UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2010
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission file
number: 0-30907
iGo, Inc.
(Exact Name of Registrant as
Specified in its Charter)
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Delaware
(State or Other Jurisdiction
of
Incorporation or
Organization)
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86-0843914
(IRS Employer
Identification No.)
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17800 N. Perimeter Dr., Suite 200,
Scottsdale, Arizona
(Address of Principal
Executive Offices)
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85255
(Zip
Code)
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(Registrants
telephone number, including area code):
(480) 596-0061
Securities
registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value
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The NASDAQ Global Market
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Securities registered pursuant to Section 12(g) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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None
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Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o No þ
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes o No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
part III of this
Form 10-K
or any amendment to this
Form 10-K. þ
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 and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large
accelerated
filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting
company þ
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
The aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price
at which the common equity was last sold as of the last business
day of the registrants most recently completed second
fiscal quarter (June 30, 2010) was approximately
$34 million.
There were 33,004,456 shares of the registrants
common stock issued and outstanding as of March 8, 2011.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the registrants definitive Proxy Statement
relating to its 2011 Annual Meeting of Stockholders to be filed
with the Securities and Exchange Commission are incorporated by
reference into Part III of this
Form 10-K.
iGo,
Inc.
FORM 10-K
TABLE OF CONTENTS
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DISCLOSURE
CONCERNING FORWARD-LOOKING STATEMENTS
This report contains statements that constitute
forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as
amended. The words believe, expect,
anticipate, estimate and other similar
statements of expectations identify forward-looking statements.
Forward-looking statements in this report can be found in the
Business, Managements Discussion and
Analysis of Financial Condition and Results of Operations
and Financial Statements and Supplementary Data
sections as well as other sections of this report and include,
without limitation, statements concerning our expectations
regarding our anticipated revenue, cash flows, gross profit,
gross margin, and related expenses for 2011; our strategy,
including but not limited to, our intentions to continue to
develop and introduce new products and technologies,
aggressively file patents and expand our intellectual property
position, market non-power accessories, and market and expand
our green power product offerings to address the
problem of vampire power as well as the expected
benefits that will result from our efforts; that our customers
may continue to curtail or suspend capital spending; that sales
to RadioShack will continue to decline in 2011; that sales to
Walmart may decline; expectations regarding future customer
product orders; our reliance on distributors and resellers for
the distribution and sale of our products; our ability to
broaden our distribution base, thus decreasing our dependence on
sales to Walmart and RadioShack; beliefs relating to our
competitive advantages and the market need for our products; our
belief that our present vendors have sufficient capacity to meet
our supply requirements; the expected availability and
sufficiency of cash and liquidity; expected market and industry
trends; beliefs relating to our distribution capabilities and
brand identity; expectations regarding the success of new
product introductions; the anticipated strength, and ability to
protect, our intellectual property portfolio; our intentions to
continue and develop power products in existing and new markets;
our intention to continue to make capital expenditures and
pursue opportunities to acquire businesses, products and
technologies; our ability to effectively integrate Adapt and
Aerial7; our expectation that a small number of customers will
continue to represent a substantial percentage of our sales
including specifically, but not limited to, RadioShack and
Walmart; expectations about inventory levels we will be required
to maintain and future sales returns; our expectations about
competition; trends in key operating metrics, including days
outstanding in accounts receivable and inventory turns; the
possibility that we may issue additional shares of stock; our
intention and ability to hold marketable securities to maturity;
our intentions about employing hedging strategies; that we may
repurchase shares of our common stock; and our expectations
regarding the outcome and anticipated impact of various legal
proceedings in which we may be involved. These forward-looking
statements are based largely on our managements
expectations and involve known and unknown risks, uncertainties
and other factors, which may cause our actual results,
performance, achievements, or industry results, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Factors
that could cause or contribute to such differences include those
discussed herein under the heading Risk Factors and
those set forth in other sections of this report and in other
reports that we file with the Securities and Exchange Commission.
In light of these risks and uncertainties, there can be no
assurance that the forward-looking statements contained in this
report will prove to be accurate. We undertake no obligation to
publicly update or revise any forward-looking statements, or any
facts, events, or circumstances after the date hereof that may
bear upon forward-looking statements.
iGo®,
iGo
Green®,
Adapt
Mobile®
and
Aerial7®
are registered trademarks of iGo, Inc. or its subsidiaries
in the United States and other countries. Other names and brands
may be claimed as the property of others.
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PART I
Our
Company
We are a leading provider of innovative accessories and power
management solutions for the electronics industry. Our vision is
to attach our products and technology to every mobile electronic
device. Increased functionality and the ability to access and
manage information remotely are driving the proliferation of
mobile electronic devices and applications. The popularity of
these devices is increasing due to reductions in size, weight
and cost and improvements in functionality, storage capacity and
reliability. Each of these devices needs to be powered and
connected when in the home, the office, or on the road, and can
be accessorized, representing opportunities for one or more of
our products.
We design and develop products that make computers and mobile
electronic devices more efficient and cost effective, thus
enabling professionals and consumers higher utilization of their
mobile devices and the ability to access information more
readily. Our current product offering primarily consists of
power, protection and audio solutions for mobile electronic
devices, and we intend to continue to introduce new accessories
for mobile electronic devices.
We have developed proprietary technology that makes electronic
devices more efficient and cost effective, thus enabling users
higher utilization of their electronic devices. We utilize our
proprietary technology to design and develop products that make
electronic devices more environmentally-friendly or
green, enabling users to reduce electronic waste and
standby or vampire power. Various power management
solutions currently on the market focus on mitigating vampire
power through manual applications. For example, other products
offer technology that reduces vampire power by manually
switching the power product on or off, completely eliminating
the electricity source to all devices plugged into the
power-strip. Our patented green technology virtually eliminates
vampire power in a more convenient manner, by automatically
powering down outlets when not in use and powering back up again
when devices need power. This feature eliminates the need for
users to continuously switch the product on and off and reduces
vampire power by up to 85%. Initially, our green technology is
featured in laptop chargers and surge protectors, yet we believe
there are other potential market opportunities for our green
technology. We are currently working with Texas Instruments to
incorporate our propriety technology into a microchip that can
be incorporated into a variety of power sources for electronic
devices. We believe our competitive advantages include our
innovative designs and multi-function capabilities of our
products and our distribution and retail relationships.
We primarily sell our products through retailers, such as
RadioShack, Walmart, Office Depot, Hudson News and Inmotion
Entertainment; resellers, such as Ingram Micro, Inc., Microcel,
and Superior Communications; and directly to end users through
our iGo and Aerial7 websites, www.igo.com and
www.aerial7.com. In the past, we primarily sold power
accessories to private label resellers and original equipment
manufacturers, or OEMs.
We currently market electronics accessory products in three main
categories, consisting of power, protection, and audio. We also
market other mobile electronic accessories, including laptop
cooling stands, mounts, and mini-projectors (also known as pico
projectors) that attach to mobile electronic devices for
displaying video.
Power. Our universal power products allow
users to charge a variety of their mobile electronic devices
from a single power source through the use of interchangeable
tips. Our power products increase end-user convenience and
minimize electronic waste as interchangeable tip solutions
require fewer resources to build, ship, inventory and dispose
of. The centerpiece of our new power management solutions is our
proprietary iGo
Green®
technology. Our first iGo Green power products are laptop
chargers and surge protectors which incorporate our new patented
iGo Green technology. Our iGo Green technology reduces energy
consumption and almost completely eliminates standby power, or
Vampire Power. We believe that this power-saving
technology, when combined with our existing universal power
products, will help us achieve our long-term goal of
establishing an industry standard for reduced power consumption
when charging mobile electronic devices.
Protection. As a result of our recent
acquisition of Adapt Mobile Limited (Adapt), we now
offer a line of skins, cases and screen protectors for mobile
electronic devices. Consumers value the protection of their
mobile electronic devices as they rely on them heavily in their
daily lives to both connect with others and store important
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information. In addition, consumers often view these products as
a way to express their personal fashion and style, similar to
clothing and other accessories. Our line of protection products
is designed to meet both of these consumer needs by providing
the consumer with a high degree of protection, while
simultaneously offering them a unique fashionable design that
fits their personal style. Currently, we offer these products
primarily in Europe, however we expect to expand our line of
cases, skins, screen protectors and other similar products and
introduce them in other markets throughout the world.
Audio. As a result of our recent acquisition
of Aerial7 Industries, Inc. (Aerial7), we now offer
a line of earbuds and headphones. As mobile phones have recently
evolved into smartphones and the introduction of new portable
media devices, all of which are capable of playing music and
video, many consumers utilize a variety of mobile electronic
devices for both communication and entertainment purposes. Our
line of audio products offer consumers the ability to both
communicate with others via an integrated microphone that can be
used with a portable computer, mobile phone or other portable
media device as well the ability to listen to music or video
from these devices. Similar to our protection products, our line
of audio products is also fashionably designed, allowing
consumers to express their unique and personal style. Currently,
these products are offered primarily through lifestyle and music
retailers around the world, however we intend to expand our
audio product offering and introduce these and similar products
in consumer electronics retailers around the world as well.
Our ability to execute successfully on our near and long-term
objectives depends largely upon the general market acceptance of
our power, protection and audio products, our ability to protect
our unique proprietary rights, including notably our iGo Green
technology, our ability to generate additional major customers,
and general economic conditions. Additionally, we must execute
on the customer relationships that we have developed and
continue to design, develop, manufacture and market new and
innovative technology and products that are embraced by these
customers and the overall market. We were formed as a limited
liability company under the laws of the State of Delaware in May
1995, and were converted to a Delaware corporation by a merger
effected in August 1996, in which we were the surviving entity.
We changed our name from Electronics Accessory Specialists
International, Inc. to Mobility Electronics, Inc. on
July 23, 1998 and on May 21, 2008 we changed our name
to iGo, Inc. Our principal executive office is located at
17800 N. Perimeter Drive, Suite 200, Scottsdale,
Arizona 85255, and our telephone number is
(480) 596-0061.
Available
Information
Our website is www.igo.com. Information on our website is
not incorporated by reference into this
Form 10-K
and should not be considered part of this report or any other
filing we make with the SEC. We file annual, quarterly and
current reports, proxy statements and other information with the
Securities and Exchange Commission. Through a link on the
Investor Relations section of the corporate page of our website,
we make available the following filings as soon as reasonably
practicable, after they are electronically filed with or
furnished to the SEC: our Annual Report on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K,
and any amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of
1934. All such filings are available free of charge.
Our
Industry
Over the past two decades, technological advancements in the
electronics industry have greatly expanded mobile device
capabilities. Mobile electronic devices, which are used
extensively for both business and personal purposes, include
portable computers, mobile phones and other portable media
devices. The popularity of these devices is benefiting from
reductions in size, weight and cost and improvements in
functionality, storage capacity and reliability. In addition,
advances in wireless technology have enabled remote access to
data networks and the Internet.
Increased functionality and the ability to access and manage
information remotely are driving the proliferation of mobile
electronic devices and applications. As the work force becomes
more mobile and spends more time away from traditional work
settings, users have sought out and become reliant on tools that
provide management of critical information and access to
wireless voice and data networks. Each of these mobile
electronic devices needs to
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be powered and connected when in the home, the office, or on the
road, and can be accessorized, representing an opportunity for
one or more of our products.
Our products support mobile electronic devices in several market
categories.
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Portable Computer Market. According to IDC, a
subsidiary of International Data Group, a technology media and
research company, the worldwide market for portable computers,
which includes laptops and tablets is expected to grow at a
compounded annual growth rate, or CAGR, of about 22% from
approximately 277.5 million units in 2011 to approximately
504 million units in 2014. The U.S. market is expected
to grow at a CAGR of about 20% from approximately
68.9 million units in 2011 to about 119.4 million
units in 2014.
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Mobile Phone Market. According to IDC, the
worldwide market for mobile phones, which includes mobile phones
and smartphones, is expected to grow at a CAGR of about 6.5%
from approximately 1.48 billion units in 2011 to about
1.79 billion units in 2014. The U.S. market is
expected to remain flat at approximately 184 million units
in 2011 compared to about 182.5 million units in 2014.
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Other Portable Media Devices. According to
IDC, the worldwide market for other portable media devices,
which includes
e-readers,
portable media players, and portable game consoles, is expected
to grow at a CAGR of about 0.3% from approximately
86 million units in 2011 to about 86.8 million units
in 2014. The U.S. market for other portable media devices
is expected to decrease at a CAGR of about 4.5% from
approximately 32.5 million units in 2011 to about
28.4 million units in 2014.
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As mobile electronic devices gain widespread acceptance, users
will continue to confront limitations on their use, driven by
such things as battery life, charging flexibility, damage from
daily usage, access to audio and visual capabilities,
compatibility issues, data input challenges and performance
requirements. Furthermore, as users seek to manage multiple
devices in their daily routine, the limitations of any one of
these functions may be exacerbated.
Mobile electronic device users usually require the use of their
devices while away from their home or office. Many of these
mobile devices have limited battery life, which results in the
need to frequently connect to a power source to operate the
device or recharge the battery. A number of factors limit the
efficient use and charging of these devices:
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the majority of chargers are model-specific, requiring a mobile
user to carry a dedicated charger for each device;
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mobile electronic devices are generally packaged with only one
charger, forcing many users to purchase additional chargers for
convenience and ease of use; and
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mobile electronic device users tend to carry multiple devices
and at times only one power source is available, limiting a
users ability to recharge multiple devices simultaneously.
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Mobile electronic device users, who usually have limited
available space in their briefcase or luggage, desire solutions
that make their mobile experience more convenient. We believe
this creates the need for universal chargers that have the
ability to simultaneously charge multiple mobile electronic
devices.
Vampire power results from devices that continue to consume
power, even when they are idle or shut off. The United States
Environmental Protection Agency (EPA) estimates that vampire
power accounts for more than $10 billion in annual energy
costs in the United States alone. In addition to tangible dollar
costs, vampire power negatively impacts the environment by
wasting vast amounts of electricity. Furthermore, according to
the Global System for Mobile Communications Association, or
GSMA, discarded chargers account for approximately
51,000 tons of waste annually. We believe this creates the need
for power solutions that have the ability to drastically reduce
vampire power and electronic waste.
The daily usage of mobile electronic devices frequently causes
cosmetic damage to, and sometimes impairs the functionality of,
these devices. As a result, consumers are increasingly searching
for ways to protect their mobile electronic devices and often
wish to do so in a manner thats aesthetically pleasing.
These needs have created a growing market opportunity for
fashionable protective cases and screens for mobile electronic
devices, particularly with respect to higher end products like
iPhones®,
iPads®
and other portable media devices.
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The increased functionality of mobile phones and portable media
devices, including features such as enhanced audio- and
video-playing capabilities, has increased the need for audio
accessories like headphones and speakers. Consumers are also
demanding more functionality from these audio accessories,
including high-quality sound output, volume controls and
communication capabilities, such as an in-line microphone, that
allow the consumer to not only hear, but also communicate with
others. In addition to increased functionality, consumers also
desire audio accessories that are fashionable and reflect their
personal tastes. These consumer demands have resulted in an
expanded demand for high-quality, fashionable headphones.
Our
Strategy
We intend to capitalize on our current strategic position in the
mobile electronic device market by continuing to introduce
innovative power, protection, and audio products that suit the
needs of a broad range of users of these devices. This includes
power solutions that are green in nature. Our goal is to attach
our products and technology to every mobile electronic device
and to be a market leader in providing unique and innovative
solutions to mobile users. Elements of our strategy include:
Integration of Green Technology in New Power
Solutions. To partner with original equipment
manufacturers (OEMs) on the integration of our patented iGo
Green technology into traditional power supplies that are
bundled with various products offered by these OEMs, including
portable computers and non-portable electronic products, such as
gaming devices, printers and projectors. In addition, the
integration of our patented iGo Green technology into new
products, such as surge protectors gives us the opportunity to
expand into channels that we have not traditionally addressed,
such as the home improvement market. Further, the possibility
extends directly into the home and commercial building markets
through the integration of our iGo Green technology directly
into the AC outlets found in the home and office.
Continue To Develop Innovative Products. We
have a history of designing and developing highly differentiated
products to serve the needs and enhance the experience of mobile
electronic device users. We intend to continue to develop and
market a broad range of highly differentiated power and
complementary products that address additional markets in which
we choose to compete. We also intend to protect our intellectual
property position in these markets by aggressively filing for
additional patents on an ongoing basis and, as necessary,
pursuing infringers of our intellectual property.
Acquire Complementary Businesses, Products and
Technologies. In addition to designing and
developing products and technologies on our own, we intend to
continue to pursue opportunities to acquire businesses, products
or technologies that complement or expand our current range of
products and sales and marketing opportunities.
Broaden Distribution of iGo and Aerial7 Branded
Product. To expand the market availability of our
iGo, iGo Green, and Aerial7 branded products, we plan to develop
relationships with a broader set of retailers and wireless
carriers, some of whom may be served through distribution
partners. We expect that these relationships will allow us to
diversify our customer base, add stability and decrease our
traditional reliance upon a limited number of private label
resellers. We also expect that these relationships will
significantly increase the availability and exposure of our
products, particularly among large national and international
retailers and wireless carriers.
Our
Products and Solutions
Power. Our innovative power products eliminate
the need for mobile electronic device users to carry multiple
chargers to operate and charge their devices. Our combination
AC/DC chargers work with any available power source, including
the AC wall outlet in a home, office or hotel room, or the DC
cigarette lighter plug in an automobile, airplane, or train. Our
battery-powered universal chargers allow users to charge a
variety of their mobile electronic devices when they do not have
access to an AC or DC power source. Our tip technology allows a
user to carry a few lightweight interchangeable tips in
combination with a single charger to charge a variety of
devices, including a substantial portion of the portable
computers, mobile phones and other portable media devices.
Further, consumers can simultaneously charge multiple devices by
using a single charger and the appropriate interchangeable tips
with our optional iGo USB connector. Our new patented iGo Green
technology addresses broad applications relating to power
supplies for office equipment, personal electronics and
appliances, and covers the only power circuit technology that
virtually eliminates vampire power automatically. Our core power
products
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are inherently green as they eliminate the need for
consumers to dispose of old chargers with the purchase of each
new electronic device. Instead, our products enable the consumer
to purchase a small, inexpensive tip capable of working with
existing chargers, thus substantially reducing electronic waste.
Sales of power products represented approximately 94%, 99% (as
recast), and 99% (as recast) of our total revenue for the years
ended December 31, 2010, 2009 and 2008, respectively.
Protection. Our protection solutions,
including cases, skins and protective screens, utilize
innovative materials and unique designs to protect mobile
electronic devices, while simultaneously complementing or
enhancing the design of the device. Currently, our protection
solutions are primarily marketed in Europe and, over time, we
intend to introduce these products in other markets throughout
the world. Sales of protection products represented
approximately 1% of our total revenue for the year ended
December 31, 2010 and for the years ended December 31,
2009 and 2008 we had no sales of protection products.
Audio. Our audio solutions include our line of
headphones and portable speakers which allow consumers to use
their mobile electronic devices for both entertainment and
communication. Our line of audio products offer consumers the
ability to both communicate with others via an in-line
microphone that can be used with a portable computer, mobile
phone or other portable media device, as well the ability to
listen to music or video from these devices. Similar to our
protection products, our line of audio products is also
fashionably designed, allowing consumers to express their unique
and personal style. Sales of audio products represented 1% of
our total revenue for the year ended December 31, 2010 and
for the years ended December 31, 2009 and 2008 we had no
sales of audio products.
Other Accessories. Our other accessories
solutions primarily include stands for portable computers and
pico projectors. Sales of other accessory products represented
approximately 4%, 1% (as recast) and 1% (as recast) of our total
revenue for the years ended December 31, 2010, 2009 and
2008, respectively.
Sales and
Marketing
We market and sell our products on a worldwide basis to
retailers, resellers, distributors, wireless carriers and
directly to end users through our iGo.com and Aerial7 websites.
Our sales organization is primarily aligned with our core retail
and distribution channels and geographies throughout North
America, Europe and Asia. During 2010, approximately 88% of our
sales were through retailers and distributors and approximately
8% of our sales were through private label resellers and OEMs.
Our total global revenue consisted of the following regional
results: North American sales of $35.0 million, or 81% of
our consolidated revenue; European sales of $6.2 million,
or 14% of our consolidated revenue; and Asia Pacific sales of
$2.1 million, or 5% of our consolidated revenue.
We have implemented a variety of marketing activities to market
our family of products including participation in major trade
shows, key distribution catalogs, distribution promotions,
reseller and information technology manager advertising, on-line
advertising and banner ads, direct mail and bundle
advertisements with retail and distribution channel partners and
cooperative advertising with our retail partners. In addition,
we pursue a public relations program to educate the market
regarding our products.
Customers
We are dependent upon a relatively small number of customers for
a significant portion of our revenue, including most notably
RadioShack and Walmart. We intend to develop relationships with
a broader set of retailers and resellers to expand the market
availability of our iGo, iGo Green, and Aerial7 branded
products. Our goal is that these relationships will allow us to
diversify our customer base, add stability and decrease our
traditional reliance upon a limited number of retailers and
resellers. These relationships could significantly increase the
availability and exposure of our products, particularly among
large national and international retailers and wireless
carriers, however we give no assurance we could expand our
customer base in a manner that would significantly reduce our
current customer concentration.
We sell to resellers, such as Microcel, retailers, such as
RadioShack, Walmart and Office Depot, private label resellers,
such as Belkin, and directly to end users through our iGo.com
and Aerial7 websites. Sales to RadioShack
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and Walmart accounted for 51% of revenue for the year ended
December 31, 2010, compared to 43% (as recast) for the year
ended December 31, 2009 and 37% (as recast) for the year
ended December 31, 2008. No customer other than RadioShack
or Walmart accounted for greater than 10% of sales for the year
ended December 31, 2010. The loss of RadioShack or Walmart
would likely have a material adverse effect on our business. For
our distribution and retail customers, we build product and
maintain inventory at various third-party warehouses that are
under our control until these customers place, and we fulfill,
purchase orders for this product. For private label resellers,
we build product to the private label resellers orders,
who take possession of the inventory upon delivery to a freight
forwarder. For various retailers, we retain ownership of
inventory until the product sells through to consumers.
As is generally the practice in our industry, a portion of our
sales to distributors and retailers is generally under terms
that provide for stock balancing return privileges and price
protection. Accordingly, we make a provision for estimated sales
returns and other allowances related to those sales. Returns,
which are netted against our reported revenue, were
approximately 3% for the year ended December 31, 2010 and
less than 1% of revenue for the years ended December 31,
2009 and 2008, respectively. Also, as is generally the practice
in our industry, our OEM and private-label reseller customers
only have return rights in the event that our product is
defective. Accordingly, we make a provision for estimated
defective product warranty claims for these customers. Defective
product warranty claims were less than 1% of revenue for the
years ended December 31, 2010, 2009 and 2008, respectively.
Backlog
Our backlog at February 15, 2011 was approximately
$2.5 million, compared with backlog of approximately
$6.0 million at February 16, 2010. Backlog includes
orders confirmed with a purchase order for products scheduled to
be shipped within 90 days to customers with approved credit
status. Because of the generally short cycle between order and
shipment and because of occasional customer changes in delivery
schedules and order cancellations (which are made without
significant penalty), we do not believe that our backlog, as of
any particular date, is necessarily indicative of actual net
sales for any future period.
Research
and Development
Our research and development efforts focus primarily on
enhancing our current products and developing innovative new
products to address a variety of mobile electronic device needs
and requirements. We work with customers, prospective customers
and outsource partners to identify and implement new solutions
intended to meet the current and future needs of the markets we
serve.
As of December 31, 2010, our research and development group
consisted of 10 people who are responsible for hardware and
software design and product testing. Electrical design services
are provided to us by several of our outsource partners under
the supervision of our in-house research and development group.
Amounts spent on research and development for the years ended
December 31, 2010, 2009, and 2008 were $1.5 million,
$2.0 million (as recast), and $2.4 million (as
recast), respectively.
Manufacturing
and Logistics
In order to manufacture our products cost-effectively, we have
implemented a strategy to outsource substantially all of the
manufacturing services for our products. Our internal activities
are focused on design, low-volume manufacturing and quality
testing and our outsourced manufacturing providers are focused
on high-volume manufacturing and logistics.
Most of our products are currently manufactured in China. In
addition to providing manufacturing services, a number of these
companies also provide us with some level of design and
development services.
We purchase the principal components of our products from
outside vendors. The terms of supply contracts are negotiated by
us or our manufacturing partners with each vendor. We believe
that our present vendors have sufficient capacity to meet our
supply requirements and that alternative production sources for
most components are generally available without interruption,
however, several vendors are sole sourced. In order to ensure
timely delivery of products to customers, from time to time, we
issue letters of authorization to our suppliers that authorize
them to secure long lead components in advance of purchase
orders for products. Further information about
9
commitments and contingencies relating to letters of
authorization is contained in Note 17 to the Consolidated
Financial Statements contained in this Annual Report on
Form 10-K.
We employ the services of an outsourced logistics company to
efficiently manage the packaging and shipment of our iGo, iGo
Green, and Aerial7 branded products to our various retail and
distribution channels. The majority of our private-label
products are shipped by our outsource manufacturers to our
private-label reseller customers or to their fulfillment hubs.
Competition
The market for our products is intensely competitive, subject to
rapid change and sensitive to new product introductions or
enhancements and marketing efforts by industry participants. The
principal competitive factors affecting the markets for our
product offerings include corporate and product reputation,
innovation with frequent product enhancement, breadth of
integrated product line, product design, functionality and
features, product quality, performance,
ease-of-use,
support and price. Although we believe that our products compete
favorably with respect to such factors, there can be no
assurance that we can maintain our competitive position against
current or potential competitors, especially those with greater
financial, marketing, service, support, technical or other
competitive resources. However, we believe that our innovative
products, coupled with our strategic relationships with
private-label resellers, retailers, resellers, distributors, and
wireless carriers provide us with a competitive advantage in the
marketplace. In particular, with respect to our power products,
we primarily compete with products offered by low-cost
manufacturers, specialized third-party mobile computing
accessory companies such as Targus, Kensington and Comarco and
retailer and OEM private label product offerings, including
those offered by RadioShack, HP and Best Buy.
Proprietary
Rights
We seek to establish and maintain our proprietary rights in our
technology and products through the use of patents, copyrights,
trademarks, and trade secret laws. We have a program to file
applications for and obtain patents, copyrights, and trademarks
in the United States and in selected foreign countries where we
believe filing for such protection is appropriate. We also seek
to maintain our trade secrets and confidential information by
nondisclosure policies and through the use of appropriate
confidentiality agreements. As of March 1, 2011, we held a
variety of patents and patents pending throughout the world
relating to our power technology, including seven newly issued
patents relating to our iGo Green technology. There can be no
assurance, however, that the rights we have obtained can be
successfully enforced against infringing products in every
jurisdiction. Although we believe the protection afforded by our
patents, copyrights, trademarks, and trade secrets has value,
the rapidly changing technology in our industry and
uncertainties in the legal process make our future success
dependent primarily on the innovative skills, technological
expertise, and management abilities of our employees rather than
on the protection afforded by patent, copyright, trademark, and
trade secret laws.
Some of our products are also designed to include software or
other intellectual property licensed from third parties. While
it may be necessary in the future to seek or renew licenses
relating to various aspects of our products, we believe, based
upon past experience and standard industry practice that such
licenses generally could be obtained on commercially reasonable
terms. Nonetheless, there can be no assurance that the necessary
licenses would be available on acceptable terms, if at all. Our
inability to obtain certain licenses or other rights or to
obtain such licenses or rights on favorable terms, or the need
to engage in litigation regarding these matters, could have a
material adverse effect on our business, operating results, and
financial condition. Moreover, inclusion in our products of
software or other intellectual property licensed from third
parties on a nonexclusive basis may limit our ability to protect
our proprietary rights in our products.
There can be no assurance that our patents and other proprietary
rights will not be challenged, invalidated, or circumvented;
that others will not assert intellectual property rights to
technologies that are relevant to us; or that our rights will
give us a competitive advantage. In addition, the laws of some
foreign countries may not protect our proprietary rights to the
same extent as the laws of the United States.
10
Employees
As of December 31, 2010 we had 62 full-time employees,
44 located in the United States, 10 located in Asia, 6 located
in Europe and 2 located in Australia, including 14 employed in
operations, 10 in research and development, 27 in sales and
marketing and 11 in administration. We engage temporary
employees from time to time to augment our full time employees,
generally in operations. None of our employees are covered by a
collective bargaining agreement. We believe we have good
relationships with our employees.
This section highlights specific risks that could affect us and
our business. You should carefully consider each of the
following risks and all of the other information set forth in
this Annual Report on
Form 10-K.
Based on the information currently known to us, we believe that
the following information identifies the most significant risk
factors affecting us. However, the risks and uncertainties that
we face are not limited to those described below. Additional
risks and uncertainties not presently known to us or that we
currently believe to be immaterial may also adversely affect our
business.
If any of the following risks and uncertainties develops into
actual events or the circumstances described in the risks and
uncertainties occur, these events or circumstances could have a
material adverse effect on our business, financial condition or
results of operations. These events could also have a negative
effect on the trading price of our securities.
Risks
Related To Our Business
We
depend on large purchases from significant customers, notably
RadioShack and Walmart, and any loss, cancellation or delay in
purchases by these customers could cause a shortfall in revenue,
excess inventory and inventory holding or obsolescence
charges.
We have historically derived a substantial portion of our
revenue from a relatively small number of customers. For
example, RadioShack and Walmart together comprised 51% of our
revenue for the year ended December 31, 2010. For the year
ended December 31, 2010, RadioShack alone represented 34%
of our revenue. Neither RadioShack nor Walmart has minimum
purchase requirements and can stop purchasing our products at
any time and with very short notice. In addition, including
RadioShack and Walmart, most of our customer agreements are
short term and non-exclusive and provide for purchases on a
purchase order basis. If RadioShack or Walmart reduces, delays
or cancels orders with us, and we are not able to sell our
products to new customers at comparable levels, our revenue
could decline significantly and could result in excess inventory
and inventory holding or obsolescence charges. In addition, any
difficulty in collecting amounts due from RadioShack or Walmart
would negatively impact our result of operations and working
capital.
Our
success is largely dependent upon our ability to expand and
diversify our customer base, while simultaneously continuing to
retain and build our relationships with RadioShack and
Walmart.
We derive a substantial portion of our revenue from RadioShack
and Walmart and any adverse change in our relationships with
RadioShack or Walmart would have a material adverse effect on
our business. If RadioShack or Walmart discontinued purchasing
our products, our revenues and net income would decline
significantly. For example, sales to RadioShack for the year
ended December 31, 2010 declined 31% as compared to the
year ended December 31, 2009 and we expect that sales to
RadioShack will continue to decline in 2011 relative to sales
generated from RadioShack in previous years. Our success will
depend upon our continued ability to retain and build upon our
relationships with RadioShack and Walmart, while simultaneously
generating relationships with new customers, particularly retail
customers willing to sell our products to consumers under our
iGo brand.
Although we are attempting to expand our customer base, we
cannot assure you that we will be able to retain our largest
customers, RadioShack and Walmart, or that we will be able to
attract additional customers, or that our customers will
continue to buy our products in the same amounts as in prior
years. The loss of RadioShack or Walmart, any reduction or
interruption in sales to RadioShack or Walmart, our inability to
successfully develop
11
relationships with additional customers or future price
concessions that we may have to make, could significantly harm
our business.
Increased
reliance upon RadioShack and Walmart, as well as other
distributors and resellers, for the sale of our products will
subject us to additional risks, and the failure to adequately
manage these risks could have a material adverse impact on our
operating results.
The inability to accurately forecast the timing and volume of
orders for sales of products to resellers and distributors
during any given quarter could adversely affect operating
results for such quarter and, potentially, for future periods.
For example, if we underestimate sales, we will not be able to
fill orders on a timely basis, which could cause customer
dissatisfaction and loss of future business. Conversely, if we
overestimate sales, we will experience increased costs from
inventory storage, waste, and obsolescence.
The loss of RadioShack, Walmart, or any other large reseller or
distributor customers, would materially harm our business. While
we currently have a limited number of reseller and distributor
agreements, none of these customers are obligated to purchase
products from us. Consequently, any reseller or distributor
could cease doing business with us at any time. Our dependence
upon RadioShack and Walmart along with a few other resellers and
distributors results in a significant concentration of credit
risk, thus a substantial portion of our trade receivables
outstanding from time to time are often concentrated among a
limited number of customers. In addition, many of these
customers also have or distribute competing products. If
RadioShack, Walmart or our other reseller and distributor
customers elect to increase the marketing of competing products
or reduce the marketing of our products, our ability to grow our
business will be negatively impacted and will adversely impact
revenues.
Additional risks associated with our reseller and distributor
business include the following:
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the termination of reseller and distributor agreements or
reduced or delayed orders;
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difficulty in predicting sales to reseller and distributors who
do not have long-term commitments to purchase from us, which
requires us to maintain sufficient inventory levels to satisfy
anticipated demand;
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lack of visibility of end user customers and revenue recognition
and channel inventory issues related to sales by resellers and
distributors;
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resellers and distributors electing to resell, or increase their
marketing of, competing products or technologies or reduced
marketing of our products; and
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changes in corporate ownership, financial condition, business
direction, or sales compensation related to our products, or
product mix by the resellers and distributors.
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Any of these risks could have a material adverse effect on our
business, financial condition, and results of operations.
If our
revenue is not sufficient to absorb our expenses, we will not be
profitable in the future.
We have experienced significant operating losses since inception
and, as of December 31, 2010, have an accumulated deficit
of $130 million. We intend to make expenditures on an
ongoing basis to support our operations, primarily from cash
generated from operations and, if available, from lines of
credit, as we develop and introduce new products and expand into
new markets. If we do not achieve revenue growth sufficient to
absorb our planned expenses, we will experience additional
losses in future periods. In addition, there can be no assurance
that we will achieve or sustain profitability.
Our future success is dependent on market acceptance of our iGo
and Aerial7 branded products. If acceptance of our iGo and
Aerial7 branded products does not grow, we will not be able to
increase or sustain our revenue, and our business will be
severely harmed. If we do not achieve widespread market
acceptance of our iGo branded power products and technology,
including our new iGo Green technology, we may not be able to
maintain our existing revenue or achieve anticipated revenue.
For example, we currently derive a material portion of our
revenue from the sale of our iGo branded power products. These
power products, particularly our new iGo Green power products,
represent a relatively new product category in the mobile
electronics industry. We anticipate that a material portion
12
of our revenue in the foreseeable future will continue to be
derived from our family of iGo branded power products. We can
give no assurance that the power product category, or the
protection and audio product categories, will develop
sufficiently to cover our expenses and costs. Moreover, our
products may not achieve widespread market acceptance if:
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we lose, or fail to replace, any significant retail or
distribution partners;
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we fail to expand or protect our proprietary rights and
intellectual property;
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we fail to complete development of these products in a timely
manner;
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we fail to achieve the performance criteria required of these
products by our customers; or
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competitors introduce similar or superior products.
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In addition, our universal chargers include a feature that
allows a single version of these products to be used with almost
any mobile electronic device. If mobile electronic device
manufacturers choose to design and manufacture their products in
such a way as to limit the use of universal devices with their
devices, it could reduce the applicability of a universal
charger product and limit market acceptance of our power
products.
Our
operating results are subject to significant fluctuations, and
if our results are worse than expected, our stock price could
fall.
Our operating results have fluctuated in the past, and may
continue to fluctuate in the future. It is likely that in some
future quarter or quarters our operating results will be below
the expectations of securities analysts and investors. If this
happens, the market price for our common stock may decline
significantly. The factors that may cause our operating results
to fall short of expectations include:
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increases in product costs from our suppliers;
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our suppliers ability to perform under their contracts
with us;
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the timing of our new product and technology introductions and
product enhancements relative to our competitors or changes in
our or our competitors pricing policies;
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market acceptance of our products, notably including our new iGo
Green power products and technology;
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the size and timing of customer orders;
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our ability to effectively manage inventory levels;
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delay or failure to fulfill orders for our products on a timely
basis;
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distribution of or changes in our revenue among our distribution
partners and retailers;
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our inability to accurately forecast our contract manufacturing
needs;
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difficulties with new product production implementation or
supply chain;
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product defects and other product quality problems;
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the degree and rate of growth of the markets in which we compete
and the accompanying demand for our products;
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our ability to expand our internal and external sales forces and
build the required infrastructure to meet anticipated
growth; and
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seasonality of sales.
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Many of these factors are beyond our control. For these reasons,
you should not rely on
period-to-period
comparisons and short-term fluctuations of our financial results
to forecast our future long-term performance.
13
Increased
focus by consumer electronics retailers on their own private
label brands could cause us to lose shelf space with our
existing retail customers and make it more difficult to have our
products assorted at new retail customers.
We believe there is an increasing focus by consumer electronics
retailers, such as RadioShack and Best Buy, to concentrate an
increasing portion of their product assortments within their own
private label products. Our largest customer, RadioShack, sells
its own private label brand of power products that compete
directly with our power products. These private label lines
compete directly with our product lines and may receive
prominent positioning on the retail floor by these retailers.
Competition has been intense in recent years and is expected to
continue. Failure to appropriately respond to these trends or to
offer effective sales incentives and marketing programs to our
customers could reduce our ability to secure adequate shelf
space at our retail customers or generate new sales
opportunities with new customers and could adversely affect our
financial performance or limit our potential for achieving
revenue growth.
The
average selling prices of our products may decrease over their
sales cycles, especially upon the introduction of new products,
which may negatively affect our gross margins.
Our products typically experience a reduction in the average
selling prices over their respective sales cycles. Further, as
we introduce new or next generation products, sales prices of
previous generation products may decline substantially. In order
to sell products that have a falling average selling price and
maintain margins at the same time, we need to continually reduce
product and manufacturing costs. Furthermore, we typically
invoice international customers in their local currency and our
revenue and gross margins could be negatively impacted by
fluctuations in the currencies where our international customers
are located. To manage manufacturing costs, we must collaborate
with our third-party manufacturers to engineer the most
cost-effective design for our products. There can be no
assurances we will be successful in our efforts to reduce these
costs and, in some situations, we may even incur price increases
from our suppliers. In order to keep our manufacturing costs
down, we must carefully manage the price paid for components
used in our products as well as manage our freight and inventory
costs. If we are unable to reduce the cost of older products as
newer products are introduced or effectively manage cost
increases for our products, our average gross margins may
decline.
If we
fail to continue to introduce new products and product
enhancements that achieve broad market acceptance on a timely
basis, we will not be able to compete effectively, and we will
be unable to increase or maintain our revenue.
The market for our products is highly competitive and in general
is characterized by rapid technological advances, changing
customer needs and evolving industry standards. If we fail to
continue to introduce new products and product enhancements that
achieve broad market acceptance on a timely basis, we will not
be able to compete effectively, and we will be unable to
increase or maintain our revenue. Our future success will depend
in large part upon our ability to:
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develop, in a timely manner, new products and services that keep
pace with developments in technology and customer requirements;
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cover potentially higher manufacturing costs of new products and
meet potentially new manufacturing requirements;
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deliver new products and services through changing distribution
channels; and
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respond effectively to new product announcements by our
competitors by quickly introducing competing products.
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We may not be successful in developing and marketing, on a
timely and cost-effective basis, either enhancements to existing
products or new products that respond to technological advances
and satisfy increasingly sophisticated customer needs. If we
fail to introduce or sell innovative new products, our operating
results may suffer. In addition, if new industry standards
emerge that we do not anticipate or adapt to, our products could
be rendered obsolete and our business could be materially
harmed. Alternatively, any delay in the development of
14
technology upon which our products are based could result in our
inability to introduce new products as planned. The success and
marketability of technology and products developed by others is
beyond our control.
We have experienced delays in releasing new products in the
past, which resulted in lower quarterly revenue than expected.
Further, our efforts to develop new and similar products could
be delayed due to unanticipated manufacturing requirements and
costs. Delays in product development and introduction could
result in:
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loss of or delay in revenue and loss of market share;
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negative publicity and damage to our reputation and brand;
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decline in the average selling price of our products and decline
in our overall gross margins; and
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adverse reactions in our sales and distribution channels.
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Acquisitions
could have negative consequences, which could harm our
business.
We have acquired, and intend to continue to pursue opportunities
to acquire businesses, products or technologies that complement
or expand our current capabilities. For example, in 2010 we
acquired Adapt and Aerial7. In 2006 we acquired substantially
all of the assets of Think Outside, Inc., a developer and
marketer of foldable keyboards and other accessories for mobile
handheld devices and, in 2007, made the determination to no
longer develop and market these keyboard products. Additional
acquisitions could require significant capital infusions and
could involve many risks including, but not limited to, the
following:
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difficulty integrating the acquired companys personnel,
products, product roadmaps, technologies, systems, processes,
and operations, including product delivery, order management,
and information systems;
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difficulty in conforming the acquired companys financial
policies and practices to our policies and practices and in
implementing and maintaining adequate internal systems and
controls over the financial reporting and information systems of
the acquired company;
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diversion of managements attention and disruption of
ongoing business;
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difficulty in combining product and technology offerings and
entering into new markets or geographical areas in which we have
no or limited direct experience and where our competitors may
have stronger market positions;
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loss of management, sales, technical, or other key personnel;
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revenue from the acquired companies not meeting our
expectations, and the potential loss of the acquired
companies customers, distributors, resellers, suppliers,
or other partners;
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delays or difficulties and the attendant expense in evaluating,
coordinating, and combining administrative, manufacturing,
sales, research and development and other operations,
facilities, and relationships with third parties in accordance
with local laws and other obligations while maintaining adequate
standards, controls and procedures, including financial controls
and controls over information systems;
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difficulty in completing projects associated with acquired
in-process research and development;
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incurring amortization expense related to intangible assets and
recording goodwill and
non-amortizable
assets that will be subject to impairment testing and possible
impairment charges;
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dilution of existing stockholders as a result of issuing equity
securities, including the assumption of any stock options or
other equity awards issued by the acquired company;
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overpayment for any acquisition or investment or unanticipated
costs or liabilities;
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responsibility for the liabilities of the acquired company,
including any potential intellectual property infringement
claims or other litigation; and
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incurring substantial write-offs, restructuring charges, and
transactional expenses.
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15
Our failure to manage these risks and challenges could
materially harm our business, financial condition, and results
of operations. Further, if we do not successfully address these
challenges in a timely manner, we may not fully realize all of
the anticipated benefits or synergies on which the value of a
transaction was based. Future transactions could cause our
financial results to differ from expectations of market analysts
or investors for any given quarter, which could, in turn, cause
a decline in our stock price.
We
outsource the manufacturing and fulfillment of our products,
which limits our control of the manufacturing process and could
result in unanticipated cost increases or cause a delay in our
ability to fill orders.
Most of our products are produced under contract manufacturing
arrangements with manufacturers in China. Our reliance on
third-party manufacturers exposes us to risks that are not in
our control, such as unanticipated cost increases or negative
fluctuations in currency, which could negatively impact our
results of operations and working capital. Any termination of or
significant disruption in our relationship with our
manufacturers may prevent us from filling customer orders in a
timely manner, as we generally do not maintain large inventories
of our products, and will negatively impact our revenue.
We source our products from independent manufacturers who
purchase components and other raw materials. Our use of contract
manufacturers reduces control over costs, product quality and
manufacturing yields. We depend upon our contract manufacturers
to deliver products that are competitive in cost, free from
defects and in compliance with our specifications and delivery
schedules. Moreover, although arrangements with such
manufacturers may contain provisions for warranty obligations on
the part of contract manufacturers, we remain primarily
responsible to our customers for warranty obligations.
Disruption in supply, a significant increase in the cost of the
assembly of our products, failure of a contract manufacturer to
remain competitive in price, the failure of a contract
manufacturer to comply with our procurement needs or the
financial failure or bankruptcy of a contract manufacturer could
delay or interrupt our ability to manufacture or deliver our
products to customers at a competitive price or on a timely
basis. In addition, regulatory agencies and legislatures in
various countries, including the United States, have undertaken
reviews of product safety, and various proposals for additional,
more stringent laws and regulations are under consideration.
Current or future laws or regulations may become effective in
various jurisdictions in which we currently operate and may
increase our costs and disrupt our business operations.
We generally provide our third-party contract manufacturers with
a rolling forecast of demand which they use to determine our
material and component requirements. Lead times for ordering
materials and components vary significantly and depend on
various factors, such as the specific supplier, contract terms
and supply and demand for a component at a given time. Some of
our components have long lead times. For example, certain
electronic components used in our chargers have lead times that
range from six to ten weeks. If our forecasts are less than our
actual requirements, our contract manufacturers may be unable to
manufacture products in a timely manner. If our forecasts are
too high, our contract manufacturers will be unable to use the
components they have purchased on our behalf, which may require
us to purchase the components from them before they are used in
the manufacture of our products.
We rely on contract fulfillment providers to warehouse our
finished goods inventory and to ship our products to our
customers. We do not have long-term contracts with our
fulfillment providers. Any termination of or significant
disruption in our relationship with our fulfillment providers
may prevent customer orders from being fulfilled in a timely
manner, as it would require that we relocate our finished goods
inventory to another warehouse facility and arrange for shipment
of products to our customers.
Our
reliance on sole sources for key components may inhibit our
ability to meet customer demand.
The principal components of our products are purchased from
outside vendors. Several of these vendors are our sole source of
supply. We do not have long-term supply agreements with the
manufacturers of these components.
We depend upon our suppliers to deliver components that are free
from defects, competitive in functionality and cost and in
compliance with our specifications and delivery schedules.
Disruption in supply, a significant increase in the cost of one
or more components, failure of a supplier to remain competitive
in functionality or price,
16
the failure of a supplier to comply with any of our procurement
needs or the financial failure or bankruptcy of a supplier could
delay or interrupt our ability to manufacture or deliver our
products to customers on a timely basis.
Any termination of or significant disruption in our relationship
with our suppliers may prevent us from filling customer orders
in a timely manner as we generally do not maintain large
inventories of components or products. In the event that a
termination or disruption were to occur, we would have to find
and qualify an alternative source. The time it would take to
complete this process would vary based upon the size of the
supplier base and the complexity of the component or product and
could divert our management resources and be costly. Delays
could range from as little as a few days to several months, and,
in some cases, a suitable alternative may not be available at
all.
We may
not be able to adequately manage our anticipated growth, which
could impair our efficiency and negatively impact
operations.
Our success depends on our ability to manage growth effectively.
If we do not effectively manage this growth, we may not be able
to operate efficiently or maintain the quality of our products.
Either outcome could materially and adversely affect our
operating results. As we continue to develop new products and
bring them to market, we will be required to manage multiple
projects, including the design and development of products and
their transition to high volume manufacturing. This could place
a significant strain on our operational, financial and
managerial resources and personnel, our management information
systems, and our operational and financial controls. To
effectively manage our growth we must:
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effectively utilize our research and development resources;
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install and implement adequate controls and management
information systems in an effective, efficient and timely manner;
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maintain and strengthen our relationships with our contract
manufacturers and fulfillment providers; and
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more effectively manage our supply chain.
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Our
inventory management is complex and failure to properly manage
inventory growth may result in excess or obsolete inventory, the
write-down of which may negatively affect our operating
results.
Our inventory management is complex as we are required to
balance the need to maintain strategic inventory levels to
ensure competitive lead times against the risk of inventory
overstock and obsolescence because of rapidly changing
technology and customer requirements. In addition, the need to
carefully manage our inventory is likely to increase as we
expect to acquire additional customers who will likely require
us to maintain certain minimum levels of inventory on their
behalf, as well as provide them with inventory return
privileges. Our customers may also increase orders during
periods of product shortages, cancel orders if their inventory
is too high, or delay orders in anticipation of new products.
They may adjust their orders in response to the supply of our
products and the products of our competitors that are available
to them and in response to seasonal fluctuations in end-user
demand. If we ultimately determine that we have excess or
obsolete inventory, we may have to reduce our prices and
write-down inventory, which in turn could result in reduced
operating results.
We
have experienced returns of our products, which could in the
future harm our reputation and negatively impact our operating
results.
In the past, some of our customers have returned products to us
because the product did not meet their expectations,
specifications or requirements. These returns were approximately
3% for the year ended December 31, 2010 and less than 1% of
revenue for each of the years ended December 31, 2009 and
2008. It is likely that we will experience some level of returns
in the future and, as our business grows, this level may be more
difficult to estimate. A portion of our sales to distributors is
generally under terms that provide for certain stock balancing
privileges. Under the stock balancing programs, some
distributors are permitted to return up to 15% of their prior
quarters purchases, provided that they place a new order
for equal or greater dollar value of the amount returned.
Also, returns may adversely affect our relationship with those
customers and may harm our reputation. This could cause us to
lose potential customers and business in the future. We record a
reserve for future returns at the
17
time revenue is recognized. We believe the reserve is adequate
given our historical level of returns. If returns increase,
however, our reserve may not be sufficient and operating results
could be negatively affected.
We may
have design quality and performance issues with our products
that may adversely affect our reputation and our operating
results.
A number of our products are based on new technology and the
designs are complex. As such, they may contain undetected errors
or performance problems, particularly during new or enhanced
product launches. Despite product testing prior to introduction,
our products have in the past, on occasion, contained errors
that were discovered after commercial introduction. Any future
defects discovered after shipment of our products could result
in loss of sales, delays in market acceptance or product returns
and warranty costs. We attempt to make adequate allowance in our
new product release schedule for testing of product performance.
Because of the complexity of our products, however, our release
of new products may be postponed should test results indicate
the need for redesign and retesting, or should we elect to add
product enhancements in response to customer feedback. In
addition, third-party products, upon which our products are
dependent, may contain defects which could reduce or undermine
the performance of our products and adversely affect our
operating results.
We may
incur product liability claims which could be costly and could
harm our reputation.
The sale of our products involves risk of product liability
claims against us. We currently maintain product liability
insurance, but our product liability insurance coverage is
subject to various coverage exclusions and limits and may not be
obtainable in the future on terms acceptable to us, or at all.
We do not know whether claims against us with respect to our
products, if any, would be successfully defended or whether our
insurance would be sufficient to cover liabilities resulting
from such claims. Any claims successfully brought against us
could harm our business.
If we
fail to protect our intellectual property our business and
ability to compete could suffer.
Our success and ability to compete are dependent upon our
internally developed technology and know-how. We rely primarily
on a combination of patent protection, copyright and trademark
laws, trade secrets, nondisclosure agreements and technical and
data security measures to protect our proprietary rights. While
we have certain patents and patents pending, including pending
patents relating to our new green power technology, there can be
no assurance that patents pending or future patent applications
will be issued or that, if issued, those patents will not be
challenged, invalidated or circumvented or that rights granted
thereunder will provide meaningful protection or other
commercial advantage to us. Moreover, there can be no assurance
that any patent rights will be upheld in the future or that we
will be able to preserve any of our other intellectual property
rights.
We typically enter into confidentiality, non-compete or
invention assignment agreements with our key employees,
distributors, customers and potential customers, and limit
access to, and distribution of, our product design documentation
and other proprietary information. There can be no assurance
that our confidentiality agreements, confidentiality procedures,
noncompetition agreements or other factors will be adequate to
deter misappropriation or independent third-party development of
our technology or to prevent an unauthorized third-party from
obtaining or using information that we regard as proprietary.
Litigation efforts may be necessary in the future to defend our
intellectual property rights and would likely result in
substantial cost to, and division of efforts by, us.
We may
be subject to intellectual property infringement claims that are
costly to defend and could limit our ability to use certain
technologies in the future.
The laws of some foreign countries do not protect or enforce
proprietary rights to the same extent as do the laws of the
United States. In addition, under current law, certain patent
applications filed with the United States Patent and Trademark
Office before November 29, 2000 may be maintained in
secrecy until a patent is issued. Patent applications filed with
the United States Patent and Trademark Office on or after
November 29, 2000, as well as patent applications filed in
foreign countries, may be published some time after filing but
prior to issuance. The right to a patent in the United States is
attributable to the first to invent, not the first to file a
patent application. We cannot be sure that our products or
technologies do not infringe patents that may be granted in the
future pursuant to
18
pending patent applications or that our products do not infringe
any patents or proprietary rights of third parties. In the event
that any relevant claims of third-party patents are upheld as
valid and enforceable, we could be prevented from selling our
products or could be required to obtain licenses from the owners
of such patents or be required to redesign our products to avoid
infringement. There can be no assurance that such licenses would
be available or, if available, would be on terms acceptable to
us or that we would be successful in any attempts to redesign
our products or processes to avoid infringement. Our failure to
obtain these licenses or to redesign our products would have a
material adverse effect on our business.
There can be no assurance that our competitors will not
independently develop technology similar to our existing
proprietary rights. We expect that our products will
increasingly be subject to infringement claims as the number of
products and competitors in our industry segment grows and the
functionality of products in different industry segments
overlaps. There can be no assurance that third parties will not
assert infringement claims against us in the future or, if
infringement claims are asserted, that such claims will be
resolved in our favor. Any such claims, with or without merit,
could be time-consuming, result in costly litigation, cause
product shipment delays or require us to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms favorable to us, if at
all. In addition, litigation may be necessary in the future to
protect our trade secrets or other intellectual property rights,
or to determine the validity and scope of the proprietary rights
of others. Such litigation could result in substantial costs and
diversion of resources.
If we
are unable to hire additional qualified personnel as necessary
or if we lose key personnel, we may not be able to successfully
manage our business or achieve our objectives.
We believe our future success will depend in large part upon our
ability to identify, attract and retain highly skilled
executive, managerial, engineering, sales and marketing, finance
and operations personnel. Competition for personnel in the
technology industry is intense, and we compete for personnel
against numerous companies, including larger, more established
companies with significantly greater financial resources. There
can be no assurance we will be successful in identifying,
attracting and retaining personnel.
Our success also depends to a significant degree upon the
continued contributions of our key executives, management,
engineering, sales and marketing, finance and manufacturing
personnel, many of whom would be difficult to replace. We do not
maintain key person life insurance on any of our executive
officers. The loss of the services of any of our key personnel,
the inability to identify, attract or retain qualified personnel
in the future or delays in hiring required personnel could make
it difficult for us to manage our business and meet key
objectives, such as timely product introductions.
We may
not be able to secure additional financing to meet our future
capital needs.
We currently rely on cash flow from operations and cash on hand
to fund our operating and capital needs. We may, in the future,
expend significant capital to further develop our products,
increase awareness of our brand names, expand our sales,
operating and management infrastructure, and pursue
opportunities to acquire businesses, products or technologies
that complement or expand our current capabilities. We may also
use capital more rapidly than currently anticipated.
Additionally, we may incur higher operating expenses and
generate lower revenue than currently expected, and we may be
required to depend on external financing to satisfy our
operating and capital needs. We may be unable to secure
financing on terms acceptable to us, or at all, at the time when
we need such funding. If we raise funds by issuing additional
equity or convertible debt securities, the ownership percentages
of existing stockholders would be reduced, and the securities
that we issue may have rights, preferences or privileges senior
to those of the holders of our common stock or may be issued at
a discount to the market price of our common stock which would
result in dilution to our existing stockholders. If we raise
additional funds by issuing debt, we may be subject to debt
covenants which could place limitations on our operations
including our ability to declare and pay dividends. Our
inability to raise additional funds on a timely basis would make
it difficult for us to achieve our business objectives and would
have a negative impact on our business, financial condition and
results of operations.
19
Risks
Related To Our Industry
Intense
competition in the market for mobile electronic devices could
adversely affect our revenue and operating
results.
The market for mobile electronic devices in general is intensely
competitive, subject to rapid changes and sensitive to new
product introductions or enhancements and marketing efforts by
industry participants. We expect to experience significant and
increasing levels of competition in the future, including
competition from private label brands offered by consumer
electronics retailers. There can be no assurance that we can
maintain our competitive position against current or potential
competitors, including our own retail customers, especially
those with greater financial, marketing, service, support,
technical or other competitive resources.
We currently compete with the internal design efforts of various
OEMs. These OEMs have larger technical staffs, more established
and larger marketing and sales organizations and significantly
greater financial resources than we do. Such competitors may
respond more quickly than we do to new or emerging technologies
and changes in customer requirements, may devote greater
resources to the development, sale and promotion of their
products better than we do or may develop products that are
superior to our products or that achieve greater market
acceptance.
Our future success will depend, in part, upon our ability to
increase sales in our targeted markets. There can be no
assurance that we will be able to compete successfully with our
competitors or that the competitive pressures we face will not
have a material adverse effect on our business. Our future
success will depend in large part upon our ability to increase
our share of our target market and to sell additional products
and product enhancements to existing customers. Future
competition may result in price reductions, reduced margins or
decreased sales.
Should
the market demand for mobile electronic devices decrease, we may
not achieve anticipated revenue.
The demand for the majority of our products and technology is
primarily driven by the underlying market demand for mobile
electronic devices. Should the growth in demand for mobile
electronic devices be inhibited, we may not be able to increase
or sustain revenue. Industry growth depends in part on the
following factors:
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general micro and macro economic conditions and decreases in
demand for mobile electronic devices resulting from recessionary
conditions;
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increased demand by consumers and businesses for mobile
electronic devices; and
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the number and quality of mobile electronic devices in the
market.
|
The market for our products and services depends on economic
conditions affecting the broader information technology market.
Prolonged weakness in this market could cause customers to
reduce their overall information technology budgets or reduce or
cancel orders for our products. In this environment, our
customers or end users may experience financial difficulty,
cease operations and fail to budget or reduce budgets for the
purchase of our products and services. This, in turn, may lead
to longer sales cycles, delays in purchase decisions, payment
and collection, and may also result in downward price pressures,
causing us to realize lower revenue and operating margins. In
addition, general economic uncertainty and the recent general
decline in capital spending in the information technology sector
make it difficult to predict changes in the purchasing
requirements of our customers and the markets we serve. We
believe that, in light of these events, some businesses have and
may continue to curtail or suspend capital spending on
information technology. These factors may cause our revenue and
operating margins to decline.
If our
products fail to comply with domestic and international
government regulations, or if these regulations result in a
barrier to our business, our revenue could be negatively
impacted.
Our products must comply with various domestic and international
laws, regulations and standards. For example, the shipment of
our products from the countries in which they are manufactured
to other international or domestic locations requires us to
obtain export licenses and to comply with possible import
restrictions of the countries in which we sell our products. In
the event that we are unable or unwilling to comply with any
such laws,
20
regulations or standards, we may decide not to conduct business
in certain markets. Particularly in international markets, we
may experience difficulty in securing required licenses or
permits on commercially reasonable terms, or at all. In
addition, we are generally required to obtain both domestic and
foreign regulatory and safety approvals and certifications for
our products. Failure to comply with existing or evolving laws
or regulations, including export and import restrictions and
barriers, or to obtain timely domestic or foreign regulatory
approvals or certificates could negatively impact our revenue.
Economic
conditions, political events, war, terrorism, public health
issues, natural disasters and other circumstances could have a
material adverse affect on our operations and
performance.
Our operations and performance, including collection of our
accounts receivable, depend significantly on worldwide economic
conditions and their impact on levels of consumer spending. Some
of the factors that could influence the levels of consumer
spending include volatility in fuel and other energy costs,
conditions in the residential real estate and mortgage markets,
labor and healthcare costs, increased unemployment (particularly
with office workers), access to credit, consumer confidence and
other macroeconomic factors affecting consumer spending
behavior. These and other economic factors have had, and could
continue to have, a material adverse effect on demand for our
products and services and on our financial condition and
operating results.
In addition, war, terrorism, geopolitical uncertainties, public
health issues, and other business interruptions have caused and
could cause damage or disruption to international commerce and
the global economy, and thus could have a strong negative effect
on us and our suppliers, logistics providers, manufacturing
vendors and customers. Our business operations are subject to
interruption by natural disasters, fire, power shortages,
terrorist attacks, and other hostile acts, labor disputes,
public health issues, and other events beyond our control. Such
events could decrease demand for our products, make it difficult
or impossible for us to make and deliver products to our
customers or to receive components from our suppliers, and
create delays and inefficiencies in our supply chain. Should
major public health issues, including pandemics, arise, we could
be negatively affected by more stringent employee travel
restrictions, additional limitations in freight services,
governmental actions limiting the movement of products between
regions, delays in production ramps of new products, and
disruptions in the operations of our manufacturing vendors and
component suppliers.
Risks
Related To Our Common Stock
Our
common stock price has been volatile, which could result in
substantial losses for stockholders.
Our common stock is currently traded on The NASDAQ Global
Market. We have in the past experienced, and may in the future
experience, limited daily trading volume. The trading price of
our common stock has been and may continue to be volatile. The
market for technology companies, in particular, has at various
times experienced extreme volatility that often has been
unrelated to the operating performance of particular companies.
These broad market and industry fluctuations may significantly
affect the trading price of our common stock, regardless of our
actual operating performance. The trading price of our common
stock could be affected by a number of factors, including, but
not limited to, changes in expectations of our future
performance, changes in estimates by securities analysts (or
failure to meet such estimates), quarterly fluctuations in our
sales and financial results and a variety of risk factors,
including the ones described elsewhere in this report. Periods
of volatility in the market price of a companys securities
sometimes result in securities class action litigation, which
regardless of the merit of the claims, can be time-consuming,
costly and divert managements attention. In addition, if
we needed to raise equity funds under adverse conditions, it
would be difficult to sell a significant amount of our stock
without causing a significant decline in the trading price of
our stock.
Our
executive officers, directors and principal stockholders have
substantial influence over us.
As of March 8, 2011, our executive officers, directors and
principal stockholders owning greater than 5% of our outstanding
common stock together beneficially owned approximately 26% of
the outstanding shares of common stock. As a result, these
stockholders, acting together, may be able to exercise
substantial influence over all matters requiring approval by our
stockholders, including the election of directors and approval
of significant
21
corporate transactions. The concentration of ownership may also
have the effect of delaying or preventing a change in our
control that may be viewed as beneficial by the other
stockholders.
Provisions
of our certificate of incorporation and bylaws could make a
proposed acquisition that is not approved by our board of
directors more difficult.
Some provisions of our certificate of incorporation and bylaws
could make it more difficult for a third-party to acquire us
even if a change of control would be beneficial to our
stockholders. These provisions include:
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authorizing the issuance of preferred stock, with rights senior
to those of the common stockholders, without common stockholder
approval;
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prohibiting cumulative voting in the election of directors;
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a staggered board of directors, so that no more than two of our
four directors are elected each year; and
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limiting the persons who may call special meetings of
stockholders.
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Our
stockholder rights plan may make it more difficult for others to
obtain control over us, even if it would be beneficial to our
stockholders.
In June 2003, our board of directors adopted a stockholders
rights plan. Pursuant to its terms, we have distributed a
dividend of one right for each outstanding share of common
stock. These rights cause substantial dilution to the ownership
of a person or group that attempts to acquire us on terms not
approved by our board of directors and may have the effect of
deterring hostile takeover attempts. These provisions could
discourage a future takeover attempt which individual
stockholders might deem to be in their best interests or in
which shareholders would receive a premium for their shares over
current prices.
Delaware
law may delay or prevent a change in control.
We are subject to the provisions of Section 203 of the
Delaware General Corporation Law. These provisions prohibit
large stockholders, in particular a stockholder owning 15% or
more of the outstanding voting stock, from consummating a merger
or combination with a corporation, unless this stockholder
receives board approval for the transaction, or
662/3%
of the shares of voting stock not owned by the stockholder
approve the merger or transaction. These provisions could
discourage a future takeover attempt which individual
stockholders might deem to be in their best interests or in
which shareholders would receive a premium for their shares over
current prices.
Our
stock price may decline if additional shares are sold in the
market.
As of March 8, 2011, we had 33,004,456 shares of
common stock outstanding. All of our outstanding shares are
currently available for sale in the public market, some of which
are subject to volume and other limitations under the securities
laws. Future sales of substantial amounts of shares of our
common stock by our existing stockholders in the public market,
or the perception that these sales could occur, may cause the
market price of our common stock to decline. We may be required
to issue additional shares upon exercise of previously granted
options and warrants that are currently outstanding.
As of March 8, 2011, we had (i) 2,174,207 shares
of common stock issuable upon the vesting of restricted stock
units under our long-term incentive plan and other outstanding
awards; and (ii) 521,093 shares were available for
future issuance under our current long-term incentive plan. We
also had warrants outstanding to purchase 5,000 shares of
common stock. The vesting of outstanding restricted stock units
could result in increased sales of our common stock in the
market, which could exert significant downward pressure on our
stock price. These sales also might make it more difficult for
us to sell equity or equity-related securities in the future at
a time and price we deem appropriate.
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Item 1B.
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Unresolved
Staff Comments
|
None.
22
Our corporate offices are located in Scottsdale, Arizona. This
facility consists of approximately 21,000 square feet of
leased space pursuant to a lease for which the current term
expires on February 28, 2014. We also lease offices in Los
Angeles, California, the United Kingdom and Shenzhen and Dong
Guan, China. Each of these offices supports our selling,
research and development, and general administrative activities.
The majority of our warehouse and product fulfillment operations
are conducted at various third-party locations throughout the
world. We believe our facilities are suitable and adequate for
our current business activities for the remainder of the lease
terms.
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Item 3.
|
Legal
Proceedings
|
We are, from time to time, party to certain legal proceedings
that arise in the ordinary course and are incidental to our
business. Although litigation is inherently uncertain, based on
past experience and the information currently available, our
management does not believe that any currently pending and
threatened litigation or claims will have a material adverse
effect on the Companys consolidated financial position or
results of operations. However, future events or circumstances,
currently unknown to management will determine whether the
resolution of pending or threatened litigation or claims will
ultimately have a material effect on our consolidated financial
position, liquidity or results of operations in any future
reporting period.
23
PART II
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Item 5.
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Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
Our common stock is traded on The NASDAQ Global Market under the
symbol IGOI.. The following sets forth, for the
period indicated, the high and low sales prices for our common
stock as reported by The NASDAQ Global Market.
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High
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Low
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|
Year Ended December 31, 2009
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Quarter Ended March 31, 2009
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$
|
0.98
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|
|
$
|
0.49
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|
Quarter Ended June 30, 2009
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|
$
|
1.32
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|
|
$
|
0.54
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|
Quarter Ended September 30, 2009
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|
$
|
1.35
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|
|
$
|
0.67
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|
Quarter Ended December 31, 2009
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|
$
|
1.49
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|
|
$
|
1.03
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|
Year Ended December 31, 2010
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|
|
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|
Quarter Ended March 31, 2010
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|
$
|
2.09
|
|
|
$
|
1.03
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|
Quarter Ended June 30, 2010
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|
$
|
2.15
|
|
|
$
|
1.34
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|
Quarter Ended September 30, 2010
|
|
$
|
2.00
|
|
|
$
|
1.37
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|
Quarter Ended December 31, 2010
|
|
$
|
4.09
|
|
|
$
|
1.77
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|
As of March 8, 2011, there were 33,004,456 shares of
our common stock outstanding held by approximately 234 holders
of record and the last reported sale price of our common stock
on The NASDAQ Global Market on March 8, 2011 was $4.01 per
share.
Dividend
Policy
We have never paid cash dividends on our common stock, and it is
the current intention of management to retain earnings to
finance the growth of our business. Future payment of cash
dividends will depend upon financial condition, results of
operations, cash requirements, tax treatment, and certain
corporate law requirements, as well as other factors deemed
relevant by our Board of Directors.
Issuer
Purchases of Equity Securities
During the fourth quarter of 2010, there were no repurchases
made by us or on our behalf, or by any affiliated
purchasers, of shares of our common stock.
24
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Item 6.
|
Selected
Financial Data
|
The following selected consolidated financial data should be
read together with our consolidated financial statements and
notes thereto, Managements Discussion and Analysis
of Financial Condition and Results of Operations and the
other information contained in this
Form 10-K.
The selected financial data presented below under the captions
Consolidated Statements of Operations Data and
Consolidated Balance Sheet Data as of and for each
of the years in the five-year period ended December 31,
2010 are derived from our consolidated financial statements,
which consolidated financial statements have been audited by
KPMG LLP, an independent registered public accounting firm. The
consolidated balance sheet data as of December 31, 2010 and
2009 and consolidated statement of operations data for each of
the years in the three-year period ended December 31, 2010,
are derived from our consolidated financial statements, included
in this
Form 10-K.
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Years Ended December 31,
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|
|
2010
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|
|
2009
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|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
|
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As recast
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As recast
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As recast
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(In thousands, except per share data)
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CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
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Revenue
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|
$
|
43,357
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|
|
$
|
48,944
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|
|
$
|
69,906
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|
|
$
|
71,892
|
|
|
$
|
92,464
|
|
Cost of revenue
|
|
|
28,947
|
|
|
|
33,776
|
|
|
|
50,877
|
|
|
|
55,418
|
|
|
|
69,349
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
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|
Gross profit
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|
|
14,410
|
|
|
|
15,168
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|
|
|
19,029
|
|
|
|
16,474
|
|
|
|
23,115
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|
Total operating expenses
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|
|
16,924
|
|
|
|
16,606
|
|
|
|
21,327
|
|
|
|
32,694
|
|
|
|
41,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Loss from operations
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|
|
(2,514
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)
|
|
|
(1,438
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)
|
|
|
(2,298
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)
|
|
|
(16,220
|
)
|
|
|
(17,924
|
)
|
Interest income, net
|
|
|
171
|
|
|
|
235
|
|
|
|
933
|
|
|
|
1,305
|
|
|
|
1,203
|
|
Gain on disposal of assets and other income, net
|
|
|
2,176
|
|
|
|
506
|
|
|
|
1,099
|
|
|
|
2,283
|
|
|
|
129
|
|
Litigation settlement income (expense)
|
|
|
|
|
|
|
|
|
|
|
672
|
|
|
|
|
|
|
|
(250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before income taxes
|
|
|
(167
|
)
|
|
|
(697
|
)
|
|
|
406
|
|
|
|
(12,632
|
)
|
|
|
(16,842
|
)
|
Provision (benefit) for income tax
|
|
|
(1,002
|
)
|
|
|
(234
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
835
|
|
|
$
|
(463
|
)
|
|
$
|
406
|
|
|
$
|
(12,632
|
)
|
|
$
|
(16,842
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share
|
|
$
|
0.03
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.40
|
)
|
|
$
|
(0.54
|
)
|
Diluted income (loss) per share
|
|
$
|
0.02
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.40
|
)
|
|
$
|
(0.54
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
32,770
|
|
|
|
32,310
|
|
|
|
31,786
|
|
|
|
31,534
|
|
|
|
31,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
35,081
|
|
|
|
32,310
|
|
|
|
34,394
|
|
|
|
31,534
|
|
|
|
31,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
24,474
|
|
|
$
|
32,552
|
|
|
$
|
30,583
|
|
|
$
|
24,242
|
|
|
$
|
17,343
|
|
Working capital
|
|
|
35,986
|
|
|
|
38,131
|
|
|
|
36,352
|
|
|
|
31,735
|
|
|
|
34,495
|
|
Total assets
|
|
|
50,173
|
|
|
|
46,177
|
|
|
|
49,940
|
|
|
|
53,273
|
|
|
|
65,864
|
|
Long-term debt and other non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
42,298
|
|
|
|
40,282
|
|
|
|
39,584
|
|
|
|
37,388
|
|
|
|
49,405
|
|
Mission Technology Group, Inc. (Mission), an entity
that was formed by one of our former officers, purchased the
assets of our expansion and docking product line in April 2007.
From 2007 through 2009 the Company consolidated the results of
Mission as a variable interest entity. Effective January 1,
2010, we determined that we were no longer the primary
beneficiary of Mission and, as such, we no longer consolidate
the results of Mission and have removed the results of Mission
from the presentation of historical financial data in this
filing. Accordingly, the consolidated statements of operations
data and consolidated balance sheet data as of and for the years
ended December 31, 2009, 2008 and 2007 have been recast to
give effect to the removal of Mission.
25
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
The following discussion and analysis of our financial
condition and results of operations should be read together with
our selected consolidated financial data and the consolidated
financial statements and notes thereto contained in this report.
The following discussion contains forward-looking statements.
Our actual results may differ significantly from the results
discussed in these forward-looking statements. Please see the
Disclosure Concerning Forward-Looking Statements and
Risk Factors above for a discussion of factors that
may affect our future results.
Overview
Our vision is to attach our products and technology to every
mobile electronic device. Increased functionality and the
ability to access and manage information remotely are driving
the proliferation of mobile electronic devices and applications.
The popularity of these devices is increasing due to reductions
in size, weight and cost and improvements in functionality,
storage capacity and reliability. Each of these devices needs to
be powered and connected when in the home, the office, or on the
road, and can be accessorized, representing opportunities for
one or more of our products.
We design and develop products that make computers and mobile
electronic devices more efficient and cost effective, thus
enabling professionals and consumers higher utilization of their
mobile devices and the ability to access information more
readily. Our current product offering primarily consists of
power, protection and audio solutions for mobile electronic
devices, and we intend to continue to introduce new accessories
for mobile electronic devices.
Power. Our universal power products allow
users to charge a variety of their mobile electronic devices
from a single power source through the use of interchangeable
tips. Our power products increase end-user convenience and
minimize electronic waste as interchangeable tip solutions
require fewer resources to build, ship, inventory and dispose
of. The centerpiece of our new power management solutions is our
proprietary iGo
Green®
technology. Our first iGo Green power products are laptop
chargers and surge protectors which incorporate our new patented
iGo Green technology. Our iGo Green technology reduces energy
consumption and almost completely eliminates standby power, or
Vampire Power, which results from devices that
continue to consume power even when they are idle or shut-off.
We believe that this power-saving technology, when combined with
our existing universal power products, will help us achieve our
long-term goal of establishing an industry standard for reduced
power consumption when charging mobile electronic devices.
Protection. As a result of our recent
acquisition of Adapt, we now offer a line of skins, cases and
screen protectors for mobile electronic devices. Consumers value
the protection of their mobile electronic devices as they rely
on them heavily in their daily lives to both connect with others
and store important information. In addition, consumers often
view these products as a way to express their personal fashion
and style, similar to clothing and other accessories. Our line
of protection products is designed to meet both of these
consumer needs by providing the consumer with a high degree of
protection, while simultaneously offering them a unique
fashionable design that fits their personal style. Currently, we
offer these products primarily in Europe, however we expect to
expand our line of cases, skins, screen protectors and other
similar products and introduce them in other markets throughout
the world.
Audio. As a result of our recent acquisition
of Aerial7, we now offer a line of earbuds and headphones. As
mobile phones have recently evolved into smartphones and the
introduction of new portable media devices, all of which are
capable of playing music and video, many consumers utilize a
variety of mobile electronic devices for both communication and
entertainment purposes. Our line of audio products offer
consumers the ability to both communicate with others via an
integrated microphone that can be used with a portable computer,
mobile phone or other portable media device as well the ability
to listen to music or video from these devices. Similar to our
protection products, our line of audio products is also
fashionably designed, allowing consumers to express their unique
and personal style. Currently, these products are offered
primarily through lifestyle and music retailers around the
world, however we intend to expand our audio product offering
and introduce these and similar products in consumer electronics
retailers around the world as well.
26
Our ability to execute successfully on our near and long-term
objectives depends largely upon the general market acceptance of
our power, protection and audio products, our ability to protect
our unique proprietary rights, including notably our iGo Green
technology, our ability to generate additional major customers,
and general economic conditions. Additionally, we must execute
on the customer relationships that we have developed and
continue to design, develop, manufacture and market new and
innovative technology and products that are embraced by these
customers and the overall market.
Critical
Accounting Policies and Estimates
Our discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial
statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires
management to make a number of estimates and judgments which
impact the reported amounts of assets, liabilities, revenue and
expenses and the related disclosure of contingent assets and
liabilities.
On an on-going basis, we evaluate our estimates, including those
related to bad debt expense, warranty obligations, sales
returns, and contingencies and litigation. We base our estimates
on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from our
estimates under different assumptions or conditions.
We believe the following critical accounting policies affect our
more significant judgments and estimates used in the preparation
of our consolidated financial statements:
Revenue Recognition. Revenue from product
sales is generally recognized upon shipment and transfer of
ownership from us or our contract manufacturers to the
customers. Allowances for sales returns and credits are provided
for in the same period the related sales are recorded. Should
the actual return or sales credit rates differ from our
estimates, revisions to our estimated allowance for sales
returns and credits may be required.
Our recognition of revenue from product sales to distributors,
resellers and retailers, or the retail and distribution
channel, is affected by agreements giving certain
customers rights to return up to 15% of their prior
quarters purchases, provided that the customer places a
new order for an equal or greater dollar value of the amount
returned. We also have agreements with certain customers that
allow them to receive credit for subsequent price reductions, or
price protection. At the time we recognize revenue
related to these agreements, we reduce revenue for the gross
sales value of estimated future returns, as well as our estimate
of future price protection. We also reduce cost of revenue for
the gross product cost of estimated future returns. We record an
allowance for sales returns in the amount of the difference
between the gross sales value and the cost of revenue as a
reduction of accounts receivable. We also have agreements with
certain customers that provide them with a 100% right of return
prior to the ultimate sale to an end user of the product.
Accordingly, we have recorded deferred revenue of $1,838,000 as
of December 31, 2010 and $914,000 (as recast) as of
December 31, 2009, which we expect to recognize as revenue
when the product is sold to the end user. Gross sales to the
retail and distribution channel accounted for approximately 88%
of revenue for the year ended December 31, 2010 and 67% (as
recast) of revenue for the year ended December 31, 2009.
Historically, a correlation has existed between the amount of
retail and distribution channel inventory and the amount of
returns that actually occur. The greater the inventory held by
our distributors, the more product returns we expect. As part of
our effort to reach an appropriate accounting estimate for
returns, for each of our products, we monitor levels of product
sales and inventory at our distributors warehouses and at
retailers. In estimating returns, we analyze historical returns,
current inventory in the retail and distribution channel,
current economic trends, changes in consumer demand, the
introduction of new competing products and market acceptance of
our products.
In recent years, as a result of a combination of the factors
described above, we have reduced our gross sales to reflect our
estimated amounts of returns and price protection. It is
possible that returns could increase rapidly and significantly
in the future. Accordingly, estimating product returns requires
significant management judgment. In addition, different return
estimates that we reasonably could have used could have had a
material impact on our reported sales and thus could have had a
material impact on the presentation of the results of
operations. For these
27
reasons, we believe that the accounting estimate related to
product returns and price protection is a critical accounting
estimate.
Inventory Valuation. Inventories consist of
finished goods and component parts purchased both partially and
fully assembled. We experience all the typical risks and rewards
of inventory held by contract manufacturers. Inventories are
stated at the lower of cost
(first-in,
first-out method) or market. Inventories include material, labor
and overhead costs. Labor and overhead costs are allocated to
inventory based on a percentage of material costs. We monitor
usage reports to determine if the carrying value of any items
should be adjusted due to lack of demand. We make a downward
adjustment to the value of our inventory for estimated
obsolescence or unmarketable inventory equal to the difference
between the cost of inventory and the estimated market value
based upon assumptions about future demand and market
conditions. If actual market conditions are less favorable than
those projected by management, additional inventory write-downs
may be required.
Deferred Tax Valuation Allowance. We record a
valuation allowance to reduce our deferred tax assets to the
amount that is more likely than not to be realized. In
determining the amount of the valuation allowance, we consider
estimated future taxable income as well as feasible tax planning
strategies in each taxing jurisdiction in which we operate.
Historically, we have recorded a deferred tax valuation
allowance in an amount equal to our net deferred tax assets. If
we determine that we will ultimately be able to utilize all or a
portion of deferred tax assets for which a valuation allowance
has been provided, the related portion of the valuation
allowance will be released to income as a credit to income tax
expense. During 2009, we released $234,000 of the valuation
allowance relating to an application for a refund of federal
alternative minimum taxes paid in 2005 and 2006 in connection
with the Worker, Homeownership, and Business Assistance Act of
2009. During 2010, we released $1,002,000 of the valuation
allowance as a result of deferred tax liabilities incurred in
connection with the acquisitions of Adapt and Aerial7.
Goodwill and Long-Lived Asset Valuation. We
test goodwill for impairment on an annual basis as of
October 1. The goodwill impairment evaluation process is
based on both a discounted future cash flows approach and a
market comparable approach. The discounted cash flows approach
uses our estimates of future market growth rates, market share,
revenue and costs, as well as appropriate discount rates. We
evaluated goodwill for impairment as of October 1, 2010 and
determined that recorded goodwill was not impaired at that time.
We test our recorded long-lived assets whenever events indicate
the recorded intangible assets may be impaired. Our long-lived
asset impairment approach is based on an undiscounted cash flows
approach. We have recorded long-lived asset impairment charges
in the past, and if we fail to achieve our assumed growth rates
or assumed gross margin, we may incur additional charges for
impairment in the future. For these reasons, we believe that the
accounting estimates related to goodwill and long-lived assets
are critical accounting estimates.
28
Results
of Operations
The following table sets forth certain consolidated financial
data for the periods indicated expressed as a percentage of
total revenue for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
Revenue
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of revenue
|
|
|
66.8
|
%
|
|
|
69.0
|
%
|
|
|
72.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
33.2
|
%
|
|
|
31.0
|
%
|
|
|
27.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
18.0
|
%
|
|
|
13.8
|
%
|
|
|
11.7
|
%
|
Research and development
|
|
|
3.5
|
%
|
|
|
4.0
|
%
|
|
|
3.5
|
%
|
General and administrative
|
|
|
17.5
|
%
|
|
|
16.1
|
%
|
|
|
15.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
39.0
|
%
|
|
|
33.9
|
%
|
|
|
30.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(5.8
|
)%
|
|
|
(2.9
|
)%
|
|
|
(3.3
|
)%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
0.4
|
%
|
|
|
0.5
|
%
|
|
|
1.3
|
%
|
Gain on disposal of assets and other income, net
|
|
|
5.0
|
%
|
|
|
1.0
|
%
|
|
|
1.6
|
%
|
Litigation settlement income
|
|
|
|
|
|
|
|
|
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before income tax
|
|
|
(0.4
|
)%
|
|
|
(1.4
|
)%
|
|
|
0.6
|
%
|
Income tax benefit
|
|
|
2.3
|
%
|
|
|
0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
1.9
|
%
|
|
|
(0.9
|
)%
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparison
of Years Ended December 31, 2010, 2009, and
2008
Revenue. Revenue generally consists of sales
of products, net of returns and allowances. To date, our
revenues have come predominantly from our universal chargers.
The following table summarizes the
year-over-year
comparison of our consolidated revenue for the periods indicated
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change from
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
Prior Year
|
|
2010
|
|
$
|
43,357
|
|
|
$
|
(5,587
|
)
|
|
|
(11.4
|
)%
|
2009
|
|
|
48,944
|
|
|
|
(20,962
|
)
|
|
|
(30.0
|
)%
|
2008
|
|
|
69,906
|
|
|
|
|
|
|
|
|
|
Following is a breakdown of revenue by significant account for
the years ended December 31, 2010, 2009 and 2008 with
corresponding dollar and percent changes (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change from 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to 2010
|
|
|
Change from 2008 to 2009
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
%
|
|
|
$
|
|
|
%
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
Change
|
|
|
Change
|
|
|
Change
|
|
|
RadioShack
|
|
|
14.7
|
|
|
|
21.2
|
|
|
|
25.6
|
|
|
|
(6.5
|
)
|
|
|
(30.7
|
)%
|
|
|
(4.4
|
)
|
|
|
(17.2
|
)%
|
Walmart
|
|
|
7.5
|
|
|
|
0.2
|
|
|
|
|
|
|
|
7.3
|
|
|
|
3650.0
|
%
|
|
|
0.2
|
|
|
|
N/A
|
|
Targus
|
|
|
|
|
|
|
11.6
|
|
|
|
32.3
|
|
|
|
(11.6
|
)
|
|
|
(100.0
|
)%
|
|
|
(20.7
|
)
|
|
|
(64.1
|
)%
|
All Other customers
|
|
|
21.2
|
|
|
|
15.9
|
|
|
|
12.0
|
|
|
|
5.3
|
|
|
|
33.3
|
%
|
|
|
3.9
|
|
|
|
32.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43.4
|
|
|
|
48.9
|
|
|
|
69.9
|
|
|
|
(5.5
|
)
|
|
|
(11.2
|
)%
|
|
|
(21.0
|
)
|
|
|
(30.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The 2010 decrease in revenue was primarily due to decreases in
sales to Targus and RadioShack. As noted in the table above,
sales to Targus decreased to $0 for the year ended
December 31, 2010 as a result of the termination
29
of our sales agreement with Targus in 2009 (as discussed below).
Sales to RadioShack also decreased during this same period to
$14.7 million for the year ended December 31, 2010.
This decrease in sales is concurrent with RadioShacks
debut of its own private label chargers. These decreases have
been offset by sales to new retail customers such as Walmart as
well as increases in sales to other retailers and distributors
as a result of our increased focus on sales to retailer and
distributors. Sales to Walmart increased to $7.5 million
for the year ended December 31, 2010. We expect that sales
to RadioShack will continue to decline in 2011. We are working
to continue to broaden our distribution base during 2011 with
the goal of reducing our dependence on sales to Walmart and
RadioShack in the future.
The 2009 decrease was primarily due to the decrease of sales to
Targus and RadioShack. In March 2009, Targus notified the
Company of its intent not to renew our distribution agreement,
which expired by its terms in May 2009. Sales to RadioShack
decreased by $4.4 million for the year ended
December 31, 2009. This was during the early stages of the
implementation of RadioShacks own branded line of chargers.
Cost of revenue, gross profit and gross
margin. Cost of revenue generally consists of
costs associated with components, outsourced manufacturing and
in-house labor associated with assembly, testing, packaging,
shipping and quality assurance, depreciation of equipment and
indirect manufacturing costs. Gross profit is the difference
between revenue and cost of revenue. Gross margin is gross
profit stated as a percentage of revenue. The following tables
summarize the
year-over-year
comparison of our cost of revenue, gross profit and gross margin
for the periods indicated (dollars in thousands):
Cost
of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Revenue
|
|
from Prior Year
|
|
from Prior Year
|
|
2010
|
|
$
|
28,947
|
|
|
$
|
(4,829
|
)
|
|
|
(14.3
|
)%
|
2009
|
|
|
33,776
|
|
|
|
(17,101
|
)
|
|
|
(33.6
|
)%
|
2008
|
|
|
50,877
|
|
|
|
|
|
|
|
|
|
Gross
profit and gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in Gross
|
|
Percentage Change
|
|
|
|
|
|
|
Profit
|
|
from Prior Year
|
Year
|
|
Gross Profit
|
|
Gross Margin
|
|
from Prior Year
|
|
(Total Dollars)
|
|
2010
|
|
$
|
14,410
|
|
|
|
33.2
|
%
|
|
$
|
(758
|
)
|
|
|
(5.0
|
)%
|
2009
|
|
|
15,168
|
|
|
|
31.0
|
%
|
|
|
(3,861
|
)
|
|
|
(20.3
|
)%
|
2008
|
|
|
19,029
|
|
|
|
27.2
|
%
|
|
|
|
|
|
|
|
|
The 2010 decrease in cost of revenue was primarily due to the
decrease in revenue discussed above. The increase in gross
margin was due primarily to an increase in average direct
margin, which excludes labor and overhead costs to 47.1% for the
year ended December 31, 2010 compared to 35.8% (as recast)
for the year ended December 31, 2009, primarily as a result
in the decline of sales of products to private label resellers
which typically result in lower margins, combined with an
increase in sales to retailers relative to total revenue.
Partially offsetting the increase in direct margin was an
increase in labor and overhead costs. Labor and overhead costs,
which are mostly fixed, increased by $3.7 million, or
160.9%, to $6.0 million for the year ended
December 31, 2010, compared to $2.3 million (as
recast) for the year ended December 31, 2009. As a result
of these factors, cost of revenue, as a percentage of revenue,
decreased to 66.8% for the year ended December 31, 2010
from 69.0% (as recast) for the year ended December 31,
2009. We continue to see increases in component costs from our
primary Asian suppliers, partially offset by expected increased
operating efficiency as a result of anticipated increases in
revenue. As a result, we expect gross margins to remain the same
or decline slightly in 2011 compared to 2010.
The 2009 decrease in cost of revenue was due primarily to a
decrease in revenue. The increase in gross margin was due
primarily to an increase in average direct margin, which
excludes labor and overhead costs to 35.8% (as recast) for the
year ended December 31, 2009 compared to 32.9% for the year
ended December 31, 2008 (as recast). Labor and overhead
costs, which are mostly fixed, decreased by $1.7 million,
or 42.5% to $2.3 million (as recast) for the year ended
December 31, 2009, compared to $4.0 million (as
recast) for the year ended December 31, 2008.
30
As a result of these factors, cost of revenue, as a percentage
of revenue, decreased to 69.0% (as recast) for the year ended
December 31, 2009, from 72.8% (as recast) for the year
ended December 31, 2008.
Sales and marketing. Sales and marketing
expenses generally consist of salaries, commissions and other
personnel-related costs of our sales, marketing and support
personnel, advertising, public relations, promotions, printed
media and travel. The following table summarizes the
year-over-year
comparison of our sales and marketing expenses for the periods
indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2010
|
|
$
|
7,805
|
|
|
$
|
1,052
|
|
|
|
15.6
|
%
|
2009
|
|
|
6,753
|
|
|
|
(1,445
|
)
|
|
|
(17.6
|
)%
|
2008
|
|
|
8,198
|
|
|
|
|
|
|
|
|
|
The 2010 increase in sales and marketing expenses primarily
resulted from increased personnel, consulting and sales
commissions, and product samples and advertising. Specifically,
personnel, sales commissions and consulting fees increased
$849,000, or 24.3%, to $4.3 million for the year ended
December 31, 2010, compared to $3.5 million (as
recast) for the year ended December 31, 2009. Advertising
and sample costs increased by $403,000, or 64.8% to
$1.0 million for the year ended December 31, 2010
compared to $623,000 (as recast) for the year ended
December 31, 2009. Partially offsetting these increases was
a reduction in trade show expense of $141,000, or 38.9%, to
$222,000 for the year ended December 31, 2010, compared to
$363,000 (as recast) for the year ended December 31, 2009.
As a percentage of revenue, sales and marketing expenses
increased to 18.0% for the year ended December 31, 2010
from 13.8% (as recast) for the year ended December 31, 2009.
The 2009 decrease in sales and marketing expenses primarily
resulted from reduced market research and retail programs, and
personnel costs. Specifically, market research and retail
program expenses decreased $1.1 million, or 69.3% to
$505,000 (as recast), compared to $1.6 million (as recast)
for the year ended December 31, 2008. Personnel costs
decreased by $411,000 or 11.3% to $3.2 million (as recast)
for the year ended December 31, 2009 compared to
$3.6 million (as recast) for the year ended
December 31, 2008. As a percentage of revenue, sales and
marketing expenses increased to 13.8% (as recast) for the year
ended December 31, 2009 from 11.7% (as recast) for the year
ended December 31, 2008.
Research and development. Research and
development expenses consist primarily of salaries and
personnel-related costs, outside consulting, lab costs and
travel-related costs of our product development group. The
following table summarizes the
year-over-year
comparison of our research and development expenses for the
periods indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2010
|
|
$
|
1,525
|
|
|
$
|
(425
|
)
|
|
|
(21.8
|
)%
|
2009
|
|
|
1,950
|
|
|
|
(484
|
)
|
|
|
(19.9
|
)%
|
2008
|
|
|
2,434
|
|
|
|
|
|
|
|
|
|
The decrease in research and development expenses in 2010
resulted primarily from a decline of product certification,
research and prototyping related expenses, and personnel and
consulting related expenses. Specifically, product
certification, research and prototyping related expenses
decreased by $206,000, or 78.9% to $55,000 for the year ended
December 31, 2010, compared to $261,000 (as recast) for the
year ended December 31, 2009. Personnel and
consulting-related expenses decreased by $157,000, or 12.6% to
$1.1 million for the year ended December 31, 2010,
compared to $1.3 million (as recast) for the year ended
December 31, 2009. As a percentage of revenue, research and
development expenses decreased to 3.5% for the year ended
December 31, 2010 from 4.0% (as recast) for the year ended
December 31, 2009.
The decrease in research and development expenses in 2009
resulted primarily from a decline of personnel and product
certification related expenses. Personnel related expenses
decreased by $420,000, or 27.7% to $1.1 million (as recast)
for the year ended December 31, 2009, compared to
$1.5 million (as recast) for the year ended
December 31, 2008. Product certification related expenses
decreased by $77,000, or 26.4% to $214,000 (as recast) for the
year ended December 31, 2009, compared to $291,000 (as
recast) for the year ended December 31, 2008. As
31
a percentage of revenue, research and development expenses
increased to 4.0% (as recast) for the year ended
December 31, 2009 from 3.5% (as recast) for the year ended
December 31, 2008.
General and administrative. General and
administrative expenses consist primarily of salaries and other
personnel-related expenses of our finance, human resources,
information systems, corporate development and other
administrative personnel, as well as facilities, legal and other
professional fees, depreciation and amortization and related
expenses. The following table summarizes the
year-over-year
comparison of our general and administrative expenses for the
periods indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2010
|
|
$
|
7,594
|
|
|
$
|
(309
|
)
|
|
|
(3.9
|
)%
|
2009
|
|
|
7,903
|
|
|
|
(2,792
|
)
|
|
|
(26.1
|
)%
|
2008
|
|
|
10,695
|
|
|
|
|
|
|
|
|
|
The 2010 decrease in general and administrative expenses
primarily result from decreases to personnel and
consulting-related expenses. Specifically, personnel and
consulting-related expenses decreased by $634,000, or 19.0% to
$2.7 million for the year ended December 31, 2010,
compared to $3.3 million (as recast) for the year ended
December 31, 2009. Partially offsetting this decrease was
an increase in non-cash equity compensation and shareholder
services expense. Non-cash equity compensation and shareholder
services expense increased by $217,000, or 16.2% to
$1.6 million for the year ended December 31, 2010,
compared to $1.4 million (as recast) for the year ended
December 31, 2009 primarily as a result of an increase in
non-cash equity awards granted during 2010. General and
administrative expenses, as a percentage of revenue increased to
17.5% for the year ended December 31, 2010, from 16.1% (as
recast) for the year ended December 31, 2009.
The 2009 decrease in general and administrative expenses
primarily result from decreases to personnel-related expenses,
legal expense, non-cash equity compensation, and franchise
taxes. Specifically, personnel-related expenses decreased by
$505,000, or 13.1% to $3.3 million (as recast) for the year
ended December 31, 2009, compared to $3.8 million (as
recast) for the year ended December 31, 2008. Legal expense
decreased $1.0 million, or 73.7% to $374,000 (as recast)
for the year ended December 31, 2009, compared to
$1.4 million (as recast) for the year ended
December 31, 2008 primarily as a result of the resolution
of outstanding litigation matters during 2009. Non-cash equity
compensation expense decreased by $753,000, or 36.5% to
$1.3 million (as recast) for the year ended
December 31, 2009, compared to $2.1 million (as
recast) for the year ended December 31, 2008 primarily as a
result of a reduction in non-cash equity awards granted during
2009 combined with an increase in the number of non-cash equity
awards cancelled during 2009. Franchise taxes decreased by
$195,000, or 59.0% to $135,000 (as recast) for the year ended
December 31, 2009, compared to $330,000 (as recast) for the
year ended December 31, 2008. General and administrative
expenses, as a percentage of revenue increased to 16.1% (as
recast) for the year ended December 31, 2009, from 15.3%
(as recast) for the year ended December 31, 2008.
Interest income, net. Interest income, net
consists primarily of interest earned on our cash balances and
short-term investments. The following table summarizes the
year-over-year
comparison of interest income, net for the periods indicated
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2010
|
|
$
|
171
|
|
|
$
|
(64
|
)
|
|
|
(27.2
|
)%
|
2009
|
|
|
235
|
|
|
|
(698
|
)
|
|
|
(74.8
|
)%
|
2008
|
|
|
933
|
|
|
|
|
|
|
|
|
|
The 2010 decrease in interest income was primarily due the use
of cash to fund acquisitions. The average yield on our cash and
short-term investments at December 31, 2010 was less than
1%, consistent with the average yield in 2009. The 2009 decrease
was primarily due to generally declining interest rates during
2009. At December 31, 2009, the average yield on our cash
and short-term investments was less than 1%, compared to 2.2% at
December 31, 2008.
Gain (loss) on disposal of assets and other income,
net. Gain (loss) on disposal of assets and other
income, net consists of the net proceeds received from the
disposal of assets, less the remaining net book value of the
32
disposed assets and other income in connection with the
collection of notes receivable that had been previously deferred
in connection with the sale of the assets of our handheld
software and hardware product lines. The following table
summarizes the
year-over-year
comparison of gain on disposal of assets for the periods
indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2010
|
|
$
|
2,176
|
|
|
$
|
1,670
|
|
|
|
330.0
|
%
|
2009
|
|
|
506
|
|
|
|
(593
|
)
|
|
|
(54.0
|
)%
|
2008
|
|
|
1,099
|
|
|
|
|
|
|
|
|
|
The 2010 gain was due primarily to the reversal of valuation
allowances against notes receivable from Mission and
Cradlepoint. The note receivable from Mission was originally
issued in connection with its purchase of the assets of our
expansion and docking product line in April 2007 and
subsequently repaid in full in April 2010, which resulted in the
reversal of a valuation allowance and corresponding recognition
of a gain of $1,700,000. The note receivable from Cradlepoint
was originally issued in connection with its purchase of the
assets of our handheld connectivity product line in February
2007. Subsequent to December 31, 2010, the note, which had
an uncollected balance of $118,000 was paid in full. Since the
note was deemed collectible, the related valuation allowance was
reversed and the Company recognized the remaining $118,000 of
gain related the transaction.
The 2009 gain on disposal of assets and other income, net was
primarily due to other deferred income recorded in connection
with the collections of notes receivable from Quickoffice and
CradlePoint relating to our sales of the assets of our handheld
software product line in 2004 and our hardware product line in
2007.
The 2008 gain on disposal of assets and other income, net was
primarily due to our sales of a portfolio of 23 patents and
patents pending relating to our foldable keyboard intellectual
property, with a net book value of $334,000 for net proceeds of
approximately $1.0 million, which resulted in a gain of
approximately $656,000.
Litigation settlement income. Litigation
settlement consists of income/expenses incurred in connection
with the settlement of litigation.
Certain former officers of iGo Corporation had sought potential
indemnification claims against our wholly-owned subsidiary, iGo
Direct Corporation, relating to an SEC matter involving such
individuals (but not involving us) that related to matters that
arose prior to our acquisition of iGo Corporation in September
2002. We initiated litigation against the carrier of iGo
Corporations directors and officers liability
insurance for coverage of these claims under its insurance
policy. During 2006, we reached settlement agreements with two
of the three former officers of iGo Corporation who were seeking
indemnification from us, and during the quarter ended
March 31, 2008, we settled our litigation with iGo
Corporations former insurance carrier, obtaining
reimbursement from the insurance carrier in the amount of
$1,500,000. Further, in connection with our settlement with the
insurance carrier, we reached a settlement agreement with the
last of the three former officers of iGo Corporation and
reimbursed him $828,000 in final settlement of all his
indemnification claims. We recorded net litigation settlement
income of $672,000 during the year ended December 31, 2008.
Income taxes. As the result of the
acquisitions of Adapt and Aerial7, we recorded a $1,002,000 tax
benefit for the year ended December 31, 2010. The tax
benefit relates to a deferred tax liability resulting from
acquired intangible assets that are not expected to be
deductible for income tax purposes. As our deferred tax assets,
net of deferred tax liabilities, are fully valued at zero, the
impact of recording this deferred tax liability resulted in a
release of a portion of our deferred tax asset valuation
allowance, and is recorded as income tax benefit for the year
ended December 31, 2010.
During the year ended December 31, 2009, we filed
Form 1139, Corporation Application for Tentative Refund, to
claim a refund of alternative minimum taxes paid for the year
ended December 31, 2005 pursuant to the Worker,
Homeownership, and Business Assistance Act of 2009, passed on
November 5, 2009. As a result, we recorded an income tax
benefit of $234,000 for the year ended December 31, 2009.
Based on historical operating losses and projections for future
taxable income, it is more likely than not that we will not
fully realize the benefits of the net operating loss
carryforwards. We have not, therefore, recorded a tax
33
benefit from our net operating loss carryforwards for the years
ended December 31, 2010, 2009 and 2008, which at
December 31, 2010 was $156 million.
Operating
Outlook
Due to increased competition, both from third parties and
private-label brands offered by some of our retail customers, we
have experienced a decline in demand for our products with our
traditional customer base. We were successful throughout 2010,
however, in increasing our customer base, primarily with the
addition of Walmart, and increasing our overall product offering
primarily through the acquisitions of Adapt and Aerial7. As a
result, even though we continue to face increased competition
from private-label brands offered by some of our retail
customers, including most notably RadioShack, we expect 2011
revenue to be more than our 2010 revenue.
We continue to see increases in component costs from our primary
Asian suppliers, partially offset by expected increased
operating efficiency as a result of anticipated increases in
revenue. As a result, we expect gross margins to remain the same
or decline slightly in 2011 compared to 2010. We expect
operating expenses to increase in 2011 compared to 2010,
primarily as a result of increased operating expenses associated
with the acquisitions of Adapt and Aerial7 and increased
personnel and operational costs related to the anticipated
growth of our business.
We anticipate increased research and development expenses in
2011 compared to 2010, primarily as a result of the continued
development of our iGo Green technology, including expenses
relating to the collaborative development of an integrated
circuit with Texas Instruments based on our iGo Green
technology. As a result of our planned research and development
efforts, we expect to further expand our intellectual property
position by filing for additional patents in various countries
around the world. A portion of these costs are recorded as
research and development expense as incurred, and a portion are
capitalized and amortized as general and administrative expense.
We may also incur additional legal and related expenses
associated with the defense and enforcement of our intellectual
property portfolio, which could increase our general and
administrative expenses.
In addition to our line of power products, we have recently
introduced a variety of new mobile electronics accessories both
as a result of our internal design efforts and as a result of
our acquisition of Adapt and Aerial7. We expect to continue to
introduce additional mobile electronics accessory products in
the future as we execute on our vision to attach our products
and technology to every mobile electronic device. In order to
continue to grow our business and enhance shareholder value, we
believe it is necessary to continue to expand our product
portfolio. Moving forward, we will continue to explore a number
of initiatives designed to broaden our product portfolio within
the mobile electronics accessories space. We currently plan that
the initiatives will consist of internal product development,
sourcing products from third-parties, joint marketing ventures,
product bundling, licensing opportunities, and acquisitions of
complementary and synergistic product families and companies. We
also have initiatives to expand our distribution beyond consumer
retail with the intent to sell products into the enterprise,
government and education channels. All of these initiatives are
designed to leverage the inherent strengths of our business,
most notably, our strong balance sheet, our compelling portfolio
of intellectual property, and our established brand and
relationships with major retailers. As we continue to execute on
this vision, we believe we can improve our ability to drive
higher levels of revenue and earnings, which will ultimately
have a positive impact on value creation for our shareholders.
Liquidity
and Capital Resources
Cash and Cash Flow. Our available cash and
cash equivalents are held in bank deposits and money market
funds in the United States and the United Kingdom. Our intent is
that the cash balances in the United Kingdom will remain there
for future growth and investments, and we will meet any
liquidity requirements in the United States through ongoing cash
flows from operations, external financing, or both. We actively
monitor the third-party depository institutions that hold our
cash and cash equivalents. Our emphasis is primarily on safety
of principal and not on maximizing yield. We diversify our cash
and cash equivalents among counterparties to minimize exposure
to any one of these entities. To date, we have experienced no
material loss or lack of access to our invested cash or cash
equivalents; however, we can provide no assurances that access
to our invested cash and cash equivalents will not be impacted
by adverse conditions in the financial markets.
34
At any point in time we have funds in our operating accounts and
customer accounts that are with third-party financial
institutions. These balances in the U.S. may exceed the
Federal Deposit Insurance Corporation (FDIC)
insurance limits. While we monitor the cash balances in our
operating accounts and adjust the cash balances as appropriate,
these cash balances could be impacted if the underlying
financial institutions fail or could be subject to other adverse
conditions in the financial markets.
Our primary use of cash has been to purchase short-term
investments, fund acquisitions, and fund the accounts receivable
and inventory needs of our business, which we expect to continue
in 2011. Some of our new suppliers of protection and audio
products have been unwilling to extend trade credit to us on the
same terms and conditions as our power product suppliers have
historically done. As a result, we are required to pay for
purchases of inventory in advance of the related sale of these
products, which has increased our use of cash to support the
working capital required to effectively operate our business.
Our primary sources of liquidity have been funds provided by the
sale of intellectual property assets. We cannot assure you that
this source will be available to us in the future.
We currently do not maintain a credit facility with a bank,
however, we may need access to this source of financing at some
point in the future. Capital markets in the United States and
throughout the world remain volatile, which could impact our
ability to obtain additional or alternative financing, including
a credit facility with a bank.
The following table sets forth for the period presented certain
consolidated cash flow information (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(3,582
|
)
|
|
$
|
2,392
|
|
|
$
|
5,675
|
|
Net cash provided by (used in) investing activities
|
|
|
(6,214
|
)
|
|
|
(8,225
|
)
|
|
|
4,756
|
|
Net cash provided by financing activities
|
|
|
|
|
|
|
|
|
|
|
37
|
|
Foreign currency exchange impact on cash flow
|
|
|
(37
|
)
|
|
|
(11
|
)
|
|
|
(64
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
$
|
(9,833
|
)
|
|
$
|
(5,844
|
)
|
|
$
|
10,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year
|
|
$
|
19,775
|
|
|
$
|
25,619
|
|
|
$
|
15,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
9,942
|
|
|
$
|
19,775
|
|
|
$
|
25,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating
activities. Cash was used by operating activities
for the year ended December 31, 2010 to fund the working
capital needs of our business, including inventory purchases and
growth in accounts receivable. We expect to continue to use cash
in operating activities in 2011 to support the anticipated
growth in our business. Our consolidated cash flow operating
metrics are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2010
|
|
2009
|
|
2008
|
|
|
|
|
As recast
|
|
As recast
|
|
Days outstanding in ending accounts receivable (DSOs)
|
|
|
73
|
|
|
|
38
|
|
|
|
63
|
|
Inventory turns
|
|
|
4
|
|
|
|
7
|
|
|
|
10
|
|
The increase in DSOs at December 31, 2010 compared to
December 31, 2009 was primarily due to decreases in
accounts receivable from Targus, which were collected in full in
mid-2009. We expect DSOs will continue to increase in 2011 as a
result of our planned expansion of direct sales to retailers and
the associated anticipated timing of cash receipts from our
customers. The decrease in inventory turns was primarily due to
the decline in revenue from sales to Targus and RadioShack, for
whom we hold no inventory. We expect inventory to grow during
2011, but we expect inventory turns to remain relatively
consistent with 2010 inventory turns.
The decrease in DSOs at December 31, 2009 compared to
December 31, 2008 was primarily due to the reductions in
accounts receivable from Targus which were collected in full in
mid-2009. The decrease in inventory
35
turns was primarily due to the decline in revenue from sales to
Targus and RadioShack, for whom we hold no inventory.
|
|
|
|
|
Net cash provided by (used in) investing
activities. For the year ended December 31,
2010, net cash was used in investing activities as we used
$4.2 million in cash to acquire Adapt and Aerial7, in
addition to net purchases of $1.7 million in short-term
investments and $280,000 in purchases of property plant and
equipment. We may use cash to fund additional acquisitions in
addition to anticipated future investments in capital equipment.
|
|
|
|
Net cash provided by financing activities. We
had no financing activities in 2010 or 2009. Net cash provided
by financing activities for the year ended December 31,
2008 was primarily from net proceeds from the exercise of stock
options and warrants. Although we expect to generate cash flows
from operations sufficient to support our operations, we may
issue additional shares of stock in the future to generate cash
for growth opportunities. Furthermore, in the future, we may use
cash to repurchase outstanding shares of our common stock.
|
Investments. At December 31, 2010, our
investments in marketable securities included eight corporate
bonds, eight United States Agency bonds, two commercial paper
instruments issued by various companies, and one municipal
mutual fund with a total fair value of approximately
$14.5 million. At December 31, 2010, five of these
securities had an unrealized loss, representing less than 1% of
the book value of all marketable securities in the portfolio.
We believe we have the ability to hold all marketable securities
to maturity. However, we may dispose of securities prior to
their scheduled maturity due to changes in interest rates,
prepayments, tax and credit considerations, liquidity or
regulatory capital requirements, or other similar factors. As a
result, we classify all marketable securities as
available-for-sale.
These securities are reported at fair value based on third-party
broker statements, which represents level 2 in the fair
value hierarchy, with unrealized gains and losses, reported in
stockholders equity as a separate component of accumulated
other comprehensive income.
Contractual Obligations. In our
day-to-day
business activities, we incur certain commitments to make future
payments under contracts such as operating leases and purchase
orders. Maturities under these contracts are set forth in the
following table as of December 31, 2010 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Due by Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
More Than
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
5 Years
|
|
|
Operating lease obligations
|
|
$
|
440
|
|
|
$
|
444
|
|
|
$
|
455
|
|
|
$
|
76
|
|
|
$
|
|
|
|
$
|
|
|
Inventory Purchase obligations
|
|
|
10,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
10,860
|
|
|
$
|
444
|
|
|
$
|
455
|
|
|
$
|
76
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Off-Balance Sheet Arrangements. We have no
off-balance sheet financing arrangements.
Acquisitions and dispositions. In 2010 we
acquired Adapt and Aerial7 to complement our product offerings
and expand our revenue base. Our future strategy includes the
possible acquisition of other businesses to continue to expand
or complement our operations. The magnitude, timing and nature
of any future acquisitions will depend on a number of factors,
including the availability of suitable acquisition candidates,
the negotiation of acceptable terms, our financial capabilities
and general economic and business conditions. Financing of
future acquisitions would result in the utilization of cash,
incurrence of additional debt, issuance of additional equity
securities or a combination of all of these. Our future strategy
may also include the possible disposition of assets that are not
considered integral to our business which would likely result in
the generation of cash.
Net Operating Loss Carryforwards. As of
December 31, 2010, we had approximately $156 million
of federal net operating loss carryforwards which expire at
various dates. We anticipate that the sale of common stock in
our initial public offering and in subsequent private offerings,
as well as the issuance of our common stock for acquisitions,
coupled with prior sales of common stock will cause an annual
limitation on the use of our net operating loss carryforwards
pursuant to the change in ownership provisions of
Section 382 of the Internal Revenue Code of 1986, as
amended. This limitation is expected to have a material effect
on the timing of and our ability to
36
use the net operating loss carryforwards in the future.
Additionally, our ability to use the net operating loss
carry-forwards is dependent upon our level of future
profitability, which cannot be determined.
Liquidity Outlook. Based on our projections,
we believe that our existing cash, cash equivalents, short-term
investments will be sufficient to meet our working capital and
capital expenditure requirements for at least the next
12 months. If we require additional capital resources to
grow our business internally or to acquire complementary
technologies and businesses at any time in the future, we may
seek to obtain debt financing or sell additional equity
securities. The sale of additional equity securities would
result in more dilution to our stockholders. In addition,
additional capital resources may not be available to us in
amounts or on terms that are acceptable to us.
Recent
Accounting Pronouncements
See Note 2(s) to our consolidated financial statements for
a summary of recently issued accounting pronouncements.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
We are exposed to certain market risks in the ordinary course of
our business. These risks result primarily from changes in
foreign currency exchange rates and interest rates. In addition,
our international operations are subject to risks related to
differing economic conditions, changes in political climate,
differing tax structures and other regulations and restrictions.
To date we have not utilized derivative financial instruments or
derivative commodity instruments. We do not expect to employ
these or other strategies to hedge market risk in the
foreseeable future. We invest our cash in money market funds and
short-term investments, which are subject to minimal credit and
market risk. We believe that the market risks associated with
these financial instruments are immaterial.
See Liquidity and Capital Resources for further
discussion of our capital structure. Market risk, calculated as
the potential change in fair value of our cash equivalents and
short-term investments resulting from a hypothetical 1.0%
(100 basis point) change in interest rates, was not
material at December 31, 2010.
37
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
IGO, INC.
AND SUBSIDIARIES
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
38
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
iGo, Inc.:
We have audited the accompanying consolidated balance sheets of
iGo, Inc. and subsidiaries (the Company) as of December 31,
2010 and 2009, and the related consolidated statements of
operations, stockholders equity and comprehensive income
(loss), and cash flows for each of the years in the three-year
period ended December 31, 2010. These consolidated
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of iGo, Inc. and subsidiaries as of December 31,
2010 and 2009, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 2010, in conformity with U.S. generally
accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements,
as of January 1, 2010, the Company adopted the provisions
of Accounting Standards Update 2009-17, Improvements to
Financial Reporting by Enterprises Involved with Variable
Interest Entities, which changed the accounting and
reporting for variable interest entities.
/s/ KPMG LLP
Phoenix, Arizona
March 11, 2011
39
IGO, INC.
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
As recast
|
|
|
|
(In thousands,
|
|
|
|
except share amounts)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
9,942
|
|
|
$
|
19,775
|
|
Short-term investments
|
|
|
14,532
|
|
|
|
12,777
|
|
Accounts receivable, net
|
|
|
8,620
|
|
|
|
5,109
|
|
Inventories
|
|
|
10,307
|
|
|
|
5,964
|
|
Prepaid expenses and other current assets
|
|
|
460
|
|
|
|
401
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
43,861
|
|
|
|
44,026
|
|
Property and equipment, net
|
|
|
654
|
|
|
|
835
|
|
Goodwill
|
|
|
1,905
|
|
|
|
|
|
Intangible assets, net
|
|
|
3,594
|
|
|
|
1,048
|
|
Notes receivable and other assets
|
|
|
159
|
|
|
|
268
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
50,173
|
|
|
$
|
46,177
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
4,666
|
|
|
$
|
3,557
|
|
Accrued expenses and other current liabilities
|
|
|
1,371
|
|
|
|
1,424
|
|
Deferred revenue
|
|
|
1,838
|
|
|
|
914
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
7,875
|
|
|
|
5,895
|
|
Equity:
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value; authorized
90,000,000 Shares; 32,893,892 and 32,411,531 shares
issued and outstanding at December 31, 2010 and 2009,
respectively
|
|
|
329
|
|
|
|
324
|
|
Additional paid-in capital
|
|
|
172,241
|
|
|
|
171,034
|
|
Accumulated deficit
|
|
|
(130,381
|
)
|
|
|
(131,216
|
)
|
Accumulated other comprehensive income
|
|
|
109
|
|
|
|
140
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
42,298
|
|
|
|
40,282
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
50,173
|
|
|
$
|
46,177
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
40
IGO, INC.
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
|
(In thousands,
|
|
|
|
except per share amounts)
|
|
|
Revenue
|
|
$
|
43,357
|
|
|
$
|
48,944
|
|
|
$
|
69,906
|
|
Cost of revenue
|
|
|
28,947
|
|
|
|
33,776
|
|
|
|
50,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
14,410
|
|
|
|
15,168
|
|
|
|
19,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
7,805
|
|
|
|
6,753
|
|
|
|
8,198
|
|
Research and development
|
|
|
1,525
|
|
|
|
1,950
|
|
|
|
2,434
|
|
General and administrative
|
|
|
7,594
|
|
|
|
7,903
|
|
|
|
10,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
16,924
|
|
|
|
16,606
|
|
|
|
21,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(2,514
|
)
|
|
|
(1,438
|
)
|
|
|
(2,298
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
171
|
|
|
|
235
|
|
|
|
933
|
|
Gain on disposal of assets and other income, net
|
|
|
2,176
|
|
|
|
506
|
|
|
|
1,099
|
|
Litigation settlement income
|
|
|
|
|
|
|
|
|
|
|
672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax
|
|
|
(167
|
)
|
|
|
(697
|
)
|
|
|
406
|
|
Income tax benefit
|
|
|
1,002
|
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
835
|
|
|
$
|
(463
|
)
|
|
$
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to iGo, Inc. per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.03
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.02
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
32,770
|
|
|
|
32,310
|
|
|
|
31,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
35,081
|
|
|
|
32,310
|
|
|
|
34,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
41
IGO, INC.
AND SUBSIDIARIES
AND
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
Net
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Income (Loss)
|
|
|
Equity
|
|
|
|
(In thousands, except share amounts)
|
|
|
Balances at December 31, 2007 as recast
|
|
|
31,446,185
|
|
|
$
|
314
|
|
|
$
|
168,010
|
|
|
$
|
(131,159
|
)
|
|
$
|
223
|
|
|
$
|
37,388
|
|
Issuance of common stock for warrants exercised
|
|
|
27,647
|
|
|
|
|
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
Issuance of common stock for options exercised
|
|
|
10,785
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Issuance of stock awards
|
|
|
439,566
|
|
|
|
5
|
|
|
|
(246
|
)
|
|
|
|
|
|
|
|
|
|
|
(241
|
)
|
Issuance of common stock for board compensation
|
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
Amortization of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
2,030
|
|
|
|
|
|
|
|
|
|
|
|
2,030
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Loss on Available for Sale Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(65
|
)
|
|
|
(65
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
406
|
|
|
|
|
|
|
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
338
|
|
Balances at December 31, 2008 as recast
|
|
|
31,924,183
|
|
|
$
|
319
|
|
|
$
|
169,863
|
|
|
$
|
(130,753
|
)
|
|
$
|
155
|
|
|
$
|
39,584
|
|
Issuance of stock awards
|
|
|
487,348
|
|
|
|
5
|
|
|
|
(139
|
)
|
|
|
|
|
|
|
|
|
|
|
(134
|
)
|
Amortization of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
1,310
|
|
|
|
|
|
|
|
|
|
|
|
1,310
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Loss on Available for Sale Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(463
|
)
|
|
|
|
|
|
|
(463
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(478
|
)
|
Balances at December 31, 2009 as recast
|
|
|
32,411,531
|
|
|
$
|
324
|
|
|
$
|
171,034
|
|
|
$
|
(131,216
|
)
|
|
$
|
140
|
|
|
$
|
40,282
|
|
Issuance of stock awards
|
|
|
482,361
|
|
|
|
5
|
|
|
|
(271
|
)
|
|
|
|
|
|
|
|
|
|
|
(266
|
)
|
Amortization of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
1,478
|
|
|
|
|
|
|
|
|
|
|
|
1,478
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Gain on Available for Sale Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
6
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(37
|
)
|
|
|
(37
|
)
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
835
|
|
|
|
|
|
|
|
835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
804
|
|
Balances at December 31, 2010
|
|
|
32,893,892
|
|
|
$
|
329
|
|
|
$
|
172,241
|
|
|
$
|
(130,381
|
)
|
|
$
|
109
|
|
|
$
|
42,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
42
IGO, INC.
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
|
(In thousands)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
835
|
|
|
$
|
(463
|
)
|
|
$
|
406
|
|
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions for doubtful accounts and sales returns and credits
|
|
|
360
|
|
|
|
547
|
|
|
|
611
|
|
Depreciation and amortization
|
|
|
1,573
|
|
|
|
1,443
|
|
|
|
1,495
|
|
Amortization of deferred compensation
|
|
|
1,478
|
|
|
|
1,310
|
|
|
|
2,030
|
|
Loss or (Gain) on disposal of assets
|
|
|
|
|
|
|
20
|
|
|
|
(656
|
)
|
Deferred taxes
|
|
|
(1,002
|
)
|
|
|
|
|
|
|
|
|
Compensation expense settled with stock
|
|
|
|
|
|
|
|
|
|
|
32
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(3,542
|
)
|
|
|
6,355
|
|
|
|
3,942
|
|
Inventories
|
|
|
(4,022
|
)
|
|
|
(2,366
|
)
|
|
|
2,845
|
|
Prepaid expenses and other assets
|
|
|
(581
|
)
|
|
|
142
|
|
|
|
740
|
|
Accounts payable
|
|
|
724
|
|
|
|
(3,203
|
)
|
|
|
(4,713
|
)
|
Accrued expenses and other current liabilities
|
|
|
595
|
|
|
|
(1,393
|
)
|
|
|
(1.057
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(3,582
|
)
|
|
|
2,392
|
|
|
|
5,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(280
|
)
|
|
|
(477
|
)
|
|
|
(303
|
)
|
Purchase of investments
|
|
|
(17,078
|
)
|
|
|
(13,427
|
)
|
|
|
(8,812
|
)
|
Sale of investments
|
|
|
15,329
|
|
|
|
5,611
|
|
|
|
12,871
|
|
Cash paid for acquisitions, net
|
|
|
(4,185
|
)
|
|
|
|
|
|
|
|
|
Proceeds from sale of assets
|
|
|
|
|
|
|
68
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(6,214
|
)
|
|
|
(8,225
|
)
|
|
|
4,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of warrants and options
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rates on cash and cash equivalents
|
|
|
(37
|
)
|
|
|
(11
|
)
|
|
|
(64
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(9,833
|
)
|
|
|
(5,844
|
)
|
|
|
10,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
19,775
|
|
|
|
25,619
|
|
|
|
15,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
9,942
|
|
|
$
|
19,775
|
|
|
$
|
25,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of restricted stock units for deferred compensation to
employees and board members during 2010, 2009 and 2008,
respectively
|
|
$
|
2,817
|
|
|
$
|
88
|
|
|
$
|
1,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
43
IGO, INC.
AND SUBSIDIARIES
Years Ended December 31, 2010, 2009 and 2008
iGo, Inc. and subsidiaries (collectively, iGo or the
Company) was formed on May 4, 1995. iGo was
originally formed as a limited liability corporation; however,
in August 1996 the Company became a corporation incorporated in
the State of Delaware.
iGo designs, develops, manufactures and distributes power
products for mobile electronic devices, such as universal
chargers and surge protectors that incorporate the
Companys iGo Green technology; protection products for
mobile electronic devices, such as skins, cases and screen
protectors; audio products for mobile electronic devices such as
earbuds, headphones and speakers; and other mobile electronic
accessory products. iGo distributes products in North America,
Europe and Asia Pacific.
|
|
(2)
|
Summary
of Significant Accounting Policies
|
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make a number of estimates and
judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, the
Company evaluates its estimates, including those related to bad
debts, sales returns and price protection, inventories, warranty
obligations, and contingencies and litigation. The Company bases
its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or
conditions.
The Company believes its critical accounting policies,
consisting of revenue recognition, inventory valuation, deferred
tax asset valuation, and goodwill and long-lived asset valuation
affect its more significant judgments and estimates used in the
preparation of its consolidated financial statements. These
policies are discussed below.
|
|
(b)
|
Principles
of Consolidation
|
The consolidated financial statements include the accounts of
iGo, Inc. and its wholly-owned subsidiaries, Mobility
California, Inc., Mobility Idaho, Inc., iGo EMEA Limited,
Mobility Texas, Inc., iGo Direct Corporation, Adapt Mobile
Limited (Adapt), and Aerial7 Industries, Inc.
(Aerial7). All significant intercompany balances and
transactions have been eliminated in the accompanying
consolidated financial statements.
The Company recognizes net revenue when the earnings process is
complete, as evidenced by an agreement with the customer,
transfer of title and acceptance, if applicable, as well as
fixed pricing and probable collectibility. Revenue from product
sales is recognized upon shipment and transfer of ownership from
the Company or contract manufacturer to the customer, unless the
customer has full right of return, in which case revenue is
deferred until either the product has sold through to the end
user or a reasonable estimate of returns can be made. Allowances
for sales returns and credits are provided for in the same
period the related sales are recorded. Should the actual return
or sales credit rates differ from the Companys estimates,
revisions to the estimated allowance for sales returns and
credits may be required.
44
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
|
|
(d)
|
Cash
and Cash Equivalents
|
All short-term investments purchased with an original maturity
of three months or less are considered to be cash equivalents.
Cash and cash equivalents include cash on hand and amounts on
deposit with financial institutions.
Short-term investments that have an original maturity between
three months and one year and a remaining maturity of less than
one year are classified as
available-for-sale.
Available-for-sale
securities are recorded at fair value and are classified as
current assets due to the Companys intent and practice to
hold these readily marketable investments for less than one
year. Any unrealized holding gains and losses related to
available-for-sale
securities are recorded, net of tax, as a separate component of
accumulated other comprehensive income (loss). When a decline in
fair value is determined to be other than temporary, unrealized
losses on
available-for-sale
securities are charged against net earnings. Realized gains and
losses are accounted for on the specific identification method.
Accounts receivable consist of trade receivables from customers
and short-term notes receivable. The Company maintains
allowances for doubtful accounts for estimated losses resulting
from the inability of the Companys customers to make
required payments. The allowance is assessed on a regular basis
by management and is based upon managements periodic
review of the collectibility of the receivables with respect to
historical experience. If the financial condition of the
Companys customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional
allowances may be required. The Company also maintains an
allowance for sales returns and credits in the amount of the
difference between the sales price and the cost of revenue based
on managements periodic review and estimate of returns.
Should the actual return or sales credit rates differ from the
Companys estimates, revisions to the estimated allowance
for sales returns and credits may be required.
Inventories consist of finished goods and component parts
purchased partially and fully assembled for computer accessory
items. The Company has all normal risks and rewards of its
inventory held by contract manufacturers and outsourced product
fulfillment hubs. Inventories are stated at the lower of cost
(first-in,
first-out method) or market. Inventories include material, labor
and overhead costs. Overhead costs are allocated to inventory
based on a percentage of material costs. The Company monitors
usage reports to determine if the carrying value of any items
should be adjusted due to lack of demand for the items. The
Company adjusts down the carrying value of inventory for
estimated obsolescence or unmarketable inventory equal to the
difference between the cost of inventory and the estimated
market value based upon assumptions about future demand and
market conditions. If actual market conditions are less
favorable than those projected by management, additional
inventory write-downs may be required.
|
|
(h)
|
Property
and Equipment
|
Property and equipment are stated at cost. Depreciation on
furniture, fixtures and equipment is provided using the
straight-line method over the estimated useful lives of the
assets ranging from three to five years. Leasehold improvements
are amortized over the shorter of the lease term or estimated
useful life. Tooling is capitalized at cost and is depreciated
over a two-year period. The Company periodically evaluates the
recoverability of property and equipment and takes into account
events or circumstances that warrant revised estimates of useful
lives or that indicate that an impairment exists. The Company
evaluates recoverability by a comparison of the carrying amount
of the assets to future projections of undiscounted cash flows
expected to be generated by the assets. The estimated future
cash flows used are based on our business plans and forecasts,
which consider historical results adjusted for
45
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
future expectations. If future market conditions and the
Companys outlook deteriorate, the Company may be required
to record impairment charges in the future.
Intangible assets include the cost of patents, trademarks and
non-compete agreements, as well as identifiable intangible
assets acquired through business combinations including trade
names, customer lists and software technology. Intangible assets
are amortized on a straight-line basis over their estimated
economic lives of three to ten years. The Company periodically
evaluates the recoverability of intangible assets and takes into
account events or circumstances that warrant revised estimates
of useful lives or that indicate that an impairment exists. The
Company evaluates recoverability by a comparison of the carrying
amount of the assets to future projections of undiscounted cash
flows expected to be generated by the assets. The estimated
future cash flows used are based on our business plans and
forecasts, which consider historical results adjusted for future
expectations. If future market conditions and the Companys
outlook deteriorate, the Company may be required to record
impairment charges in the future.
Goodwill is the excess of the purchase price over the fair value
of the net assets acquired. Goodwill is tested for impairment
annually as of October 1, or more frequently if indications
of impairment arise.
The Company provides limited warranties on certain of its
products for periods generally not exceeding three years. The
Company accrues for the estimated cost of warranties at the time
revenue is recognized. The accrual is based on the
Companys actual claim experience. Should actual warranty
claim rates, or service delivery costs, differ from our
estimates, revisions to the estimated warranty liability would
be required.
The Company utilizes the asset and liability method of
accounting for income taxes. Under the asset and liability
method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the year in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the
enactment date.
The Company records a valuation allowance to reduce its deferred
tax assets to the amount that is more likely than not to be
realized. While the Company has considered forecasts of future
taxable income and ongoing prudent and feasible tax planning
strategies in assessing the need for the valuation allowance, in
the event the Company was to determine that it would be able to
realize its deferred tax assets in the future in excess of the
net recorded amount, an adjustment to the valuation allowance
and deferred tax benefit would increase net income in the period
such determination was made.
|
|
(m)
|
Net
Income (Loss) per Common Share
|
Basic income (loss) per share is computed by dividing income
(loss) by the weighted-average number of common shares
outstanding for the period. Diluted income (loss) per share
reflects the potential dilution that could occur if securities
or contracts to issue common stock were exercised or converted
to common stock or resulted in the issuance of common stock that
then shared in the earnings or loss of the Company. For 2009,
the assumed
46
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
exercise of outstanding stock options and warrants and the
impact of restricted stock units have been excluded from the
calculations of diluted net loss per share as their effect is
anti-dilutive.
|
|
(n)
|
Share-based
Compensation
|
The Company measures all share-based payments to employees at
fair value and records expense in the consolidated statement of
operations over the requisite service period (generally the
vesting period).
|
|
(o)
|
Fair
Value of Financial Instruments
|
The Companys financial instruments include cash
equivalents, short-term investments, accounts receivable, and
accounts payable. Due to the short-term nature of cash
equivalents, accounts receivable, and accounts payable, the fair
value of these instruments approximates their recorded value.
The Company does not have material financial instruments with
off-balance sheet risk.
|
|
(p)
|
Research
and Development
|
The cost of research and development is charged to expense as
incurred.
|
|
(q)
|
Foreign
Currency Translation
|
The financial statements of the Companys foreign
subsidiary are measured using the local currency as the
functional currency. Assets and liabilities of this subsidiary
are translated at exchange rates as of the balance sheet date.
Revenues and expenses are translated at average rates of
exchange in effect during the year. The resulting cumulative
translation adjustments have been recorded as comprehensive
income (loss), a separate component of stockholders equity.
The Company is engaged in the business of selling accessories
for computers and mobile electronic devices and operates a
single business segment.
|
|
(s)
|
Recently
Issued Accounting Pronouncements
|
In February 2010, the Financial Accounting Standards Board
(FASB) issued ASU
2010-09,
Subsequent Events (Topic 855): Amendments to Certain
Recognition and Disclosure Requirements (ASU
2010-09).
ASU 2010-09
reiterates that an SEC filer is required to evaluate subsequent
events through the date that the financial statements are issued
but eliminates the required disclosure of the date through which
subsequent events have been evaluated. The updated guidance was
effective upon issuance and its adoption did not have an impact
on the Companys consolidated financial statements.
In January 2010, the FASB issued ASU
2010-06,
Fair Value Measurements and Disclosures (Topic 820):
Improving Disclosures about Fair Value Measurements
(ASU
2010-06).
ASU 2010-06
requires new disclosures on transfers in and out of Level 1
and Level 2 fair value measurements and separate
disclosures for activity relating to Level 3 fair value
measurements. In addition, this guidance clarifies existing fair
value disclosures for the level of disaggregation and the input
and valuation techniques used to measure fair value. The new
disclosures were effective for interim and annual reporting
periods beginning after December 15, 2009. The Company has
adopted this guidance and there has been no significant impact
to the Companys disclosures upon adoption.
In December 2009, the FASB issued ASU
2009-17,
which changes how a reporting entity determines when an entity
that is insufficiently capitalized or is not controlled through
voting (or similar rights) should be consolidated. ASU
2009-17 also
requires a reporting entity to provide additional disclosures
about its involvement with Variable
47
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
Interest Entities (VIE) and any significant changes
in risk exposure due to that involvement. ASU
2009-17 was
effective for fiscal years beginning after November 15,
2009 and for interim periods within the first annual reporting
period. As noted above, upon adoption of ASU
2009-17,
effective January 1, 2010, the Company no longer met the
conditions to be the primary beneficiary of Mission Technology
Group, Inc. (Mission). As a result, the Company no
longer consolidates the results of Mission.
Other accounting standards and exposure drafts, such as exposure
drafts related to revenue recognition, lease accounting, loss
contingencies, comprehensive income and fair value measurements,
that have been issued or proposed by the FASB or other standards
setting bodies that do not require adoption until a future date
are being evaluated by the Company to determine whether adoption
will have a material impact on the Companys consolidated
financial statements.
|
|
(3)
|
Mission
Deconsolidation
|
In April 2007, the Company sold the assets of its expansion and
docking business to Mission, an entity that was formed by a
former officer of the Company, in exchange for $3,930,000 of
notes receivable and a 15% common equity interest in Mission.
Effective January 1, 2010, upon the adoption of ASU
2009-17, the
Company determined that, although Mission is a VIE, the Company
is no longer the primary beneficiary of Mission, as the Company
did not, and does not, have the power to direct the activities
that most significantly impact the economic performance of
Mission.
As a result, as of January 1, 2010, the Company no longer
consolidates the results of Mission and has removed the results
of Mission from the presentation of historical financial
information in this filing. Accordingly, the consolidated
balance sheets as of December 31, 2009, the consolidated
statements of operations, stockholders equity and
comprehensive income (loss), and cash flows for the years ended
December 31, 2009 and 2008, have been recast to give effect
to the removal of Mission from the accompanying consolidated
financial statements.
Upon deconsolidation of Mission on January 1, 2010, the
Company had recorded a valuation allowance of $1,714,000 against
the then-remaining uncollected principal balance on the note
receivable from Mission of $1,847,000. The Company recorded no
value related to its 15% common equity interest. In February
2010, the Company received a principal payment of $147,000 from
Mission, leaving a net uncollected balance against the note
receivable of $1,700,000 at March 31, 2010. In April 2010,
the Company entered into a transaction with Mission that
resulted in complete collection of its note receivable and the
sale of its 15% common equity interest. As the Company had
previously recorded a valuation allowance of $1,714,000 against
the promissory notes, the Company determined that as of
March 31, 2010, based on the subsequent collection of
$1,700,000 as
payment-in-full
against the note receivable, collectability was reasonably
assured. Accordingly, the Company reversed its valuation
allowance against the note receivable and recorded a gain of
$1,714,000 in the first quarter of 2010, which gain is included
in the accompanying Consolidated Statements of Operations under
the caption Gain on disposal of assets and other income,
net. The Company received cumulative proceeds of
$3,930,000 million, plus interest, between April 2007 and
April 2010 in connection with the sale of the docking and
expansion business to Mission.
48
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
The following table presents the condensed consolidated balance
sheet as of December 31, 2009, reflecting the
deconsolidation of Mission, as recast (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
As Reported
|
|
|
Adjustments
|
|
|
As Recast
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,091
|
|
|
$
|
(316
|
)
|
|
$
|
19,775
|
|
Short-term investments
|
|
|
12,777
|
|
|
|
|
|
|
|
12,777
|
|
Accounts receivable, net
|
|
|
5,692
|
|
|
|
(583
|
)
|
|
|
5,109
|
|
Inventories
|
|
|
6,612
|
|
|
|
(648
|
)
|
|
|
5,964
|
|
Prepaid expenses and other current assets
|
|
|
411
|
|
|
|
(10
|
)
|
|
|
401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
45,583
|
|
|
|
(1,557
|
)
|
|
|
44,026
|
|
Property and equipment, net
|
|
|
890
|
|
|
|
(55
|
)
|
|
|
835
|
|
Intangible assets, net
|
|
|
1,087
|
|
|
|
(39
|
)
|
|
|
1,048
|
|
Notes receivable and other assets
|
|
|
174
|
|
|
|
94
|
|
|
|
268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
47,734
|
|
|
$
|
(1,557
|
)
|
|
$
|
46,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,868
|
|
|
$
|
(311
|
)
|
|
$
|
3,557
|
|
Accrued expenses and other current liabilities
|
|
|
1,667
|
|
|
|
(243
|
)
|
|
|
1,424
|
|
Deferred revenue
|
|
|
965
|
|
|
|
(51
|
)
|
|
|
914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
6,500
|
|
|
|
(605
|
)
|
|
|
5,895
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total iGo, Inc. common stockholders equity
|
|
|
40,310
|
|
|
|
(28
|
)
|
|
|
40,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
924
|
|
|
|
(924
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
41,234
|
|
|
|
(952
|
)
|
|
|
40,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
47,734
|
|
|
$
|
(1,557
|
)
|
|
$
|
46,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
The following table presents the condensed consolidated
statement of operations for the years ended December 31,
2009 and December 31, 2008, reflecting the deconsolidation
of Mission, as recast (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
Year Ended December 31, 2008
|
|
|
|
As Reported
|
|
|
Adjustments
|
|
|
As Recast
|
|
|
As Reported
|
|
|
Adjustments
|
|
|
As Recast
|
|
|
Revenue
|
|
$
|
55,420
|
|
|
$
|
(6,476
|
)
|
|
$
|
48,944
|
|
|
$
|
77,146
|
|
|
$
|
(7,240
|
)
|
|
$
|
69,906
|
|
Cost of revenue
|
|
|
37,061
|
|
|
|
(3,285
|
)
|
|
|
33,776
|
|
|
|
54,554
|
|
|
|
(3,677
|
)
|
|
|
50,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
18,359
|
|
|
|
(3,191
|
)
|
|
|
15,168
|
|
|
|
22,592
|
|
|
|
(3,563
|
)
|
|
|
19,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
7,646
|
|
|
|
(893
|
)
|
|
|
6,753
|
|
|
|
9,074
|
|
|
|
(876
|
)
|
|
|
8,198
|
|
Research and development
|
|
|
3,007
|
|
|
|
(1,057
|
)
|
|
|
1,950
|
|
|
|
3,548
|
|
|
|
(1,114
|
)
|
|
|
2,434
|
|
General and administrative
|
|
|
8,999
|
|
|
|
(1,096
|
)
|
|
|
7,903
|
|
|
|
11,887
|
|
|
|
(1,192
|
)
|
|
|
10,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
19,652
|
|
|
|
(3,046
|
)
|
|
|
16,606
|
|
|
|
24,509
|
|
|
|
(3,182
|
)
|
|
|
21,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(1,293
|
)
|
|
|
(145
|
)
|
|
|
(1,438
|
)
|
|
|
(1,917
|
)
|
|
|
(381
|
)
|
|
|
(2,298
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
127
|
|
|
|
108
|
|
|
|
235
|
|
|
|
773
|
|
|
|
160
|
|
|
|
933
|
|
Gain on disposal of assets and other income, net
|
|
|
667
|
|
|
|
(161
|
)
|
|
|
506
|
|
|
|
1,179
|
|
|
|
(80
|
)
|
|
|
1,099
|
|
Litigation settlement income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
672
|
|
|
|
|
|
|
|
672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax
|
|
|
(499
|
)
|
|
|
(198
|
)
|
|
|
(697
|
)
|
|
|
707
|
|
|
|
(301
|
)
|
|
|
406
|
|
Income tax benefit
|
|
|
234
|
|
|
|
|
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(265
|
)
|
|
|
(198
|
)
|
|
|
(463
|
)
|
|
|
707
|
|
|
|
(301
|
)
|
|
|
406
|
|
Less: Net income attributable to non-controlling interest
|
|
|
(284
|
)
|
|
|
284
|
|
|
|
|
|
|
|
(256
|
)
|
|
|
256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to iGo, Inc.
|
|
$
|
(549
|
)
|
|
$
|
86
|
|
|
$
|
(463
|
)
|
|
$
|
451
|
|
|
$
|
(45
|
)
|
|
$
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
The following table presents the condensed consolidated
statement of cash flows for the years ended December 31,
2009 and December 31 2008, reflecting the deconsolidation of
Mission, as recast (dollars in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2009
|
|
|
Year Ended December 31, 2008
|
|
|
|
As Reported
|
|
|
Adjustments
|
|
|
As Recast
|
|
|
As Reported
|
|
|
Adjustments
|
|
|
As Recast
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(265
|
)
|
|
$
|
(198
|
)
|
|
$
|
(463
|
)
|
|
$
|
707
|
|
|
$
|
(301
|
)
|
|
$
|
406
|
|
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions for doubtful accounts and sales returns and credits
|
|
|
547
|
|
|
|
|
|
|
|
547
|
|
|
|
611
|
|
|
|
|
|
|
|
611
|
|
Depreciation and amortization
|
|
|
1,524
|
|
|
|
(81
|
)
|
|
|
1,443
|
|
|
|
1,563
|
|
|
|
(68
|
)
|
|
|
1,495
|
|
Amortization of deferred compensation
|
|
|
1,310
|
|
|
|
|
|
|
|
1,310
|
|
|
|
2,030
|
|
|
|
|
|
|
|
2,030
|
|
Loss or (Gain) on disposal of assets
|
|
|
20
|
|
|
|
|
|
|
|
20
|
|
|
|
(656
|
)
|
|
|
|
|
|
|
(656
|
)
|
Compensation expense settled with stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
|
32
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
6,315
|
|
|
|
40
|
|
|
|
6,355
|
|
|
|
3,759
|
|
|
|
183
|
|
|
|
3,942
|
|
Inventories
|
|
|
(2,259
|
)
|
|
|
(107
|
)
|
|
|
(2,366
|
)
|
|
|
3,053
|
|
|
|
(208
|
)
|
|
|
2,845
|
|
Prepaid expenses and other assets
|
|
|
(425
|
)
|
|
|
567
|
|
|
|
142
|
|
|
|
96
|
|
|
|
644
|
|
|
|
740
|
|
Accounts payable
|
|
|
(3,206
|
)
|
|
|
3
|
|
|
|
(3,203
|
)
|
|
|
(4,620
|
)
|
|
|
(93
|
)
|
|
|
(4,713
|
)
|
Accrued expenses and other current liabilities
|
|
|
(1,326
|
)
|
|
|
(67
|
)
|
|
|
(1,393
|
)
|
|
|
(1,033
|
)
|
|
|
(24
|
)
|
|
|
(1,057
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
2,235
|
|
|
|
157
|
|
|
|
2,392
|
|
|
|
5,542
|
|
|
|
133
|
|
|
|
5,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(524
|
)
|
|
|
47
|
|
|
|
(477
|
)
|
|
|
(342
|
)
|
|
|
39
|
|
|
|
(303
|
)
|
Purchase of investments
|
|
|
(13,427
|
)
|
|
|
|
|
|
|
(13,427
|
)
|
|
|
(8,812
|
)
|
|
|
|
|
|
|
(8,812
|
)
|
Sale of investments
|
|
|
5,611
|
|
|
|
|
|
|
|
5,611
|
|
|
|
12,871
|
|
|
|
|
|
|
|
12,871
|
|
Proceeds from sale of assets
|
|
|
68
|
|
|
|
|
|
|
|
68
|
|
|
|
1,000
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(8,272
|
)
|
|
|
47
|
|
|
|
(8,225
|
)
|
|
|
4,717
|
|
|
|
39
|
|
|
|
4,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of warrants and options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rates on cash and cash equivalents
|
|
|
(11
|
)
|
|
|
|
|
|
|
(11
|
)
|
|
|
(65
|
)
|
|
|
1
|
|
|
|
(64
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(6,048
|
)
|
|
|
204
|
|
|
|
(5,844
|
)
|
|
|
10,231
|
|
|
|
173
|
|
|
|
10,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
26,139
|
|
|
|
(520
|
)
|
|
|
25,619
|
|
|
|
15,908
|
|
|
|
(693
|
)
|
|
|
15,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
20,091
|
|
|
$
|
(316
|
)
|
|
$
|
19,775
|
|
|
$
|
26,139
|
|
|
$
|
(520
|
)
|
|
$
|
25,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
On August 6, 2010, the Company acquired for cash all of the
outstanding stock of Adapt, a company headquartered in London,
England. The purchase price for the Adapt common stock was
$900,000. As part of the acquisition, the Company entered into
three year employment agreements with the three founders and key
employees of Adapt. Each of these three key employees received
grants of 200,000 restricted stock units (RSUs) that
will vest 33% on each of August 6, 2011 and August 6,
2012, and 34% on August 6, 2013.
Adapt markets of a broad range of accessories for mobile
electronic devices, including mini-projectors (also known as
pico projectors) that attach to mobile electronic devices for
displaying video, as well as a variety of skins, cases, chargers
and screen protectors. The acquisition expands the
Companys European sales presence and increases its product
offerings for fast-growing categories within the mobile
electronics accessories space.
The acquisition has been accounted for using the acquisition
method of accounting. Accordingly, the total consideration was
allocated to the tangible and intangible assets acquired and
liabilities assumed based on their estimated fair values as of
the acquisition date. Fair values were determined by Company
management based on information available at the date of
acquisition. The results of operations of Adapt were included in
the Companys consolidated financial statements from the
date of acquisition, and were not material to the Companys
reported results.
The preliminary allocation of total consideration to the assets
acquired and liabilities assumed based on the estimated fair
value of Adapt was as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Life
|
|
Tangible assets acquired
|
|
$
|
277
|
|
|
|
Intangible assets acquired
|
|
|
|
|
|
|
Customer relationships
|
|
|
720
|
|
|
5 years
|
Non-compete agreements
|
|
|
80
|
|
|
3 years
|
Trade name
|
|
|
40
|
|
|
3 years
|
Goodwill
|
|
|
183
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
|
|
1,300
|
|
|
|
Liabilities assumed
|
|
|
(173
|
)
|
|
|
Deferred tax liability, net
|
|
|
(227
|
)
|
|
|
|
|
|
|
|
|
|
Total consideration
|
|
$
|
900
|
|
|
|
|
|
|
|
|
|
|
Customer relationships relates to Adapts existing customer
base, valued based on projected discounted cash flows generated
from customers in place. The employment agreements with the
three founders of Adapt contain non-compete provisions to
protect the Company. The non-compete agreements were valued
based on the assumption that absent the agreements, Adapts
business enterprise value would be decreased. Trade name relates
to the Adapt trade name. The value of the trade name was
estimated by capitalizing the estimated profits saved as a
result of acquiring or licensing the asset. The intangible
assets acquired are amortized on a straight-line basis over
their estimated useful lives. The goodwill associated with the
acquisition is not subject to amortization and is not expected
to be deductible for income tax purposes. The deferred tax
liability relates to the acquired intangible assets which are
also not expected to be deductible for income tax purposes. As
the deferred tax assets of the Company, net of its deferred tax
liabilities are fully valued at zero, the impact of recording
this deferred tax liability resulted in a release of a portion
of the Companys deferred tax asset valuation allowance,
and is recorded as income tax benefit for the year ended
December 31, 2010.
52
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
The results of Adapt, as well as, the impact of the acquisition
of Adapt are not considered material to the Companys
consolidated financial statements.
On October 7, 2010, the Company acquired Aerial7, a
designer and marketer of innovative headphones for mobile
electronic devices and professional audio equipment.
Pursuant to the terms of the Agreement and Plan of Merger (the
Merger Agreement) dated October 7, 2010 by and
among the Company, Mobility Assets, Inc., a wholly owned
subsidiary of the Company (Merger Sub), Aerial7 and
the agent for Aerial7s shareholders, Merger Sub was merged
with and into Aerial7 and, as a result, Aerial7 continues as the
surviving corporation and is a wholly owned subsidiary of the
Company. The Company acquired all outstanding shares of Aerial7
stock in exchange for aggregate consideration of $3,340,000 (the
Merger Consideration). The Merger Consideration was
subject to adjustment based on the working capital position of
Aerial7 on the closing date of October 7, 2010, which
remains unresolved. Any adjustment to the Merger Consideration
based on the working capital position of Aerial7 will be paid
solely from an escrow fund consisting of $250,000 of the Merger
Consideration, which was withheld at closing.
As part of the Merger, the Company entered into employment
agreements with a three year term with the three founders and
key employees of Aerial7. Each of these three key employees
received grants of 150,000 RSUs that will vest in equal annual
installments of 50,000 RSUs on each of October 7, 2011,
October 7, 2012 and October 7, 2013. The RSUs were
issued as an inducement for these key employees to accept
employment with the Company in connection with the acquisition
of Aerial7 and, accordingly, shareholder approval is not
required pursuant to Nasdaq Marketplace Rule 5635(c)(4).
The acquisition of Aerial7 expands the Companys line of
accessories for portable computers, tablets, smartphones and
other portable media devices. Aerial7 headphones combine
acoustic technology with fashionable design. Aerial7 offers a
wide range of styles and features that turn headphones from just
a functional accessory to a fashion statement that allows
consumers to express their unique and personal style.
Aerial7s headphones are sold through fashion, action
sports and professional audio retailers. Aerial7 also uses an
international distribution network to sell its products in more
than 50 countries, which accounts for approximately 60% of
Aerial7s historical sales.
The acquisition has been accounted for using the acquisition
method of accounting. Accordingly, the total consideration was
allocated to the tangible and intangible assets acquired and
liabilities assumed based on their estimated fair values as of
the acquisition date. Fair values were determined by Company
management based on information available at the date of
acquisition.
53
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
The preliminary allocation of total consideration to the assets
acquired and liabilities assumed based on the estimated fair
value of Aerial7 was as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Life
|
|
Tangible assets acquired
|
|
$
|
462
|
|
|
|
Intangible assets acquired
|
|
|
|
|
|
|
Customer relationships
|
|
|
830
|
|
|
5 years
|
Non-compete agreements
|
|
|
90
|
|
|
3 years
|
Trade name
|
|
|
170
|
|
|
3 years
|
Proprietary processes
|
|
|
850
|
|
|
5 years
|
In process research and development
|
|
|
220
|
|
|
Indefinite
|
Goodwill
|
|
|
1,722
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
|
|
4,344
|
|
|
|
Liabilities assumed
|
|
|
(229
|
)
|
|
|
Deferred tax liability, net
|
|
|
(775
|
)
|
|
|
|
|
|
|
|
|
|
Total consideration
|
|
$
|
3,340
|
|
|
|
|
|
|
|
|
|
|
Customer relationships relates to Aerial7s existing
customer base, valued based on projected discounted cash flows
generated from customers in place. The employment agreements
with the three founders of Aerial7 contain non-compete
provisions to protect the Company. The non-compete agreements
were valued based on the assumption that absent the agreements,
the Aerial7s business enterprise value would be decreased.
Trade name relates to the Aerial7 trade name. The value of the
trade name was estimated by capitalizing the estimated profits
saved as a result of acquiring or licensing the asset. The
proprietary processes and in process research and development
were valued utilizing the excess earnings method of estimated
future discounted cash flows. The amortizable intangible assets
acquired are amortized on a straight-line basis over their
estimated useful lives. The Company periodically evaluates the
recoverability of the
non-amortizable
intangible asset and takes into account events or circumstances
that indicate that an impairment exists. The goodwill associated
with the acquisition is not subject to amortization and is not
expected to be deductible for income tax purposes. The deferred
tax liability relates to the acquired intangible assets which
are also not expected to be deductible for income tax purposes.
As the deferred tax assets of the Company, net of its deferred
tax liabilities are fully valued at zero, the impact of
recording this deferred tax liability resulted in a release of a
portion of the Companys deferred tax asset valuation
allowance, and is recorded as income tax benefit for the year
ended December 31, 2010.
The consolidated financial statements as of December 31,
2010 include the accounts of Aerial7 and results of operations
since the dates of acquisition. The following summary, prepared
on a pro forma basis, presents the results of operations as if
the acquisition had occurred on January 1, 2010 (unaudited
dollars in thousands, except per share data).
|
|
|
|
|
|
|
Year Ended
|
|
|
December 31, 2010
|
|
Net revenue
|
|
$
|
44,676
|
|
Net loss
|
|
$
|
(577
|
)
|
Net loss per share basic and diluted
|
|
$
|
(0.02
|
)
|
The pro forma results are not necessarily indicative of what the
actual consolidated results of operations might have been if the
acquisition had been effective at the beginning of 2010 or as a
projection of future results.
54
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
|
|
(5)
|
Fair
Value Measurement
|
As of December 31, 2010, the Companys financial
assets and financial liabilities that are measured at fair value
on a recurring basis are comprised of overnight money market
funds and investments in marketable securities.
The Company invests excess cash from its operating cash accounts
in overnight money market funds and reflects these amounts
within cash and cash equivalents on the consolidated balance
sheet at a net value of 1:1 for each dollar invested.
At December 31, 2010, investments totaling $14,532,000 are
included within short-term investments on the consolidated
balance sheet. These investments are considered
available-for-sale
securities and are reported at fair value based on third-party
broker statements which represents level 2 in the fair
value hierarchy. The unrealized gains and losses on
available-for-sale
securities are recorded in accumulated other comprehensive
income. Realized gains and losses are included in interest
income, net.
The Company has determined that all of its investments in
marketable securities should be classified as
available-for-sale
and reported at fair value.
The Company assesses its investments in marketable securities
for
other-than-temporary
declines in value by considering various factors that include,
among other things, any events that may affect the
creditworthiness of a securitys issuer, the length of time
the security has been in a loss position, and the Companys
ability and intent to hold the security until a forecasted
recovery of fair value.
The Company used net cash of $17,078,000 in the purchase of
available-for-sale
marketable securities during the year ended December 31,
2010, and it generated net proceeds of $15,329,000 in the sale
of such securities for the year ended December 31, 2010.
The Company used net cash of $13,427,000 in the purchase of
available-for-sale
marketable securities during the year ended December 31,
2009 and generated net proceeds of $5,611,000 in the sale of
securities for the year ended December 31, 2009.
As of December 31, 2010 and 2009, the amortized cost basis,
unrealized holding gains, unrealized holding losses, and
aggregate fair value by short-term major security type
investments were as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
December 31, 2009
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
|
|
|
Holding
|
|
|
|
|
|
|
|
|
Holding
|
|
|
|
|
|
|
Amortized
|
|
|
Gains
|
|
|
Aggregate
|
|
|
Amortized
|
|
|
Gains
|
|
|
Aggregate
|
|
|
|
Cost
|
|
|
(Losses)
|
|
|
Fair Value
|
|
|
Cost
|
|
|
(Losses)
|
|
|
Fair Value
|
|
|
U.S. corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper
|
|
$
|
1,100
|
|
|
$
|
|
|
|
$
|
1,100
|
|
|
$
|
3,495
|
|
|
$
|
|
|
|
$
|
3,495
|
|
Corporate notes and bonds
|
|
|
4,519
|
|
|
|
4
|
|
|
|
4,523
|
|
|
|
3,278
|
|
|
|
|
|
|
|
3,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,619
|
|
|
|
4
|
|
|
|
5,623
|
|
|
|
6,773
|
|
|
|
|
|
|
|
6,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. municipal funds
|
|
|
2,071
|
|
|
|
3
|
|
|
|
2,074
|
|
|
|
5,000
|
|
|
|
4
|
|
|
|
5,004
|
|
U.S. government securities
|
|
|
6,833
|
|
|
|
2
|
|
|
|
6,835
|
|
|
|
1,001
|
|
|
|
(1
|
)
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14,523
|
|
|
$
|
9
|
|
|
$
|
14,532
|
|
|
$
|
12,774
|
|
|
$
|
3
|
|
|
$
|
12,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
Goodwill is as follows (dollars in thousands):
|
|
|
|
|
Reported balance at December 31, 2009
|
|
$
|
|
|
Acquisition of Adapt
|
|
|
183
|
|
Acquisition of Aerial7
|
|
|
1,722
|
|
|
|
|
|
|
Reported balance at December 31, 2010
|
|
$
|
1,905
|
|
|
|
|
|
|
|
|
(8)
|
Property
and Equipment
|
Property and equipment consists of the following (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
As recast
|
|
|
Furniture and fixtures
|
|
$
|
421
|
|
|
$
|
421
|
|
Store, warehouse and related equipment
|
|
|
500
|
|
|
|
500
|
|
Computer equipment
|
|
|
3,100
|
|
|
|
3,061
|
|
Tooling
|
|
|
2,514
|
|
|
|
2,236
|
|
Leasehold improvements
|
|
|
546
|
|
|
|
535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,081
|
|
|
|
6,753
|
|
Less accumulated depreciation and amortization
|
|
|
(6,427
|
)
|
|
|
(5,918
|
)
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
654
|
|
|
$
|
835
|
|
|
|
|
|
|
|
|
|
|
Aggregate depreciation and amortization expense for property and
equipment totaled $510,000, $612,000 (as recast) and $680,000
(as recast) for the years ended December 31, 2010, 2009 and
2008, respectively.
56
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
Intangible assets consist of the following at December 31,
2010 and 2009 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
December 31, 2009
|
|
|
|
Average
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
|
Life
|
|
|
Intangible
|
|
|
Accumulated
|
|
|
Intangible
|
|
|
Intangible
|
|
|
Accumulated
|
|
|
Intangible
|
|
|
|
(Years)
|
|
|
Assets
|
|
|
Amortization
|
|
|
Assets
|
|
|
Assets
|
|
|
Amortization
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
As recast
|
|
|
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents and trademarks
|
|
|
3
|
|
|
$
|
4,576
|
|
|
$
|
(3,885
|
)
|
|
$
|
691
|
|
|
$
|
3,967
|
|
|
$
|
(3,052
|
)
|
|
$
|
915
|
|
Non-compete agreements
|
|
|
3
|
|
|
|
170
|
|
|
|
(19
|
)
|
|
|
151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names
|
|
|
8
|
|
|
|
652
|
|
|
|
(375
|
)
|
|
|
277
|
|
|
|
442
|
|
|
|
(309
|
)
|
|
|
133
|
|
Customer intangibles
|
|
|
5
|
|
|
|
1,550
|
|
|
|
(102
|
)
|
|
|
1,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proprietary process
|
|
|
5
|
|
|
|
850
|
|
|
|
(43
|
)
|
|
|
807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amortizable
|
|
|
|
|
|
|
7,798
|
|
|
|
(4,424
|
)
|
|
|
3,374
|
|
|
|
4,409
|
|
|
|
(3,361
|
)
|
|
|
1,048
|
|
Non-amortized
intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In process research and development
|
|
|
|
|
|
|
220
|
|
|
|
|
|
|
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
|
|
|
|
|
$
|
8,018
|
|
|
$
|
(4,424
|
)
|
|
$
|
3,594
|
|
|
$
|
4,409
|
|
|
$
|
(3,361
|
)
|
|
$
|
1,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In December 2008, the Company sold a portfolio of patents and
patents pending related to its foldable keyboard technology for
gross proceeds of $1,000,000. The net book value of this
portfolio of patents was $344,000, resulting in a gain on the
sale of these assets of $656,000. The Company continues to
maintain all of its patents and patents pending related to its
power and other technologies.
Aggregate amortization expense for identifiable intangible
assets totaled $1,063,000, $830,000 (as recast) and $815,000 (as
recast) for the years ended December 31, 2010, 2009 and
2008, respectively. Estimated amortization expense for each of
the five succeeding years ended December 31 is as follows
(dollars in thousands):
|
|
|
|
|
|
|
Amortization
|
Year
|
|
Expense
|
|
2011
|
|
$
|
1,255
|
|
2012
|
|
|
773
|
|
2013
|
|
|
656
|
|
2014
|
|
|
484
|
|
2015
|
|
|
205
|
|
The Company has entered into various non-cancelable operating
lease agreements for its office facilities and office equipment,
which expire in 2014. Existing facility leases require monthly
rents plus payment of property taxes, normal maintenance and
insurance on facilities. Rental expense for the operating leases
was $445,000, $460,000 (as recast) and $594,000 (as recast)
during the years ended 2010, 2009, and 2008, respectively.
57
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
A summary of the minimum future lease payments for the years
ending December 31 follows (dollars in thousands):
|
|
|
|
|
2011
|
|
$
|
440
|
|
2012
|
|
|
444
|
|
2013
|
|
|
455
|
|
2014
|
|
|
76
|
|
2015
|
|
|
|
|
Thereafter
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,415
|
|
|
|
|
|
|
The provision for income taxes includes income taxes currently
payable and those deferred due to temporary differences between
the financial statement and tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future.
As a result of the Aerial7 and Adapt acquisitions, the Company
was able to release valuation allowance of $1,002,000, resulting
in an income tax benefit for the year ended December 31,
2010. During the year ended December 31, 2009, the Company
filed Form 1139, Corporation Application for Tentative
Refund, to claim a refund of alternative minimum taxes paid for
the year ended December 31, 2005 pursuant to the Worker,
Homeownership, and Business Assistance Act of 2009, passed on
November 5, 2009. As a result, the Company recorded an
income tax benefit of $234,000 for the year ended
December 31, 2009. The Company recorded no provision for
income taxes for the year ended December 31, 2008.
The provision for income taxes differed from the amounts
computed by applying the statutory U.S. federal income tax
rate of 34% in 2010, 2009 and 2008 to income (loss) before
income taxes as a result of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
Expected tax at federal statutory rate
|
|
$
|
(57
|
)
|
|
$
|
(238
|
)
|
|
$
|
138
|
|
Meals, entertainment and other non-deductible expenses
|
|
|
(8
|
)
|
|
|
16
|
|
|
|
15
|
|
Foreign rate differential
|
|
|
487
|
|
|
|
371
|
|
|
|
50
|
|
Gain on sale of assets of Texas subsidiary
|
|
|
|
|
|
|
36
|
|
|
|
(16
|
)
|
Expired stock options
|
|
|
|
|
|
|
144
|
|
|
|
|
|
Change of net operating loss as a result of Section 382
Study
|
|
|
|
|
|
|
|
|
|
|
(19,670
|
)
|
Change in deferred tax valuation allowance
|
|
|
(1,424
|
)
|
|
|
(563
|
)
|
|
|
19,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
|
|
$
|
(1,002
|
)
|
|
$
|
(234
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With the exception of 2005, 2006, 2009 and 2010, the Company has
generated net operating losses for income tax reporting purposes
since inception. At December 31, 2010, the Company had net
operating loss carry-forwards for federal income tax purposes of
approximately $156,445,000 and approximately $5,179,000 for
foreign income tax purposes which, subject to possible annual
limitations, are available to offset future taxable income, if
any. The federal net operating loss carry-forwards expire
between 2018 and 2028.
58
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
The temporary differences that give rise to deferred tax assets
and liabilities at December 31, 2010 and 2009 are as
follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforward for federal income taxes
|
|
$
|
53,191
|
|
|
$
|
53,337
|
|
Net operating loss carryforward for foreign income taxes
|
|
|
1,398
|
|
|
|
2,700
|
|
Net operating loss carryforward for state income taxes
|
|
|
2,638
|
|
|
|
2,767
|
|
Depreciation and amortization
|
|
|
186
|
|
|
|
1,141
|
|
Accrued liabilities
|
|
|
696
|
|
|
|
1,358
|
|
Reserves
|
|
|
178
|
|
|
|
182
|
|
Bad debts
|
|
|
47
|
|
|
|
49
|
|
Tax credits
|
|
|
372
|
|
|
|
372
|
|
Inventory obsolescence
|
|
|
614
|
|
|
|
536
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax assets
|
|
|
59,320
|
|
|
|
62,442
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible Assets
|
|
|
|
|
|
|
|
|
Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
59,320
|
|
|
|
62,442
|
|
Less valuation allowance
|
|
|
(59,320
|
)
|
|
|
(62,442
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
The valuation allowance for deferred tax assets as of
December 31, 2010 and 2009 was $59,320,000 and $62,442,000,
respectively. The change in the total valuation allowance for
the year ended December 31, 2010 was a decrease of
$3,122,000.
In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is
dependent upon generation of future taxable income during the
periods in which those temporary differences become deductible.
In addition, due to changes in ownership resulting from the
frequency of equity transactions and acquisitions by the
Company, it is possible the use of the Companys remaining
net operating loss carry-forward may be limited in accordance
with Section 382 of the Internal Revenue Code.
Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning
strategies in assessing the valuation allowance. Based upon the
level of historical taxable income and projections for future
taxable income over the periods in which the deferred tax assets
are deductible, management currently believes it is more likely
than not that the Company will not realize the benefits of these
deductible differences.
Uncertain
Tax Positions
The Company is required to recognize in the financial statements
the impact of a tax position, if that position is not more
likely than not of being sustained upon examination, based on
the technical merits of the position. It is the Companys
policy to recognize interest and penalties related to uncertain
tax positions in general and administrative
59
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
expense. As a result of its historical net operating losses, the
statute of limitations remains open for each tax year since
1998, with the exception of 2005 and 2006.
A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
Gross unrecognized tax benefits, beginning of year
|
|
$
|
350
|
|
|
$
|
356
|
|
Additions based on tax positions related to the current year
|
|
|
7
|
|
|
|
21
|
|
Additions/Subtractions for tax positions of prior years
|
|
|
(29
|
)
|
|
|
(27
|
)
|
Reductions for settlements and payments
|
|
|
|
|
|
|
|
|
Reductions due to statute expiration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrecognized tax benefits, end of year
|
|
$
|
328
|
|
|
$
|
350
|
|
|
|
|
|
|
|
|
|
|
Included in the balance of gross unrecognized tax benefits at
December 31, 2010, are $35,000 of tax positions for which
the ultimate deductibility is highly certain but for which there
is uncertainty about the timing of such deductibility. Because
of the impact of deferred tax accounting, other than interest
and penalties, the disallowance of the shorter deductibility
period would not affect the annual effective tax rate but would
normally accelerate the payment of cash to the taxing authority
to an earlier period. However, because the Company has
significant tax net operating losses in the federal and most
state taxing jurisdictions, the Company believes any ultimate
settlement of these items differently than as reported in the
original tax returns will have little or no impact.
Included in the balance of gross unrecognized tax benefits at
December 31, 2010 is $248,000 of tax positions for which
ultimate tax benefit is uncertain. These amounts consist of
various credits. Because of the permanent nature of these items
the disallowance would normally impact the effective tax rate.
With respect to the uncertain positions identified above, both
timing and credit items, the Company has established a valuation
allowance against all of the credit carry-forward amounts and
the net deferred tax assets. Further, sufficient net operating
losses exist to offset any potential increase in taxable items.
Therefore, any reversal or settlement of the amounts identified
above should result in little or no additional tax. Accordingly,
no interest or penalty has been accrued or included related to
the table amounts shown above.
There are no positions the Company reasonably anticipates will
significantly increase or decrease within 12 months of the
reporting date.
The Company files income tax returns in the U.S. federal
jurisdiction, and various state and foreign jurisdictions. With
few exceptions, the Company is subject to examinations in all
jurisdictions as statutes have not closed due to a history of
net operating losses.
|
|
(12)
|
Stockholders
Equity
|
|
|
(a)
|
Convertible
Preferred Stock and Related Warrants
|
During January of 2008, 27,647 Series F Warrants were
exercised and exchanged for 27,647 shares of Common Stock
at a par value of $0.01. At December 31, 2008, there were
no further Series F Warrants outstanding.
|
|
(b)
|
Common
Stock and Related Warrants
|
Holders of shares of common stock are entitled to one vote per
share on all matters submitted to a vote of the Companys
stockholders. There is no right to cumulative voting for the
election of directors. Holders of shares of common stock are
entitled to receive dividends, if and when declared by the board
of directors out of funds legally
60
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
available therefore, after payment of dividends required to be
paid on any outstanding shares of preferred stock. Upon
liquidation, holders of shares of common stock are entitled to
share ratably in all assets remaining after payment of
liabilities, subject to the liquidation preferences of any
outstanding shares of preferred stock. Holders of shares of
common stock have no conversion, redemption or preemptive rights.
As of December 31, 2007, Motorola held warrants to purchase
1,190,476 shares of the Companys common stock, with
two performance targets, as defined in the warrant agreement. On
February 15, 2008, 595,238 warrants expired due to
non-achievement of the first set of performance criteria. At
December 31, 2009, Motorola held warrants to purchase
595,238 shares of the Companys common stock. On
February 15, 2010, these warrants expired due to
non-achievement of the remaining performance criteria.
At December 31, 2010, there were warrants outstanding and
exercisable for 5,000 shares of common stock.
|
|
(13)
|
Employee
Benefit Plans
|
The Company has a defined contribution 401(k) plan for all
employees. Under the 401(k) plan, employees are permitted to
make contributions to the plan in accordance with IRS
regulations. The Company may make discretionary contributions as
approved by the Board of Directors. The Company contributed
$160,000, $169,000 (as recast) and $176,000 (as recast) during
2010, 2009 and 2008, respectively.
|
|
(b)
|
Restricted
Stock Units
|
During 2004, the Company adopted the Omnibus Long-Term Incentive
Plan (the 2004 Omnibus Plan) and the Non-Employee
Directors Plan (the 2004 Directors Plan). Under
the 2004 Omnibus Plan, the Company may grant up to 2,350,000
stock options, stock appreciation rights, restricted stock
awards, performance awards, and other stock awards. Under the
2004 Directors Plan, the Company may grant up to 400,000
stock options, stock appreciation rights, restricted stock
awards, performance awards, and other stock awards.
Under the 2004 Directors Plan and the 2004 Omnibus Plan,
the Company has awarded Restricted Stock Units
(RSUs), in lieu of stock options. Unearned
compensation is measured at fair market value on the date of
grant and recognized as compensation expense over the period in
which the RSUs vest. All RSUs awarded to employees under the
2004 Omnibus Plan vest ratably over three or four years,
depending on the terms of each individual award or, on a pro
rata basis, upon the employees death, disability or
termination without cause or, in full, upon a change in control
of the Company. RSUs awarded to board members upon their
election or re-election to the board under the
2004 Directors Plan vest 100% upon the three-year
anniversary of the grant date. RSUs awarded to board members
upon their election or re-election to the board under the 2004
Omnibus Plan vest ratably over three years. RSUs awarded to
board members upon their appointment as board chairman or to a
board committee vest 100% upon the anniversary of the grant
date. All RSUs awarded to board members may vest earlier, on a
pro rata basis, upon the directors death, disability, or
retirement or, in full, upon a change in control of the Company.
On June 11, 2007, pursuant to the terms of the employment
agreement dated May 1, 2007 by and between the Company and
Michael D. Heil, Mr. Heil was awarded 1,000,000 restricted
stock units outside of the Companys 2004 Directors
Plan and 2004 Omnibus Plan as an inducement award without
stockholder approval pursuant to NASDAQ Marketplace
Rule 5635(c)(4). Pursuant to the terms of
Mr. Heils agreement, 500,000 of the restricted stock
units vested in increments of 125,000 shares per year
effective on June 11, 2008, June 11, 2009 and
June 11, 2010, with the final 125,000 restricted stock
units scheduled to vest on June 11, 2011. On March 19,
2008, the vesting terms for the remaining 500,000 restricted
stock units granted to Mr. Heil were amended to provide
time-based vesting, pursuant to which 125,000 shares vested
on each of March 19, 2009 and March 19, 2010, and
125,000 shares scheduled to vest on each of March 19,
2011 and March 19, 2012. All RSUs granted to Mr. Heil
may
61
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
vest earlier, in full, upon a change in control of the Company
or, on a pro rata basis, upon Mr. Heils death,
disability or termination without cause.
On August 6, 2010, in connection with the Companys
acquisition of Adapt, the Company entered into three year
employment agreements with the three founders and key employees
of Adapt. Each of these three key employees received grants of
200,000 restricted stock units RSUs that are scheduled to vest
33% on each of August 6, 2011 and August 6, 2012, and
34% on August 6, 2013. All RSUs granted to the key
employees of Adapt may vest earlier, in full, upon a change in
control of the Company or, on a pro rata basis, upon their
death, disability or termination without cause.
On October 7, 2010, in connection with the Companys
acquisition of Aerial7, the Company entered into three year
employment agreements with the three founders and key employees
of Aerial7. Each of these three key employees received grants of
150,000 RSUs that are scheduled to vest in equal annual
installments of 50,000 RSUs on each of October 7, 2011,
October 7, 2012 and October 7, 2013. All RSUs granted
to the key employees of Aerial7 may vest earlier, in full, upon
a change in control of the Company or, on a pro rata basis, upon
their death, disability or termination without cause.
The following table summarizes information regarding restricted
stock unit activity for the years ended December 31, 2008,
2009 and 2010, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 Directors Plan
|
|
|
2004 Omnibus Plan
|
|
|
Inducement Grants
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Value per
|
|
|
|
|
|
Value per
|
|
|
|
|
|
Value per
|
|
|
|
Number
|
|
|
Share
|
|
|
Number
|
|
|
Share
|
|
|
Number
|
|
|
Share
|
|
|
Outstanding, January 1, 2008
|
|
|
194,667
|
|
|
|
4.64
|
|
|
|
1,168,614
|
|
|
|
4.90
|
|
|
|
1,000,000
|
|
|
|
2.13
|
|
Granted
|
|
|
58,165
|
|
|
|
1.26
|
|
|
|
949,500
|
|
|
|
1.27
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(48,875
|
)
|
|
|
5.69
|
|
|
|
(116,955
|
)
|
|
|
3.08
|
|
|
|
|
|
|
|
|
|
Released to common stock
|
|
|
(74,125
|
)
|
|
|
5.53
|
|
|
|
(279,441
|
)
|
|
|
5.60
|
|
|
|
(125,000
|
)
|
|
|
2.13
|
|
Released for settlement of taxes
|
|
|
|
|
|
|
|
|
|
|
(126,666
|
)
|
|
|
5.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2008
|
|
|
129,832
|
|
|
|
2.22
|
|
|
|
1,595,052
|
|
|
|
2.70
|
|
|
|
875,000
|
|
|
|
2.13
|
|
Granted
|
|
|
31,500
|
|
|
|
0.71
|
|
|
|
110,250
|
|
|
|
0.59
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(37,000
|
)
|
|
|
2.53
|
|
|
|
(496,787
|
)
|
|
|
2.38
|
|
|
|
|
|
|
|
|
|
Released to common stock
|
|
|
(29,833
|
)
|
|
|
1.24
|
|
|
|
(285,515
|
)
|
|
|
2.72
|
|
|
|
(172,000
|
)
|
|
|
2.13
|
|
Released for settlement of taxes
|
|
|
|
|
|
|
|
|
|
|
(132,806
|
)
|
|
|
2.75
|
|
|
|
(78,000
|
)
|
|
|
2.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2009
|
|
|
94,499
|
|
|
$
|
1.90
|
|
|
|
790,194
|
|
|
$
|
2.60
|
|
|
|
625,000
|
|
|
$
|
2.13
|
|
Granted
|
|
|
58,194
|
|
|
|
1.54
|
|
|
|
426,806
|
|
|
|
1.90
|
|
|
|
1,050,000
|
|
|
|
1.83
|
|
Canceled
|
|
|
|
|
|
|
|
|
|
|
(70,093
|
)
|
|
|
2.24
|
|
|
|
|
|
|
|
|
|
Released to common stock
|
|
|
(80,417
|
)
|
|
|
2.07
|
|
|
|
(230,756
|
)
|
|
|
3.27
|
|
|
|
(171,188
|
)
|
|
|
2.13
|
|
Released for settlement of taxes
|
|
|
|
|
|
|
|
|
|
|
(107,922
|
)
|
|
|
3.85
|
|
|
|
(78,812
|
)
|
|
|
2.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2010
|
|
|
72,276
|
|
|
$
|
1.42
|
|
|
|
808,229
|
|
|
$
|
1.90
|
|
|
|
1,425,000
|
|
|
$
|
1.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2010, 2009 and 2008, the
Company recorded in general and administrative expense pre-tax
charges of $1,478,000, $1,310,000 and $2,062,000 associated with
the expensing of restricted stock unit activity.
As of December 31, 2010, there was $8,853,000 of total
unrecognized compensation cost related to non-vested RSUs, which
is expected to be recognized over a weighted average period of
two years.
62
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
As of December 31, 2010, all outstanding restricted stock
units were non-vested.
In 1996, the Company adopted the Incentive Stock Option Plan
(the 1996 Plan). The 1996 Plan terminated on
April 30, 2008. The options under the 1996 Plan, the CES
Options, and the 2004 Omnibus Plan were granted at the fair
market value of the Companys stock at the date of grant as
determined by the Companys Board of Directors. Options
become exercisable over varying periods up to 3.5 years and
expire at the earlier of termination of employment or up to six
years after the date of grant. At December 31, 2010, there
were no shares available for grant under the 1996 Plan and
2004 Director Plan and 500,359 shares available under
the 2004 Omnibus Plan.
The Company did not grant any stock options during the years
ended December 31, 2010, 2009 or 2008. The following table
summarizes information regarding stock option activity for the
years ended December 31, 2008, 2009 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
Number
|
|
|
Exercise Price per Share
|
|
|
Outstanding, January 1, 2008
|
|
|
396,175
|
|
|
$
|
6.26
|
|
Granted
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(38,093
|
)
|
|
|
3.08
|
|
Exercised
|
|
|
(10,785
|
)
|
|
|
0.84
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2008
|
|
|
347,297
|
|
|
|
6.77
|
|
Granted
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(307,297
|
)
|
|
|
6.67
|
|
Exercised
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2009
|
|
|
40,000
|
|
|
|
7.59
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(40,000
|
)
|
|
|
7.59
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2010
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Cash received from option exercises during the year ended
December 31, 2008 totaled $9,000.
63
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
|
|
(14)
|
Net
Income (Loss) per Share
|
The computation of basic and diluted net income (loss) per share
(EPS) follows (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
Basic net income (loss) per share computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
835
|
|
|
$
|
(463
|
)
|
|
$
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
32,770
|
|
|
|
32,310
|
|
|
|
31,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
|
$
|
0.03
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
Diluted net income (loss) per share computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
835
|
|
|
$
|
(463
|
)
|
|
$
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
32,770
|
|
|
|
32,310
|
|
|
|
31,786
|
|
Effect of dilutive stock options, warrants, and restricted stock
units
|
|
|
2,311
|
|
|
|
|
|
|
|
2,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,081
|
|
|
|
32,310
|
|
|
|
34,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share
|
|
$
|
0.02
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
Stock options not included in dilutive net income (loss) per
share since anti-dilutive
|
|
|
|
|
|
|
|
|
|
|
292
|
|
Warrants not included in dilutive net income (loss) per share
since anti-dilutive
|
|
|
5
|
|
|
|
600
|
|
|
|
600
|
|
|
|
(15)
|
Product
Lines, Concentration of Credit Risk and Significant
Customers
|
The Company is engaged in the business of selling accessories
for computers and mobile electronic devices. The Company has
four product lines, consisting of Power, Protection, Audio, and
Other Accessories. The Companys chief operating decision
maker (CODM) continues to evaluate revenues and
gross profits based on product lines, routes to market and
geographies.
64
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
The following tables summarize the Companys revenues by
product line, as well as its revenues by geography and the
percentages of revenue by route to market (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Product Line
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
Power
|
|
$
|
40,933
|
|
|
$
|
48,277
|
|
|
$
|
69,217
|
|
Protection
|
|
|
252
|
|
|
|
|
|
|
|
|
|
Audio
|
|
|
640
|
|
|
|
|
|
|
|
|
|
Other Accessories
|
|
|
1,532
|
|
|
|
667
|
|
|
|
689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
43,357
|
|
|
$
|
48,944
|
|
|
$
|
69,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Geography
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
North America
|
|
$
|
35,004
|
|
|
$
|
43,325
|
|
|
$
|
66,674
|
|
Europe
|
|
|
6,219
|
|
|
|
4,556
|
|
|
|
2,141
|
|
Asia Pacific
|
|
|
2,134
|
|
|
|
1,063
|
|
|
|
1,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
43,357
|
|
|
$
|
48,944
|
|
|
$
|
69,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Revenue by
|
|
|
|
Route to Market
|
|
|
|
Years Ended
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
As recast
|
|
|
As recast
|
|
|
Retailers and distributors
|
|
|
88
|
%
|
|
|
67
|
%
|
|
|
50
|
%
|
OEM and private-label-resellers
|
|
|
8
|
%
|
|
|
31
|
%
|
|
|
48
|
%
|
Other
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and
trade accounts receivable. The Company places its cash with high
credit quality financial institutions and generally limits the
amount of credit exposure to the amount of FDIC coverage.
However, periodically during the year, the Company maintains
cash in financial institutions in excess of the current FDIC
insurance coverage limit of $250,000. The Company performs
ongoing credit evaluations of its customers financial
condition but does not typically require collateral to support
customer receivables. The Company establishes an allowance for
doubtful accounts based upon factors surrounding the credit risk
of specific customers, historical trends and other information.
Two customers accounted for 34% and 17% of net sales for the
year ended December 31, 2010. Two customers accounted for
43% and 24% of net sales (as recast) for the year ended
December 31, 2009. Two customers accounted for 46% and 37%
of net sales (as recast) for the year ended December 31,
2008.
Two customers accounts receivable balance accounted for
28% and 16% of net accounts receivable at December 31,
2010. Two customers accounts receivable balances accounted
for 40% and 10% of net accounts receivable (as recast) at
December 31, 2009.
65
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
Allowance for doubtful accounts was $131,000 and $130,000 (as
recast) at December 31, 2010 and December 31, 2009,
respectively. Allowance for sales returns and price protection
was $419,000 and $442,000 (as recast) at December 31, 2010
and December 31, 2009, respectively.
|
|
(16)
|
Litigation
Settlement
|
Certain former officers of iGo Corporation had sought potential
indemnification claims against the Companys wholly-owned
subsidiary, iGo Direct Corporation, relating to an SEC matter
involving such individuals (but not involving the Company) that
related to matters that arose prior to the Companys
acquisition of iGo Corporation in September 2002. The Company
initiated litigation against the carrier of iGo
Corporations directors and officers liability
insurance for coverage of these claims under its insurance
policy. During 2006, the Company reached settlement agreements
with two of the three former officers of iGo Corporation that
were seeking indemnification from the Company, resulting in
litigation settlement expense of $250,000 for the year ended
December 31, 2006. During the year ended December 31,
2008, the Company settled its litigation with iGo
Corporations former insurance carrier, obtaining
reimbursement from the insurance carrier in the amount of
$1,500,000. Further, in connection with its settlement with the
insurance carrier, the Company reached a settlement agreement
with the last of the three former officers of iGo Corporation
and reimbursed him $828,000 in final settlement of all his
indemnification claims. The Company recorded net litigation
settlement income of $672,000 during the year ended
December 31, 2008. On July 18, 2008, the SEC announced
it had settled its case against each of the three former
officers of iGo Corporation.
The Company procures its products primarily from supply sources
based in Asia. Typically, the Company places purchase orders for
completed products and takes ownership of the finished inventory
upon completion and delivery from its supplier. Occasionally,
the Company presents its suppliers with Letters of
Authorization for the suppliers to procure long-lead raw
components to be used in the manufacture of the Companys
products. These Letters of Authorization indicate the
Companys commitment to utilize the long-lead raw
components in production. As of June 30, 2007, based on a
change in strategic direction, the Company determined it would
not procure certain products for which it had outstanding
Letters of Authorization with suppliers. The Company believes it
is probable that it will be required to pay suppliers for
certain Letter of Authorization commitments and has already
partially settled some of these obligations. At
December 31, 2009, the Company had estimated and accrued a
liability for this contingency in the amount of $150,000. At
December 31, 2010, the Company had estimated, and recorded,
a remaining liability for this contingency in the amount of
$160,000.
From time to time, the Company is involved in legal proceedings
arising in the ordinary course of its business. The Company is
not currently a party to any litigation that the Company
believes, if determined adversely to it, would have a material
adverse effect on its financial condition, results of
operations, or cash flows.
66
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
|
|
(18)
|
Supplemental
Financial Information
|
A summary of additions and deductions related to the allowances
for accounts receivable for the years ended December 31,
2010, 2009 and 2008 follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
Charged to
|
|
|
|
|
|
Balance at
|
|
|
|
Beginning of
|
|
|
Costs and
|
|
|
|
|
|
End of
|
|
|
|
Year
|
|
|
Expenses
|
|
|
Utilization
|
|
|
Year
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2010
|
|
$
|
130
|
|
|
$
|
1
|
|
|
$
|
|
|
|
$
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2009
|
|
$
|
570
|
|
|
$
|
125
|
|
|
$
|
(565
|
)
|
|
$
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008
|
|
$
|
597
|
|
|
$
|
47
|
|
|
$
|
(74
|
)
|
|
$
|
570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for sales returns and price protection:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2010
|
|
$
|
442
|
|
|
$
|
979
|
|
|
$
|
(1,002
|
)
|
|
$
|
419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2009
|
|
$
|
246
|
|
|
$
|
695
|
|
|
$
|
(499
|
)
|
|
$
|
442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008
|
|
$
|
474
|
|
|
$
|
564
|
|
|
$
|
(792
|
)
|
|
$
|
246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2010, 2009 and
2008 (Continued)
|
|
(19)
|
Quarterly
Financial Data (Unaudited)
|
A summary of the quarterly data for the years ended
December 31, 2010 and 2009 follows (dollars in thousands,
except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Year ended December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
8,169
|
|
|
$
|
9,748
|
|
|
$
|
12,220
|
|
|
$
|
13,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
2,652
|
|
|
$
|
3,312
|
|
|
$
|
4,039
|
|
|
$
|
4,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
(3,727
|
)
|
|
$
|
(3,809
|
)
|
|
$
|
(4,368
|
)
|
|
$
|
(5,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
$
|
|
|
|
$
|
|
|
|
$
|
235
|
|
|
$
|
767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
768
|
|
|
$
|
(400
|
)
|
|
$
|
51
|
|
|
$
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.02
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.02
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2009 (As recast):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
13,413
|
|
|
$
|
13,618
|
|
|
$
|
11,994
|
|
|
$
|
9,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
3,897
|
|
|
$
|
3,899
|
|
|
$
|
4,124
|
|
|
$
|
3,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
(5,250
|
)
|
|
$
|
(3,835
|
)
|
|
$
|
(3,953
|
)
|
|
$
|
(3,568
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
$
|
(1,052
|
)
|
|
$
|
162
|
|
|
$
|
318
|
|
|
$
|
109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.03
|
)
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.03
|
)
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth quarter 2010 results included the recognition of
$1,646,000 of deferred revenues and $786,000 of related deferred
cost of revenues, resulting from the Companys ability to
make a reasonable estimate of customer returns.
68
|
|
Item 9.
|
Changes
in and Disagreements With Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
Based on their evaluation as of December 31, 2010, our
Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures, as
defined in
Rules 13a-15(e)
and
15d-15(e)
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), were effective as of the end of the
period covered by this report to ensure that the information
required to be disclosed by us in reports we file or submit
under the Exchange Act was recorded, processed, summarized and
reported within the time periods specified in the SECs
rules and instructions for
Form 10-K.
Our disclosure controls and procedures are designed to ensure
that information required to be disclosed in the reports that we
file or submit under the Exchange Act is accumulated and
communicated to our management, including our Principal
Executive Officer and our Principal Financial Officer, to allow
timely decisions regarding required disclosure.
Managements
Annual Report on Internal Control over Financial
Reporting
Management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting
as defined by
Rules 13a-15(f)
and
15d-15(f)
under the Exchange Act. Because of its inherent limitations,
internal control over financial reporting may not prevent or
detect misstatements. Therefore, even those systems determined
to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Companys
internal control over financial reporting as of
December 31, 2010. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework. Based on our assessment of
those criteria, management has concluded that the Company
maintained effective internal control over financial reporting
as of December 31, 2010.
This Managements report is not deemed filed for
purposes of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section,
unless we specifically state in future filing that such report
is to be considered filed.
Changes
in Internal Control over Financial Reporting
There was no change in our internal control over financial
reporting (as such term is defined in Exchange Act
Rules 13a-15(f)
and
15d-15(f))
during the quarter ended December 31, 2010 that has
materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
|
|
Item 9B.
|
Other
Information
|
Not applicable.
PART III
|
|
Item 10.
|
Directors,
Executive Officers, and Corporate Governance
|
The information required by this Item 10 is incorporated by
reference to our definitive proxy statement for the 2011 Annual
Meeting of Stockholders to be filed with the Securities and
Exchange Commission within 120 days following year end.
We have adopted a Code of Business Conduct and Ethics (the
Code) that applies to all of our directors, officers
and employees (including our principal executive officer,
principal financial officer, principal accounting officer or
controller, or persons performing similar functions), and meets
the requirements of the SEC rules
69
promulgated under Section 406 of the Sarbanes-Oxley Act of
2002. Our Code is available on our website at www.igo.com
and copies are available to stockholders without charge upon
written request to our Secretary at the Companys principal
address. Any substantive amendment to the Code or any waiver of
a provision of the Code granted to our principal executive
officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
will be posted on our website at www.igo.com within five
business days (and retained on the Web site for at least one
year).
|
|
Item 11.
|
Executive
Compensation
|
The information required by this Item 11 is incorporated by
reference to our definitive proxy statement for the 2011 Annual
Meeting of Stockholders to be filed with the Securities and
Exchange Commission within 120 days following year end.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The information required by this Item 12 is incorporated by
reference to our definitive proxy statement for the 2011 Annual
Meeting of Stockholders to be filed with the Securities and
Exchange Commission within 120 days following year end.
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
The information required by this Item 13 is incorporated by
reference to our definitive proxy statement for the 2011 Annual
Meeting of Stockholders to be filed with the Securities and
Exchange Commission within 120 days following year end.
|
|
Item 14.
|
Principal
Accounting Fees and Services
|
The information required by this Item 14 is incorporated by
reference to our definitive proxy statement for the 2011 Annual
Meeting of Stockholders to be filed with the Securities and
Exchange Commission within 120 days following year end.
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedules
|
(a) (1) (2) Financial Statements.
See the Index to Consolidated Financial Statements in
Part II, Item 8. All financial statement schedules
have been omitted because they are not applicable, or because
the required information is either incorporated by reference or
included in the consolidated financial statements or notes
thereto included in this
Form 10-K.
(3) Exhibits.
The Exhibit Index and required Exhibits immediately
following the Signatures to this
Form 10-K
are filed as part of, or hereby incorporated by reference into,
this
Form 10-K.
70
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized on March 11, 2011.
IGO, INC.
Michael D. Heil
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF
ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Michael D. Heil
and Darryl S. Baker, jointly and severally, his
attorney-in-fact, each with the full power of substitution, for
such person, in any and all capacities, to sign any and all
amendments to this Annual Report on
Form 10-K,
and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every
act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might do
or could do in person hereby ratifying and confirming all that
each of said attorneys-in-fact and agents, or his substitute,
may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant in the capacities indicated on
March 11, 2011.
|
|
|
|
|
Signatures
|
|
Title
|
|
|
|
|
/s/ Michael
D. Heil
Michael
D. Heil
|
|
President, Chief Executive Officer and Member of the Board
(Principal Executive Officer)
|
|
|
|
/s/ Darryl
S. Baker
Darryl
S. Baker
|
|
Vice President and Chief Financial Officer (Principal Financial
and Accounting Officer)
|
|
|
|
/s/ Michael
J. Larson
Michael
J. Larson
|
|
Director and Chairman of the Board
|
|
|
|
/s/ Peter
L. Ax
Peter
L. Ax
|
|
Director
|
|
|
|
/s/ Frederic
Welts
Frederic
Welts
|
|
Director
|
71
EXHIBIT INDEX
|
|
|
|
|
Exhibit Number
|
|
Description of Document
|
|
|
2
|
.1
|
|
Agreement and Plan of Merger dated October 7, 2010 by and
among iGo, Inc., Mobility Assets, Inc., Aerial7 Industries, Inc.
and Seth Egorin, as shareholders Agent(1)
|
|
3
|
.1
|
|
Certificate of Incorporation of the Company(2)
|
|
3
|
.2
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of June 17, 1997(3)
|
|
3
|
.3
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of September 10, 1997(2)
|
|
3
|
.4
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of July 20, 1998(2)
|
|
3
|
.5
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of February 3, 2000(2)
|
|
3
|
.6
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of March 31, 2000(3)
|
|
3
|
.7
|
|
Certificate of Designations, Preferences, Rights and Limitations
of Series G Junior Participating Preferred Stock of
Mobility Electronics, Inc.(4)
|
|
3
|
.8
|
|
Certificate of Ownership and Merger Merging iGo Merger Sub Inc.
with and into Mobility Electronics, Inc.(5)
|
|
3
|
.9
|
|
Certificate of Elimination of Series C, Series D,
Series E, and Series F Preferred Stock of Mobility
Electronics, Inc.(5)
|
|
3
|
.10
|
|
Fourth Amended and Restated Bylaws of the Company(6)
|
|
4
|
.1
|
|
Specimen of Common Stock Certificate(7)
|
|
4
|
.2
|
|
Rights Agreement between the Company and Computershare
Trust Company, dated June 11, 2003(4)
|
|
4
|
.3
|
|
Amendment No. 1 to Rights Agreement dated as of
August 4, 2006, by and between the Company and
Computershare Trust Company(8)
|
|
4
|
.4
|
|
Amendment No. 2 to Rights Agreement dated as of
October 11, 2006, by and between the Company and
Computershare Trust Company(9)
|
|
4
|
.5
|
|
Form of Warrant to Purchase Common Stock of the Company issued
to Silicon Valley Bank on September 3, 2003(10)
|
|
10
|
.1
|
|
Amended and Restated 1996 Long Term Incentive Plan, as amended
on January 13, 2000(2)+
|
|
10
|
.2
|
|
Employee Stock Purchase Plan (11)+
|
|
10
|
.3
|
|
2004 Omnibus Plan (12)+
|
|
10
|
.4
|
|
Form of Indemnity Agreement executed between the Company and
certain officers and directors(13)
|
|
10
|
.5
|
|
Standard Multi-Tenant Office Lease by and between the Company
and I.S. Capital, LLC, dated July 17, 2002(14)
|
|
10
|
.6
|
|
Amendment to Lease Agreement by and between the Company and I.S.
Capital, LLC, dated February 1, 2003(14)
|
|
10
|
.7
|
|
Second Amendment to Lease Agreement by and between the Company
and I.S. Capital, LLC, dated January 15, 2004(14)
|
|
10
|
.8
|
|
Third Amendment to Lease Agreement by and between the Company
and Mountain Valley Community Church, effective as of
October 6, 2004(15)
|
|
10
|
.9
|
|
Fifth Amendment to Lease Agreement between the Company and
Mountain Valley Church, effective August 25, 2008(16)
|
|
10
|
.10
|
|
Form of Amended and Restated 2005 Omnibus Long-Term Incentive
Plan Restricted Stock Unit Award Agreement (17)+
|
|
10
|
.11
|
|
Amended and Restated Form of Non-Employee Director Long-Term
Incentive Plan Restricted Stock Unit Award Agreement (Annual
Committee Grants) (17)+
|
|
|
|
|
|
Exhibit Number
|
|
Description of Document
|
|
|
10
|
.12
|
|
Amended and Restated Form of Non-Employee Director Long-Term
Incentive Plan Restricted Stock Unit Award Agreement (Election /
Re-Election Committee Grants) (17)+
|
|
10
|
.13
|
|
Form of 2007 Omnibus Long-Term Incentive Plan Restricted Stock
Unit Award Agreement (18)+
|
|
10
|
.14
|
|
Form Change In Control Agreement executed between the
Company and certain officers (19)+
|
|
10
|
.15
|
|
Amendment No. 1 to $2.5 Million Secured Promissory Note(20)
|
|
10
|
.16
|
|
Employment Agreement, dated May 1, 2007, by and between the
Company and Michael D. Heil (21)+
|
|
10
|
.17
|
|
Omnibus Long-Term Incentive Plan Restricted Stock Unit Award
Agreement, dated June 11, 2007 (22)+
|
|
10
|
.18
|
|
Omnibus Long-Term Incentive Plan Restricted Stock Unit Award
Agreement, dated June 11, 2007 (22)+
|
|
10
|
.19
|
|
Non-Employee Director Compensation Program (22)+
|
|
10
|
.20
|
|
2008 Executive Bonus Plan (23)+
|
|
10
|
.21
|
|
Amendment No. 1 to Omnibus Long-Term Incentive Plan
Restricted Stock Unit Award Agreement, dated March 19, 2008
(23)+
|
|
10
|
.22
|
|
Form of Omnibus Long-Term Incentive Plan Restricted Stock Unit
Award Agreement (23)+
|
|
10
|
.23
|
|
2009 Executive Bonus Plan(24)
|
|
10
|
.24
|
|
2010 Executive Bonus Plan(25)
|
|
10
|
.24
|
|
Note Repayment and Stock Repurchase Agreement dated
April 19, 2010(26)
|
|
10
|
.25
|
|
First Amendment to the iGo, Inc. Omnibus Long Term Incentive
Plan(27)
|
|
21
|
.1
|
|
Subsidiaries.
|
|
|
|
|
iGo Direct Corporation (Delaware)
|
|
|
|
|
iGo EMEA Limited (United Kingdom)
|
|
|
|
|
Mobility California, Inc. (Delaware)
|
|
|
|
|
Mobility Idaho, Inc. (Delaware)
|
|
|
|
|
Mobility Texas, Inc. (Texas)
|
|
|
|
|
Aerial7 Industries, Inc. (Delaware)
|
|
|
|
|
Adapt Mobile Limited (United Kingdom)
|
|
23
|
.1
|
|
Consent of KPMG LLP.*
|
|
24
|
.1
|
|
Power of Attorney (included on the signature page of this Annual
Report on
Form 10-K)
|
|
31
|
.1
|
|
Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
31
|
.2
|
|
Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
32
|
.1
|
|
Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002*
|
|
|
|
* |
|
Filed / Furnished herewith |
|
+ |
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Management or compensatory plan or agreement. |
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(1) |
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Previously filed as an exhibit to Current Report on
Form 8-K
filed on October 8, 2010. |
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(2) |
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Previously filed as an exhibit to Registration Statement
No. 333-30264
dated February 11, 2000. |
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(3) |
|
Previously filed as an exhibit to Amendment No. 2 to
Registration Statement
No. 333-30264
on
Form S-1
dated May 4, 2000. |
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(4) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on June 19, 2003. |
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(5) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on May 21, 2008. |
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(6) |
|
Previously filed as an exhibit to Annual Report on
Form 10-K
for the year end December 31, 2008. |
|
(7) |
|
Previously filed as an exhibit to Amendment No. 3 to
Registration Statement
No. 333-30264
on
Form S-1
dated May 18, 2000. |
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|
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(8) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on August 4, 2006. |
|
(9) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on October 12, 2006. |
|
(10) |
|
Previously filed as an exhibit to
Form 10-Q
for the quarter ended September 30, 2003. |
|
(11) |
|
Previously filed as an exhibit to Registration Statement
No. 333-69336
on
Form S-8
filed on September 13, 2001. |
|
(12) |
|
Previously filed in definitive proxy statement on
Schedule 14A filed on April 15, 2004. |
|
(13) |
|
Previously filed as an exhibit to
Form 10-Q
for the quarter ended September 30, 2001. |
|
(14) |
|
Previously filed as an exhibit to
Form 10-K
for the period ended December 31, 2003. |
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(15) |
|
Previously filed as an exhibit to
Form 10-Q
for the quarter ended September 30, 2004. |
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(16) |
|
Previously filed as an exhibit to
Form 10-Q
for the quarter ended September 30, 2008. |
|
(17) |
|
Previously filed as an exhibit to
Form 10-K
for the period ended December 31, 2005. |
|
(18) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on January 5, 2007. |
|
(19) |
|
Previously filed as an exhibit to
Form 10-K
for the period ended December 31, 2006. |
|
(20) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on April 16, 2008. |
|
(21) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on May 3, 2007. |
|
(22) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on June 13, 2007. |
|
(23) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on March 21, 2008. |
|
(24) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed April 2, 2009. |
|
(25) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on April 6, 2010. |
|
(26) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on April 21, 2010. |
|
(27) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on May 20, 2010. |
All other schedules and exhibits are omitted because they are
not applicable or because the required information is contained
in the Financial Statements or Notes thereto.