UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
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by the Registrant
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by a Party other than the Registrant
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appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
ORSUS XELENT TECHNOLOGIES,
INC.
(Name of
Registrant as Specified in Its Charter)
(Name of
Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
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(2)
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Aggregate
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Per
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calculated and state how it was determined):
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ORSUS
XELENT TECHNOLOGIES, INC.
12th
Floor, Tower B, Chaowai MEN Office Building
26
Chaowai Street, Chaoyang Disc.
Beijing,
People’s Republic Of China 100020
NOTICE
OF THE 2009 ANNUAL MEETING OF STOCKHOLDERS
To
Be Held On December 30, 2009
To the
Stockholders of Orsus Xelent Technologies, Inc.:
You are
cordially invited to attend the 2009 Annual Meeting of Stockholders of Orsus
Xelent Technologies, Inc., a Delaware corporation (the “Company”). The annual
meeting will be held on Wednesday, December 30, 2009 at 9:00 a.m. Eastern
Standard Time at the offices of K&L Gates LLP, 599 Lexington Avenue, New
York, NY 10022
for
the following purposes:
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1.
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To
elect five (5) directors of the Company to hold office until the 2010
Annual Meeting of
Stockholders;
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2.
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To
ratify the appointment of Bernstein & Pinchuk LLP as the Company’s
independent auditors for the fiscal year ending December 31, 2009;
and
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3.
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To
conduct any other business properly brought before the annual meeting or
any adjournment or postponement
thereof.
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These
items of business are more fully described in the Proxy Statement accompanying
this Notice. The record date for the annual meeting is November 2, 2009. Only
stockholders of record at the close of business on that date may vote at the
annual meeting or any adjournment or postponement thereof. A list of the
stockholders entitled to vote at the annual meeting will be available for
examination by any stockholder for any purpose reasonably related to the
annual meeting during ordinary business hours in the office of the Chief
Financial Officer of the Company during the ten days prior to the annual
meeting.
You are cordially invited to attend the
annual meeting in person. Whether or not you expect to attend the annual
meeting, please submit your vote by proxy as promptly as possible in order to
ensure your representation at the annual meeting and that a quorum will be
present. Even if you have voted by proxy, you may still vote in person
if you attend the annual meeting. Please note, however, that if your shares
are held of record by a broker, bank, or other nominee and you wish to vote at
the annual meeting, you must obtain a proxy issued in your name from that record
holder.
Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to be Held on
December 30
,
2009: The
Proxy Statement for the Annual Meeting and the Annual Report on Form 10-K for
the year ended March 31, 2008 are available at
http://materials.proxyvote.com/68749U.
By Order
of the Board of Directors,
Liu
Yu
Chairman
of the Board of Directors
November
12, 2009
ORSUS
XELENT TECHNOLOGIES, INC.
29
th
Floor,
Tower B, Chaowai MEN Office Building
26
Chaowai Street, Chaoyang Disc.
Beijing,
People’s Republic Of China 100020
FOR
THE 2009 ANNUAL MEETING OF STOCKHOLDERS
To
Be Held On December 30, 2009
QUESTIONS
AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why
am I receiving these materials?
The proxy
materials are being furnished to you because the Board of Directors of Orsus
Xelent Technologies, Inc. (sometimes referred to as the “Company”, “Orsus
Xelent”, “us” or “our”) is soliciting your proxy to vote at the 2009 Annual
Meeting of Stockholders. You are invited to attend the annual meeting to vote on
the proposals described in this proxy statement. However, you do not need to
attend the annual meeting to vote your shares. Instead, you may simply complete,
sign and return the proxy card, which is available at
http://materials.proxyvote.com/68749U. The approximate date on which
the proxy statement and accompanying materials are intended to be sent or given
to the stockholders is November 16, 2009.
Who
can vote at the annual meeting?
Only stockholders of record at the
close of business on November 2, 2009, will be entitled to vote at the annual
meeting. On this record date, there were 29,756,000 shares of common stock
outstanding and entitled to vote.
Stockholders of Record:
Shares Registered in Your Name
If on
November 2, 2009, your shares were registered directly in your name with our
transfer agent, Corporate Stock Transfer, Inc., then you are a stockholder of
record. As a stockholder of record, you may vote in person at the annual meeting
or vote by proxy. Whether or not you plan to attend the annual meeting, we ask
you to fill out and return the proxy card, which is available at
http://materials.proxyvote.com/68749U, if you wish to have your vote
recorded.
Beneficial
Owner: Shares Registered in the
Name of a Broker or Bank
If on
November
2, 2009,
your shares were held in an account at a brokerage firm, bank, dealer or other
similar organization, then you are the beneficial owner of shares held in
“street name’’ and these proxy materials are being forwarded to you by that
organization. The organization holding your account is considered the
stockholder of record for purposes of voting at the annual meeting. As a
beneficial owner, you have the right to direct your broker or other agent on how
to vote the shares in your account. You are also invited to attend the annual
meeting. However, since you are not the stockholder of record, you may not vote
your shares in person at the annual meeting unless you request and obtain a
valid proxy from your broker or other agent.
The only
matters scheduled for a vote are (i) the election of five (5) directors of the
Company, to hold office until the 2010 Annual Meeting of Stockholders, and (ii)
the ratification of the appointment of Bernstein & Pinchuk LLP as the
Company’s independent auditors for the fiscal year ending December 31,
2009.
How
do I vote?
You may
either vote “For’’ all the nominees to the Board of Directors or you may
withhold from voting for any nominee you specify. For all of the
other matters to be voted on, you may vote “For”, “Against” or abstain from
voting.
Stockholder of Record: Shares
Registered in Your Name
If you are a stockholder of record, you
may vote in person at the annual meeting, or vote by proxy using the proxy card,
which is available at http://materials.proxyvote.com/68749U. Whether or not you
plan to attend the annual meeting, we urge you to vote by proxy to ensure your
vote is counted. You may still attend the annual meeting and vote in person if
you have already voted by proxy. Please note that the notice letter
you received directing you to the website at which the proxy materials are
available is not the proxy card and should not be used to submit your
vote.
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To
vote in person, come to the annual meeting and we will give you a ballot
when you arrive.
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To
vote using the proxy card, simply print the proxy card, complete, sign and
date it and return it promptly to K&L Gates LLP, Attn: Aaron Menzi,
599 Lexington Avenue, New York, NY 10022. If you return your signed proxy
card to us before the annual meeting, we will vote your shares as you
direct. Please note that the notice letter you received directing you
to the website at which proxy materials are available is not the proxy
card and should not be used to submit your
vote.
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Beneficial Owner: Shares Registered
in the Name of Broker or Bank
If you
are a beneficial owner of shares registered in the name of your broker, bank, or
other agent, you should have received a proxy card and voting instructions with
these proxy materials from that organization rather than from us. Simply
complete and mail the proxy card or follow the instructions included with the
proxy materials to vote by telephone or Internet to ensure that your vote is
counted. To vote in person at the annual meeting, you must obtain a valid proxy
from your broker, bank, or other agent. Follow the instructions from your broker
or bank included with these proxy materials, or contact your broker or bank to
request a proxy form.
How many votes do I have
?
On each
matter to be voted upon, you have one vote for each share of common stock you
own as of November 2, 2009.
What
if I return a proxy card but do not make specific choices?
If you
return a signed and dated proxy card without marking any voting selections, your
shares will be voted “For” the election of all of the Company’s nominees for
director. If any other matter is properly presented at the annual meeting, your
proxy (one of the individuals named on your proxy card) will vote your shares
using his or her best judgment.
Who
is paying for this proxy solicitation?
We will
pay for the entire cost of soliciting proxies. In addition to these proxy
materials, our directors and employees may also solicit proxies in person, by
telephone or by other means of communication. Directors and employees will not
be paid any additional compensation for soliciting proxies. We may also
reimburse brokerage firms, banks and other agents for the cost of
forwarding proxy materials to beneficial owners.
What does it mean if I receive more
than one set of proxy materials or notice letter
?
If you
receive more than one set of proxy materials or notice letter for the Annual
Meeting of Stockholders, your shares are registered in more than one name or are
registered in different accounts. Please submit your vote by proxy for all of
your shares to ensure that all of your shares are voted.
Can
I change my vote after submitting my proxy?
Yes. You
can revoke your proxy at any time before the final vote at the annual meeting.
You may revoke your proxy in any one of three ways:
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1.
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You
may submit another properly completed proxy bearing a later
date.
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2.
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You
may send a written notice that you are revoking your proxy to Orsus
Xelent’s Chief Financial Officer at 29th Floor, Tower B, Chaowai MEN
Office Building, 26 Chaowai Street, Chaoyang Dist., Beijing, People’s
Republic Of China 100020.
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3.
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You
may attend the annual meeting and vote in person. Simply attending the
annual meeting will not, by itself, revoke your
proxy.
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When
are stockholder proposals due for next year’s annual meeting?
To be
considered for inclusion in next year’s proxy materials, your proposal must be
delivered in writing by July 19, 2010, to Orsus Xelent’s Chief Financial Officer
at 29th Floor, Tower B, Chaowai MEN Office Building, 26 Chaowai Street, Chaoyang
Dist., Beijing, People’s Republic Of China 100020. If the 2010 annual meeting is
to be held before November 30, 2010 or after January 29, 2011, the proposal must
be received by us either 90 days prior to the actual meeting date or 10 days
after we first publicly announce the meeting date, whichever is later.
Stockholders are also advised to review the Company’s Bylaws, which contain
additional requirements with respect to advance notice of stockholder proposals
and director nominations.
How
are votes counted?
Votes
will be counted by the inspector of election appointed for the annual meeting,
who will separately count “For” and (with respect to proposals other than the
election of directors) “Against” votes, abstentions and broker non-votes.
Abstentions will be counted towards the vote total for each proposal and will
have the same effect as “Against” votes. Broker non-votes have no effect
and will not be counted towards the vote total for any proposal.
If your
shares are held by your broker as your nominee (that is, in “street name”), you
will need to obtain a proxy form from the institution that holds your shares and
follow the instructions included on that form regarding how to instruct your
broker to vote your shares. If the broker or nominee is not given specific
instructions, shares held in the name of such broker or nominee may not be voted
on those matters and will not be considered as present and entitled to vote with
respect to those matters. Shares represented by such “broker non-votes” will,
however, be counted in determining whether there is a quorum.
How
many votes are needed to approve the proposal?
For the election of Directors, the five
(5) nominees receiving the most “For” votes (among votes properly cast in person
or by proxy) will be elected. Broker non-votes will have no effect. For the
ratification of the auditors, a majority of the shares of common stock
represented in person or by proxy and entitled to vote at the annual meeting
must be voted in favor of the proposal.
What
is the quorum requirement?
A quorum of stockholders is necessary
to hold a valid meeting. A quorum will be present if at least a majority of the
outstanding shares are represented by stockholders present at the meeting or by
proxy. On the record date, there were 29,756,000 shares outstanding and entitled
to vote. Thus 14,878,001 shares must be represented by stockholders present at
the annual meeting or by proxy to have a quorum. Your shares will be counted
towards the quorum only if you submit a valid proxy vote or vote at the annual
meeting. Abstentions and broker non-votes will be counted towards the quorum
requirement. If there is no quorum, a majority of the votes present at the
annual meeting may adjourn the annual meeting to another date.
How can I find out the results of
the voting at the annual meeting
?
Voting
results will be published in the Company’s annual report on Form 10-K for the
fiscal year ending December 31, 2009.
Interest
of Officers and Directors in Matters to Be Acted Upon
None of the Company’s directors or
executive officers has any substantial interest, direct or indirect, by security
holdings or otherwise, in any matter to be acted upon at the annual
meeting.
PROPOSAL
ONE
ELECTION
OF DIRECTORS
Orsus
Xelent’s Board of Directors is currently comprised of five members, each serving
a one year term. Vacancies on the Board of Directors may be filled only by
persons elected by a majority of the remaining Directors. A Director elected by
the Board of Directors to fill a vacancy shall serve for the remainder of the
term of that Director and until the Director’s successor is elected and
qualified. This includes vacancies created by an increase in the number of
Directors.
The Board
of Directors has recommended for election Guoji Liu, Liu Yu, Naizhong Che, Peng
Wang, and Zhixiang Zhang. If elected at the annual meeting, these Directors
would serve until the 2010 Annual Meeting and until their successors are elected
and qualified, or until their earlier death, resignation or
removal.
Directors
are elected by a plurality of the votes present in person or represented by
proxy and entitled to vote at the annual meeting. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of Guoji Liu, Liu Yu, Naizhong Che, Peng Wang, and Zhixiang Zhang. In the event
that any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as the Board of Directors may propose. Each of Guoji Liu, Liu Yu,
Naizhong Che, Peng Wang, and Zhixiang Zhang has agreed to serve if elected,
and we have no reason to believe that they will be unable to serve.
Our
directors and nominees, their ages, positions with Orsus Xelent, the dates of
their initial election or appointment as director are as follows:
Name
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Age
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Position With NOEC
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Served From
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Guoji
Liu
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40
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Director and Chief Executive Officer
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March
2009
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Liu
Yu
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43
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Chairman
of the Board
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March
2005
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Naizhong
Che (2)(3)
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66
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Director
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February
2007
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Peng
Wang (1)(2)
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37
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Director
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February
2007
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Zhixiang
Zhang (1)(3)
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41
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Director
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February
2007
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(1)
Member of Audit Committee
(2)
Member of Compensation Committee
(3)
Member of Nominating and Corporate Governance Committee
The
following is a brief biography of each director nominee.
Guoji Liu
earned his
undergraduate degree at China Science and Technology University Management
College in 1993 and has over 15 years’ working experience in the cell phone
industry specializing in the marketing and management. Since September 2007,
Guoji Liu has served as a deputy General Manager of the Company and has
helped the Company capture a considerable market share of mid-level and low-end
products. Before joining the Company, Mr. Guoji Liu worked as a supervisor at
Pantech Beijing office (Mar. 2005 - Aug. 2007), a general manager at the
marketing department of Tianjin Sanyo Telecommunication Corp. (Nov. 2004 - Mar.
2005), the assistant of CEO for Beijing Huasong PYPO Group Co. Ltd. (Nov. 2003 -
Nov. 2004), a sales director for Xiamen Chabridge Telecom Equipment
Co. Ltd. (Oct. 2002 - Oct. 2003), an account manager for Beijing Nokia
Telecommunication Ltd. (1997 - 2002), and a sales director for Beijing Aurora
telecommunication Corp. Ltd. (1993 - 1997).
Liu Yu
has served as Chairman
of our Board of Directors since March 31, 2005 and a member of the Board of
Directors of Beijing Xelent since April 2003. From May 1998 to
present he has also served as Chairman of the Board of Beijing Huanyitong
Technology & Trading Co., Ltd. From May 1995 to April 1998,
he served as General Manager of Beijing Lianwanjia Telecommunication Trading
Center.
Naizhong Che
earned his B.S.
from Beijing University of Posts and Telecommunications. Now retired,
he has broad experience in the communications industry including R&D,
production, imports and exports. He served twelve years with the
Ministry of Information Industry of China Posts and Telecommunications Industry
Standardization Institute in various capacities.
Peng Wang
earned his
bachelor’s degree at Central University of Finance and Economics and his
master’s at Guanghua School of Management, Peking University. His expertise
includes formulating, planning and implementing marketing strategies for
technology companies. He is currently General Manager for Beijing
Youlilianxu Technology Co., Ltd. Where he is responsible for products in China,
including ViewSonic projection, Samsung MP4 and LG projection.
Zhixiang Zhang
earned bachelor
and master’s degrees at Central University of Finance and
Economics. He has extensive experience in corporate financial
management, audits and financial strategy, and most recently was the Financial
Controller for Cec-Chinacomm Communications Co., Ltd.
***THE
BOARD OF DIRECTORS STRONGLY RECOMMENDS
THAT
YOU VOTE “FOR” THE ELECTION OF EACH OF MESSRS.
Gouji
Liu, Liu Yu, Naizhong Che, Peng Wang and Zhixiang Zhang ***
PROPOSAL
2 - RATIFICATION OF APPOINTMENT OF
BERNSTEIN
& PINCHUK LLP
The Audit
Committee of the Board of Directors has appointed Bernstein & Pinchuk LLP as
the Company’s independent registered public accountants for the fiscal year
ending December 31, 2009.
PKF Hong
Kong Certified Public Accounts, the Company’s independent public accountants
since October 17, 2008, resigned on August 10, 2009. The Audit Committee
approved the resignation of PKF Hong Kong Certified Public Accounts and hired
Bernstein & Pinchuk LLP as the Company’s independent public accountants
effective on August 13, 2009. For additional information, please review the
Company’s Current Report on Form 8-K filed with the SEC on August 14, 2009 and
“
Changes in and Disagreements
with Accountants
” below.
Representatives
of PKF Hong Kong
Certified
Public Accountants and Bernstein & Pinchuk LLP are not expected to be
present at the Meeting.
We are
asking our stockholders to ratify the selection of Bernstein & Pinchuk LLP
as our independent public accountants. Although ratification is not required by
our Bylaws or otherwise, the Board of Directors is submitting the selection of
Bernstein & Pinchuk LLP to our stockholders for ratification as a matter of
good corporate practice.
The
affirmative vote of the holders of a majority of shares represented in person or
by proxy and entitled to vote on this item will be required for approval.
Abstentions will be counted as represented and entitled to vote and will
therefore have the effect of a negative vote.
***THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
RATIFICATION
OF THE APPOINTMENT OF BERNSTEIN & PINCHUK LLP AS
THE
COMPANY’S INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL YEAR
2009.
***
In the
event stockholders do not ratify the appointment, the appointment will be
reconsidered by the Audit Committee and the Board of Directors. Even if the
selection is ratified, the Audit Committee in its discretion may select a
different independent public accounting firm at any time during the year if it
determines that such a change would be in the best interests of the Company and
our stockholders.
Meetings
and Certain Committees of the Board
The Board
of Directors held eight meetings during the fiscal year ended December 31,
2008. Each of the directors attended, either in person or
telephonically, at least 75% of the aggregate Board of Directors meetings and
meetings of any committees on which he served during his tenure as a director or
committee member.
On
February 7, 2007, the Company’s Board of Directors approved and authorized the
establishment of three new committees to assist the Board of Directors in the
execution of its responsibilities: an Audit Committee, a Compensation Committee
and a Nominations/Corporate Governance Committee. In accordance with NYSE Amex
Equities listing standards, all the committees are comprised solely of
non-employee, independent Directors. Charters for each committee are available
on the Company’s website at www.orsus-xelent.com. The charter of each
committee is also available in print by stockholder request. The
table below shows current membership for each of the Board’s standing
committees:
Audit Committee
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Nominating/Corporate
Governance Committee
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Compensation Committee
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Zhixiang
Zhang (Chair)
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Naizhong
Che (Chair)
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Naizhong
Che (Chair)
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Peng
Wang
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Zhixiang
Zhang
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Peng
Wang
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Board
Committees
Audit
Committee
The Audit
Committee is responsible for overseeing the Company’s corporate accounting,
financial reporting practices, audits of financial statements and the quality
and integrity of the Company’s financial statements and reports. In addition,
the Audit Committee oversees the qualifications, independence and performance of
the Company’s independent auditors. In furtherance of these responsibilities,
the Audit Committee’s duties include the following: evaluating the performance
of and assessing the qualifications of the independent auditors; determining and
approving the engagement of the independent auditors to perform audit, reviewing
and attesting to services and performing any proposed permissible non-audit
services; evaluating employment by the Company of individuals formerly employed
by the independent auditors and engaged on the Company’s account and any
conflicts or disagreements between the independent auditors and management
regarding financial reporting, accounting practices or policies; discussing with
management and the independent auditors the results of the annual audit;
reviewing the financial statements proposed to be included in the Company’s
annual report on Form 10-K; discussing with management and the independent
auditors the results of the auditors’ review of the Company’s quarterly
financial statements; conferring with management and the independent auditors
regarding the scope, adequacy and effectiveness of internal auditing and
financial reporting controls and procedures; and establishing procedures for the
receipt, retention and treatment of complaints regarding accounting, internal
accounting control and auditing matters and the confidential and anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.
The Audit
Committee is currently comprised of Zhixiang Zhang (Chair) and Peng Wang, both
of whom are “independent,” as defined in applicable SEC rules and the NYSE Amex
Equities Company Guide. The Audit Committee met five times during the
fiscal year ended December 31, 2008. The Board of Directors has determined that
Zhixiang Zhang qualifies as an “audit committee financial expert,” as defined in
applicable SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002.
The Board of Directors made a qualitative assessment of Mr. Zhang’s level of
knowledge and experience based on a number of factors, including his formal
education and experience.
The Audit
Committee operates under the written Audit Committee Charter adopted by the
Board of Directors in February of 2007, a copy of which may be obtained by
writing the Secretary of the Company at 29th Floor, Tower B, Chaowai MEN Office
Building, 26 Chaowai Street, Chaoyang Disc., Beijing, People’s Republic of China
100020. The Report of the Audit Committee is included elsewhere in this proxy
statement.
Compensation
Committee
The
Compensation Committee reviews and, as it deems appropriate, recommends to the
Board of Directors’ policies, practices and procedures relating to the
compensation of the officers and other managerial employees and the
establishment and administration of employee benefit plans. It advises and
consults with the officers of the Company as may be requested regarding
managerial personnel policies. The Compensation Committee also has such
additional powers as may be conferred upon it from time to time by the Board of
Directors. The Compensation Committee is currently comprised of the following
Directors of the Company: Naizhong Che (Chair) and Peng Wang, both of whom are
“independent” as defined by the Company Guide of NYSE Amex Equities. For the
fiscal year ended December 31, 2008, the Compensation Committee met 1 time. The
Compensation Committee operates under the written Compensation Committee Charter
adopted by the Board of Directors in February of 2007, a copy of which may be
obtained by writing the Secretary of the Company at 29th Floor, Tower B, Chaowai
MEN Office Building, 26 Chaowai Street, Chaoyang Disc., Beijing, People’s
Republic of China 100020.
Compensation
Committee Interlocks and Insider Participation in Compensation
Decisions
During
the fiscal year ended December 31, 2008, none of the Company’s executive
officers served on the board of directors or compensation committee of any other
entity whose executive officers served either the Company’s Board of Directors
or Compensation Committee.
Nominating
and Corporate Governance Committee
The
Nominating and Corporate Governance Committee (“Nominating Committee”) is
responsible for preparing a list of candidates to fill the expiring terms of
directors serving on our Board of Directors. The Nominating Committee submits
the list of candidates to the Board of Directors who determines which candidates
will be nominated to serve on the Board of Directors. The names of nominees are
then submitted for election at our Annual Meeting of Stockholders. The
Nominating Committee also submits to the entire Board of Directors a list of
nominees to fill any interim vacancies on the Board of Directors resulting from
the departure of a member of the Board of Directors for any reason prior to the
expiration of his term. In recommending nominees to the Board of Directors, the
Nominating Committee keeps in mind the functions of this body. The Nominating
Committee considers various criteria, including the ability of the individual to
meet the SEC and NYSE Amex Equities “independence” requirements, general
business experience, general financial experience, knowledge of the Company’s
industry (including past industry experience), education, and demonstrated
character and judgment. The Nominating Committee will consider director nominees
recommended by a stockholder if the stockholder mails timely notice to the
Secretary of the Company at its principal offices, which notice includes (i) the
name, age and business address of such nominee, (ii) the principal occupation of
such nominee, (iii) a brief statement as to such nominee’s qualifications, (iv)
a statement that such nominee consents to his or her nomination and will serve
as a director if elected, (v) whether such nominee meets the definition of an
“independent” director under the rules of the NYSE Amex Equities listing
standards and (vi) the name, address, class and number of shares of capital
stock of the Company held by the nominating stockholder. Any person nominated by
a stockholder for election to the Board of Directors will be evaluated based on
the same criteria as all other nominees.
The
Nominating Committee also oversees our adherence to our corporate governance
standards. The members of the Nominating Committee are Naizhong Che (Chair) and
Zhixiang Zhang, both of whom are “independent” as defined by the Company Guide
of NYSE Amex Equities. For the fiscal year ended December 31, 2008, the
Nominating Committee met 3 times. The Nominating Committee operates
under the written Nominating Committee Charter adopted by the Board of Directors
in February of 2007, a copy of which may be obtained by writing the Secretary of
the Company at 29th Floor, Tower B, Chaowai MEN Office Building, 26 Chaowai
Street, Chaoyang Disc., Beijing, People’s Republic of China 100020.
During
the fiscal year ended December 31, 2008, there were no changes to the procedures
by which holders of our common stock may recommend nominees to the Board of
Directors.
Report
of the Audit Committee
(as
set forth in the Company’s Form 10-K for the fiscal year ended December 31,
2008)
The Audit
Committee was established on February 7, 2007 and is composed of non-management
Directors. It is currently composed of two independent Directors,
Zhixiang Zhang (Chair) and Peng Wang, and operates under the written Audit
Committee charter adopted by the Board of Directors on February 7,
2007.
Under its
charter, the Audit Committee provides assistance and guidance to the Board in
fulfilling its oversight responsibilities to the Company’s stockholders with
respect to the Company’s corporate accounting and reporting practices as well as
the quality and integrity of the Company’s financial statements and reports. The
Company’s principal executive officer and principal financial officer have the
primary responsibility for the financial statements and the reporting process,
including the systems of internal controls. The Company’s independent auditors
are responsible for auditing the Company’s financial statements and expressing
an opinion on the conformity of the audited financial statements with generally
accepted accounting principles. The Audit Committee’s responsibility is to
monitor and oversee these processes.
To this
end, the Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2008 with
management and PKF Certified Public Accounts, the Company’s independent auditor.
The Audit Committee discussed with PKF Certified Public Accounts certain matters
related to the conduct of the audit as required by Statement on Auditing
Standards 61, as amended by Statement on Auditing Standards 90. In addition, the
Audit Committee has received from PKF Certified Public Accounts the written
disclosures and the letter regarding the auditor’s independence required by
Independence Standards Board Standard No. 1 and has discussed with PKF Certified
Public Accounts its independence.
In
reliance on the reviews and discussions described above, the Audit Committee
recommended to the Board of Directors that the Company’s audited financial
statements for the fiscal year ended December 31, 2008 be included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and
the Board of Directors accepted the Audit Committee’s
recommendation.
The Audit
Committee selected PKF Certified Public Accounts as the Company’s independent
auditors for the fiscal year ended December 31, 2008. The selection
of auditors is determined by the Audit Committee. Although ratification by
stockholders is not required by our Bylaws or otherwise, at our Annual Meeting
of Stockholders on December 30, 2008, the Board of Directors submitted the
selection of PKF Certified Public Accountants to our stockholders for
ratification as a matter of good corporate practice. *
AUDIT
COMMITTEE
Zhixiang
Zhang (Chair)
Peng
Wang
* As discussed under the caption “
Changes in and Disagreements with
Accountants
” below, PKF Certified Public Accounts resigned as the
Company’s independent auditors, effective August 10, 2009.
Stockholder
Communications
The Board
of Directors welcomes communications from our stockholders, and maintains a
process for stockholders to communicate with the Board of
Directors. Stockholders who wish to communicate with the Board of
Directors may send a letter to the Chairman of the Board of Directors of Orsus
Xelent Technologies, Inc., at 12th Floor, Tower B, Chaowai MEN Office Building,
26 Chaowai Street, Chaoyang Disc., Beijing, People’s Republic Of China
100020. The mailing envelope must contain a clear notation indicating
that the enclosed letter is a “Stockholder-Board Communication.” All
such letters should identify the author as a security holder. All
such letters will be reviewed by the Chairman of the Board of Directors and
submitted to the entire Board of Directors no later than the next regularly
scheduled Board of Directors meeting.
Annual
Meetings
We have
no policy with respect to Director attendance at annual meetings.
Compensation
of Directors
On March
27, 2008, the Board adopted a proposal to compensate Directors for their service
to the Company. The compensation for all Directors was set at $2,000 per month
for service from February 7, 2007 to March 4, 2008, with each Director being
paid in accordance with their term on the Board of Directors. For service from
March 5, 2008 to December 31, 2008, the compensation for committee chairpersons
is increased to $2,500, but compensation for other Directors or committee
members remains at $2,000 per month. Any income tax owed by Directors in China
on such compensation is deducted from the salary and paid to the tax authority
by the Company, with any Directors outside of China arranging for the payment of
any applicable income taxes. Previously, the Company did not pay compensation to
its Directors. All Directors are reimbursed for out-of-pocket
expenses in connection with attendance at Board of Director’s and/or committee
meetings. The Company is in the process of evaluating whether to establish other
compensation plans (e.g. options) in the future.
Retirement,
Post-Termination and Change in Control
We have
no retirement, pension, or profit-sharing programs for the benefit of Directors,
officers or other employees, nor do we have post-termination or change in
control arrangements with Directors, officer or other employees, but our Board
of Directors may recommend adoption of one or more such programs in the
future.
EXECUTIVE
OFFICERS
General
Certain
information concerning our executive officers as of the date of this proxy
statement is set forth below.
Name
|
|
Age
|
|
Position
With Our Company
|
Guoji
Liu
(1)
|
|
40
|
|
Chief
Executive Officer and Director
|
Hua
Chen
(2)
|
|
48
|
|
Chief
Financial
Officer
|
__________________
(1)
|
For
complete biography see page 7.
|
(2)
|
Prior
to his appointment as Chief Financial Officer of the Company, Mr. Hua Chen
was the Acting CFO of Daye Transmedia Co. Ltd., one of the top media
companies in the People’s Republic of China, from May 2008 to April
2009. In addition, from August 2005 to May of 2008 he was the
Vice General Manager of Elight Capital Inc., a financial consulting
company, and from April 1999 to May 2008 he was the Chief Analyst of Genes
Capital Group, which performs assets management and investment
analysis. Mr. Hua Chen entered a one year employment
arrangement with the Company and will receive a base salary compensation
of RMB 30,000 (approximately US$4,390) per month for his position as Chief
Financial Officer of the
Company.
|
Certain
Relationships, Related Transactions, and Director Independence.
Related
Party Transaction Policy
Other
than the Company's Code of Business Conduct and Ethics, the Board of Directors
does not have a specific written policy regarding the review of related party
transactions. The Board of Directors does, however, follow certain procedures
relating to the approval of transactions involving related parties. Related
parties generally include executive officers and Directors, stockholders owning
more than 5% of the Company’s Common Stock or immediate family members of any
such persons. A related party transaction will be approved only if it is
disclosed to the Board of Directors and is approved by a majority of the
disinterested members of the Board of Directors. Prior to approving any related
party transaction, the members of the Board of Directors reviewing such
transaction must (i) be satisfied that they received all material facts relating
to the transaction, (ii) have considered all relevant facts and circumstances
available to them and (iii) have determined that the transaction is in (or not
inconsistent with) the best interests of the Company’s stockholders. No Director
that is an interested party in a transaction may participate in the discussion
or approval of such transaction. Other than as disclosed below, since our last
fiscal year, based on written representations from the executive officers and
Directors of the Company, there were no related party transactions.
The
following is a description of related party transactions involving more than
$120,000, since the beginning of our last fiscal year, between us and our
directors, nominees, executive officers, stockholders owning more than 5% of the
Company’s common stock or members of their immediate family:
Messrs
Wang Xin (former officer, Director and significant shareholder of the Orsus
Xelent) and Liu Yu (Chairman of the Board of the Company) have outstanding loans
to the Company, which loans are unsecured, interest-free and repayable by the
Company on demand of the noteholder. The amount outstanding as
of June 30, 2009 is $469,000. The largest aggregate amount of
principal outstanding since January 1, 2008 is $469,000. The amount
of principal paid on these loans since January 1, 2008 is $0.
The
Company has bank loans that were guaranteed by a Director, Mr. Liu
Yu. The amount outstanding as of June 30, 2009 is
$9,379,000. The largest aggregate amount of principal outstanding
since January 1, 2008 is $9,541,000. The amount of principal paid on
these loans since January 1, 2008 is $9,541,000 (the Company paid off the
previous one year term loans in September 2008 and February 2009 respectively
for the aggregate amount of $9,541,000 and then incurred new bank loans for the
total amount of $9,379,000 reflected above). The amount of interest
paid on these loans since January 1, 2008 is $1,470,000. As of June
30, 2009 the interest rate payable on these loans are 6.372%.for the amount of
$2,513,000 bank loan and 10.08% for the amount of $6,866,000 bank loan
respectively.
As
December 31, 2008, Mr. Wang Zhibin, a former director of the Company,
had an outstanding loan
to the Company in the amount of $131,000, which was unsecured, interest-free
must be repaid by the Company upon demand by the noteholder. The loan
was subsequently repaid in full prior to March 30, 2008.
As of
December 31, 2007, the Company had a mortgage loan in the amount of $73,000 that
was guaranteed by Wang Xin, a former officer, Director and significant
shareholder of the Orsus Xelent. The mortgage loan was paid in full
prior to March 30, 2009.
Director
Independence
Messrs.
Naizhong Che, Peng Wang and Zhixiang Zhang are all non-employee Directors, and
all of whom our Board of Directors has determined are independent pursuant to
the rules of NYSE Amex Equities and the SEC. All of the members of our Audit
Committee, Nominating and Corporate Governance Committee and Compensation
Committee are independent as defined by the rules of NYSE Amex Equities and the
SEC.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of our
Common Stock as of November 12, 2009 for each person known by us to be the
beneficial owner of more than 5% of our outstanding shares of Common
Stock. Unless otherwise indicated, we believe that all persons named
in the table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.
|
|
|
|
Amount and Nature of Beneficial
Ownership
(2)
|
|
Title
of
Class
|
|
Name and Address of Beneficial
Owner
(1)
|
|
Number
of Shares
(3)
|
|
|
Percent
of
Voting Stock
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Liu
Yu, Chairman of the Board
|
|
|
6,150,000
|
|
|
|
20.56
|
%
|
|
(1)
|
Unless
otherwise noted, the address is that of the
Company.
|
|
(2)
|
On
November 12, 2009, there were 29,756,000 shares of our Common Stock
outstanding. Each person named above has sole investment and
voting power with respect to all shares of the Common Stock shown as
beneficially owned by the person, except as otherwise indicated
below.
|
|
(3)
|
Under
applicable rules promulgated by the SEC pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), a person is deemed
the “beneficial owner” of a security with regard to which the person,
directly or indirectly, has or shares (a) the voting power, which includes
the power to vote or direct the voting of the security, or (b) the
investment power, which includes the power to dispose or direct the
disposition of the security, in each case irrespective of the person’s
economic interest in the security. Under these SEC rules, a
person is deemed to beneficially own securities which the person has the
right to acquire within 60 days through (x) the exercise of any option or
warrant or (y) the conversion of another
security.
|
|
(4)
|
In
determining the percent of our Common Stock owned by a person (a) the
numerator is the number of shares of our Common Stock beneficially owned
by the person, including shares the beneficial ownership of which may be
acquired within 60 days upon the exercise of options or warrants or
conversion of convertible securities, and (b) the denominator is the total
of (i) the 29,756,000 shares of our Common Stock outstanding on November
12, 2009 and (ii) any shares of our Common Stock which the person has the
right to acquire within 60 days upon the exercise of options or warrants
or conversion of convertible securities. Neither the numerator
nor the denominator includes shares which may be issued upon the exercise
of any other options or warrants or the conversion of any other
convertible securities.
|
The
following table sets forth information regarding the beneficial ownership of our
Common Stock as of November 12, 2009 for each of our officers and Directors and
all our officers and Directors as a group. Unless otherwise
indicated, we believe that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them.
|
|
|
|
Amount and Nature of Beneficial
Ownership
(2)
|
|
Title
of
Class
|
|
Name and Address of Beneficial
Owner
(1)
|
|
Number
of Shares
(3)
|
|
|
Percent
of
Voting Stock
(4)
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Guoji
Liu, Chief Executive Officer and Director
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Liu
Yu, Chairman of the Board
|
|
|
6,150,000
|
|
|
|
20.56
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Zhao
Hongwei, Chief Financial Officer
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Naizhong
Che, Director
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Peng
Wang, Director
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Zhixiang
Zhang, Director
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Directors
and executive officers as a group (6 persons)
|
|
|
6,150,000
|
|
|
|
20.56
|
%
|
|
(1)
|
Unless
otherwise noted, the address is that of the
Company.
|
|
(2)
|
On
November 12, 2009, there were 29,756,000 shares of our Common Stock
outstanding. Each person named above has sole investment and
voting power with respect to all shares of the Common Stock shown as
beneficially owned by the person, except as otherwise indicated
below.
|
|
(3)
|
Under
applicable rules promulgated by the SEC pursuant to the Exchange Act, a
person is deemed the “beneficial owner” of a security with regard to which
the person, directly or indirectly, has or shares (a) the voting power,
which includes the power to vote or direct the voting of the security, or
(b) the investment power, which includes the power to dispose or direct
the disposition of the security, in each case irrespective of the person’s
economic interest in the security. Under these SEC rules, a
person is deemed to beneficially own securities which the person has the
right to acquire within 60 days through (x) the exercise of any option or
warrant or (y) the conversion of another
security.
|
|
(4)
|
In
determining the percent of our Common Stock owned by a person (a) the
numerator is the number of shares of our Common Stock beneficially owned
by the person, including shares the beneficial ownership of which may be
acquired within 60 days upon the exercise of options or warrants or
conversion of convertible securities, and (b) the denominator is the total
of (i) the 29,756,000 shares of our Common Stock outstanding on November
12, 2009 and (ii) any shares of our Common Stock which the person has the
right to acquire within 60 days upon the exercise of options or warrants
or conversion of convertible securities. Neither the numerator
nor the denominator includes shares which may be issued upon the exercise
of any other options or warrants or the conversion of any other
convertible securities.
|
Compensation
of Officers
The
following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to all of the executive officers of
the Company, who served during the fiscal year ended December 31, 2008, for
services in all capacities to the Company:
Name &
Principal
Position
|
|
Year
|
|
|
Salary (1)
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards (2)
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
Wang
Xin, CEO and director (3)
|
|
|
2008
2007
|
|
|
|
71,529
65,378
|
|
N/A
N/A
|
|
N/A
N/A
|
|
|
177,000
N/A
|
|
N/A
N/A
|
|
|
248,529
65,378
|
|
Zhao
Hongwei, CFO (4)
|
|
|
2008
2007
|
|
|
|
56,017
51,200
|
|
N/A
N/A
|
|
N/A
N/A
|
|
|
94,400
N/A
|
|
N/A
N/A
|
|
|
150,417
51,200
|
|
Wang
Xiaolong, Vice-President
|
|
|
2008
2007
|
|
|
|
32,748
29,932
|
|
N/A
N/A
|
|
N/A
N/A
|
|
|
113,280
N/A
|
|
N/A
N/A
|
|
|
146,028
29,932
|
|
|
(1)
|
“Salary”
listed above represents the amount of compensation that each person is
owed for the fiscal year ended December 31, 2008. In response
to the international financial market recession that began during the
second half of 2008, our officers have agreed to extend the payment for a
portion of their salaries until a time mutually agreed upon by the Company
and the officer. As of December 31, 2008, they only received a portion of
their cash compensation.
|
|
§
|
Mr.
Wang Xin received $4,077.39 during the period, deferring $67,451.61 of
compensation.
|
|
§
|
Mr.
Zhao Hongwei received $27,444.31 during the period, deferring $28.572.69
of compensation.
|
|
§
|
Mr.
Wang Xiaolong received $17,586.70 during the period, deferring $15,161.30
of compensation.
|
|
(2)
|
“Option
Awards” refer to the dollar amount recognized for financial statement
reporting purposes in accordance with FAS 123R for options awarded during
the reporting period. The charts on pages 51 and 52 illustrate the options
that were awarded by the Company on April 2,
2008.
|
|
(3)
|
Mr.
Wang Xin resigned from his positions as Chief Executive Officer and as a
member of the Board of Directors of the Company on March 27,
2009.
|
|
(4)
|
Mr.
Zhao Hongwei resigned from his position as Chief Financial Officer of the
Company on August 14, 2009.
|
Other
than those listed in the table above, there was no officer of the Company whose
combined salary and bonus for the fiscal year ended December 31, 2008 exceeded
$100,000. The amounts listed in the table above were paid by Beijing Orsus
Xelent Technology & Trading Company Limited (“Xelent”), the wholly owned
subsidiary of our wholly owned subsidiary United First International Limited
(“UFIL”). While we do have employment agreements with our executive
officers, the salary for our executive officers is at the discretion of our
Board of Directors. We expect to pay substantially similar compensation to our
executives in the future and anticipate continuing to pay them through
Xelent.
The
Company adopted our 2007 Omnibus Long-Term Incentive Plan (the “Plan”), as
approved by our stockholders at the Annual Meeting on December 18, 2007. For
additional information on the Plan, please see the Current Report on Form 8-K
filed with the Securities and Exchange Commission on January 11, 2008. On April
2, 2008, the Board of the Company agreed to grant certain options to management
officers who made major contributions to the formation and development of the
Company as one-time awards. The number of shares of stock and the
Company officials who received awards under the Plan are as
follows:
Designated Grantees
|
|
Shares of Stock Options
|
|
|
Exercise Price
|
|
Exercisable Date
|
|
Expiration Date
|
Wang
Xiaolong
|
|
|
96,000
|
|
|
$
|
2.26
|
|
July
2, 2008
|
|
April
2, 2018
|
Wu
Wei
|
|
|
28,000
|
|
|
$
|
2.26
|
|
July
2, 2008
|
|
April
2, 2018
|
Che
Hongyu
|
|
|
50,000
|
|
|
$
|
2.26
|
|
July
2, 2008
|
|
April
2, 2018
|
Wan
Feng
|
|
|
40,000
|
|
|
$
|
2.26
|
|
July
2, 2008
|
|
April
2, 2018
|
Yang
Shulin
|
|
|
20,000
|
|
|
$
|
2.26
|
|
July
2, 2008
|
|
April
2, 2018
|
Zhao
Hongwei
|
|
|
80,000
|
|
|
$
|
2.26
|
|
July
2, 2008
|
|
April
2, 2018
|
Liu
Yu
|
|
|
150,000
|
|
|
$
|
2.26
|
|
July
2, 2008
|
|
April
2, 2018
|
Wang
Xin
|
|
|
150,000
|
|
|
$
|
2.26
|
|
July
2, 2008
|
|
April
2,
2018
|
Outstanding
Equity Awards at December 31, 2008
|
|
Option awards
|
Name
|
|
Number of
Securities
Underlying
unexercised
options
(#) exercisable
|
|
|
Number of
Securities
Underlying
unexercised options
(#) unexercisable
|
|
|
Equity incentive plan
awards: Number of
securities underlying
unexercised unearned
options
(#)
|
|
|
Option
Exercise
price
($)
|
|
Option
Expiration
date
|
Wang
Xin, CEO (1)
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
2.26
|
|
April 2, 2018
|
Zhao
Hongwei, CFO (2)
|
|
|
80,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
2.26
|
|
April
2, 2018
|
Wang
Xiaolong, Vice-President
|
|
|
96,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
2.26
|
|
April
2,
2018
|
|
(1)
|
Mr.
Wang Xin resigned from his positions as Chief Executive Officer and as a
member of the Board of Directors of the Company on March 27,
2009.
|
|
(2)
|
Mr.
Zhao hongwei resigned from his position as Chief Financial Officer of the
Company on August 14, 2009.
|
As of as
of December 31, 2008, the Company did not have nonqualified deferred
compensation and did not have any post-employment payments to
report.
As
stipulated by PRC regulations, the Company maintains a defined contribution
retirement plan for all of its employees who are residents of the
PRC. All retired employees of the Company are entitled to an annual
pension equal to their basic annual salary upon retirement. The
Company contributed to a state sponsored retirement plan approximately 20% of
the basic salary of its employees and has no further obligations for the actual
pension payments or post-retirement benefits beyond the annual
contributions. The state sponsored retirement plan is responsible for
the entire pension obligation payable to all employees. The pension
expenses were $59 and $63 for the years ended December 31, 2008 and 2007
respectively.
Employment
Agreements
While we
do have employment agreements with our executive officers, the salary for our
executive officers is at the discretion of our Board of Directors
Our
Compensation Committee is comprised of three members and is responsible for the
administration of all salary, bonus and incentive compensation plans for our
officers and key employees. The members of our Compensation Committee are
Naizhong Che (Chair), Zhixiang Zhang and Peng Wang, all of whom are
“independent” Directors.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934 requires that the Company’s
Directors and executive officers and persons who beneficially own more than ten
percent (10%) of a registered class of its equity securities, file with the SEC
reports of ownership and changes in ownership of its Common Stock and other
equity securities. Executive officers, Directors, and greater than
ten percent (10%) beneficial owners are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports that they
file. Based solely upon a review of the copies of such reports
furnished to the Company, with respect to the 2007 fiscal year, the officers,
Directors, and beneficial owners of more than ten percent (10%) of our Common
Stock have filed their initial statements of ownership on Form 3 on a timely
basis, and the officers, Directors and beneficial owners of more than ten
percent (10%) of our Common Stock have also filed the required Forms 4 or 5 on a
timely basis, except for (i) the timely filing of the Form 4 for Liu Yu, a
Director of the Company, for the award of stock options on April 2, 2008, which
was due to unforeseen delays and was subsequently filed with the SEC on April
30, 2008, and (ii) the timely filing of the Form 3 for Zhao Hongwei for his
appointment as Chief Financial Officer of the Company on November 26, 2005,
which was subsequently filed with the SEC on April 11, 2008.
Arrangements
or Understandings
There was
no arrangement or understanding between any of our Directors and any other
person pursuant to which any Director was to be selected as a
Director.
Involvement
in Certain Legal Proceedings
During
the past five (5) years, none of the Directors or executive officers has been
involved in any legal proceedings that are material to the evaluation of their
ability or integrity.
The
Company is party to certain litigation/arbitration with regards to amounts
payable to suppliers for which the Company was not satisfied with the
quality and timing of the goods supplied. However, the amount in question
is not material to the Company and we believe that such litigation/arbitration
will not have a material adverse effect on us or our business and that we will
be able to resolve these issues through further business
negotiations.
Family
Relationships
There are
no family relationships between any two (2) or more of the Company’s Directors
or executive officers.
Changes
in and Disagreements with Accountants
Change from Moores Rowland
Mazars to
PKF
Hong
Kong
Certified Public
Accountants
Following
the reorganization of Moores Rowland Mazars (“Moores”) on June 1, 2007, in which
certain of its partners joined Mazars CPA Limited (“Mazars”) and Moores changed
its name to Moores Rowland, Moores resigned as the Company’s independent public
accountants effective June 29, 2007. Moores had been the Company’s
independent public accountants since May 9, 2005. The Audit Committee
approved the resignation of Moores on June 29, 2007. As reported in
our Form 8-K filed on July 6, 2007, the Company appointed Mazars as its
independent accountant effective as of June 29, 2007. Certain members of Moores
formed Mazars, and we hired that firm to be our independent
accountant.
On
October 17, 2008, Mazars resigned as the independent public accountants of the
Company. The Audit Committee approved the resignation of Mazars on October 21,
2008. Mazars’ audit report on the Company’s consolidated financial statements
for each of the past two fiscal years did not contain an adverse opinion or
disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles.
During
the Company’s two most recent fiscal years and through the subsequent interim
period on or prior to October 17, 2008, (a) there were no disagreements between
the Company and Mazars on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Mazars, would have caused
Mazars to make reference to the subject matter of the disagreement in connection
with its report; and (b) no reportable events as set forth in Item
304(a)(1)(v)(A) through (D) of Regulation S-K have occurred. Mazars furnished a
letter addressed to the SEC stating that it agreed with the above statements.
Such letter, dated October 21, 2008, was attached as Exhibit 16.1 to the
Company’s Current Report on Form 8-K filed with the SEC on October 22,
2008.
Engagement
of new independent registered public accounting firm, PKF Hong Kong Certified
Public Accountants
The Audit
Committee appointed PKF Hong Kong Certified Public Accountants (“PKF”) as the
Company’s new independent public accountants, effective on October 21, 2008.
During the Company’s two most recent fiscal years and subsequent interim period
on or prior to October 21, 2008, the Company has not consulted with PKF
regarding the application of accounting principles to a specified transaction,
either completed or proposed, or any of the matters or events set forth in Item
304(a)(2) of Regulation S-K.
Change from
PKF
Hong
Kong
Certified Public
Accountants
On August
10, 2009, PKF resigned as the independent public accountants of the Company. The
Audit Committee approved the resignation of the Former Auditors on August 13,
2009. PFK’s audit report on the Company’s consolidated financial statements for
each of the past fiscal years did not contain an adverse opinion or disclaimer
of opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
During
the Company’s most recent fiscal years and through the subsequent interim period
on or prior to August 10, 2009, (a) there were no disagreements between the
Company and the Former Auditors on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of the Former Auditors, would
have caused the Former Auditors to make reference to the subject matter of the
disagreement in connection with its report; and (b) no reportable events as set
forth in Item 304(a)(1)(v)(A) through (D) of Regulation S-K have
occurred.
Mazars
furnished a letter addressed to the SEC stating that it agreed with the above
statements. Such letter, dated August 13, 2009, was attached as Exhibit 16.1 to
the Company’s Current Report on Form 8-K filed with the SEC on August 14,
2009.
Engagement
of new independent registered public accounting firm, Bernstein & Pinchuk
LLP
The Audit
Committee appointed PKF Hong Kong Certified Public Accountants (“PKF”) as the
Company’s new independent public accountants, effective on October 21, 2008.
During the Company’s two most recent fiscal years and subsequent interim period
on or prior to October 21, 2008, the Company has not consulted with PKF
regarding the application of accounting principles to a specified transaction,
either completed or proposed, or any of the matters or events set forth in Item
304(a)(2) of Regulation S-K.
The Audit
Committee appointed Bernstein & Pinchuk LLP (“B&P”) as the Company’s new
independent public accountants, effective on August 10, 2009. During the
Company’s most recent fiscal years and subsequent interim period on or prior to
August 10, 2009, the Company has not consulted with B&P regarding the
application of accounting principles to a specified transaction, either
completed or proposed, or any of the matters or events set forth in Item
304(a)(2) of Regulation S-K.
Set below
are aggregate fees billed by Moores Rowland Mazars, Mazars CPA Limited and PKF
Hong Kong Certified Public Accountants for professional services rendered for
the audit of the Company’s annual financial statements for the fiscal years
ended December 31, 2008 and 2007, and the review of the financial statements
included in the Company’s Form 10Q and Form 10QSB for 2008 and
2007.
Audit
Fees
During
the fiscal year ended December 31, 2008, the fees for our principal accountant
were $115,000 which included $30,000 for three quarterly reviews, and $85,000
for the preparation of this annual report on Form 10-K. During the fiscal year
ended December 31, 2007, the fees for our principal accountant were $90,000,
which was composed of $22,500 for two quarters review and $67,500 for the
preparation of the annual report on Form 10-K.
Audit
Related Fees
During
the fiscal years ended December 31, 2008 and December 31, 2007, our principal
accountants did not render assurance and related services reasonably related to
the performance of the audit or review of financial statements.
Tax
Fees
During
the fiscal years ended December 31, 2008 and December 31, 2007, our principal
accountant did not render services to us for tax compliance, tax advice and tax
planning.
All
Other Fees
During
the fiscal years ended December 31, 2008 and December 31, 2007, there were no
fees billed for products and services provided by the principal accountants
other than those set forth above.
The Audit
Committee has reviewed the above fees for non-audit services and believes such
fees are compatible with the preservation of the independent registered public
accountants’ independence.
Policy
on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent
Accountant
The
policy of the Audit Committee, and the Board of Directors acting as a whole
prior to the establishment of the Audit Committee, is to pre-approve all audit
and non-audit services provided by the independent accountants. These services
may include audit services, audit-related services, tax fees, and other
services. Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services
and is subject to a specific budget. The Audit Committee, and the Board of
Directors acting as a whole prior to the establishment of the Audit Committee,
has delegated pre-approval authority to certain committee members when
expedition of services is necessary. The independent accountants and management
are required to periodically report to the full Audit Committee, and the Board
of Directors acting as a whole prior to the establishment of the Audit
Committee, regarding the extent of services provided by the independent
accountants in accordance with this pre-approval delegation, and the fees for
the services performed to date. None of the fees paid to the independent
accountants during fiscal years ended December 31, 2008 and 2007, under the
categories Audit-Related and All Other fees described above, were approved by
the Audit Committee, or the Board of Directors acting as a whole prior to the
establishment of the Audit Committee, after services were rendered pursuant to
the de minimis exception established by the SEC.
Delivery
of Documents to Stockholders Sharing an Address
Only one
Proxy Statement is being delivered to two or more security holders who share an
address, unless the Company has received contrary instruction from one or more
of the security holders. The Company will promptly deliver, upon
written or oral request, a separate copy of the Proxy Statement to a security
holder at a shared address to which a single copy of the document was
delivered. If you would like to request additional copies of the
Proxy Statement, or if in the future you would like to receive multiple copies
of information or proxy statements, or annual reports, or, if you are currently
receiving multiple copies of these documents and would, in the future, like to
receive only a single copy, please so instruct the Company, by writing to us at
12th
Floor,
Tower B, Chaowai MEN Office Building, No. 26 Chaowai Street, Chaoyang
Disc. Beijing, People’s Republic Of China 100020.
Submission
of Stockholder Proposals
If you
wish to have a proposal included in our proxy statement and form of proxy for
next year’s annual meeting in accordance with Rule 14a-8 under the Exchange Act,
your proposal must be received by us at our principal executive offices on or
before July 19, 2010. A proposal which is received after that date or which
otherwise fails to meet the requirements for stockholder proposals established
by the SEC will not be included. The submission of a stockholder proposal does
not guarantee that it will be included in the proxy statement. If the
2010 annual meeting is to be held before November 30, 2010 or after January 29,
2011, the proposal must be received by us either 90 days prior to the actual
meeting date or 10 days after we first publicly announce the meeting date,
whichever is later. Stockholders are also advised to review the Company’s
Bylaws, which contain additional requirements with respect to advance notice of
stockholder proposals and director nominations.
Other
Matters
As of the
date of this Proxy Statement, the Board of Directors has no knowledge of any
business which will be presented for consideration at the Meeting other than the
Election of the Directors and the Ratification of Auditors. Should any other
matter be properly presented, it is intended that the enclosed proxy will be
voted in accordance with the best judgment of the persons voting the
proxies.
We file
annual, quarterly and special reports, proxy statements and other information
with the SEC. The public may read and copy any materials that we have
filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site that contains
the reports, proxy and information statements and other information regarding
the Company that we have filed electronically with the SEC. The
address of the SEC’s Internet site is http://www.sec.gov.
Annual
Report on Form 10-K
A copy of
the Company’s Annual Report on Form 10-K covering the fiscal year ended December
31, 2008, and all amendments thereto, accompanies this Proxy Statement. Except
for the financial statements included in the Annual Report that are specifically
incorporated by reference herein, the Annual Report on Form 10-K is not
incorporated in this Proxy Statement and is not to be deemed part of this proxy
soliciting material. Additional copies of the Annual Report on Form 10-K are
available upon request.
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
/s/
Liu Yu
|
|
Liu
Yu
|
|
Chairman
of the Board of
Directors
|
November
12, 2009
ORSUS
XELENT TECHNOLOGIES, INC.
29th
Floor, Tower B, Chaowai MEN Office Building
26
Chaowai Street, Chaoyang Disc.
Beijing,
People’s Republic Of China 100020
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held on December 30, 2009
The
stockholder(s) whose signature(s) appear(s) on the reverse side of this proxy
form hereby appoint(s) Guoji Liu and Hua Chen, INDIVIDUALLY or any of them as
proxies, with full power of substitution, and hereby authorize(s) them to
represent and vote all shares of Common Stock of the Company which the
stockholder(s) would be entitled to vote on all matters which may come before
the Annual Meeting of Stockholders to be held at 9:00 a.m., local time, at the
offices of K&L Gates LLP, 599 Lexington Avenue, New York, New York 10022 or
at any adjournment or adjournments thereof.
This
proxy will be voted in accordance with the instructions indicated on the reverse
side of this card. If no instructions are given, this proxy will be
voted FOR the proposals and in the proxies’ discretion upon such other business
as may properly come before the meeting and any adjournments or postponements
thereof.
Please
date, sign and mail your proxy card in the
envelope
provided as soon as possible.
|
|
FOR
THE MATTER SET FORTH BELOW, THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
THE MATTER SUBMITTED. PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE INK AS SHOWN HERE
|
|
|
|
1.
|
|
ELECTION
OF DIRECTORS.
Guoji
Liu, Liu Yu, Naizhong Che, Peng Wang, and Zhixiang
Zhang
|
|
|
o
FOR all nominees, listed above
(except as specified
below).
o
WITHHOLD AUTHORITY to vote for
all nominees listed above.
|
INSTRUCTIONS:
|
TO
WITHHOLD AUTHORITY FOR ANY INDICATED NOMINEE, WRITE THE NAME(S) OF THE
NOMINEE(S) IN THE SPACE PROVIDED:
_________________________________________
__________________________________________________________________________________
|
2.
|
|
RATIFICATION
OF APPOINTMENT OF BERNSTEIN & PINCHUK LLP AS THE COMPANY’S INDEPENDENT
PUBLIC ACCOUNTANTS FOR FISCAL YEAR 2009.
|
|
|
o
FOR the ratification of
BERNSTEIN &
PINCHUK LLP
.
o
AGAINST the ratification of
BERNSTEIN &
PINCHUK LLP
.
o
ABSTAIN
|
DATED:
_________________, 2009
Please
sign exactly as name appears hereon. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Name:
|
_______________________________
|
|
|
Address:
|
_______________________________
|
|
Signature
|
|
_______________________________
|
|
|
|
_______________________________
|
|
|
Number
of Shares: ________________________
|
|
Signature
if held jointly
|
|
|
|
Please
mark, sign, date and return this proxy card to Aaron Menzi, K&L Gates LLP,
599 Lexington Ave, NY, NY 10022.
ORSUS
XELENT TECHNOLOGIES, INC.
**Important
Notice Regarding the Availability of Proxy Materials**
for
the
Shareholder
Meeting to Be Held on
December
30, 2009
|
The
proxy statement and annual report on Form 10-K are available
at
http://materials.proxyvote.com/68749U
|
|
Meeting
Information
|
How
to Vote
|
|
|
|
Date:
Time:
Location:
|
December
30, 2009
9:00
AM EST
K&L
Gates LLP
599
Lexington Avenue
32nd
Floor
New
York, NY 10022
|
To
vote, simply complete and mail the proxy card or follow the instructions
included with the proxy materials to vote by telephone or
Internet. Alternatively, you may elect to vote in person at the
annual meeting. You will be given a ballot when you
arrive.
|
Voting
Items
The Board
of Directors recommends you vote
FOR
the following
proposals:
|
1.
|
Election
of Directors:
|
Nominees:
|
Guoji
Liu
|
|
Liu
Yu
|
|
Naizhong
Che
|
|
Peng
Wang
|
|
Zhixiang
Zhang
|
|
2.
|
Ratification
of Appointment of Bernstein & Pinchuk LLP as the Company’sIndependent
Public Accountants for the Fiscal Year ending December 31,
2009
|
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