POS AM: Post-effective amendment to a registration statement that is not immediately effective upon filing
Published on February 25, 2009
As
filed with the Securities and Exchange Commission on February 25,
2009
Registration
No. 333-149860
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
________________________
Post-Effective
Amendment No. 1
on
Form
S-3
to
Form
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
________________________
EMCORE
Corporation
New Jersey
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3674
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22-2746503
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||
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
EMCORE
Corporation
10420
Research Road, SE
Albuquerque,
New Mexico 87123
(505-332-5000)
Agent For
Service
KEITH
J. KOSCO, ESQ.
EMCORE
Corporation
10420
Research Road, SE
Albuquerque,
New Mexico 87123
(505-332-5000)
With
Copies To:
TOBIAS
L. KNAPP, ESQ.
Jenner
& Block LLP
919
Third Avenue
37th
Floor
New
York, New York 10022
(212-891-1600)
|
Approximate
date of commencement of proposed sale to the
public: From time to time after this post effective amendment becomes
effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. x
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ¨
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ¨
Indicate
by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer”, "accelerated filer",
“non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
o Large accelerated
filer x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933 or until the registration statement shall become effective on such date as
the Securities and Exchange Commission, acting pursuant to Section 8(a),
may determine.
The
information in this prospectus is not complete and may be changed. Neither we
nor the selling stockholders named in this prospectus may sell the securities
described in this document until the registration statement filed with the
Securities and Exchange Commission is declared effective. This prospectus is not
an offer to sell these securities and neither we nor the selling stockholders
are soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
PRELIMINARY
PROSPECTUS
SUBJECT
TO COMPLETION, dated February 25, 2009
9,400,003
Shares
Common
Stock
This
prospectus relates to the registration for resale of up to 9,400,003 shares of
our common stock.
The
9,400,003 shares of common stock relate to (i) 8,000,000 shares of common stock;
and (ii) 1,400,003 shares of common stock issuable upon exercise of
warrants. We issued the common stock and warrants to the selling
stockholders named in this prospectus in a private placement that closed on
February 20, 2008.
This prospectus will be used by the
selling stockholders to resell their common stock. We will not receive any
proceeds from this offering, though we may receive proceeds from any cash
exercise of warrants by the selling stockholders. The registration of these
securities does not necessarily mean that the selling stockholders will offer or
sell all or any of these securities. We will incur the expenses in connection
with the registration of these shares.
The selling stockholders from time to
time may offer and resell the shares held by them directly or through agents or
broker-dealers on terms to be determined at the time of sale. To the extent
required, the names of any agent or broker-dealer and the applicable commissions
or discounts and any other required information with respect to any particular
offer will be set forth in a prospectus supplement that will accompany this
prospectus. A prospectus supplement may also add, update or change information
contained in this prospectus.
Our
common stock is traded on The NASDAQ Global Market under the symbol
“EMKR”. The last reported sale price of our common stock on The
NASDAQ Global Market on January 20, 2009 was $1.18 per share.
Investing
in our common stock involves risks.
See
“Risk Factors” beginning on page 5.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date of this prospectus
is ,
2009
You
should rely only on the information contained or incorporated by reference in
this prospectus. We have not authorized anyone to provide you with
additional information or information different from that contained in this
prospectus. Each selling stockholder is offering to sell, and seeking offers to
buy, shares of our common stock only in jurisdictions where those offers and
sales are permitted. The information contained or incorporated by reference in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of shares of common
stock offered by this prospectus.
In this
prospectus, the “Company”, “EMCORE”, “we”, “us”, and “our” refer to EMCORE
Corporation and its subsidiaries. Our fiscal year ends on September
30 of each calendar year. For example, fiscal year 2008 refers to the
year ended September 30, 2008. EMCORE is a registered trademark of
EMCORE Corporation. This prospectus contains product names, trade names and
trademarks of EMCORE and other organizations.
TABLE
OF CONTENTS
Page
|
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Prospectus
Summary
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2
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Risk
Factors
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5
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Special
Note Regarding Forward-Looking Statements
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23
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Use
of Proceeds
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24
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Certain
U.S. Federal Tax Considerations for non-U.S. Holders
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24
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Principal
and Selling Stockholders
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27
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Plan
of Distribution
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33
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Description
of Common Stock to be Registered
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35
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Legal
Matters
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39
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Experts
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39
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Where
You Can Find More Information
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39
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Information
Incorporated by Reference
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40
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ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we have filed with the
Securities and Exchange Commission (the “SEC”) using a “shelf” registration
process. This means the securities described in this prospectus may be offered
and sold using this prospectus from time to time as described in the “Plan of
Distribution”. You should carefully read this prospectus and the information
described under the heading “Where You Can Find More Information”. Under no
circumstances should the delivery to you of this prospectus or any offering or
sales made pursuant to this prospectus create any implication that the
information contained in this prospectus is correct as of any time after the
date of this prospectus.
PROSPECTUS
SUMMARY
This
summary highlights information about EMCORE Corporation and the offering
contained elsewhere in this prospectus and is qualified in its entirety by
the more detailed information and financial statements included elsewhere
in this prospectus or otherwise incorporated by reference. You should
carefully read the entire prospectus and other information incorporated by
reference before making an investment decision, especially the information
presented under the heading “Risk Factors”. In this prospectus, except as
otherwise indicated or as the context may otherwise require, all
references to “EMCORE”, “we”, “us” and “our” refer to EMCORE Corporation
and its subsidiaries.
Business
Overview
We
are a provider of compound semiconductor-based components and subsystems
for the broadband, fiber optic, satellite, and terrestrial solar power
markets. We were established in 1984 as a New Jersey
corporation. We have two reporting segments: Fiber Optics and
Photovoltaics. Our Fiber Optics segment offers optical
components, subsystems, and systems that enable the transmission of video,
voice, and data over high-capacity fiber optic cables for high-speed data
and telecommunications, cable television (“CATV”) and
fiber-to-the-premises (“FTTP”) networks. Our Photovoltaics
segment provides solar products for satellite and terrestrial
applications. For satellite applications, we offer high-efficiency
compound semiconductor-based gallium arsenide (“GaAs”) solar cells,
covered interconnect cells (“CICs”) and fully integrated solar
panels. For terrestrial applications, we offer concentrating
photovoltaic (“CPV”) systems for utility scale solar applications as well
as offering our high-efficiency GaAs solar cells and CPV components for
use in solar power concentrator systems.
Our
headquarters and principal executive offices are located at 10420 Research
Road, SE, Albuquerque, New Mexico, 87123, and our main telephone number is
(505) 332-5000. For specific information about our Company, our
products or the markets we serve, please visit our website at
http://www.emcore.com. The information contained in or
connected to our website is not part of this prospectus.
Strategy
After
completing several strategic acquisitions and divestures over the past few
years, we have developed a strong business focus and comprehensive product
portfolio in two main sectors: Fiber Optics and
Photovoltaics. Our principal objective is to maximize
shareholder value by leveraging our expertise in advanced compound
semiconductor technologies to be a leading provider of high-performance,
cost-effective product solutions in each of the markets that we
serve. Key elements of our strategy include:
Drive
Business Growth, Reduce Cost, and Deliver Profitability.
With our
enhanced product portfolio, expanded customer base, and established
vertically-integrated, low-cost manufacturing infrastructure in our fiber
optics business, we are better positioned than ever to leverage our
resources and infrastructure to grow our revenue through new product
introductions and gain market share. We expect several initiatives for
cost reduction to come to fruition in fiscal 2009, which we believe will
improve our gross profit and margins. We have also significantly
reduced capital expenditures and have placed a greater emphasis on
improving our working capital management. While we enjoy the moderate
growth and greater visibility in our satellite photovoltaics
business, we recognize the need for further investment in our CPV business
to develop a more cost competitive design. Management is committed to
achieving overall profitability once we deploy our Gen-III CPV system
solution.
Focus
Our R&D Effort on Cost Reduction and Market Share Gain.
We
have invested substantially in research and development and product
engineering over the past years. We have developed a clear path towards
business growth and are recognized as a technology leader in both our
Fiber Optics and Photovoltaics segments. In fiscal 2009, we
will be focusing our R&D and product engineering efforts on product
cost reduction and market share gain through more complete product
solutions for our customers.
Grow Our Terrestrial Solar
Power Business by Focused Effort and Strategic
Partnership.
For
our CPV component business, we intend to continue to secure and expand our
leadership position by providing high-performance, reliable, and
cost-effective products and excellent customer service. For our CPV system
business, our business development focus will be in the U.S. market
primarily due to the extension of the investment tax credit (ITC) and
other favorable policies for renewable energy in the U.S. We expect our
Gen-III CPV system solution to provide a competitive levelized cost of
energy for utility scale projects in certain regions. We will continue to
develop and expand strategic partnerships with major international
companies to drive our business penetration and expansion into the
international markets. We expect a substantial ramp-up of our CPV business
to occur in the second half of 2009.
Pursue Strategic Acquisitions
and Partnership Opportunities.
We
are committed to the ongoing evaluation of strategic opportunities that
can expand our addressable markets and strengthen our competitive
position. Where appropriate, we will acquire additional products,
technologies, or businesses that are complementary to, or that broaden the
markets in which we operate. We plan to pursue strategic acquisitions and
partnerships to increase revenue which will allow for higher overhead
absorption and improved gross margins.
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Issuer
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EMCORE
Corporation, a New Jersey corporation.
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Selling
stockholders
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The
shares of our common stock to be offered and sold using this prospectus
will be offered and sold by the selling stockholders named in this
prospectus or in any supplement to this prospectus. See
“Principal and Selling Stockholders”.
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Common stock
offered
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9,400,003
shares of our common stock, no par value.
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Common
stock outstanding after this offering
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78,337,504
shares as of February 17, 2009 (this figure does not include
shares issuable upon the exercise of the warrants or any outstanding
options for the purchase of our common stock).
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Registration
rights
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Pursuant
to a registration rights agreement that we entered into with the selling
stockholders in connection with the private placement of the common stock
and warrants, we have filed with the SEC a registration statement, of
which this prospectus is a part. We are obligated under the registration
rights agreement to keep the registration statement effective until the
earlier of (1) the date on which the selling stockholders shall have sold
all of the shares of common stock registered pursuant to the registration
statement and (2) the first date as of which all of the shares of common
stock registered pursuant to the registration statement may be sold
without restriction pursuant to Rule 144 under the Securities Act (the
“Registration Period”). We will be required to pay liquidated
damages to the holders of the common stock if we fail to comply with our
obligations to register the common stock within the specified time period
and if we fail to keep this registration statement effective for the
duration of the Registration Period, other than during grace periods that
are permitted by the registration rights agreement. See
“Description of Common Stock to be Registered —Registration
Rights”.
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No
proceeds
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We
will not receive any proceeds from the sale by any selling stockholder of
the common stock. Upon any exercise of the warrants by payment
of cash, however, we will receive the exercise price of the warrants,
which will be used for general corporate purposes.
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Trading
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Our
common stock is listed on The NASDAQ Global Market under the symbol
“EMKR”.
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Risk
factors
|
See
“Risk Factors” beginning on page 5 of this prospectus and other
information contained, or incorporated by reference, in this prospectus
for a discussion of factors you should consider carefully before deciding
to invest in the common stock.
|
This
prospectus covers the resale of up to 9,400,003 shares of our common
stock. We issued and sold 8,000,000 shares of our common stock and
warrants exercisable for 1,400,003 shares of our common stock to the selling
stockholders in a private placement that closed on February 20, 2008. The
summary below describes the principal terms of the offering. The
“Description of Common Stock to be Registered” section of this prospectus
contains a more detailed description of our common stock.
Issuer
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EMCORE
Corporation, a New Jersey corporation.
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Selling
stockholders
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The
shares of our common stock to be offered and sold using this prospectus
will be offered and sold by the selling stockholders named in this
prospectus or in any supplement to this prospectus. See
“Principal and Selling Stockholders”.
|
Common stock
offered
|
9,400,003
shares of our common stock, no par value.
|
Common
stock outstanding after this offering
|
78,337,504
shares as of February 17, 2009 (this figure does not include
shares issuable upon the exercise of the warrants or any outstanding
options for the purchase of our common stock).
|
Registration
rights
|
Pursuant
to a registration rights agreement that we entered into with the selling
stockholders in connection with the private placement of the common stock
and warrants, we have filed with the SEC a registration statement, of
which this prospectus is a part. We are obligated under the registration
rights agreement to keep the registration statement effective until the
earlier of (1) the date on which the selling stockholders shall have sold
all of the shares of common stock registered pursuant to the registration
statement and (2) the first date as of which all of the shares of common
stock registered pursuant to the registration statement may be sold
without restriction pursuant to Rule 144 under the Securities Act (the
“Registration Period”). We will be required to pay liquidated
damages to the holders of the common stock if we fail to comply with our
obligations to register the common stock within the specified time period
and if we fail to keep this registration statement effective for the
duration of the Registration Period, other than during grace periods that
are permitted by the registration rights agreement. See
“Description of Common Stock to be Registered —Registration
Rights”.
|
No
proceeds
|
We
will not receive any proceeds from the sale by any selling stockholder of
the common stock. Upon any exercise of the warrants by payment
of cash, however, we will receive the exercise price of the warrants,
which will be used for general corporate purposes.
|
Trading
|
Our
common stock is listed on The NASDAQ Global Market under the symbol
“EMKR”.
|
Risk
factors
|
See
“Risk Factors” beginning on page 5 of this prospectus and other
information contained, or incorporated by reference, in this prospectus
for a discussion of factors you should consider carefully before deciding
to invest in the common stock.
|
RISK
FACTORS
We
have a history of incurring significant net losses and our future profitability
is not assured.
We
commenced operations in 1984 and as of December 31, 2008, we had an accumulated
deficit of $478.2 million. We incurred a net loss of $53.4 million for the
three months ended December 31, 2008, which included a $33.8 million non-cash
impairment charge related to goodwill and intangible assets. Our
operating results for future periods are subject to numerous uncertainties and
we cannot assure you that we will not continue to experience net losses for the
foreseeable future. Although our revenue has grown in recent years,
we may be unable to sustain such growth rates in light of potential changes in
market or economic conditions. If we are not able to increase revenue
and reduce our costs, we may not be able to achieve profitability.
We
may be unable to obtain additional financing, increase our revenue and lower our
costs of operations, which could adversely affect our ability to continue as a
going concern.
Our
ability to continue as a going concern is dependent upon our ability to obtain
financing and achieve levels of revenue and cost reductions that are adequate to
support our capital and operating requirements. No assurance can be
given that we will be able to obtain additional financing on terms that are
satisfactory to us or increase our revenue and reduce our operating costs to
levels that will sufficiently support our capital and operating
requirements. We may be unable to obtain adequate financing, increase
our revenue and/or lower our costs. Our recurring losses raise
substantial doubt about our ability to continue as a going
concern. Our auditors have included in their report an explanatory
paragraph regarding the recurring losses that raise substantial doubt about our
ability to continue as a going concern.
We
may not be able to increase or sustain our recent revenue growth rate, and we
may not be able to manage our future revenue growth effectively.
Over the
last five years, the Company’s compound annual revenue growth rate exceeded
32%. We may not be able to increase or sustain this revenue growth
rate. In February 2008, the Company acquired assets of the telecom
portion of Intel Corporation’s Optical Platform Division (“OPD”). In
April 2008, the Company acquired the enterprise and storage assets of Intel
Corporation’s OPD business, as well as Intel’s Connects Cables
business. These acquisitions totaled approximately $41.6 million
or approximately 17% of total consolidated revenue in fiscal 2008. We
may not experience similar growth of our total consolidated revenue or even
similar revenue growth within our Fiber Optics segment in future periods.
Accordingly, investors should not rely on the results of any prior quarterly or
annual period as an indication of our future operating performance.
Our
future revenue is inherently unpredictable. As a result, our
operating results are likely to fluctuate from period to period, and we may fail
to meet the expectations of our analysts and/or investors, which may cause
volatility in our stock price and may cause our stock price to
decline.
Our
quarterly and annual operating results have fluctuated substantially in the past
and are likely to fluctuate significantly in the future due to a variety of
factors, some of which are outside of our control. Factors that could
cause our quarterly or annual operating results to fluctuate
include:
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•
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market
acceptance of our products;
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•
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market
demand for the products and services provided by our
customers;
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•
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disruptions
or delays in our manufacturing processes or in our supply of raw materials
or product components;
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•
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changes
in the timing and size of orders by our
customers;
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•
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cancellations
and postponements of previously placed
orders;
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•
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reductions
in prices for our products or increases in the costs of our raw materials;
and
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•
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the
introduction of new products and manufacturing
processes.
|
In
addition, the limited lead times with which several of our customers order our
products restrict our ability to forecast revenue. We may also
experience a delay in generating or recognizing revenue for a number of
reasons. For example, orders at the beginning of each quarter
typically represent a small percentage of expected revenue for that quarter and
are generally cancelable at any time. We depend on obtaining orders during each
quarter for shipment in that quarter to achieve our revenue objectives. Failure
to ship these products by the end of a quarter may adversely affect our results
of operations.
Our
credit facility agreement with Bank of America, N.A., contains customary
covenants and defaults, including among others, limitations on dividends,
incurrence of indebtedness and liens and mergers and acquisitions and may
restrict our operating flexibility.
As a
result of the foregoing, we believe that period-to-period comparisons of our
results of operations should not be relied upon as indications of future
performance. In addition, our results of operations in one or more
future quarters may fail to meet the expectations of analysts or investors,
which would likely result in a decline in the trading price of our common
stock.
Our
ability to achieve operational and material cost reductions and to realize
production efficiencies for our operations is critical to our ability to achieve
long-term profitability.
We have
implemented a number of operational and material cost reductions and
productivity improvement initiatives, which are intended to reduce our expense
structure at both the cost of goods sold and the operating expense levels. Cost
reduction initiatives often involve facility consolidation and re-design of our
products, which requires our customers to accept and qualify the new designs,
potentially creating a competitive disadvantage for our
products. These initiatives can be time-consuming and disruptive to
our operations and costly in the short-term. Successfully
implementing these and other cost-reduction initiatives throughout our
operations is critical to our future competitiveness and ability to achieve
long-term profitability. However, there can be no assurance that these
initiatives will be successful in creating profit margins sufficient to sustain
our current operating structure and business.
Financial
markets worldwide are currently in the midst of an unprecedented crisis which
may have a materially adverse impact on the Company, our customers and our
suppliers.
Financial
markets are in an unprecedented financial crisis worldwide, affecting both debt
and equity markets, which has substantially limited the amount of financing
available to all companies, including companies with substantially greater
resources, better credit ratings and more successful operating histories than
us. It is impossible to predict how long this crisis will last or how
it will be resolved. It may, however, have a materially adverse
affect on the Company for a number of reasons, such as:
·
|
The
Company’s historic lack of profitability has caused it to consume cash,
through acquisitions, operations and as a result of the research and
development and capital expenditures necessary to expand the market which
the Company serves (particularly the terrestrial solar market), as
discussed in more detail below. The Company may be unable to
acquire the cash necessary to finance these activities from either the
debt or the equity markets and as a result the Company may be unable to
continue operations.
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·
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The
Company’s fiber optics products are sold principally to large publicly
held companies which are also dependent on public debt and equity
markets. Our customers may be unable to obtain the financing
necessary to continue their own
operations.
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·
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The
market for the products of the Company’s fiber optics customers, into
which the Company’s fiber optics products are incorporated, is dependent
on capital spending from telecommunications and data communications
companies, which may also be adversely affected by the lack of
financing.
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·
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The
market for the Company’s satellite solar cells may also be adversely
affected by the worldwide financial crisis, because the market for
commercial satellites depends on capital spending by telecommunications
companies and the market for military satellites depends on resources
allocated for military intelligence spending, which may be
restricted. The market for the Company’s terrestrial solar
products is dependent on the availability of project financing for
photovoltaic projects, which may no longer be available, and is also
largely dependent on government support of various types, such as
investment tax credits, which may no longer be available as governments
allocate scarce resources to deal with the financial
crisis.
|
·
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A
reduction in the Company’s sales will adversely affect the Company’s
ability to draw on its existing line of credit with Bank of America
because that line of credit is largely dependent on the level of the
Company’s accounts receivable.
|
In
addition, the worldwide financial crisis may adversely affect certain assets
held by the Company. Historically, the Company has invested in
securities with an auction reset feature (“auction rate
securities”). Beginning in February 2008, the auction rate securities
market experienced a significant increase in the number of failed auctions,
resulting from a lack of liquidity, which occurs when sell orders exceed buy
orders, and does not necessarily signify a default by the issuer. In February
2008, the auction market failed for the Company’s auction rate securities, which
meant the Company was unable to sell its investments in auction rate
securities. At September 30, 2008, the Company had
approximately $3.1 million in auction rate securities. For failed
auctions, we continue to earn interest on these investments at the maximum
contractual rate as the issuer is obligated under contractual terms to pay
penalty rates should auctions fail. The underlying assets for $1.7 million of
this total are currently AAA rated, the highest rating by a rating
agency. The remaining $1.4 million of investments are securities
whose underlying assets are primarily student loans which are substantially
backed by the U.S. Government. In October 2008, the Company received agreements
from its investment brokers announcing settlement of the auction rate securities
at 100% par value, of which $1.7 million was settled in November 2008 and $1.4
million is expected to be settled by June 2010. The Company
classified $1.7 million as a current asset and the remaining $1.4 million as a
long-term asset based on the expected settlement dates. Because we
expect to receive full value for all securities, we have not recorded any
impairment on these investments as of December 31, 2008. If we are
unable to liquidate and settle these auction rate securities on favorable terms
and conditions, such liquidity limitations could have a material adverse effect
on the Company's business, financial condition, results of operations, and cash
flow.
The
market price for our common stock has experienced significant price and volume
volatility and is likely to continue to experience significant volatility in the
future. This volatility may impair our ability to finance strategic
transactions with our stock and otherwise harm our business.
The
closing price of our common stock fluctuated from a high of $15.30 per share to
a low of $4.46 per share during the year ended September 30, 2008. As
of February 17, 2009 our stock price was $0.80. Our stock price is
likely to experience significant volatility in the future as a result of
numerous factors outside our control. Significant declines in our
stock price may interfere with our ability to raise additional funds through
equity financing or to finance strategic transactions with our
stock. We have historically used equity incentive compensation as
part of our overall compensation arrangements. The effectiveness of
equity incentive compensation in retaining key employees may be adversely
impacted by volatility in our stock price. In addition, there may be
increased risk of securities litigation following periods of fluctuations in our
stock price. These and other consequences of volatility in our stock
price could have the effect of diverting management’s attention and could
materially harm our business, and could be exacerbated by the current worldwide
financial crisis.
We
have significant liquidity and capital requirements and may require additional
capital in the future. If we are unable to obtain the additional
capital necessary to meet our requirements, our business may be adversely
affected.
Historically,
the Company has consumed cash from operations. We had negative cash
flow from operations of approximately $21.1 million for the three months ended
December 31, 2008. We have managed our liquidity situation through a
series of cost reduction initiatives, capital markets transactions and the sale
of assets. We had approximately $75.4 million in working capital as
of December 31, 2008. The global credit market crisis has had a
dramatic effect on the markets we serve and has created a substantially more
difficult business environment for us. We do not believe it is likely that these
adverse economic conditions, and their effect on the technology industry, will
improve significantly in the near term, notwithstanding the unprecedented
intervention by the U.S. and other governments in the global banking and
financial systems.
If our
cash on hand is not sufficient to fund the cash used by our operating activities
and meet our other liquidity requirements, we will seek to obtain additional
equity or debt financing or dispose of assets to provide additional working
capital in the future.
Due to
the unpredictable nature of the capital markets, particularly in the technology
sector, we cannot assure you that we will be able to raise additional capital if
and when it is required, especially if we experience disappointing operating
results. If adequate funds are not available or not available on
acceptable terms, our ability to continue to fund expansion, develop and enhance
products and services, or otherwise respond to competitive pressures may be
severely limited. Such a limitation could have a material adverse
effect on our business, financial condition, results of operations and cash
flow.
The
market for our terrestrial solar power products for utility-scale applications
may take time to develop, is rapidly changing and extremely price-sensitive,
involves issues with which the Company has little experience, and is currently
dependent on the policy decisions of governments both inside and outside the
United States.
We have
invested and intend to continue to invest significant resources in the
adaptation of our high-efficiency compound semiconductor-based GaAs solar cell
products for terrestrial applications, including the sale of both concentrator
photovoltaics (“CPV”) components and systems. We generated our first
revenue from the sale of CPV systems in 2008, which involved the design,
manufacture and installation of large and complex structures intended for
outdoor operation, with which the Company has had no previous
experience.
Factors
such as changes in energy prices or the development of new and efficient
alternative energy technologies could also limit growth in, or reduce the market
for, our terrestrial solar power products. In addition, we
experienced difficulties in applying our satellite-based solar products to
terrestrial applications. We may experience further difficulties in
the future in competing with new and emerging terrestrial solar power products,
which we have determined to be extremely price sensitive and rapidly changing as
well as obtaining financing for utility-scale projects utilizing our technology,
particularly in view of the current worldwide financial crisis.
We have
determined that the terrestrial solar power business will require substantial
additional funding for the hiring of employees, research and development and
investment in capital equipment in order to successfully
compete. In addition, historically much of the market for CPV
systems has been outside the U.S. This has involved partnering with
non-U.S. entities, which (because terrestrial solar power generation is a
relatively new industry) may have little experience in the field and which may
be new companies. Participation in non-U.S. markets will involve
evaluation and compliance with non-U.S. laws, regulations, and government
electric supply contracts which the Company has limited experience in. The rates
available under non-U.S. government electric supply contracts are subject to
policy decisions of these governments, which can change in unpredictable
ways. Because of a reduction in rates offered under
non-U.S. electric supply contracts, we believe that most of our future business
in the near term will involve projects located within the United States, which
has a substantially less developed program for encouraging the use of solar
power and where the economic competitiveness of our products will be even more
significant. There can be no assurance that our bids on solar power
installations will be accepted, that we will win any of these bids, that our CPV
systems will be qualified for these projects, or that governments will continue
to offer electric supply contracts and other incentives that will make our
products economically viable. If our terrestrial solar power cell
products are not cost competitive or accepted by the market, our business,
financial condition and results of operations may be materially and adversely
affected.
Successful
deployment of our solar power systems may require us to assume roles with
respect to solar power projects with which we have limited or no experience
(such as acting as general contractor) and which may expose us to certain
financial risks (such as cost overruns and performance guaranties) which we ay
not have the expertise to properly evaluate or manage. In addition,
since we cannot test our CPV components and solar power systems for the duration
of our standard 20-year warranty period, we may be subject to unexpected
warranty expense; if we are subject to warranty and product liability claims,
such claims could adversely affect our business, financial condition, results of
operations, and cash flow.
The
competitive environment in which our CPV solar power systems business operates
may require us to arrange financing for our customer’s projects and/or undertake
post-sale customer obligations. If we are unable to arrange adequate
financing or if our post-sale customer obligations are more costly than
expected, our revenue and financial results could be materially and adversely
affected.
We may
arrange third-party financing for our end customer’s solar
projects. Additionally, we may be required as a condition of
financing or at the request of our end customer to undertake certain post-sale
obligations such as:
• System
output performance guaranties;
• System
maintenance;
• Liquidated
damage payments or customer termination rights if the system is not commissioned
within specified timeframes;
• Guaranties
of certain minimum residual value of the system at specified future dates;
and
• System
termination clauses whereby we could be required to buy-back a customer’s system
at fair value on specified future dates.
Such financing
arrangements and post-sale obligations involve complex accounting
analyses and judgments regarding the timing of revenue and expense
recognition and in certain situations these factors may require us to defer
revenue recognition until projects are completed, which could adversely affect
revenue in a particular period.
Due to
the recent tightening of credit markets and concerns regarding the availability
of credit, our customers may be delayed in obtaining, or may not be able to
obtain, necessary financing for their purchases of solar power systems. If we
are unable to arrange adequate financing or if our post-sale customer
obligations are more costly than expected, our revenue and financial results
could be materially and adversely affected.
Our
Photovoltaics segment recognizes certain contract revenue on a
“percentage-of-completion” basis and upon the achievement of contractual
milestones and any delay or cancellation of a project could adversely affect our
business.
Our
Photovoltaics segment recognizes certain revenue on a “percentage-of-completion”
basis and, as a result, revenue from this segment is driven by the performance
of our contractual obligations. The percentage-of-completion method of
accounting for revenue recognition is inherently subjective because it relies on
management estimates of total project cost as a basis for recognizing revenue
and profit. Accordingly, revenue and profit we have recognized under the
percentage-of-completion method are potentially subject to adjustments in
subsequent periods based on refinements in estimated costs of project completion
that could materially impact our future revenue and profit.
As with
any project-related business, there is the potential for delays within any
particular customer project. Variation of project timelines and estimates may
impact our ability to recognize revenue in a particular period. Moreover,
incurring penalties involving the return of the contract price to the customer
for failure to timely install one project could negatively impact our ability to
continue to recognize revenue on a “percentage-of-completion” basis generally
for other projects. In addition, certain customer contracts may include payment
milestones due at specified points during a project. Because our Photovoltaics
segment usually must invest substantial time and incur significant expense in
advance of achieving milestones and the receipt of payment, failure to achieve
such milestones could adversely affect our business, financial condition,
results of operations, and cash flows.
As
supply of polysilicon increases, the corresponding increase in the global supply
of silicon-based solar cells and panels may cause substantial downward pressure
on the prices of our terrestrial solar power products, resulting in lower
revenues.
As
additional polysilicon becomes available, we expect solar panel production
globally to increase. Decreases in polysilicon pricing and increases in
silicon-based solar panel production could each result in substantial downward
pressure on the price of solar cells and panels, including our terrestrial solar
power products. Such price reductions could have a negative impact on our
revenue, and our business, financial condition results of operations and cash
flows may be materially and adversely affected.
We
are substantially dependent on a small number of customers and the loss of any
one of these customers could adversely affect our business, financial condition
and results of operations.
In fiscal
2008, 2007 and 2006, our top five customers accounted for 46%, 49%, and 39%,
respectively of our total annual consolidated revenue. There can be
no assurance that we will continue to achieve historical levels of sales of our
products to our largest customers. Even though our customer base is
expected to increase and our revenue streams to diversify, a substantial portion
of our net revenues could continue to depend on sales to a limited number of
customers. Our agreements with these customers may be cancelled if we fail
to meet certain product specifications or materially breach the agreement, and
our customers may seek to renegotiate the terms of current agreements or
renewals. The loss of or a reduction in sales to one or more of our larger
customers could have a material adverse affect on our business, financial
condition and results of operations.
Long-term,
firm commitment supply agreements could result in insufficient or excess
inventory or place us at a competitive disadvantage.
We
manufacture our products utilizing materials, components, and services provided
by third parties. We seek to obtain a lower cost of inventory by negotiating
multi-year, binding contractual commitments directly with our suppliers. Under
such agreements, we may be required to purchase a specified quantity of products
or use a certain amount of services, which is often over a period of twelve
months or more. We also may be required to make substantial prepayments or issue
secured letters of credit to these suppliers against future deliveries. These
contractual commitments, or any other “take or pay” agreement we enter into,
allows the supplier to invoice us for the full purchase price of product or
services that we are under contract for, whether or not we actually order the
required volume or services. If for any reason we fail to order the required
volume or services, the resulting monetary damages could have a material adverse
effect on our business, financial condition, results of operations, and cash
flows.
We do not
obtain contracts or commitments from customers for all of our products
manufactured with materials purchased under such firm commitment contracts.
Instead, we rely on our long-term internal forecasts to determine the timing of
our production schedules and the volume and mix of products to be manufactured.
The level and timing of orders placed by customers may vary for many reasons. As
a result, at any particular time, we may have insufficient or excess inventory,
which could render us unable to fulfill customer orders or increase our cost of
production. This would place us at a competitive disadvantage to our
competitors, and could have a material adverse effect on our business, financial
condition, results of operations, and cash flows.
Long-term
contractual commitments also expose us to specific counter-party risk, which can
be magnified when dealing with suppliers without a long, stable production and
financial history. For example, if one or more of our contractual counterparties
is unable or unwilling to provide us with the contracted amount of product, we
could be required to attempt to obtain product in the open market, which could
be unavailable at that time, or only available at prices in excess of our
contracted prices. In addition, in the event any such supplier experiences
financial difficulties, it may be difficult or impossible, or may require
substantial time and expense, for us to recover any or all of our prepayments.
Any of the foregoing could have a material adverse effect on our business,
financial condition, results of operations, and cash flows.
Our
operating results could be harmed if we lose access to sole or limited sources
of materials, components or services.
We
currently obtain some materials, components and services used in our products
from limited or single sources. We generally do not carry significant
inventories of any raw materials. Because we often do not account for a
significant part of our suppliers’ businesses, we may not have access to
sufficient capacity from these suppliers in periods of high demand. In addition,
since we generally do not have guaranteed supply arrangements with our
suppliers, we risk serious disruption to our operations if an important supplier
terminates product lines, changes business focus, or goes out of business.
Because some of these suppliers are located overseas, we may be faced with
higher costs of purchasing these materials if the U.S. dollar weakens against
other currencies. If we were to change any of our limited or sole source
suppliers, we would be required to re-qualify each new supplier.
Re-qualification could prevent or delay product shipments that could materially
adversely affect our results of operations. In addition, our reliance on these
suppliers may materially adversely affect our production if the components vary
in quality or quantity. If we are unable to obtain timely deliveries of
sufficient components of acceptable quality or if the prices of components for
which we do not have alternative sources increase, our business, financial
condition and results of operations could be materially adversely
affected.
If
our contract manufacturers fail to deliver quality products at reasonable prices
and on a timely basis, our business, financial condition and results of
operations could be materially adversely affected.
We are
increasing our use of contract manufacturers located outside of the U.S. as a
less-expensive alternative to performing our own manufacturing of certain
products. Contract manufacturers in Asia currently manufacture a
significant portion of our high-volume fiber optics products. We
supply inventory to our contract manufacturers and we bear the risk of loss,
theft or damage to our inventory while it is held in their
facilities.
If these
contract manufacturers do not fulfill their obligations to us, or if we do not
properly manage these relationships and the transition of production to these
contract manufacturers, our existing customer relationships may
suffer. In addition, by undertaking these activities, we run the risk
that the reputation and competitiveness of our products and services may
deteriorate as a result of the reduction of our ability to oversee and control
quality and delivery schedules.
The use
of contract manufacturers located outside of the U.S. also subjects us to the
following additional risks that could significantly impair our ability to source
our contract manufacturing requirements internationally, including:
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unexpected
changes in regulatory requirements;
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legal
uncertainties regarding liability, tariffs and other trade
barriers;
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inadequate
protection of intellectual property in some
countries;
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greater
incidence of shipping delays;
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greater
difficulty in hiring talent needed to oversee manufacturing
operations;
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potential
political and economic instability;
and
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potential
adverse actions by the incoming Obama Administration pursuant to its
stated intention to reduce the loss of U.S.
jobs.
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Prior to
our customers accepting products manufactured at our contract manufacturers,
they must requalify the product and manufacturing processes. The qualification
process can be lengthy and expensive, with no guarantee that any particular
product qualification process will lead to profitable product sales. The
qualification process determines whether the product manufactured at our
contract manufacturer achieves our customers’ quality, performance and
reliability standards. Our expectations as to the time periods required to
qualify a product line and ship products in volumes to customers may be
erroneous. Delays in qualification can impair the expected timing of the
transfer of a product line to our contract manufacturer and may impair the
expected amount of sales of the affected products. We may, in fact, experience
delays in obtaining qualification of products produced by our contract
manufacturers and, therefore, our operating results and customer relationships
could be materially adversely affected.
If
we do not keep pace with rapid technological change, our products may not be
competitive.
We
compete in markets that are characterized by rapid technological change,
frequent new product introductions, changes in customer requirements, evolving
industry standards, continuous improvement in products and the use of our
existing products in new applications. We may not be able to develop
the underlying core technologies necessary to create new products and
enhancements at the same rate as or faster than our competitors, or to license
the technology from third parties that is necessary for our
products.
Product
development delays may result from numerous factors, including:
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changing
product specifications and customer
requirements;
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unanticipated
engineering complexities;
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expense
reduction measures we have implemented and others we may
implement;
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difficulties
in hiring and retaining necessary technical personnel;
and
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difficulties
in allocating engineering resources and overcoming resource
limitations.
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We cannot
assure you that we will be able to identify, develop, manufacture, market or
support new or enhanced products successfully, if at all, or on a timely, cost
effective or repeatable basis. Our future performance will depend on our
successful development and introduction of, as well as market acceptance of, new
and enhanced products that address market changes as well as current and
potential customer requirements and our ability to respond effectively to
product announcements by competitors, technological changes or emerging industry
standards. Because it is generally not possible to predict the amount of time
required and the costs involved in achieving certain research, development and
engineering objectives, actual development costs may exceed budgeted amounts and
estimated product development schedules may be extended. If we incur budget
overruns or delays in our research and development efforts, our business,
financial condition and results of operations may be materially adversely
affected.
The
competitive and rapidly evolving nature of our industry has in the past resulted
and is likely in the future to result in reductions in our product prices and
periods of reduced demand for our products.
We face
substantial competition in each of our reporting segments from a number of
companies, many of which have greater financial, marketing, manufacturing and
technical resources than us. Larger-sized competitors often spend more on
research and development, which could give those competitors an advantage in
meeting customer demands and introducing technologically innovative products
before we do. We expect that existing and new competitors will improve the
design of their existing products and will introduce new products with enhanced
performance characteristics.
The
introduction of new products and more efficient production of existing products
by our competitors has resulted and is likely in the future to result in price
reductions and increases in expenses and reduced demand for our
products. In addition, some of our competitors may be willing to
provide their products at lower prices, accept a lower profit margin or expend
more capital in order to obtain or retain business. Competitive
pressures have required us to reduce the prices of some of our products. These
competitive forces could diminish our market share and gross margins, resulting
in a material adverse affect on our business, financial condition and results of
operations.
New
competitors may also enter our markets, including some of our current and
potential customers who may attempt to integrate their operations by producing
their own components and subsystems or acquiring one of our competitors, thereby
reducing demand for our products. In addition, rapid product
development cycles, increasing price competition due to maturation of
technologies, the emergence of new competitors in Asia with lower cost
structures and industry consolidation resulting in competitors with greater
financial, marketing and technical resources could result in lower prices or
reduced demand for our products.
Expected
and actual introductions of new and enhanced products may cause our customers to
defer or cancel orders for existing products and may cause our products to
become obsolete. A slowdown in demand for existing products ahead of a new
product introduction could result in a write-down in the value of inventory on
hand related to existing products. We have in the past experienced a slowdown in
demand for existing products and delays in new product development and such
delays may occur in the future. To the extent customers defer or cancel orders
for existing products due to a slowdown in demand or in anticipation of a new
product release or if there is any delay in development or introduction of our
new products or enhancements of our products, our business, financial condition
and results of operations could be materially adversely affected.
Our
products are difficult to manufacture. Our production could be
disrupted and our results will suffer if our production yields are low as a
result of manufacturing difficulties.
We
manufacture many of our wafers and devices in our own production facilities.
Difficulties in the production process, such as contamination, raw material
quality issues, human error or equipment failure, can cause a substantial
percentage of wafers and devices to be nonfunctional. Lower-than-expected
production yields may delay shipments or result in unexpected levels of warranty
claims, either of which can materially adversely affect our results of
operations. We have experienced difficulties in achieving planned yields in the
past, particularly in pre-production and upon initial commencement of full
production volumes, which have adversely affected our gross margins. Because the
majority of our manufacturing costs are fixed, achieving planned production
yields is critical to our results of operations. Because we manufacture many of
our products in a single facility, we have greater risk of interruption in
manufacturing resulting from fire, natural disaster, equipment failures, or
similar events than we would if we had back-up facilities available for
manufacturing these products. We could also incur significant costs
to repair and/or replace products that are defective and in some cases costly
product redesigns and/or rework may be required to correct a
defect. Additionally, any defect could adversely affect our
reputation and result in the loss of future orders.
Some of
the capital equipment used in the manufacture of our products have been
developed and made specifically for us, is not readily available from multiple
vendors and would be difficult to repair or replace if it were to become damaged
or stop working. If any of these suppliers were to experience financial
difficulties or go out of business, or if there were any damage to or a
breakdown of our manufacturing equipment at a time when we are manufacturing
commercial quantities of our products, our business, financial condition and
results of operations could be materially adversely affected.
We
face lengthy sales and qualifications cycles for our new products and, in many
cases, must invest a substantial amount of time and funds before we receive
orders.
Most of
our products are tested by current and potential customers to determine whether
they meet customer or industry specifications. The length of the qualification
process, which can span a year or more, varies substantially by product and
customer, and thus can cause our results of operations to be unpredictable.
During a given qualification period, we invest significant resources and
allocate substantial production capacity to manufacture these new products prior
to any commitment to purchase by customers. In addition, it is difficult to
obtain new customers during the qualification period as customers are reluctant
to expend the resources necessary to qualify a new supplier if they have one or
more existing qualified sources. If we are unable to meet applicable
specifications or do not receive sufficient orders to profitably use the
allocated production capacity, our business, financial condition and results of
operations could be materially adversely affected.
Our
historical and future budgets for operating expenses, capital expenditures,
operating leases and service contracts are based upon our assumptions as to the
future market acceptance of our products. Because of the lengthy lead times
required for product development and the changes in technology that typically
occur while a product is being developed, it is difficult to accurately estimate
customer demand for any given product. If our products do not achieve an
adequate level of customer demand, our business, financial condition and results
of operations could be materially adversely affected.
Shifts
in industry-wide demands and inventories could result in significant inventory
write-downs.
The life
cycles of some of our products depend heavily upon the life cycles of the end
products into which our products are designed. Products with short life cycles
require us to manage production and inventory levels closely. We evaluate our
ending inventories on a quarterly basis for excess quantities, impairment of
value and obsolescence. This evaluation includes analysis of sales levels by
product and projections of future demand based upon input received from our
customers, sales team and management estimates. If inventories on hand are in
excess of demand, or if they are greater than 12-months old, appropriate
reserves may be recorded. In addition, we write off inventories that are
considered obsolete based upon changes in customer demand, manufacturing process
changes that result in existing inventory obsolescence or new product
introductions, which eliminate demand for existing products. Remaining inventory
balances are adjusted to approximate the lower of our manufacturing cost or
market value.
If future
demand or market conditions are less favorable than our estimates, inventory
write-downs may be required. We cannot assure investors that obsolete or excess
inventories, which may result from unanticipated changes in the estimated total
demand for our products and/or the estimated life cycles of the end products
into which our products are designed, will not affect us beyond the inventory
charges that we have already taken.
The
types of sales contracts which we use in the markets which we serve subject us
to unique risks in each of those markets.
In our
Fiber Optics reporting segment, we generally do not have long-term contracts
with our customers and we typically sell our products pursuant to purchase
orders with short lead times. As a result, our customers could stop
purchasing our products at any time and we must fulfill orders in a timely
manner to keep our customers. Risks associated with the absence of
long-term contracts with our customers include the following:
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our
customers can stop purchasing our products at any time without
penalty;
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our
customers may purchase products from our competitors;
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customers are not required to make minimum purchases.
These
risks are increased by the fact that our customers in this market are large,
sophisticated companies which have considerable purchasing power and control
over their suppliers. In the Fiber Optics market, we generally sell our products
pursuant to individual purchase orders, which often have extremely short lead
times. If we are unable to fulfill these orders in a timely manner,
it is likely that we will lose sales and customers. In addition, we
sell some of our products to the U.S. Government and governmental
entities. These contracts are generally subject to termination for
convenience provisions and may be cancelled at any time.
Cancellations
or rescheduling of customer orders could result in the delay or loss of
anticipated sales without allowing us sufficient time to reduce, or delay the
incurrence of, our corresponding inventory and operating expenses. In addition,
changes in forecasts or the timing of orders from these or other customers
expose us to the risks of inventory shortages or excess inventory.
In
contrast, in our Photovoltaics reporting segment, we generally enter into
long-term firm fixed-price contracts, which could subject us to losses if we
have cost overruns. While firm fixed-price
contracts allow us to benefit from cost savings, they also expose us to the risk
of cost overruns. If the initial estimates we used to determine the contract
price and the cost to perform the work prove to be incorrect, we could incur
losses. In addition, some of our contracts have specific provisions relating to
cost, schedule, and performance. If we fail to meet the terms specified in those
contracts, then our cost to perform the work could increase or our price could
be reduced, which would adversely affect our financial condition. These programs
have risk for reach-forward losses if our estimated costs exceed our estimated
price.
Fixed-price
development work inherently has more uncertainty than production contracts and,
therefore, more variability in estimates of the cost to complete the work. Many
of these development programs have very complex designs. As technical or quality
issues arise, we may experience schedule delays and cost impacts, which could
increase our estimated cost to perform the work or reduce our estimated price,
either of which could adversely affect our financial condition. Some fixed-price
development contracts include initial production units in their scope of work.
Successful performance of these contracts depends on our ability to meet
production specifications and delivery rates. If we are unable to
perform and deliver to contract requirements, our contract price could be
reduced through the incorporation of liquidated damages, termination of the
contract for default, or other financially significant exposure. Management uses
its best judgment to estimate the cost to perform the work and the price we will
eventually be paid on fixed-price development programs. While we believe the
cost and price estimates incorporated in the financial statements are
appropriate, future events could result in either favorable or unfavorable
adjustments to those estimates.
The risk
of fixed price contracts in the photovoltaics market is increased by the new and
rapidly changing nature of the terrestrial photovoltaics market and the
Company’s lack of experience in that market.
We
are a party to several U.S. Government contracts, which are subject to unique
risks.
In 2008,
5% of our revenue was derived from U.S. Government contracts. We
intend to continue our policy of selectively pursuing contract research, product
development and market development programs funded by various agencies of the
U.S. federal and state governments to complement and enhance our own resources.
Depending on the type of contract, funding from government grants is either
recorded as revenue or as an offset to our research and development
expense.
In
addition to normal business risks, our contracts with the U.S. Government are
subject to unique risks, some of which are beyond our control. We
have had government contracts modified, curtailed or terminated in the past and
we expect this will continue to happen from time to time.
The funding of U.S. Government
programs is subject to Congressional appropriations. Many of the U.S.
Government programs in which we participate may extend for several years;
however, these programs are normally funded annually. Long-term government
contracts and related orders are subject to cancellation if appropriations for
subsequent performance periods are not made. The termination of funding for a
U.S. Government program would result in a loss of anticipated future revenue
attributable to that program, which could have a material adverse effect on our
operations.
The U.S. Government may modify,
curtail, or terminate our contracts. The U.S. Government may modify,
curtail, or terminate its contracts and subcontracts without prior notice at its
convenience upon payment for work done and commitments made at the time of
termination. A reduction or discontinuance of these programs or of
our participation in these programs would materially increase our research and
development expenses, which would adversely affect our profitability and could
impair our ability to develop our solar power products and
services. Modification, curtailment or termination of our major programs or
contracts could have a material adverse effect on our results of operations and
financial condition.
Our contract costs are subject to
audits by U.S. Government agencies. U.S. Government representatives may
audit the costs we incur on our U.S. Government contracts, including allocated
indirect costs. Such audits could result in adjustments to our contract costs.
Any costs found to be improperly allocated to a specific contract will not be
reimbursed, and such costs already reimbursed must be refunded. We have recorded
contract revenue based upon costs we expect to realize upon final audit.
However, we do not know the outcome of any future audits and adjustments and we
may be required to reduce our revenue or profits upon completion and final
negotiation of audits. If any audit uncovers improper or illegal activities, we
may be subject to civil and criminal penalties and administrative sanctions,
including termination of contracts, forfeiture of profits, suspension of
payments, fines and suspension or prohibition from doing business with the U.S.
Government. We have been audited in the past by the U.S. Government
and expect that we will be in the future.
Our business is subject to potential
U.S. Government review. We are sometimes subject to certain U.S.
Government reviews of our business practices due to our participation in
government contracts. Any such inquiry or investigation could potentially result
in a material adverse effect on our results of operations and financial
condition.
Our U.S. Government business is also
subject to specific procurement regulations and other requirements. These
requirements, although customary in U.S. Government contracts, increase our
performance and compliance costs. These costs might increase in the future,
reducing our margins, which could have a negative effect on our financial
condition. Failure to comply with these regulations and requirements could lead
to suspension or debarment, for cause, from U.S. Government contracting or
subcontracting for a period of time and could have an adverse effect on our
reputation and ability to secure future U.S. Government
contracts.
We
have significant international sales, which expose us to additional risks and
uncertainties.
Sales to
customers located outside the U.S. accounted for approximately 44% of our
consolidated revenue in fiscal 2008, 27% of our revenue in fiscal 2007 and 24%
of our revenue in fiscal 2006. Sales to customers in Asia represent the majority
of our international sales. We believe that international sales will continue to
account for a significant percentage of our revenue as we seek international
expansion opportunities. Because of this, the following international commercial
risks may materially adversely affect our revenue:
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political
and economic instability or changes in U.S. Government policy with respect
to these foreign countries may inhibit export of our devices and limit
potential customers’ access to U.S. dollars in a country or region in
which those potential customers are
located;
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we
may experience difficulties in the timeliness of collection of foreign
accounts receivable and be forced to write off these
receivables;
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tariffs
and other barriers may make our devices less cost
competitive;
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the
laws of certain foreign countries may not adequately protect our trade
secrets and intellectual property or may be burdensome to comply
with;
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potentially
adverse tax consequences to our customers may damage our cost
competitiveness;
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currency
fluctuations, which may make our products less cost competitive, affecting
overseas demand for our products or otherwise adversely affect our
business; and
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language
and other cultural barriers may require us to expend additional resources
competing in foreign markets or hinder our ability to effectively
compete.
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In
addition, we may be exposed to additional legal risks under the laws of both the
countries in which we operate and in the United States, including the Foreign
Corrupt Practices Act.
We
are increasing operations in China, which exposes us to risks inherent in doing
business in China.
In May
2007, EMCORE Hong Kong, Ltd., a wholly owned subsidiary of EMCORE Corporation,
announced the opening of a new manufacturing facility in Langfang, China. Our
new company, Langfang EMCORE Optoelectronics Co. Ltd., is located approximately
20 miles southeast of Beijing and currently occupies a space of 44,000 square
feet with a Class-10,000 clean room for optoelectronic device
packaging. Another 40,000 square feet is available for future
expansion. We have begun the transfer of our most cost sensitive
optoelectronic devices to this facility. This facility, along with a
strategic alignment with our existing contract-manufacturing partners, should
enable us to improve our cost structure and gross margins across product lines.
We expect to develop and provide improved service to our global customers by
having a local presence in Asia. As we continue to consolidate
our manufacturing operations, we will incur additional costs to transfer product
lines to our China facility, including costs of qualification testing with our
customers, which could have a material adverse impact on our operating results
and financial condition.
Our
China-based activities are subject to greater political, legal and economic
risks than those faced by our other operations. In particular, the
political, legal and economic climate in China (both at national and regional
levels) is extremely fluid and unpredictable. Our ability to operate in China
may be adversely affected by changes in Chinese laws and regulations, such as
those relating to taxation, import and export tariffs, environmental
regulations, land use rights, intellectual property and other matters, which
laws and regulations remain highly underdeveloped and subject to change, with
little or no prior notice, for political or other reasons. Moreover, the
enforceability of applicable existing Chinese laws and regulations is
uncertain. In addition, we may not obtain the requisite legal permits
to continue to operate in China and costs or operational limitations may be
imposed in connection with obtaining and complying with such permits. Our
business could be materially harmed by any changes in the political, legal or
economic climate in China or the inability to enforce applicable Chinese laws
and regulations.
As a
result of a government order to ration power for industrial use, operations in
our China facility may be subject to possible interruptions or shutdowns,
adversely affecting our ability to complete manufacturing commitments on a
timely basis. If we are required to make significant investments in generating
capacity to sustain uninterrupted operations at our facility, we may not realize
the reductions in costs anticipated from our expansion in China. In addition,
future outbreaks of avian influenza, or other communicable diseases, could
result in quarantines or closures of our facility, thereby disrupting our
operations and expansion in China.
We intend
to export the majority of the products manufactured at our facilities in China.
Accordingly, upon application to and approval by the relevant governmental
authorities, we will not be subject to certain Chinese taxes and are exempt from
customs duty assessment on imported components or materials when the finished
products are exported from China. We are, however, required to pay income taxes
in China, subject to certain tax relief. As the Chinese trade regulations are in
a state of flux, we may become subject to other forms of taxation and duty
assessments in China or may be required to pay for export license fees in the
future. In the event that we become subject to any increased taxes or new forms
of taxation imposed by authorities in China, our results of operations could be
materially and adversely affected.
We
will lose sales if we are unable to obtain government authorization to export
our products.
Exports
of our products are subject to export controls imposed by the U.S. Government
and administered by the U.S. Departments of State and Commerce. In certain
instances, these regulations may require pre-shipment authorization from the
administering department. For products subject to the Export
Administration Regulations (“EAR”) administered by the Department of Commerce’s
Bureau of Industry and Security, the requirement for a license is dependent on
the type and end use of the product, the final destination and the identity of
the end user. Virtually all exports of products subject to the
International Traffic in Arms Regulations (“ITAR”) regulations administered by
the Department of State’s Directorate of Defense Trade Controls require a
license. Most of our fiber optics products and our terrestrial solar
power products are subject to EAR; however, certain fiber optics products and
all of our commercially available solar cell satellite power products are
currently subject to ITAR.
Given the
current global political climate, obtaining export licenses can be difficult and
time-consuming. Failure to obtain export licenses for product
shipments could significantly reduce our revenue and could materially adversely
affect our business, financial condition and results of operations. Compliance
with U.S. Government regulations may also subject us to additional fees and
costs. The absence of comparable restrictions on competitors in those countries
may adversely affect our competitive position.
Protecting
our trade secrets and obtaining patent protection is critical to our ability to
effectively compete.
Our
success and competitive position depend on protecting our trade secrets and
other intellectual property. Our strategy is to rely on trade secrets and
patents to protect our manufacturing and sales processes and products. Reliance
on trade secrets is only an effective business practice if trade secrets remain
undisclosed and a proprietary product or process is not reverse engineered or
independently developed. We take measures to protect our trade secrets,
including executing non-disclosure agreements with our employees, customers and
suppliers. If parties breach these agreements or the measures we take are not
properly implemented, we may not have an adequate remedy. Disclosure of our
trade secrets or reverse engineering of our proprietary products, processes, or
devices could materially adversely affect our business, financial condition and
results of operations.
Our
failure to obtain or maintain the right to use certain intellectual property may
materially adversely affect our business, financial condition and results of
operations.
The
compound semiconductor, optoelectronics and fiber optic communications
industries are characterized by frequent litigation regarding patent and other
intellectual property rights. From time to time we have received, and may
receive in the future; notice of claims of infringement of other parties’
proprietary rights and licensing offers to commercialize third party patent
rights. There can be no assurance that:
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infringement
claims (or claims for indemnification resulting from infringement claims)
will not be asserted against us or that such claims will not be
successful;
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future
assertions will not result in an injunction against the sale of infringing
products, which could significantly impair our business and results of
operations;
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any
patent owned or licensed by us will not be invalidated, circumvented or
challenged; or
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we
will not be required to obtain licenses, the expense of which may
adversely affect our results of operations and
profitability.
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In
addition, effective copyright and trade secret protection may be unavailable or
limited in certain foreign countries. Litigation, which could result in
substantial cost and diversion of our resources, may be necessary to defend our
rights or defend us against claimed infringement of the rights of
others. In certain circumstances, our intellectual property rights
associated with government contracts may be limited.
Protection
of the intellectual property owned or licensed to us may require us to initiate
litigation, which can be an extremely expensive, protracted procedure with an
uncertain outcome. The availability of financial resources may limit
the Company’s ability to commence or defend such litigation.
Failure to comply
with environmental and safety regulations, resulting in improper handling of
hazardous raw materials used in our manufacturing processes, could result in
costly remediation fees, penalties or damages.
We are
subject to laws and regulations and must obtain certain permits and licenses
relating to the use of hazardous materials. Our production activities involve
the use of certain hazardous raw materials, including, but not limited to,
ammonia, gallium, phosphate and arsine. If our control systems are unsuccessful
in preventing a release of these materials into the environment or other adverse
environmental conditions or human exposures occur, we could experience
interruptions in our operations and incur substantial remediation and other
costs or liabilities. In addition, certain foreign laws and
regulations place restrictions on the concentration of certain hazardous
materials, including, but not limited to, lead, mercury and cadmium, in our
products. Failure to comply with such laws and regulations could subject us to
future liabilities or result in the limitation or suspension of the sale or
production of our products. These regulations include the European Union’s
(“EU”) Restrictions on Hazardous Substances, Directive on Waste Electrical and
Electronic Equipment and the directive on End of Life for Vehicles. Failure to
comply with environmental and health and safety laws and regulations may limit
our ability to export products to the EU and could materially adversely affect
our business, financial condition and results of operations. In
addition, during the past year the Department of Homeland Security has commenced
a program to evaluate the security of certain chemicals which may be of interest
to terrorists, including chemicals utilized by the Company. This
evaluation may lead to regulations or restrictions affecting the Company’s
ability to utilize these chemicals or the costs of doing so.
Our
recent acquisitions have placed, and will continue to place, a significant
strain on our management, personnel, systems, and resources.
Our
recent acquisitions
have placed, and will continue to place, a significant strain on our management,
personnel, systems, and resources. To successfully manage our growth and handle
the responsibilities of being a public company, we believe we must
effectively:
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hire,
train, integrate and manage additional qualified engineers for research
and development activities, sales and marketing personnel, and financial
and information technology
personnel;
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retain
key management and augment our management team, particularly if we lose
key members;
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continue
to enhance our customer resource management and manufacturing management
systems;
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implement
and improve additional and existing administrative, financial and
operations systems, procedures and controls, including the need to update
and integrate our financial internal control
systems;
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expand
and upgrade our technological capabilities;
and
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manage
multiple relationships with our customers, suppliers and other third
parties.
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We may encounter
difficulties in effectively managing the budgeting, forecasting and other
process control issues presented by the acquisitions. If we are unable to manage
our growth effectively, we may not be able to take advantage of market
opportunities, develop new products, satisfy customer requirements, execute our
business plan or respond to competitive pressures.
A
failure to attract and retain managerial, technical and other key personnel
could reduce our revenue and our operational effectiveness.
Our
future success depends, in part, on our ability to attract and retain certain
key personnel, including scientific, operational, financial, and managerial
personnel. In addition, our technical personnel represent a
significant asset and serve as the source of our technological and product
innovations. The competition for attracting and retaining key employees
(especially scientists, technical personnel, financial personnel and senior
managers and executives) is intense. Because of this competition for skilled
employees, we may be unable to retain our existing personnel or attract
additional qualified employees in the future. If we are unable to retain our
skilled employees and attract additional qualified employees to the extent
necessary to keep up with our business demands and changes, our business,
financial condition and results of operations may be materially adversely
affected. The risks involved in recruiting and retaining these key
personnel may be increased by our lack of profitability, the volatility of our
stock price and the perceived affect of reductions in force and other cost
reduction efforts which we have recently implemented.
It
may be difficult or costly to obtain director and officer insurance coverage as
a result of our historical stock option granting practices.
Although
we have recently renewed our directors and officer insurance coverage on what we
believe to be favorable terms, it may become more difficult to obtain director
and officer insurance coverage in the future. If we are able to obtain
this coverage, it could be significantly more expensive than in the past, which
would have an adverse effect on our financial results and cash flow. As a result
of this and related factors, our directors and officers could face increased
risks of personal liability in connection with the performance of their duties.
As a result, we may have difficultly attracting and retaining qualified
directors and officers, which could adversely affect our business.
We
are subject to risks associated with the availability and coverage of
insurance.
For
certain risks, the Company does not maintain insurance coverage because of cost
and/or availability. Because the Company retains some portion of its insurable
risks, and in some cases self-insures completely, unforeseen or catastrophic
losses in excess of insured limits may have a material adverse effect on the
Company’s results of operations and financial position.
Our
business and operations would be adversely impacted in the event of a failure of
our information technology infrastructure.
We rely
upon the capacity, reliability and security of our information technology
hardware and software infrastructure and our ability to expand and update this
infrastructure in response to our changing needs. We are constantly updating our
information technology infrastructure. Any failure to manage, expand and update
our information technology infrastructure or any failure in the operation of
this infrastructure could harm our business.
Despite
our implementation of security measures, our systems are vulnerable to damages
from computer viruses, natural disasters, unauthorized access and other similar
disruptions. Any system failure, accident or security breach could result in
disruptions to our operations. To the extent that any disruptions or security
breach results in a loss or damage to our data, or inappropriate disclosure of
confidential information, it could harm our business. In addition, we may be
required to incur significant costs to protect against damage caused by these
disruptions or security breaches in the future.
In
addition, implementation of new software programs, including the implementation
of an enterprise resource planning (“ERP”) program which the Company intends to
install during the upcoming year, may have adverse impact on the Company,
including interruption of operations, loss of data, budget overruns and the
consumption of management time and resources.
If
we fail to remediate deficiencies in our current system of internal controls, we
may not be able to accurately report our financial results or prevent fraud. As
a result, our business could be harmed and current and potential investors could
lose confidence in our financial reporting, which could have a negative effect
on the trading price of our equity securities.
The
Company is subject to the ongoing internal control provisions of Section 404 of
the Sarbanes-Oxley Act of 2002. These provisions provide for the identification
of material weaknesses in internal control over financial reporting, which is a
process to provide reasonable assurance regarding the reliability of financial
reporting for external purposes in accordance with U.S. GAAP. If we
cannot provide reliable financial reports or prevent fraud, our brand, operating
results and the market value of our equity securities could be harmed. We have
in the past discovered, and may in the future discover, areas of our internal
controls that need improvement. In fiscal 2008 and 2007, the Company
identified deficiencies in our internal controls over financial
reporting.
We have
devoted significant resources to remediate and improve our internal controls. We
have also been monitoring the effectiveness of these remediated measures. We
cannot be certain that these measures will ensure adequate controls over our
financial processes and reporting in the future. We intend to continue
implementing and monitoring changes to our processes to improve internal
controls over financial reporting. Any failure to implement required new or
improved controls, or difficulties encountered in their implementation,
could harm our operating results or cause us to fail to meet our reporting
obligations.
Inadequate
internal controls could also cause investors to lose confidence in our reported
financial information, which could have a negative effect on the trading price
of our equity securities. Further, the impact of these events could also make it
more difficult for us to attract and retain qualified persons to serve on our
Board of Directors or as executive officers, which could harm our business. The
additions of our manufacturing facility in China and acquisitions increase the
burden on our systems and infrastructure, and impose additional risk to the
ongoing effectiveness of our internal controls, disclosure controls, and
procedures.
Certain
provisions of New Jersey law and our charter may make a takeover of EMCORE
difficult even if such takeover could be beneficial to some of our
shareholders.
New
Jersey law and our certificate of incorporation, as amended, contain certain
provisions that could delay or prevent a takeover attempt that our shareholders
may consider in their best interests. Our Board of Directors is divided into
three classes. Directors are elected to serve staggered three-year terms and are
not subject to removal except for cause by the vote of the holders of at least
80% of our capital stock. In addition, approval by the holders of 80% of our
voting stock is required for certain business combinations unless these
transactions meet certain fair price criteria and procedural requirements or are
approved by two-thirds of our continuing directors. We may in the future adopt
other measures that may have the effect of delaying or discouraging an
unsolicited takeover, even if the takeover were at a premium price or favored by
a majority of unaffiliated shareholders. Certain of these measures may be
adopted without any further vote or action by our shareholders and this could
depress the price of our common stock.
Additional
litigation may arise in the future relating to our historical stock option
practices and other issues.
Although
we have received final court approval of the settlement of the three derivative
actions which were filed against certain of our current and former directors and
officers relating to historical stock options practices, and the SEC has
indicated that is has terminated its investigation of these matters, additional
securities-related litigation (including possible litigation involving
employees) may still arise. Additional lawsuits, regardless of their
underlying merit, could become time consuming and expensive, and if they result
in unfavorable outcomes, there could be material adverse effect on our business,
financial condition, results of operations and cash flows. We may be
required to pay substantial damages or settlement costs in excess of our
insurance coverage related to these matters, which would have a further material
adverse effect on our financial condition or results of operations.
Acquisitions
of other companies or investments in joint ventures with other companies could
adversely affect our operating results, dilute our shareholders’ equity, or
cause us to incur additional debt or assume contingent liabilities.
To
increase our business and maintain our competitive position, we may acquire
other companies or engage in joint ventures in the future. Acquisitions and
joint ventures involve a number of risks that could harm our business and result
in the acquired business or joint venture not performing as expected,
including:
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insufficient
experience with technologies and markets in which the acquired business is
involved, which may be necessary to successfully operate and integrate the
business;
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problems
integrating the acquired operations, personnel, technologies or products
with the existing business and
products;
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diversion
of management time and attention from the core business to the acquired
business or joint venture;
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potential
failure to retain key technical, management, sales and other personnel of
the acquired business or joint
venture;
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difficulties
in retaining relationships with suppliers and customers of the acquired
business, particularly where such customers or suppliers compete with
us;
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reliance
upon joint ventures which we do not
control;
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subsequent
impairment of the acquired assets, including intangible assets;
and,
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assumption
of liabilities including, but not limited to, lawsuits, tax examinations,
warranty issues, etc.
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We may
decide that it is in our best interests to enter into acquisitions or joint
ventures that are dilutive to earnings per share or that negatively impact
margins as a whole. In addition, acquisitions or joint ventures could require
investment of significant financial resources and require us to obtain
additional equity financing, which may dilute our shareholders’ equity, or
require us to incur additional indebtedness.
Changes
to financial accounting standards may affect our consolidated results of
operations and cause us to change our business practices.
We
prepare our financial statements to conform with U.S. GAAP. These accounting
principles are subject to interpretation by the American Institute of Certified
Public Accountants, the SEC and various bodies formed to interpret and create
appropriate accounting policies. A change in those policies can have a
significant effect on our consolidated reported results and may affect our
reporting of transactions completed before a change is announced. Changes to
those rules or the questioning of current practices may adversely affect our
reported financial results or the way we conduct our business. For
example, in December 2003, the FASB issued Staff Position Interpretation No. 46,
“Consolidation of Variable Interest Entities”, or FIN 46(R). The accounting
method under FIN 46(R) may impact our accounting for future joint ventures or
project companies. In the event that we are deemed the primary beneficiary of a
Variable Interest Entity (VIE) subject to the accounting of FIN 46(R), we may
have to consolidate the assets, liabilities and financial results of the joint
venture. This could have an adverse impact on our financial position, gross
margin and operating results.
Our
announced strategy to split the Company may not be successfully
implemented.
On April
4, 2008, the Company announced that its Board of Directors had authorized the
Company to proceed with the prospects of splitting the Company into two separate
corporations, one consisting of the Fiber Optics reporting segment and one
consisting of the Photovoltaics business segment. These studies
continue, and certain steps have been undertaken to implement this
strategy. There can be no assurance, however, that this strategy will
be successfully implemented, or when this implementation will
occur. Among the factors which may adversely impact or delay the
implementation of this strategy include the following:
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Further
study may reveal issues which make such a split inadvisable or
uneconomical, or future changes in laws, regulations or accounting rules
may create such issues;
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Key
customers or suppliers may not consent to contract assignments or other
arrangements necessary to implement this
strategy;
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It
may not be possible to obtain shareholder consent for the implementation
of this strategy;
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Future
capital market developments may prevent the Company from obtaining
necessary financing for one or both of the resulting corporations;
and
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It
may not be possible to fully staff the Board of Directors of one or both
resulting corporations.
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In
addition, because the future management of each of the resulting corporations
has not been identified, it is not possible to currently predict what the
strategy of each of these corporations would be following their separation, or
whether such strategy(ies) would be successful.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
In
addition to the other information contained or incorporated by reference in this
prospectus, you should carefully consider the Risk Factors beginning on page 5
of this prospectus in evaluating whether to purchase our common stock. Some of
the statements in this prospectus and the documents incorporated herein by
reference constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. These statements are based
largely on our current expectations and projections about future events and
financial trends affecting the financial condition of our business, relate to
future events or our future financial performance and involve known and unknown
risks, uncertainties and other factors that may cause the actual results, levels
of activity, performance or achievements of our business or our industry to be
materially different from those expressed or implied by any forward-looking
statements. Such statements include, in particular, projections about our future
results included in our Exchange Act reports, statements about our plans,
strategies, business prospects, changes and trends in our business and the
markets in which we operate as described in this prospectus and the documents
incorporated herein by reference. These forward-looking statements
may be identified by the use of terms and phrases such as “expects”,
“anticipates”, “intends”, “plans”, believes”, “estimates”, “targets”, “can”,
“may”, “could”, “will”, and variations of these terms and similar phrases. The
information contained or incorporated by reference in this prospectus includes
forward-looking statements concerning:
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our
ability to remain competitive and a leader in our industry and the future
growth of the company, the industry, and the economy in
general;
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our
ability to achieve structural and material cost reductions without
impacting product development or manufacturing
execution;
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expected
improvements in our product and technology development
programs;
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our
ability to successfully develop, introduce, market and qualify new
products, including our terrestrial solar
products;
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our
ability to identify and acquire suitable acquisition targets and
difficulties in integrating recent or future acquisitions into our
operations;
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other
risks and uncertainties described in our filings with the SEC such as:
cancellations, rescheduling, or delays in product shipments; manufacturing
capacity constraints; lengthy sales and qualification cycles; difficulties
in the production process; changes in semiconductor industry growth;
increased competition; delays in developing and commercializing new
products; and other factors.
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Neither
management nor any other person assumes responsibility for the accuracy and
completeness of the forward-looking statements. All forward-looking statements
in this prospectus are made as of the date hereof, based on information
available to us as of the date hereof, and we caution you not to rely on these
statements without also considering the risks and uncertainties associated with
these statements and our business that are addressed in this prospectus. Certain
of the information included in this prospectus may supersede or supplement
forward-looking statements in our Exchange Act reports incorporated herein by
reference. We assume no obligation to update any forward-looking
statement.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of shares of common stock by the selling
stockholders in this offering, although upon any exercise of warrants by payment
of cash, we will receive the exercise price of the warrants, which will be used
for general corporate purposes. We cannot guarantee that the selling
stockholders will exercise any warrants.
The following is a discussion of
the material U.S. federal income tax considerations generally applicable to the
purchase, ownership and disposition of our common stock by non-U.S. holders.
This discussion assumes that our common stock is held as a capital
asset. This discussion does not cover all aspects of U.S. federal
income taxation that may be relevant to the purchase, ownership or disposition
of our common stock by prospective investors in light of their particular
circumstances. In particular, this discussion does not address all of the tax
considerations that may be relevant to certain types of investors subject to
special treatment under U.S. federal income tax laws, such as:
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dealers
in securities or currencies;
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financial
institutions;
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regulated
investment companies;
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real
estate investment trusts;
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tax-exempt
entities;
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insurance
companies;
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cooperatives;
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persons
holding common stock as part of a hedging, integrated, conversion or
constructive sale transaction or a
straddle;
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traders
in securities that elect to use a mark-to-market method of accounting for
their securities holdings;
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U.S.
expatriates; or
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partnerships
or entities or arrangements treated as a partnership or other pass-through
entity for U.S. federal tax purposes (or investors
therein).
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Furthermore, this discussion is based
upon the provisions of the Internal Revenue Code of 1986, as amended (the
“Code”), the Treasury regulations promulgated thereunder and administrative and
judicial interpretations thereof, all as of the date hereof. Such authorities
may be repealed, revoked, modified or subject to differing interpretations,
possibly on a retroactive basis, so as to result in U.S. federal income tax
consequences different from those discussed below. We have not received a ruling
from the Internal Revenue Service (the “IRS”) with respect to any of the matters
discussed herein. This discussion does not address any state, local or non-U.S.
tax considerations.
If you are considering the purchase of
our common stock, we urge you to consult your own tax advisors concerning the
particular U.S. federal income tax consequences to you of the purchase,
ownership and disposition of our common stock, as well as any consequences to
you arising under state, local and non-U.S. tax laws.
Consequences
to Non-U.S. Holders
The following discussion applies only
to non-U.S. holders. A “non-U.S. holder” is a beneficial owner of our common
stock (other than a partnership or an entity or arrangement treated as a
partnership for U.S. federal income tax purposes) that is not, for U.S. federal
income tax purposes one of the following:
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a
citizen or an individual resident of the United
States;
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a
corporation (or other entity taxable as a corporation) created or
organized in or under the laws of the United States or any state thereof
or the District of Columbia;
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an
estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
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a
trust if it (i) is subject to the primary supervision of a court within
the United States and one or more U.S. persons have the authority to
control all substantial decisions of the trust or (ii) has a valid
election in effect under applicable U.S. Treasury regulations to be
treated as a U.S. person.
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Special rules may apply to you if
you are a “controlled foreign corporation” or a “passive foreign investment
company” or are otherwise subject to special treatment under the Code. Any such
holders should consult their own tax advisors to determine the U.S. federal
income, state, local and non-U.S. tax consequences that may be relevant to
them.
Dividends
Although we do not currently intend to
pay cash dividends on our common stock in the foreseeable future, dividends paid
to you (to the extent paid out of our current or accumulated earnings and
profits, as determined for U.S. federal income tax purposes) generally will be
subject to U.S. federal withholding tax at a 30% rate or such lower rate as may
be specified by an applicable income tax treaty. Generally, if you
wish to claim the benefit of an applicable treaty rate for dividends paid on our
common stock, you must provide the withholding agent with a properly executed
IRS Form W−8BEN, claiming an exemption from or reduction in withholding under
the applicable income tax treaty. If you are eligible for a reduced
rate of U.S. federal withholding tax pursuant to an applicable income tax
treaty, you may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund with the IRS.
Dividends that are effectively
connected with a trade or business you conduct within the United States (and, if
certain tax treaties apply, are attributable to a permanent establishment in the
United States), are not subject to the U.S. federal withholding tax but,
instead, are subject to regular U.S. federal income tax on a net income basis at
applicable graduated rates. Corporate holders may also be subject to “branch
profits tax”.
Sale,
Exchange or Other Taxable Disposition of Common Stock
You generally will not be subject to
U.S. federal income tax with respect to gain recognized on a sale, exchange or
other taxable disposition of shares of our common stock unless:
·
|
the
gain is effectively connected with your conduct of a trade or business in
the United States (and, if certain tax treaties apply, is attributable to
a permanent establishment in the United
States);
|
·
|
you
are present in the United States for 183 or more days in the taxable year
of the sale, and certain other conditions are
met;
|
·
|
you
are subject to provisions applicable to certain United States expatriates;
or
|
·
|
we
are or have been a United States real property holding corporation
(“USRPHC”) for U.S. federal income tax purposes at any time during the
shorter of the five-year period preceding such disposition and your
holding period in the common stock, and (i) you beneficially own, or have
owned, more than 5% of the total fair market value of our common stock at
any time during the five-year period preceding such disposition or (ii)
our common stock has ceased to be traded on an established securities
market prior to the beginning of the calendar year in which the sale or
disposition occurs, and certain other conditions are
met.
|
If a
partnership or other entity or arrangement treated as a partnership for U.S.
federal income tax purposes holds our common stock, the U.S. federal income tax
treatment of a partner in such partnership will generally depend upon the status
of the partner and the activities of the partnership. If you are a partner of a
partnership holding our common stock, we urge you to consult your own tax
advisors.
U.S.
Federal Estate Tax
Shares of our common stock held by an
individual non-U.S. holder at the time of his or her death will be included in
such non-U.S. holder’s gross estate for U.S. federal estate tax purposes, unless
an applicable estate tax treaty provides otherwise. Consequently,
shareholders who are non-U.S. holders may be subject to U.S. federal estate tax
on all or a portion of the value of the common stock owned at the time of their
death.
Information
Reporting and Backup Withholding
You may be subject to information
reporting and backup withholding with respect to any dividends on, and the
proceeds from dispositions of, our common stock paid to you unless you comply
with certain reporting procedures (usually satisfied by providing an IRS Form
W−8BEN) or otherwise establish an exemption. Additional rules relating to
information reporting requirements and backup withholding with respect to the
payment of proceeds from the disposition of shares of our common stock will
apply as follows:
·
|
If
the proceeds are paid to or through the U.S. office of a broker (U.S. or
foreign), they generally will be subject to backup withholding and
information reporting, unless you certify that you are not a U.S. person
under penalties of perjury (usually on an IRS Form W−8BEN) or otherwise
establish an exemption;
|
·
|
If
the proceeds are paid to or through a non-U.S. office of a broker that is
not a U.S. person and is not a foreign person with certain specified U.S.
connections (a “U.S. Related Person”), they will not be subject to backup
withholding or information reporting;
or
|
·
|
If
the proceeds are paid to or through a non-U.S. office of a broker that is
a U.S. person or a U.S. Related Person, they generally will be subject to
information reporting (but not backup withholding), unless you certify
that you are not a U.S. person under penalties of perjury (usually on an
IRS Form W−8BEN) or otherwise establish an
exemption.
|
In addition, the amount of any
dividends paid to you and the amount of tax, if any, withheld from such payment
generally must be reported annually to you and the IRS. The IRS may make such
information available under the provisions of an applicable income tax treaty to
the tax authorities in the country in which you reside.
Backup withholding is not an additional
tax. Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against your U.S. federal income tax liability
provided the required information is timely furnished by you to the IRS.
non-U.S. holders should consult their own tax advisors regarding the filing of a
U.S. tax return for claiming a refund of such backup
withholding.
PRINCIPAL
AND SELLING STOCKHOLDERS
Selling
Stockholders
The
shares of common stock being offered by the selling stockholders are those
previously issued to the selling stockholders and those issuable to the selling
stockholders upon the exercise of the warrants. We are registering
the shares of common stock in order to permit the selling stockholders to offer
the shares for resale from time to time. Except for the ownership of
the shares of common stock and the warrants, the selling stockholders have not
had any material relationship with us within the past three years.
The table
below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of common stock held by each of the selling
stockholders, as provided to us by representatives of the selling stockholders
as of February 29, 2008. The second column lists the number of shares
of common stock beneficially owned by each selling stockholder, based on its
ownership of the shares of common stock and the warrants as of February 29,
2008, assuming exercise of the warrants held by the selling stockholders on that
date, without regard to any limitations on exercise.
The third
column lists the shares of common stock being offered by this prospectus by the
selling stockholders. In accordance with the terms of the
registration rights agreement with the holders of the shares of common stock and
the warrants, this prospectus generally covers the resale of the aggregate
number of shares of common stock equal to the number of shares of common stock
issued and the shares of common stock issuable upon exercise of the related
warrants, determined as if the outstanding warrants were exercised, as
applicable, in full, in each case, as of the trading day immediately preceding
the date this registration statement was initially filed with the
SEC. The fourth column assumes the sale of all of the shares offered
by the selling stockholders pursuant to this prospectus and that any other
shares of our common stock beneficially owned by these selling stockholders will
continue to be beneficially owned. Under the terms of the warrants, a
selling stockholder may not exercise the warrants, to the extent such exercise
would cause such selling stockholder, together with its affiliates, to
beneficially own a number of shares of common stock which would exceed 4.99% of
our then outstanding shares of common stock following such exercise, excluding
for purposes of such determination shares of common stock issuable upon exercise
of the warrants which have not been exercised. The number of shares
in each of the second and third columns does not reflect this
limitation. The selling stockholders may sell all, some or none of
their shares in this offering. See “Plan of
Distribution”.
Name of Selling Stockholder
|
Number of Shares Owned Prior to
Offering
|
Maximum Number of Shares to be Sold Pursuant to
this Prospectus
|
Number of Shares Owned After
Offering
|
Polar
Securities Inc. (1)
|
987,001
|
987,001
|
-
|
The
Quercus Trust (2)
|
6,266,727
|
883,600
|
5,383,127
|
Marathon
Global Equity Master Fund, Ltd. (3)
|
705,000
|
705,000
|
-
|
UBS
O’Connor LLC F/B/O: O’Connor Pipes Corporate Strategies Master Limited
(4)
|
394,800
|
394,800
|
-
|
UBS
O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage Master Limited
(5)
|
247,408
|
247,408
|
-
|
UBS
O’Connor LLC F/B/O: O’Connor Global Convertible Arbitrage II Master
Limited (6)
|
15,792
|
15,792
|
-
|
The
Tocqueville Fund (7)
|
599,250
|
599,250
|
-
|
Highbridge
International LLC (8)
|
640,430
|
587,500
|
52,930
|
Ardsley
Partners Fund II, L.P.(9)
|
502,238
|
148,638
|
353,600
|
Ardsley
Partners Institutional Fund, L.P.(10)
|
324,115
|
96,115
|
228,000
|
Ardsley
Partners Renewable Energy Fund, L.P. (11)
|
215,753
|
80,253
|
135,500
|
Ardsley
Offshore Fund, Ltd. (12)
|
350,988
|
103,988
|
247,000
|
Ardsley
Renewable Energy Offshore Fund, Ltd. (13)
|
368,318
|
136,418
|
231,900
|
Marion
Lynton (14)
|
12,660
|
3,760
|
8,900
|
HFR
HE (15)
|
50,930
|
18,330
|
32,600
|
Hudson
Bay Fund LP (16)
|
392,920
|
392,920
|
-
|
Hudson
Bay Overseas Fund, Ltd. (17)
|
641,080
|
641,080
|
-
|
Portside
Growth and Opportunity Fund (18)
|
564,000
|
564,000
|
-
|
Empire
Capital Partners, LTD (19)
|
728,978
|
169,905
|
559,073
|
Empire
Capital Partners, LP (20)
|
773,768
|
182,595
|
591,173
|
Capital
Ventures International (21)
|
352,500
|
352,500
|
-
|
Iroquois
Master Fund Ltd. (22)
|
352,500
|
352,500
|
-
|
Kingdon
Associates (23)
|
938,204
|
85,305
|
852,899
|
M.
Kingdon Offshore Ltd. (24)
|
2,809,321
|
255,386
|
2,553,935
|
Kingdon
Family Partnership, L.P. (25)
|
129,975
|
11,809
|
118,166
|
Investcorp
Interlachen Multi-Strategy Master Fund Limited (26)
|
235,000
|
235,000
|
-
|
CD
Investment Partners, Ltd. (27)
|
188,000
|
188,000
|
-
|
Lagunitas
Partners LP (28)
|
164,650
|
113,975
|
50,675
|
Gruber
& McBaine International (29)
|
22,200
|
8,225
|
13,975
|
Jon
D & Linda W Gruber Trust (30)
|
79,775
|
65,800
|
13,975
|
Cara
Castle Partners (31)
|
103,400
|
103,400
|
-
|
MMCAP
International Inc SPC (32)
|
176,250
|
176,250
|
-
|
Cranshire
Capital, L.P. (33)
|
141,000
|
141,000
|
-
|
Enable
Growth Partners LP (34)
|
117,500
|
117,500
|
-
|
Crestview
Capital Master, LLC (35)
|
117,500
|
117,500
|
-
|
RHP
Master Fund, Ltd. (36)
|
117,500
|
117,500
|
-
|
(1)
Includes warrants exercisable for 147,001 shares of common stock at an
exercise price of $15.06. Bill Peckford has voting and
investment control over the securities held by Polar Securities
Inc.
|
(2)
Includes warrants exercisable for 131,600 shares of common stock at an
exercise price of $15.06. David Gelbaum & Monica Chavez
Gelbaum, Co-Trustees of The Quercus Trust, have voting and investment
control over the securities owned by The Quercus Trust.
|
(3)
Includes warrants exercisable for 105,000 shares of common stock at an
exercise price of $15.06. Marathon Asset Management, LLC
(“Marathon”) is Investment Advisor to Marathon Global Equity Master Fund,
Ltd. (“MGEMF”). Marathon exercises investment discretion over
any securities held by MGEMF.
|
(4)
Includes warrants exercisable for 58,800 shares of common stock at an
exercise price of $15.06. This selling stockholder is a fund
which cedes investment control to UBS O’Connor LLC (the “Investment
Manager”). The Investment Manager makes all the
investment/voting decisions. UBS O’Connor LLC is a wholly owned
subsidiary of UBS AG which is listed and traded on the New York Stock
Exchange.
|
(5)
Includes warrants exercisable for 36,848 shares of common stock at an
exercise price of $15.06. This selling stockholder is a fund
which cedes investment control to UBS O’Connor LLC (the “Investment
Manager”). The Investment Manager makes all the
investment/voting decisions. UBS O’Connor LLC is a wholly owned
subsidiary of UBS AG which is listed and traded on the New York Stock
Exchange.
|
(6)
Includes warrants exercisable for 2,352 shares of common stock at an
exercise price of $15.06. This selling stockholder is a fund
which cedes investment control to UBS O’Connor LLC (the “Investment
Manager”). The Investment Manager makes all the
investment/voting decisions. UBS O’Connor LLC is a wholly owned
subsidiary of UBS AG which is listed and traded on the New York Stock
Exchange.
|
(7)
Includes warrants exercisable for 89,250 shares of common stock at an
exercise price of $15.06. Tocqueville Asset Management L.P. is
the investment advisor to The Tocqueville Fund.
|
(8)
Includes warrants exercisable for 87,500 shares of common stock at an
exercise price of $15.06. Highbridge Capital Management, LLC is
the trading manager of Highbridge International LLC and has voting control
and investment discretion over the securities held by Highbridge
International LLC. Glenn Dubin and Henry Swieca control
Highbridge Capital Management, LLC and have voting control and investment
discretion over the securities held by Highbridge International
LLC. Each of Highbridge Capital Management, LLC, Glenn Dubin
and Henry Swieca disclaims beneficial ownership of the securities held by
Highbridge International LLC.
|
(9)
Includes warrants exercisable for 22,138 shares of common stock at an
exercise price of $15.06. Philip J. Hempleman has voting and
investment control over the securities held by Ardsley Partners Fund II,
L.P.
|
(10)
Includes warrants exercisable for 14,315 shares of common stock at an
exercise price of $15.06. Philip J. Hempleman has voting and
investment control over the securities held by Ardsley Partners
Institutional Fund, L.P.
|
(11)
Includes warrants exercisable for 11,953 shares of common stock at an
exercise price of $15.06. Philip J. Hempleman has voting and
investment control over the securities held by Ardsley Partners Renewable
Energy Fund, L.P.
|
(12)
Includes warrants exercisable for 15,488 shares of common stock at an
exercise price of $15.06. Philip J. Hempleman has voting and
investment control over the securities held by Ardsley Offshore Fund,
Ltd.
|
(13)
Includes warrants exercisable for 20,318 shares of common stock at an
exercise price of $15.06. Philip J. Hempleman has voting and
investment control over the securities held by Ardsley Renewable Energy
Offshore Fund, Ltd.
|
(14)
Includes warrants exercisable for 560 shares of common stock at an
exercise price of $15.06. Philip J. Hempleman has voting and
investment control over the securities held by Marion
Lynton.
|
(15)
Includes warrants exercisable for 2,730 shares of common stock at an
exercise price of $15.06. Philip J. Hempleman has voting and
investment control over the securities held by HFR HE.
|
(16)
Includes warrants exercisable for 58,520 shares of common stock at an
exercise price of $15.06. Sander Gerber, Yoav Roth and John
Doscas share voting and investment power over these securities. Each of
Sander Gerber, Yoav Roth and John Doscas disclaim beneficial ownership
over the securities held by Hudson Bay Fund LP. The selling stockholder
acquired the securities offered for its own account in the ordinary course
of business, and at the time it acquired the securities, it had no
agreements, plans or understandings, directly or indirectly to distribute
the securities.
|
(17)
Includes warrants exercisable for 95,480 shares of common stock at an
exercise price of $15.06. Sander Gerber, Yoav Roth and John
Doscas share voting and investment power over these securities. Each of
Sander Gerber, Yoav Roth and John Doscas disclaim beneficial ownership
over the securities held by Hudson Bay Overseas Fund LTD. The selling
stockholder acquired the securities offered for its own account in the
ordinary course of business, and at the time it acquired the securities,
it had no agreements, plans or understandings, directly or indirectly to
distribute the securities.
|
(18)
Includes warrants exercisable for 84,000 shares of common stock at an
exercise price of $15.06. Ramius LLC (“Ramius”) is the
investment adviser of Portside Growth and Opportunity Fund (“Portside”)
and consequently has voting control and investment discretion over
securities held by Portside. Ramius disclaims beneficial
ownership of these securities. C4S & Co., L.L.C. (“C4S”) is
the managing member of Ramius and may be considered the beneficial owner
of any securities deemed to be beneficially owned by
Ramius. C4S disclaims beneficial ownership of these
securities. Peter A. Cohen, Morgan B. Stark, Thomas W. Strauss
and Jeffrey M. Solomon are the sole managing members of C4S and may be
considered beneficial owners of any securities deemed to be beneficially
owned by C4S. Messrs. Cohen, Stark, Strauss and Solomon
disclaim beneficial ownership of these securities.
|
(19)
Includes warrants exercisable for 25,305 shares of common stock at an
exercise price of $15.06. Peter J. Richards and Scott A. Fine,
Managing Members of Empire Capital Management, LLC (investment manager to
Empire Capital Partners, LTD), exercise voting and investment control over
securities held by Empire Campital Partners, LTD.
|
(20)
Includes warrants exercisable for 27,195 shares of common stock at an
exercise price of $15.06. Peter J. Richards and Scott A. Fine,
Managing Members of Empire Capital Management, LLC (investment manager to
Empire Capital Partners, LP), exercise voting and investment control over
securities held by Empire Campital Partners, LP.
|
(21)
Includes warrants exercisable for 52,500 shares of common stock at an
exercise price of $15.06. Heights Capital Management, Inc., the
authorized agent of Capital Ventures International (“CVI”), has
discretionary authority to vote and dispose of the shares held by CVI and
may be deemed to be the beneficial owner of these
shares. Martin Kobinger, in his capacity as Investment Manager
of Heights Capital Management, Inc., may also be deemed to have investment
discretion and voting power over the shares held by CVI. Mr.
Kobinger disclaims any such beneficial ownership of the
shares.
|
(22)
Includes warrants exercisable for 52,500 shares of common stock at an
exercise price of $15.06. Joshua Silverman has voting and
investment control over the shares held by Iroquois Master Fund
Ltd. Mr. Silverman disclaims beneficial ownership of these
shares.
|
(23)
Includes warrants exercisable for 12,705 shares of common stock at an
exercise price of $15.06. Mark Kingdon, as Managing Member of
Kingdon Capital Management, LLC (investment manager to Kingdon
Associates), exercises voting and investment control over securities held
by Kingdon Associates.
|
(24)
Includes warrants exercisable for 38,036 shares of common stock at an
exercise price of $15.06. Mark Kingdon, as Managing Member of
Kingdon Capital Management, LLC (investment manager to M. Kingdon Offshore
Ltd.), exercises voting and investment control over securities held by M.
Kingdon Offshore Ltd.
|
(25)
Includes warrants exercisable for 1,759 shares of common stock at an
exercise price of $15.06. Mark Kingdon, as Managing Member of
Kingdon Capital Management, LLC (investment manager to Kingdon Family
Partnership, L.P.), exercises voting and investment control over
securities held by Kingdon Family Partnership, L.P.
|
(26)
Includes warrants exercisable for 35,000 shares of common stock at an
exercise price of $15.06. Interlachen Capital Group LP is the trading
manager of Investcorp Interlachen Multi-Strategy Master Fund Limited and
has voting and investment discretion over securities held by Investcorp
Interlachen Multi-Strategy Master Fund Limited. Andrew Fraley,
in his role as Chief Investment Officer of Interlachen Capital Group LP,
has voting control and investment discretion over securities held by
Investcorp Interlachen Multi-Strategy Master Fund
Limited. Andrew Fraley disclaims beneficial ownership of the
securities held by Investcorp Interlachen Multi-Strategy Mater Fund
Limited.
|
(27)
Includes warrants exercisable for 28,000 shares of common stock at an
exercise price of $15.06. Carpe Diem Capital Management LLC
(“Carpe Diem Capital”), as investment manager for CD Investment Partners,
Ltd. (“CDIP”), ZPII, L.P. (“ZP II”), as the manager and sole member of
Carpe Diem Capital, C3 Management Inc. (“C3”), as the general partner of
ZP II, and John D. Ziegelman, as the Chairman of the Board, President and
Treasurer and the beneficial owner of 100% of the outstanding shares of
common stock of C3, each may be deemed to have beneficial ownership of the
shares owned by CDIP which are being registered
hereunder.
|
(28)
Includes warrants exercisable for 16,975 shares of common stock at an
exercise price of $15.06. Gruber & McBaine Capital
Management is the general partner of Lagunitas Partners LP. The
natural persons with voting and investment control for this stockholder
are Jon D. Gruber and J. Patterson McBaine.
|
(29)
Includes warrants exercisable for 1,225 shares of common stock at an
exercise price of $15.06. Gruber & McBaine Capital
Management is the general partner of Gruber & McBaine
International. The natural persons with voting and investment
control for this stockholder are Jon D. Gruber and J. Patterson
McBaine.
|
(30)
Includes warrants exercisable for 9,800 shares of common stock at an
exercise price of $15.06. Jon D. Gruber has voting and
investment control over the securities held by the Jon D & Linda W
Gruber Trust.
|
(31)
Includes warrants exercisable for 15,400 shares of common stock at an
exercise price of $15.06. Damien Quinn holds voting and
investment control over the securities held by Cara Castle
Partners.
|
(32)
Includes warrants exercisable for 26,250 shares of common stock at an
exercise price of $15.06. The natural person with voting and
investment control for this stockholder is Matthew
MacIsaac.
|
(33)
Includes warrants exercisable for 21,000 shares of common stock at an
exercise price of $15.06. Mitchell P. Kopin, President of
Downsview Capital, Inc., the General Partner of Cranshire Capital, L.P.,
has sole voting and investment control over the shares.
|
(34)
Includes warrants exercisable for 17,500 shares of common stock at an
exercise price of $15.06. Mitch Levine holds voting and
investment control over the securities held by Enable Growth Partners
LP.
|
(35)
Includes warrants exercisable for 17,500 shares of common stock at an
exercise price of $15.06. Crestview Capital Partners, LLC
(“Crestview Partners”) is the sole manager of Crestview, and as such has
the power to direct the vote and to direct the disposition of investments
owned by Crestview and thus may also be deemed to beneficially own the
securities owned by Crestview. Stewart Flink, Robert Hoyt and
Daniel Warsh are the managers of Crestview Partners, and as such may be
deemed to share the power to vote and to dispose of investments
beneficially owned by Crestview Partners, including the Company’s common
stock. As a result, each of Messrs. Flink, Hoyt and Warsh may
also be deemed to beneficially own the above-described shares of the
Company’s common stock held by Crestview and Crestview Partners; however
each disclaims beneficial ownership of such shares.
|
(36)
Includes warrants exercisable for 17,500 shares of common stock at an
exercise price of $15.06. RHP Master Fund, Ltd. is a party to
an investment management agreement with Rock Hill Investment Management,
L.P., a limited partnership of which the general partner is RHP General
Partner, LLC. Pursuant to such agreement, Rock Hill Investment
Management directs the voting and disposition of shares owned by RHP
Master Fund. Messrs. Wayne Bloch and Peter Lockhart own all of
the interests in RHP General Partner. The aforementioned
entities and individuals disclaim beneficial ownership of the Company’s
securities owned by the RHP Master
Fund.
|
Principal
Stockholders
The
following table sets forth certain information, as of September 30, 2008, with
respect to the beneficial ownership of our common stock by:
·
|
each
person or group that we know to be the beneficial owner of more than 5% of
the outstanding shares of any class of our voting
securities;
|
·
|
each
of our executive officers and directors;
and
|
·
|
our
executive officers and directors as a
group.
|
As of
February 17, 2009, a total of 78,337,504 shares of common stock were
outstanding. In the following table, (a) shares under “Outstanding
shares” include shares subject to options that were vested as of September 30,
2008 or will vest within 60 days of September 30, 2008 and (b) unless otherwise
noted, each person identified possesses, to our knowledge, sole voting and
investment power with respect to the shares listed, subject to community
property laws where applicable. Shares not outstanding but deemed
beneficially owned by virtue of the right of a person to acquire those shares
are treated as outstanding only for purposes of determining the number and
percent of shares of common stock owned by such person or
group. Unless otherwise indicated, the address of each of the
beneficial owners is c/o EMCORE Corporation, 10420 Research Road, SE,
Albuquerque, New Mexico 87123.
Name
|
Shares
Beneficially
Owned
|
Percent
of
Common
Stock
|
|||||
Robert
Bogomolny
|
86,972
|
*
|
|||||
John
Gillen
|
29,242
|
*
|
|||||
Adam
Gushard (1)
|
212,141
|
*
|
|||||
Hong
Q. Hou, Ph.D. (2)
|
496,250
|
*
|
|||||
John
Iannelli, Ph.D. (3)
|
113,893
|
*
|
|||||
Keith
J. Kosco, Esq.(4)
|
24,500
|
*
|
|||||
John
M. Markovich
|
-
|
*
|
|||||
Reuben
F. Richards, Jr. (5)
|
1,012,054
|
1.3%
|
|
||||
Thomas
J. Russell (6)
|
5,276,815
|
6.7%
|
|
||||
Charles
Scott (7)
|
42,409
|
*
|
|||||
All
directors and executive officers as a group (10
persons) (8)
|
7,294,276
|
9.2%
|
|
||||
AMVESCAP
PLC (11)
|
4,000,005
|
5.1%
|
|
||||
Brookside
Capital Partners Fund, LP (10)
|
5,002,777
|
6.4%
|
|
||||
Invesco
Ltd.(9)
|
4,817,145
|
6.2%
|
|
||||
Kopp Investment
Advisors, LLC (12)
|
4,101,349
|
5.2%
|
|
||||
The
Quercus Trust (13)
|
3,800,183
|
4.9%
|
|
||||
Wachovia
Corporation (14)
|
5,158,132
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6.6%
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*
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Less
than 1.0%
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(1)
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Includes
options to purchase 184,098 shares and 9,395 shares held in a 401(k)
Plan.
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(2)
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Includes
options to purchase 378,125 shares.
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(3)
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Includes
options to purchase 102,631 shares and 4,683 shares held in a 401(k)
Plan.
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(4)
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Includes
options to purchase 24,500 shares.
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(5)
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Includes
options to purchase 322,500 shares and 175,000 shares held by
spouse.
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(6)
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Includes
2,280,035 shares held by The AER Trust.
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(7)
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Includes
30,409 shares owned by Kircal, Ltd.
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(8)
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Includes
options to purchase 1,011,854 shares beneficially owned by Reuben F.
Richards, Jr., Executive Chairman; Hong Hou, Chief Executive Officer; John
M. Markovich, Chief Financial Officer; Adam Gushard, Former Interim Chief
Financial Officer; John Iannelli, Chief Technology Officer; and Keith J.
Kosco, Chief Legal Officer.
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(9)
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This
information is based solely on information contained in a Schedule 13G/A
filed with the SEC on February 14, 2008, by invesco Ltd. (“Invesco”). The
address of Alexandra Global is Citco Building, Wickams Cay, P.O. Box 662,
Road Town, Tortola, British Virgin Islands. The address of
Alexandra Management and Filimonov is 767 Third Avenue, 39th Floor, New
York, New York 10017.
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(10)
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This
information is based solely on information contained in a Schedule 13G
filed with the SEC on July 21, 2008, by Brookside Capital Partners Find,
L.P. (the “Brookside Fund”). Brookside Capital Investors, L.P.,
a Delaware limited partnership (“Brookside Investors”) is the sole general
partner of the Brookside Fund. Brookside Capital Management, LLC, a
Delaware limited liability company (“Brookside Management”), is the sole
general partner of Brookside Investors. Mr. Domenic J. Ferrante is the
sole managing member of Brookside Management. The Brookside Fund
beneficially owned 5,002,777 shares of Common Stock. The Brookside Fund
acts by and through its general partner, Brookside Investors. Brookside
Investors acts by and through its general partner, Brookside Management.
Mr. Domenic J. Ferrante is the managing member of Brookside Management and
thus is the controlling person of Brookside Management. No person other
than the respective owner referred to herein of the Common Stock is known
to have the right to receive or the power to direct the receipt of
dividends from or the proceeds from the sale of such Common Stock.The
address of the Brookside Fund, Brookside Investors, Brookside Management
and Mr. Ferrante is 111 Huntington Avenue, Boston, Massachusetts
02199.
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(11)
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This
information is based solely on information contained in a Schedule 13G
filed with the SEC on February 14, 2007, by AMVESCAP PLC, a U.K. entity,
on behalf of itself and PowerShares Capital Management LLC, a U.S. entity
(“PowerShares”). The shares reported for AMVESCAP PLC represent the total
shares held by AMVESCAP PLC through PowerShares. The address of
AMVESCAP PLC is 30 Finsbury Square, London EC2A 1AG,
England. The address of AMVESCAP PLC is 30 Finsbury Square,
London EC2A 1AG, England.
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(12)
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This
information is based solely on information contained in a Schedule 13D
filed with the SEC on April 4, 2008, by Kopp Investment Advisors, LLC
(“KIA”), a wholly-owned subsidiary of Kopp Holding Company, LLC (“KHC”),
which is controlled by Mr. LeRoy C. Kopp (“Kopp”) (collectively, the “Kopp
Parties”). KIA reports beneficially owning a total of 4,101,349
shares including having sole voting power over 4,101,349 shares and shared
dispositive power over 2,242,774 shares. Kopp reports
beneficially owning a total of 4,242,774 shares, including having sole
dispositive power over 2,000,000 shares. The address of the
Kopp Parties is 7701 France Avenue South, Suite 500, Edina, Minnesota
55435. The address of Kopp Investment Advisors, LLC is 7701 France Avenue
South, Suite 500, Edina, Minnesota 55435.
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(13)
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This
information is based solely on information contained in a Schedule 13D
filed with the SEC on August 20, 2008, by The Quercus Trust, David Gelbaum
and Monica Chavez Gelbaum. The Quercus Trust reports
beneficially owning a total of 3,800,183 shares and sharing voting and
dispositive power with respect to such shares. David Gelbaum,
Trustee, The Quercus Trust, reports beneficially owning a total of
3,800,183 shares and sharing voting and dispositive power with respect to
such shares. Monica Chavez Gelbaum, Trustee, The Quercus Trust,
reports beneficially owning a total of 3,800,183 shares and sharing voting
and dispositive power with respect to such shares. The address
of David Gelbaum, an individual, as co-trustee of the Quercus Trust and
Monica Chavez Gelbaum, an individual, as co-trustee of the Quercus Trust
is 2309 Santiago Drive, Newport Beach, California
92660.
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(14)
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This
information is based solely on information contained in a Schedule 13G
filed with the SEC on January 14, 2008, by Wachovia
Corporation. Wachovia Corporation reports beneficially owning a
total of 5,158,132 shares including having sole voting power over 139,917
shares and sole dispositive power over 2,878,097
shares. Wachovia Corporation is a parent holding company and
the relevant subsidiaries are Wachovia Securities, LLC (IA) and Wachovia
Bank, N.A. (B.K.). Wachovia Securities, LLC is an investment
advisor for clients; the securities reported by this subsidiary are
beneficially owned by such clients. Wachovia Bank, N.A. (B.K.)
holds the securities reported in a fiduciary capacity for its respective
customers. The address of Wachovia Corporation is One Wachovia
Center, Charlotte, North Carolina
28288.
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PLAN
OF DISTRIBUTION
We are
registering the shares of common stock previously issued and the shares of
common stock issuable upon exercise of the warrants to permit the resale of
these shares of common stock by the holders of the common stock from time to
time after the date of this prospectus. We will not receive any of
the proceeds from the sale by the selling stockholders of the shares of common
stock. However, upon any exercise of the warrants by payment of cash,
we will receive the exercise price of the warrants. We will bear all
fees and expenses incident to our obligation to register the shares of common
stock.
The
selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the
shares of common stock are sold through underwriters or broker-dealers, the
selling stockholders will be responsible for underwriting discounts or
commissions or agent’s commissions. The shares of common stock may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions, which
may involve crosses or block transactions,
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on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
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in
the over-the-counter market;
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in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
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through
the writing of options, whether such options are listed on an options
exchange or otherwise;
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•
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involving
ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
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•
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involving
block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
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•
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involving
purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
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involving
an exchange distribution in accordance with the rules of the applicable
exchange;
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involving
privately negotiated transactions;
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involving
short sales;
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involving
sales pursuant to Rule 144;
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•
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in
connection with which broker-dealers may agree with the selling
stockholders to sell a specified number of such shares at a stipulated
price per share;
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•
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involving
a combination of any such methods of sale;
and
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•
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involving
any other method permitted pursuant to applicable
law.
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If the
selling stockholders effect such transactions by selling shares of common stock
to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with
sales of the shares of common stock or otherwise, the selling stockholders may
enter into hedging transactions with broker-dealers, which may in turn engage in
short sales of the shares of common stock in the course of hedging in positions
they assume. The selling stockholders may also sell shares of common
stock short and deliver shares of common stock covered by this prospectus to
close out short positions and to return borrowed shares in connection with such
short sales. The selling stockholders may also loan or pledge shares
of common stock to broker-dealers that in turn may sell such
shares.
The
selling stockholders may pledge or grant a security interest in some or all of
the shares of common stock owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time pursuant to this prospectus or any
amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act of 1933, as amended, amending, if necessary, the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus. The selling
stockholders also may transfer and donate the shares of common stock in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution of
the shares of common stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular
offering of the shares of common stock is made, a prospectus supplement or
amendment, if required, will be distributed which will set forth the aggregate
amount of shares of common stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
Under the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In
addition, in some states the shares of common stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied
with.
There can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which this
prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may
also restrict the ability of any person engaged in the distribution of the
shares of common stock to engage in market-making activities with respect to the
shares of common stock. All of the foregoing may affect the
marketability of the shares of common stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
common stock.
We will
pay all expenses of the registration of the shares of common stock pursuant to
the registration rights agreement, estimated to be $0.3 million in total,
including, without limitation, Securities and Exchange Commission filing fees
and expenses of compliance with state securities or “Blue Sky” laws; provided,
however, that a selling stockholder will pay all underwriting discounts and
selling commissions, if any. We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution. We may be
indemnified by the selling stockholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling stockholder specifically for use in
this prospectus, in accordance with the related registration rights agreement,
or we may be entitled to contribution.
Once sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.
DESCRIPTION
OF COMMON STOCK TO BE REGISTERED
The
following is a description of our common stock. It does not purport
to be complete and is subject to, and qualified in its entirety by, the
provisions of our Restated Certificate of Incorporation and By-Laws, forms of
which have previously been filed and are incorporated by reference into this
prospectus, and by the applicable provisions of New Jersey law.
General
Matters
Our
authorized capital stock consists of 200,000,000 shares of common stock and
5,882,352 shares of preferred stock, no par value. On February 17,
2009, immediately prior to this offering, we had 78,337,504 shares of common
stock issued and outstanding and no shares of preferred stock issued and
outstanding.
Common
Stock
Holders
of common stock are entitled to one vote per share on matters to be voted upon
by the shareholders of the Company. Subject to the preferences that may be
applicable to any outstanding shares of preferred stock, the holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared
by the Board of Directors out of funds legally available therefor. In the event
of liquidation, dissolution or winding up of the Company, the holders of common
stock are entitled to share ratably in all assets remaining after payment of
liabilities, subject to the prior liquidation rights of any outstanding shares
of preferred stock. The common stock has no preemptive, redemption, conversion
or other subscription rights. The outstanding shares of common stock are, and
the shares offered by the Company in the offering will be, when issued and paid
for, fully paid and nonassessable. The rights, preferences and privileges of
holders of common stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred stock currently
outstanding or which the Company may designate and issue in the
future.
Preferred
Stock
The Board
of Directors has the authority, without action by the stockholders, to designate
and issue preferred stock in one or more series and to designate the rights,
preferences and privileges of each series, which may be greater than the rights
of the common stock. It is not possible to state the actual effect of the
issuance of any shares of preferred stock upon the rights of holders of the
common stock until the Board of Directors determines the specific rights of the
holders of this preferred stock. However, the effects might include, among other
things:
•
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restricting
dividends on the common stock;
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•
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diluting
the voting power of the common stock;
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•
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impairing
the liquidation rights of the common stock; or
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•
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delaying
or preventing a change in control of the company without further action by
the stockholders.
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No shares
of preferred stock are outstanding, and we have no present plans to issue any
shares of preferred stock.
Stock
Options, Warrants and Other
Obligations to Issue Capital Stock
As of
December 31, 2008, we had outstanding warrants to purchase an aggregate of
1,400,003 shares of our common stock. In addition, we had 8,439,065
shares of our common stock issuable upon the exercise of stock options
outstanding with a weighted average exercise price of $6.54 per share and
766,716 shares of our common stock reserved for future grants under our 2000
Stock Option Plan.
In the
private placement, we sold 8,000,000 shares of our common stock, at a price of
$12.50 per share, and, for no additional consideration, warrants to purchase up
to 1,400,003 shares of common stock, at an exercise price of $15.06 per share.
The warrants were issued in connection with the private placement to the selling
stockholders that closed on February 20, 2008. The warrants are immediately
exercisable and remain exercisable until February 15, 2013.
The
warrants may be exercised in whole or in part. If a holder desires to exercise
its warrants, it must deliver an exercise notice to us at our principal office
that specifies the number of shares of common stock to be purchased upon
exercise. Unless the holder has elected a cashless exercise of the warrant, the
notice must also be accompanied by payment of an amount equal to the per share
exercise price multiplied by the number of shares for which the warrant is being
exercised. Pursuant to the terms of the warrants, the holder will not
have the right to exercise any portion of the warrants to the extent that after
giving effect to such exercise, the holder (together with the holder’s
affiliates), would beneficially own in excess of 4.99% (the “maximum
percentage”) of the number of shares of our common stock outstanding immediately
after giving effect to such exercise. By written notice to the
Company, the Holder may from time to time increase or decrease the maximum
percentage to any other percentage not in excess of 9.99% specified in such
notice; provided that (i) any such increase will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company, and (ii)
any such increase or decrease will apply only to the holder delivering such
notice and not to any other holder of warrants.
The
exercise price of the warrants may be adjusted upon certain events, including
stock dividends, stock splits, recapitalizations and similar adjustments to the
number of shares of our common stock outstanding and dividends paid in cash, in
shares of our common stock or securities convertible into our common stock or in
kind.
Registration
Rights
Under a
registration rights agreement that we entered into on February 15, 2008, we
granted the selling stockholders registration rights with respect to the common
stock. We are obligated under the registration rights agreement to
use our commercially reasonable best efforts to cause the registration statement
of which this prospectus is a part to be declared effective by May 20, 2008, or,
in the event the registration statement is reviewed by the SEC, by June 19,
2008. We are also obligated under the registration rights agreement
to keep this registration statement effective for a period ending on the earlier
of (i) the date on which all shares of common stock registered pursuant to this
registration statement have been sold and (ii) the first date as of which all
shares of common stock registered pursuant to this registration statement may be
sold without restriction pursuant to Rule 144 (or any successor thereto)
promulgated under the Securities Act of 1933.
We will
be obligated under the registration rights agreement to pay liquidated damages
to the selling stockholders if any of the following default events
occurs:
•
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on
or prior to thirty (30) days following the date the private placement
transaction closed, a registration statement has not been filed with the
SEC (a “filing failure”);
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•
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we
fail to use our commercially reasonable best efforts to cause such
registration statement to be declared effective by the SEC on or prior to
(1) ninety (90) days after the closing date of the private
placement transaction if there is no review of the registration statement
by the SEC or (2) one hundred twenty (120) days after the
closing date of the transaction if there is a review of the registration
statement by the SEC (an “effectiveness failure”); or
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on
any day after the effective date of the registration statement sales of
all the common stock required to be included on such registration
statement cannot be made (other than as permitted during a grace period as
set forth in the registration rights agreement) pursuant to such
registration statement, including because of a failure to keep such
registration statement effective, to disclose such information as is
necessary for sales to be made pursuant to such registration statement or
to register sufficient a sufficient amount of common stock (a “maintenance
failure”); or
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after
the date six months following the closing of the private placement, we
fail to file any required reports under Section 12 or 15(d) of the 1934
Act such that we are not in compliance with Rule 144(c)(1) or a result of
which the purchasers in the private placement are unable to sell their
registrable securities without restriction under Rule 144 (or any
successor thereto) (a “current public information
default”).
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In these
events, the registration rights agreement requires us to pay as liquidated
damages for such failure to each holder of securities that are registrable
securities under the registration rights agreement an amount equal to 1.0% of
the aggregate purchase price of such registrable securities included in the
registration statement of which this prospectus is a part on each of the
following dates:
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the
day that a filing failure occurs and on every thirtieth day (pro rated for
shorter periods) thereafter until such filing failure is
cured;
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•
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the
day that an effectiveness failure occurs and on every thirtieth day (pro
rated for shorter periods) thereafter until such effectiveness failure is
cured;
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the
initial day of a maintenance failure and on every thirtieth day (pro rated
for shorter periods) thereafter until such maintenance failure is cured;
and
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the
day that a current public information default occurs and on every
thirtieth day (pro rated for shorter periods) thereafter until such
current public information default is cured.
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This
description of the registration rights agreement is intended to be a summary of
the terms of the agreement that are material to a purchaser of our common
stock. It does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the registration rights
provisions of the agreement.
Antitakeover
Effects of Provisions of our Articles of Incorporation and Bylaws
Our Board
of Directors is divided into three classes. As a result of this provision, at
least two annual meetings of shareholders may be required for shareholders to
change a majority of the Board of Directors. Our by-laws provide that the Board
of Directors shall consist of not less than six nor more than twelve members,
with the exact number to be determined by the vote of not less than 66 2/3 % of
the Board of Directors from time to time. Directors are elected to serve
staggered three-year terms and are not subject to removal except for cause by
the vote of the holders of at least 80% of our capital stock. Unless otherwise
required by law, vacancies on the Board of Directors, including vacancies
resulting from an increase in the number of directors or the removal of
directors, may only be filled by an affirmative vote of 66 2/3% of the directors
then in office. The classification of directors, the ability of the
Board of Directors to increase the number of directors, the inability of the
shareholders to remove directors without cause or fill vacancies on the Board of
Directors and the inability of holders of less than 80% of our capital stock to
remove directors even with cause will make it more difficult to change the Board
of Directors, and will promote the continuity of existing
management.
These and
other provisions also may have the effect of deterring, preventing or delaying
changes in control or management. These provisions are intended to enhance the
likelihood of continued stability in the composition of the Board of Directors
and in the policies furnished by the Board of Directors and to discourage types
of transactions that may involve an actual or threatened change of control.
These provisions are designed to reduce our vulnerability to an unsolicited
acquisition proposal. The provisions also are intended to discourage tactics
that may be used in proxy fights. However, such provisions could have the effect
of discouraging others from making tender offers for our shares and, as a
consequence, they also may inhibit fluctuations in the market price of our
shares that could result from actual or rumored takeover attempts. These
provisions also may have the effect of preventing changes in our
management.
New
Jersey Shareholders Protection Act
The New
Jersey Shareholders Protection Act, NJSA 14A:10A−1 et seq., which we refer to as
New Jersey Act, prohibits certain New Jersey corporations, such as us following
this offering, from entering into certain “business combinations” with an
“interested shareholder” (any person who is the beneficial owner of 10% or more
of such corporation’s outstanding voting securities) for five years after such
person became an interested shareholder, unless the business combination or the
interested shareholder’s acquisition of stock was approved by the corporation’s
Board of Directors prior to such interested shareholder’s stock acquisition
date. After the five-year waiting period has elapsed, a business combination
between such corporation and an interested shareholder will be prohibited unless
the business combination is approved by the holders of at least two-thirds of
the voting stock not beneficially owned by the interested shareholder, or unless
the business combination satisfies the New Jersey Act’s fair price provision
intended to provide that all shareholders (other than the interested
shareholders) receive a fair price for their shares.
The New
Jersey Act defines “business combination” to include the following transactions
between a corporation or a subsidiary and an interested shareholder or such
interested shareholder’s affiliates: (1) the merger or consolidation of the
corporation with the interested shareholder or any corporation that after the
merger or consolidation would be an affiliate or associate of the interested
shareholder; (2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with the interested shareholder, which has an aggregate market
value equal to 10% or more of the aggregate market value of all of the assets or
of the outstanding stock, or 10% or more of the income of the corporation or its
subsidiaries; (3) the issuance or transfer to the interested shareholder of any
stock of the corporation having an aggregate market value equal to or greater
than 5% of the corporation’s outstanding stock; (4) the adoption of a plan or
proposal for the liquidation or dissolution of the corporation proposed by the
interested shareholder; (5) any reclassification of securities proposed by the
interested shareholder that has the effect, directly or indirectly, of
increasing any class or series of stock that is owned by the interested
shareholder; and (6) the receipt by the interested shareholder of any loans or
other financial assistance from the corporation.
The New
Jersey Act does not apply to certain business combinations, including those with
persons who acquired 10% or more of the voting power of the corporation prior to
the time the corporation was required to file periodic reports pursuant to the
Exchange Act or prior to the time the corporation’s securities began to trade on
a national securities exchange.
Transfer
Agent and Registrar
The
Transfer Agent and Registrar for our common stock is American Stock Transfer
& Trust Company, New York, New York.
Listing
Our
shares of common stock are quoted on The NASDAQ Global Market under the symbol
“EMKR”.
LEGAL
MATTERS
The
validity of the shares of common stock offered hereby will be passed upon by
Jenner & Block LLP and, with respect to matters governed by New Jersey law,
by Dillon, Bitar & Luther, L.L.C.
EXPERTS
The consolidated financial statements
incorporated in this Prospectus by reference from the Company’s Annual Report on
Form 10-K for the fiscal year ended September 30, 2008, and the effectiveness of
EMCORE Corporation's internal control over financial reporting have been audited
by Deloitte & Touche LLP, an independent registered public accounting firm,
as stated in their reports which are incorporated herein by reference (which
reports (1) express an unqualified opinion on the consolidated financial
statements and includes an explanatory paragraph relating to the Company’s
ability to continue as a going concern and (2) express an unqualified opinion on
the effectiveness of internal control over financial reporting). Such
financial statements have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current
reports and other information with the Securities and Exchange Commission. You
may read and copy any document that we file at the Public Reference Room of the
SEC located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. In addition, the SEC maintains an Internet site at www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically, including EMCORE. We are not
incorporating the contents of the SEC website into this
prospectus. Certain of our filings may also be found on our website,
www.emcore.com, under the heading “Investor”. The information contained in or
connected to our website is not part of this prospectus.
We have
filed with the SEC a registration statement on Form S-1 (together with all
amendments and exhibits, the “registration statement”) under the Securities Act
of 1933, as amended with respect to the offering of common stock. This
prospectus, which constitutes part of the registration statement, does not
contain all of the information set forth in the registration statement. Certain
parts of the registration statement are omitted from the prospectus in
accordance with the rules and regulations of the SEC.
Our
common stock is listed on The NASDAQ Global Market and similar information can
be inspected and copied at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INFORMATION INCORPORATED BY
REFERENCE
The SEC allows us to
incorporate by reference in this prospectus the information in documents we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information in this prospectus
updates (and, to the extent of any conflict, supersedes) information
incorporated by reference that we have filed with the SEC prior to the date of
this prospectus. You
should read all of the information incorporated by reference because it is an
important part of this prospectus.
We incorporate by
reference the documents listed below and
any future filings made with the SEC by us under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until we sell all of the securities
(other than filings or portions of filings that are furnished under applicable
SEC rules rather than filed):
-
Annual Report on Form 10-K for the fiscal year ended September 30, 2008, filed
with the SEC on December 30, 2008, and as amended by Form 10-K/A, filed with the
SEC on January 28,
2009.
-
Quarterly Report on Form 10-Q for the quarter ended December 31, 2008, filed
with the SEC on February 17, 2009.
- Current
Reports on Form 8-K, filed with the SEC on October 3, 2008, November 3,
2008, December 11, 2008, and February 10, 2009.
We hereby undertake to
provide without charge to each person, including any beneficial owner, to whom a
copy of this prospectus is delivered, upon written or oral request of any such
person, a copy of any and all of the reports or documents that have been
incorporated by reference in this prospectus, other than exhibits to such
documents unless such exhibits have been specifically incorporated by reference
thereto. Requests for such copies should be directed to our Investor Relations
department, at the following address:
EMCORE
Corporation
10420
Research Road, SE
Albuquerque,
New Mexico 87123
EMCORE
CORPORATION
9,400,003
Shares
Common
Stock
,
2009
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution
The
following table sets forth the estimated costs and expenses of the sale and
distribution of the securities being registered, all of which are being borne by
the Registrant.
SEC
registration fee
|
$ | 2,335 | ||
Printing
and engraving fees
|
10,000 | |||
Legal
fees and expenses
|
175,000 | |||
Accounting
fees and expenses
|
133,000 | |||
Total
|
$ | 320,335 | ||
Item
14. Indemnification of Directors and Officers
The
Company’s Restated Certificate of Incorporation and By-Laws include provisions
(i) to reduce the personal liability of the Company’s directors for monetary
damage resulting from breaches of their fiduciary duty, and (ii) to permit the
Company to indemnify its directors and officers to the fullest extent permitted
by New Jersey law. The Company has obtained directors’ and officers’ liability
insurance that insures such persons against the costs of defense, settlement, or
payment of a judgment under certain circumstances.
Subject
to certain limitations, we are obligated to indemnify our current and former
directors, officers and employees in connection with the investigation of our
historical stock option granting practices, related government investigation and
shareholder litigation. These obligations arise under the terms of our
certificate of incorporation, our bylaws, applicable contracts, and New Jersey
law. The obligation to indemnify generally means that we are required to pay or
reimburse the individuals’ reasonable legal expenses and possibly damages and
other liabilities incurred in connection with these matters. We are currently
paying or reimbursing legal expenses being incurred in connection with these
matters by a number of our current and former directors, officers and employees.
The maximum potential amount of future payments the Company could be required to
make under these indemnification agreements is unlimited; however, the Company
has a director and officer liability insurance policies that limits its exposure
and enables it to recover a portion of any future amounts paid.
Item
15. Recent Sales of Unregistered Securities
1. On
November 10, 2005, EMCORE entered into an exchange agreement with Alexandra
Global Master Fund Ltd. to exchange $14,425,000 aggregate principal amount of
EMCORE’s outstanding convertible subordinated notes due May 15, 2006 for
$16,580,460 aggregate principal amount of newly issued convertible senior
subordinated notes due May 15, 2011. The notes were converted into
shares of our common stock on January 29, 2008 in connection with the
transaction on this date described below.
2. On
November 8, 2005, EMCORE entered into an asset purchase agreement with
Phasebridge, Inc., a privately held company located in Pasadena, California. In
connection with the asset purchase, based on a 10-trading day weighted average
price, EMCORE issued 128,205 shares of EMCORE common stock, no par value, that
were valued in the transaction at $0.7 million. The offer and sale
was made pursuant to Rule 506 of Regulation D under the Securities Act of 1933,
as amended (Securities Act), and without registration under the Securities Act,
in reliance on the exemption provided thereby. EMCORE relied upon the
representations, warranties, and agreements of Phasebridge, including its
agreement with respect to restrictions on resale, in support of the satisfaction
of the conditions of such exemption.
3. On
December 18, 2005, EMCORE entered into an asset purchase agreement with Force,
Inc., a privately held company located in Christiansburg, Virginia. In
connection with the asset purchase, EMCORE issued 240,000 shares of EMCORE
common stock, no par value, with a market value of $1.6 million at the
measurement date and $0.5 million in cash. The offer and sale was made pursuant
to Rule 506 of Regulation D under the Securities Act, and without registration
under the Securities Act, in reliance on the exemption provided
thereby. EMCORE relied upon the representations, warranties, and
agreements of Force, including its agreement with respect to restrictions on
resale, in support of the satisfaction of the conditions of such
exemption.
4. On
January 12, 2006, EMCORE entered into an Agreement and Plan of Merger with K2
Optronics, Inc., a privately held company located in Sunnyvale, California (K2)
and EMCORE Optoelectronics Acquisition Corporation, a wholly owned subsidiary of
EMCORE. In connection with the merger, EMCORE issued 548,688 shares of EMCORE
common stock, no par value, to K2’s shareholders.
5. On
January 29, 2008, EMCORE, in privately negotiated transactions, entered into
separate agreements with holders of approximately 97.5%, or approximately $83.3
million aggregate principal amount, of its outstanding 5.50% convertible senior
subordinated notes due 2011 (the “Notes”) pursuant to which this small number of
holders converted their Notes into the Company’s common stock. In
connection with the conversion of the Notes, the Company issued 11,884,937
shares of its common stock, based on a conversion price of $7.01, in accordance
with the terms of the Notes. The issuance of the Company’s common
stock upon conversion of the Notes is made in reliance on the exemption from the
registration requirements provided under Section 3(a)(9) of the Securities Act
of 1933. To incentivize the holders to convert their Notes, the
Company made cash payments to such holders equal to 4% of the principal amount
of the Notes converted, or $3.3 million, plus accrued interest of approximately
$1.0 million on the Notes converted. Subsequently, the
remaining $2.2 million in outstanding Notes were converted for 302,019 shares at
$7.01, in accordance with the terms of the Notes for a total of 12,186,656
shares.
6. On
February 20, 2008, we completed a private placement to accredited investors of
8,000,000 shares of our common stock, no par value, and warrants to purchase an
additional 1,400,003 shares of our common stock. The purchase price
was $12.50 per share, priced at the 20 day volume-weighted average
price. The warrants grant the holder the right to purchase one share
of our common stock at a price of $15.06 per share. The warrants are
immediately exercisable and remain exercisable for a period of 5 years from the
closing date.
7. On
February 22, 2008, EMCORE completed its acquisition of the telecom-related
assets of Intel Corporation’s Optical Platform Division. The telecom
assets acquired include intellectual property, assets and technology comprised
of tunable lasers, tunable transponders, 300-pin transponders, and integrated
tunable laser assemblies. The purchase price was $75 million in cash
and $10 million in the Company’s common stock, priced at a volume-weighted
average price of $13.84 per share. Under the terms of the Agreement,
the purchase price of $85 million could be adjusted based on an inventory
true-up, plus specifically assumed liabilities.
8. On
April 20, 2008, EMCORE completed the acquisition of the enterprise and storage
assets of Intel's Optical Platform Division. The assets acquired include
inventory, fixed assets, intellectual property, and technology relating to
optical transceivers for enterprise and storage customers, as well as optical
cable interconnects for high-performance computing clusters. As
consideration for the purchase of assets, the Company issued 3.7 million
restricted shares of the Company’s common stock to Intel. These
shares were valued at $26.1 million. In addition, the Company may be
required to make an additional payment to Intel based on the Company’s stock
price twelve months after the closing of the transaction. In the
event that the Company is required to make an additional payment, it has the
option to make that payment in cash, common stock or both (but not to exceed the
equivalent value of 1.3 million shares).
9. In
July 2008, EMCORE issued 145,843 shares of the Company's common stock to
Opticomm Corporation as an additional earn-out payment. This transaction
was valued at approximately $0.7 million. In April 2007, EMCORE acquired
privately-held Opticomm Corporation and agreed to an adidtional earn-out payment
based on Opticomm's 2007 revenue.
Item
16. Exhibits and Financial Statement Schedules
(a)
Exhibits.
2.1
|
Merger
Agreement, dated January 12, 2006, by and among K2 Optronics, Inc., EMCORE
Corporation, and EMCORE Optoelectronics Acquisition Corp. (incorporated by
reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed
on January 19, 2006).
|
2.2
|
Asset
Purchase Agreement between IQE RF, LLC, IQE plc, and EMCORE Corporation,
dated July 19, 2006. (incorporated by reference to Exhibit 2.1 to
Registrant’s Current Report on Form 8-K filed on July 24,
2006).
|
2.3
|
Membership
Interest Purchase Agreement, dated as of August 31, 2006, by and between
General Electric Company, acting through the GE Lighting operations of its
Consumer and Industrial division, and EMCORE Corporation (incorporated by
reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed
on September 7, 2006).
|
2.4
|
Stock
Purchase Agreement, dated as of April 13, 2007, by and among Registrant,
Opticomm Corporation and the persons named on Exhibit 1 thereto
(incorporated by reference to Exhibit 2.1 to Registrant’s Current Report
on Form 8-K filed April 19, 2007).
|
2.5*
|
Loan
and Security Agreement dated as of September 29, 2008, between Bank of
America, N.A. and Registrant.
|
2.6
|
Asset
Purchase Agreement, dated December 17, 2007, between EMCORE Corporation
and Intel Corporation (incorporated by reference to Exhibit 2.1 to the
Registrant’s Form 10-Q filed on February 11, 2008)
|
2.7
|
Asset
Purchase Agreement, dated April 9, 2008, between EMCORE Corporation and
Intel Corporation (incorporated by reference to Exhibit 2.1 to the
Registrant’s Form 10-Q filed on May 12, 2008)
|
2.8
|
Securities Purchase Agreement, dated February 15,
2008, between EMCORE Corporation and each investor identified on the
signature pages thereto (Filed as part of the Company’s Current Report on
Form 8-K, Commission file no. 000-22175, dated February 20, 2008, and
incorporated herein by reference)
|
3.1
|
Restated
Certificate of Incorporation, dated April 4, 2008 (incorporated by
reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K filed
on April 4, 2008).
|
3.2
|
Amended
By-Laws, as amended through August 7, 2008 (incorporated by reference to
Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on August 13,
2008).
|
4.1
|
Registration Rights Agreement, dated February 15,
2008, between EMCORE Corporation and the investors identified on the
signature pages thereto (Filed as part of the Company’s Current Report on
Form 8-K, Commission file no. 000-22175, dated February 20, 2008, and
incorporated herein by reference)
|
4.2
|
Form of Warrant, dated February 15, 2008 (Filed as
part of the Company’s Current Report on Form 8-K, Commission file no.
000-22175, dated February 20, 2008, and incorporated herein by
reference)
|
4.3
|
Specimen
certificate for shares of common stock (incorporated by reference to
Exhibit 4.1 to Amendment No. 3 to the Registration Statement on Form S-1
(File No. 333-18565) filed with the Commission on February 24,
1997).
|
5.1**
|
Opinion of Jenner & Block LLP |
5.2** | Opinion of Dillon, Bitar & Luther, L.L.C. |
10.1†
|
1995
Incentive and Non-Statutory Stock Option Plan (incorporated by reference
to Exhibit 10.1 to the Amendment No. 1 to the Registration Statement on
Form S-1 filed on February 6, 1997).
|
10.2†
|
1996
Amendment to Option Plan (incorporated by reference to Exhibit 10.2 to
Amendment No. 1 to the Registration Statement on Form S-1 filed on
February 6, 1997).
|
10.3†
|
MicroOptical
Devices 1996 Stock Option Plan (incorporated by reference to Exhibit 99.1
to the Registration Statement on Form S-8 filed on February 6,
1998).
|
10.4†
|
2000
Stock Option Plan, as amended and restated on March 31, 2008 (incorporated
by reference to the attached Exhibit to the Company’s Definitive Proxy
Statement filed on March 4, 2008).
|
10.5†
|
2000
Employee Stock Purchase Plan, as amended and restated on February 13, 2006
(incorporated by reference to Exhibit 10.2 to Registrant’s Current Report
on Form 8-K filed on February 17, 2006).
|
10.6†
|
Directors’
Stock Award Plan (incorporated herein by reference to Exhibit 99.1 to
Registrant’s Original Registration Statement of Form S-8 filed on November
5, 1997), as amended by the Registration Statement on Form S-8 filed on
August 10, 2004.
|
10.7
|
Memorandum
of Understanding, dated as of September 26, 2007 between Lewis Edelstein
and Registrant regarding shareholder derivative litigation (incorporated
by reference to Exhibit 10.10 to Registrant’s Annual Report on Form 10-K
for the fiscal year ended September 20, 2006).
|
10.8†
|
Fiscal
2008 Executive Bonus Plan (incorporated by reference to Exhibit
10.1 the Registrant’s Form 10-Q filed on May 12, 2008).
|
10.9†
|
Executive
Severance Policy (incorporated by reference to Exhibit 10.2 to
Registrant’s Current Report on Form 8-K filed on April 19,
2007).
|
10.10†
|
Outside
Directors Cash Compensation Plan, as amended and restated on February 13,
2006 (incorporated by reference to Exhibit 10.3 to Registrant’s Current
Report on Form 8-K filed on February 17, 2006).
|
10.11
|
Exchange
Agreement, dated as of November 10, 2005, by and between Alexandra Global
Master Fund Ltd. and Registrant (incorporated by reference to Exhibit
10.15 to Registrant’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2005).
|
10.12
|
Consent
to Amendment and Waiver, dated as of April 9, 2007, by and among EMCORE
Corporation and certain holders of the 2004 Notes party thereto
(incorporated by reference to Exhibit 10.1 to Registrant’s Current Report
on Form 8-K filed on April 10, 2007).
|
10.13
|
Consent
to Amendment and Waiver, dated as of April 9, 2007, by and between EMCORE
Corporation and the holder of the 2005 Notes (incorporated by reference to
Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed on April 10,
2007).
|
10.14
|
Investment
Agreement between WorldWater and Power Corp. and Registrant, dated
November 29, 2006 (incorporated by reference to Exhibit 10.1 to
Registrant’s Current Report on Form 8-K filed on December 5,
2006).
|
10.15
|
Registration
Rights Agreement between WorldWater and Power Corp. and Registrant, dated
November 29, 2006 (incorporated by reference to Exhibit 10.1 to
Registrant’s Current Report on Form 8-K filed on December 5,
2006).
|
10.16
|
Letter
Agreement between WorldWater and Power Corp. and Registrant, dated
November 29, 2006 (incorporated by reference to Exhibit 10.3 to
Registrant’s Current Report on Form 8-K filed on December 5, 2006).
Confidential Treatment has been requested by the Company with respect to
portions of this document. Such portions are indicated by
“*****”.
|
10.17†
|
Dr.
Hong Hou Offer Letter dated December 14, 2006 (incorporated by reference
to Exhibit 10.1 to Registrant’s Current Report filed on December 20,
2006).
|
10.18
|
Stipulation
of Compromise and Settlement, dated as of November 28, 2007 executed by
the Company and the other defendants and the plaintiffs in the Federal
Court Action and the State Court Actions (incorporated by reference to
Exhibit 10.19 to the Registrant’s Form 10-K filed of December 31,
2007).
|
10.19†
|
2008
Director’s Stock Award Plan (incorporated by reference to Exhibit 10.1 to
Registrant’s Form 10-Q filed on February 11, 2008).
|
10.20†*
|
Mr.
John M. Markovich Offer Letter dated August 7, 2008.
|
14.1
|
Code
of Ethics for Financial Professionals (incorporated by reference to
Exhibit 14.1 to Registrant’s Annual Report on Form 10-K for the fiscal
year ended September 30, 2003).
|
21.1**
|
Subsidiaries
of the Registrant.
|
23.1**
|
Consent
of Deloitte & Touche LLP.
|
23.2**
|
Consent
of Jenner & Block LLP (contained in Exhibit
5.1)
|
23.3**
|
Consent
of Dillon, Bitar & Luther, L.L.C. (contained in Exhibit
5.2)
|
__________
* Filed with the Form 10-K filed on
December 30, 2008
** Filed herewith
† Management contract or compensatory
plan
(b) Financial
Statement Schedules. Not
applicable.
Item
17. Undertakings
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post−effective amendment to this registration statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of this registration statement (or the most recent post−effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each such
post−effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post−effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for purposes of determining liability under the Securities Act to any
purchaser:
(i) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(ii) Each
prospectus required to be filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering shall be deemed to be part of and
included in the registration statement as of the earlier of the date such form
of prospectus is first used after effectiveness.
Provided, however, that no statement
made in a registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such
effective date, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such effective
date.
(5) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(6) That,
for the purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the
securities, the undersigned registrant undertakes that in a primary
offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned
registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(7) The
undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Pursuant
to the requirements of the Securities Act of 1933, the registrant, EMCORE
Corporation, has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Albuquerque, State of New Mexico, on the 25th day of February,
2009.
EMCORE
CORPORATION
|
||
Date:
February 25, 2009
|
By:
|
/s/
Reuben F. Richards, Jr.
|
Reuben
F. Richards, Jr.
|
||
Executive
Chairman & Chairman of the Board
(Principal
Executive Officer)
|
Date:
February 25, 2009
|
By:
|
/s/
Hong Q. Hou
|
Hong
Q. Hou, Ph.D.
|
||
Chief
Executive Officer
(Principal
Executive Officer)
|
Pursuant
to the requirements of the Securities Exchange Act of 1933, this registration
statement has been signed by the following persons on behalf of the registrant
in the capacities indicated, on February 25, 2009.
Signature
|
Title
|
/s/ Reuben F. Richards, Jr.
|
|
Reuben
F. Richards, Jr.
|
Executive
Chairman and Chairman of the Board (Principal Executive
Officer)
|
/s/ Hong Q. Hou
|
|
Hong
Q. Hou, Ph.D.
|
Chief
Executive Officer and Director (Principal Executive
Officer)
|
/s/ John M. Markovich
|
|
John
M. Markovich
|
Chief
Financial Officer (Principal Financial and Accounting
Officer)
|
*
|
|
Thomas
J. Russell, Ph.D.
|
Director
|
*
|
|
Charles
T. Scott
|
Director
|
*
|
|
John
Gillen
|
Director
|
*
|
|
Robert
Bogomolny
|
Director
|
* By:
/s/ Reuben F. Richards
Reuben
F. Richards, Jr.
Attorney
in Fact
|