x
|
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Utah
|
87-0398877
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Securities
registered under Section 12(b) of the Act:
Title
of each class
|
Name
of each exchange on which registered
|
Common
Stock, $0.001 par value
|
The
NASDAQ Capital Market
|
Larger
Accelerated Filer
¨
|
Accelerated
Filer
¨
|
Non-Accelerated
Filer
x
|
Smaller
Reporting Company
¨
|
PAGE
|
||
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
1
|
|
BUSINESS
|
1
|
|
RISK
FACTORS
|
12
|
|
UNRESOLVED
STAFF COMMENTS
|
17
|
|
PROPERTIES
|
18
|
|
LEGAL
PROCEEDINGS
|
18
|
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
20
|
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
21
|
|
SELECTED
FINANCIAL DATA
|
23
|
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
26
|
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
36
|
|
FINANCIAL
STATEMENTS AND SUPPLEMENTAL DATA
|
36
|
|
CHANGE
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
36
|
|
CONTROLS
AND PROCEDURES
|
37
|
|
OTHER
INFORMATION
|
37
|
|
DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT
|
38
|
|
EXECUTIVE
COMPENSATION
|
38
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
38
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
38
|
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
38
|
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
39
|
|
41
|
Market
|
Typical
Number of Participants
|
·
Professional
Conferencing:
|
20-200
|
·
Premium
Conferencing
|
8-30
|
·
Tabletop
Conferencing
|
1-30
|
·
Personal
Conferencing
|
1-15
|
·
|
Professionally
installed audio conferencing systems that are used in executive
boardrooms, courtrooms, hospitals, and auditoriums that integrate with all
leading video and telepresence
systems
|
·
|
Premium
conferencing systems that integrate with video and web conferencing
systems
|
·
|
Tabletop
conferencing phones used in conference rooms and
offices
|
·
|
Personal
conferencing devices that enable hands-free audio communications in new
ways that have never before been
possible.
|
·
|
Increasing
availability of easy-to-use audio conferencing
equipment
|
·
|
Improving
voice quality of audio conferencing systems compared to telephone handset
speakerphones
|
·
|
Trending
expansion of global, regional, and local corporate
enterprises
|
·
|
Availability
of a wider range of affordable audio conferencing products for small
businesses and home offices
|
·
|
Growth
of distance learning and corporate training
programs
|
·
|
Trend
toward deploying greater numbers of
teleworkers
|
·
|
Decreases
in the amount of travel within most enterprises for routine
meetings
|
·
|
Transition
to the Internet Protocol, or IP, network from the traditional public
switched telephone network, or PSTN and the deployment of VoIP
applications
|
PCs
& Macs
|
VoIP
telephony applications such as Skype & Vonage; enterprise softphones;
audio for web-based videoconferencing applications; gaming; audio
playback
|
Cell
phones
|
Connects
to the 2.5mm headset jack of many cell phones for hands-free, full-duplex
audio conferencing
|
Telephones
|
Connects
to the headset jack (certain phone models) for hands-free, full-duplex
audio conferencing
|
iPods
& MP3 players
|
For
full-bandwidth audio playback
|
Desktop
video conferencing systems
|
For
hands-free, full-duplex audio
conferencing
|
·
|
InfoComm
– the AV industry’s largest trade show. In June 2008 we had a strong
presence at InfoComm, where we highlighted a significant number of new
products.
|
·
|
National
Systems Contractors Association – this show focuses on the sound
reinforcement industry, and we highlight our professional audio
conferencing products.
|
·
|
A/V
Integrator trade shows – we regularly invest and participate in trade
shows hosted by our partners, namely system
integrators.
|
·
|
channel
partnerships;
|
·
|
our
ability to effectively communicate the differentiated value-added features
of our products through sales and marketing
efforts;
|
·
|
product
design, quality, and functionality of
products;
|
·
|
establishment
of brand name recognition;
|
·
|
pricing;
|
·
|
access
to and penetration of distribution
channels;
|
·
|
quality
of customer support; and
|
·
|
a
significant customer base.
|
·
|
Avoidance
of a significant investment in upgrading our manufacturing
infrastructure;
|
·
|
RoHS-compliant
manufacturing facilities;
|
·
|
Scalability
in our manufacturing process without major investment or major
restructuring costs;
|
·
|
Achievement
of future cost reductions on manufacturing costs and inventory costs based
upon increased economies of scale in material and labor;
and
|
·
|
Manufacturing
world class quality products by partnering with outsource manufacturers
certified with International Organization of Standardization (ISO)
processes.
|
·
|
meeting
required specifications and regulatory
standards;
|
·
|
meeting
market expectations for
performance;
|
·
|
hiring
and keeping a sufficient number of skilled
developers;
|
·
|
obtaining
prototype products at anticipated cost
levels;
|
·
|
having
the ability to identify problems or product defects in the development
cycle; and
|
·
|
achieving
necessary manufacturing
efficiencies.
|
·
|
unexpected
changes in, or the imposition of, additional legislative or regulatory
requirements;
|
·
|
unique
environmental regulations;
|
·
|
fluctuating
exchange rates;
|
·
|
tariffs
and other barriers;
|
·
|
difficulties
in staffing and managing foreign sales
operations;
|
·
|
import
and export restrictions;
|
·
|
greater
difficulties in accounts receivable collection and longer payment
cycles;
|
·
|
potentially
adverse tax consequences;
|
·
|
potential
hostilities and changes in diplomatic and trade relationships;
and
|
·
|
disruption
in services due to natural disaster, economic or political difficulties,
quarantines, transportation, or other restrictions associated with
infectious diseases.
|
·
|
statements
or changes in opinions, ratings, or earnings estimates made by brokerage
firms or industry analysts relating to the market in which we do business
or relating to us specifically;
|
·
|
disparity
between our reported results and the projections of
analysts;
|
·
|
the
shift in sales mix of products that we currently sell to a sales mix of
lower-gross profit product
offerings;
|
·
|
the
level and mix of inventory levels held by our
distributors;
|
·
|
the
announcement of new products or product enhancements by us or our
competitors;
|
·
|
technological
innovations by us or our
competitors;
|
·
|
success
in meeting targeted availability dates for new or redesigned
products;
|
·
|
the
ability to profitably and efficiently manage our supplies of products and
key components;
|
·
|
the
ability to maintain profitable relationships with our
customers;
|
·
|
the
ability to maintain an appropriate cost
structure;
|
·
|
quarterly
variations in our results of
operations;
|
·
|
general
consumer confidence or general market conditions or market conditions
specific to technology industries;
|
·
|
domestic
and international economic
conditions;
|
·
|
unexpected
changes in regulatory requirements and
tariffs;
|
·
|
our
ability to report financial information in a timely manner;
and
|
·
|
the
markets in which our stock is
traded.
|
2008
|
2007
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First
Quarter
|
$ | 7.25 | $ | 4.40 | $ | 3.75 | $ | 3.00 | ||||||||
Second
Quarter
|
7.42 | 5.00 | 4.34 | 3.20 | ||||||||||||
Third
Quarter
|
5.81 | 4.50 | 6.69 | 4.05 | ||||||||||||
Fourth
Quarter
|
5.07 | 3.66 | 6.58 | 4.57 |
Number of securities to be issued upon exercise of
outstanding options, warrants, and rights
|
Weighted-average exercise price of outstanding
options, warrants and rights
|
Number of securities remaining available for
future issuance under equity compensation plans
|
|
Equity
compensation
|
|||
plans
approved by
|
|||
security
holders
|
1,199,046
|
$5.85
|
996,000
|
Equity
compensation
|
|||
plans
not approved by
|
|||
security
holders
|
-
|
-
|
-
|
Total
|
1,199,046
|
$5.85
|
996,000
|
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number (or Approximate Dollar Value) of Shares that may be Purchased Under
the Plans or Programs (1)
|
||||||||||||
April
1, 2008 – April 30, 2008
|
42,915 | $ | 4.80 | 42,915 | $ | 1,056,105 | ||||||||||
May
1, 2008 – May 31, 2008
|
129,395 | $ | 4.42 | 129,395 | $ | 483,823 | ||||||||||
June
1, 2008 – June 30, 2008
|
50,000 | $ | 4.15 | 50,000 | $ | 276,573 | ||||||||||
Total
|
222,310 | 222,310 |
(1)
|
On
August 30, 2007, we announced that our Board of Directors had approved a
stock repurchase program to purchase up $3,625,000 of our common stock
during the following 12 month period in open market and private block
transactions. On May 1, 2008 we announced that our Board of Directors
authorized the purchase of up to an additional $1 million of our common
stock. All repurchased shares will be immediately retired. The stock
repurchase program expired on August 30,
2008.
|
Years Ended June 30,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(in
thousands of dollars, except per share data)
|
||||||||||||||||||||
Operating
results:
|
||||||||||||||||||||
Revenue
|
$ | 39,752 | $ | 39,861 | $ | 35,362 | $ | 29,087 | $ | 25,736 | ||||||||||
Costs
and expenses:
|
||||||||||||||||||||
Cost
of goods sold
|
16,461 | 17,723 | 17,375 | 12,720 | 14,760 | |||||||||||||||
Sales
& Marketing
|
6,673 | 7,791 | 7,866 | 9,070 | 8,497 | |||||||||||||||
Research
and product development
|
7,070 | 7,535 | 8,299 | 5,305 | 4,237 | |||||||||||||||
General
and administrative
|
7,669 | 3,091 | 5,108 | 5,489 | 6,767 | |||||||||||||||
Settlement
in shareholders' class action
|
- | - | (1,205 | ) | (2,046 | ) | 4,080 | |||||||||||||
Impairment
losses
|
- | - | - | 180 | - | |||||||||||||||
Restructuring
charge
|
- | - | - | 110 | - | |||||||||||||||
Operating
income (loss)
|
1,879 | 3,721 | (2,081 | ) | (1,741 | ) | (12,605 | ) | ||||||||||||
Other
income (expense), net
|
1,005 | 1,523 | 1,016 | 318 | (261 | ) | ||||||||||||||
Income
(loss) from continuing operations before income taxes
|
2,884 | 5,244 | (1,065 | ) | (1,423 | ) | (12,866 | ) | ||||||||||||
(Provision)
benefit for income taxes
|
2,756 | (457 | ) | 1,005 | 3,370 | 964 | ||||||||||||||
Income
(loss) from continuing operations
|
5,640 | 4,787 | (60 | ) | 1,947 | (11,902 | ) | |||||||||||||
Income
(loss) from discontinued operations
|
16 | 422 | 2,155 | 14,128 | 2,015 | |||||||||||||||
Net
income (loss)
|
$ | 5,656 | $ | 5,209 | $ | 2,095 | $ | 16,075 | $ | (9,887 | ) | |||||||||
Earnings
(loss) per common share:
|
||||||||||||||||||||
Basic
earnings (loss) from continuing operations
|
$ | 0.53 | $ | 0.42 | $ | (0.01 | ) | $ | 0.17 | $ | (1.08 | ) | ||||||||
Diluted
earnings (loss) from continuing operations
|
$ | 0.52 | $ | 0.41 | $ | (0.01 | ) | $ | 0.16 | $ | (1.08 | ) | ||||||||
Basic
earnings from discontinued operations
|
$ | 0.00 | $ | 0.04 | $ | 0.18 | $ | 1.26 | $ | 0.18 | ||||||||||
Diluted
earnings from discontinued operations
|
$ | 0.00 | $ | 0.04 | $ | 0.18 | $ | 1.15 | $ | 0.18 | ||||||||||
Basic
earnings (loss)
|
$ | 0.53 | $ | 0.45 | $ | 0.18 | $ | 1.44 | $ | (0.89 | ) | |||||||||
Diluted
earnings (loss)
|
$ | 0.52 | $ | 0.45 | $ | 0.17 | $ | 1.30 | $ | (0.89 | ) | |||||||||
Weighted
average shares outstanding:
|
||||||||||||||||||||
Basic
|
10,694,401 | 11,497,773 | 11,957,756 | 11,177,406 | 11,057,896 | |||||||||||||||
Diluted
|
10,798,281 | 11,575,721 | 12,206,618 | 12,332,106 | 11,057,896 | |||||||||||||||
As of June 30,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Financial
data:
|
||||||||||||||||||||
Current
assets
|
$ | 28,885 | $ | 38,317 | $ | 39,743 | $ | 34,879 | $ | 27,202 | ||||||||||
Long-term
Securities
|
11,168 | (1) | - | - | - | - | ||||||||||||||
Total
assets
|
44,300 | 41,063 | 41,405 | 38,021 | 32,156 | |||||||||||||||
Long-term
debt, net of current maturities
|
- | - | - | - | 240 | |||||||||||||||
Capital
leases, net of current maturities
|
- | - | - | - | 2 | |||||||||||||||
Total
shareholders' equity
|
32,140 | 30,438 | 30,412 | 24,911 | 9,006 |
Fiscal 2008 Quarters Ended
|
||||||||||||||||||||
Sept. 30
|
Dec. 31
|
Mar. 31
|
June 30
|
Total
|
||||||||||||||||
(in thousands of dollars, except per share
data)
|
||||||||||||||||||||
Revenue
|
$ | 9,442 | $ | 10,787 | $ | 9,163 | $ | 10,360 | $ | 39,752 | ||||||||||
Cost
of goods sold
|
(4,299 | ) | (4,414 | ) | (3,439 | ) | (4,309 | ) | (16,461 | ) | ||||||||||
Sales
& Marketing
|
(1,601 | ) | (1,578 | ) | (1,640 | ) | (1,855 | ) | (6,674 | ) | ||||||||||
Research
and product development
|
(1,756 | ) | (1,678 | ) | (1,701 | ) | (1,935 | ) | (7,070 | ) | ||||||||||
General
and administrative
|
(2,895 | ) | (1,198 | ) | (1,183 | ) | (2,393 | ) | (7,669 | ) | ||||||||||
Other
income (expense), net
|
341 | 311 | 196 | 157 | 1,005 | |||||||||||||||
Income
(loss) from continuing operations before income taxes
|
(768 | ) | 2,230 | 1,396 | 26 | 2,884 | ||||||||||||||
Benefit
(provision) for income taxes
|
(171 | ) | (449 | ) | (335 | ) | 3,711 | 2,756 | ||||||||||||
Income
(loss) from continuing operations
|
(939 | ) | 1,781 | 1,061 | 3,737 | 5,640 | ||||||||||||||
Income
from discontinued operations
|
15 | 1 | - | - | 16 | |||||||||||||||
Net
income (loss)
|
$ | (924 | ) | $ | 1,782 | $ | 1,061 | $ | 3,737 | $ | 5,656 | |||||||||
Basic
income (loss) earnings per common share:
|
||||||||||||||||||||
Continuing
operations
|
$ | (0.09 | ) | $ | 0.16 | $ | 0.10 | $ | 0.36 | $ | 0.53 | |||||||||
Discontinued
operations
|
- | - | - | - | 0.00 | |||||||||||||||
Basic
income (loss) earnings per common share
|
$ | (0.08 | ) | $ | 0.16 | $ | 0.10 | $ | 0.36 | $ | 0.53 | |||||||||
Diluted
income (loss) earnings per common share:
|
||||||||||||||||||||
Continuing
operations
|
$ | (0.08 | ) | $ | 0.16 | $ | 0.10 | $ | 0.36 | $ | 0.52 | |||||||||
Discontinued
operations
|
- | - | - | - | 0.00 | |||||||||||||||
Diluted
income (loss) earnings per common share
|
$ | (0.08 | ) | $ | 0.16 | $ | 0.10 | $ | 0.36 | $ | 0.52 |
Fiscal 2007 Quarters Ended
|
||||||||||||||||||||
Sept. 30
|
Dec. 31
|
Mar. 31
|
June 30
|
Total
|
||||||||||||||||
(in thousands of dollars, except per share
data)
|
||||||||||||||||||||
Revenue
|
$ | 9,411 | $ | 10,107 | $ | 9,355 | $ | 10,988 | $ | 39,861 | ||||||||||
Cost
of goods sold
|
(4,316 | ) | (4,860 | ) | (4,190 | ) | (4,357 | ) | (17,723 | ) | ||||||||||
Sales
& Marketing
|
(1,918 | ) | (1,789 | ) | (2,004 | ) | (2,080 | ) | (7,791 | ) | ||||||||||
Research
and product development
|
(2,079 | ) | (1,855 | ) | (1,848 | ) | (1,753 | ) | (7,535 | ) | ||||||||||
General
and administrative
|
(809 | ) | (688 | ) | (763 | ) | (831 | ) | (3,091 | ) | ||||||||||
Other
income (expense), net
|
332 | 320 | 577 | 294 | 1,523 | |||||||||||||||
Income
from continuing operations before income taxes
|
621 | 1,235 | 1,127 | 2,261 | 5,244 | |||||||||||||||
Benefit
(provision) for income taxes
|
19 | (155 | ) | (167 | ) | (154 | ) | (457 | ) | |||||||||||
Income
from continuing operations
|
640 | 1,080 | 960 | 2,107 | 4,787 | |||||||||||||||
Income
from discontinued operations
|
37 | 4 | 263 | 118 | 422 | |||||||||||||||
Net
income
|
$ | 677 | $ | 1,084 | $ | 1,223 | $ | 2,225 | $ | 5,209 | ||||||||||
Basic
income earnings per common share:
|
||||||||||||||||||||
Continuing
operations
|
$ | 0.05 | $ | 0.09 | $ | 0.09 | $ | 0.19 | $ | 0.42 | ||||||||||
Discontinued
operations
|
- | - | 0.02 | 0.01 | 0.04 | |||||||||||||||
Basic
income earnings per common share
|
$ | 0.05 | $ | 0.09 | $ | 0.11 | $ | 0.20 | $ | 0.45 | ||||||||||
Diluted
income earnings per common share:
|
||||||||||||||||||||
Continuing
operations
|
$ | 0.05 | $ | 0.09 | $ | 0.09 | $ | 0.19 | $ | 0.41 | ||||||||||
Discontinued
operations
|
- | - | 0.02 | 0.01 | 0.04 | |||||||||||||||
Diluted
income earnings per common share
|
$ | 0.06 | $ | 0.09 | $ | 0.11 | $ | 0.20 | $ | 0.45 |
Fiscal 2006 Quarters Ended
|
||||||||||||||||||||
Sept. 30
|
Dec. 31
|
Mar. 31
|
June 30
|
Total
|
||||||||||||||||
(in thousands of dollars, except per share
data)
|
||||||||||||||||||||
Revenue
|
$ | 8,777 | $ | 9,102 | $ | 8,277 | $ | 9,206 | $ | 35,362 | ||||||||||
Cost
of goods sold
|
(4,013 | ) | (4,470 | ) | (4,253 | ) | (4,639 | ) | (17,375 | ) | ||||||||||
Sales
& Marketing
|
(1,812 | ) | (1,810 | ) | (1,920 | ) | (2,324 | ) | (7,866 | ) | ||||||||||
Research
and product development
|
(1,799 | ) | (1,778 | ) | (2,201 | ) | (2,521 | ) | (8,299 | ) | ||||||||||
General
and administrative
|
(1,771 | ) | (1,457 | ) | (1,060 | ) | (820 | ) | (5,108 | ) | ||||||||||
Settlement
in shareholders' class action
|
1,205 | - | - | - | 1,205 | |||||||||||||||
Other
income (expense), net
|
166 | 191 | 237 | 422 | 1,016 | |||||||||||||||
Income
(loss) from continuing operations before income taxes
|
753 | (222 | ) | (920 | ) | (676 | ) | (1,065 | ) | |||||||||||
Benefit
(provision) for income taxes
|
222 | 146 | 782 | (145 | ) | 1,005 | ||||||||||||||
Income
(loss) from continuing operations
|
975 | (76 | ) | (138 | ) | (821 | ) | (60 | ) | |||||||||||
Income
from discontinued operations
|
1,012 | 157 | 677 | 309 | 2,155 | |||||||||||||||
Net
income (loss)
|
$ | 1,987 | $ | 81 | $ | 540 | $ | (512 | ) | $ | 2,096 | |||||||||
Basic
income (loss) earnings per common share:
|
||||||||||||||||||||
Continuing
operations
|
$ | 0.09 | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.07 | ) | $ | 0.00 | |||||||
Discontinued
operations
|
0.08 | 0.01 | 0.06 | 0.03 | 0.18 | |||||||||||||||
Basic
income (loss) earnings per common share
|
$ | 0.17 | $ | 0.01 | $ | 0.04 | $ | (0.04 | ) | $ | 0.18 | |||||||||
Diluted
income (loss) earnings per common share:
|
||||||||||||||||||||
Continuing
operations
|
$ | 0.09 | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.07 | ) | $ | 0.00 | |||||||
Discontinued
operations
|
0.08 | 0.01 | 0.06 | 0.03 | 0.18 | |||||||||||||||
Diluted
income (loss) earnings per common share
|
$ | 0.17 | $ | 0.01 | $ | 0.04 | $ | (0.04 | ) | $ | 0.17 |
Year
Ended June 30,
|
||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
(in
thousands of dollars)
|
||||||||||||||||||||||||
% of Revenue
|
% of Revenue
|
% of Revenue
|
||||||||||||||||||||||
Revenue
|
$ | 39,752 | 100.0% | $ | 39,861 | 100.0% | $ | 35,362 | 100.0% | |||||||||||||||
Cost
of goods sold
|
16,461 | 41.4% | 17,723 | 44.5% | 17,375 | 49.1% | ||||||||||||||||||
Gross
profit
|
23,291 | 58.6% | 22,138 | 55.5% | 17,987 | 50.9% | ||||||||||||||||||
Operating
expenses (benefit):
|
||||||||||||||||||||||||
Sales
& Marketing
|
6,673 | 16.8% | 7,791 | 19.5% | 7,866 | 22.2% | ||||||||||||||||||
Research
and product development
|
7,070 | 17.8% | 7,535 | 18.9% | 8,299 | 23.5% | ||||||||||||||||||
General
and administrative
|
7,669 | 19.3% | 3,091 | 7.8% | 5,108 | 14.4% | ||||||||||||||||||
Settlement
in shareholders' class action
|
- | 0.0% | - | 0.0% | (1,205 | ) | -3.4% | |||||||||||||||||
Total
operating expenses
|
21,412 | 53.9% | 18,417 | 46.2% | 20,068 | 56.8% | ||||||||||||||||||
Operating
income (loss)
|
1,879 | 4.7% | 3,721 | 9.3% | (2,081 | ) | -5.9% | |||||||||||||||||
Other
income, net
|
1,005 | 2.5% | 1,523 | 3.8% | 1,016 | 2.9% | ||||||||||||||||||
Income
(loss) from continuing operations before income taxes
|
2,884 | 7.3% | 5,244 | 13.2% | (1,065 | ) | -3.0% | |||||||||||||||||
Benefit
from (Provision) for income taxes
|
2,756 | 6.9% | (457 | ) | -1.1% | 1,005 | 2.8% | |||||||||||||||||
Income
(loss) from continuing operations
|
5,640 | 14.2% | 4,787 | 12.0% | (60 | ) | -0.2% | |||||||||||||||||
Income
from discontinued operations, net of tax
|
16 | 0.0% | 422 | 1.1% | 2,156 | 6.1% | ||||||||||||||||||
Net
income
|
$ | 5,656 | 14.2% | $ | 5,209 | 13.1% | $ | 2,096 | 5.9% |
Year
Ended June 30,
|
||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
(in
thousands of dollars)
|
||||||||||||||||||||||||
%
of Revenue
|
%
of Revenue
|
%
of Revenue
|
||||||||||||||||||||||
Cost
of goods sold
|
$ | 16,461 | 41.40% | $ | 17,723 | 44.50% | $ | 17,375 | 49.10% | |||||||||||||||
Gross
profit
|
$ | 23,291 | 58.60% | $ | 22,138 | 55.50% | $ | 17,987 | 50.90% |
Years Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Total
income from discontinued operations, net of income taxes
|
||||||||||||
Conferencing
services business
|
$ | - | $ | - | $ | 729 | ||||||
OM
Video
|
16 | 381 | 248 | |||||||||
Burk
Technology
|
- | - | 953 | |||||||||
Ken-A-Vision
|
- | 41 | 226 | |||||||||
Total
income from discontinued operations, net of income taxes
|
$ | 16 | $ | 422 | $ | 2,156 |
Contractual
Obligations
|
Total
|
Less
than 1 Year
|
1-3
Years
|
4-5
Years
|
After
5 Years
|
|||||||||||||||
Operating
Leases
|
$ | 4,408 | $ | 701 | $ | 1,396 | $ | 1,345 | $ | 965 | ||||||||||
Total
Contractual
|
||||||||||||||||||||
Cash
Obligations
|
$ | 4,408 | $ | 701 | $ | 1,396 | $ | 1,345 | $ | 965 |
10.7
|
Manufacturing
Agreement between ClearOne Communications, Inc. and Inovar, Inc. dated
August 1, 2005
|
Incorp.
by reference
4
|
10.8
|
Office
Lease between Edgewater Corporate Park, LLC and ClearOne Communications,
Inc. dated June 5, 2006
|
Incorp.
by reference
6
|
10.9
|
Consulting
Agreement between Edward D. Bagley and ClearOne Communications, Inc. dated
July 6, 2007
|
Incorp.
by reference
8
|
10.10
|
Severance
Agreement between ClearOne Communications, Inc. and Edward D. Bagley dated
July 6, 2007*
|
Incorp.
by reference
8
|
10.11
|
Compromise
Agreement between ClearOne Communications UK Limited and Martin Offwood
dated August 13, 2007*
|
Incorp.
by reference
9
|
10.12
|
Warehouse
Lease Agreement between Woodenshoe Development and Clearone
Communications, Inc. dated October 5, 2007
|
Incorp.
by reference
9
|
14.1
|
Code
of Ethics, approved by the Board of Directors on August 23,
2006
|
Incorp.
by reference
6
|
Subsidiaries
of the registrant
|
This
filing
|
|
Consent
of Jones Simkins P.C., Company’s independent auditors for the year ending
June 30, 2008
|
This
filing
|
|
Consent
of Hansen Barnett & Maxwell, P.C., Company’s independent auditors for
the year ending June 30, 2006
|
This
filing
|
|
Section
302 Certification of Chief Executive Officer
|
This
filing
|
|
Section
302 Certification of Interim Chief Financial Officer
|
This
filing
|
|
Section
1350 Certification of Chief Executive Officer
|
This
filing
|
|
Section
1350 Certification of Interim Chief Financial Officer
|
This
filing
|
1
|
Incorporated
by reference to the Registrant’s registration statement on Form S-3/A
filed with the Commission on November 1,
2002.
|
3
|
Incorporated
by reference to the Registrant’s Annual Report on Form 10-K for the fiscal
year ended June 30, 2003.
|
4
|
Incorporated
by reference to the Registrant’s Annual Report on Form 10-K for the fiscal
year ended June 30, 2004.
|
6
|
Incorporated
by reference to the Registrant’s Annual Report on Form 10-K for the fiscal
year ended June 30, 2006.
|
7
|
Incorporated
by reference to the Registrant’s registration statement on form S-8 filed
with the Commission on October 6,
2006.
|
8
|
Incorporated
by reference to the Registrant’s Annual Report on Form 10-K for the fiscal
year ended June 30, 2007.
|
9
|
Incorporated
by reference to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2007.
|
10
|
Incorporated
by reference to the Registrant’s registration statement on Form S-8 filed
with the Commission on January 22,
2008.
|
CLEARONE
COMMUNICATIONS, INC.
|
||
September
10, 2008
|
By:
|
/s/ Zeynep Hakimoglu
|
Zeynep
Hakimoglu
|
||
President,
Chief Executive Officer, and
Chairman
|
Signature
|
Title
|
Date
|
/s/ Zeynep Hakimoglu
|
President,
Chief Executive Officer, and Chairman
|
September
10, 2008
|
Zeynep
Hakimoglu
|
(Principal
Executive Officer)
|
|
/s/ Greg A. LeClaire
|
Chief
Financial Officer
|
September
10, 2008
|
Greg
A. LeClaire
|
(Principal
Financial and Accounting Officer)
|
|
/s/ Brad R. Baldwin
|
Director
|
September
10, 2008
|
Brad
R. Baldwin
|
||
/s/ Larry R. Hendricks
|
Director
|
September
10, 2008
|
Larry
R. Hendricks
|
||
/s/ Scott M. Huntsman
|
Director
|
September
10, 2008
|
Scott
M. Huntsman
|
Page
|
|
Report
of Independent Registered Public Accounting Firm – Jones Simkins,
P.C.
|
|
Report
of Independent Registered Public Accounting Firm – Hansen Barnett &
Maxwell, P.C.
|
|
Consolidated
Balance Sheets as of June 30, 2008 and 2007
|
|
Consolidated
Statements of Operations and Comprehensive Income for fiscal years ended
June 30, 2008, 2007, and 2006
|
|
Consolidated
Statements of Shareholders' Equity for fiscal years ended June 30, 2008,
2007, and 2006
|
|
Consolidated
Statements of Cash Flows for fiscal years ended June 30, 2008, 2007, and
2006
|
|
Notes
to Consolidated Financial Statements
|
June
30,
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 3,327 | $ | 2,782 | ||||
Marketable
securities
|
5,922 | 19,871 | ||||||
Accounts
receivable, net of allowance for doubtful accounts
|
||||||||
of
$87 and $54, respectively
|
7,238 | 8,025 | ||||||
Deposit,
bond for preliminary injunction
|
908 | - | ||||||
Note
receivable
|
43 | 163 | ||||||
Inventories,
net
|
7,799 | 7,263 | ||||||
Deferred
income taxes
|
2,828 | - | ||||||
Prepaid
expenses and other assets
|
820 | 213 | ||||||
Total
current assets
|
28,885 | 38,317 | ||||||
Long-term
marketable securities
|
11,168 | - | ||||||
Property
and equipment, net
|
2,554 | 2,694 | ||||||
Intangible
assets, net
|
47 | - | ||||||
Note
receiveable - long-term
|
- | 43 | ||||||
Long-term
deferred tax asset
|
1,639 | - | ||||||
Other
assets
|
7 | 9 | ||||||
Total
assets
|
$ | 44,300 | $ | 41,063 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 2,187 | $ | 1,745 | ||||
Accrued
income taxes
|
72 | 660 | ||||||
Accrued
liabilities
|
3,600 | 1,874 | ||||||
Deferred
product revenue
|
4,547 | 4,872 | ||||||
Total
current liabilities
|
10,406 | 9,151 | ||||||
Deferred
rent
|
700 | 855 | ||||||
Other
long-term liabilities
|
1,054 | 619 | ||||||
Total
liabilities
|
12,160 | 10,625 | ||||||
Shareholders'
equity:
|
||||||||
Common
stock, par value $0.001, 50,000,000 shares authorized,
|
||||||||
10,228,902
and 10,861,920 shares issued and outstanding, respectively
|
10 | 11 | ||||||
Additional
paid-in capital
|
44,618 | 47,582 | ||||||
Accumulated
other comprehensive loss
|
(694 | ) | - | |||||
Accumulated
deficit
|
(11,794 | ) | (17,155 | ) | ||||
Total
shareholders' equity
|
32,140 | 30,438 | ||||||
Total
liabilities and shareholders' equity
|
$ | 44,300 | $ | 41,063 | ||||
See
accompanying notes to consolidated financial statements
|
Years
Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Revenue
|
$ | 39,752 | $ | 39,861 | $ | 35,362 | ||||||
Cost
of goods sold
|
16,461 | 17,723 | 17,375 | |||||||||
Gross
profit
|
23,291 | 22,138 | 17,987 | |||||||||
Operating
expenses:
|
||||||||||||
Sales
& marketing
|
6,673 | 7,791 | 7,866 | |||||||||
Research
and product development
|
7,070 | 7,535 | 8,299 | |||||||||
General
and administrative
|
7,669 | 3,091 | 5,108 | |||||||||
Settlement
in shareholders' class action
|
- | - | (1,205 | ) | ||||||||
Total
operating expenses
|
21,412 | 18,417 | 20,068 | |||||||||
Operating
income (loss)
|
1,879 | 3,721 | (2,081 | ) | ||||||||
Other
income (expense), net:
|
||||||||||||
Interest
income
|
1,039 | 1,468 | 813 | |||||||||
Interest
expense
|
(5 | ) | (4 | ) | - | |||||||
Other,
net
|
(29 | ) | 59 | 203 | ||||||||
Total
other income (expense), net
|
1,005 | 1,523 | 1,016 | |||||||||
Income
(loss) from continuing operations before income taxes
|
2,884 | 5,244 | (1,065 | ) | ||||||||
(Provision)
benefit for income taxes
|
2,756 | (457 | ) | 1,005 | ||||||||
Income
(loss) from continuing operations
|
5,640 | 4,787 | (60 | ) | ||||||||
Discontinued
operations:
|
||||||||||||
Income
from discontinued operations
|
- | 75 | 361 | |||||||||
Gain
on disposal of discontinued operations
|
25 | 598 | 2,726 | |||||||||
Income
tax provision
|
(9 | ) | (251 | ) | (931 | ) | ||||||
Income
from discontinued operations
|
16 | 422 | 2,156 | |||||||||
Net
income
|
$ | 5,656 | $ | 5,209 | $ | 2,096 | ||||||
Comprehensive
income:
|
||||||||||||
Net
income
|
$ | 5,656 | $ | 5,209 | $ | 2,096 | ||||||
Unrealized
(loss) on marketable securities, net of taxes of $413
|
$ | (694 | ) | $ | - | $ | - | |||||
Comprehensive
income
|
$ | 4,962 | $ | 5,209 | $ | 2,096 | ||||||
See
accompanying notes to consolidated financial statements
|
Years
Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Basic
earnings (loss) per common share from continuing
operations
|
$ | 0.53 | $ | 0.42 | $ | (0.01 | ) | |||||
Diluted
earnings (loss) per common share from continuing
operations
|
$ | 0.52 | $ | 0.41 | $ | - | ||||||
Basic
earnings per common share from discontinued operations
|
$ | - | $ | 0.04 | $ | 0.18 | ||||||
Diluted
earnings per common share from discontinued operations
|
$ | - | $ | 0.04 | $ | 0.18 | ||||||
Basic
earnings per common share
|
$ | 0.53 | $ | 0.45 | $ | 0.18 | ||||||
Diluted
earnings per common share
|
$ | 0.52 | $ | 0.45 | $ | 0.17 | ||||||
Basic
weighted average shares outstanding
|
10,694,401 | 11,497,773 | 11,957,756 | |||||||||
Diluted
weighted average shares outstanding
|
10,798,281 | 11,575,721 | 12,206,618 | |||||||||
See
accompanying notes to consolidated financial statements
|
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
Other
|
Total
|
||||||||||||||||||||||||||
Common Stock
|
Paid-In
|
Deferred
|
Comprehensive
|
Accumulated
|
Shareholders'
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Compensation
|
Income
|
Deficit
|
Equity
|
||||||||||||||||||||||
Balances
at June 30, 2005
|
11,264,233 | 11 | 49,393 | (33 | ) | - | (24,460 | ) | 24,911 | |||||||||||||||||||
Issuance
of Common Shares
|
||||||||||||||||||||||||||||
related
to shareholder
|
||||||||||||||||||||||||||||
settlement
agreement
|
920,494 | 1 | 2,263 | - | - | - | 2,264 | |||||||||||||||||||||
Compensation
expense resulting
|
||||||||||||||||||||||||||||
from
the modification of stock
|
||||||||||||||||||||||||||||
options
|
- | - | 16 | - | - | - | 16 | |||||||||||||||||||||
Compensation
cost associated
|
||||||||||||||||||||||||||||
with
SFAS No. 123R
|
- | - | 1,092 | - | - | - | 1,092 | |||||||||||||||||||||
SFAS
No. 123R transition
|
||||||||||||||||||||||||||||
expense
|
- | - | - | 33 | - | - | 33 | |||||||||||||||||||||
Net
income
|
- | - | - | - | - | 2,096 | 2,096 | |||||||||||||||||||||
Balances
at June 30, 2006
|
12,184,727 | 12 | 52,764 | - | - | (22,364 | ) | 30,412 | ||||||||||||||||||||
Tender
offer
|
(1,073,552 | ) | (1 | ) | (4,602 | ) | - | - | - | (4,603 | ) | |||||||||||||||||
Stock
buy back program
|
(265,360 | ) | - | (1,450 | ) | - | - | - | (1,450 | ) | ||||||||||||||||||
Exercise
of stock options
|
15,940 | - | 54 | - | - | - | 54 | |||||||||||||||||||||
Tax
benefit stock option exercise
|
- | - | 9 | - | - | - | 9 | |||||||||||||||||||||
Compensation
cost associated
|
||||||||||||||||||||||||||||
with
SFAS No. 123R
|
- | - | 802 | - | - | - | 802 | |||||||||||||||||||||
Employee
stock purchase program
|
165 | - | 4 | - | - | - | 4 | |||||||||||||||||||||
Net
income
|
- | - | - | - | - | 5,209 | 5,209 | |||||||||||||||||||||
Balances
at June 30, 2007
|
10,861,920 | $ | 11 | $ | 47,582 | $ | - | $ | - | $ | (17,155 | ) | $ | 30,438 | ||||||||||||||
Stock
buy back program
|
(834,646 | ) | (1 | ) | (4,354 | ) | - | - | - | (4,355 | ) | |||||||||||||||||
Exercise
of stock options
|
228,368 | - | 792 | - | - | - | 792 | |||||||||||||||||||||
Shares
received/retired upon
|
||||||||||||||||||||||||||||
exercise
of stock options
|
(28,066 | ) | - | (186 | ) | - | - | - | (186 | ) | ||||||||||||||||||
Tax
benefit stock option exercise
|
- | - | 70 | - | - | - | 70 | |||||||||||||||||||||
Compensation
cost associated
|
||||||||||||||||||||||||||||
with
SFAS No. 123R
|
- | - | 707 | - | - | - | 707 | |||||||||||||||||||||
Employee
stock purchase program
|
1,326 | - | 7 | - | - | - | 7 | |||||||||||||||||||||
Adoption
of FIN 48
|
- | - | - | - | - | (295 | ) | (295 | ) | |||||||||||||||||||
Unrealized (loss) on marketable
securities,
net of tax
|
- | - | - | - | (694 | ) | - | (694 | ) | |||||||||||||||||||
Net
income
|
- | - | - | - | - | 5,656 | 5,656 | |||||||||||||||||||||
Balances
at June 30, 2008
|
10,228,902 | $ | 10 | $ | 44,618 | $ | - | $ | (694 | ) | $ | (11,794 | ) | $ | 32,140 | |||||||||||||
See
accompanying notes to consolidated financial statements
|
Years
Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss) from continuing operations
|
$ | 5,640 | $ | 4,787 | $ | (60 | ) | |||||
Adjustments
to reconcile net income (loss) from continuing operations
|
||||||||||||
to
net cash provided by operations:
|
||||||||||||
Impairment
on marketable securities
|
155 | - | - | |||||||||
Depreciation
and amortization expense
|
767 | 870 | 1,389 | |||||||||
Stock-based
compensation
|
714 | 806 | 1,140 | |||||||||
Write-off
of inventory
|
136 | 660 | 681 | |||||||||
(Gain)
loss on disposal of assets
|
6 | (58 | ) | (237 | ) | |||||||
Provision
for doubtful accounts
|
33 | 5 | 3 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
322 | (261 | ) | (928 | ) | |||||||
Deferred
taxes
|
(4,467 | ) | - | - | ||||||||
Deposit
- bond for preliminary injunction
|
(908 | ) | - | - | ||||||||
Notes
receivable
|
163 | (206 | ) | - | ||||||||
Inventories
|
(672 | ) | (1,309 | ) | (2,236 | ) | ||||||
Prepaids
and other assets
|
(590 | ) | 40 | 45 | ||||||||
Accounts
payable
|
875 | (811 | ) | 434 | ||||||||
Accrued
liabilities
|
1,726 | (673 | ) | (960 | ) | |||||||
Other
long term liabilities
|
- | 619 | - | |||||||||
Accrued
income taxes
|
(50 | ) | 3,267 | 1,345 | ||||||||
Deferred
product revenue
|
(325 | ) | (999 | ) | 816 | |||||||
Net
cash provided by continuing operating activities
|
3,525 | 6,737 | 1,432 | |||||||||
Net
cash provided by discontinued operating activities
|
- | 47 | 730 | |||||||||
Net
cash provided by operating activities
|
3,525 | 6,784 | 2,162 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of property and equipment
|
(786 | ) | (909 | ) | (224 | ) | ||||||
Purchase
of intangible assets
|
(49 | ) | - | - | ||||||||
Proceeds
from the sale of property and equipment
|
- | 35 | 230 | |||||||||
Purchase
of marketable securities
|
(15,378 | ) | (23,369 | ) | (14,800 | ) | ||||||
Sale
of marketable securities
|
16,897 | 24,050 | 10,050 | |||||||||
Net
cash provided by (used in) continuing investing activities
|
684 | (193 | ) | (4,744 | ) | |||||||
Net
cash provided by discontinued investing activities
|
16 | 941 | 1,930 | |||||||||
Net
cash provided by (used in) investing activities
|
700 | 748 | (2,814 | ) | ||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from the issuance of common stock - options
|
605 | 54 | - | |||||||||
Common
stock purchased and retired
|
(4,355 | ) | (6,053 | ) | - | |||||||
Tax
benefit from stock options
|
70 | 9 | - | |||||||||
Net
cash used in financing activities
|
(3,680 | ) | (5,990 | ) | - | |||||||
Net
increase (decrease) in cash and cash equivalents
|
545 | 1,542 | (652 | ) | ||||||||
Cash
and cash equivalents at the beginning of the year
|
2,782 | 1,240 | 1,892 | |||||||||
Cash
and cash equivalents at the end of the year
|
$ | 3,327 | $ | 2,782 | $ | 1,240 | ||||||
See
accompanying notes to consolidated financial statements
|
Years
Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||
Cash
paid for interest
|
$ | 5 | $ | 4 | $ | - | ||||||
Cash
paid (received) for income taxes
|
1,701 | (3,202 | ) | (1,419 | ) | |||||||
Supplemental
disclosure of non-cash financing activities:
|
||||||||||||
Adoption
of FIN48
|
$ | 295 | $ | - | $ | - | ||||||
Exchanged
accounts receivable from a vendor with accounts payable
|
||||||||||||
to
the same vendor
|
432 | 15 | - | |||||||||
Lease
incentive for leasehold improvements
|
- | 1,088 | - | |||||||||
Sales
of property and equipment for accounts payable
|
- | 25 | - | |||||||||
Value
of common shares issued in shareholder settlement
|
- | - | 2,264 | |||||||||
See
accompanying notes to consolidated financial statements
|
1.
|
Organization
– Nature of Operations
|
2.
|
Summary
of Significant Accounting Policies
|
Description
|
Balance
at Beginning of Period
|
Charged
to Costs and Expenses
|
Deductions
|
Balance
at End of Period
|
||||||||||||
Year
ended June 30, 2007
|
$ | 49 | $ | 12 | $ | (7 | ) | $ | 54 | |||||||
Year
ended June 30, 2008
|
$ | 54 | $ | 33 | $ | - | $ | 87 |
Deferred Revenue
|
Deferred Cost of Goods Sold
|
Deferred Gross Profit
|
||||||||||
June
30, 2008
|
$ | 4,547 | $ | 1,719 | $ | 2,828 | ||||||
June
30, 2007
|
4,872 | 2,115 | 2,757 | |||||||||
June
30, 2006
|
5,871 | 2,817 | 3,054 |
Years Ended June 30,
|
||||||||
2008
|
2007
|
|||||||
Balance
at the beginning of year
|
$ | 125 | $ | 169 | ||||
Accruals/additions
|
329 | 241 | ||||||
Usage
|
(243 | ) | (285 | ) | ||||
Balance
at end of year
|
$ | 211 | $ | 125 |
Years Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Numerator:
|
||||||||||||
Income
(loss) from continuing operations
|
$ | 5,640 | $ | 4,787 | $ | (60 | ) | |||||
Income
from discontinued operations, net of tax
|
- | 47 | 226 | |||||||||
Gain
on disposal of discontinued operations, net of tax
|
16 | 375 | 1,930 | |||||||||
Net
income
|
$ | 5,656 | $ | 5,209 | $ | 2,096 | ||||||
Denominator:
|
||||||||||||
Basic
weighted average shares
|
10,694,401 | 11,497,773 | 11,957,756 | |||||||||
Dilutive
common stock equivalents using treasury stock method
|
103,880 | 77,948 | 248,862 | |||||||||
Diluted
weighted average shares
|
10,798,281 | 11,575,721 | 12,206,618 | |||||||||
Basic
earnings (loss) per common share:
|
||||||||||||
Continuing
operations
|
$ | 0.53 | $ | 0.42 | $ | (0.01 | ) | |||||
Discontinued
operations
|
$ | - | $ | 0.00 | $ | 0.02 | ||||||
Disposal
of discontinued operations
|
$ | 0.00 | $ | 0.03 | $ | 0.16 | ||||||
Net
income
|
$ | 0.53 | $ | 0.45 | $ | 0.18 | ||||||
Diluted
earnings (loss) per common share:
|
||||||||||||
Continuing
operations
|
$ | 0.52 | $ | 0.41 | $ | 0.00 | ||||||
Discontinued
operations
|
$ | 0.00 | $ | 0.00 | $ | 0.02 | ||||||
Disposal
of discontinued operations
|
$ | 0.00 | $ | 0.03 | $ | 0.16 | ||||||
Net
income
|
$ | 0.52 | $ | 0.45 | $ | 0.17 |
Years Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Income
from discontinued operations
|
||||||||||||
Ken-A-Vision
|
$ | - | $ | 75 | $ | 361 | ||||||
Total
income from discontinued operations
|
- | 75 | 361 | |||||||||
Gain
(loss) on disposal of discontinued operations
|
||||||||||||
Conferencing
services business
|
$ | - | $ | - | $ | 1,030 | ||||||
OM
Video
|
25 | 607 | 350 | |||||||||
Burk
Technology
|
- | - | 1,346 | |||||||||
Ken-A-Vision
|
- | (9 | ) | - | ||||||||
Total
gain on disposal of discontinued operations
|
25 | 598 | 2,726 | |||||||||
Income
tax provision
|
||||||||||||
Conferencing
services business
|
$ | - | $ | - | $ | (301 | ) | |||||
OM
Video
|
(9 | ) | (227 | ) | (102 | ) | ||||||
Burk
Technology
|
- | - | (393 | ) | ||||||||
Ken-A-Vision
|
- | (24 | ) | (135 | ) | |||||||
Total
income tax provision
|
(9 | ) | (251 | ) | (931 | ) | ||||||
Total
income from discontinued operations, net of income taxes
|
||||||||||||
Conferencing
services business
|
$ | - | $ | - | $ | 729 | ||||||
OM
Video
|
16 | 380 | 248 | |||||||||
Burk
Technology
|
- | - | 953 | |||||||||
Ken-A-Vision
|
- | 42 | 226 | |||||||||
Total
income from discontinued operations, net of income taxes
|
$ | 16 | $ | 422 | $ | 2,156 |
Year Ended June 30,
|
||||
2006
|
||||
Inventory
|
$ | 411 | ||
Patents,
net
|
154 | |||
Total
current assets
|
$ | 565 |
Year Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Revenue
|
$ | - | $ | 648 | $ | 2,269 | ||||||
Cost
of goods sold
|
- | 573 | 1,908 | |||||||||
Gross
profit
|
- | 75 | 361 | |||||||||
Loss
on disposal
|
- | (9 | ) | - | ||||||||
Provision
for income taxes
|
- | (24 | ) | (135 | ) | |||||||
Income
from discontinued operations
|
$ | - | $ | 42 | $ | 226 |
As of June 30,
|
||||||||
2008
|
2007
|
|||||||
Raw
materials
|
$ | 724 | $ | 453 | ||||
Finished
goods
|
5,356 | 4,695 | ||||||
Consigned
inventory
|
1,719 | 2,115 | ||||||
Total
inventory
|
$ | 7,799 | $ | 7,263 |
Estimated
|
As of June 30,
|
||||||||
useful lives
|
2008
|
2007
|
|||||||
Office
furniture and equipment
|
3
to 10 years
|
$ | 8,197 | $ | 7,825 | ||||
Leasehold
improvements
|
1
to 6 years
|
1,309 | 1,289 | ||||||
Manufacturing
and test equipment
|
2
to 10 years
|
1,532 | 1,433 | ||||||
11,038 | 10,547 | ||||||||
Accumulated
depreciation and amortization
|
(8,484 | ) | (7,853 | ) | |||||
Property
and equipment, net
|
$ | 2,554 | $ | 2,694 |
Description
of Securities
|
Total
- All Less than 12 Months
|
|||||||
Fair
Value
|
Unrealized
Losses
|
|||||||
Marketable
Securities
|
$ | 17,090 | $ | 1,107 |
Year
ending June 30,
|
||||||||
2008
|
2007
|
|||||||
Balance,
beginning of year
|
$ | - | $ | - | ||||
Unrealized
holding (losses), in marketable securities (before taxes)
|
(1,107 | ) | - | |||||
Income
tax benefit
|
413 | |||||||
Balance,
end of year
|
$ | (694 | ) | $ | - |
Year ending June 30,
|
||||||||
2008
|
2007
|
|||||||
Net
income
|
$ | 5,656 | $ | 5,209 | ||||
Other
comprehensive income (loss):
|
||||||||
Unrealized
gain (loss) on available-for-sale investment
|
(1,107 | ) | 0 | |||||
Income
tax benefit
|
413 | 0 | ||||||
$ | 4,962 | $ | 5,209 |
Years Ending
June 30,
|
||||
2009
|
$ | 701 | ||
2010
|
695 | |||
2011
|
682 | |||
2012
|
663 | |||
2013
|
644 | |||
Thereafter
|
1,023 | |||
Total
minimum lease payments
|
$ | 4,408 |
As of June 30,
|
||||||||
2008
|
2007
|
|||||||
Accrued
salaries and other compensation
|
$ | 974 | $ | 1,027 | ||||
Other
accrued liabilities
|
2,626 | 847 | ||||||
Total
|
$ | 3,600 | $ | 1,874 |
Fiscal Year Ended
|
|||
June 30,
|
June 30,
|
June 30,
|
|
2008
|
2007
|
2006
|
|
Risk-free
interest rate, average
|
4.5%
|
4.8%
|
4.4%
|
Expected
option life, average
|
4.3
years
|
4.6
years
|
5.9
years
|
Expected
price volatility, average
|
73.9%
|
88.3%
|
87.2%
|
Expected
dividend yield
|
0.0%
|
0.0%
|
0.0%
|
Expected
annual forfeiture rate
|
10.0%
|
10.0%
|
10.0%
|
Year Ended June 30, 2006
|
||||||||
(in thousands)
|
||||||||
SFAS
|
||||||||
No.
123R
|
||||||||
Compensation
|
||||||||
As Reported
|
Expense
|
|||||||
Revenue
|
$ | 35,362 | $ | - | ||||
Cost
of goods sold
|
17,375 | (49 | ) | |||||
Gross
profit
|
17,987 | 49 | ||||||
Operating
expenses:
|
||||||||
Sales
and marketing
|
7,866 | (99 | ) | |||||
Research
and product development
|
8,299 | (203 | ) | |||||
General
and administrative
|
5,108 | (756 | ) | |||||
Settlement
in shareholders' class action
|
(1,205 | ) | - | |||||
Total
operating expenses
|
20,068 | (1,058 | ) | |||||
Operating
loss
|
(2,081 | ) | 1,107 | |||||
Other
income, net
|
1,016 | 34 | ||||||
Loss
from continuing operations before income taxes
|
(1,065 | ) | 1,141 | |||||
Benefit
for income taxes
|
1,005 | (264 | ) | |||||
Income
from continuing operations
|
(60 | ) | 877 | |||||
Income
from discontinued operations, net of tax
|
2,156 | - | ||||||
Net
income
|
$ | 2,096 | $ | 877 | ||||
Basic
earnings (loss) per common share:
|
||||||||
Continuing
operations
|
$ | (0.01 | ) | $ | 0.07 | |||
Discontinued
operations
|
0.18 | - | ||||||
Net
income
|
0.18 | 0.07 | ||||||
Diluted
earnings (loss) per common share:
|
||||||||
Continuing
operations
|
$ | 0.00 | $ | 0.07 | ||||
Discontinued
operations
|
0.18 | - | ||||||
Net
income
|
0.17 | 0.07 |
Stock Options
|
Number of Shares
|
Weighted Average Exercise
Price
|
||||||
Outstanding
at June 30, 2005
|
1,493,112 | 6.21 | ||||||
Granted
|
29,000 | 2.63 | ||||||
Expired
and canceled
|
(118,353 | ) | 3.55 | |||||
Forfeited
prior to vesting
|
(165,839 | ) | 8.11 | |||||
Exercised
|
- | - | ||||||
Outstanding
at June 30, 2006
|
1,237,920 | 6.12 | ||||||
Granted
|
436,500 | 3.84 | ||||||
Expired
and canceled
|
(329,316 | ) | 6.45 | |||||
Forfeited
prior to vesting
|
(55,965 | ) | 3.94 | |||||
Exercised
|
(15,940 | ) | 3.41 | |||||
Outstanding
at June 30, 2007
|
1,273,199 | 5.38 | ||||||
Granted
|
319,000 | 6.13 | ||||||
Expired
and canceled
|
(68,058 | ) | 7.39 | |||||
Forfeited
prior to vesting
|
(96,727 | ) | 5.23 | |||||
Exercised
|
(228,368 | ) | 3.47 | |||||
Outstanding
at June 30, 2008
|
1,199,046 | 5.85 | ||||||
Exercisable
|
747,736 | 6.07 |
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||
Exercise Price Range
|
Number of Shares
|
Weighted Average Exercise
Price
|
Weighted Average Contractual Term
(Years)
|
Options Exercisable
|
Weighted Average Exercise
Price
|
||||||||||||||
$0.00
to $4.00
|
486,442 | $ | 3.45 |
7.0
years
|
352,442 | $ | 3.41 | ||||||||||||
$4.01 to $8.00 | 572,354 | 5.99 |
7.6
years
|
268,470 | 5.98 | ||||||||||||||
$8.01 to $12.00 | 52,500 | 11.83 |
2.1
years
|
51,688 | 11.86 | ||||||||||||||
$12.01 to $16.00 | 87,000 | 14.64 |
1.8
years
|
74,713 | 14.87 | ||||||||||||||
$16.01 to $20.00 | 750 | 18.80 |
1.8
years
|
423 | 19.13 | ||||||||||||||
Total
|
1,199,046 | $ | 5.85 |
6.7
years
|
747,736 | $ | 6.07 |
Non-vested Shares
|
Number of Shares
|
Weighted Average Grant-Date Fair
Value
|
||||||
Non-vested
at June 30, 2007
|
478,654 | $ | 2.87 | |||||
Granted
|
319,000 | 3.69 | ||||||
Vested
|
(249,617 | ) | 2.68 | |||||
Forfeited
prior to vesting
|
(96,727 | ) | 3.38 | |||||
Non-vested
at June 30, 2008
|
451,310 | $ | 3.44 |
2008
|
2007
|
2006
|
||||||||||
Customer
A
|
31.0% | 30.4% | 24.6% | |||||||||
Customer
B
|
14.4% | 13.4% | 16.6% | |||||||||
Customer
C
|
14.4% | 12.8% | 15.0% | |||||||||
Total
|
59.8% | 56.6% | 56.2% |
2008
|
2007
|
|||||||
Customer
A
|
22.5% | 29.3% | ||||||
Customer
B
|
15.3% | 16.7% | ||||||
Customer
C
|
12.3% | 12.2% | ||||||
Total
|
50.1% | 58.2% |
Years Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
U.S.
|
$ | 3,033 | $ | 5,184 | $ | (1,113 | ) | |||||
Non-U.S.
|
(149 | ) | 60 | 48 | ||||||||
$ | 2,884 | $ | 5,244 | $ | (1,065 | ) |
Years Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Current:
|
||||||||||||
U.S.
Federal
|
$ | (1,395 | ) | $ | (435 | ) | $ | 889 | ||||
U.S.
State
|
(61 | ) | (4 | ) | 118 | |||||||
Non-U.S.
|
- | (18 | ) | (2 | ) | |||||||
Total
current
|
$ | (1,456 | ) | $ | (457 | ) | $ | 1,005 | ||||
Deferred:
|
||||||||||||
U.S.
Federal
|
3,368 | (148 | ) | (619 | ) | |||||||
U.S.
State
|
844 | (594 | ) | 73 | ||||||||
Change
in deferred before valuation allowance
|
4,212 | (742 | ) | (546 | ) | |||||||
Decrease
(increase) in valuation allowance
|
- | 742 | 546 | |||||||||
Total
deferred
|
4,212 | - | - | |||||||||
(Provision)
benefit for income taxes
|
$ | 2,756 | $ | (457 | ) | $ | 1,005 |
Years Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
U.S.
federal statutory income tax rate at 34.0 percent
|
$ | (989 | ) | $ | (1,782 | ) | $ | 362 | ||||
State
income tax (provision) benefit, net of federal income
|
||||||||||||
tax
effect
|
517 | (4 | ) | 79 | ||||||||
Repatriated
foreign earnings
|
(308 | ) | - | - | ||||||||
Foreign
tax credit
|
185 | - | - | |||||||||
Non-deductible
SFAS No. 123R compensation expense
|
(106 | ) | (122 | ) | (143 | ) | ||||||
Research
and development credit
|
58 | 329 | 72 | |||||||||
Foreign
earnings or losses taxed at different rates
|
(45 | ) | (11 | ) | 14 | |||||||
Uncertain
tax positions
|
(295 | ) | - | - | ||||||||
Non-deductible
items and other
|
59 | 496 | 180 | |||||||||
Change
in valuation allowance
|
3,680 | 637 | 441 | |||||||||
Tax
(provision) benefit
|
$ | 2,756 | $ | (457 | ) | $ | 1,005 |
2008
|
2007
|
||||||||||||||
Current
|
Long-term
|
Current
|
Long-term
|
||||||||||||
Deferred
revenue
|
$ | 1,103 | $ | $ | 1,075 | $ | |||||||||
Basis
difference in intangible assets
|
599 | 676 | |||||||||||||
Inventory
reserve
|
815 | 870 | |||||||||||||
Net
operating loss carryforwards
|
25 | 115 | |||||||||||||
Accumulated
research and development credits
|
341 | 960 | |||||||||||||
Alternative
minimum tax credits
|
287 | 409 | |||||||||||||
Accrued
liabilities
|
1,044 | 242 | |||||||||||||
Deductible
SFAS 123R compensation expense
|
513 | 436 | |||||||||||||
Allowance
for sales returns and doubtful accounts
|
34 | 21 | |||||||||||||
State
income taxes
|
(228 | ) | (61 | ) | |||||||||||
Uncertain
tax positions
|
(155 | ) | |||||||||||||
Difference
in property and equipment basis
|
(324 | ) | (254 | ) | |||||||||||
Other
|
60 | 414 | 77 | ||||||||||||
Total
net deferred income tax asset
|
2,828 | 1,639 | 2,644 | 1,983 | |||||||||||
Less
valuation allowance
|
- | - | (2,644 | ) | (1,983 | ) | |||||||||
Net
deferred income tax asset
|
$ | 2,828 | $ | 1,639 | $ | - | $ | - |
As of June 30,
|
||||||||
2008
|
2007
|
|||||||
Current
deferred income tax assets
|
$ | 2,828 | $ | - | ||||
Long-term
deferred income tax assets
|
1,639 | - | ||||||
Current
deferred income tax liabilities
|
- | - | ||||||
Long-term
deferred income tax liabilities
|
- | |||||||
Net
deferred income tax assets
|
$ | 4,467 | $ | - |
Unrecognized
tax benefits at July 1, 2007
|
$ | 862 | ||
Tax
positions taken in a prior period
|
||||
Gross
increases
|
63 | |||
Gross
decreases
|
- | |||
Tax
positions taken in the current period
|
||||
Gross
increases
|
419 | |||
Gross
decreases
|
- | |||
Settlements
with taxing authorities
|
- | |||
Lapse
of applicable statute of limitations
|
(192 | ) | ||
Unrecognized
tax benefits at June 30, 2008
|
$ | 1,152 |
Years Ended June 30,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
United
States
|
$ | 27,826 | $ | 28,336 | $ | 25,316 | ||||||
All
other countries
|
11,926 | 11,525 | 10,046 | |||||||||
Total
|
$ | 39,752 | $ | 39,861 | $ | 35,362 |
NAME
|
ADDRESS
|
|
Jace
N. Green
|
4048
Barker Road
|
|
West
Valley City, Utah 84119
|
NAME
|
ADDRESS
|
|
Joseph
Y. Hornsby
|
1132
Montgomery Street
|
|
Salt
Lake City, Utah 84104
|
||
Elaine
Avilez
|
4048
Barker Road
|
|
West
Valley City, Utah 84119
|
||
Jace
N. Green
|
4048
Barker Road
|
|
West
Valley City, Utah 84119
|
NAME
|
ADDRESS
|
|
Joseph
Y. Hornsby
|
1132
Montgomery Street
|
|
Salt
Lake City, Utah 84104
|
||
Elaine
Avilez
|
4048
Barker Road
|
|
West
Valley City, Utah 84119
|
||
Jace
N. Green
|
4048
Barker Road
|
|
West
Valley City, Utah 84119
|
/s/ Joseph Y. Hornsby
|
|
Joseph
Y. Hornsby
|
|
/s/ Elaine
Avilez
|
|
Elaine
Avilez
|
|
/s/ Jace N. Green
|
|
Jace
N. Green
|
/s/ Judith R. Willard
|
|
NOTARY
PUBLIC
|
|
Residing
at
Salt Lake
|
|
My
Commission Expires:
|
|
6-15-85
|
INSULAR,
INC.
|
|
By:
/s/ Craig Niebuhr
|
|
Craig
Niebuhr, President
|
|
By:
/s/ Craig Niebuhr
|
|
Jace
Green, Secretary
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/s/ Notary
Public
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NOTARY
PUBLIC
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My
commission expires:
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Residing
at:
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5-29-88
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Salt Lake City,
Utah
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GENTNER
ENGINEERING COMPANY
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By:
/s/ Russell D. Gentner
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Russell
D. Gentner, President
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GENTNER
ELECTRONICS COMPANY
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A
Utah corporation
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By:
/s/ Russell D. Gentner
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RUSSELL
D. GENTNER
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President
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By:
/s/ William H. Gillman
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WILLIAM
H. GILLMAN
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Secretary
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/s/ Russell D. Gentner
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RUSSELL
D. GENTNER
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My
Commission Expires:
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/s/ Willie Steed
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NOTARY
PUBLIC
|
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10-6-86
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Residing
at: Utah
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/s/ William H. Gillman
|
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WILLIAM
H. GILLMAN
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My
Commission Expires:
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/s/ Willie Steed
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NOTARY
PUBLIC
|
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10-6-86
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Residing
at: Utah
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By:
/s/ William V. Trowbridge,
Jr.
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William
V. Trowbridge, Jr.
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President
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By:
/s/ David L. Harmon
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David
L. Harmon
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Secretary
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1.
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Articles
I of the Articles of Incorporation of the Corporation is deleted in its
entirety and the following is substituted
therefore:
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2.
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This
Amendment to the Articles of Incorporation (the "Amendment") was adopted
(i) by the Board of Directors of the Corporation as of September 17, 2001,
and (ii) with the recommendation of the Board of Directors, at a meeting
of the shareholders of the Corporation held on November 14,
2001.
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3.
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As
of the date of the record date for the shareholders meeting referenced in
paragraph 2, the Corporation had 8,628,478 shares of outstanding Common
Stock all of which were entitled to vote on the above noted Amendment and
5,544,252 of which were indisputably present at the shareholder's meeting
at which the vote was taken. Common Stock is the only class of stock of
the Corporation. The Amendment was approved, receiving 5,468,778 votes,
which constituted a majority of the outstanding shares of Common Stock of
the Corporation.
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4.
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These
Articles of Amendment to the Articles of Incorporation shall become
effective on January 1, 2002.
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GENTNER
COMMUNICATIONS
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CORPORATION,
a Utah corporation
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By:
/s/ James A. Valeo
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James
A. Valeo, Vice President
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1.
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I
have reviewed this annual report of ClearOne Communications, Inc. on Form
10-K;
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2.
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Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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4.
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The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
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b)
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Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
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c)
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Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting.
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5.
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The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
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b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
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Date:
September 10, 2008
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By:
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/s/ Zeynep Hakimoglu
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Zeynep
Hakimoglu
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||
President,
Chief Executive Officer and
Chairman
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1.
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I
have reviewed this annual report of ClearOne Communications, Inc. on Form
10-K;
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2.
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Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
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c)
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Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting.
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5.
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The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
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Date:
September 10, 2008
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By:
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/s/ Greg A. LeClaire
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Greg
A. LeClaire
|
||
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
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Date:
September 10, 2008
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By:
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/s/ Zeynep Hakimoglu
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Zeynep
Hakimoglu
|
||
President,
Chief Executive Officer and Chairman
(Principal
Executive Officer)
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Date:
September 10, 2008
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By:
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/s/ Greg A. LeClaire
|
Greg
A. LeClaire
|
||
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
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