UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 16, 2006
MOBILITY ELECTRONICS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
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0-30907
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86-0843914 |
(Commission File Number)
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(IRS Employer Identification No.) |
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17800 N. Perimeter Dr., Suite 200, Scottsdale, Arizona
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85255 |
(Address of Principal Executive Offices)
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(Zip Code) |
(480) 596-0061
(Registrants telephone number, including area code)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
On February 15, 2006, without admitting any liability, and in order to avoid the risk, cost
and burden of further litigation, Mobility Electronics, Inc. (the Company) entered into a
compromise settlement agreement and release (the Settlement Agreement) regarding the previously
disclosed litigation entitled Holmes Lundt, et al. vs. Mobility Electronics, Inc., et al. and Jason
Carnahan, et al. vs. Mobility Electronics, Inc., et al., pending in the District Court of the
Fourth Judicial District of the State of Idaho, in and for the County of Ada, Case No. CV OC
0302562D (the Lundt Litigation), and Jess Asla, et al. vs. Mobility Electronics, Inc., et al.,
pending in the United States District Court for the District of Idaho, Case No. CV-050342-S-BLW
(the Asla Litigation). The litigation covered by the Settlement Agreement pertains to the
Companys acquisition of Portsmith, Inc. pursuant to the terms of an Agreement and Plan of Merger
dated as of February 20, 2002, by and among Portsmith, Inc., certain holders of the outstanding
capital stock of Portsmith, Inc., Mobility Electronics, Inc. and Mobility Europe Holdings, Inc.
(the Merger Agreement). A more complete summary of the lawsuit is included in the Companys
periodic filings filed with the Securities and Exchange Commission.
The parties to the Settlement Agreement include (i) the plaintiffs in the Lundt Litigation and
Asla Litigation, namely Holmes Lundt, Leslie Lundt, Daniel P. Axtman, Jr., Amy Reino, Ethan Savage,
Matthew Cole, Brenda Marcelin, Jason Carnahan, Mark Peterson, Richard Neff, Diane Kiehn, Cliff
Weisgerber, Jess Asla, Ryan Adamson, Daren Nordhagen, Christine Smith, (collectively, the
Plaintiffs); and (ii) the Company, Mobility, Idaho, Inc. f/k/a Mobility Europe Holdings, Inc. and
Portsmith, Inc. (Portsmith), Charles R. Mollo, and Joan W. Brubacher (collectively, the Mobility
Parties).
Pursuant to the terms of the Settlement Agreement, the Company has agreed to pay the
Plaintiffs the aggregate sum of $3 million in cash, release one plaintiff from the repayment of a
$484,000 obligation, and issue 82,538 shares of the Companys common stock, $0.01 par value per
share to one plaintiff that were earned pursuant to the earn-out provisions of the Merger Agreement
but not previously issued.
In addition, pursuant to the terms of the Settlement Agreement, the Plaintiffs and the
Mobility Parties have mutually agreed to release each other and their affiliates from any and all
claims that they may have against the other, including without limitation, any and all claims
relating to the Merger Agreement. The Plaintiffs and Mobility Parties also agreed to be
responsible for their own respective attorneys fees and costs.
Item 3.02. Unregistered Sales of Equity Securities.
The information disclosed in Item 1.01 of this Current Report on Form 8-K with respect to the
issuance of 82,538 shares of the Companys common stock, $0.01 par value per share to one of the
plaintiffs is incorporated into this Item 3.02. This issuance was exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended, as a transaction not involving a public
offering.
Item 7.01. Regulation FD Disclosure.
As a result of the Settlement Agreement described in Item 1.01 above, and in accordance with
Statement of Financial Accounting Standard No. 5, Accounting for Contingencies (SFAS No. 5), the
Company has recorded an additional $4.3 million charge against its fourth quarter 2005 earnings
prepared in accordance with generally accepted accounting principles (GAAP). Although the
Settlement Agreement is a subsequent event that did not exist until February 15, 2006, SFAS No. 5
requires that the expense related to the Settlement Agreement be charged to the period in which the
underlying litigation was in existence and for which the Company has not yet reported in its
financial statements filed with the Securities and Exchange Commission. On February 9, 2006, the
Company announced a net loss of $1.1
million, or ($0.04) per diluted share, for the three months ended December 31, 2005, and net
income of $9.3 million, or $0.29 per diluted share, for the year ended December 31, 2005. The
additional charge of $4.3 million results in a net loss of $5.4 million, or ($0.18) per diluted
share for the three months ended December 31, 2005, and net income of $5.0 million, or $0.16 per
diluted share, for the year ended December 31, 2005. The charge will be reflected in the Companys
financial results for both the three months and the year ended December 31, 2005 filed with the
Securities and Exchange Commission on Form 10-K.
On February 16, 2006, the Company issued a press release regarding the Settlement Agreement
described in Item 1.01 above. A copy of the press release is furnished with this Form 8-K as
Exhibit 99.1.
SIGNATURES
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.
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Mobility Electronics, Inc.
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Dated: February 16, 2006 |
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/s/ Joan W. Brubacher
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Name: |
Joan W. Brubacher |
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Title: |
Executive Vice President and Chief Financial Officer |
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