ( " Tomen " ) as truly transformative for ACL and its Samsung business. In line with Samsung ' s strategy to streamline its distribution network, the joint venture combines Tomen ' s strong financial position with ACL ' s Atlantic client base and team into one entity known as ATMD, which we believe is poised to become a leading Samsung distributor across Greater China . The joint venture optimizes the Samsung semiconductor position in the Greater China market and creates a full product supply chain business model. By combining forces, ATMD will offer a broad portfolio of Samsung semiconductor products, which includes Tomen ' s higher margin products, addressing the rapidly expanding smartphone, storage devices, tablets, and notebooks manufactured in China . ACL will retain a 30% interest in this joint venture, which was launched on April 1, 2012 .
USmart Electronic Products Limited Acquisition Underway: We entered into a non-binding memorandum of understanding to acquire Jussey Investments Limited, the majority shareholder of USmart Electronic Products Limited ( " USmart " ), on March 30, 2012 . USmart specializes in the manufacture and distribution of computer peripherals, premium smartphones, high-end tablets, flash storage, communication devices and consumer electronics appliances. We believe USmart is poised to bring to ACL relationships with world renowned brands and long term sourcing partnerships. USmart ' s focus is on advanced technology from a design, manufacturing and distribution standpoint. The addition will broaden ACL ' s business across the three " C " markets -- computers, consumer electronics and communication technologies. This pending acquisition will diversify ACL ' s business beyond distribution and increase our exposure to the rapidly growing Asian smartphone market. We are progressing well with the closing of this transaction and expect it to close by June 2012 .
Systematic Semiconductor Limited Acquisition Pending: On February 13, 2012 , we entered into a non-binding memorandum of understanding to acquire Systematic Semiconductor Limited ( " Systematic " ), which is a successful trader and procurement network specialist of memory products. Systematic specializes in memory components with over thirty categories and 350 subcategories in the space. Systematic ' s broad product portfolio and flexibility in its relationships with a broad spectrum of branded manufacturers, wholesales/distributors and retailers results in excellent margins. With the addition of Systematic, ACL will be further integrated into the supply chain and diversify its business towards the consumer platform across China and Hong Kong . We expect this transaction to close by the end of May 2012 .
In closing, these transactions exemplify our strategic objective to strengthen and diversify our semiconductor product platform for 2012 and beyond. We remain optimistic about the overall market prospects as we believe the semiconductor market is on track to resume growth by the second half of 2012. The enterprise spending cycle will continue to expand throughout 2012, and the launch of Microsoft Windows 8 for tablets and ultrabooks is expected to drive demand for computing platforms. Smartphone penetration should accelerate with the growth of lower-cost devices in emerging markets such as China , India and Southeast Asia . Datacenter and storage is projected to grow in order to support cloud-based applications, and anticipated growth in data traffic will drive more investments in networking and computing infrastructure. According to the research manager at IDC, double-digit growth is projected for consumer devices such as media tablets and eReaders in 2012.
We deeply appreciate your faith in our ability to make 2012 a year of transformation and growth.
Yours sincerely, Chung-Lun Yang
Comments & Business Outlook
Fourth Quarter 2011 Results
For the fourth quarter ended December 31, 2011 , ACL reported net revenue of $73.2 million , compared to $117.9 million in the same period last year.
Loss per diluted share was $0.08 for the quarter ended December 31, 2011 , as compared to a loss of $0 in the same period last year.
Mr. Chung-Lun Yang , Chairman and Chief Executive Officer of ACL, commented, "While 2011 was a challenging macroeconomic year across the global semiconductor business, ACL maintained its market position and undertook strategic initiatives to broaden our business model and set the foundation for future growth and higher gross margins. The bottom line for the year was affected by an allowance of doubtful accounts which in effect offsets the Company's accounts receivables for the fiscal year 2011. Without such allowance ACL would have shown a profit for 2011 in spite of the pricing pressures that were evident industry wide."
Mr. Yang, continued, "We remain focused on pursuing opportunities to penetrate the rapidly expanding three 'C' markets - computers, consumer electronic appliances and communication technologies. In the first quarter of 2012, we believe we successfully moved to assure success in this arena. Of major importance was the non-binding MOU to acquire Jussey Investments Limited ("Jussey"), the majority owner of USmart Electronic Products Limited ("USmart"), broadening our platform from distribution to manufacturing and design. In addition, we signed a non-binding MOU to acquire Systematic Semiconductor Limited ("Systematic") (known as Superb Sino Holdings Ltd. BVI) that provides high margin, global brand components, diversifying ACL with new brands. Also during the first quarter we announced a new joint venture with Tomen Devices Corporation, a Japan based seller of Samsung components. The joint venture called ATMD (Hong Kong ) Limited ("ATMD") will expand our geographic footprint for distribution of Samsung semiconductors in mainland China . These transactions meet our objective of strengthening our product portfolio and expanding into divergent geographic regions. We believe that ACL is well positioned to benefit from the anticipated demand driven revenue growth for NAND Flash in 2012 due to the continued expansion in the global smartphone and tablets market."
Joint Venture
On March 9, 2012, ACL International Holdings Limited (“ACL Holdings”), a wholly owned subsidiary of ACL Semiconductors Inc. (the “Company”) entered into a Shareholders’ Agreement (the “Agreement”) with Tomen Devices Corporation (“Tomen”), a company incorporated in Japan, pursuant to which Agreement ACL Holdings and Tomen agreed to form a joint venture, ATMD (Hong Kong) Limited (“ATMD”), to be incorporated in Hong Kong.
Tomen has been one of the authorized distributors of Samsung Japan Corporation (“SJC”) in Japan with respect to certain semi-conductors and electronics parts manufactured by Samsung. SJC is a shareholder of Tomen. ACL Holdings’ subsidiary, Atlantic Components Limited (“Atlantic”), has been one of the authorized distributors of Samsung Electronics Co., Ltd. (“SECC”) in Hong Kong and Shenzhen, China, with respect to similar products manufactured by Samsung. Other than the foregoing, no prior material relationship existed between the Company and Tomen, any of its affiliates, or any of its directors or officers.
Comments & Business Outlook
Third Quarter 2011 Results
Net revenue of $74.0 million , as compared to revenue of $102.3 million for the same period last year.
Net income for the quarter ended September 30, 2011 was $1.9 million compared to net loss of $76,736 in the same period last year.
Earnings per diluted share was $0.07 for the quarter ended September 30, 2011 compared to $0.00 per diluted share in the same period last year.
Mr. Chung-Lun Yang , Chairman and Chief Executive Officer of ACL Semiconductors Inc., commented, "The third quarter 2011 results reflect a significant improvement from the previous quarter. Following difficult selling conditions in the second quarter 2011, we managed to negotiate more favorable purchasing prices from Samsung. A better offering price was achieved early on in the third quarter 2011, which contributed to a reduction in the cost of sales."
Mr. Chung-Lun Yang continued, "While we did see a challenging quarter due to global macroeconomic conditions and the effect on NAND flash sale prices, we don't expect this trend to continue. We believe both the second and third quarters of 2011 represented irregular performances as a direct result of volatility in the semiconductor market. However, the overall NAND Flash market demand remains strong and our outlook remains favorable. We do anticipate market volatility to continue into the fourth quarter 2011 and we expect our annual results to become stable."
Comments & Business Outlook
Second Quarter 2011 Results
For the quarter ended June 30, 2011, ACL Semiconductors reported net revenue of $100.8 million, an increase from $89.5 million, or 12.6%, compared to the same period last year.
Net loss for the quarter ended June 30, 2011 was $2.7 million compared to net income of $0.6 million in the same period last year. The year-over-year decrease in net income was primarily a result of destabilizing NAND flash prices in the second quarter. Loss per diluted share was $0.10 for the quarter ended June 30, 2011 compared to the gain of $0.02 per diluted share in the same period last year.
Mr. Chung-Lun Yang, Chairman and Chief Executive Officer of ACL Semiconductors Inc., commented, "The second quarter of 2011 demonstrated strong growth in sales, with our net sales increasing 12.6%, as compared to the same period last year. While we did see a tough quarter due to the economic conditions and the effect on NAND flash prices, we don't expect this trend to continue."
Mr. Yang continued, "We faced a tough second quarter due to global macro economic conditions and the crisis in Japan. NAND flash prices were down and, although we managed to maintain our sales turnover, the market conditions forced us to sell below our costs. Although the market conditions are still weak in the third quarter, we decided to use this period to expand our customer network. We have closely discussed this initiative with our suppliers and they are willing to support our strategy with a very favorable offer. We believe these adjusted terms will bring a greater profit margin to ACL moving forward. As a distributor of the world's largest NAND flash supplier for the Hong Kong and Southern China regions, we are confident that our gross profit will increase in the second half of this year."
Comments & Business Outlook
On May 13 2011 , ACL Semiconductors Inc. reported results for the quarter ended March 31, 2011 ,
Net revenue of $121.0 million , an increase from $99.0 million , or 22% , compared to the same period last year. The year-over-year revenue growth was primarily due to an increase of sales volume in the PRC market.
Net income for the quarter ended March 31, 2011 was $1.4 million or essentially flat as compared to net income of $1.4 million in the same period last year.
Earnings per diluted share were $0.05 for the quarter ended March 31, 2011 was flat compared to the gain of $0.05 in the same period last year.
Mr. Yang continued, "This is a very exciting time for ACL as we see a strong growth momentum carry over from the last quarter into the beginning of 2011. We continue to explore initiatives which will improve our operational efficiency and financial performance. Looking further into 2011 we foresee demand for various memory products to continue to grow as the demand for mobile electronics continues to rise. We believe that we are at the beginning of a long growth cycle in the NAND Flash, DRAM and Graphics RAM sectors and ACL remains well positioned to be a leading distributor of Samsung memory components."
Comments & Business Outlook
On March 14 , 2011, ACL Semiconductors Inc. reported results for the quarter ended December 31, 2010. The Company reported
Net revenue of $117.9 million, an increase from $90.3 million, or 31%, compared to the same period last year.
Net loss for the quarter ended December 31, 2010 was $24,874, compared to net loss of $383,804 in the same period last year.
The year-over-year revenue growth was primarily due to an increase of sales volume in the PRC market. The decrease in net loss resulted primarily from pricing pressure stabilization on our products as compared to the year ago quarter. Loss per diluted share was $0.0009 for the quarter ended December 31, 2010, as compared to a loss of $0.01 in the same period last year.
Mr. Alan Yang, Chairman and Chief Executive Officer of ACL Semiconductors, commented, "The fourth quarter of 2010 demonstrated strong revenue growth, with our total revenue increasing 31%, as compared to the same period last year. These outstanding results reflect the success of our business model and the macro economic factors across Hong Kong and Southern China. Most importantly, Samsung wrapped up their best year of net sales, and has guided for a strong 2011. As a distributor of Samsung products, we are also expecting strong financial performance in 2011."
Liquidity Requirements
Our principal sources of liquidity have been cash from operations, bank lines of credit and credit terms from suppliers. Our principal uses of cash have been for operations and working capital.
We anticipate these uses will continue to be our principal uses of cash in the future
Comments & Business Outlook
HONG KONG, Feb. 14, 2011 /PRNewswire-Asia / -- ACL Semiconductors Inc. expects strong fourth quarter and full year 2010 results based on Samsung's record setting fiscal year.
Mr. Alan Yang, Chairman and Chief Executive Officer of ACL Semiconductors, commented, "Samsung has just wrapped up their best year yet in terms of both net sales and net income in 2010. To have that kind of performance in a challenging economic environment over the past year is impressive. Along the same lines we are also expecting a strong fourth quarter and full year 2010 results."
According to Samsung's recent earnings release, consolidated revenue was an all-time high of 154.63 trillion won in 2010 ($138.86 billion) up 13 percent from the previous year's record of 136.32 trillion won. Samsung also indicated that operating profit for 2010 was 16.15 trillion won.
Mr. Yang continued, "With the rise of tablet devices, consistent growth sales of mobile phones and continued demand in LCD TV's, we are expecting another strong year for Samsung in 2011. Likewise it signals a strong year for ACL as we look forward to providing high quality Samsung products and value added services to our network of customers in the coming year."
Share Structure
ACL Semiconductors, Inc. held its
2010 Annual Meeting of Stockholders on November 22, 2010. At the meeting, stockholders re-elected all three directors nominated by the Company’s Board of Directors. In addition, stockholders ratified the appointment of Albert Wong & Co. as the Company’s independent registered public accounting firm for the year ending December 31, 2010, and approved an amendment to the Company’s Certificate of Incorporation to
effect a reverse split of the Company’s issued and outstanding common stock of between a one-for-four (1-4) and one-for-twenty (1-20) in the discretion of the Board of Directors.
Liquidity Requirements
Our ability to draw down under our various credit and loan facilities is, in each case, subject to the prior consent of the relevant lending institution to make advances at the time of the requested advance and each facility (other than with respect to certain long term mortgage loans) is payable within 90 days of drawdown. Accordingly, on a case by case basis, we may elect to terminate or not renew several of our credit facilities if significant reduction in our available short term borrowings that we do not deem it is commercially reasonable. The Company has obtained a $20 million purchase credit from Samsung.
The Company plans to obtain an additional $30 million line of credit from various lenders
Comments & Business Outlook
"The third quarter of 2010 demonstrated another quarter of year-over-year revenue growth. Our total revenue was up 34.6% in the quarter ended September 30, 2010 , as compared to the same period last year. These outstanding results also reflect the success of our business model and the macro economic factors across Hong Kong and Southern China . Most importantly, we are proud of the distribution and product research we supply to Samsung, as we are positioned to be a leading distributor of Samsung memory products in Southern China . During the quarter, we began to promote Samsung's high density NAND Flash (4GB and above) in order to capture a larger market share as well as to push the high density products to the mainstream market. This promotion was successful, which resulted in our increased sales volume for the quarter."
For the quarter ended September 30, 2010 , ACL Semiconductors reported net revenue of $102.3 million , an increase from $76.0 million , or 34.6% , compared to the same period last year.
Net loss for the quarter ended September 30, 2010 was $77,000 , compared to net income of $ 1.0 million in the same period last year. The net loss resulted primarily from increased pricing pressure on our products and our promotion of Samsung's NAND products.
Earnings per diluted share was$0.00 for the quarter ended September 30, 2010 , as compared to $0.03 in the same period last year.
Mr. Yang continued, "During the quarter we continued to pursue initiatives to improve our internal financial performance and minimize unnecessary costs. We recorded an 11.2% decrease in operating expenses as compared to the corresponding quarter in 2009. We expect our sales turnover to remain stable in the fourth quarter of 2010. We also expect global market demand and the average selling prices of our products to remain stable in the fourth quarter 2010 . We are confident in our outlook as the electronics sector is expected to grow for the remainder of the year and we are well-positioned to take advantage of the foreseeable growth in China 's market."
