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, 2009
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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
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86-0843914
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(State or Other Jurisdiction
of
Incorporation or
Organization)
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(IRS Employer
Identification No.)
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17800 N. Perimeter Dr., Suite 200,
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85255
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Scottsdale, Arizona
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(Zip Code)
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(Address of Principal Executive
Offices)
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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. o
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, 2009) was approximately
$23 million.
There were 32,544,025 shares of the registrants
common stock issued and outstanding as of March 9, 2010.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the registrants definitive Proxy Statement
relating to its 2010 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
2
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, gross profit, gross margin,
and related expenses for 2010 as well as our anticipated cash
flows in 2010; 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 we will not receive any significant orders from
Targus after December 31, 2009 and that sales to RadioShack
will continue to decline in 2010; that we will deconsolidate
Mission Technology Group from our consolidated financial
statements effective January 1, 2010; our intention to
retain cash balances in foreign countries; our anticipated
penetration of the wireless carrier, dealer/agent, and
distributor markets; the expected growth in sales of power
products for high-power mobile electronic devices; expectations
regarding future customer product orders; our reliance on
distributors and resellers for the distribution and sale of our
products; 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
intentions to recruit a broad base of retailers and distributors
for our tip technology; our expectations that existing and new
distributor, reseller and retailer distribution networks will
help us diversify and stabilize our customer base; our intention
to continue to make capital expenditures and pursue
opportunities to acquire businesses, products and technologies;
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; expectations about
inventory levels we will be required to maintain and future
sales returns; our expectations about competition; our long term
goals to establish an inventory standard for all mobile
electronic power products based on our tip technology; the
impact of the current economic rescission on our industry in
general, and specifically on the Company; 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 are
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®
and iGo
Green®
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.
3
PART I
Our
Company
We are a leading provider of innovative products and power
management solutions for the electronics industry. We use our
proprietary technology to design and develop products that make
electronic devices more efficient and cost effective, thus
enabling users higher utilization of their electronic devices.
We also 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. We believe our competitive advantages include our
innovative designs and multi-function capabilities of our
products, and our distribution, wireless carrier, and retail
relationships.
We primarily sell our products through retailers, such as
RadioShack Corporation; resellers, such as Superior
Communications and Ingram Micro, Inc.; wireless carriers, such
as AT&T; and directly to end users through our iGo brand
website, www.igo.com. In the past, we sold power
accessories primarily to private label resellers and original
equipment manufacturers, or OEMs.
Our power products, marketed under our iGo and iGo Green brands,
include our range of green AC, DC, combination AC/DC, and
battery-powered universal power adapters, as well as our newly
developed line of green surge protectors. Our combination AC/DC
power adapters allow users to charge a variety of their mobile
electronic devices from AC power sources located in a home,
office or hotel room, as well as DC power sources located in
automobiles, planes and trains. Our battery-powered universal
power adapters allow users to charge a variety of their mobile
electronic devices when they do not have access to an AC or DC
power source. Each of these adapters utilizes our
interchangeable tip technology, which allows the use of a single
power adapter with interchangeable tips to charge a variety of
mobile electronic devices, including portable computers, mobile
phones, MP3 players, smartphones, PDAs, portable gaming consoles
and other handheld devices. When our power adapters are combined
with a multiple output connector accessory, such as the iGo USB
connector or iGo power splitter, the user can also
simultaneously charge multiple mobile electronic devices. The
use of one charging solution increases end-user convenience and
minimizes electronic waste as interchangeable tip solutions
require fewer resources to build, ship, inventory and dispose of.
In addition to our traditional power products, we recently
launched an energy-efficient environmentally-friendly product
line. Various 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 patent-pending 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 the market
opportunity for green products is vast and that our technology
has the versatility to play an important role in future green
power solutions.
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.
We have three operating business segments, consisting of the
High-Power Group, Low-Power Group and Connectivity Group. For
additional information regarding revenue, operating results and
assets by business segment, product type and geographic region,
see Note 16 to the Consolidated Financial Statements
contained in Part II, Item 8 of this Annual Report on
Form 10-K.
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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, smartphones, portable digital
assistants (PDAs), handheld devices, digital cameras, portable
DVD players, MP3 players, and portable game consoles. 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
connectivity technologies, such as
Bluetooth®
wireless technology and Wi-Fi, 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 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 is
expected to grow at a compounded annual growth rate, or CAGR, of
about 15.4% from approximately 175 million units in 2010 to
about 291 million units in 2013. The U.S. market is
expected to grow at a CAGR of about 11.0% from approximately
40 million units in 2010 to about 58 million units in
2013.
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Low Power Mobile Electronic Devices. According
to IDC, the worldwide market for low power mobile electronic
devices, which includes mobile phones, converged mobile devices,
PDAs, portable media players, and portable game consoles is
expected to grow at a CAGR of about 3.7% from approximately
1.4 billion units in 2010 to about 1.7 billion units
in 2013. The U.S. market is expected to remain flat at
approximately 235 million units in 2010 compared to about
242 million units in 2013.
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Handheld and Converged Mobile Device
Market. According to IDC, the worldwide market
for converged mobile devices, which includes smartphones and
other handheld devices with telephony and data capabilities, is
expected to grow at a CAGR of about 13.7% from approximately
190 million units in 2010 to about 288 million units
in 2013. The U.S. market for converged mobile devices is
expected to grow at a CAGR of about 15.7% from approximately
51 million units in 2010 to about 70 million units in
2013.
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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, 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 mobile
electronic devices offer designs and form factors that support
portability and travel comfort; however, 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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Most power adapters are compatible with either AC-only power
sources located in places such as a home, office or hotel room,
or DC-only power sources such as those located in automobiles,
planes, and trains;
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The majority of power adapters are model-specific requiring a
mobile user to carry a dedicated power adapter for each device;
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Mobile electronic devices are generally packaged with only one
power adapter, forcing many users to purchase additional power
adapters 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, such as an
automobiles cigarette lighter, limiting a users
ability to recharge multiple devices.
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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 power adapters 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.
Our
Solutions
Our innovative power solutions eliminate the need for mobile
electronic device users to carry multiple power adapters to
operate and charge their devices. Our AC/DC combination power
adapters 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 power adapters 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 adapter to charge a variety of
devices, including a substantial portion of the portable
computers, mobile phones, smartphones, PDAs, and other mobile
electronic devices currently in the market. Further, device
users can simultaneously charge multiple devices by using a
single adapter and the appropriate interchangeable tips with our
optional iGo USB connector or iGo power splitter accessories.
Our new patent-pending 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 are inherently
green as they eliminate the need for consumers to
dispose of old adapters with the purchase of each new electronic
device. Instead, our products enable the consumer to simply
purchase a small, inexpensive tip capable of working with
existing adapters, thus substantially reducing electronic waste.
Our
Strategy
We intend to capitalize on our current strategic position in the
mobile electronic device market by continuing to introduce
innovative power solution products that suit the needs of a
broad range of users of these devices, including power solutions
that are green in nature. It is our goal to be a market leader
in providing unique, innovative and green power solutions to
mobile users. Elements of our strategy include:
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.
Integration of Green Technology in New Power
Solutions. The integration of our green
technology in 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 green
technology directly into the AC outlets found in the home and
office.
Market Complementary Non-Power Accessories. We
intend to market a variety of non-power accessories, some of
which may be manufactured by other companies, that are
complementary to our power products. Our strategy is to market a
broad assortment of products that accessorize mobile electronic
devices under the brand name iGo.
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Broaden Distribution of iGo Branded
Product. To expand the market availability of our
iGo and iGo Green 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
We provide a range of power products designed to satisfy the
needs of the electronic device user while traveling, at home or
in the office. The following is a description of our primary
products by category, which are sold under our iGo and iGo Green
brands.
Power Products. We offer a range of universal
AC, DC, combination AC/DC and battery-powered adapters that are
designed for use with portable computers, as well as a variety
of other low power mobile electronic devices, including mobile
phones, smartphones, PDAs, digital cameras, MP3 players, and
portable game consoles.
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Power Products for High-Power Mobile Electronic
Devices. Since inception, we have sold a variety
of power products designed for use with portable computers. In
early 2003, we introduced our first combination AC/DC universal
power adapter, which is designed to power portable computers and
works with any commonly 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. In addition,
we offer a range of DC-only power adapters, more commonly known
as auto/air adapters, and a range of AC-only power adapters. In
2009, we introduced our first lineup of universal power adapters
and surge protectors that incorporate our new green technology,
which is designed to virtually eliminate vampire power. Our
entire family of portable computer power adapters utilizes our
interchangeable tip technology which allows a single power
adapter to plug into a substantial portion of the portable
computers in the market. When our portable computer power
adapters are combined with our optional iGo USB connector or iGo
power splitter accessories, the user can simultaneously charge
multiple mobile electronic devices, including mobile phones,
smartphones, PDAs, digital cameras, MP3 players, and portable
game consoles, eliminating the need to carry multiple charging
adapters. Sales of our portable computer power products
represented approximately 51%, 59% and 62% of our total revenue
for the years ended December 31, 2009, 2008 and 2007,
respectively.
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Power Products for Low-Power Mobile Electronic
Devices. In 2004, we introduced our first power
adapters designed for use with mobile electronic products with
power requirements lower than those of portable computers, such
as mobile phones, smartphones, PDAs, digital cameras, MP3
players, and portable game consoles. These products include a
range of DC cigarette lighter adapters, mobile AC adapters,
combination AC/DC adapters, and battery-powered adapters. This
family of power adapters also utilizes our interchangeable tip
technology which allows a single power adapter to plug into a
substantial number of mobile electronic devices other than
portable computers. When combined with our optional iGo USB
connector or iGo power splitter accessories, the user of these
power adapters can simultaneously charge multiple mobile
electronic devices. Sales of these power adapters represented
approximately 36%, 30%, and 25% of our total revenue for the
years ended December 31, 2009, 2008 and 2007, respectively.
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Accessories. In the past we have also marketed
a number of mobile device accessories such as monitor stands,
portable computer stands and foldable keyboards. Sales of these
products represented approximately 1%, 1%, and 4% of our total
revenue for the years ended December 31, 2009, 2008, and
2007, respectively.
Expansion and Docking Products. In April 2007,
we sold the expansion and docking business to Mission Technology
Group (Mission). Missions results of
operations are consolidated with ours because Mission is
obligated to repay the promissory notes it issued to us in
connection with this sale, and we have determined that we are
the primary beneficiary of this variable interest entity.
Effective January 1, 2010, we have determined we will no
longer consolidate the results of Mission. Mission offers a
variety of PCI slot expansion products for portable computers,
desktop computers and servers. For more information, see
Item 7 Managements Discussion and Analysis of
Financial Condition and Results of Operations Recent
Developments, and Critical Accounting
7
Policies and Estimates, Variable Interest Entities. Sales
of expansion and docking products represented approximately 12%,
9%, and 9% of our total revenue for the years ended
December 31, 2009, 2008 and 2007, 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 website. Our sales
organization is primarily aligned with our core retail and
distribution channels and geographies throughout North America
and Europe. During 2009, approximately 59% of our sales were
through retailers and distributors and approximately 27% of our
sales were through private label resellers and OEMs.
Our total global revenue consisted of the following regional
results: North American sales of $49.8 million, or 90% of
our consolidated revenue; European sales of $4.6 million,
or 8% of our consolidated revenue; and Asia Pacific sales of
$1.1 million, or 2% 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
In March 2009, Targus notified us of its intent not to renew our
distribution agreement, which expired in May 2009. Accordingly,
in the future, we expect that we will be even more dependent
upon a relatively small number of customers for a significant
portion of our revenue, including most notably RadioShack. We
intend to develop relationships with a broader set of retailers
and wireless carriers to expand the market availability of our
iGo and iGo Green 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 private label 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 substantially replace the lost Targus revenue.
We sell to distributors, such as Superior Communications,
resellers, such as Microcel, retailers, such as RadioShack,
private label resellers, such as Targus through the first half
of 2009 and Belkin currently, and directly to end users through
our iGo.com website. Sales to Superior Communications, Microcel,
RadioShack, Targus and Belkin together accounted for 74% of
revenue for the year ended December 31, 2009, compared to
81% for the year ended December 31, 2008 and 66% for the
year ended December 31, 2007. Our distributors sell a wide
range of our products to value-added resellers, system
integrators, cataloguers, major retail outlets and certain OEM
fulfillment outlets worldwide. RadioShack, in particular,
accounted for 38% of our revenue for the year ended
December 31, 2009. In addition, in spite of the loss of
Targus as a customer during the middle of 2009, Targus accounted
for 21% of our revenue for the year ended December 31,
2009. The loss of RadioShack or any of our remaining other major
customers, would likely have a material adverse effect on our
business. No customer other than Targus or RadioShack accounted
for greater than 10% of sales for the year ended
December 31, 2009.
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 wireless carriers, 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 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
8
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, 2009
and 2008, respectively.
Backlog
Our backlog at February 16, 2010 was approximately
$6.0 million, compared with backlog of approximately
$9.7 million at February 24, 2009. 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, 2009, our research and development group
consisted of 15 people who are responsible for hardware and
software design and product testing, which included six research
and development personnel employed at Mission as of
December 31, 2009. 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,
2009, 2008, and 2007 were $3.0 million, $3.5 million,
and $5.2 million, 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.
Our family of universal power products and surge protector
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 commitments and
contingencies relating to letters of authorization is contained
in Note 18 to the Consolidated Financial Statements
contained in this Annual Report on
Form 10-K.
We employ the services of an outsource logistics company to
efficiently manage the packaging and shipment of our iGo and iGo
Green 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
9
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.
Our power products primarily compete with products offered by
low-cost manufacturers of model-specific adapters and
specialized third-party mobile computing accessory companies,
including American Power Conversion, Belkin, Comarco, Lind, and
RRC Power Solutions. In addition, we compete with the internal
design efforts of some of our customers.
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 February 23, 2010, we
held approximately 244 patents and patents pending worldwide
relating to our power technology, including our new 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.
Employees
As of December 31, 2009 we had 52 full-time employees,
44 located in the United States, 4 located in Asia and 4 located
in Europe, including 10 employed in operations, 9 in
engineering, 22 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. Mission
had 29 full-time employees at December 31, 2009.
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.
10
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.
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 a significant customer,
RadioShack, and any loss, cancellation or delay in purchases by
this customer 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, Targus and RadioShack together comprised 59% of our
revenue for the year ended December 31, 2009. More
recently, as a result of the discontinuance of our relationship
with Targus, we are deriving an even larger portion of our
revenue from RadioShack. For the year ended December 31,
2009, RadioShack alone represented 38% of our revenue.
RadioShack does not have minimum purchase requirements and can
stop purchasing our products at any time and with very short
notice. In addition, including RadioShack, most of our customer
agreements are short term and non-exclusive and provide for
purchases on a purchase order basis. We expect that RadioShack
will continue to represent a substantial percentage of our
sales. If RadioShack 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 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 relationship with RadioShack.
We derive a substantial portion of our revenue from RadioShack
and any adverse change in our relationship with RadioShack would
have a material adverse effect on our business. If RadioShack
discontinued purchasing our products, our revenues and net
income would decline significantly. For example, sales to
RadioShack for the year ended December 31, 2009 declined
17% as compared to the year ended December 31, 2008 and we
expect that sales to RadioShack will continue to decline in 2010
relative to sales generated from RadioShack in previous years.
Our success will depend upon our continued ability to retain and
build upon our relationship with RadioShack, 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
customer, RadioShack, 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, any reduction or interruption in sales to
RadioShack, our inability to successfully develop relationships
with additional customers or future price concessions that we
may have to make, could significantly harm our business.
11
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, 2009, have an accumulated deficit
of $131 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
branded power products, particularly in light of the loss of the
Targus relationship. If acceptance of our iGo branded power
products does not continue to 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 green technology, we may not 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 green power products, represent a
relatively new product category in the mobile electronics
industry. We anticipate that a material portion of our revenue
in the foreseeable future will be derived from our family of iGo
branded power products and similar power products in this
relatively new market category that we are currently developing
or plan to develop. We can give no assurance that this market
category will develop sufficiently to cover our expenses and
costs or that we will be able to develop similar power products.
Moreover, our power 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, the retail version of our universal power adapter
products includes 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 power adapter product and limit
market acceptance of our power products at the retail level.
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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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
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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our suppliers ability to perform under their contracts
with us;
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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.
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 and adversely affect our financial
performance.
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 may 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. 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. In order to do so, we must carefully manage
the price paid for components used in our products as well as
manage our freight and inventory costs to reduce overall product
costs. If we are unable to reduce the cost of older products as
newer products are introduced, our average gross margins may
decline.
Increased
reliance upon RadioShack, 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, 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 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
13
time are often concentrated among a limited number of customers.
In addition, many of these customers also have or distribute
competing products. If RadioShack, 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 impair our revenue.
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 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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meet potentially new manufacturing requirements and cover
potentially higher manufacturing costs of new products;
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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
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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14
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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 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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assumption of 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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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.
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
15
agreements and technical 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 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. For example, at the beginning of 2008 we
settled a patent infringement lawsuit with American Power
Conversion Corporation. We incurred significant costs in this
lawsuit and many of our executive officers and employees devoted
substantial time and effort to this lawsuit.
We
outsource the manufacturing and fulfillment of our products,
which limits our control of the manufacturing process and may
cause a delay in our ability to fill orders.
Most of our products are produced under contract manufacturing
arrangements with several manufacturers in China, Taiwan and the
United States. Our reliance on third-party manufacturers exposes
us to risks that are not in our control, 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
16
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 product quality and
manufacturing yields and costs. We depend upon our contract
manufacturers to deliver products that are free from defects,
competitive in cost 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 any of 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 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 high-power adapter products
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 iGo
branded finished goods inventory and to ship our iGo branded
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, 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
17
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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increase the managerial skills of our supervisors;
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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 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 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
18
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
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.
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
19
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.
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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 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, 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.
20
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,
which have recently deteriorated significantly in many countries
and regions, including the United States, and may remain
depressed for the foreseeable future. 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
common stock could be delisted from The NASDAQ Global Market if
we fail to maintain compliance with its listing
standards.
NASDAQ imposes certain standards that a company must satisfy in
order to maintain the listing of its securities on The NASDAQ
Global Market. Among other things, these standards require that
we maintain an audit committee comprised of at least three
members, all of whom must be independent. On October 20,
2009, Larry M. Carr resigned from our board immediately due to
health reasons. Due to Mr. Carrs resignation, we
received written notification from The NASDAQ Stock Market that
we were not in compliance with NASDAQ Listing
Rule 5605(c)(4)(B). In the event that we are not able to
identify, recruit and successfully appoint a new independent
board member to replace Mr. Carr by the time of our 2010
annual meeting of stockholders, our stock could be subject to
delisting from The NASDAQ Global Market. Any such delisting
could adversely affect the market liquidity of our common stock,
and the market price of our common stock could decrease and
could also adversely
21
affect our ability to obtain financing for the continuation of
our operations
and/or
result in the loss of confidence by investors, customers,
suppliers and employees.
Our
executive officers, directors and principal stockholders have
substantial influence over us.
As of January 1, 2010, our executive officers, directors
and principal stockholders owning greater than 5% of our
outstanding common stock together beneficially owned
approximately 31% 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 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 1, 2010, we had 32,544,025 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 1, 2010, we had (i) 35,000 shares of
common stock issuable upon exercise of stock options under our
long-term incentive plans, of which 35,000 options were
exercisable; (ii) 1,312,535 shares of common stock
issuable upon the vesting of restricted stock units under our
long term incentive plan and other outstanding awards;
22
and (iii) 872,008 shares were available for future
issuance under our existing plans. We also had warrants
outstanding to purchase 5,000 shares of common stock.
Increased sales of our common stock in the market after exercise
of currently outstanding options 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
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None.
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 the
United Kingdom, and Dong Guan, China. Each of these offices
supports our selling, research and development, and general
administrative activities. 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. Mission Technology Group leases a facility
in San Diego, California.
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Item 3.
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Legal
Proceedings
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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
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Our common stock has been traded on The NASDAQ Global Market
under the symbol IGOI since May 22, 2008. 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, 2008
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Quarter Ended March 31, 2008
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$
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1.67
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$
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0.97
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Quarter Ended June 30, 2008
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$
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1.68
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$
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1.16
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Quarter Ended September 30, 2008
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$
|
1.30
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$
|
1.01
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Quarter Ended December 31, 2008
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$
|
1.10
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$
|
0.63
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Year Ended December 31, 2009
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Quarter Ended March 31, 2009
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|
$
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0.98
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|
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$
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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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$
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1.35
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$
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0.67
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Quarter Ended December 31, 2009
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$
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1.49
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$
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1.03
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As of March 1, 2010, there were 32,544,025 shares of
our common stock outstanding held by approximately 250 holders
of record and the last reported sale price of our common stock
on The NASDAQ Global Market on March 1, 2010 was $1.17 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 2009, 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.
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Selected
Financial Data
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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,
2009 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, 2009 and
2008 and consolidated statement of operations data for each of
the years in the three-year period ended December 31, 2009,
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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2009
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2008
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2007
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2006
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2005
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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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$
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55,420
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$
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77,146
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$
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77,719
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$
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92,464
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$
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85,501
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Cost of revenue
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37,061
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|
|
|
54,554
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|
|
|
58,473
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|
|
|
69,349
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|
|
|
59,653
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|
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Gross profit
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18,359
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|
|
|
22,592
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|
|
19,246
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|
23,115
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|
|
|
25,848
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Total operating expenses
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19,652
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|
24,509
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|
|
34,866
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|
|
41,039
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|
|
|
28,712
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Loss from operations
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(1,293
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)
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|
(1,917
|
)
|
|
|
(15,620
|
)
|
|
|
(17,924
|
)
|
|
|
(2,864
|
)
|
Interest income, net
|
|
|
127
|
|
|
|
773
|
|
|
|
1,156
|
|
|
|
1,203
|
|
|
|
813
|
|
Gain on disposal of assets and other income, net
|
|
|
667
|
|
|
|
1,179
|
|
|
|
2,284
|
|
|
|
129
|
|
|
|
11,627
|
|
Litigation settlement income (expense)
|
|
|
|
|
|
|
672
|
|
|
|
|
|
|
|
(250
|
)
|
|
|
(4,284
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before income taxes
|
|
|
(499
|
)
|
|
|
707
|
|
|
|
(12,180
|
)
|
|
|
(16,842
|
)
|
|
|
5,292
|
|
Provision (benefit) for income tax
|
|
|
(234
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
|
|
|
(265
|
)
|
|
|
707
|
|
|
|
(12,180
|
)
|
|
|
(16,842
|
)
|
|
|
5,007
|
|
Less: Net income attributable to non-controlling interest
|
|
|
(284
|
)
|
|
|
(256
|
)
|
|
|
(384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to iGo, Inc.
|
|
$
|
(549
|
)
|
|
$
|
451
|
|
|
$
|
(12,564
|
)
|
|
$
|
(16,842
|
)
|
|
$
|
5,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share basic and diluted
attributable to iGo, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.40
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
0.16
|
|
Diluted income (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.40
|
)
|
|
$
|
(0.54
|
)
|
|
$
|
0.16
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
32,310
|
|
|
|
31,786
|
|
|
|
31,534
|
|
|
|
31,392
|
|
|
|
30,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
32,310
|
|
|
|
34,394
|
|
|
|
31,534
|
|
|
|
31,392
|
|
|
|
32,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
32,868
|
|
|
$
|
31,104
|
|
|
$
|
24,934
|
|
|
$
|
17,343
|
|
|
$
|
33,923
|
|
Working capital
|
|
|
39,803
|
|
|
|
37,639
|
|
|
|
33,400
|
|
|
|
34,495
|
|
|
|
42,902
|
|
Total assets
|
|
|
47,734
|
|
|
|
51,235
|
|
|
|
54,150
|
|
|
|
65,864
|
|
|
|
83,910
|
|
Long-term debt and other non-current liabilities, less current
portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
824
|
|
Total stockholders equity
|
|
|
41,234
|
|
|
|
40,337
|
|
|
|
37,840
|
|
|
|
49,405
|
|
|
|
59,349
|
|
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
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 because of reductions in size, weight, and
cost and improvements in functionality, storage capacity and
reliability. Each of these devices needs to be powered and
because of connected when in the home, the office, or on the
road, and can be accessorized, representing opportunities for
one or more of our products.
Our focus is on becoming a comprehensive provider of power
management solutions. The centerpiece of our new power
management solutions is the launch of our new iGo
Greentm
products. The first iGo Green products are notebook chargers and
surge protectors that incorporate our new patent-pending
technology, which has been designed to reduce energy consumption
and almost completely eliminate standby power, or vampire power,
that results from devices that continue to consume power even
when they are idle or shut-off, such as computers and mobile
phones.
We believe that this power-saving technology, when combined with
our existing power products that incorporate our interchangeable
tip technology for both high-power and low-power mobile
electronic devices, will help us achieve our long-term goal of
establishing an industry standard for reduced power consumption
in the charging of mobile electronic devices.
We use our proprietary technology to design and develop products
that make computers and other electronic devices more efficient
and cost effective, thus enabling higher utilization by
professionals and consumers. Our products include power products
for high-power mobile electronic devices, such as portable
computers; power-saving surge protectors; power products for
low-power mobile electronic devices, such as mobile phones,
PDAs, and MP3 players; and accessory products. We are organized
in three business segments, which consist of the High-Power
Group, the Low-Power Group and the Connectivity Group. In
February 2007, we sold substantially all of the assets, which
consisted primarily of inventory, of our handheld hardware
product line. The operating results of the handheld hardware
product line were historically included in the results of the
Connectivity Group. In April 2007, we sold substantially all of
the remaining assets of our Connectivity Group. In addition, the
operating results of Mission, which purchased substantially all
of the assets of our expansion and docking product line, are
consolidated with our operating results and are included in the
Connectivity Group.
Sales through retailers and distributors accounted for
approximately 59% of revenue for the year ended
December 31, 2009 and approximately 45% of revenue for the
year ended December 31, 2008. Sales to private-label
resellers and OEMs accounted for approximately 27% of revenue
for the year ended December 31, 2009 and approximately 45%
of revenue for the year ended December 31, 2008. The
balance of our revenue during these periods was derived from
direct sales to end-users.
In March 2009, Targus notified us of its intent not to renew our
distribution agreement, which expired in May 2009. At that time,
Targus was one of our two largest customers and accounted for
21% of our sales for the year ended December 31, 2009 and
42% for the year ended December 31, 2008. Accordingly, in
the future, we expect that we will be even more dependent upon a
relatively small number of customers for a significant portion
of our revenue, including most notably RadioShack. Further, we
expect to experience a reduction in our revenue in the first
half of 2010 as a result of the discontinuance of our
relationship with Targus and a return to a traditional level of
orders from RadioShack compared to the seasonal increase in
orders that we received from RadioShack in the third quarter of
2009. We intend to develop relationships with a broader set of
retailers and wireless carriers to expand the market
availability of our iGo branded products. Our goal is that these
relationships will allow us to diversify our
26
customer base, add stability and decrease our historical
reliance upon a limited number of private label 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 can
provide no assurance that we will be able to replace the lost
revenue from Targus.
Our ability to execute successfully on our near and long-term
objectives depends largely upon the general market acceptance of
our green technology which allows users to significantly reduce
vampire power, our ability to acquire and protect our
proprietary rights to this technology, and on 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 in general.
High-Power Group. Our High-Power Group is
focused on the development, marketing and sale of power products
and accessories for mobile electronic devices with high power
requirements, which consist primarily of portable computers and
our recently introduced line of power-saving surge protectors.
These devices also allow users to simultaneously charge one or
more low-power mobile electronic devices with our optional iGo
dualpower and power splitter accessories. We sell our iGo
branded products directly to retailers such as RadioShack,
hhgregg, Frys Electronics and Office Max. Historically, we
sold these products to private-label resellers and OEMs.
We supplied OEM specific, high-power adapter
products to Dell through the first quarter of 2007 and we
supplied Lenovo through the first quarter of 2008. Until May
2009, we also marketed and distributed high-power adapter
products on a private-label basis through Targus. Targus
accounted for approximately 40% of High-Power Group revenue for
the year ended December 31, 2009 and approximately 70% of
High-Power Group revenue for the year ended December 31,
2008. High-Power Group revenue accounted for approximately 52%
of revenue for the year ended December 31, 2009 and
approximately 60% of revenue for the year ended
December 31, 2008.
Low-Power Group. Our Low-Power Group is
focused on the development, marketing and sale of power products
for low-power mobile electronic devices, such as mobile phones,
smartphones, PDAs, MP3 players and portable gaming consoles.
These products include cigarette lighter adapters, mobile AC
adapters, low-power universal AC/DC adapters, and low-power
universal battery products. Each of these power devices is
designed to incorporate our interchangeable tip technology. We
sell these products to distributors, resellers and retailers.
Low-power product revenue accounted for approximately 36% of
revenue for the year ended December 31, 2009 and 31% of
revenue for the year ended December 31, 2008.
During 2007, the market for foldable keyboards decreased
significantly and we made the decision to discontinue the
production and marketing of foldable keyboard products. We sold
the remaining inventory of these products in the ordinary course
of business. Accordingly, revenue from this product line
decreased significantly in 2008. We have historically accounted
for our foldable keyboard business as part of our Low-Power
Group. Sales of these foldable keyboard products represented
less than 1% of our total revenue for the years ended
December 31, 2009 and 2008, respectively.
Connectivity Group. Our Connectivity Group
consists primarily of the operating results of Mission. The
Connectivity Group was historically focused on the development,
marketing and sale of connectivity and expansion and docking
products.
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
27
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 $965,000 and
$412,000 as of December 31, 2009 and 2008, respectively,
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 59% of revenue for the year
ended December 31, 2009 and 45% of revenue for the year
ended December 31, 2008.
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 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. We recorded a downward adjustment of
$4.0 million during the year ended December 31, 2007.
During 2008, we recorded additional profit due to better than
planned sales of excess inventory that had previously been
adjusted to zero value. 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
28
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.
Long-Lived Asset Valuation. 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 long-lived assets are critical
accounting estimates.
Variable Interest Entities. The primary
beneficiary of a variable interest entity (VIE) is
required to include the VIEs assets, liabilities and
operating results in its consolidated financial statements. In
general, a VIE is an entity used to conduct activities or hold
assets that either (i) has an insufficient amount of equity
to carry out its principal activities without additional
subordinated financial support, (ii) has a group of equity
owners that are unable to make significant decisions about its
activities, or (iii) has a group of equity owners that do
not have the obligation to absorb losses or the right to receive
returns generated by its operations.
In April 2007, we completed a sale of the assets of our
expansion and docking business to Mission, an entity that was
formed by a former officer of the Company, in exchange for
$3.9 million of notes receivable and a 15% common equity
interest. We contributed no cash equity to Mission at its
formation and Missions equity consists solely of its
operating profit. Accordingly, we have determined that Mission
does not have sufficient equity to carry out its principal
operating activities without subordinated financial support, and
that Mission qualifies as a VIE. We have also determined that
our 15% equity interest and our $3.9 million notes
receivable qualify as variable interests. Furthermore, as
Mission is obligated to repay the promissory notes it issued to
us, we have determined that we are the primary beneficiary of
the VIE, and accordingly, must include the assets, liabilities
and operating results of Mission in our consolidated financial
statements.
In December 2009, the Financial Accounting Standards Board
(FASB) issued Accounting Standards Update
2009-17
(ASU
2009-17)
2009-17,
Consolidations (Topic 810) Improvements to
Financial Reporting by Enterprises Involved with Variable
Interest Entities. ASU
2009-17
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 VIEs and any significant
changes in risk exposure due to that involvement. ASU
2009-17 is
effective for fiscal years beginning after November 15,
2009 and for interim periods within the first annual reporting
period. As a result of the adoption of ASU
2009-17 on
January 1, 2010, we expect to no longer consolidate the
results of Mission.
29
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,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Revenue
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Cost of revenue
|
|
|
66.9
|
%
|
|
|
70.7
|
%
|
|
|
75.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
33.1
|
%
|
|
|
29.3
|
%
|
|
|
24.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
13.8
|
%
|
|
|
11.8
|
%
|
|
|
12.6
|
%
|
Research and development
|
|
|
5.4
|
%
|
|
|
4.6
|
%
|
|
|
6.7
|
%
|
General and administrative
|
|
|
16.2
|
%
|
|
|
15.4
|
%
|
|
|
19.1
|
%
|
Asset impairment
|
|
|
|
|
|
|
|
|
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
35.4
|
%
|
|
|
31.8
|
%
|
|
|
44.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(2.3
|
)%
|
|
|
(2.5
|
)%
|
|
|
(20.1
|
)%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
0.2
|
%
|
|
|
1.0
|
%
|
|
|
1.5
|
%
|
Litigation settlement expense
|
|
|
|
|
|
|
0.9
|
%
|
|
|
|
|
Gain on disposal of assets and other income (expense), net
|
|
|
1.2
|
%
|
|
|
1.5
|
%
|
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before income tax
|
|
|
(0.9
|
)%
|
|
|
0.9
|
%
|
|
|
(15.7
|
)%
|
Income tax benefit
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(0.5
|
)%
|
|
|
0.9
|
%
|
|
|
(15.7
|
)%
|
Less: Net income attributable to non-controlling interest
|
|
|
(0.5
|
)%
|
|
|
(0.3
|
)%
|
|
|
(0.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to iGo, Inc.
|
|
|
(1.0
|
)%
|
|
|
0.6
|
%
|
|
|
(16.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparison
of Years Ended December 31, 2009, 2008, and
2007
Revenue. Revenue generally consists of sales
of products, net of returns and allowances. To date, our
revenues have come predominantly from power adapters, handheld
products, expansion and docking products, and accessories. The
following table summarizes the
year-over-year
comparison of our consolidated revenue for the periods indicated
($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change from
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
Prior Year
|
|
2009
|
|
$
|
55,420
|
|
|
$
|
(21,726
|
)
|
|
|
(28.2
|
)%
|
2008
|
|
|
77,146
|
|
|
|
(573
|
)
|
|
|
(0.7
|
)%
|
2007
|
|
|
77,719
|
|
|
|
|
|
|
|
|
|
Following is a discussion of revenue by business segment.
High-Power Group. High-Power Group revenue is
derived from sales of power products and accessories for mobile
electronic devices with high power requirements, which consist
primarily of portable computers. The following table summarizes
the
year-over-year
comparison of our High-Power Group revenue for the periods
indicated ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change from
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
Prior Year
|
|
2009
|
|
$
|
28,752
|
|
|
$
|
(17,404
|
)
|
|
|
(37.7
|
)%
|
2008
|
|
|
46,156
|
|
|
|
(1,918
|
)
|
|
|
(4.0
|
)%
|
2007
|
|
|
48,074
|
|
|
|
|
|
|
|
|
|
The 2009 decrease in High-Power Group revenue was primarily due
to the decrease in the sales of high power products to private
label resellers. Overall sales of high-power products to private
label resellers decreased by
30
$17.9 million, or 55.8% to $14.2 million for the year
ended December 31, 2009 as compared to $32.1 million
for the year ended December 31, 2008. In March 2009, Targus
notified us of its intent not to renew our distribution
agreement, which expired by its terms in May 2009. Accordingly,
we do not anticipate any significant additional orders for our
power products from Targus beyond the year ending
December 31, 2009. Sales to Targus decreased by
$20.7 million, or 64.0% to $11.6 million for the year
ended December 31, 2009, compared to $32.3 million for
the year ended December 31, 2008. The decline in sales of
high power products to private label resellers was partially
offset by an increase in sales of high power products to
wireless carriers of $454,000 for the year ended
December 31, 2009 compared to December 31, 2008. We
expect High-Power Group revenue in 2010 to stabilize as we
anticipate growth in sales of high-power products and
power-saving surge protectors to retailers.
The 2008 decrease in High-Power Group revenue was primarily due
to the decrease in the sale of high power products to OEM
accounts. Sales to OEMs decreased by $10.0 million, or
87.9%, to $1.4 million for the year ended December 31,
2008 compared to $11.4 million for the year ended
December 31, 2007 due to the loss of business from Dell and
Lenovo. This decrease was partially offset by an increase in
revenue from sales to Targus in 2008 by $5.1 million, or
18.9%, to $32.3 million for the year ended
December 31, 2008 compared to $27.1 million for the
year ended December 31, 2007. Likewise, revenue from sales
to RadioShack increased by $3.3 million, or 63.1%, to
$8.5 million for the year ended December 31, 2008
compared to $5.2 million for the year ended
December 31, 2007.
Low-Power Group. Low-Power Group revenue is
derived from the sales of low-power adapter products and
foldable keyboard products. The following table summarizes the
year-over-year
comparison of our Low-Power Group revenue for the periods
indicated ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2009
|
|
$
|
20,187
|
|
|
$
|
(3,560
|
)
|
|
|
(15.0
|
)%
|
2008
|
|
|
23,747
|
|
|
|
1,334
|
|
|
|
6.0
|
%
|
2007
|
|
|
22,413
|
|
|
|
|
|
|
|
|
|
The 2009 decrease in Low-Power Group revenue was primarily due
to a decrease in the sale of low-power products to RadioShack.
Overall sales of low-power products to RadioShack decreased by
$4.2 million, or 24.5%, to $12.8 million, or 63.6% of
Low-Power Group revenue, for the year ended December 31,
2009 as compared to $17.0 million, or 71.7% of Low-Power
Group revenue, for the year ended December 31, 2008. This
decrease was partially offset by an increase in sales to
wireless distributors and other retailers of $437,000, or 6.3%
to $7.4 million for the year ended December 31, 2009
compared to $7.0 million for the year ended
December 31, 2008. We expect sales of low power products to
RadioShack to continue to decline in 2010 as a result of the
introduction of its own private label brand of low-power
products during 2009. We anticipate continuing to gain market
penetration into wireless distribution and other retail channels
in 2010, which could partially offset the expected decrease in
revenue from RadioShack.
The 2008 increase in Low-Power Group revenue was primarily due
to revenue from sales of low-power product sales to RadioShack,
which increased by $1.6 million, or 10.4% to
$17.0 million for the year ended December 31, 2008
compared to $15.4 million for the year ended
December 31, 2007. Revenue from sales of low-power products
to wireless carrier distribution increased by $1.5 million,
or 94.4%, to $3.0 million for the year ended
December 31, 2008 as compared to $1.6 million for the
year ended December 31, 2007. Revenue from sales of
low-power products in the airport channel increased by $744,000,
or 107.9% to $1.4 million for the year ended
December 31, 2008 compared to $689,000 for the year ended
December 31, 2007. These increases were offset by a
decrease in revenue from the sales of foldable keyboards of
$2.6 million, or 83.8%, to $504,000 for the year ended
December 31, 2008 as compared to $3.1 million for the
year ended December 31, 2007 due to the company
discontinuing this line of products during 2008.
Connectivity Group. Connectivity Group revenue
was derived from sales of expansion and docking products and
handheld products. In the first quarter of 2007, we divested the
handheld hardware product line. In the second quarter of 2007,
we sold the assets of the expansion and docking product line to
Mission. We consolidate the operating results of Mission
Technology and those results are included in the Connectivity
Group. See
31
Acquisitions and Dispositions for more
information. The following table summarizes the
year-over-year
comparison of our Connectivity Group revenue for the periods
indicated ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|
Percentage Change
|
|
Year
|
|
Annual Amount
|
|
|
from Prior Year
|
|
|
from Prior Year
|
|
|
2009
|
|
$
|
6,481
|
|
|
$
|
(762
|
)
|
|
|
(10.5
|
)%
|
2008
|
|
|
7,243
|
|
|
|
11
|
|
|
|
0.2
|
%
|
2007
|
|
|
7,232
|
|
|
|
|
|
|
|
|
|
Connectivity revenue decreased for the year ended
December 31, 2009 compared with revenue for the year ended
December 31, 2008 due primarily to a general decline in
demand for these products. Beginning January 1, 2010, we
expect to no longer consolidate the operating results of Mission
Technology Group into the Connectivity Group, and as a result,
we expect to eliminate the Connectivity Group segment effective
January 1, 2010.
Connectivity revenue for the year ended December 31, 2008
was consistent with revenue for the year ended December 31,
2007.
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 ($ in thousands):
Cost
of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
|
Percentage Change
|
|
Year
|
|
Cost of Revenue
|
|
|
from Prior Year
|
|
|
from Prior Year
|
|
|
2009
|
|
$
|
37,061
|
|
|
$
|
(17,493
|
)
|
|
|
(32.1
|
)%
|
2008
|
|
|
54,554
|
|
|
|
(3,919
|
)
|
|
|
(6.7
|
)%
|
2007
|
|
|
58,473
|
|
|
|
|
|
|
|
|
|
Gross
profit and gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|
Percentage Change
|
|
|
|
|
|
|
|
|
|
in Gross Profit
|
|
|
from Prior Year
|
|
Year
|
|
Gross Profit
|
|
|
Gross Margin
|
|
|
from Prior Year
|
|
|
(Total Dollars)
|
|
|
2009
|
|
$
|
18,359
|
|
|
|
33.1
|
%
|
|
$
|
(4,233
|
)
|
|
|
(18.7
|
)%
|
2008
|
|
|
22,592
|
|
|
|
29.3
|
%
|
|
|
3,346
|
|
|
|
17.4
|
%
|
2007
|
|
|
19,246
|
|
|
|
24.8
|
%
|
|
|
|
|
|
|
|
|
The 2009 decrease in cost of revenue and corresponding increase
in gross profit 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, on high-power and low-power products to
39.2% for the year ended December 31, 2009 compared to
35.9% for the year ended December 31, 2008, primarily as a
result in the decline of sales of high power products to private
label resellers which typically result in lower margins,
combined with an increase in the mix of sales to low-power
products relative to total revenue. Labor and overhead costs,
which are mostly fixed, decreased by $1.7 million, or
32.6%, to $3.3 million for the year ended December 31,
2009, compared to $5.0 million for the year ended
December 31, 2008. As a result of these factors, cost of
revenue, as a percentage of revenue, decreased to 66.9% for the
year ended December 31, 2009 from 70.7% for the year ended
December 31, 2008.
The 2008 decrease in cost of revenue and the corresponding
increase in gross margin was due primarily to a charge to excess
and obsolete inventory expense of $4.0 million for the year
ended December 31, 2007. The positive impact of the reduced
excess and obsolete inventory expense was partially offset by a
decline in average direct margin, which excludes labor and
overhead costs, on high-power products to 28.4% for the year
ended December 31, 2008 compared to 35.1% for the year
ended December 31, 2007, primarily as a result of the
reduced direct margin on sales to Targus during
32
2008. As a result of these factors, cost of revenue as a
percentage of revenue decreased to 70.7% for the year ended
December 31, 2008 from 75.2% for the year ended
December 31, 2007, resulting in increased gross margin.
Sales and marketing. Sales and marketing
expenses generally consist of salaries, commissions and other
personnel-related costs of our sales, marketing and support
personnel, advertising, public relations, promotions, printed
media and travel. The following table summarizes the
year-over-year
comparison of our sales and marketing expenses for the periods
indicated ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2009
|
|
$
|
7,646
|
|
|
$
|
(1,428
|
)
|
|
|
(15.7
|
)%
|
2008
|
|
|
9,074
|
|
|
|
(690
|
)
|
|
|
(7.1
|
)%
|
2007
|
|
|
9,764
|
|
|
|
|
|
|
|
|
|
The 2009 decrease in sales and marketing expenses primarily
resulted from reduced personnel costs and reduced distribution
and retail programs. Specifically, personnel costs decreased by
$651,000 or 13.9% to $4.0 million for the year ended
December 31, 2009 compared to $4.7 million for the
year ended December 31, 2008. Distribution and retail
program expenses decreased $885,000, or 80.5%, to $183,000 for
the year ended December 31, 2009 compared to
$1.1 million for the year ended December 31, 2008. As
a percentage of revenue, sales and marketing expenses increased
to 13.8% for the year ended December 31, 2009 from 11.8%
for the year ended December 31, 2008.
The 2008 decrease in sales and marketing expenses primarily
resulted from reduced investment in nationwide newspaper and
radio advertising campaigns in the United States. Specifically,
advertising expense decreased by $798,000, or 85.6%, to $135,000
for the year ended December 31, 2008 compared to $932,000
for the year ended December 31, 2007. As a percentage of
revenue, sales and marketing expenses decreased to 11.8% for the
year ended December 31, 2008 from 12.6% for the year ended
December 31, 2007.
Research and development. Research and
development expenses consist primarily of salaries and
personnel-related costs, outside consulting, lab costs and
travel-related costs of our product development group. The
following table summarizes the
year-over-year
comparison of our research and development expenses for the
periods indicated ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2009
|
|
$
|
3,007
|
|
|
$
|
(541
|
)
|
|
|
(15.2
|
)%
|
2008
|
|
|
3,548
|
|
|
|
(1,653
|
)
|
|
|
(31.8
|
)%
|
2007
|
|
|
5,201
|
|
|
|
|
|
|
|
|
|
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 $441,000, or 16.9% to $2.2 million for the
year ended December 31, 2009, compared to $2.6 million
for the year ended December 31, 2008. Product certification
and testing-related expenses decreased by $148,000, or 24.2% to
$463,000 for the year ended December 31, 2009, compared to
$611,000 for the year ended December 31, 2008. As a
percentage of revenue, research and development expenses
increased to 5.4% for the year ended December 31, 2009 from
4.6% for the year ended December 31, 2008.
The decrease in research and development expenses in 2008
primarily resulted from reduced personnel expenses directly
relating to the impact of an organizational restructuring that
occurred in July 2007. As a result of the July 2007 action,
employee-related expenses decreased by $1.1 million, or
32.8%, to $2.3 million for the year ended December 31,
2008 as compared to $3.5 million for the year ended
December 31, 2007. Engineering-related consulting and
development fees also decreased by $474,000, or 40.9%, to
$684,000 for the year ended December 31, 2008 as compared
to $1.2 million for the year ended December 31, 2007.
As a percentage of revenue, research and development expenses
decreased to 4.6% for the year ended December 31, 2008 from
6.7% for the year ended December 31, 2007.
33
General and administrative. General and
administrative expenses consist primarily of salaries and other
personnel-related expenses of our finance, human resources,
information systems, corporate development and other
administrative personnel, as well as facilities, legal and other
professional fees, depreciation and amortization and related
expenses. The following table summarizes the
year-over-year
comparison of our general and administrative expenses for the
periods indicated ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2009
|
|
$
|
8,999
|
|
|
$
|
(2,888
|
)
|
|
|
(24.3
|
)%
|
2008
|
|
|
11,887
|
|
|
|
(2,966
|
)
|
|
|
(20.0
|
)%
|
2007
|
|
|
14,853
|
|
|
|
|
|
|
|
|
|
The 2009 decrease in general and administrative expenses
primarily result from decreases to personnel-related expenses,
legal expense, non-cash equity compensation, and insurance.
Specifically, personnel-related expenses decreased by $880,000,
or 22.7% to $3.0 million for the year ended
December 31, 2009, compared to $3.9 million for the
year ended December 31, 2008. Legal expense decreased
$1.0 million, or 71.4% to $374,000 for the year ended
December 31, 2009, compared to $1.4 million 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
35.8% to $1.3 million for the year ended December 31,
2009, compared to $2.1 million 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. Insurance related expenses decreased by $90,000, or
27.8% to $234,000 for the year ended December 31, 2009,
compared to $324,000 for the year ended December 31, 2008
primarily as a result of reduced premiums for directors and
officers liability insurance. General and administrative
expenses, as a percentage of revenue increased to 16.2% for the
year ended December 31, 2009, from 15.4% for the year ended
December 31, 2008.
The 2008 decrease in general and administrative expenses
primarily resulted from decreases to personnel-related expenses,
outside professional fees and non-cash equity compensation
expense. Specifically, personnel-related expenses decreased
$1.0 million, or 23.7%, to $3.4 million for the year
ended December 31, 2008, from $4.4 million for the
year ended December 31, 2007. Included in this decrease is
$614,000 in separation expense incurred in connection with the
retirement of our former chief executive officer in 2007.
Outside professional fees, including legal and accounting,
decreased $1.0 million, or 28.1%, to $2.6 million for
the year ended December 31, 2008, from $3.7 million
for the year ended December 31, 2007. Non-cash equity
compensation decreased by $563,000 to $2.1 million, or
21.4%, for the year ended December 31, 2008 from
$2.6 million for the year ended December 31, 2007, due
primarily to the organizational restructuring that occurred in
July 2007 and the resignation of a board member that occurred in
May 2008. General and administrative expenses as a percentage of
revenue decreased to 15.4% for the year ended December 31,
2008 from 19.1% for the year ended December 31, 2007.
Asset impairment. Asset impairment expense
consists of expenses associated with impairment write-downs of
goodwill, amortizable intangible assets, and property and
equipment.
At December 31, 2007, we determined that $3.7 million
of goodwill associated with the High-Power Group and $237,000 of
goodwill associated with the Low-Power Group was fully impaired.
Accordingly, we recorded a goodwill impairment charge of
$3.9 million during the year ended December 31, 2007.
Also, during the fourth quarter of 2007, as a result of our
decision to discontinue production and marketing of foldable
keyboard products, we determined a triggering event had occurred
resulting in an asset impairment charge of $1.1 million
related to amortizable intangible assets and property and
equipment associated with our Low-Power Group. As a result of
these factors, we recorded total asset impairment charges of
$5.0 million during the year ended December 31, 2007.
We recorded no asset impairment charges during the years ended
December 31, 2009 and 2008.
34
Interest income, net. Interest income, net
consists primarily of interest earned on our cash balances and
short-term investments. The following table summarizes the
year-over-year
comparison of interest income, net for the periods indicated ($
in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2009
|
|
$
|
127
|
|
|
$
|
(646
|
)
|
|
|
(83.6
|
)%
|
2008
|
|
$
|
773
|
|
|
$
|
(383
|
)
|
|
|
(33.1
|
)%
|
2007
|
|
|
1,156
|
|
|
|
|
|
|
|
|
|
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%.
The 2008 decrease was primarily due to generally declining
interest rates during 2008. At December 31, 2008, the
average yield on our cash and short-term investments was
approximately 2.2%.
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
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 ($ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
|
|
Percentage Change
|
Year
|
|
Annual Amount
|
|
from Prior Year
|
|
from Prior Year
|
|
2009
|
|
$
|
667
|
|
|
$
|
(512
|
)
|
|
|
(43.4
|
)%
|
2008
|
|
$
|
1,179
|
|
|
$
|
(1,105
|
)
|
|
|
(48.4
|
)%
|
2007
|
|
$
|
2,284
|
|
|
|
|
|
|
|
|
|
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 sale of a portfolio of 23 patents and
patents pending relating to our foldable keyboard intellectually
property, with a net book value of $344,000 for net proceeds of
approximately $1.0 million which resulted in a gain of
approximately $656,000.
The 2007 gain on disposal of assets and other income, net was
primarily due to our sale of a portfolio of 13 patents and
patents pending relating to our SplitBridge and serialized PCI
intellectual property, with a net book value of $28,000 for net
proceeds of approximately $1.8 million, which resulted in a
gain of approximately $1.8 million.
Litigation settlement. 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.
35
Income taxes. 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.
We have incurred net operating losses from inception through the
end of 2009; therefore, no provision for income taxes was
required for the years ended December 31, 2008 or 2007.
Based on historical operating losses and our financial
projections, it is more likely than not that we will not fully
realize the benefits of the net operating loss carry-forwards.
Thus, we have not recorded a tax benefit from our net operating
loss carry-forwards for the years ended December 31, 2009,
2008 and 2007.
Operating
Outlook
Due to increased competition and the current global economic
downturn, we have experienced a decline in consumer demand for
our products. It is difficult for us to predict the depth and
length of this economic downturn and its impact on our business
in the long-term. We expect 2010 revenue to continue to decrease
from 2009 levels, primarily due to a reduction in consumer
demand for mobile electronic accessories resulting from the
ongoing worldwide recession and from the loss of our largest
customer, Targus. This reduction in revenue may be partially
offset by further gains in market penetration into mobile
wireless carriers, distributors and retailers largely through
our sales efforts.
We expect gross margin percentage in 2010 to be slightly higher
than 2009 due to a shift in customer mix from private label
customers to direct sales to retailers. We expect operating
expenses related to our power businesses to decrease in 2010
compared to 2009, as we expect reduced general and
administrative expenses, partially offset by increased spending
in sales and marketing and research and development.
As a result of our planned research and development efforts, we
expect to further expand our intellectual property position by
filing for additional patents. 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.
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.
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. The anticipated growth of our business will require
investments in accounts receivable and inventories. In addition
to our cash flow from operations, our primary sources of
liquidity have been funds provided by issuances of equity
securities and proceeds from the sale of intellectual property
assets. We cannot assure you that these sources will be
available to us in the future.
Capital markets in the United States and throughout the world
remain disrupted and under stress. This disruption and stress is
evidenced by a lack of liquidity in the debt capital markets,
the re-pricing of credit risk in the
36
syndicated credit market and the failure of certain major
financial institutions. This stress is compounded by the ongoing
severe worldwide rescission. Despite actions of the
U.S. federal government, these events have contributed to
worsening general economic conditions that are materially and
adversely impacting the broader financial and credit markets and
reduced the availability of debt capital for the market as a
whole. Reflecting this concern, many lenders and capital
providers have reduced, and in some cases ceased to provide,
debt funding to borrowers. The resulting lack of available
credit, lack of confidence in the financial sector, increased
volatility in the financial markets and reduced business
activity could materially and adversely impact our ability to
obtain additional or alternative financing.
The following table sets forth for the period presented certain
consolidated cash flow information (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Net cash provided by operating activities
|
|
$
|
2,235
|
|
|
$
|
5,542
|
|
|
$
|
3,443
|
|
Net cash provided by (used in) investing activities
|
|
|
(8,272
|
)
|
|
|
4,717
|
|
|
|
5,148
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
|
37
|
|
|
|
(1,919
|
)
|
Foreign currency exchange impact on cash flow
|
|
|
(11
|
)
|
|
|
(65
|
)
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
$
|
(6,048
|
)
|
|
$
|
10,231
|
|
|
$
|
6,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year
|
|
$
|
26,139
|
|
|
$
|
15,908
|
|
|
$
|
9,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
20,091
|
|
|
$
|
26,139
|
|
|
$
|
15,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities. Cash was provided by operating
activities for the year ended December 31, 2009 as
operating losses were more than offset by non-cash expenses and
decreases to accounts receivable as a result of our reduced
revenue base in 2009. In 2010, we expect to continue to generate
cash from operating activities as we expect changes to working
capital and non-cash items to more than offset any operating
losses that may be incurred. Our consolidated cash flow
operating metrics are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
Days outstanding in ending accounts receivable (DSOs)
|
|
|
37
|
|
|
|
59
|
|
|
|
79
|
|
Inventory turns
|
|
|
7
|
|
|
|
9
|
|
|
|
6
|
|
The decrease in DSOs at December 31, 2009 compared to
December 31, 2008 was primarily due to decreases in
accounts receivable from Targus. We expect DSOs will increase in
2010 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 to manage
inventory growth during 2010 but we expect inventory turns to
decrease relative to 2009 inventory turns as we anticipate
carrying higher levels of inventory for our new retail customers.
The decrease in DSOs at December 31, 2008 compared to
December 31, 2007 was primarily due to the reductions in
accounts receivable from Lenovo due to the loss of that account,
combined with the faster timing of payments received from
Targus. The increase in inventory turns was primarily due to
excess and obsolete inventory charges recorded during 2007
relating to our connectivity, low-power and keyboard inventories.
|
|
|
|
|
Net cash provided by (used in) investing
activities. For the year ended December 31,
2009, net cash was used in investing activities as we had net
purchases of $7.8 million in short-term investments and
$524,000 in purchases of property plant and equipment. We
anticipate future investment in capital equipment, primarily for
tooling equipment to be used in the production of new products.
|
37
|
|
|
|
|
Net cash provided by (used in) financing
activities. We had no financing activities in
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, 2009, our
investments in marketable securities included six corporate
bonds, one United States Agency bond, six commercial paper
instruments issued by various companies, and one municipal
mutual fund with a total fair value of approximately
$13.0 million. At December 31, 2009, four 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.
Financing Facilities. In July 2008, the line
of credit we had entered into in July 2006 expired and we
elected to not renew this credit facility due to our current
cash and investment position. In the future, debt financing may
not be available to us in amounts or on terms that are
acceptable to us.
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, 2009 (amounts in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Due by Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
More than
|
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
5 years
|
|
|
Operating lease obligations
|
|
$
|
431
|
|
|
$
|
440
|
|
|
$
|
444
|
|
|
$
|
455
|
|
|
$
|
76
|
|
|
$
|
|
|
Inventory Purchase obligations
|
|
|
9,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
9,989
|
|
|
$
|
440
|
|
|
$
|
444
|
|
|
$
|
455
|
|
|
$
|
76
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The preceding table does not include Missions contractual
obligations.
Off-Balance Sheet Arrangements. We have no
off-balance sheet financing arrangements.
Acquisitions and dispositions. In the past we
have made acquisitions of other companies 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, 2009, we had approximately $157 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 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.
38
Liquidity Outlook. Based on our projections,
we believe that our existing cash, cash equivalents, short-term
investments and our cash flow from operations 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 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,
short-term investments and line of credit resulting from a
hypothetical 1.0% (100 basis point) change in interest
rates, was not material at December 31, 2009.
39
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
IGO, INC.
AND SUBSIDIARIES
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
40
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,
2009 and 2008, 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, 2009. 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,
2009 and 2008, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 2009, in conformity with U.S. generally
accepted accounting principles.
As discussed in Note 2 to the consolidated financial
statements, as of January 1, 2009, the Company adopted the
provisions of ASC Topic 810, Consolidation, which changed
the accounting and reporting for minority interests, which are
now recharacterized as noncontrolling interests and classified
as a component of equity.
(signed) /s/ KPMG LLP
Phoenix, Arizona
March 9, 2010
41
IGO, INC.
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands,
|
|
|
|
except share amounts)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,091
|
|
|
$
|
26,139
|
|
Short-term investments
|
|
|
12,777
|
|
|
|
4,964
|
|
Accounts receivable, net
|
|
|
5,692
|
|
|
|
12,554
|
|
Inventories
|
|
|
6,612
|
|
|
|
4,353
|
|
Prepaid expenses and other current assets
|
|
|
411
|
|
|
|
527
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
45,583
|
|
|
|
48,537
|
|
Property and equipment, net
|
|
|
890
|
|
|
|
1,147
|
|
Intangible assets, net
|
|
|
1,087
|
|
|
|
1,231
|
|
Notes receivable and other assets
|
|
|
174
|
|
|
|
320
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
47,734
|
|
|
$
|
51,235
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,868
|
|
|
$
|
7,074
|
|
Accrued expenses and other current liabilities
|
|
|
1,667
|
|
|
|
3,412
|
|
Deferred revenue
|
|
|
965
|
|
|
|
412
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
6,500
|
|
|
|
10,898
|
|
Equity:
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value; authorized
90,000,000 Shares; 32,411,531 and 31,924,183 shares
issued and outstanding at December 31, 2009 and 2008,
respectively
|
|
|
324
|
|
|
|
319
|
|
Additional paid-in capital
|
|
|
171,035
|
|
|
|
169,863
|
|
Accumulated deficit
|
|
|
(131,189
|
)
|
|
|
(130,640
|
)
|
Accumulated other comprehensive income
|
|
|
140
|
|
|
|
155
|
|
|
|
|
|
|
|
|
|
|
Total iGo, Inc. common stockholders equity
|
|
|
40,310
|
|
|
|
39,697
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
924
|
|
|
|
640
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
41,234
|
|
|
|
40,337
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
47,734
|
|
|
$
|
51,235
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
42
IGO, INC.
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands,
|
|
|
|
except per share amounts)
|
|
|
Revenue
|
|
$
|
55,420
|
|
|
$
|
77,146
|
|
|
$
|
77,719
|
|
Cost of revenue
|
|
|
37,061
|
|
|
|
54,554
|
|
|
|
58,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
18,359
|
|
|
|
22,592
|
|
|
|
19,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
7,646
|
|
|
|
9,074
|
|
|
|
9,764
|
|
Research and development
|
|
|
3,007
|
|
|
|
3,548
|
|
|
|
5,201
|
|
General and administrative
|
|
|
8,999
|
|
|
|
11,887
|
|
|
|
14,853
|
|
Asset impairment
|
|
|
|
|
|
|
|
|
|
|
5,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
19,652
|
|
|
|
24,509
|
|
|
|
34,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(1,293
|
)
|
|
|
(1,917
|
)
|
|
|
(15,620
|
)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
127
|
|
|
|
773
|
|
|
|
1,156
|
|
Gain on disposal of assets and other income, net
|
|
|
667
|
|
|
|
1,179
|
|
|
|
2,284
|
|
Litigation settlement income
|
|
|
|
|
|
|
672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax
|
|
|
(499
|
)
|
|
|
707
|
|
|
|
(12,180
|
)
|
Income tax benefit
|
|
|
234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(265
|
)
|
|
|
707
|
|
|
|
(12,180
|
)
|
Less: Net income attributable to non-controlling interest
|
|
|
(284
|
)
|
|
|
(256
|
)
|
|
|
(384
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to iGo, Inc.
|
|
$
|
(549
|
)
|
|
$
|
451
|
|
|
$
|
(12,564
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to iGo, Inc. per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.02
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.02
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
32,310
|
|
|
|
31,786
|
|
|
|
31,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
32,310
|
|
|
|
34,394
|
|
|
|
31,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
43
IGO, INC.
AND SUBSIDIARIES
AND
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
Non-
|
|
|
Net
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Controlling
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Income (Loss)
|
|
|
Interest
|
|
|
Equity
|
|
|
|
(In thousands, except share amounts)
|
|
|
Balances at December 31, 2006
|
|
|
31,731,938
|
|
|
$
|
317
|
|
|
$
|
167,436
|
|
|
$
|
(118,527
|
)
|
|
$
|
179
|
|
|
$
|
|
|
|
$
|
49,405
|
|
Issuance of common stock for warrants exercised
|
|
|
13,823
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
Issuance of common stock for options exercised
|
|
|
121,673
|
|
|
|
1
|
|
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
239
|
|
Issuance of stock awards
|
|
|
264,405
|
|
|
|
3
|
|
|
|
(208
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(205
|
)
|
Issuance of common stock for board compensation
|
|
|
13,473
|
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
Amortization of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
2,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,625
|
|
Purchase of treasury stock
|
|
|
(689,656
|
)
|
|
|
(7
|
)
|
|
|
(2,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,147
|
)
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Gain on Available for Sale Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
8
|
|
Foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
36
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,564
|
)
|
|
|
|
|
|
|
384
|
|
|
|
(12,180
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,136
|
)
|
Balances at December 31, 2007
|
|
|
31,446,185
|
|
|
$
|
314
|
|
|
$
|
168,010
|
|
|
$
|
(131,091
|
)
|
|
$
|
223
|
|
|
$
|
384
|
|
|
$
|
37,840
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
451
|
|
|
|
|
|
|
|
256
|
|
|
|
707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
639
|
|
Balances at December 31, 2008
|
|
|
31,924,183
|
|
|
$
|
319
|
|
|
$
|
169,863
|
|
|
$
|
(130,640
|
)
|
|
$
|
155
|
|
|
$
|
640
|
|
|
$
|
40,337
|
|
Issuance of stock awards
|
|
|
487,348
|
|
|
|
5
|
|
|
|
(138
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(133
|
)
|
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 income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(549
|
)
|
|
|
|
|
|
|
284
|
|
|
|
(265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(280
|
)
|
Balances at December 31, 2009
|
|
|
32,411,531
|
|
|
$
|
324
|
|
|
$
|
171,035
|
|
|
$
|
(131,189
|
)
|
|
$
|
140
|
|
|
$
|
924
|
|
|
$
|
41,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
44
IGO, INC.
AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except share amounts)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(265
|
)
|
|
$
|
707
|
|
|
$
|
(12,180
|
)
|
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions for doubtful accounts and sales returns and credits
|
|
|
547
|
|
|
|
611
|
|
|
|
593
|
|
Depreciation and amortization
|
|
|
1,524
|
|
|
|
1,563
|
|
|
|
2,074
|
|
Amortization of deferred compensation
|
|
|
1,310
|
|
|
|
2,030
|
|
|
|
2,625
|
|
Loss or (Gain) on disposal of assets
|
|
|
20
|
|
|
|
(656
|
)
|
|
|
(1,535
|
)
|
Impairment of goodwill
|
|
|
|
|
|
|
|
|
|
|
3,912
|
|
Impairment of intangible assets
|
|
|
|
|
|
|
|
|
|
|
573
|
|
Impairment of property and equipment
|
|
|
|
|
|
|
|
|
|
|
564
|
|
Compensation expense settled with stock
|
|
|
|
|
|
|
32
|
|
|
|
45
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
6,315
|
|
|
|
3,759
|
|
|
|
3,338
|
|
Inventories
|
|
|
(2,259
|
)
|
|
|
3,053
|
|
|
|
4,944
|
|
Prepaid expenses and other assets
|
|
|
(425
|
)
|
|
|
96
|
|
|
|
(1,180
|
)
|
Accounts payable
|
|
|
(3,206
|
)
|
|
|
(4,620
|
)
|
|
|
(522
|
)
|
Accrued expenses and other current liabilities
|
|
|
(1,326
|
)
|
|
|
(1,033
|
)
|
|
|
192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
2,235
|
|
|
|
5,542
|
|
|
|
3,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(524
|
)
|
|
|
(342
|
)
|
|
|
(464
|
)
|
Purchase of investments
|
|
|
(13,427
|
)
|
|
|
(8,812
|
)
|
|
|
(883
|
)
|
Sale of investments
|
|
|
5,611
|
|
|
|
12,871
|
|
|
|
4,645
|
|
Proceeds from sale of assets
|
|
|
68
|
|
|
|
1,000
|
|
|
|
1,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities
|
|
|
(8,272
|
)
|
|
|
4,717
|
|
|
|
5,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common stock
|
|
|
|
|
|
|
|
|
|
|
(2,147
|
)
|
Repayment of long-term debt and capital lease obligations
|
|
|
|
|
|
|
|
|
|
|
(25
|
)
|
Proceeds from exercise of warrants and options
|
|
|
|
|
|
|
37
|
|
|
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
|
37
|
|
|
|
(1,919
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rates on cash and cash equivalents
|
|
|
(11
|
)
|
|
|
(65
|
)
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(6,048
|
)
|
|
|
10,231
|
|
|
|
6,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
|
|
26,139
|
|
|
|
15,908
|
|
|
|
9,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
20,091
|
|
|
$
|
26,139
|
|
|
$
|
15,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of restricted stock units for deferred compensation to
employees and board members during 2009, 2008 and 2007,
respectively
|
|
$
|
88
|
|
|
$
|
1,281
|
|
|
$
|
2,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
45
IGO, INC.
AND SUBSIDIARIES
Years Ended December 31, 2009, 2008 and 2007
(1) Nature
of Business
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/or
distributes power products for high-power mobile electronic
devices, such as portable computers; power products for
low-power mobile electronic devices, such as mobile phones,
PDAs, and MP3 players; expansion and docking products; and
mobile electronic accessory products. iGo distributes products
in North America, Europe and Asia Pacific.
(2) Summary
of Significant Accounting Policies
(a) Use
of Estimates
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, long-lived asset valuation, and VIEs
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., Mobility Assets, Inc. and iGo Direct
Corporation, and as of April 16, 2007, the accounts of
Mission Technology Group, Inc. (Mission), in which
Mobility California, Inc. holds a 15% equity interest
(collectively, iGo or the Company). The
accounts of Mission are consolidated as Mission is a VIE. Refer
to Note 3 for further discussion of the consolidation of
Mission. All significant intercompany balances and transactions
have been eliminated in the accompanying consolidated financial
statements.
(c) Revenue
Recognition
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 the product has sold through to the end user.
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.
46
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (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.
(e) Investments
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.
(f) Accounts
Receivable
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.
(g) Inventories
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
47
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
future expectations. If future market conditions and the
Companys outlook deteriorate, the Company may be required
to record impairment charges in the future.
(i) Intangible
Assets
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. All of the Companys
intangible assets are subject to amortization.
(j) Warranty
Costs
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.
(k) Income
Taxes
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.
(l) 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 and
2007, the assumed 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.
48
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
(m) 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).
(n) 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.
(o) Research
and Development
The cost of research and development is charged to expense as
incurred.
(p) 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.
(q) Segment
Reporting
The Company is engaged in the business of selling accessories
for computers and mobile electronic devices. The Company has
three reporting business segments, consisting of the High-Power
Group, Low-Power Group, and Connectivity Group. As of
December 31, 2009, 2008 and 2007, the results of the
Connectivity Segment consist of the operating results of Mission.
(r) Recently
Issued Accounting Pronouncements
In December 2009, the Financial Accounting Standards Board
(FASB) issued Accounting Standards Update
2009-17
(ASU
2009-17)
2009-17,
Consolidations (Topic 810) Improvements to
Financial Reporting by Enterprises Involved with Variable
Interest Entities. ASU
2009-17
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 VIEs and any significant
changes in risk exposure due to that involvement. ASU
2009-17 is
effective for fiscal years beginning after November 15,
2009 and for interim periods within the first annual reporting
period. As a result of the adoption of ASU
2009-17 on
January 1, 2010, the Company expects it will no longer
consolidate the results of Mission.
In June 2009, the FASB issued guidance now codified as
Accounting Standards Codification (ASC) Topic 105,
Generally Accepted Accounting Principles (ASC
Topic 105) as the single source of authoritative
non-governmental U.S. GAAP. ASC Topic 105 does not change
current U.S. GAAP, but is intended to simplify user access
to all authoritative U.S. GAAP by providing all
authoritative literature related to a particular topic in one
place (the Codification). On the effective date of
this Statement, the Codification superseded all then-existing
non-SEC accounting and reporting standards, and all other
non-grandfathered non-SEC accounting literature not included in
the Codification became non-authoritative. The provisions of ASC
Topic 105 are effective for interim and annual periods ending
after September 15, 2009. The Company adopted ASC Topic 105
in the third quarter of 2009. This pronouncement had no effect
on the Companys consolidated financial position, results
of operations or
49
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
cash flows, but impacted the Companys financial reporting
process by replacing all references to pre-Codification
standards with references to the applicable Codification topic.
In May 2009, the FASB issued guidance now codified as ASC
855-10-25-01,
Subsequent Events (ASC
855-10-25-01)
which establishes the accounting for and disclosure of events
that occur after the balance sheet date but before financial
statements are issued or are available to be issued. The
standard is effective for interim or annual financial periods
ending after June 15, 2009. The Company adopted ASC
855-10-25-01
effective with the interim report for the period ended
June 30, 2009. The Company has performed an evaluation of
subsequent events and no non-recognized subsequent events were
noted.
In December 2007, the FASB issued guidance now codified as ASC
Topic 810, Consolidation (ASC Topic
810), which changes the accounting and reporting for
minority interests such that they will be re-characterized as
non-controlling interests and classified as a component of
equity. It also requires the amount of consolidated net income
attributable to the parent and to the non-controlling interest
be clearly identified and presented on the face of the
consolidated statement of income; changes in ownership interest
be accounted for similarly, as equity transactions; and when a
subsidiary is deconsolidated, any retained non-controlling
equity investment in the former subsidiary and the gain or loss
on the deconsolidation of the subsidiary be measured at fair
value. This pronouncement is effective for financial statements
issued for fiscal years beginning after December 15, 2008.
The Company adopted the above-noted guidance of ASC Topic 810 on
January 1, 2009 and the Company presents non-controlling
interest in Mission (previously shown as minority interest) as a
component of equity on the consolidated balance sheets. Minority
interest expense is no longer separately reported as a reduction
to net income (loss) on the consolidated statement of
operations, but is instead shown below net income (loss) under
the heading net income (loss) attributable to
non-controlling interest. Total provision for income taxes
remains unchanged; however, the Companys effective tax
rate as calculated from the amounts shown on the consolidated
statement of operations has changed as net income (loss)
attributable to non-controlling interest is no longer included
as a deduction in the determination of income (loss) from
continuing operations. Operating losses can be allocated to
non-controlling interests even when such allocation results in a
deficit balance (i.e., book value can go negative). As discussed
above, the company expects to deconsolidate Mission Technology
effective January 1, 2010.
(3) Variable
Interest Entity
The primary beneficiary of a VIE is required to include the
VIEs assets, liabilities and operating results in its
consolidated financial statements. In general, a VIE is a
corporation, partnership, limited liability company, trust or
any other legal structure used to conduct activities or hold
assets that either (i) has an insufficient amount of equity
to carry out its principal activities without additional
subordinated financial support, (ii) has a group of equity
owners that are unable to make significant decisions about its
activities, or (iii) has a group of equity owners that do
not have the obligation to absorb losses or the right to receive
returns generated by its operations.
In April 2007, the Company completed a sale of 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.
There was no cash equity contributed to Mission at its formation
and Missions equity consists solely of its operating
profit. Accordingly, the Company has determined that Mission
does not have sufficient equity to carry out its principal
operating activities without subordinated financial support, and
that Mission qualifies as a VIE. The Company has also determined
that its 15% equity interest and its $3,930,000 notes receivable
qualify as variable interests. Furthermore, as Mission is
obligated to repay the promissory notes it issued to the
Company, the Company has determined that it is the primary
beneficiary of the VIE, and accordingly, must include the
assets, liabilities and operating results of Mission in its
consolidated financial statements. The Company reports as
Non-controlling interest the portion of the
Companys net income (loss) that is attributable to the
collective ownership interests of non-controlling investors.
Non-controlling interest represents the 85% share in the
50
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
net earnings of Mission held by other owners. As of
December 31, 2009, the unpaid principal balance of the
remaining note receivable from Mission was $1,847,000.
The following table summarizes the balance sheet effect of
consolidating Mission as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
iGo
|
|
|
|
Mission
|
|
|
Consolidated
|
|
|
|
(Amounts in thousands)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
316
|
|
|
$
|
20,091
|
|
Short-term investments
|
|
|
|
|
|
|
12,777
|
|
Accounts receivable, net
|
|
|
583
|
*
|
|
|
5,692
|
|
Inventories
|
|
|
648
|
|
|
|
6,612
|
|
Prepaid expenses and other current assets
|
|
|
10
|
|
|
|
411
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,557
|
|
|
|
45,583
|
|
Property and equipment, net
|
|
|
|
|
|
|
890
|
|
Intangible assets, net
|
|
|
|
|
|
|
1,087
|
|
Notes receivable and other assets
|
|
|
|
|
|
|
174
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,557
|
|
|
$
|
47,734
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
311
|
|
|
$
|
3,868
|
|
Accrued expenses and other current liabilities
|
|
|
271
|
*
|
|
|
1,667
|
|
Deferred revenue
|
|
|
51
|
|
|
|
965
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
633
|
|
|
|
6,500
|
|
Equity:
|
|
|
|
|
|
|
|
|
Total iGo, Inc. common stockholders equity
|
|
$
|
|
|
|
$
|
40,310
|
|
Non-controlling interest
|
|
|
924
|
|
|
|
924
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
924
|
|
|
|
41,234
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
1,557
|
|
|
$
|
47,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Reflects the elimination of intercompany accounts and notes
receivable. |
(4) Fair
Value Measurement
As of December 31, 2009, 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, 2009, investments totaling $12,777,000 are
included within short-term investments on the consolidated
balance sheet. These investments are considered
available-for-sale
securities and are reported at fair
51
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
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.
(5) Investments
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 $13,427,000 in the purchase of
available-for-sale
marketable securities during the year ended December 31,
2009, and it generated net proceeds of $5,611,000 in the sale of
such securities for the year ended December 31, 2009. The
Company generated net proceeds of $4,059,000 in the purchase and
sale of securities for the year ended December 31, 2008.
As of December 31, 2009 and 2008, the amortized cost basis,
unrealized holding gains, unrealized holding losses, and
aggregate fair value by short-term major security type
investments were as follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
December 31, 2008
|
|
|
|
|
|
|
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
|
|
$
|
3,495
|
|
|
$
|
|
|
|
$
|
3,495
|
|
|
$
|
1,642
|
|
|
$
|
4
|
|
|
$
|
1,646
|
|
Corporate notes and bonds
|
|
|
3,278
|
|
|
|
|
|
|
|
3,278
|
|
|
|
3,319
|
|
|
|
(1
|
)
|
|
|
3,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,773
|
|
|
|
|
|
|
|
6,773
|
|
|
|
4,961
|
|
|
|
3
|
|
|
|
4,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. municipal funds
|
|
|
5,000
|
|
|
|
4
|
|
|
|
5,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government securities
|
|
|
1,001
|
|
|
|
(1
|
)
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
12,774
|
|
|
$
|
3
|
|
|
$
|
12,777
|
|
|
$
|
4,961
|
|
|
$
|
3
|
|
|
$
|
4,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Inventories
Inventories consist of the following (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Raw materials
|
|
$
|
648
|
|
|
$
|
740
|
|
Finished goods
|
|
|
5,964
|
|
|
|
3,613
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,612
|
|
|
$
|
4,353
|
|
|
|
|
|
|
|
|
|
|
52
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
(7) Property
and Equipment
Property and equipment consists of the following (amounts in
thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Furniture and fixtures
|
|
$
|
421
|
|
|
$
|
448
|
|
Store, warehouse and related equipment
|
|
|
721
|
|
|
|
982
|
|
Computer equipment
|
|
|
3,213
|
|
|
|
2,914
|
|
Tooling
|
|
|
2,114
|
|
|
|
1,949
|
|
Leasehold improvements
|
|
|
535
|
|
|
|
550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,004
|
|
|
|
6,843
|
|
Less accumulated depreciation and amortization
|
|
|
(6,114
|
)
|
|
|
(5,696
|
)
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
890
|
|
|
$
|
1,147
|
|
|
|
|
|
|
|
|
|
|
Aggregate depreciation and amortization expense for property and
equipment totaled $692,000, $748,000 and $1,274,000 for the
years ended December 31, 2009, 2008 and 2007, respectively.
The Company incurred no asset impairment charges during the
years ended December 31, 2009 and 2008, respectively.
During the quarter ended December 31, 2007, the Company
determined that there was an indication that property and
equipment, with a gross value of $917,000, amortizable
intangible assets, with a gross value of $970,000, associated
with its Low-Power Group segment, and goodwill with a gross
value of $3,912,000 associated with its High-Power and Low-Power
Group segments might be impaired. Accordingly, the Company
performed impairment analyses and determined that these property
and equipment assets, amortizable intangible assets, and
goodwill were impaired due to a significant deterioration in
forecasted sales. As a result, during the quarter ended
December 31, 2007, the Company recorded impairment charges
of $563,000 related to property and equipment, which was net of
accumulated depreciation of $353,000, $573,000 related to
amortizable intangible assets, which was net of accumulated
amortization of $397,000, and $3,912,000 related to goodwill.
These impairment charges are included in the consolidated
statements of operations under the caption Asset
Impairment.
Intangible assets consist of the following at December 31,
2009 and 2008 (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
December 31, 2008
|
|
|
|
Average
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
|
Life
|
|
|
Intangible
|
|
|
Accumulated
|
|
|
Intangible
|
|
|
Intangible
|
|
|
Accumulated
|
|
|
Intangible
|
|
|
|
(Years)
|
|
|
Assets
|
|
|
Amortization
|
|
|
Assets
|
|
|
Assets
|
|
|
Amortization
|
|
|
Assets
|
|
|
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License fees
|
|
|
7
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
334
|
|
|
$
|
(334
|
)
|
|
$
|
|
|
Patents and trademarks
|
|
|
3
|
|
|
|
4,007
|
|
|
|
(3,053
|
)
|
|
|
954
|
|
|
|
3,320
|
|
|
|
(2,270
|
)
|
|
|
1,050
|
|
Trade names
|
|
|
10
|
|
|
|
442
|
|
|
|
(309
|
)
|
|
|
133
|
|
|
|
442
|
|
|
|
(261
|
)
|
|
|
181
|
|
Customer intangibles
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
4,449
|
|
|
$
|
(3,362
|
)
|
|
$
|
1,087
|
|
|
$
|
4,129
|
|
|
$
|
(2,898
|
)
|
|
$
|
1,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
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.
In April 2007, the Company sold a portfolio of patents and
patents pending related to its PCI expansion and docking
technology for gross proceeds of $1,850,000. The net book value
of this portfolio of patents was $28,000, resulting in a gain on
the sale of these assets of $1,822,000. Per the terms of the
agreement, the Company received a perpetual, non-exclusive
license to utilize the patent portfolio, and granted a
sublicense to Mission in its ongoing connectivity business.
In connection with the April 2007 sale of patents, the Company
disposed of a license asset related to its PCI expansion and
docking business, which had a gross value of $400,000,
accumulated amortization of $163,000, and a net book value of
$237,000, resulting in a loss on disposition of $237,000.
As discussed in Note 8 above, during the year ended
December 31, 2007, the Company determined that trademarks
with a gross value of $190,000 and customer intangibles of
$780,000 were impaired. Accordingly, the Company recorded an
impairment charge of $573,000 during 2007 which was net of
accumulated amortization of $150,000 related to trademarks and
$247,000 related to customer intangibles.
Aggregate amortization expense for identifiable intangible
assets totaled $832,000, $815,000 and $800,000 for the years
ended December 31, 2009, 2008 and 2007, respectively.
Estimated amortization expense for each of the five succeeding
years ended December 31 is as follows (amounts in thousands):
|
|
|
|
|
|
|
Amortization
|
Year
|
|
Expense
|
|
2010
|
|
$
|
608
|
|
2011
|
|
|
211
|
|
2012
|
|
|
139
|
|
2013
|
|
|
62
|
|
2014
|
|
|
28
|
|
|
|
(10)
|
Notes
Receivable and Other Assets
|
In February 2007, the Company sold substantially all of the
assets, which consisted primarily of inventory, of its handheld
connectivity business to CradlePoint, Inc.
(CradlePoint) for $1,800,000 plus potential
additional consideration based on future performance. At the
closing, the Company received $50,000 in cash and a promissory
note for $1,500,000, bearing interest at the rate of 6%
annually, to be paid within two years as CradlePoint sold the
inventory it acquired in the transaction. The Company received a
cash payment of $250,000 in August 2007. The contract terms
specify that the Company will also receive (1) 5% of
CradlePoints revenues for five years, with a minimum
payment of $300,000 due within three years, and (2) 100% of
the first $200,000, and 50% thereafter, of any sales beyond the
first $1,800,000 of inventory purchased by CradlePoint at the
closing. As of February 26, 2009, CradlePoint was not in
compliance with the terms of the promissory note.
In May 2009, the Company amended the terms of its agreement with
CradlePoint to (1) cancel the outstanding $1,500,000
promissory note, which had an outstanding balance of $199,000 as
of June 30, 2009, (2) eliminate CradlePoints
obligation to pay the Company 5% of CradlePoints revenues
for five years, including the minimum payment of $300,000 due
within three years, and (3) eliminate CradlePoints
obligation to pay 100% of the first $200,000, and 50%
thereafter, of any sales beyond the first $1,800,000 of
inventory purchased by CradlePoint at the closing. In exchange
for the foregoing, the amendment provides that the Company shall
receive (1) payment of $80,000 from CradlePoint upon the
date of the amendment; and (2) a new promissory note for
$670,000 bearing
54
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
interest at the rate of 6% annually, with payments to be made
monthly over two years from the date of the amendment. The
Company did not recognize a loss as a result of this amendment.
The estimated net realizable value of the note receivable from
CradlePoint in connection with this transaction is included in
notes receivable and other assets. The gross outstanding
principal balance of the new promissory note was $456,000 as of
December 31, 2009, and the Company has recorded an
allowance of $456,000 against this note. Accordingly, the net
balance of the new CradlePoint note receivable was $0 as of
December 31, 2009, and the net balance of the old
CradlePoint note receivable was $210,000 as of December 31,
2008.
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 $667,000, $752,000 and $980,000 during the years ended 2009,
2008, and 2007, respectively.
A summary of the minimum future lease payments for the years
ending December 31 follows (amounts in thousands):
|
|
|
|
|
2010
|
|
$
|
431
|
|
2011
|
|
|
440
|
|
2012
|
|
|
444
|
|
2013
|
|
|
455
|
|
2014
|
|
|
76
|
|
Thereafter
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,846
|
|
|
|
|
|
|
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.
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 years ended December 31, 2008 and 2007.
55
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
The provision for income taxes differed from the amounts
computed by applying the statutory U.S. federal income tax
rate of 34% in 2009, 2008 and 2007 to income (loss) before
income taxes as a result of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Expected tax at federal statutory rate
|
|
$
|
(170
|
)
|
|
$
|
240
|
|
|
$
|
(4,141
|
)
|
Equity interest in non-includable entity
|
|
|
(68
|
)
|
|
|
(102
|
)
|
|
|
(132
|
)
|
Meals, entertainment and other non-deductible expenses
|
|
|
16
|
|
|
|
15
|
|
|
|
22
|
|
Foreign rate differential
|
|
|
371
|
|
|
|
50
|
|
|
|
36
|
|
Gain on sale of assets of Texas subsidiary
|
|
|
36
|
|
|
|
(16
|
)
|
|
|
(3
|
)
|
Expired stock options
|
|
|
144
|
|
|
|
|
|
|
|
|
|
Change of net operating loss as a result of Section 382
Study
|
|
|
|
|
|
|
(19,670
|
)
|
|
|
|
|
Change in deferred tax valuation allowance
|
|
|
(563
|
)
|
|
|
19,483
|
|
|
|
3,632
|
|
Adjustment to deferred taxes
|
|
|
|
|
|
|
|
|
|
|
(663
|
)
|
Non-deductible goodwill impairment
|
|
|
|
|
|
|
|
|
|
|
1,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
|
|
$
|
(234
|
)_
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With the exception of 2005 and 2006, the Company has generated
net operating losses for income tax reporting purposes since
inception. At December 31, 2009, the Company had net
operating loss carry-forwards for federal income tax purposes of
approximately $156,873,000 and approximately $8,854,000 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 2029.
56
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
The temporary differences that give rise to deferred tax assets
and liabilities at December 31, 2009 and 2008 are as
follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforward for federal income taxes
|
|
$
|
53,337
|
|
|
$
|
53,420
|
|
Net operating loss carryforward for foreign income taxes
|
|
|
2,700
|
|
|
|
2,328
|
|
Net operating loss carryforward for state income taxes
|
|
|
2,767
|
|
|
|
3,010
|
|
Depreciation and amortization
|
|
|
1,141
|
|
|
|
1,575
|
|
Accrued liabilities
|
|
|
1,358
|
|
|
|
1,843
|
|
Reserves
|
|
|
182
|
|
|
|
245
|
|
Bad debts
|
|
|
49
|
|
|
|
213
|
|
Tax credits
|
|
|
372
|
|
|
|
631
|
|
Inventory obsolescence
|
|
|
536
|
|
|
|
755
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax assets
|
|
|
62,442
|
|
|
|
64,020
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible Assets
|
|
|
|
|
|
|
(47
|
)
|
Acquisitions
|
|
|
|
|
|
|
(145
|
)
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax liabilities
|
|
|
|
|
|
|
(192
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
62,442
|
|
|
|
63,828
|
|
Less valuation allowance
|
|
|
(62,442
|
)
|
|
|
(63,828
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
The valuation allowance for deferred tax assets as of
December 31, 2009 and 2008 was $62,442,000 and $63,828,000,
respectively. The change in the total valuation allowance for
the year ended December 31, 2009 was a decrease of
$1,386,000.
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 i 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
57
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
expense. As a result of its historical net operating losses, the
statute of limitations remains open for each tax year since 1998.
A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Gross unrecognized tax benefits, beginning of year
|
|
$
|
356
|
|
|
$
|
297
|
|
Additions based on tax positions related to the current year
|
|
|
21
|
|
|
|
86
|
|
Additions/Subtractions for tax positions of prior years
|
|
|
(27
|
)
|
|
|
(27
|
)
|
Reductions for settlements and payments
|
|
|
|
|
|
|
|
|
Reductions due to statute expiration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross unrecognized tax benefits, end of year
|
|
$
|
350
|
|
|
$
|
356
|
|
|
|
|
|
|
|
|
|
|
Included in the balance of gross unrecognized tax benefits at
December 31, 2009, are $58,000 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, 2009 is $247,000 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.
|
|
(13)
|
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
58
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (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.
In May 2007, the Companys board of directors authorized,
and the Company repurchased, 689,656 shares of its common
stock at a price of $3.11 per share, or a total price of
$2,147,382, in a private transaction. The Company immediately
retired these shares upon repurchase based on approval received
from its Board of Directors.
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, 2009, there were warrants outstanding and
exercisable for 600,235 shares of common stock.
|
|
(14)
|
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
$210,000, $255,000 and $207,000 during 2009, 2008 and 2007,
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 under the 2004 Omnibus
Plan during 2005 and 2006 that remained outstanding vested on
January 13, 2010. All RSUs awarded under the 2004 Omnibus
Plan during 2007 and 2008 will vest ratably on January 2,
2008, 2009, 2010 and 2011, but may vest earlier, either
partially or in full, if specific performance criteria are met
or, on a pro rata basis, upon the death, disability, termination
without cause, or retirement of plan participants. All RSUs
awarded under the 2004 Omnibus Plan during 2009 will vest
ratably over a four year period beginning on the date of grant.
RSUs awarded to board members under the 2004 Directors Plan
for election to the board vest 100% upon the three-year
anniversary of the grant date, but may vest earlier, on a pro
rata basis, upon the death, disability, or retirement of plan
participants. RSUs awarded to board members under the
2004 Directors Plan for committee service vest 100% upon
the one-year anniversary of the grant date, but may vest
earlier, on a pro rata basis, upon the death, disability, or
retirement of plan participants.
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, the Companys newly elected director,
chief executive officer and president, 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
59
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
(c)(4). Pursuant to the terms of Mr. Heils agreement,
500,000 of the restricted stock units will vest in increments of
125,000 shares per year effective on June 11, 2008,
June 11, 2009, June 11, 2010 and June 11, 2011,
or earlier, in full, upon a change in control of iGo or, on a
pro rata basis, upon Mr. Heils death, disability or
termination without cause. On March 19, 2008, the vesting
terms for the remaining 500,000 restricted stock units granted
to Mr. Heil were amended to provide that such restricted
stock units will vest in increments of 125,000 shares per
year effective March 19, 2009, March 19, 2010,
March 19, 2011 and March 19, 2012, or earlier, in
full, upon a change in control of iGo or, on a pro rata basis,
upon Mr. Heils death, disability or termination
without cause.
The following table summarizes information regarding restricted
stock unit activity for the years ended December 31, 2007,
2008 and 2009, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 Directors Plan
|
|
|
2004 Omnibus Plan
|
|
|
Heil Grant
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Value per
|
|
|
|
|
|
Value per
|
|
|
|
|
|
Value per
|
|
|
|
Number
|
|
|
Share
|
|
|
Number
|
|
|
Share
|
|
|
Number
|
|
|
Share
|
|
|
Outstanding, January 1, 2007
|
|
|
164,400
|
|
|
$
|
8.20
|
|
|
|
914,164
|
|
|
$
|
7.36
|
|
|
|
|
|
|
$
|
|
|
Granted
|
|
|
127,167
|
|
|
|
2.81
|
|
|
|
1,053,450
|
|
|
|
3.45
|
|
|
|
1,000,000
|
|
|
|
2.13
|
|
Canceled
|
|
|
|
|
|
|
|
|
|
|
(575,457
|
)
|
|
|
5.24
|
|
|
|
|
|
|
|
|
|
Released to common stock
|
|
|
(96,900
|
)
|
|
|
8.28
|
|
|
|
(167,505
|
)
|
|
|
7.19
|
|
|
|
|
|
|
|
|
|
Released for settlement of taxes
|
|
|
|
|
|
|
|
|
|
|
(66,487
|
)
|
|
|
7.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2007
|
|
|
194,667
|
|
|
|
4.64
|
|
|
|
1,158,165
|
|
|
|
4.88
|
|
|
|
1,000,000
|
|
|
|
2.13
|
|
Granted
|
|
|
58,165
|
|
|
|
1.27
|
|
|
|
949,500
|
|
|
|
1.27
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(48,875
|
)
|
|
|
5.69
|
|
|
|
(116,955
|
)
|
|
|
3.06
|
|
|
|
|
|
|
|
|
|
Released to common stock
|
|
|
(74,125
|
)
|
|
|
1.24
|
|
|
|
(268,992
|
)
|
|
|
1.40
|
|
|
|
(125,000
|
)
|
|
|
2.96
|
|
Released for settlement of taxes
|
|
|
|
|
|
|
|
|
|
|
(126,666
|
)
|
|
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2008
|
|
|
129,832
|
|
|
|
4.67
|
|
|
|
1,595,052
|
|
|
|
3.73
|
|
|
|
875,000
|
|
|
|
2.01
|
|
Granted
|
|
|
31,500
|
|
|
|
0.71
|
|
|
|
110,250
|
|
|
|
0.73
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(37,000
|
)
|
|
|
2.53
|
|
|
|
(496,787
|
)
|
|
|
2.42
|
|
|
|
|
|
|
|
|
|
Released to common stock
|
|
|
(29,833
|
)
|
|
|
0.55
|
|
|
|
(285,515
|
)
|
|
|
0.65
|
|
|
|
(172,000
|
)
|
|
|
0.65
|
|
Released for settlement of taxes
|
|
|
|
|
|
|
|
|
|
|
(132,806
|
)
|
|
|
0.65
|
|
|
|
(78,000
|
)
|
|
|
0.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2009
|
|
|
94,499
|
|
|
$
|
5.49
|
|
|
|
790,194
|
|
|
$
|
5.77
|
|
|
|
625,000
|
|
|
$
|
2.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2009, 2008 and 2007, the
Company recorded in general and administrative expense pre-tax
charges of $1,310,000, $2,062,000 and $2,560,000 associated with
the expensing of restricted stock unit activity.
As of December 31, 2009, there was $1,857,000 of total
unrecognized compensation cost related to non-vested RSUs, which
is expected to be recognized over a weighted average period of
one year.
As of December 31, 2009, 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, 2009, there
were no shares available for
60
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
grant under the 1996 Plan, and 749,150 shares and
58,194 shares available under the 2004 Omnibus Plan and the
2004 Directors Plan, respectively.
The Company did not grant any stock options during the years
ended December 31, 2009, 2008 or 2007, respectively. The
following table summarizes information regarding stock option
activity for the years ended December 31, 2007, 2008 and
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
Number
|
|
|
Exercise Price per Share
|
|
|
Outstanding, January 1, 2007
|
|
|
708,078
|
|
|
|
6.10
|
|
Granted
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(195,855
|
)
|
|
|
8.25
|
|
Exercised
|
|
|
(116,048
|
)
|
|
|
1.92
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2007
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes information about the stock
options outstanding at December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
Aggregate
|
|
|
|
Options
|
|
|
Contractual Life
|
|
|
Exercise
|
|
|
Options
|
|
|
Exercise
|
|
|
Intrinsic
|
|
Range of Exercise Prices
|
|
Outstanding
|
|
|
(In years)
|
|
|
Price
|
|
|
Exercisable
|
|
|
Price
|
|
|
Value
|
|
|
$6.10 - $6.38
|
|
|
13,000
|
|
|
|
0.50
|
|
|
|
6.32
|
|
|
|
13,000
|
|
|
$
|
6.32
|
|
|
|
|
|
$6.39 - $8.03
|
|
|
7,000
|
|
|
|
0.39
|
|
|
|
7.40
|
|
|
|
7,000
|
|
|
|
7.40
|
|
|
|
|
|
$8.48 - $8.51
|
|
|
20,000
|
|
|
|
0.41
|
|
|
|
8.49
|
|
|
|
20,000
|
|
|
|
8.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$6.10 - $8.51
|
|
|
40,000
|
|
|
|
0.43
|
|
|
$
|
7.59
|
|
|
|
40,000
|
|
|
$
|
7.59
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash received from option exercises during the years ended
December 31, 2009, 2008 and 2007 totaled $0, $9,000 and
$239,000, respectively.
In June 2007, the Company recorded in general and administrative
expense pre-tax charges of $65,000 associated with the expensing
of stock options, due to a modification to a prior grant of
stock options that resulted in a new measurement date for that
option award. The Company used the Black-Scholes option
valuation model to value the option award as of the new
measurement date using the following assumptions: weighted
average life of 2.6 years, risk free rate of 4.9%,
volatility of 65%, and dividend rate of 0%.
For the year ended December 31, 2007, the Company recorded
in general and administrative expense pre-tax charges of $65,000
associated with the expensing of stock options and employee
stock purchase plan activity. The Company recorded no expense
related to stock options for the years ended December 31,
2008 and 2009, respectively.
61
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
As of December 31, 2009, there were no outstanding
non-vested stock options, and no unrecognized compensation
expense relating to non-vested stock options.
|
|
(15)
|
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,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Basic net income (loss) per share computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(549
|
)
|
|
$
|
451
|
|
|
$
|
(12,564
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
32,310
|
|
|
|
31,786
|
|
|
|
31,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.40
|
)
|
Diluted net income (loss) per share computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(549
|
)
|
|
$
|
451
|
|
|
$
|
(12,564
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
32,310
|
|
|
|
31,786
|
|
|
|
31,534
|
|
Effect of dilutive stock options, warrants, and restricted stock
units
|
|
|
|
|
|
|
2,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,310
|
|
|
|
34,394
|
|
|
|
31,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share
|
|
$
|
(0.02
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.40
|
)
|
Stock options not included in dilutive net income (loss) per
share since anti-dilutive
|
|
|
|
|
|
|
292
|
|
|
|
267
|
|
Warrants not included in dilutive net income (loss) per share
since anti-dilutive
|
|
|
600
|
|
|
|
600
|
|
|
|
1,195
|
|
|
|
(16)
|
Business
Segments, 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
three operating business segments, consisting of the High-Power
Group, Low-Power Group, and Connectivity Group. The
Companys chief operating decision maker (CODM)
continues to evaluate revenues and gross profits based on
product lines, routes to market and geographies.
In February 2007, the Company sold substantially all of the
assets, which consisted primarily of inventory, of its handheld
hardware product line. The operating results of the handheld
hardware product line were historically included in the results
of the Connectivity Group. In April 2007, the Company sold
substantially all of the assets, which consisted primarily of
inventory, of its expansion and docking product line to Mission.
The operating results
62
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
of Mission are included in the results of the Connectivity
Group. The following tables summarize the Companys
revenue, operating results and assets by business segment
(amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
High-Power Group
|
|
$
|
28,752
|
|
|
$
|
46,156
|
|
|
$
|
48,074
|
|
Low-Power Group
|
|
|
20,187
|
|
|
|
23,747
|
|
|
|
22,413
|
|
Connectivity Group
|
|
|
6,481
|
|
|
|
7,243
|
|
|
|
7,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
55,420
|
|
|
$
|
77,146
|
|
|
$
|
77,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
High-Power Group
|
|
$
|
(3,448
|
)
|
|
$
|
367
|
|
|
$
|
(1,312
|
)
|
Low-Power Group
|
|
|
9,913
|
|
|
|
8,024
|
|
|
|
338
|
|
Connectivity Group
|
|
|
46
|
|
|
|
431
|
|
|
|
(608
|
)
|
Corporate
|
|
|
(7,804
|
)
|
|
|
(10,739
|
)
|
|
|
(14,038
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,293
|
)
|
|
$
|
(1,917
|
)
|
|
$
|
(15,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The High-Power Group operating loss for 2007 includes a $222,000
inventory impairment charge and a $3,675,000 goodwill impairment
charge (see Note 8). The Low-Power Group operating income
for 2007 includes a $3,512,000 inventory impairment charge, a
$1,137,000 asset impairment charge and a $237,000 goodwill
impairment charge (see Note 8).
The Companys corporate function supports its various
business segments and, as a result, the Company attributes the
aggregate amount of its general and administrative expense to
corporate as opposed to allocating it to individual business
segments.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
High-Power Group
|
|
$
|
8,628
|
|
|
$
|
11,977
|
|
Low-Power Group
|
|
|
4,705
|
|
|
|
6,447
|
|
Connectivity Group
|
|
|
1,703
|
|
|
|
2,009
|
|
Corporate
|
|
|
32,698
|
|
|
|
30,802
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47,734
|
|
|
$
|
51,235
|
|
|
|
|
|
|
|
|
|
|
The Companys cash and investments are used to support its
various business segments and, as a result, the Company
considers its aggregate cash and investments to be corporate
assets as opposed to assets of individual business segments.
63
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
The Company attributes revenue from external customers to
geography based on the location to which products are shipped.
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 (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Product Line
|
|
|
|
Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
High-power mobile electronic power products
|
|
$
|
28,047
|
|
|
$
|
45,886
|
|
|
$
|
47,835
|
|
Low-power mobile electronic power products
|
|
|
20,187
|
|
|
|
23,243
|
|
|
|
19,308
|
|
Foldable keyboard products
|
|
|
|
|
|
|
504
|
|
|
|
3,101
|
|
Accessories and other products
|
|
|
709
|
|
|
|
270
|
|
|
|
221
|
|
Handheld products
|
|
|
|
|
|
|
|
|
|
|
44
|
|
Expansion and docking products
|
|
|
6,477
|
|
|
|
7,243
|
|
|
|
7,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
55,420
|
|
|
$
|
77,146
|
|
|
$
|
77,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Geography
|
|
|
|
Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
North America
|
|
$
|
49,801
|
|
|
$
|
73,914
|
|
|
$
|
64,109
|
|
Europe
|
|
|
4,556
|
|
|
|
2,141
|
|
|
|
3,579
|
|
Asia Pacific
|
|
|
1,063
|
|
|
|
1,091
|
|
|
|
10,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
55,420
|
|
|
$
|
77,146
|
|
|
$
|
77,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Revenue by Route to Market
|
|
|
|
Years Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Retailers and distributors
|
|
|
59
|
%
|
|
|
45
|
%
|
|
|
37
|
%
|
OEM and private-label-resellers
|
|
|
27
|
%
|
|
|
45
|
%
|
|
|
52
|
%
|
Other
|
|
|
14
|
%
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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 38% and 21% of net sales for the
year ended December 31, 2009. Two customers accounted for
42% and 33% of net sales for the year ended December 31,
2008. Three customers accounted for 36%, 27%, and 10% of net
sales for the year ended December 31, 2007.
64
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
One customers accounts receivable balance accounted for
36% of net accounts receivable at December 31, 2009. Two
customers accounts receivable balances accounted for 56%
and 28% of net accounts receivable at December 31, 2008.
Allowance for doubtful accounts was $130,000 and $570,000 at
December 31, 2009 and December 31, 2008, respectively.
Allowance for sales returns and price protection was $442,000
and $246,000 at December 31, 2009 and December 31,
2008, respectively.
If any of our significant customers reduce, delay or cancel
orders with us, and we are not able to sell our products to new
customers at comparable levels, our revenues could decline
significantly and could result in excess inventory and
obsolescence charges. In addition, any difficulty in collecting
amounts due from one or more significant customers would
negatively impact our operating results.
|
|
(17)
|
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.
At December 31, 2008, the Company had accrued a $600,000
liability for payroll related taxes and potential interest and
penalties in connection with the Companys voluntary review
of historical stock option granting practices and determination
that certain grants had intrinsic value on the applicable
measurement dates of the stock option grants. The Internal
Revenue Service has commenced an audit of employment taxes due
in connection with these stock option grants. In February 2009,
the Company received and accrued for an assessment from the
Internal Revenue Service related to this audit in the amount of
$596,000. In March 2009, the Company received an additional
assessment from the Internal Revenue Service related to this
audit in the amount of $268,000. Based on the progress of the
audit, as of June 30, 2009, the Company accrued an
additional $270,000 related to this liability. In June 2009, the
Company received a full and final assessment from the Internal
Revenue Service related to this audit in the amount of $672,000,
which was paid in full by the Company, and the Company
recognized a favorable adjustment in the amount of $198,000 to
the accrued contingent liability related to this audit. In July
2009, the Company received and executed closing agreements on
the final determination covering specific matters related to
this audit, and in August 2009, the Internal Revenue Service
formally completed its audit upon its execution of the closing
agreements. No contingent liability related to this audit exists
at December 31, 2009.
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
65
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
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, 2008, the Company had
estimated and accrued a liability for this contingency in the
amount of $254,000. At December 31, 2009, the Company had
estimated, and recorded, a remaining liability for this
contingency in the amount of $150,000.
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.
|
|
(19)
|
Supplemental
Financial Information
|
A summary of additions and deductions related to the allowances
for accounts receivable for the years ended December 31,
2009, 2008 and 2007 follows (amounts 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, 2009
|
|
$
|
570
|
|
|
$
|
125
|
|
|
$
|
(565
|
)
|
|
$
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008
|
|
$
|
597
|
|
|
$
|
47
|
|
|
$
|
(74
|
)
|
|
$
|
570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2007
|
|
$
|
286
|
|
|
$
|
125
|
|
|
$
|
186
|
|
|
$
|
597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for sales returns and price protection:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2009
|
|
$
|
246
|
|
|
$
|
695
|
|
|
$
|
(499
|
)
|
|
$
|
442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008
|
|
$
|
474
|
|
|
$
|
564
|
|
|
$
|
(792
|
)
|
|
$
|
246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2007
|
|
$
|
350
|
|
|
$
|
468
|
|
|
$
|
(344
|
)
|
|
$
|
474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
IGO, INC.
AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and
2007 (Continued)
|
|
(20)
|
Quarterly
Financial Data (Unaudited)
|
A summary of the quarterly data for the years ended
December 31, 2009 and 2008 follows (amounts in thousands,
except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
14,940
|
|
|
$
|
15,075
|
|
|
$
|
13,837
|
|
|
$
|
11,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
4,618
|
|
|
$
|
4,577
|
|
|
$
|
5,105
|
|
|
$
|
4,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
(6,043
|
)
|
|
$
|
(4,578
|
)
|
|
$
|
(4,726
|
)
|
|
$
|
(4,305
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(1,117
|
)
|
|
$
|
118
|
|
|
$
|
538
|
|
|
$
|
196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net Income attributable to non-controlling interest
|
|
$
|
26
|
|
|
$
|
16
|
|
|
$
|
(220
|
)
|
|
$
|
(106
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
(1,091
|
)
|
|
$
|
134
|
|
|
$
|
318
|
|
|
$
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.03
|
)
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.03
|
)
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
18,938
|
|
|
$
|
18,553
|
|
|
$
|
20,091
|
|
|
$
|
19,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
5,578
|
|
|
$
|
5,404
|
|
|
$
|
6,145
|
|
|
$
|
5,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
(6,906
|
)
|
|
$
|
(5,787
|
)
|
|
$
|
(5,612
|
)
|
|
$
|
(6,204
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of assets
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlement income
|
|
$
|
672
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
$
|
(235
|
)
|
|
$
|
(66
|
)
|
|
$
|
859
|
|
|
$
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net Income attributable to non-controlling interest
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(210
|
)
|
|
$
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(235
|
)
|
|
$
|
(66
|
)
|
|
$
|
649
|
|
|
$
|
103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
0.02
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
0.02
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the fourth quarter of 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 quarter ended
December 31, 2009.
67
|
|
Item 9.
|
Changes
in and Disagreements With Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A(T).
|
Controls
and Procedures
|
Based on their evaluation as of December 31, 2009, 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, 2009. 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, 2009.
This annual report does not include an attestation report of
the Companys registered public accounting firm regarding
internal control over financial reporting. Managements
report was not subject to attestation by the Companys
registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit the Company
to provide only managements report in this annual
report.
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, 2009 that has
materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
|
|
Item 9B.
|
Other
Information
|
Not applicable.
68
|
|
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 2010 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 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 2010 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 2010 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 2010 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 2010 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.
(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.
69
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 9, 2010.
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 9, 2010.
|
|
|
|
|
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
|
70
EXHIBIT INDEX
|
|
|
|
|
Exhibit Number
|
|
Description of Document
|
|
|
3
|
.1
|
|
Certificate of Incorporation of the Company(1)
|
|
3
|
.2
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of June 17, 1997(2)
|
|
3
|
.3
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of September 10, 1997(1)
|
|
3
|
.4
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of July 20, 1998(1)
|
|
3
|
.5
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of February 3, 2000(1)
|
|
3
|
.6
|
|
Articles of Amendment to the Certificate of Incorporation of the
Company dated as of March 31, 2000(2)
|
|
3
|
.7
|
|
Certificate of Designations, Preferences, Rights and Limitations
of Series G Junior Participating Preferred Stock of
Mobility Electronics, Inc.(3)
|
|
3
|
.8
|
|
Certificate of Ownership and Merger Merging iGo Merger Sub Inc.
with and into Mobility Electronics, Inc.(4)
|
|
3
|
.9
|
|
Certificate of Elimination of Series C, Series D,
Series E, and Series F Preferred Stock of Mobility
Electronics, Inc.(4)
|
|
3
|
.10
|
|
Fourth Amended and Restated Bylaws of the Company(5)
|
|
4
|
.1
|
|
Specimen of Common Stock Certificate(6)
|
|
4
|
.2
|
|
Rights Agreement between the Company and Computershare
Trust Company, dated June 11, 2003(3)
|
|
4
|
.3
|
|
Amendment No. 1 to Rights Agreement dated as of
August 4, 2006, by and between the Company and
Computershare Trust Company(7)
|
|
4
|
.4
|
|
Amendment No. 2 to Rights Agreement dated as of
October 11, 2006, by and between the Company and
Computershare Trust Company(8)
|
|
4
|
.5
|
|
Form of Warrant to Purchase Common Stock of the Company issued
to Silicon Valley Bank on September 3, 2003(9)
|
|
4
|
.6
|
|
$25 Million Threshold Warrant to Purchase Shares of Common Stock
issued to Motorola, Inc., dated as of March 31, 2005(10)
|
|
4
|
.7
|
|
$50 Million Threshold Warrant to Purchase Shares of Common Stock
issued to Motorola, Inc., dated as of March 31, 2005(10)
|
|
4
|
.8
|
|
Strategic Partners Investment Agreement by and among the
Company, RadioShack Corporation and Motorola, Inc., dated as of
March 31, 2005(10)
|
|
10
|
.1
|
|
Amended and Restated 1996 Long Term Incentive Plan, as amended
on January 13, 2000(1)+
|
|
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)
|
|
|
|
|
|
Exhibit Number
|
|
Description of Document
|
|
|
10
|
.10
|
|
Employment Agreement, dated July 17, 2006, by and between
the Company and Jonathan Downer (17)+
|
|
10
|
.11
|
|
Omnibus Long-Term Incentive Plan Restricted Stock Unit Award
Agreement, dated July 17, 2006, by and between the Company
and Jonathan Downer (17)+
|
|
10
|
.12
|
|
Form of Amended and Restated 2005 Omnibus Long-Term Incentive
Plan Restricted Stock Unit Award Agreement (18)+
|
|
10
|
.13
|
|
Amended and Restated Form of Non-Employee Director Long-Term
Incentive Plan Restricted Stock Unit Award Agreement (Annual
Committee Grants) (18)+
|
|
10
|
.14
|
|
Amended and Restated Form of Non-Employee Director Long-Term
Incentive Plan Restricted Stock Unit Award Agreement (Election /
Re-Election Committee Grants) (18)+
|
|
10
|
.15
|
|
Form of 2007 Omnibus Long-Term Incentive Plan Restricted Stock
Unit Award Agreement (19)+
|
|
10
|
.16
|
|
Asset Purchase Agreement dated as of February 21, 2007 by
and between Mobility California, Inc. and Mission Technology
Group, Inc (20)
|
|
10
|
.17
|
|
Form Change In Control Agreement executed between the
Company and certain officers (21)+
|
|
10
|
.18
|
|
$2.5 Million Secured Promissory Note dated April 16, 2007
issued by Mission Technology Group, Inc(22)
|
|
10
|
.19
|
|
$1.43 Million Secured Promissory Note dated April 16, 2007
issued by Mission Technology Group, Inc(22)
|
|
10
|
.20
|
|
Amendment No. 1 to $2.5 Million Secured Promissory Note(23)
|
|
10
|
.21
|
|
Employment Agreement, dated May 1, 2007, by and between the
Company and Michael D. Heil (24)+
|
|
10
|
.22
|
|
Omnibus Long-Term Incentive Plan Restricted Stock Unit Award
Agreement, dated June 11, 2007 (25)+
|
|
10
|
.23
|
|
Omnibus Long-Term Incentive Plan Restricted Stock Unit Award
Agreement, dated June 11, 2007 (25)+
|
|
10
|
.24
|
|
Non-Employee Director Compensation Program (25)+
|
|
10
|
.25
|
|
2008 Executive Bonus Plan (26)+
|
|
10
|
.26
|
|
Amendment No. 1 to Omnibus Long-Term Incentive Plan
Restricted Stock Unit Award Agreement, dated March 19, 2008
(26)+
|
|
10
|
.27
|
|
Form of Omnibus Long-Term Incentive Plan Restricted Stock Unit
Award Agreement (26)+
|
|
10
|
.28
|
|
2009 Executive Bonus Plan(27)
|
|
21
|
.1
|
|
Subsidiaries
|
|
|
|
|
iGo Direct Corporation (Delaware)
|
|
|
|
|
iGo EMEA Limited (United Kingdom)
|
|
|
|
|
Mobility Assets, Inc. (Delaware)
|
|
|
|
|
Mobility California, Inc. (Delaware)
|
|
|
|
|
Mobility Idaho, Inc. (Delaware)
|
|
|
|
|
Mobility Texas, Inc. (Texas)
|
|
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 |
|
+ |
|
Management or compensatory plan or agreement. |
|
|
|
(1) |
|
Previously filed as an exhibit to Registration Statement
No. 333-30264
dated February 11, 2000. |
|
(2) |
|
Previously filed as an exhibit to Amendment No. 2 to
Registration Statement
No. 333-30264
on
Form S-1
dated May 4, 2000. |
|
(3) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on June 19, 2003. |
|
(4) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on May 21, 2008. |
|
(5) |
|
Previously filed as an exhibit to Annual Report on
Form 10-K
for the year end December 31, 2008. |
|
(6) |
|
Previously filed as an exhibit to Amendment No. 3 to
Registration Statement
No. 333-30264
on
Form S-1
dated May 18, 2000. |
|
(7) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on August 4, 2006. |
|
(8) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on October 12, 2006. |
|
(9) |
|
Previously filed as an exhibit to
Form 10-Q
for the quarter ended September 30, 2003. |
|
(10) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on April 5, 2005. |
|
(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. |
|
(15) |
|
Previously filed as an exhibit to
Form 10-Q
for the quarter ended September 30, 2004. |
|
(16) |
|
Previously filed as an exhibit to
Form 10-Q
for the quarter ended September 30, 2008. |
|
(17) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on July 18, 2006. |
|
(18) |
|
Previously filed as an exhibit to
Form 10-K
for the period ended December 31, 2005. |
|
(19) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on January 5, 2007. |
|
(20) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on February 22, 2007. |
|
(21) |
|
Previously filed as an exhibit to
Form 10-K
for the period ended December 31, 2007. |
|
(22) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on April 18, 2007. |
|
(23) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on April 16, 2008. |
|
(24) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on May 3, 2007. |
|
(25) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on June 13, 2007. |
|
(26) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed on March 21, 2008. |
|
(27) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
filed March 27, 2009 |
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.