<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission file number: 0-30907
-------
MOBILITY ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 86-0843914
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7955 EAST REDFIELD ROAD
SCOTTSDALE, ARIZONA 85260
(480) 596-0061
(Address and telephone number of principal executive offices)
Indicate by check mark whether 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 [ ] NO [X]
At July 31, 2000, there were 12,085,834 shares of the Registrant's Common
Stock outstanding.
<PAGE> 2
MOBILITY ELECTRONICS, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of June 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations
for the Three and Six Months Ended June 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURE 18
INDEX TO EXHIBITS 19
</TABLE>
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<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,701,652 $ 4,792,313
Accounts receivable, net 6,916,976 2,992,014
IPO proceeds receivable 44,640,000 --
Inventories 2,121,569 1,554,016
Prepaid expenses and other current assets 826,845 682,728
------------- -------------
Total current assets 56,207,042 10,021,071
------------- -------------
Property and equipment, net 1,906,534 1,916,891
Other assets, net 2,438,208 2,961,375
------------- -------------
Total assets $ 60,551,784 $ 14,899,337
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit $ 2,794,472 $ --
Accounts payable 3,238,275 2,298,946
Accrued expenses and other current liabilities 2,592,829 1,109,771
Notes payable 2,685,042 --
Current installments of long-term debt 71,490 993,138
Current installments of capital lease obligations 57,793 136,326
------------- -------------
Total current liabilities 11,439,901 4,538,181
------------- -------------
Lines of credit -- 2,728,538
Long-term debt, less current installments 3,401,250 5,285,750
Capital lease obligations, less current installments 13,569 36,636
------------- -------------
Total liabilities 14,854,720 12,589,105
------------- -------------
Stockholders' equity:
Convertible preferred stock - Series C, $.01 par value;
authorized 15,000,000 shares; 2,477,808 and
2,399,102 shares issued and outstanding at
June 30, 2000 and December 31, 1999,
respectively 24,478 23,991
Common stock, $.01 par value; authorized 90,000,000
shares; 11,363,714 and 5,978,679 shares issued
and outstanding at June 30, 2000 and December
31, 1999, respectively 113,637 59,787
Additional paid-in capital 101,759,113 51,719,778
Accumulated deficit (52,724,255) (46,659,488)
Stock subscription and deferred compensation (3,475,909) (2,833,836)
------------- -------------
Total stockholders' equity 45,697,064 2,310,232
------------- -------------
Total liabilities and stockholders' equity $ 60,551,784 $ 14,899,337
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------------ ------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 6,289,680 $ 3,560,417 $ 11,291,685 $ 6,788,201
Cost of sales 4,822,047 3,464,119 8,429,333 6,258,994
------------ ------------ ------------ ------------
Gross profit 1,467,633 96,298 2,862,352 529,207
------------ ------------ ------------ ------------
Operating expenses:
Sales and marketing 1,838,918 1,219,599 2,983,219 2,773,766
Research and development 927,549 1,117,221 1,878,206 2,189,705
General and administrative 927,816 687,277 1,875,269 1,516,374
Non-cash compensation 350,900 350,750 658,827 350,750
------------ ------------ ------------ ------------
Total operating expenses 4,045,183 3,374,847 7,395,521 6,830,595
------------ ------------ ------------ ------------
Loss from operations (2,577,550) (3,278,549) (4,533,169) (6,301,388)
Other income (expense):
Interest expense (685,648) (2,928,591) (1,672,382) (3,570,786)
Interest income 80,695 20,352 138,494 34,985
Other, net 80 126 2,290 598
------------ ------------ ------------ ------------
Loss before provision for income taxes (3,182,423) (6,186,662) (6,064,767) (9,836,591)
Provision for income taxes -- -- -- --
------------ ------------ ------------ ------------
Net loss (3,182,423) (6,186,662) (6,064,767) (9,836,591)
Beneficial conversion costs of preferred stock -- -- (48,663) --
------------ ------------ ------------ ------------
Net loss attributable to common stockholders $ (3,182,423) $ (6,186,662) $ (6,113,430) $ (9,836,591)
============ ============ ============ ============
Net loss per share:
Basic and diluted $ (0.46) $ (1.33) $ (0.93) $ (2.14)
============ ============ ============ ============
Weighted average common shares outstanding:
Basic and diluted 6,869,711 4,644,932 6,596,966 4,605,912
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,064,767) $ (9,836,591)
Adjustments to reconcile net loss to net cash used
in operating activities:
Provision for accounts receivable 60,000 60,000
Provision for obsolete inventory 5,000 30,000
Depreciation and amortization 359,073 740,753
Amortization on deferred loan costs 1,106,650 2,920,537
Amortization on deferred compensation 658,827 42,750
Changes in operating assets and liabilities:
Accounts receivable (3,984,962) (990,847)
Inventories (572,554) 1,179,816
Prepaid expenses and other assets (767,671) 197,476
Accounts payable 939,329 (1,125,460)
Accrued expenses and other current liabilities 570,836 (286,556)
------------ ------------
Net cash used in operating activities (7,690,239) (7,068,122)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (291,794) (718,034)
------------ ------------
Net cash used in investing activities (291,794) (718,034)
------------ ------------
Cash flows from financing activities:
Cash received from issuance of notes payable -- 3,500,000
Cash received from lines of credit 65,933 --
Repayment of note payable (166,667) --
Repayment of long-term debt and capital lease obligations (216,080) (108,995)
Net proceeds from issuance of common stock -- 1,845,187
Net proceeds from issuance of preferred stock 4,996,148 1,980,129
Proceeds from exercise of warrants 212,038 173,878
------------ ------------
Net cash provided by financing activities 4,891,372 7,390,199
------------ ------------
Effects of exchange rates on cash and cash equivalents -- 12,414
Net decrease in cash and cash equivalents (3,090,661) (383,543)
Cash and cash equivalents, beginning of period 4,792,313 2,432,703
------------ ------------
Cash and cash equivalents, end of period $ 1,701,652 $ 2,049,160
============ ============
Supplemental cash flow information:
Interest paid $ 563,103 $ 655,251
============ ============
Noncash investing and financing activities:
Warrants issued in connection with the execution of debt instruments $ 365,328 $ 4,275,657
============ ============
Warrants issued in connection with the extension of notes payable $ 213,043 $ --
============ ============
Accrued interest refinanced with extension of notes payable $ 160,042 $ --
============ ============
Conversion of bridge loans to 278,125 shares of common stock $ -- $ 2,225,000
============ ============
Issuance of 166,666 shares of Series C preferred stock for settlement
of accounts payable and inventory purchases $ -- $ 1,000,000
============ ============
Issuance of 38,500 shares of common stock as settlement for
contingent purchase price $ -- $ 308,000
============ ============
Options issued for services $ -- $ 67,443
============ ============
Stock subscription receivable $ 1,200,000 $ --
============ ============
IPO proceeds receivable $ 44,640,000 $ --
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-5-
<PAGE> 6
MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include
the accounts of Mobility Electronics, Inc. ("Mobility" or the "Company")
formerly known as Electronics Accessory Specialists International, Inc. and its
wholly owned subsidiary, Mobility Electronics, L.L.C., including its three
operating subsidiaries, up to October 1999, being the month of the sale of the
subsidiary. All significant intercompany balances and transactions have been
eliminated in the accompanying consolidated financial statements.
The accompanying condensed consolidated financial statements are
unaudited and have been prepared in accordance with generally accepted
accounting principles, pursuant to rules and regulations of the Securities and
Exchange Commission (the "SEC"). In the opinion of management, the accompanying
condensed consolidated financial statements include normal recurring adjustments
that are necessary for a fair presentation of the results for the interim
periods presented. Certain information and footnote disclosures have been
condensed or omitted pursuant to such rules and regulations. These condensed
consolidated financial statements should be read in conjunction with our audited
consolidated financial statements and notes thereto for the fiscal year ended
December 31, 1999 included in our Registration Statement on Form S-1 as amended,
filed with the SEC. The results of operations for the three and six months ended
June 30, 2000 are not necessarily indicative of results to be expected for the
full year or any other period.
2. INITIAL PUBLIC OFFERING
On June 30, 2000, the Company's registration statement on Form S-1
registering its initial public offering ("IPO") of 4,000,000 shares of common
stock became effective. At the offering price of $12.00 per share, the Company
will receive proceeds of approximately $44.6 million from the IPO, net of
underwriting discounts and commissions of approximately $3.4 million. Additional
offering expenses incurred or estimated include legal, accounting and printing
expenses of approximately $1.2 million, director and officers liability
insurance of $160,300, SEC and NASDAQ registration and filing fees of $140,855
and miscellaneous expenses of $42,700. The net cash proceeds to the Company
after the payment of the estimated total offering expenses of $4.9 million is
estimated to be approximately $43.1 million. As part of the IPO, the Company
granted the underwriters a 30-day option from the effective date of the IPO to
purchase up to 600,000 additional shares of common stock to cover
over-allotments, if any. On July 28, 2000, the underwriters exercised their
30-day option in full and purchased 600,000 additional shares of common stock,
resulting in additional IPO proceeds due to the Company of approximately $6.7
million, net of underwriting discounts and commissions of $504,000. Including
the underwriters' over-allotment option, the expected net cash proceeds to the
Company after deducting the estimated total offering expenses of $5.4 million is
estimated to be approximately $49.8 million.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue Recognition
Revenue from product sales is recognized upon shipment and transfer of
ownership from the Company or contract manufacturer to the customer. Provisions
for returns and credits are provided for in the same period the related sales
are recorded.
(b) Segment Reporting
The Company has only one operating business segment, the sale of
peripheral computer equipment.
(c) Recent Accounting Pronouncements
During December 1999, the SEC released Staff Accounting Bulletin No.
101 (SAB No. 101), "Revenue Recognition in Financial Statements". SAB 101
summarizes the SEC staff's view in applying generally accepted accounting
principles to revenue recognition in financial statements. In March 2000, the
SEC staff issued SAB 101A to delay certain transition provisions of SAB 101. SAB
101A deferred the effective date for registrants with a fiscal year beginning
between December 16, 1999 and March 15, 2000. Those registrants may report a
change in accounting principle no later than their second fiscal quarter of the
fiscal year beginning after December 15, 1999. In periods subsequent to
transition, registrants should disclose
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<PAGE> 7
MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
the amount of revenue (if material to income before income taxes) recognized in
those periods that was included in the cumulative effect adjustment. The
adoption of SAB 101 did not have a material impact on our revenues or revenue
recognition policies.
In March 2000, the Financial Accounting Standards Board issued
Interpretation Number 44, "Accounting for Certain Transactions Involving Stock
Compensation - An Interpretation of APB No. 25". The Interpretation clarifies
the application of Opinion 25 in certain situations, as defined. The
Interpretation is effective July 1, 2000 but covers certain events having
occurred after December 15, 1998. To the extent that events covered by this
Interpretation occur during the period after December 15, 1998 but before the
issuance of the Interpretation, the effects of applying this Interpretation
would be recognized on a prospective basis from the effective date. Accordingly,
upon initial application of the Interpretation, no adjustment would be made to
financial statements for the periods before the effective date and no expense
would be recognized for any additional compensation cost measured that is
attributed to periods before the effective date. The Company expects that the
adoption of this Interpretation will not have a material impact on the
accompanying condensed consolidated financial statements.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133: "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133), which established accounting
and reporting standards for all derivative instruments and hedging activities.
SFAS No. 133 requires the recognition of all derivatives as either assets or
liabilities in the balance sheet at fair value. In June 1999, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133" (SFAS No. 137), which
defers the effective date of SFAS No. 133 to be effective for all fiscal years
beginning after June 15, 2000. The Company will adopt SFAS No. 133 in Fiscal
2002. SFAS No. 133 is not expected to have a material impact on the Company's
result of operations or financial position.
4. STOCKHOLDERS' EQUITY
(a) Preferred Stock
On March 6, 2000, the Company signed a Strategic Partner Agreement with
Cybex Computer Products Corporation ("Cybex"). The Company and Cybex have agreed
to license certain technology to each other and the Company has agreed to sell
certain of its products to Cybex on a private label basis. In conjunction with
this agreement, the Company sold Cybex 500,000 shares of $.01 par value Series D
preferred stock for $5,000,000, or $10.00 per share. On June 30, 2000, the first
trading date of the Company's initial public offering, the shares of Series D
preferred stock converted automatically into 438,595 shares of common stock at a
conversion rate of 1-to-0.87719 ($10.00 divided by 95% of the $12.00 initial
public offering price per share of common stock).
During January 2000, the Company completed a private placement and
issued 48,706 shares of Series C preferred stock at $6.00 per share for total
gross proceeds of $292,236. In conjunction with this private placement, the
Company issued a warrant for each share of Series C preferred stock to purchase
one additional share of common stock. The total warrants issued of 48,706 are
exercisable at $.02 per common stock share and expire October 1, 2002.
At the date of issuance of the Series C preferred stock, a non-cash
beneficial conversion adjustment of $48,663, which represents a 17% discount to
the fair market value of the common stock at the date of issuance, has been
recorded in the 2000 consolidated financial statements as an increase and
decrease to additional paid-in capital.
The Series C preferred stock is convertible into shares of common
stock. The rate of conversion is 1-to-0.68995 as of June 30, 2000. The initial
conversion rate was 1-for-1, but is subject to change if certain events occur.
Generally, the conversion rate will be adjusted if the Company issues any
non-cash dividends on outstanding securities, splits its securities or otherwise
effects a change to the number of its outstanding securities. The conversion
rate will also be adjusted if the Company issues additional securities at a
price that is less than the price that the Series C preferred stockholders paid
for their shares. Such adjustments will be made according to certain formulas
that are designed to prevent dilution of the Series C preferred stock. The
Series C preferred stock can be converted at any time at the option of the
holder, and will convert automatically, immediately prior to the consummation of
a firm commitment public offering of common stock pursuant to a
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<PAGE> 8
MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
registration statement filed with the Securities and Exchange Commission having
a per share price equal to or greater than $24.00 per share and a total gross
offering amount of not less than $15,000,000.
The Company may not pay any cash dividends on its common stock while
any Series C preferred stock remain outstanding without the consent of the
Series C preferred stockholders. Holders of Series C preferred stock are
entitled to vote on all matters submitted for a vote of the holders of common
stock. Holders will be entitled to one vote for each share of common stock into
which one share of Series C preferred stock could then be converted. In the
event of liquidation or dissolution, the holders of Series C preferred stock
will be entitled to receive the amount they paid for their stock, plus accrued
and unpaid dividends out of the Company's assets legally available for such
payments prior to the time other holders of securities junior to the Series C
preferred stock will be entitled to any payments.
(b) Common Stock
On March 10, 2000, the Company's Board of Directors authorized, and on
March 31, 2000 the Company's stockholders approved, a 1-for-2 reverse stock
split, and post-split adjustment of the number of authorized shares of common
stock to 90,000,000 shares. All share information included in the accompanying
condensed consolidated financial statements has been retroactively adjusted to
reflect this reverse split and post-split adjustment.
Holders of shares of common stock are entitled to one vote per share on
all matters submitted to a vote of the Company's 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 available therefor, 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.
5. LONG-TERM DEBT
On February 29, 2000, the Company amended certain of its Bridge Notes
to extend the maturity date of $1,225,000 of those Bridge Notes and related
accrued interest of approximately $160,000 from March 31, 2000 to the earlier of
an initial public offering ("IPO") or other equity infusion of $10,000,000 or
greater, or March 31, 2001. In addition, the annual interest rate was increased
to 14%. In conjunction with the extension of the maturity date, the Company
issued warrants to purchase 138,502 shares of common stock valued at $213,043.
The value of the warrants is charged to interest expense over the term of the
related debt. These warrants are exercisable for common stock at an exercise
price of $.02 per share. The Bridge Note extension agreement also provides that
the holders of the Bridge Notes have the option, within 15 days following the
close of an IPO, to convert any or all of the outstanding principal balance and
accrued but unpaid interest into shares of common stock at a conversion price of
95% of the offering price of the recently completed IPO, or $11.40 per share. In
July 2000, $327,009 of principal and accrued interest was converted into 26,685
shares of common stock and the balance of the outstanding Bridge Notes and
accrued interest was paid in full except for $100,000, which is expected to be
converted into common stock at a later date.
In July 2000, $8,395 of convertible debentures were converted to 1,086
shares of common stock at a conversion rate of $7.73 per share. The balance of
the convertible debentures and accrued interest thereon was paid in full. All
other long-term debt of the Company was also paid in full in July 2000.
6. LINES OF CREDIT
On March 13, 2000, the Company entered into agreements to extend the
maturity date of the lines of credit and promissory note agreements due March
31, 2000 to March 31, 2001. On July 14, 2000 the Company's lines of credit and
accrued interest thereon were paid in full. Available credit is $3,000,000 under
the domestic line of credit and $750,000 under the foreign line of credit.
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<PAGE> 9
MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS
Three customers accounted for 18%, 12% and 11% of net sales for the six
months ended June 30, 1999. Three customers accounted for 30%, 20% and 14% of
net sales for the six months ended June 30, 2000.
8. CONTINGENCIES AND LITIGATION
The Company is involved in various claims and legal actions in the
ordinary course of business. In the opinion of management, based on consultation
with legal counsel, the ultimate disposition of these matters will not have a
material adverse effect on the Company's financial position, results of
operations or liquidity. Accordingly, the accompanying condensed consolidated
financial statements do not include a provision for losses, if any, that might
result from the ultimate disposition of these matters.
9. NET LOSS PER SHARE
The computation of basic and diluted net loss per share follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss $(3,182,423) $(6,186,662) $(6,064,767) $(9,836,591)
Beneficial conversion costs of preferred stock -- -- (48,663) --
----------- ----------- ----------- -----------
Net loss attributable to common stockholders $(3,182,423) $(6,186,662) $(6,113,430) $(9,836,591)
=========== =========== =========== ===========
Weighted average common shares outstanding -
basic and diluted 6,869,711 4,644,932 6,596,966 4,605,912
=========== =========== =========== ===========
Net loss per share - basic and diluted $ (0.46) $ (1.33) $ (0.93) $ (2.14)
=========== =========== =========== ===========
</TABLE>
The following table summarizes securities outstanding which were not
included in the calculation of diluted net loss per share since their inclusion
would be antidilutive:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Stock options and warrants 3,124,376 2,141,629 3,124,376 2,141,629
=========== =========== =========== ===========
Convertible preferred stock 2,447,808 1,166,460 2,447,808 1,166,460
=========== =========== =========== ===========
</TABLE>
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<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This quarterly report contains forward-looking statements that involve
risks and uncertainties. The statements contained in this report that are not
purely historical are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Without limiting the foregoing, the words "may," "will," "should,"
"could," "expects," "plans," "intends," "anticipates," "believes," "estimates,"
"predicts," "potential," "continue" and similar expressions are intended to
identify forward-looking statements. All forward-looking statements included in
this quarterly report are based on information available to us up to and
including the date of this document, and we assume no obligation to update any
such forward-looking statements. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, set forth elsewhere in this quarterly report. You should also carefully
review the risks outlined in other documents that we file from time to time with
the Securities and Exchange Commission.
The following discussion and analysis of our financial condition and
results of operations should be read together with our condensed consolidated
financial statements and notes thereto contained in this report.
OVERVIEW
Mobility Electronics designs, develops and markets technology and products
for the computer industry as well as for a broad range of related microprocessor
applications. These technologies and products allow the connection of the
computer to various peripherals using a remote peripheral component interface,
or PCI bus, technology. Our proprietary Split Bridge(TM) technology consists of
a Split Bridge(TM) link, typically two customized semiconductors, or chips, two
connectors and a high-speed cable. Our technology for the first time allows any
computer's primary PCI bus, which is the heart of the computer, to be extended
to a remote location of up to 15 feet with virtually no software requirements or
performance degradation. This enables architectural designs of computer systems
and applications that previously were not feasible.
Mobility was founded in May 1995 to develop products for the portable
computer market. Initial sales were generated primarily from reselling
third-party power products. In mid-1996 we began manufacturing and shipping our
first port replicator and monitor stand products to Toshiba. During 1997 we
expanded our product offering to include port replicators for other computer
original equipment manufacturers, or OEMs, to meet the growing end user demand
for such products. After reviewing our financial performance relative to the
mechanical port replicator product line, we determined that we needed to
discontinue this product line. The then available technology required each port
replicator to be unique to each portable computer. It typically took two months
to design a unit and an additional month to implement production and have
product available in the market. Lifecycles of portable computers vary, but they
average approximately nine months. With one-third of the lifecycle consumed in
design and production implementation, it was difficult to generate sufficient
unit volume over the remaining life of the portable computer to amortize the
design and tooling costs. In addition, once the portable computer was replaced
in the market by a new model, we faced the economic issues associated with the
distribution channel's return of unsold product. This resulted in obsolete
inventory, as the unit was model specific to the discontinued portable computer.
The product line abandonment plan involved a migration from the mechanical
port replicator product offering to a universal line of docking stations. In the
first quarter of 1998 we began to pursue a technology that would enable us to
create a new universal docking product category which would allow portable
computer users to configure a flexible, high performance docking solution that
would be compatible with essentially all makes and models of portable computers.
In doing so, we developed our Split Bridge(TM) technology, which technology has
far reaching applications. In the first quarter of 1999 we changed our overall
business strategy to pursue the development and commercialization of our Split
Bridge(TM) technology as our primary focus.
Universal docking stations are a natural application for the Split
Bridge(TM) technology. These docking stations represent the first commercial
application of the technology. A line of products was designed around our Split
Bridge(TM) technology and existing USB technology. The universal nature of the
product line overcomes the issues that made the mechanical port replicator
financially unviable. Specifically, the products are not model specific to
portable computers and therefore provide leverage to the engineering and tooling
costs. In addition, the products are compatible with virtually all PCI-based
computers, which eliminates the inventory obsolescence issues, as the products
will be compatible with new portable computer models into the foreseeable
future.
We also evaluated our basic business strategy relative to the power
products and monitor stand product lines and determined that a fundamental
change was required. During the first half of 1999, we implemented a
manufacturing strategy that migrated in-house production to contract
manufacturers in Taiwan. This decision was made to take advantage of lower costs
offered by contract manufacturers and the ability to reduce in-house fixed
overhead expenses. Implementation of this strategy was completed in September
1999. The outsourcing of manufacturing allows us to concentrate our efforts on
technological development and application.
As a result of the product line abandonment plan and our outsourcing of
manufacturing, we experienced significant improvement in gross margins in the
third quarter of 1999. The new universal connectivity product line has been set
up to use our contract manufacturing partner in Malaysia and the cost of net
sales is predictable based upon committed price quotations.
-10-
<PAGE> 11
We sell our products directly to OEMs and the retail channel, as well as
through distributors. We have also established a few select worldwide private
label accounts, most notably IBM, NEC and Targus. A substantial portion of our
sales are concentrated among a number of OEMs, including Compaq, Dell,
Hewlett-Packard, IBM, NEC, Targus and Toshiba. Direct sales to OEMs accounted
for approximately 68.7% of net sales for the six months ended June 30, 2000 and
60.8% of net sales for the twelve months ended December 31, 1999. We expect that
we will continue to be dependent upon a number of OEMs for a significant portion
of our net sales in future periods, although no OEM is presently obligated to
purchase a specified amount of products.
A portion of our sales to distributors and resellers is generally under
terms that provide for certain stock balancing return privileges and price
protection. Sales to this channel have increased and are expected to further
increase significantly. Accordingly, we make a provision for estimated sales
returns and other allowances related to those sales. Returns, which have been
netted in the sales presented herein, were approximately 6.3% of sales for the
six months ended June 30, 2000 and 6.6% of sales for the twelve months ended
December 31, 1999. The major distributors are allowed to return up to 15.0% of
their prior quarter's purchases under the stock balancing programs, provided
that they place a new order for equal or greater dollar value of the stock
balancing return. Historically, the returns have been primarily mechanical port
replicators that are associated with portable computers that have been replaced
in the market. It is anticipated that the return activity will diminish
significantly due to the nature of the universal docking station and the reduced
obsolescence issues.
We derive a significant portion of our sales outside the United States,
principally in France, Germany and the United Kingdom, to OEMs, retailers and a
limited number of independent distributors. We expect sales outside the United
States to continue to account for a large portion of our future net sales.
International sales are generally denominated in the currency of our foreign
customers. A decrease in the value of foreign currencies relative to the U.S.
dollar could result in a significant decrease in U.S. dollar sales received by
us for our international sales. That risk may be increased as a result of the
introduction in January 1999 of the new "Euro" currency in European countries
that are part of the European Monetary Union, or EMU. During 2002, all EMU
countries are expected to completely replace their national currencies with the
Euro. However, we cannot determine the impact this may have on our business
because a significant amount of uncertainty exists as to the effect the Euro
will have on the marketplace and because all of the final rules and regulations
have not yet been defined and finalized by the European Commission regarding the
Euro currency. We intend to develop and implement a plan to mitigate this risk
once the final rules and regulations are established. We have not engaged in
hedging transactions with respect to our net foreign currency exposure. To the
extent that we implement hedging activities in the future with respect to
foreign currency transactions, there can be no assurance that we will be
successful in such hedging activities.
Various factors have in the past affected and may continue in the future to
affect our gross profits, including but not limited to, our product mix, lower
volume production and higher fixed costs for newly introduced product platforms
and technologies, market acceptance of newly introduced products and the
position of our products in their respective lifecycles. The initial stages of
our product introductions are generally characterized by lower volume production
which is accompanied by higher costs, especially for specific products which are
initially purchased in small volumes during the development lifecycle.
-11-
<PAGE> 12
RESULTS OF OPERATIONS
The following table presents certain selected consolidated financial data
for the periods indicated expressed as a percentage of net sales:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
2000 1999 2000 1999
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 76.7% 97.3% 74.7% 92.2%
----- ------ ----- ------
Gross profit 23.3% 2.7% 25.3% 7.8%
Operating expenses:
Sales and marketing 29.2% 34.3% 26.4% 40.9%
Research and development 14.7% 31.4% 16.6% 32.3%
General and administrative 14.8% 19.3% 16.6% 22.3%
Non-cash compensation 5.6% 9.9% 5.8% 5.2%
----- ------ ----- ------
Total operating expenses 64.3% 94.8% 65.5% 100.6%
----- ------ ----- ------
Loss from operations (41.0)% (92.1)% (40.1)% (92.8)%
Other income (expense):
Interest expense (10.9)% (82.3)% (14.8)% (52.6)%
Interest income 1.3% 0.6% 1.2% 0.5%
Other, net 0.0% 0.0% 0.0% 0.0%
----- ------ ----- ------
Loss before provision for income taxes (50.6)% (173.8)% (53.7)% (144.9)%
Provision for income taxes 0.0% 0.0% 0.0% 0.0%
----- ------ ----- ------
Net loss (50.6)% (173.8)% (53.7)% (144.9)%
Beneficial conversion costs of preferred stock 0.0% 0.0% 0.0% 0.0%
----- ------ ----- ------
Net loss attributable to common stockholders (50.6)% (173.8)% (53.7)% (144.9)%
===== ====== ===== ======
</TABLE>
Comparison of Three Months Ended June 30, 2000 and 1999
Net sales. Net sales consist of sales of product net of returns and
allowances. We recognize sales at the time goods are shipped and the ownership
of the goods is transferred to the customer, and maintain a reserve for stock
rotation transactions with the distribution channel. Net sales increased 76.7%
to $6.3 million for the three months ended June 30, 2000 from $3.6 million for
the three months ended June 30, 1999. There were several factors that
contributed to the sales growth, with sales of new products, which are based on
our Split Bridge(TM) technology, being the primary contributor. Sales from new
products totaled $2.0 million for the three months ended June 30, 2000, which
represented 31.8% of total net sales. Sales of our core product lines, power
products and monitor stands, increased 57.7% to $4.1 million, which accounted
for 67.3% of total net sales for the three months ended June 30, 2000 from $2.6
million for the three months ended June 30, 1999. Sales of mechanical port
replicators decreased 79% to $200,000 for the three months ended June 30, 2000
from $950,000 for the three months ended June 30, 1999. This decrease was
anticipated based upon our 1998 decision to abandon this product line which was
implemented in the first quarter of 1999.
Cost of sales. Our cost of sales consists primarily of costs associated
with components, outsourced manufacturing and in-house labor associated with
assembly, testing, packaging, shipping, quality assurance, depreciation of
equipment and indirect manufacturing costs. Cost of sales increased 39.2% to
$4.8 million for the three months ended June 30, 2000 from $3.5 million for the
three months ended June 30, 1999. The increase in cost of sales was primarily
the result of the volume increase in net sales. Cost of sales as a percentage of
net sales decreased to 76.7% for the three months ended June 30, 2000 from 97.3%
for the three months ended June 30, 1999.
Gross profit. Gross profit increased to 23.3% of net sales for the three
months ended June 30, 2000 from 2.7% of net sales for the three months ended
June 30, 1999. The gross profit rate improvement had two primary drivers: the
shift of manufacturing to outsourced contract manufacturers during 1999 and a
change in our sales mix from mechanical port replicators which have low gross
margin percentages to new products which have higher gross margin percentages.
-12-
<PAGE> 13
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. Sales and marketing expenses increased 50.8% to $1.8 million for the
three months ended June 30, 2000 from $1.2 million for the three months ended
June 30, 1999. The increase was primarily due to the launch of the new universal
product line. Spending was increased on demand creation activities including
advertising, trade shows and retail promotions. Sales and marketing expenses as
a percentage of net sales decreased to 29.2% for the three months ended June 30,
2000 from 34.3% for the three months ended June 30, 1999 primarily due to net
sales increasing at a faster rate than our sales and marketing expenses. We
expect sales and marketing expenses to increase in the future as we continue to
launch new product lines.
Research and development. Research and development expenses consist
primarily of salaries and personnel-related costs, facilities, outside
consulting, lab costs and travel related costs of our product development group.
Research and development expenses decreased 17.0% to $928,000 for the three
months ended June 30, 2000 from $1.1 million for the three months ended June 30,
1999. Research and development expenses as a percentage of net sales decreased
to 14.7% for the three months ended June 30, 2000 from 31.4% for the three
months ended June 30, 1999. The reduction was the result of discontinuing
development of mechanical docking products which was engineering intensive due
to the model specific nature of the product and the short lifecycle of the host
portable computer. We expect research and development costs to increase in the
future as we continue to develop next generation ASIC chips in order to keep us
at the leading edge of universal docking and remote PCI bus applications.
General and administrative. General and administrative costs consist
primarily of salaries and other personnel-related costs of our finance, human
resources, informational systems, corporate development and other administrative
personnel, professional fees, bad debt, depreciation and amortization and
related expenses. General and administrative costs increased 35.0% to $928,000
for the three months ended June 30, 2000 from $687,000 for the three months
ended June 30, 1999. The increase was primarily attributed to the recruiting and
relocation expenses and salaries of personnel hired to build the infrastructure
to support our growth. As a percentage of net sales, general and administrative
expenses decreased to 14.8% for the three months ended June 30, 2000 from 19.3%
for the three months ended June 30, 1999. We expect general and administrative
costs to increase in the future, in particular as we incur higher legal,
accounting and other expenses associated with being a public company.
Non-cash compensation. Non-cash compensation of $351,000, which is the
result of the issuance of common stock and stock options at a price deemed to be
less than market value to employees and outside consultants for services
rendered was flat for the quarters ended June 30, 2000 and June 30, 1999. As a
percentage of net sales, non-cash compensation was 5.6% and 9.9% for the three
months ended June 30, 2000 and 1999, respectively.
Interest expense, net. Interest expense consists of interest on our bank
revolving lines of credit and promissory notes as well as our subordinated debt
and convertible debentures, partially offset by interest earned on our cash
balances and short-term investments. In March and July, 1999 we issued
convertible bridge loan debt that included warrants. In the three months ended
June 30, 2000 we recorded a charge for deferred loan expense of $179,000
relative to such warrants. Net interest expense decreased 79.2% to $605,000 for
the three months ended June 30, 2000 from $2.9 million for the three months
ended June 30, 1999. The decrease was primarily due to a $2.2 million reduction
in the charge for deferred loan expense related to the bridge loan warrants.
Income taxes. We have incurred losses from inception to date; therefore, no
provision for income taxes was required for the three months ended June 30,
2000.
Comparison of Six Months Ended June 30, 2000 and 1999
Net sales. Net sales increased 66.3% to $11.3 million for the six months
ended June 30, 2000 from $6.8 million for the six months ended June 30, 1999.
Sales of new products, which are based on our Split Bridge(TM) technology,
primarily contributed to the growth in net sales. Sales from new products
totaled $3.8 million for the six months ended June 30, 2000 which represented
33.3% of total net sales. Sales of our core product lines, power products and
monitor stands increased 84.2% to $7.0 million, which accounted for 61.9% of
total net sales for the six months ended June 30, 2000 from $3.8 million for the
six months ended June 30, 1999. Sales of mechanical port replicators decreased
77.2% to $630,000 for the six months ended June 30, 2000 from $2.9 million for
the six months ended June 30, 1999. This decrease was anticipated based upon our
1998 decision to abandon this product line which was implemented in the first
quarter of 1999.
Cost of sales. Cost of sales increased 34.7% to $8.4 million for the six
months ended June 30, 2000 from $6.3 million for the six months ended June 30,
1999. The increase in cost of sales was primarily the result of the volume
increase in net sales. Cost of sales as a percentage of net sales decreased to
74.7% for the six months ended June 30, 2000 from 92.2% for the six months ended
June 30, 1999.
Gross profit. Gross profit increased to 25.3% of net sales for the six
months ended June 30, 2000 from 7.8% of net sales for the six months ended June
30, 1999. The gross profit rate improvement had two primary drivers: the shift
of
-13-
<PAGE> 14
manufacturing to outsourced contract manufacturers during 1999 and a change in
our sales mix from mechanical port replicators which have low gross margin
percentages to new products which have higher gross margin percentages.
Sales and marketing. Sales and marketing expenses increased 7.6% to $3.0
million for the six months ended June 30, 2000 from $2.8 million for the six
months ended June 30, 1999. The relatively small increase was due to a decrease
in spending in the second quarter of 1999 from relatively high levels in the
first quarter of that year as a result of the decision to abandon the mechanical
dock business and reposition the Company to pursue a universal line of docking
stations. In the second quarter of 2000, however, sales and marketing spending
increased from the first quarter of the year as additional promotional expenses
were incurred related to the launch of the new universal products. Sales and
marketing expenses as a percentage of net sales decreased to 26.4% for the six
months ended June 30, 2000 from 40.9% for the six months ended June 30, 1999
primarily due to net sales increasing at a greater rate than our sales and
marketing expenses. We expect sales and marketing expenses to increase in the
future as we continue to launch new product lines and as sales increase.
Research and development. Research and development expenses decreased 14.2%
to $1.9 million for the six months ended June 30, 2000 from $2.2 million for the
six months ended June 30, 1999. Research and development expenses as a
percentage of net sales decreased to 16.6% for the six months ended June 30,
2000 from 32.3% for the six months ended June 30, 1999. The reduction was the
result of discontinuing development of mechanical docking products which was
engineering intensive due to the model specific nature of the product and the
short lifecycle of the host portable computer. We expect research and
development costs to increase in the future as we continue to develop next
generation ASIC chips in order to keep us at the leading edge of universal
docking and remote PCI bus applications.
General and administrative. General and administrative costs increased
23.7% to $1.9 million for the six months ended June 30, 2000 from $1.5 million
for the six months ended June 30, 1999. The increase was primarily attributed to
the recruiting and relocation expenses and salaries of personnel hired to build
the infrastructure to support our growth. As a percentage of net sales, general
and administrative expenses decreased to 16.6% for the six months ended June 30,
2000 from 22.3% for the six months ended June 30, 1999.
Non-cash compensation. Non-cash compensation which is the result of the
issuance of common stock and stock options at a price deemed to be less than
market value to employees and outside consultants for services rendered
increased 87.8% to $659,000 for the six months ended June 30, 2000 from $351,000
for the six months ended June 30, 1999. As a percentage of net sales, non-cash
compensation was 5.8% and 5.2% for the six months ended June 30, 2000 and 1999,
respectively.
Interest expense, net. In March and July, 1999 we issued convertible bridge
loan debt that included warrants. In the six months ended June 30, 2000 we
recorded a charge for deferred loan expense of $615,000 relative to such
warrants. Net interest expense decreased 56.6% to $1.5 million for the six
months ended June 30, 2000 from $3.5 million for the six months ended June 30,
1999. The decrease was primarily due to a $1.9 million reduction in the charge
for deferred loan expense related to the bridge loan warrants.
Income taxes. We have incurred losses from inception to date; therefore, no
provision for income taxes was required for the six months ended June 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 2000, the Company's registration statement on Form S-1
registering its initial public offering of 4,000,000 shares of common stock
became effective. At the offering price of $12.00 per share, the Company
received proceeds in July 2000 of approximately $44.6 million, net of
underwriting discounts and commissions, from the initial public offering. As
part of the initial public offering, the Company granted the underwriters a
30-day option to purchase up to 600,000 additional shares of common stock to
cover over-allotments, if any. On July 28, 2000, the underwriters exercised
their 30-day option in full and purchased 600,000 additional shares of common
stock, resulting in additional IPO proceeds due to the Company of approximately
$6.7 million, net of underwriting discounts and commissions.
Since inception, we have funded our operations primarily through debt and
equity financing, as the cost of our operating activities have exceeded our
sales. Our operating activities used cash of $7.7 million and $7.1 million for
the six months ended June 30, 2000 and 1999, respectively. Net cash used in
operating activities for the six months ended June 30, 2000 was primarily
attributed to our net loss and an increase in accounts receivable, offset in
part by a decrease in amortization of deferred loan costs, a non-cash expense.
Our investing activities used cash of $292,000 and $718,000 for the six
months ended June 30, 2000 and 1999, respectively. From inception through June
30, 2000, cash used in investing activities was primarily used for capital
purchases, including tooling and capital leases.
-14-
<PAGE> 15
Our financing activities provided cash of $4.9 million and $7.4 million for
the six months ended June 30, 2000 and 1999, respectively. Net cash provided by
financing activities for the six months ended June 30, 2000 was primarily from
net proceeds from the sale of preferred stock.
Our cash and cash equivalents decreased to $1.7 million at June 30, 2000,
compared to $4.8 million at December 31, 1999. Our net working capital at those
same dates was $44.8 million and $5.6 million, respectively. At June 30, 2000
our available sources of liquidity other than our cash and cash equivalents were
foreign and domestic lines of credit with Bank of America totaling $3.75
million.
We believe that our existing sources of liquidity and net proceeds from the
initial public offering will be sufficient to satisfy our expected working
capital, debt repayment requirements and capital expenditures needs for at least
the next twelve months.
At December 31, 1999 we had $32.0 million of federal net operating loss
carryforwards which expire at various dates. We anticipate that the sale of
common stock in the offering 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 our ability to use the net operating loss carryforward in the
future. Additionally, our ability to use the net operating loss carryforward is
dependent upon our level of profitability, which cannot be determined.
YEAR 2000 READINESS
To date, we have not experienced any significant Year 2000 problems with
our products and business systems and do not expect that we will do so in the
future. We continue to monitor these systems to ensure that latent date-related
matters that may arise are properly and timely addressed. Costs associated with
the evaluation and modification of the products and business systems were
expensed as incurred and were not material to the financial position or results
of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks in the ordinary course or 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, which are subject to minimal credit and market risk. We believe that the
market risks associated with these financial instruments are immaterial.
Our revolving lines of credit and certain other debt obligations are
subject to variable rate interest which could be adversely affected by increases
in rates. During July, 2000, all except $100,000 of our debt was paid-off with
proceeds from our initial public offering, which minimizes this interest rate
risk.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
We are not a party to any material legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The following information relates to the use of proceeds from our initial
public offering of common stock. The effective date of our Registration
Statement on Form S-1, commission file number 333-30264, relating to our initial
public offering, was June 30, 2000. The aggregate offering price of the
4,600,000 shares registered, all of which were sold and which included the
exercise of the underwriters' over-allotment option, was $55,200,000. The
managing underwriters in the offering were Deutsche Banc Alex. Brown and Banc of
America Securities LLC.
-15-
<PAGE> 16
In connection with the offering, the estimated expenses are as follows:
<TABLE>
<S> <C>
Underwriting Discounts and Commissions $3,864,000
Other Expenses $1,532,855
----------
Total Estimated Expenses $5,396,855
==========
</TABLE>
Payment of expenses were to persons other than directors, officers, our
general partners or their associates, persons owning ten percent or more of any
class of our equity securities, or our affiliates. Our net offering proceeds,
after deducting the total estimated expenses described above, will be
$49,803,145.
From the effective date of the Registration Statement on June 30, 2000
through June 30, 2000, which was the end of the reporting period, none of the
proceeds from the offering had been received, and, therefore, none were used;
however, through July 31, 2000 we used the net proceeds from the offering to
repay indebtedness of $8,436,988.
All of the above listed payments were direct or indirect payments to
persons other than: directors, officers, general partners or their associates,
persons owning ten percent or more of any class of our equity securities, or our
affiliates.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None
ITEM 5. OTHER INFORMATION:
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits:
Exhibit
Number Description
------- -----------
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.(3)
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 -- Certificate of Designations, Preferences, Rights and
Limitations of Series C Preferred Stock.(1)
3.7 -- Amended Bylaws of the Company.(1)
3.8 -- Certificate of the Designations, Preferences, Rights and
Limitations of Series D Preferred Stock.(2)
3.9 -- Articles of Amendment to the Certificate of Incorporation of
the Company dated as of March 31, 2000.(3)
4.1 -- Specimen of Common Stock Certificate.(4)
4.2 -- Form of 12% Convertible Debenture of the Company.(1)
4.3 -- Registration Rights Agreement by and between the Company and
Miram International, Inc. dated July 29, 1997.(1)
4.4 -- Form of Unit Purchase Agreement used in 1998 Private
Placements for the Purchase of Up To 900 Units, Each
Consisting of 1,000 shares of the Company's Common stock.(1)
4.5 -- Form of Unit Purchase Agreement used in 1997 Private
Placements for the Purchase of Up To 875 Units, Each
Consisting of 2,000 shares of the Company's common stock and
warrants to purchase 500 shares of the Company's Common
Stock.(1)
4.6 -- Form of Warrant to Purchase Shares of common stock of the
Company used with the 13% Bridge Notes and Series C
Preferred Stock Private Placements.(3)
4.7 -- Form of 13% Bridge Promissory Note and Warrant Purchase
Agreement used in March 1999 Private Placement.(1)
4.8 -- Form of 13% Bridge Promissory Note and Warrant Purchase
Agreement used in July 1999 Private Placement.(1)
4.9 -- Form of 13% Bridge Note issued in July 1999 Private
Placements.(1)
4.10 -- 13% Bridge Note Conversion Notice expired June 30, 1999.(1)
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<PAGE> 17
4.11 -- Form of Series C Preferred Stock Purchase Agreement used in
1998 and 1999 Private Placements.(1)
4.12 -- Form of Series C Preferred Stock and Warrant Purchase
Agreements used in 1999 and 2000 Private Placements.(1)
4.13 -- Series C Preferred Stock Purchase Agreement executed May 3,
1999, between the Company, Philips Semiconductors VLSI, Inc.
(f/k/a VLSI Technology, Inc.) and Seligman Communications
and Information Fund, Inc.(1)
4.14 -- Amended and Restated Stock Purchase Warrant issued by the
Company to Finova Capital Corporation (f/k/a Sirrom Capital
Corporation) dated as of March 25, 1998.(1)
4.15 -- Stock Purchase Warrant issued by the Company to Finova
Capital Corporation (f/k/a Sirrom Capital Corporation) dated
as of March 25, 1998.(1)
4.16 -- Series C Preferred Stock and Warrant Purchase Agreement
dated October 29, 1999, between the Company and Seligman
Communications and Information Fund, Inc.(1)
4.17 -- Contribution and Indemnification Agreement by and among
Janice L. Breeze, Jeffrey S. Doss, Charles R. Mollo, Cameron
Wilson, the Company and certain Stockholders of the Company
dated April 20, 1998.(1)
4.18 -- Form of Warrant to Purchase common stock of the Company
issued to certain holders in Connection with that certain
Contribution and Indemnification Agreement by and among
Janice L. Breeze, Jeffrey S. Doss, Charles S. Mollo, Cameron
Wilson, the Company and certain Stockholders of the Company
dated April 20, 1998.(1)
4.19 -- Form of Warrant to Purchase common stock of the Company
issued to certain holders in Connection with that certain
Contribution and Indemnification Agreement by and among
Janice L. Breeze, Jeffrey S. Doss, Charles S. Mollo, Cameron
Wilson, the Company and certain Stockholders of the Company
dated November 2, 1999.(2)
4.20 -- Form of Warrant to Purchase Common Stock of the Company
issued in the 1997
4.21 -- Form of 13% Bridge Note issued in March 1999 Private
Placement.(2)
4.23 -- Investor Rights Agreement dated October 29, 1999 by and
between the Company and Seligman Communications and
Information Fund, Inc. entered into in connection with The
Series C Preferred Stock and Warrant Purchase Agreement
Series C Preferred Stock and Warrant Purchase Agreement
dated October 29, 1999.(2)
4.24 -- Form of Warrant to Purchase Shares of Common Stock issued in
connection with the Loan Extension Agreement dated February
29, 2000.(2)
4.25 -- Investors' Rights Agreement executed May 3, 1999 between the
Company, Philips Semiconductors VLSI, Inc. f/k/a VLSI
Technology, Inc.) and Seligman Communications and
Information Fund, Inc.(3)
4.26 -- Registration Rights granted by the Company to Cybex Computer
Products Corporation in connection with the Strategic
Partner Agreement dated March 6, 2000.(3)
4.27 -- 13% Bridge Note Conversion Notice used in July 1999 Private
Placement.(4)
10.1 -- Donald W. Johnson Non-qualified Stock Option Agreement dated
April 1, 2000.(3)
10.2 -- Consulting Agreement dated June 30, 2000 by and between the
Company and Portsmith LLC (6)
10.3 -- Promissory note in the principal sum of $1,198,800 dated
June 30, 2000 made by Portsmith LLC payable to the Company.
(6)
10.4 -- Strategic Partnership Agreement dated July 12, 2000 made by
and between the Company and 2C Computing, Inc.(5)
10.5 -- License Agreement dated July 12, 2000 made by and between
the Company and 2C Computing, Inc.(5)
24.1 -- None
27.1 -- Financial Data Schedule.(6)
----------
(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. 1 to Registration Statement
No. 333-30264 dated March 28, 2000.
(3) Previously filed as an exhibit to Amendment No. 2 to Registration Statement
No. 333-30264 dated May 4, 2000.
(4) Previously filed as an exhibit to Amendment No. 4 to Registration Statement
No. 333-30264 dated May 26, 2000.
(5) Previously filed as an exhibit to Post-Effective Amendment No. 1 to
Registration Statement No. 333-30264 dated July 24, 2000.
(6) Filed herewith.
(b) Reports on Form 8-K: None
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<PAGE> 18
MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements 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.
MOBILITY ELECTRONICS, INC.
Dated: August 14, 2000 By: /S/ RICHARD W. WINTERICH
--------------- ----------------------------------------
Richard W. Winterich
Vice President and Chief Financial Officer
and Authorized Officer of Registrant
(Principal Financial and Accounting Officer)
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<PAGE> 19
MOBILITY ELECTRONICS, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C> <C>
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.(3)
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 -- Certificate of Designations, Preferences, Rights and
Limitations of Series C Preferred Stock.(1)
3.7 -- Amended Bylaws of the Company.(1)
3.8 -- Certificate of the Designations, Preferences, Rights and
Limitations of Series D Preferred Stock.(2)
3.9 -- Articles of Amendment to the Certificate of Incorporation of
the Company dated as of March 31, 2000.(3)
4.1 -- Specimen of Common Stock Certificate.(4)
4.2 -- Form of 12% Convertible Debenture of the Company.(1)
4.3 -- Registration Rights Agreement by and between the Company and
Miram International, Inc. dated July 29, 1997.(1)
4.4 -- Form of Unit Purchase Agreement used in 1998 Private
Placements for the Purchase of Up To 900 Units, Each
Consisting of 1,000 shares of the Company's Common stock.(1)
4.5 -- Form of Unit Purchase Agreement used in 1997 Private
Placements for the Purchase of Up To 875 Units, Each
Consisting of 2,000 shares of the Company's common stock and
warrants to purchase 500 shares of the Company's Common
Stock. (1)
4.6 -- Form of Warrant to Purchase Shares of common stock of the
Company used with the 13% Bridge Notes and Series C
Preferred Stock Private Placements.(3)
4.7 -- Form of 13% Bridge Promissory Note and Warrant Purchase
Agreement used in March 1999 Private Placement.(1)
4.8 -- Form of 13% Bridge Promissory Note and Warrant Purchase
Agreement used in July 1999 Private Placement.(1)
4.9 -- Form of 13% Bridge Note issued in July 1999 Private
Placements.(1)
4.10 -- 13% Bridge Note Conversion Notice expired June 30, 1999.(1)
4.11 -- Form of Series C Preferred Stock Purchase Agreement used in
1998 and 1999 Private Placements.(1)
4.12 -- Form of Series C Preferred Stock and Warrant Purchase
Agreements used in 1999 and 2000 Private Placements.(1)
4.13 -- Series C Preferred Stock Purchase Agreement executed May 3,
1999, between the Company, Philips Semiconductors VLSI, Inc.
(f/k/a VLSI Technology, Inc.) and Seligman Communications
and Information Fund, Inc.(1)
4.14 -- Amended and Restated Stock Purchase Warrant issued by the
Company to Finova Capital Corporation (f/k/a Sirrom Capital
Corporation) dated as of March 25, 1998.(1)
4.15 -- Stock Purchase Warrant issued by the Company to Finova
Capital Corporation (f/k/a Sirrom Capital Corporation) dated
as of March 25, 1998.(1)
4.16 -- Series C Preferred Stock and Warrant Purchase Agreement
dated October 29, 1999, between the Company and Seligman
Communications and Information Fund, Inc.(1)
4.17 -- Contribution and Indemnification Agreement by and among
Janice L. Breeze, Jeffrey S. Doss, Charles R. Mollo, Cameron
Wilson, the Company and certain Stockholders of the Company
dated April 20, 1998.(1)
4.18 -- Form of Warrant to Purchase common stock of the Company
issued to certain holders in Connection with that certain
Contribution and Indemnification Agreement by and among
Janice L. Breeze, Jeffrey S. Doss, Charles S. Mollo, Cameron
Wilson, the Company and certain Stockholders of the Company
dated April 20, 1998.(1)
4.19 -- Form of Warrant to Purchase common stock of the Company
issued to certain holders in Connection with that certain
Contribution and Indemnification Agreement by and among
Janice L. Breeze, Jeffrey S. Doss, Charles S. Mollo, Cameron
Wilson, the Company and certain Stockholders of the Company
dated November 2, 1999.(2)
4.20 -- Form of Warrant to Purchase Common Stock of the Company
issued in the 1997
4.21 -- Form of 13% Bridge Note issued in March 1999 Private
Placement.(2)
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C> <C>
4.23 -- Investor Rights Agreement dated October 29, 1999 by and
between the Company and Seligman Communications and
Information Fund, Inc. entered into in connection with The
Series C Preferred Stock and Warrant Purchase Agreement
Series C Preferred Stock and Warrant Purchase Agreement
dated October 29, 1999.(2)
4.24 -- Form of Warrant to Purchase Shares of Common Stock issued in
connection with the Loan Extension Agreement dated February
29, 2000.(2)
4.25 -- Investors' Rights Agreement executed May 3, 1999 between the
Company, Philips Semiconductors VLSI, Inc. f/k/a VLSI
Technology, Inc.) and Seligman Communications and
Information Fund, Inc.(3)
4.26 -- Registration Rights granted by the Company to Cybex Computer
Products Corporation in connection with the Strategic
Partner Agreement dated March 6, 2000.(3)
4.27 -- 13% Bridge Note Conversion Notice used in July 1999 Private
Placement.(4)
10.1 -- Donald W. Johnson Non-qualified Stock Option Agreement dated
April 1, 2000.(3)
10.2 -- Consulting Agreement dated June 30, 2000 by and between the
Company and Portsmith LLC (6)
10.3 -- Promissory note in the principal sum of $1,198,800 dated
June 30, 2000 made by Portsmith LLC payable to the Company.
(6)
10.4 -- Strategic Partnership Agreement dated July 12, 2000 made by
and between the Company and 2C Computing, Inc.(5)
10.5 -- License Agreement dated July 12, 2000 made by and between
the Company and 2C Computing, Inc.(5)
24.1 -- Power of Attorney.(1)
27.1 -- Financial Data Schedule.(6)
</TABLE>
----------
(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. 1 to Registration Statement
No. 333-30264 dated March 28, 2000.
(3) Previously filed as an exhibit to Amendment No. 2 to Registration Statement
No. 333-30264 dated May 4, 2000.
(4) Previously filed as an exhibit to Amendment No. 4 to Registration Statement
No. 333-30264 dated May 26, 2000.
(5) Previously filed as an exhibit to Post-Effective Amendment No. 1 to
Registration Statement No. 333-30264 dated July 24, 2000.
(6) Filed herewith.
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.
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