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Filed with the Securities and Exchange Commission on
March 8, 2006
Securities Act Registration
No. 333-131222
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
Form S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
MOBILITY ELECTRONICS,
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
I.D. Number)
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17800 North Perimeter Drive, Suite 200
Scottsdale, Arizona 85255
(480) 596-0061
(Address, including zip code,
and telephone number,
including area code, of
Registrants principal executive offices)
Joan W. Brubacher
Executive Vice President and Chief Financial Officer
17800 North Perimeter Drive, Suite 200
Scottsdale, Arizona 85255
(480) 596-0061
(Name, address, including zip
code, and telephone
number, including area code, of
agent for service)
Copies of all communications to:
Richard F. Dahlson, Esq.
Jackson Walker L.L.P.
2435 N. Central Expressway, Suite 600
Richardson, Texas 75080
(972) 744-2900
Approximate date of commencement of proposed sale to
public: From time to time after this Registration
Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box: o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following box:
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering: o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering:
o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following box: o
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following box: o
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
The
information contained in this prospectus is not complete and may
be changed. The selling stockholders may not sell these
securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.
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SUBJECT
TO COMPLETION, DATED MARCH 8, 2006
PROSPECTUS
MOBILITY
ELECTRONICS, INC.
Common
Stock
3,760,264 Shares
The stockholders identified in the section of this prospectus
entitled Selling Stockholders on page 12 and
their permitted transferees are offering up to
3,760,264 shares of our common stock under this prospectus.
A description of the transaction in which the selling
stockholders obtained the shares offered is set forth under the
Selling Stockholders section of this prospectus as
well. We will not receive any proceeds from the sale of common
stock by the selling stockholders in this offering.
Our common stock is quoted on the Nasdaq National Market under
the symbol MOBE. The price to the public for the
shares and the proceeds to the selling stockholders will depend
upon the market price of the shares when sold. On March 6,
2006, the average of the high and low prices for the common
stock was $8.59 per share.
Investing in our common stock involves risks. See Risk
Factors beginning on page 2
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is ,
2006.
TABLE OF
CONTENTS
You should rely only on the information contained or
incorporated by reference in this prospectus. We have not
authorized anyone to provide prospective investors with
different or additional information. This prospectus is not an
offer to sell nor is it seeking an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
The information contained in this prospectus is correct only as
of the date of this prospectus, regardless of the time of the
delivery of this prospectus or any sale of these securities.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference
contain statements that constitute 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. The words believe,
expect, anticipate, and other similar
statements of expectations identify forward-looking statements.
Forward-looking statements in this prospectus and the documents
incorporated by reference include our expectations regarding the
adequacy of our financial reserves for future returns,
expectations regarding our customer relationships, and
expectations regarding capital expenditures. These
forward-looking statements are based largely on
managements expectations and involve known and unknown
risks, uncertainties and other factors, which may cause our
actual results, performance or achievements, or industry
results, to be materially different from any future results,
performance or achievements expressed or implied by these
forward-looking statements. Risks that could cause results to
differ materially from managements expectations are
described in this prospectus under the heading Risk
Factors. Additional factors that could cause actual
results to differ materially from those expressed in these
forward-looking statements include, among others, the following:
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the loss of, and failure to replace, any significant customers;
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the timing and success of new product introductions;
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product developments, introductions and pricing of competitors;
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the timing of substantial customer orders;
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the availability of qualified personnel;
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the performance of suppliers and subcontractors;
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difficulties in assimilating and integrating the operations,
products and workforce of the acquired companies;
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market demand and industry and general economic or business
conditions; and
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other factors to which this prospectus refers.
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In light of these risks and uncertainties, the forward-looking
statements contained in this prospectus and the documents
incorporated by reference may not prove to be accurate. We
undertake no obligation to update or revise any forward-looking
statements, or any facts, events, or circumstances after the
date hereof that may bear upon forward-looking statements.
Additionally, we do not undertake any responsibility to update
you on the occurrence of unanticipated events which may cause
actual results to differ from those expressed or implied by
these forward-looking statements.
All subsequent written or oral forward-looking statements
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by these cautionary statements.
OUR
BUSINESS
We are a leading provider of innovative products and solutions
for the mobile electronic industry. We utilize our proprietary
technology to design and develop products that make mobile
electronic devices more efficient and cost effective, thus
enabling professionals and consumers higher utilization of their
mobile devices and the ability to access information more
readily.
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. Our principal
executive office is located at 17800 N. Perimeter
Drive, Suite 200, Scottsdale, Arizona 85255, and our
telephone number is
(480) 596-0061.
Our website can be accessed at
www.mobilityelectronics.com. Information contained in our
website and the website of our subsidiaries, including iGo
Direct Corporation (www.igo.com), does not constitute
part of this prospectus. Unless otherwise indicated in this
prospectus,
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references to Mobility, us,
we, and our refer to Mobility
Electronics, Inc. and shall include our predecessor, Electronics
Accessory Specialists International, L.L.C.
RISK
FACTORS
Investing in our common stock involves a high degree of risk.
You should carefully consider the following risks and all the
other information contained and incorporated by reference in
this prospectus before making an investment decision about our
common stock. While the risks described below are the ones we
believe are most important for you to consider, these risks are
not the only ones that we face. If any of the following risks
actually occurs, our business, operating results or financial
condition could suffer, the trading price of our common stock
could decline and you could lose all or part of your
investment.
Risks
Related To Our Business
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, 2005, have an accumulated deficit
of $101.7 million. We intend to make expenditures on an
ongoing basis to support our operations, primarily from cash
generated from operations and possibly, 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
power products. If acceptance of these products does not
continue to grow, we will be unable to increase or sustain our
revenue, and our business will be severely harmed. If we do not
gain market acceptance of our products and technology, we will
be unable to achieve anticipated revenue or maintain revenue.
If we do not achieve widespread market acceptance of our power
products and 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 power adapter products. These universal power adapters
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 universal 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 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
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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 power, handheld connectivity, and
expansion and docking products;
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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 OEMs,
private-label resellers and distribution partners;
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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 which may
result from the development of new products;
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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.
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 appropriate
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.
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We have experienced delays in releasing new products in the
past, which resulted in lower quarterly revenue than expected.
For example, the introduction in early 2003 of our AC/DC power
combination product, Juice, was delayed approximately
13 weeks due to necessary modifications required to meet
safety certification and production start up requirements.
Further, our efforts to develop new and similar products could
be delayed due to unanticipated manufacturing requirements and
costs. Delays in product development and introduction could
result in:
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loss of or delay in revenue and loss of market share;
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negative publicity and damage to our reputation and brand;
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decline in the average selling price of our products and decline
in our overall gross margins; and
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adverse reactions in our sales and distribution channels.
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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.
We
depend on large purchases from a few significant customers, and
any loss, cancellation or delay in purchases by these customers
could cause a shortfall in revenue, excess inventory and
inventory holding or obsolescence charges.
We have historically derived a substantial portion of our
revenue from a relatively small number of customers. Our five
largest customers comprised 74% of our revenue for the year
ended December 31, 2005. These customers typically do not
have minimum purchase requirements and can stop purchasing our
products at any time or with very short notice. In addition,
most customer agreements are short term and non-exclusive and
provide for purchases on a purchase order basis. We expect that
a small number of customers will continue to represent a
substantial percentage of our sales.
For example, Targus accounted for 27% of our revenue and
RadioShack accounted for 18% of our revenue for the year ended
December 31, 2005. In the event Targus, RadioShack or any
of our other major customers reduce, delay or cancel 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 one or more key customers would negatively
impact our result of operations.
Our
success depends in part upon sales to OEMs, whose unpredictable
demands and requirements may subject us to potential adverse
revenue fluctuations.
We expect that we will continue to be dependent upon a limited
number of OEMs for a significant portion of our revenue in
future periods. No OEM is presently obligated either to purchase
a specified amount of products or to provide us with binding
forecasts of product purchases for any period. Our products are
typically one of many related products used by portable computer
users. Demand for our products is therefore subject to many
risks beyond our control, including, among others:
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competition faced by our OEM customers in their particular end
markets;
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market acceptance of our technology and products by our OEM
customers;
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technical challenges which may or may not be related to the
components supplied by us;
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the technical, sales and marketing and management capabilities
of our OEM customers; and
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the financial and other resources of our OEM customers.
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The reduction, delay or cancellation of orders from our
significant OEM customers, or the discontinuance of the use of
our products by our end users may subject us to potential
adverse revenue fluctuations.
Our
success is dependent in part upon our relationships with
strategic private-label resellers.
We have entered into relationships with various customers to
sell our power products on a private-label basis. Our
relationships with strategic private-label resellers are
critical to our success and the failure of these private-label
resellers to purchase, and successfully market and distribute
our products will limit our success and the market acceptance of
our relatively new family of universal power adapters. For
example, during 2004, one of our former private-label reseller
partners, Kensington, decided to distribute products
manufactured by a competitor in addition to our family of power
products, which could limit end-user access to our products.
Kensington has subsequently discontinued its sales of our family
of power products. In the event other private-label resellers
discontinue the sale of our power products or are unsuccessful
in marketing and distributing our products, our revenue will
suffer which could have a negative impact on the price of our
common stock.
In addition, under the terms of our agreement with Targus, our
direct access to certain U.S. markets has been limited for
the sale of our power products for use with high-power mobile
electronic devices, and the agreement also provides that we may
not enter into any more than two broad-based, private-label
distribution agreements. Accordingly, our success will depend in
part upon Targus ability and willingness to effectively
and widely distribute and market our products. For example,
because the Targus distribution chain includes large retailers
such as Best Buy, we are limited in our ability to distribute
our high-power products to retailers such as this directly. If
Targus does not purchase the volume of products that we
anticipate, our results of operations will suffer.
Success of our relationship with private-label resellers, such
as Targus, will also depend in part upon their success in
marketing and selling our products on a private-label basis
outside of the United States. The international sales by our
private-label resellers are subject to a number of risks that
could limit sales of our products. These risks include:
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the impact of possible recessionary environments in foreign
economies;
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political and economic instability;
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unexpected changes in regulatory requirements;
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export restriction and availability of export licenses; and
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tariffs and other trade barriers.
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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, South
Korea and the United States. Our reliance on third party
manufacturers exposes us to risks, which are not in our control,
and our revenue could be negatively impacted. Any termination of
or significant disruption in our relationship with our
manufacturers may prevent us from filling customer orders in a
timely manner, as we generally do not maintain large inventories
of our products, and will negatively impact our revenue.
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
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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.
Hipro Electronics Company, Ltd., for example, is currently the
exclusive manufacturer of our specific Juice product. Our
agreement with Hipro does not permit us to second source this
Juice product from any other manufacturer. In addition, Hipro
manufactures our products on a purchase order basis and does not
dedicate manufacturing capacity to us. Any disruption in our
relationship with Hipro
and/or the
inability of Hipro to meet our manufacturing needs for this
Juice product could harm our business. In order to replace Hipro
we would have to identify and qualify an alternative supplier.
This process could take several months to complete and would
significantly impair our ability to fulfill customer orders.
Similarly, we may encounter these same issues with respect to
other products manufactured for us by Hipro, as well as with
respect to other products manufactured for us by RadioShack,
Phihong and others.
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 demand and supply for a component at a given time. Some of
our components have long lead times. For example, certain
electronic components used in our Juice product 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 the sole source of
supply of the components that they supply. Examples of sole
source critical components include two different programmable
microprocessors used in various models of our handheld hardware
products. We do not have long term supply agreements with the
manufacturers of these components or with our contract
manufacturers. We obtain both components and products under
purchase orders.
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.
Delays could range from as little as a few days to six months,
and, in some cases, a suitable alternative may not be available
at all.
If
we fail to protect our intellectual property, our business and
ability to compete could suffer.
Our success and ability to compete are dependent upon our
internally developed technology and know-how. We rely primarily
on a combination of patent protection, copyright and trademark
laws, trade secrets, nondisclosure agreements and technical
measures to protect our proprietary rights. While we have
certain patents and patents
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pending, 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, noncompete 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. We
have recently begun to aggressively pursue the protection of our
intellectual property rights, including filing a lawsuit in the
Eastern District of Texas alleging that Formosa Electronics, Co.
Ltd., a foreign manufacturer of power adapters, is infringing
one or more of our patents. Litigation efforts such as these
have been, and will in the future be, necessary to defend our
intellectual property rights, both for our power and expansion
technology, and will likely result in substantial cost to, and
divisions 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 existing proprietary
rights of others. 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, in 2003 we settled a lawsuit with
Comarco, Inc. in which each party made patent infringement
claims against the other. We incurred significant costs in the
lawsuit and devoted substantial time and efforts of certain
employees and members of management to this lawsuit.
7
Acquisitions
could have negative consequences, which could harm our
business.
We have acquired, and may pursue opportunities to acquire
businesses, products or technologies that complement or expand
our current capabilities. Acquisitions could require significant
capital infusions and could involve many risks including, but
not limited to, the following:
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difficulties in assimilating and integrating the operations,
products and workforce of the acquired companies;
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acquisitions may negatively impact our results of operations
because they may require large one-time charges or could result
in increased debt or contingent liabilities, adverse tax
consequences, substantial depreciation or deferred compensation
charges, or the amortization or write down of amounts related to
deferred compensation, goodwill and other intangible assets;
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acquisitions may be dilutive to our existing stockholders;
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acquisitions may disrupt our ongoing business and distract our
management; and
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key personnel of the acquired company may decide not to work for
us.
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We may not be able to identify or consummate any future
acquisitions on acceptable terms, or at all. If we do pursue any
acquisitions, it is possible that we may not realize the
anticipated benefits from such acquisitions.
We
may not be able to adequately manage our anticipated growth,
which could impair our efficiency and negatively impact
operations.
Our success depends on our ability to manage growth effectively.
If we do not effectively manage this growth, we may not be able
to operate efficiently or maintain the quality of our products.
Either outcome could materially and adversely affect our
operating results. As we continue to develop new products and
bring them to market, we will be required to manage multiple
projects, including the design and development of products and
their transition to high volume manufacturing. This will 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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increase 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 provider; 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.
8
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 and requirements. These returns were 1% of
revenue for the year ended December 31, 2005 and 2% of
revenue for the year ended December 31, 2004. 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. We have not
historically experienced significant stock balance returns.
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. For example,
in 2004, after the commercial introduction of a power adapter
that we manufactured for Dell, we encountered a design defect
that required us to complete a field rework of previously
produced units, provide proper usage guidelines and make
permanent changes for future production. Errors or performance
problems such as this may also be discovered in the future. Any
future defects discovered after shipment of our products could
result in loss of sales, delays in market acceptance or product
returns and warranty costs. We attempt to make adequate
allowance in our new product release schedule for testing of
product performance. Because of the complexity of our products,
however, our release of new products may be postponed should
test results indicate the need for redesign and retesting, or
should we elect to add product enhancements in response to
customer feedback. In addition, third-party products, upon which
our products are dependent, may contain defects which could
reduce or undermine the performance of our products and
adversely affect our operating results.
We
may incur product liability claims which could be costly and
could harm our reputation.
The sale of our products involves risk of product liability
claims against us. We currently maintain product liability
insurance, but our product liability insurance coverage is
subject to various coverage exclusions and limits and may not be
obtainable in the future on terms acceptable to us, or at all.
We do not know whether claims against us with respect to our
products, if any, would be successfully defended or whether our
insurance would be sufficient to cover liabilities resulting
from such claims. Any claims successfully brought against us
could harm our business.
If
we 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
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 management, engineering,
sales and marketing, finance and manufacturing personnel, many
of whom would be difficult to replace. In particular, we believe
that our future success depends on Charles R. Mollo, Chief
Executive Officer and President, Joan W. Brubacher, Executive
Vice President and Chief Financial Officer and Timothy S.
Jeffries,
9
Executive Vice President and Chief Operating Officer. 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 expect to expend significant capital to further develop our
products, increase awareness of our brand names and to expand
our operating and management infrastructure as needed to support
our anticipated growth. We may 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, including the
repayment of our debt obligations. We may be unable to secure
additional debt or equity financing on terms acceptable to us,
or at all, at the time when we need such funding. If we do 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, such as the debt
covenants under our secured credit facility, 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. 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. In 2003, we settled a patent infringement
suit with Comarco, one of our competitors in power products,
that resulted in a cross license, which does not include the
right to sub-license, relating to our respective power product
technology. As a result, Comarco may be positioned to develop
and market power products that are substantially similar to our
products.
We currently compete with the internal design efforts of both
our OEM and non-OEM customers. These OEMs, as well as a number
of our non-OEM competitors, have larger technical staffs, more
established and larger marketing and sales organizations and
significantly greater financial resources than we do. There can
be no assurance that such competitors will be unable to respond
as quickly to new or emerging technologies and changes in
customer requirements, devote greater resources to the
development, sale and promotion of their products better than we
do or 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.
10
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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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 has caused in the past and may
cause in the future 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.
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 National
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 prospectus.
Periods of volatility in the market price of a companys
securities sometimes result in securities class action
litigation. In 2004, for example, we incurred significant
expenses as a result of a securities class action lawsuit that
was filed against us. This lawsuit has since been dismissed, but
other similar lawsuits could be filed against us in the future
and, regardless of the merit of these claims, such lawsuits can
be time-consuming, costly and divert managements
attention. In addition, if we needed to
11
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
stock price may decline if additional shares are sold in the
market.
As of March 2, 2006, we had 30,983,080 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 2, 2006, we had 1,114,944 shares of common
stock issuable upon exercise of stock options under our
long-term incentive plans, of which 1,008,652 options were
exercisable as of March 2, 2006; as of March 2, 2006,
we had 894,462 shares of common stock issuable upon the
vesting of restricted stock units under our long term incentive
plans; 115,527 shares were available for future issuance
under our 1996 stock option plan, 1,466,065 shares were
available for future issuance under our Mobility Electronics,
Inc. Omnibus Long-Term Incentive Plan, and 247,234 shares
were available for future issuance under our Mobility
Electronics, Inc. Non-Employee Director Long-Term Incentive
Plan; 1,773,037 shares of common stock were available for
purchase under our Employee Stock Purchase Plan; and we had
warrants outstanding to purchase 2,427,422 shares of common
stock, of which 46,470 were exercisable as of March 2,
2006. 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.
Our
executive officers, directors and principal stockholders have
substantial influence over us.
As of March 2, 2006, our executive officers, directors and
principal stockholders owning greater than 5% of our outstanding
common stock together beneficially owned approximately 49% 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.
In addition, our certificate of incorporation does not provide
for cumulative voting with respect to the election of directors.
Consequently, our present directors, executive officers,
principal stockholders and our respective affiliates may be able
to control the election of the members of the board of
directors. Such a concentration of ownership could have an
adverse effect on the price of the common stock, and may have
the effect of delaying or preventing a change in control,
including transactions in which stockholders might otherwise
receive a premium for their shares over then current market
prices.
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
six directors are elected each year; and
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limiting the persons who may call special meetings of
stockholders.
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12
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.
USE OF
PROCEEDS
All of the common stock offered under this prospectus is being
sold by the selling stockholders. We will not receive any of the
proceeds from the sale of the common stock.
SELLING
STOCKHOLDERS
On March 31, 2005, we entered into several agreements to
restructure our strategic relationships with RadioShack
Corporation and Motorola, Inc. One of these agreements was a
Strategic Partners Investment Agreement pursuant to which
Motorola and RadioShack each purchased 689,656 shares of
our common stock at a price of $7.25 per share, for total
aggregate proceeds to us of $10 million. Also included in
these agreements were two warrants for each of RadioShack and
Motorola which provide each with the right to purchase up to an
additional 1,190,476 shares of our common stock at a price
of $8.40 per share based on our performance results. As
part of the Strategic Partners Investment Agreement, we agreed
to register the resale of the shares issued to Motorola and
RadioShack, as well as the shares issuable pursuant to the
warrants issued to Motorola and RadioShack, and to bear the
expenses incident to this registration. As part of the
restructure of our strategic relationships, we also entered into
separate Sales Representative Agreements with Motorola and
RadioShack pursuant to which each agreed to engage in the sale
of our power products for low power mobile electronic devices.
In addition, RadioShack is one of our largest customers and
accounted for 16% of our revenue for the nine months ended
September 30, 2005, as well as 18% and 15% of our revenue
for the years ended December 31, 2004 and 2003,
respectively.
The issuances described above were made in reliance upon the
exemption from registration available under Section 4(2) of
the Securities Act of 1933.
The shares covered by this prospectus may be offered from time
to time by the selling stockholders. The selling stockholders
may sell all, some or none of their shares in this offering. See
Plan of Distribution.
The following table sets forth (i) the name of the selling
stockholders, (ii) the number and percentage of shares of
common stock beneficially owned by the selling stockholders,
(iii) the maximum number of shares of common stock which
may be offered for the account of the selling stockholders under
this prospectus, and (iv) the amount and percentage of
common stock that would be owned by the selling stockholders
after completion of the offering, assuming a sale of all of the
common stock which may be offered hereunder. The term
selling stockholders includes donees, pledgees,
transferees or other successors in interest selling shares of
common stock or interests
13
therein received after the date of this prospectus from the
selling stockholders as a gift, pledge, partnership distribution
or other transfer.
The information set forth below is based upon information
submitted to us by the selling stockholders and updated in
accordance with our records through March 2, 2006. The
percentages below are based on 30,983,080 shares of common
stock outstanding as of March 2, 2006.
Except for the strategic relationships described above with both
Motorola and RadioShack, neither of these entities has, within
the past three years, had any position, office or other material
relationship with us or any of our affiliates. The selling
stockholders are not registered broker-dealers or an affiliate
of a registered broker-dealer. Unless otherwise noted as
appropriate in a footnote below, the selling stockholders have
sole voting and dispositive power over the shares offered.
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Shares Beneficially Owned
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Shares Beneficially Owned
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Before Offering
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After Offering
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Percentage
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Shares
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Percentage
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Name of Selling
Stockholder
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Number
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Ownership
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Offered
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Number
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Ownership
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Motorola, Inc. (1)
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689,656
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2.2
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%
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1,880,132
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*
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RadioShack Corporation (2)
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689,656
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2.2
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%
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1,880,132
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*
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(1) |
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David W. Devonshire has investment and voting power over these
shares in his capacity as Executive Vice President, Chief
Financial Officer of Motorola, Inc. |
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(2) |
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David Barnes has investment and voting power over these shares
in his capacity as Senior Vice President and Chief Financial
Officer of RadioShack Corporation. |
PLAN OF
DISTRIBUTION
The shares of common stock offered by this prospectus may be
sold by the selling stockholders or their transferees from time
to time in:
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transactions in the
over-the-counter
market, the Nasdaq National Market, or on one or more exchanges
on which the securities may be listed or quoted at the time of
sale;
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negotiated transactions;
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transactions otherwise than on the Nasdaq or exchanges;
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underwritten offerings;
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distributions to equity security holders, partners or other
stockholders of the selling stockholders;
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through the writing of options, whether such options are listed
on an options exchange or otherwise; or
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through a combination of these methods of sale.
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The selling stockholders may sell the shares of our common stock
at:
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fixed prices which may be changed;
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market prices prevailing at the time of sale;
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prices related to prevailing market prices;
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negotiated prices; or
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any other method permitted by law.
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14
In connection with sales of the common stock or otherwise, the
selling stockholders may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the
common stock in the course of hedging in positions they assume.
The selling stockholders may also sell shares of common stock
short and deliver shares of common stock to close out short
positions, or loan or pledge shares of common stock to
broker-dealers that in turn may sell those shares. If the
selling stockholders effect such transactions by selling shares
of common stock to or through underwriters, broker-dealers or
agents, those underwriters, broker-dealers or agents may receive
commissions in the form of discounts, concessions or commissions
from the selling stockholders or commissions from purchasers of
the shares of common stock for whom they may act as agent or to
whom they may sell as principal. Any such discounts, concessions
or commissions as to particular underwriters, brokers-dealers or
agents may be in excess of those customary in the types of
transactions involved.
The selling stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock
owned by them. If the selling stockholders default in the
performance of their secured obligations, the pledgees or
secured parties may offer and sell the shares of common stock
from time to time under this prospectus or an amendment to this
prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this
prospectus. The selling stockholders also may transfer the
shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this prospectus.
Direct
Sales, Agents, Dealers and Underwriters
The selling stockholders or their transferees may effect
transactions by selling the shares of common stock in any of the
following ways:
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directly to purchasers; or
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to or through agents, dealers or underwriters designated from
time to time.
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Agents, dealers or underwriters may receive compensation in the
form of underwriting discounts, concessions or commissions from
the selling stockholders
and/or the
purchasers of shares for whom they act as agent or to whom they
sell as principals, or both. The agents, dealers or underwriters
that act in connection with the sale of shares will be deemed to
be underwriters within the meaning of
Section 2(11) of the Securities Act of 1933, and any
discount or commission received by them and any profit on the
resale of shares as principal might be deemed to be underwriting
discounts or commissions under the Securities Act of 1933.
Regulation M
The selling stockholders and any other persons participating in
the sale or distribution of the shares are subject to applicable
provisions of the Exchange Act and the rules and regulations
under such act, including, without limitation,
Regulation M. These provisions may restrict certain
activities of, and limit the timing of purchase and sales of any
of the shares by, the selling stockholders or any other such
person. Furthermore, under Regulation M persons engaged in
a distribution of securities are prohibited from simultaneously
engaging in market making and certain other activities with
respect to such securities for a specified period of time prior
to the commencement of such distributions, subject to specified
exceptions or exemptions. All of these limitations may affect
the marketability of the shares.
Supplements
To the extent required, we will set forth in a supplement to
this prospectus filed with the SEC the number of shares to be
sold, the purchase price and public offering price, any new
selling stockholders, the name or names of any agent, dealer or
underwriter, and any applicable commissions or discounts with
respect to a particular offering.
15
State
Securities Law
Under the securities laws of some states, the selling
stockholders may only sell the shares in those states through
registered or licensed brokers or dealers. In addition, in some
states the selling stockholders may not sell the shares unless
they have been registered or qualified for sale in that state or
an exemption from registration or qualification is available and
is satisfied.
Expenses,
Indemnification
We will not receive any of the proceeds from the sale of the
shares of common stock sold by the selling stockholders and will
bear all expenses related to the registration of this offering
but will not pay for any underwriting commissions, fees or
discounts, if any. We will indemnify the selling stockholders
against some civil liabilities, including some liabilities which
may arise under the Securities Act of 1933.
In the event of a material change in the plan of distribution
disclosed in this Prospectus, the selling stockholders will not
be able to effect transactions in the shares pursuant to this
prospectus until such time as a post-effective amendment to the
Registration Statement is filed with, and declared effective by,
the Commission.
LEGAL
MATTERS
The validity of the issuance of the shares of common stock
offered by this prospectus will be passed upon for us by Jackson
Walker L.L.P.
EXPERTS
The consolidated financial statements of Mobility Electronics,
Inc. and subsidiaries as of December 31, 2005 and 2004 and
for each of the years in the three-year period ended
December 31, 2005 and managements assessment of the
effectiveness of internal control over financial reporting as of
December 31, 2005 have been incorporated by reference
herein and in the registration statement in reliance upon the
reports of KPMG LLP, independent registered public accounting
firm, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
WHERE YOU
CAN FIND MORE INFORMATION
We are subject to the informational requirements of the
Securities Exchange Act of 1934 and, in accordance therewith,
file reports, proxy statements and other information with the
Securities and Exchange Commission. Such reports, proxy
statements and other information filed by us with the Commission
can be inspected and copied at the Public Reference Room of the
Commission located at 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
Additionally, the Commission maintains a website
(http://www.sec.gov) that contains reports, proxy
statements and information statements and other information
regarding registrants that file electronically with the
Commission. Our website can be accessed at
www.mobilityelectronics.com.
INFORMATION
INCORPORATED BY REFERENCE
The following documents, which have been filed with the
Commission by Mobility, are incorporated herein by reference and
made a part hereof:
(i) Annual Report of Mobility on
Form 10-K
for the year ended December 31, 2005;
(ii) Mobilitys current report on
Form 8-K
filed February 16, 2006; and
16
(iii) Description of the Common Stock contained in
Mobilitys Registration Statement on
Form S-1
(No. 333-30264),
effective as of June 30, 2000 and Registration Statement on
Form 8-A.
All documents filed by us pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date
of this prospectus and prior to the termination of the offering
of the common stock to be made hereunder shall be deemed to be
incorporated by reference herein and to be a part hereof from
the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
We will provide, without charge, to each person, including any
beneficial owner, to whom a copy of this prospectus is
delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated herein by
reference (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Written or
telephone requests for such documents should be directed to
Investor Relations, 17800 North Perimeter Drive, Suite 200,
Scottsdale, Arizona 85255, telephone number
(480) 596-0061.
17
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
ITEM 14.
|
Other
Expenses of Issuance and Distribution.
|
The following table sets forth the expenses to be paid by the
Company in connection with the offering described in this
Registration Statement. All amounts are estimates, except the
SEC Registration Fee.
|
|
|
|
|
SEC Registration Fee
|
|
$
|
4,322
|
|
Printing Costs
|
|
$
|
2,000
|
|
Legal Fees and Expenses
|
|
$
|
10,000
|
|
Accounting Fees
|
|
$
|
10,000
|
|
Miscellaneous
|
|
$
|
678
|
|
|
|
|
|
|
TOTAL
|
|
$
|
27,000
|
|
|
|
|
|
|
|
|
ITEM 15.
|
Indemnification
of Directors and Officers.
|
Delaware
General Corporation Law
We have authority under Section 145 of the Delaware General
Corporation Law (DGCL) to indemnify our directors
and officers to the extent provided for in such statute. Our
Amended and Restated Certificate of Incorporation provides for
indemnification of our officers and directors to the extent
permitted under the DGCL.
Amended
and Restated Certificate of Incorporation
Our Amended and Restated Certificate of Incorporation provides
that a director shall not be personally liable to us or our
stockholders for monetary damages for breach of fiduciary duty
as a director, except as limited by the DGCL. If the DGCL is
amended to authorize the further elimination or limitation of
the liability of directors, then the liability of a director, in
addition to the limitation on personal liability described
above, shall be limited to the fullest extent permitted by the
amended DGCL. Further, any repeal or modification of such
provision of the Amended and Restated Certificate of
Incorporation by our stockholders shall be prospective only, and
shall not adversely affect any limitation on the personal
liability of a director existing at the time of such repeal or
modification.
Bylaws
Our Bylaws provide that we (i) shall indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by reason of the
fact that such person is or was a director or officer of
Mobility, or is or was serving at our request as a director or
officer of another corporation, partnership, joint venture,
trust, other enterprises or employee benefit plan and
(ii) upon a determination by the board of directors that
indemnification is appropriate, we may indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by reason of the
fact that such person is or was an employee or agent of Mobility
or at our request was serving as an employee or agent of any
other corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan, in the case of (i) and
(ii) against reasonable expenses (including attorneys
fees), judgments, fines, penalties, amounts paid in settlement
and other liabilities actually and reasonably incurred by such
person in connection with such action or suit if such person
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of Mobility, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe that his conduct was unlawful. However, in an
action or suit by or in our right to procure a judgment in our
favor, no indemnification shall be made in respect of any claim
as to which such person shall have been adjudged to be liable to
Mobility unless and only to the extent that a court of
appropriate jurisdiction shall determine that, despite the
adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to
indemnity of such expenses which the court shall deem proper.
Any indemnification shall be made by us upon a determination
that indemnification of such person is proper in the
circumstances because he has met the applicable standard of
conduct set
II-1
forth above. Expenses incurred by a person who is or was a
director or officer of Mobility in defending such actions or
suits shall be paid by us at reasonable intervals in advance of
the final disposition of such action or suit upon receipt of an
undertaking by or on behalf of the director or officer to repay
such amount if it shall ultimately be determined that he is not
entitled to be indemnified by us. In addition, we shall pay or
reimburse expenses incurred by any person who is or was a
director or officer in connection with such persons
appearance as a witness or other participant in a proceeding in
which such person or Mobility is not a named party to such
proceeding, provided that such appearance or participation is on
behalf of us or by reason of his past or present capacity as a
director or officer of Mobility. We intend these provisions to
provide indemnification for appropriate persons to the fullest
extent permitted by law.
Indemnity
Agreements
We have entered into Indemnity Agreements with each of our
directors and executive officers. Pursuant to such agreements,
we will, to the extent permitted by applicable law, indemnify
such persons against all expenses, judgments fines and penalties
incurred in connection with the defense or settlement of any
actions brought against them by reason of the fact that they
were directors or officers or assumed certain responsibilities
at the direction of Mobility.
Insurance
We maintain liability insurance for the benefit of our directors
and officers.
(a) Exhibits
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of
Document
|
|
|
4
|
.1
|
|
Certificate of Incorporation of
the Company, and amendments thereto.(1)
|
|
4
|
.2
|
|
Amended and Restated Bylaws of the
Company.(2)
|
|
4
|
.3
|
|
$25 Million Threshold Warrant
to Purchase Shares of Common Stock issued to Motorola, Inc.,
dated as of March 31, 2005.(3)
|
|
4
|
.4
|
|
$50 Million Threshold Warrant
to Purchase Shares of Common Stock issued to Motorola, Inc.,
dated as of March 31, 2005.(3)
|
|
4
|
.5
|
|
$25 Million Threshold Warrant
to Purchase Shares of Common Stock issued to RadioShack
Corporation, dated as of March 31, 2005.(3)
|
|
4
|
.6
|
|
$50 Million Threshold Warrant
to Purchase Shares of Common Stock issued to RadioShack
Corporation, dated as of March 31, 2005.(3)
|
|
4
|
.7
|
|
Strategic Partners Investment
Agreement by and among Mobility Electronics, Inc., RadioShack
Corporation and Motorola, Inc., dated as of March 31,
2005.(3)
|
|
5
|
.1
|
|
Opinion of Jackson Walker L.L.P.(4)
|
|
23
|
.1
|
|
Consent of KPMG LLP.*
|
|
23
|
.2
|
|
Consent of Jackson Walker L.L.P.(4)
|
|
24
|
|
|
Power of Attorney(4)
|
|
|
|
* |
|
Filed herewith |
|
(1) |
|
Previously filed as exhibits to the Companys Registration
Statement
No. 333-30264
on
Form S-1
dated February 11, 2000; to Amendment No. 1 to
Registration Statement
No. 333-30264
on
Form S-1
dated March 28, 2000; to Amendment No. 2 to
Registration Statement
No. 333-30264
on
Form S-1
dated May 4, 2000; to Current Report on
Form 8-K
filed on January 14, 2003; and to Current Report on
Form 8-K
filed on June 19, 2003. |
|
(2) |
|
Previously filed as an exhibit to the Companys
Registration Statement
No. 333-116182
on
Form S-8
dated June 4, 2004. |
|
(3) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
dated April 5, 2005. |
II-2
|
|
|
(4) |
|
Previously filed as an exhibit to the Companys
Registration Statement
No. 333-131222
on
Form S-3
dated January 22, 2006. |
The registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, That:
(A) Paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on
Form S-8,
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated
by reference in the registration statement; and
(B) Paragraphs (1)(i), (1)(ii) and (1)(iii) do not
apply if the registration statements is on
Form S-3
or
Form F-3
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the
registration statement, or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is a part of the
registration statement.
(C) Provided, further, however, that paragraphs (1)(i)
and (1)(ii) do not apply if the registration statement is for an
offering of asset-backed securities on
Form S-1
or
Form S-3,
and the information required to be included in a post-effective
amendment is provided pursuant to Item 1100(c) of
Regulation AB (§229.1100(c)).
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of this offering;
II-3
(4) That, for the purpose of determining liability under
the Securities Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed
to be part of and included in the registration statement as of
the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however,
that no statement made in a registration statement or
prospectus that is a part of the registration statement or made
in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is a part of
the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective
date; or
(ii) If the registrant is subject to Rule 430C, each
prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness.
Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or
prospectus that was part of the registration statement or made
in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering
of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method
used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or to
sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
(6) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the registrants
annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934
II-4
(and, where applicable, each filing of an employee benefit
plans annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof; and
(7) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Scottsdale, State of Arizona, on March 8, 2006.
MOBILITY ELECTRONICS, INC.
Charles R. Mollo
President, Chief Executive
Officer and Chairman of the Board
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933 this
Registration Statement has been signed by the following persons
in the capacities indicated on March 8, 2006.
|
|
|
|
|
SIGNATURES
|
|
TITLE
|
|
/s/ Charles R. Mollo
Charles
R. Mollo
|
|
President, Chief Executive Officer
and Chairman of the Board (Principal Executive Officer)
|
|
|
|
/s/ Joan W.
Brubacher
Joan
W. Brubacher
|
|
Chief Financial Officer and
Executive Vice President (Principal Financial and Accounting
Officer)
|
|
|
|
/s/ *
Larry
M. Carr
|
|
Director
|
|
|
|
/s/ *
Jeffrey
R. Harris
|
|
Director
|
|
|
|
/s/ *
William
O. Hunt
|
|
Director
|
|
|
|
/s/ *
Robert
W. Shaner
|
|
Director
|
|
|
|
/s/ *
Jerre
L. Stead
|
|
Director
|
|
|
|
|
|
*By:
|
|
/s/ Joan W.
Brubacher
Joan
W. Brubacher
Attorney-in-Fact
|
|
|
II-6
EXHIBIT INDEX
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of
Document
|
|
|
4
|
.1
|
|
Certificate of Incorporation of
the Company, and amendments thereto.(1)
|
|
4
|
.2
|
|
Amended and Restated Bylaws of the
Company.(2)
|
|
4
|
.3
|
|
$25 Million Threshold Warrant
to Purchase Shares of Common Stock issued to Motorola, Inc.,
dated as of March 31, 2005.(3)
|
|
4
|
.4
|
|
$50 Million Threshold Warrant
to Purchase Shares of Common Stock issued to Motorola, Inc.,
dated as of March 31, 2005.(3)
|
|
4
|
.5
|
|
$25 Million Threshold Warrant
to Purchase Shares of Common Stock issued to RadioShack
Corporation, dated as of March 31, 2005.(3)
|
|
4
|
.6
|
|
$50 Million Threshold Warrant
to Purchase Shares of Common Stock issued to RadioShack
Corporation, dated as of March 31, 2005.(3)
|
|
4
|
.7
|
|
Strategic Partners Investment
Agreement by and among Mobility Electronics, Inc., RadioShack
Corporation and Motorola, Inc., dated as of March 31,
2005.(3)
|
|
5
|
.1
|
|
Opinion of Jackson Walker L.L.P.(4)
|
|
23
|
.1
|
|
Consent of KPMG LLP.*
|
|
23
|
.2
|
|
Consent of Jackson Walker L.L.P.(4)
|
|
24
|
|
|
Power of Attorney(4)
|
|
|
|
* |
|
Filed herewith |
|
(1) |
|
Previously filed as exhibits to the Companys Registration
Statement
No. 333-30264
on
Form S-1
dated February 11, 2000; to Amendment No. 1 to
Registration Statement
No. 333-30264
on
Form S-1
dated March 28, 2000; to Amendment No. 2 to
Registration Statement
No. 333-30264
on
Form S-1
dated May 4, 2000; to Current Report on
Form 8-K
filed on January 14, 2003; and to Current Report on
Form 8-K
filed on June 19, 2003. |
|
(2) |
|
Previously filed as an exhibit to the Companys
Registration Statement
No. 333-116182
on
Form S-8
dated June 4, 2004. |
|
(3) |
|
Previously filed as an exhibit to Current Report on
Form 8-K
dated April 5, 2005. |
|
|
|
(4) |
|
Previously filed as an exhibit to the Companys
Registration Statement
No. 333-131222
on
Form S-3
dated January 22, 2006. |
II-7