x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
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DELAWARE
|
77-0344424
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S.
Employer Identification No.)
|
|
780
Montague Expressway, #504 San Jose,
California
|
95131
|
|
(Address
of Principal Executive Offices)
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(Zip
Code)
|
Title
of Each Class
|
Name
of Each Exchange on Which Registered
|
|
Common
Stock, $.001 par value
|
Nasdaq
Capital Market
|
|
Page
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||
PART
I.
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|||
Item
1.
|
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1
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Item 1A.
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4
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Item 1B.
|
|
8
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Item
2.
|
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8
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Item
3.
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8
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Item
4.
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8
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PART
II.
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|||
Item
5.
|
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9
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Item
6.
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11
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Item
7.
|
|
12
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Item 7A.
|
|
18
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Item
8.
|
|
20
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Item
9.
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41
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Item
9A.
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41
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Item 9B.
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|
41
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PART
III.
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|||
Item 10.
|
|
42
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Item 11.
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42
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Item 12.
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42
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Item 13.
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42
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Item 14.
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42
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PART
IV.
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|||
Item 15.
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|
43
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44
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||
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45
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Item 1.
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BUSINESS
|
•
|
Providing
high-performance, power-efficient handheld
systems.
|
•
|
Continuing
to build relationships with leading component, software and solutions
providers to offer our customers complete
systems.
|
•
|
Focusing
our sales efforts on several points in the sales channel including:
original design manufacturers, design firms, contract manufacturers, and
original equipment
manufacturers.
|
NAME
|
|
AGE
|
|
POSITION
|
Douglas
R. Young
|
|
63
|
|
President,
Chief Executive Officer, (Acting) Chief Financial Officer, and
Director
|
Syed
Zaidi
|
|
50
|
|
Chief
Operating Officer and
Director
|
Item 1A.
|
RISK
FACTORS
|
Item 1B.
|
UNRESOLVED
STAFF COMMENTS
|
Item 2.
|
PROPERTIES
|
Item 3.
|
LEGAL
PROCEEDINGS
|
Item 4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
Item 5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY
SECURITIES
|
Fiscal
2009
|
1st
|
2nd
|
3rd
|
4th
|
||||||||||||
Price
range common stock:
|
||||||||||||||||
Low
|
$ | 0.88 | $ | 0.15 | $ | 0.01 | $ | 0.01 | ||||||||
High
|
$ | 1.68 | $ | 0.93 | $ | 0.41 | $ | 0.01 | ||||||||
Fiscal
2008
|
||||||||||||||||
Price
range common stock:
|
||||||||||||||||
Low
|
$ | 3.08 | $ | 3.06 | $ | 3.45 | $ | 1.68 | ||||||||
High
|
$ | 4.52 | $ | 4.35 | $ | 4.26 | $ | 3.45 |
Plan
Category
|
(A)
Number of Shares to be
Issued Upon Exercise of
Outstanding
Options,
Warrants
and Rights
|
|
(B)
Weighted Average
Exercise
Price of
Outstanding Options,
Warrants
and Rights
|
|
(C)
Number of Shares Remaining
Available
for Future Issuance
Under
Equity Compensation
Plans
(Excluding Shares
Reflected
in Column A)
|
|||
Equity
compensation plans approved by stockholders
|
745,523
|
|
$
|
5.00
|
|
1,350,265
|
(1)
|
|
Equity
compensation plans not approved by stockholders
|
219,640
|
|
$
|
11.58
|
|
0
|
(2)
|
|
Total
|
965,163
|
|
$
|
6.11
|
|
1,350,265
|
(1)
|
Includes
1,198,566 shares available for future issuance under our 2003 Stock Option
Plan, as amended, generally used for grants to officers and directors.
Also includes 151,699 shares available under our 2006 Employee Stock
Purchase Plan.
|
(2)
|
Shares
available under our 1998 Nonstatutory Stock Option Plan are used for
grants to employees other than officers and directors except as provided
within the plan. The 1998 Plan expired in June 2008 and no additional
shares may be issued from this plan. For a description of the
1998 Plan, see Note 4 of Notes to Consolidated Financial Statements in
Item 8 of Part II of this Form 10-K, which information is
incorporated by reference into this Item 5 of Part II of this Form
10-K. This plan was not previously required to be approved by
stockholders. Due to regulatory changes, going forward, all material
changes to the plan require stockholder
approval.
|
Item 6.
|
SELECTED
FINANCIAL DATA
|
Fiscal
Years ended
|
||||||||||||||||||||
January 25,
2009
|
January 27,
2008
|
January 28,
2007
|
January 29,
2006
|
January 30,
2005
|
||||||||||||||||
(in
thousands, except per share data)
Consolidated
Statement of Operations Data:
|
||||||||||||||||||||
Product
revenue
|
$
|
1,980
|
$
|
2,083
|
$
|
572
|
$
|
862
|
$
|
2,466
|
||||||||||
Licensing
revenue
|
—
|
—
|
—
|
8,490
|
—
|
|||||||||||||||
Total
revenue
|
1,980
|
2,083
|
572
|
9,352
|
2,466
|
|||||||||||||||
Cost
of product revenue
|
4,755
|
1,666
|
524
|
884
|
3,195
|
|||||||||||||||
Cost
of licensing revenue
|
—
|
—
|
—
|
2,861
|
—
|
|||||||||||||||
Impairment
of certain acquired and licensed intangible assets
|
—
|
—
|
—
|
—
|
89
|
|||||||||||||||
Total
cost of revenue
|
4,755
|
1,666
|
524
|
3,745
|
3,284
|
|||||||||||||||
Gross
profit (loss)
|
(2,775
|
)
|
417
|
48
|
5,607
|
(818
|
)
|
|||||||||||||
Operating
expenses:
|
|
|||||||||||||||||||
Research
and development
|
7,950
|
11,762
|
13,763
|
12,403
|
18,208
|
|||||||||||||||
Sales,
general and administrative
|
5,299
|
7,066
|
6,080
|
6,916
|
7,447
|
|||||||||||||||
Gain
on sale of patents, net
|
(9,500
|
)
|
—
|
(1,044
|
)
|
(3,481
|
)
|
—
|
||||||||||||
Restructuring
Expense
|
1,936
|
—
|
—
|
—
|
—
|
|||||||||||||||
Impairment
of certain acquired and licensed intangible assets
|
—
|
—
|
—
|
—
|
1,437
|
|||||||||||||||
Total
operating expenses
|
5,685
|
18,828
|
18,799
|
15,838
|
27,092
|
|||||||||||||||
Loss
from operations
|
(8,460
|
)
|
(18,411
|
)
|
(18,751
|
)
|
(10,231
|
)
|
(27,910
|
)
|
||||||||||
Interest
income and other
|
174
|
469
|
915
|
724
|
415
|
|||||||||||||||
Interest
expense
|
(19
|
)
|
(66
|
)
|
(381
|
)
|
(2,569
|
)
|
(534
|
)
|
||||||||||
Loss
on marketable equity securities
|
(191
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||
Gain
on debt forgiveness
|
396
|
—
|
—
|
—
|
—
|
|||||||||||||||
Gains
from change in fair value on revaluation of warrant
liability
|
38
|
829
|
1,835
|
—
|
—
|
|||||||||||||||
Loss
before income taxes
|
(8,062
|
)
|
(17,179
|
)
|
(16,382
|
)
|
(12,076
|
)
|
(28,029
|
)
|
||||||||||
Income
tax provision (benefit)
|
(165
|
)
|
(454
|
)
|
137
|
(2,770
|
)
|
196
|
||||||||||||
Net
loss
|
$
|
(7,897
|
)
|
$
|
(16,725
|
)
|
$
|
(16,519
|
)
|
$
|
(9,306
|
)
|
$
|
(28,225
|
)
|
|||||
Basic
and diluted net loss per share (1)
|
$
|
(0.62)
|
$
|
(1.35
|
)
|
$
|
(1.65
|
)
|
$
|
(1.32
|
)
|
$
|
(4.33
|
)
|
||||||
Weighted
common shares outstanding for basic and diluted (1)
|
12,645
|
12,356
|
10,015
|
7,074
|
6,524
|
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||
Consolidated
Balance Sheet Data:
|
|
|||||||||||||||||||
Cash
and cash equivalents
|
|
$
|
183
|
$
|
964
|
$
|
16,468
|
$
|
26,695
|
$
|
8,944
|
|||||||||
Short-term
investments
|
|
—
|
500
|
4,014
|
—
|
16,082
|
||||||||||||||
Working
capital
|
|
(3,320
|
)
|
2,496
|
13,402
|
22,068
|
18,526
|
|||||||||||||
Total
assets
|
|
535
|
7,613
|
24,090
|
30,494
|
30,714
|
||||||||||||||
Long-term
obligations
|
|
—
|
428
|
803
|
773
|
5,074
|
||||||||||||||
Total
stockholders’ equity (deficit)
|
|
(3,320
|
)
|
3,547
|
14,677
|
24,114
|
17,960
|
(1)
|
See
Note 1 and Note 2 of Notes to Consolidated Financial
Statements.
|
Item 7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Year
Ended
|
January 25,
2009
|
January 27,
2008
|
||||||||
Sweden
|
0 | % | 50 | % | ||||||
Korea
|
12 | % | 20 | % | ||||||
Singapore
|
84 | % | 20 | % | ||||||
United
States
|
1 | % | 4 | % | ||||||
Japan
|
0 | % | 3 | % | ||||||
Hong
Kong
|
3 | % | 1 | % | ||||||
England
|
0 | % | 1 | % | ||||||
Malaysia
|
0 | % | 1 | % | ||||||
Taiwan
|
0 | % | 0 | % |
Year
Ended
|
January 25,
2009
|
January 27,
2008
|
||||||||
Neonode AB.
|
* | % | 50 | % | ||||||
Flextronics
Manufacturing
|
86 | % | 20 | % | ||||||
Sejin
Electron Inc.
|
0 | % | 14 | % | ||||||
Edom
Technology Co.**
|
* | * | % | |||||||
Premier
Components Distribution**
|
* | * | % | |||||||
Premier
Microelectronics Europe LTD**
|
* | * | % | |||||||
Exadigm
Inc.
|
* | * | ||||||||
All
others
|
* | * |
*
|
represents
less than 10% of product revenue
|
|
**
|
customer
is a distributor
|
2010
|
2011
|
There After
|
Total
|
|||||||||||||
CONTRACTUAL
OBLIGATIONS
|
||||||||||||||||
Operating
leases
|
$ | 1,118 | $ | 280 | $ | — | $ | 1,398 | ||||||||
Design
tool software licenses
|
286 | — | — | 286 | ||||||||||||
Total
contractual cash obligations
|
$ | 1,404 | $ | 280 | $ | — | $ | 1,684 |
Item 7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
|
Fair
Value
|
|||||||
(in
thousands, except percentages)
|
|
January 25,
2009
|
January 27,
2008
|
|||||
|
Taxable
|
Taxable
|
||||||
Cash
and cash equivalents
|
|
$
|
183
|
$
|
964
|
|||
Weighted
average interest rate
|
|
0.1
|
%
|
3.21
|
%
|
|||
Short-term
investments
|
|
-
|
500
|
|||||
Weighted
average interest rate
|
|
-
|
5.24
|
%
|
||||
Total
cash, cash equivalents and short-term investments
|
|
$
|
183
|
$
|
1,464
|
Level 1 -
|
|
Inputs
are quoted prices (unadjusted) in active markets for identical assets or
liabilities.
|
Level 2 -
|
|
Inputs
are quoted prices for similar assets or liabilities in an active market,
quoted prices for identical or similar assets or liabilities in markets
that are not active, inputs other than quoted prices that are observable
and market-corroborated inputs which are derived principally from or
corroborated by observable market data.
|
Level 3 -
|
|
Inputs
are derived from valuation techniques in which one or more significant
inputs or value drivers are unobservable (i.e., supported by little or no
market activity).
|
(Level
1)
|
||||||||
Quoted Prices
|
||||||||
in
Active
|
||||||||
Markets
of
|
||||||||
Balance as of
|
Identical
|
|||||||
January
25, 2009
|
Assets
|
|||||||
Money
market funds
|
$ | 14 | $ | 14 | ||||
$ | 14 | $ | 14 |
Item 8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY
DATA
|
Reference page
|
|
Consolidated Statements of
Operations
|
21
|
Consolidated Balance
Sheets
|
22
|
Consolidated Statements of Cash
Flows
|
23
|
Consolidated Statements of
Stockholders’ Equity (Deficit)
|
24
|
Notes to Consolidated Financial
Statements
|
25
|
Report of Independent Registered
Public Accounting Firm
|
40
|
Year
Ended
|
||||||||
January 25,
2009
|
January 27,
2008
|
|||||||
(in thousands, except per share data)
|
||||||||
Product
revenue
|
$ | 1,980 | $ | 2,083 | ||||
Cost
of product revenue
|
4,755 | 1,666 | ||||||
Gross
profit (loss)
|
(2,775 | ) | 417 | |||||
Operating
expenses:
|
||||||||
Research
and development
|
7,950 | 11,762 | ||||||
Sales,
general and administrative
|
5,299 | 7,066 | ||||||
Restructuring
expense
|
1,936 | — | ||||||
Gain
on sale of patents, net
|
(9,500 | ) | — | |||||
Total
operating expenses
|
5,685 | 18,828 | ||||||
Loss
from operations
|
(8,460 | ) | (18,411 | ) | ||||
Interest
income and other
|
174 | 469 | ||||||
Interest
expense
|
(19 | ) | (66 | ) | ||||
Loss
on marketable equity securities
|
(191 | ) | — | |||||
Gain
on debt forgiveness
|
396 | — | ||||||
Gain
from change in fair value on revaluation of warrant
liability
|
38 | 829 | ||||||
Loss
before income taxes
|
(8,062 | ) | (17,179 | ) | ||||
Income
tax (benefit)
|
(165 | ) | (454 | ) | ||||
Net
loss
|
$ | (7,897 | ) | $ | (16,725 | ) | ||
Basic
and diluted net loss per share
|
$ | (0.62 | ) | $ | (1.35 | ) | ||
Weighted
common shares outstanding for basic and diluted
|
12,645 | 12,356 |
January 25,
2009
|
January 27,
2008
|
|||||||
(in thousands, except share and per
share
amounts)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 183 | $ | 964 | ||||
Short-term
investments
|
— | 500 | ||||||
Accounts
receivable, less allowance for doubtful accounts of $0 at
January 25, 2009 and January 27, 2008
|
41 | 529 | ||||||
Inventory
|
98 | 3,715 | ||||||
Prepaid
deposits
|
176 | 2 | ||||||
Prepaid
expense
|
23 | 365 | ||||||
Other
current assets
|
14 | 59 | ||||||
Total
current assets
|
535 | 6,134 | ||||||
Property,
plant and equipment, net
|
— | 692 | ||||||
Long-term
prepaid assets
|
— | 74 | ||||||
Long-term
investments
|
— | 471 | ||||||
Other
assets
|
— | 242 | ||||||
Total
assets
|
$ | 535 | $ | 7,613 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 2,009 | $ | 1,448 | ||||
Compensation
and related benefits
|
1,483 | 1,057 | ||||||
Income
taxes payable
|
104 | 583 | ||||||
Current
portion of capital lease obligations
|
— | 316 | ||||||
Warrant
liability
|
— | 38 | ||||||
Other
accruals
|
259 | 196 | ||||||
Total
current liabilities
|
3,855 | 3,638 | ||||||
Capital
lease obligations
|
— | 339 | ||||||
Other
long-term liabilities
|
— | 89 | ||||||
Commitments
and contingencies (Note 8)
|
||||||||
Stockholders’
equity (deficit):
|
||||||||
Preferred
stock, $.001 par value:
|
||||||||
Authorized
shares—2,000,000
|
||||||||
Issued
and outstanding shares – none at January 25, 2009 and January 27,
2008
|
— | — | ||||||
Common
stock, $.001 par value: Authorized shares—100,000,000 Issued and
outstanding shares – 12,570,914 at January 25, 2009 and 12,455,779 at
January 27, 2008
|
40 | 39 | ||||||
Additional
paid-in-capital
|
123,371 | 122,071 | ||||||
Accumulated
other comprehensive income
|
— | 271 | ||||||
Accumulated
deficit
|
(126,731 | ) | (118,834 | ) | ||||
Total
stockholders’ equity (deficit)
|
(3,320 | ) | 3,547 | |||||
Total
liabilities and stockholders’ equity (deficit)
|
$ | 535 | $ | 7,613 |
Year
Ended
|
||||||||
January 25,
2009
|
January 27,
2008
|
|||||||
(in
thousands)
|
||||||||
Operating
activities
|
||||||||
Net
loss
|
$ | (7,897 | ) | $ | (16,725 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation
|
830 | 1,008 | ||||||
Gain
on sale of patents
|
(9,500 | ) | — | |||||
Gain
from change in fair value on revaluation of warrant
liability
|
(38 | ) | (829 | ) | ||||
Gain
on debt forgiveness
|
(396 | ) | — | |||||
Gain
on sale of property, plant and equipment
|
(38 | ) | — | |||||
Reversal
of provision for tax liability
|
— | (480 | ) | |||||
Net
write-downs on inventory
|
3,555 | 101 | ||||||
Loss
on marketable equity securities
|
191 | — | ||||||
Stock-based
compensation
|
1,232 | 1,761 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
480 | (464 | ) | |||||
Inventory
|
61 | (2,748 | ) | |||||
Prepaid
and other current assets
|
463 | (29 | ) | |||||
Long-term
prepaid and other assets
|
75 | 68 | ||||||
Accounts
payable
|
536 | (214 | ) | |||||
Compensation
and related benefits
|
426 | 40 | ||||||
Income
taxes payable
|
(479 | ) | 52 | |||||
Other
accruals and other long-term liabilities
|
(27 | ) | 37 | |||||
Net
cash used in operating activities
|
(10,526 | ) | (18,422 | ) | ||||
Investing
activities
|
||||||||
Proceeds
from sale of patents
|
9,500 | — | ||||||
Purchases
of property, plant and equipment
|
(100 | ) | (206 | ) | ||||
Purchases
of short-term investments
|
(2,991 | ) | (4,485 | ) | ||||
Maturities
of short-term investments
|
3,502 | 8,001 | ||||||
Net
cash provided by investing activities
|
9,911 | 3,310 | ||||||
Financing
activities
|
||||||||
Payments
on capital lease obligations
|
(235 | ) | (866 | ) | ||||
Net
proceeds from issuance of common stock, net of repurchases
|
69 | 474 | ||||||
Net
cash used in activities
|
(166 | ) | (392 | ) | ||||
Net
decrease in cash and cash equivalents
|
(781 | ) | (15,504 | ) | ||||
Cash
and cash equivalents at beginning of year
|
964 | 16,468 | ||||||
Cash
and cash equivalents at end of year
|
$ | 183 | $ | 964 | ||||
Supplemental
schedules of cash flow information
|
||||||||
Cash
paid during the year for:
|
||||||||
Interest
|
$ | 19 | $ | 66 | ||||
Taxes
paid
|
$ | 310 | $ | 28 |
Common
Stock
|
Additional
Paid
- In-
|
Accumulated
Other
Comprehensive
|
Accumulated
|
Total
Stockholders’
Equity
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Income
(Loss)
|
Deficit |
(Deficit)
|
|||||||||||||||||||
(in
thousands, except share data)
|
||||||||||||||||||||||||
Balance
at January 28, 2007
|
12,271,499 | $ | 39 | $ | 116,850 | $ | (2 | ) | $ | (102,210 | ) | $ | 14,677 | |||||||||||
Issuance
of common stock under stock option plan
|
59,473 | — | 99 | — | — | 99 | ||||||||||||||||||
Issuance
of common stock under employee stock purchase plan
|
124,807 | — | 375 | — | — | 375 | ||||||||||||||||||
FIN
48 adoption adjustment for a decrease in liability for unrecognized tax
benefits
|
— | — | — | — | 101 | 101 | ||||||||||||||||||
Stock-based
compensation expense
|
— | — | 1,761 | — | — | 1,761 | ||||||||||||||||||
Reclassification
of warrant liability to equity for amended warrants
|
— | — | 2,986 | — | — | 2,986 | ||||||||||||||||||
Components
of comprehensive loss:
|
||||||||||||||||||||||||
Net
loss
|
— | — | — | — | (16,725 | ) | (16,725 | ) | ||||||||||||||||
Change
in unrealized gain on investments
|
— | — | — | 273 | — | 273 | ||||||||||||||||||
Total
comprehensive loss
|
— | — | — | — | — | (16,452 | ) | |||||||||||||||||
Balance
at January 27, 2008
|
12,455,779 | $ | 39 | $ | 122,071 | $ | 271 | $ | (118,834 | ) | $ | 3,547 | ||||||||||||
Issuance
of common stock under employee stock purchase plan
|
115,135 | 1 | 68 | — | — | 69 | ||||||||||||||||||
Stock-based
compensation expense
|
— | — | 1,232 | — | — | 1,232 | ||||||||||||||||||
Components
of comprehensive loss:
|
||||||||||||||||||||||||
Net
loss
|
— | — | — | — | (7,897 | ) | (7,897 | ) | ||||||||||||||||
Change
in unrealized loss on investments
|
— | — | — | (271 | ) | — | (271 | ) | ||||||||||||||||
Total
comprehensive loss
|
— | — | — | — | — | (8,168 | ) | |||||||||||||||||
Balance
at January 25, 2009
|
12,570,914 | $ | 40 | $ | 123,371 | $ | — | $ | (126,731 | ) | $ | (3,320 | ) |
Amortized
Cost
|
Gross
Unrealized
Gain
|
Fair
Value
|
||||||||||
January 25,
2009
|
||||||||||||
Cash
and cash equivalents:
|
||||||||||||
Money
market funds
|
$ | 14 | $ | — | $ | 14 | ||||||
Bank
accounts
|
169 | — | 169 | |||||||||
Total
|
$ | 183 | $ | — | $ | 183 |
Amortized
Cost
|
Gross
Unrealized
Gain
|
Fair
Value
|
||||||||||
January 27,
2008
|
||||||||||||
Cash
and cash equivalents:
|
||||||||||||
Money
market funds
|
$ | 533 | $ | — | $ | 533 | ||||||
Bank
accounts
|
431 | — | 431 | |||||||||
Total
|
$ | 964 | $ | — | $ | 964 | ||||||
Short-term
investments:
|
||||||||||||
Certificate
of deposit
|
$ | — | $ | — | $ | — | ||||||
U.S.
Government agencies
|
500 | — | 500 | |||||||||
Total
|
$ | 500 | $ | — | $ | 500 | ||||||
Long-term
investments:
|
||||||||||||
Equity
securities
|
$ | 200 | $ | 271 | $ | 471 | ||||||
Total
|
$ | 200 | $ | 271 | $ | 471 |
(Level
1)
|
||||||||
Quoted Prices
|
||||||||
in
Active
|
||||||||
Markets
of
|
||||||||
Balance as of
|
Identical
|
|||||||
January
25, 2009
|
Assets
|
|||||||
Money
market funds
|
$ | 14 | $ | 14 | ||||
$ | 14 | $ | 14 |
January 25,
2009
|
January 27,
2008
|
|||||||
(in
thousands)
|
||||||||
Raw
materials
|
$ | 27 | $ | 2,078 | ||||
Work
in process
|
31 | — | ||||||
Finished
goods
|
40 | 1,637 | ||||||
Total
|
$ | 98 | $ | 3,715 |
Fiscal
year ended
|
|
January 25,
2009
|
January 27,
2008
|
|||||
Property,
plant and equipment:
|
|
|||||||
Computer
equipment and software
|
|
$
|
1,370
|
$
|
6,411
|
|||
Furniture
and fixtures
|
|
84
|
1,770
|
|||||
Machinery
and equipment
|
|
774
|
1,194
|
|||||
Total
|
|
2,228
|
9,375
|
|||||
Less
accumulated depreciation and amortization
|
|
(2,228
|
)
|
(8,683
|
)
|
|||
Property,
plant and equipment, net
|
|
$
|
0
|
$
|
692
|
Year
ended
|
|
January 25,
2009
|
January 27,
2008
|
|||||
Net
loss
|
|
$
|
(7,897
|
)
|
$
|
(16,725
|
)
|
|
Net
change in unrealized gain/loss on available for sale
securities
|
|
(271
|
)
|
273
|
||||
Comprehensive
loss
|
|
$
|
(8,168
|
)
|
$
|
(16,452
|
)
|
Year
ended
|
January
25,
|
January
27,
|
||||||
2009
|
2008
|
|||||||
(in
thousands)
|
||||||||
Employee
severance and benefit arrangements
|
$ | 1,157 | $ | - | ||||
Contract
termination and other costs
|
12 | - | ||||||
Asset
impairment
|
767 | - | ||||||
Total
restructuring charges
|
$ | 1,936 | $ | - |
Year
Ended
|
|
January 25,
2009
|
January 27,
2008
|
|||||
|
(in
thousands, except per share data)
|
|||||||
Numerator:
|
|
|||||||
Net
loss
|
|
$
|
(7,897
|
)
|
$
|
(16,725
|
)
|
|
Denominator:
|
|
|||||||
Denominator
for basic and diluted loss per share—weighted-average outstanding
shares
|
|
12,645
|
12,356
|
|||||
Basic
and diluted loss per share
|
|
$
|
(0.62
|
)
|
$
|
(1.35
|
)
|
Year
Ended
|
|
January 25,
2009
|
January 27,
2008
|
|||||
|
(in
thousands)
|
|||||||
Income
(loss) before taxes
|
|
|||||||
U.
S.
|
|
$
|
(8,577
|
)
|
$
|
(16,368
|
)
|
|
Foreign
|
|
515
|
(811
|
)
|
||||
Total
loss before taxes
|
|
$
|
(8,062
|
)
|
$
|
(17,179
|
)
|
|
Provision
(benefit) for taxes
|
|
|||||||
Current:
|
|
|||||||
U.S.
|
|
$
|
(2
|
)
|
$
|
(466
|
)
|
|
Foreign
|
|
(163
|
)
|
12
|
||||
Total
provision (benefit) for income taxes
|
|
$
|
(165
|
)
|
$
|
(454
|
)
|
Year
Ended
|
January 25,
2009
|
January 27,
2008
|
||||||
(in thousands except percentages) | ||||||||
Pre-tax
loss
|
$ | (8,062 | ) | $ | (17,179 | ) | ||
Federal
statutory rate
|
35 | % | 35 | % | ||||
Expected
benefit
|
(2,822 | ) | (6,013 | ) | ||||
Foreign
taxes
|
25 | 124 | ||||||
Tax
reserves
|
(193 | ) | (415 | ) | ||||
Net
operating loss not currently benefited
|
2,821 | 5,926 | ||||||
R&D
credit (Federal)
|
— | (125 | ) | |||||
Other
|
4 | 49 | ||||||
Provision
(benefit) for income taxes
|
$ | (165 | ) | $ | (454 | ) |
Year
Ended
|
|
January 25,
2009
|
January 27,
2008
|
|||||
|
(in
thousands)
|
|||||||
Deferred
tax assets:
|
|
|||||||
Net
operating loss carryforward
|
|
$
|
50,091
|
$
|
46,794
|
|||
Research
and development credit
|
|
8,167
|
8,167
|
|||||
Acquisition
costs
|
|
—
|
1,920
|
|||||
Reserves
and accruals
|
|
2,183
|
1,434
|
|||||
Capitalized
research and development
|
|
—
|
1,837
|
|||||
Other
|
|
—
|
316
|
|||||
Total
deferred tax assets
|
|
60,441
|
60,468
|
|||||
Valuation
allowance
|
|
$
|
(60,441
|
)
|
$
|
(60,468
|
)
|
|
Net
deferred tax assets
|
|
—
|
—
|
Total
|
||||
(in
thousands)
|
||||
Balance
at January 27, 2008
|
$
|
2,341
|
||
Decreases
related to reduction of Texas tax liability
|
(218
|
)
|
||
Expiration
of the statute of limitations for transfer pricing
reserves
|
(227
|
)
|
||
Decrease
related to transfer pricing reserves
|
(23
|
)
|
||
Balance
at January 25, 2009
|
$
|
1,873
|
Year
Ended
|
January 25,
2009
|
January 27,
2008
|
||||||
(in
thousands)
|
||||||||
Cost
of revenue
|
$ | 26 | $ | 23 | ||||
Research
and development
|
584 | 917 | ||||||
Sales,
general and administrative
|
622 | 821 | ||||||
Total
|
$ | 1,232 | $ | 1,761 |
Employee
Option Plan
|
Employee
Stock Purchase Plan
|
|||||||||||||||
Year
Ended
|
January
25,
2009
|
January 27,
2008
|
January
25,
2009
|
January 27,
2008
|
||||||||||||
Risk-free
interest rates
|
1.75 | % | 4.27 | % | n/a | * | 5.0 | % | ||||||||
Volatility
|
.96 | .98 | n/a | * | .91 | |||||||||||
Expected
life of option in years
|
3.76 | 4.09 | n/a | * | 1.24 | |||||||||||
*Our
Board of Directors temporarily suspended the ESPP program in July
2008. Subsequently, no additional grants have been made to the
ESPP
program.
|
Number
of
Shares
Outstanding
(Options)
|
Weighted
Average
Exercise
Price
Per
Share
|
|
Weighted
Average
Remaining
Contractual
Term
(in
Years)
|
Aggregate
Intrinsic
Value
|
|||||||||
|
|||||||||||||
Balance
at January 28, 2007
|
2,256,573
|
$
|
6.73
|
|
|||||||||
Granted
|
425,730
|
$
|
3.69
|
|
|||||||||
Exercised
|
(59,473
|
)
|
$
|
1.67
|
|
||||||||
Forfeitures
and cancellations
|
(424,705
|
)
|
$
|
6.40
|
|
||||||||
Balance
at January 27, 2008
|
2,198,125
|
$
|
6.34
|
|
|||||||||
Granted
|
734,250
|
$
|
1.47
|
|
|||||||||
Exercised
|
—
|
$
|
—
|
||||||||||
Forfeitures
and cancellations
|
(1,967,212
|
)
|
$
|
4.64
|
|
||||||||
Balance
at January 25, 2009
|
965,163
|
$
|
6.11
|
|
4.27
|
$
|
—
|
||||||
Vested
and expected to vest at January 25, 2009
|
711,632
|
$
|
6.99
|
|
3.44
|
$
|
—
|
||||||
Exercisable
at January 25, 2009
|
708,777
|
$
|
7.01
|
|
3.42
|
$
|
—
|
Outstanding
|
|
Exercisable
|
|||||||||||||||
Range of
Exercise Prices Per Share
|
Shares
Outstanding
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
per
Share
|
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
per
Share
|
||||||||||
(in thousands)
|
(in years)
|
|
|
(in thousands)
|
|||||||||||||
$1.35—1.51
|
170
|
7.99
|
|
$
|
1.51
|
|
54
|
$
|
1.51
|
||||||||
$1.52—2.75
|
180
|
5.45
|
|
$
|
2.24
|
|
167
|
$
|
2.24
|
||||||||
$2.76—4.83
|
232
|
3.39
|
|
$
|
4.46
|
|
174
|
$
|
4.42
|
||||||||
$4.84—7.97
|
183
|
3.21
|
|
$
|
6.46
|
|
114
|
$
|
6.40
|
||||||||
$7.98—13.95
|
103
|
1.93
|
|
$
|
13.36
|
|
103
|
$
|
13.36
|
||||||||
$13.95
and over
|
97
|
2.19
|
|
$
|
16.94
|
|
97
|
$
|
16.94
|
||||||||
965
|
4.27
|
|
$
|
6.11
|
|
709
|
$
|
7.01
|
|
January 25,
2009
|
January 27,
2008
|
||||||
|
(in
thousands)
|
|||||||
Software
under capital lease
|
|
$
|
655
|
$
|
655
|
|||
Accumulated
amortization
|
|
(655
|
)
|
(236
|
)
|
|||
Net
software under capital lease
|
|
$
|
---
|
$
|
419
|
(in thousands)
|
||||
Fiscal
2010
|
$ | 1,404 | ||
Fiscal
2011
|
280 | |||
Thereafter
|
— | |||
Total
minimum lease payments
|
$ | 1,684 |
Year
Ended
|
||||||||||
January 25,
2009
|
January 27,
2008
|
|||||||||
Sweden
|
— | % | 50 | % | ||||||
Korea
|
12 | % | 20 | % | ||||||
Singapore
|
84 | % | 20 | % | ||||||
United
States
|
1 | % | 4 | % | ||||||
Japan
|
— | % | 3 | % | ||||||
Hong
Kong
|
— | % | 1 | % | ||||||
England
|
— | % | 1 | % | ||||||
Malaysia
|
3 | % | 1 | % | ||||||
Taiwan
|
— | % | — | % |
Year
Ended
|
||||||||||
January 25,
2009
|
January 27,
2008
|
|||||||||
Neonode AB.
|
* | % | 50 | % | ||||||
Flextronics
Manufacturing
|
86 | % | 20 | % | ||||||
Sejin
Electron Inc.
|
* | % | 14 | % | ||||||
Edom
Technology Co.**
|
* | * | ||||||||
Premier
Components Distribution**
|
* | * | ||||||||
Premier
Microelectronics Europe LTD**
|
* | * | ||||||||
Exadigm
Inc.
|
* | * |
*
|
represents
less than 10% of product revenue
|
|
**
|
customer
is a distributor
|
Item 9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
Item 9A.
|
CONTROLS
AND PROCEDURES
|
Item 9B.
|
Other
Information
|
Item 10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.
|
Item 11.
|
EXECUTIVE
COMPENSATION.
|
Item 12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
|
Item 13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
|
Item 14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
Item 15.
|
EXHIBITS
AND FINANCIAL STATEMENT
SCHEDULES
|
(a)
|
The
following documents are filed as part of this
report:
|
1.
|
Financial
Statements.
|
2.
|
Exhibits
|
(b)
|
Exhibits.
|
NEOMAGIC
CORPORATION
|
||
By:
|
/s/ DOUGLAS
R. YOUNG
|
|
DOUGLAS
R. YOUNG
|
||
Chief
Financial Officer (Acting)
(Principal
Financial Officer)
|
||
Date:
May 11, 1009
|
Name
|
Title
|
Date
|
||
/S/ DOUGLAS R.YOUNG
Douglas
R. Young
|
President, Chief Executive
Officer and Director (Principal Executive Officer)
|
May
11, 2009
|
||
/S/ DOUGLAS R. YOUNG
Douglas
R. Young
|
Chief Financial
Officer(Acting) (Principal Financial Officer and Principal
Accounting Officer)
|
May
11, 2009
|
||
/S/ SYED ZAIDI
Syed
Zaidi
|
Chief
Operating Office and Director
|
May
11, 2009
|
Number
|
|
Description
|
3.1(8)
|
|
Amended
and Restated Certificate of Incorporation.
|
3.2(14)
|
|
Bylaws,
as amended through April 6, 2007.
|
4.1(4)
|
|
Preferred
Stock Rights Agreement dated December 19, 2002, between the Company and
EquiServe Trust Company, N.A.
|
4.2(6)
|
|
Amendment
to Rights Agreement, dated as of August 20, 2004, between the Company and
EquiServe Trust Company, N.A.
|
4.3(15)
|
|
Amendment
No. 3 to Rights Agreement, dated as of April 6, 2007, between the Company
and EquiServe Trust Company, N.A.
|
4.4(5)
|
|
Series
A Warrant to Satellite Strategic Finance Associates, LLC, dated August 20,
2004.
|
4.5(5)
|
|
Series
B Warrant to Satellite Strategic Finance Associates, LLC, dated August 20,
2004.
|
4.6(5)
|
|
Registration
Rights Agreement dated August 19, 2004 by and between the Company and
Satellite Strategic Finance Associates, LLC.
|
4.7(3)
|
|
Certificate
of Designation of Rights, Preferences and Privileges of Series A
Participating Preferred Stock.
|
4.8(5)
|
|
Amended
and Restated Certificate of Designations, Preferences and Rights of the
Series B Convertible Preferred Stock dated August 20,
2004.
|
4.9(9)
|
|
Registration
Rights Agreement dated December 13, 2005 by and between the Company and
named Private Investors.
|
4.10(9)
|
|
Warrant
to Registration Rights Agreement dated December 13,
2005.
|
4.11(13)
|
|
Form
of Warrant originally issued December 6, 2006.
|
4.12(16)
|
|
Form
of Amendment to Warrant, dated July 27, 2007.
|
10.1(1)
|
|
Form
of Indemnification Agreement entered into by the Company with each of its
directors and executive officers.
|
10.2(2)
|
|
Lease
Agreement, dated as of October 9, 1997, between the Company and A&P
Family Investments, as landlord for the leased premises located at 3250
Jay Street.
|
10.3(1)
|
|
Amended
and Restated 1993 Stock Plan and related agreements.
|
10.4(1)
|
|
Lease
Agreement, dated as of February 5, 1996, between the Company and A&P
Family Investments, as landlord.
|
10.5(1)
|
|
1997
Employee Stock Purchase Plan, with exhibit.
|
10.6(10)
|
|
1998
Nonstatutory Stock Option Plan amended December 22,
2005.
|
10.7(19)
|
|
2003
Stock Option Plan, as amended July 12, 2007.
|
10.8(3)
|
|
Amendment
No. 1, dated as of February 26, 2002, between the Company and A&P
Family Investments, as landlord for the leased premises located at 3250
Jay Street.
|
10.9(6)
|
|
Securities
Purchase Agreement dated August 19, 2004 by and between the Company and
Satellite Strategic Finance Associates, LLC.
|
10.10(6)
|
|
Amended
and Restated Patent Licensing Agreement dated March 28, 2005 by and
between the Company and The Consortium for Technology Licensing,
Ltd.
|
Number
|
|
Description
|
10.11(6)
|
|
Patent
Purchase Agreement dated April 6, 2005 by and between the Company and
Faust Communications, LLC.
|
10.12(7)
|
|
Settlement
Agreement and Release dated May 31, 2005 between the Company and Prakash
Agarwal.
|
10.13(8)
|
|
Patent
License Agreement dated September 1, 2005 between the Company and Sony
Corporation.
|
10.14(9)
|
|
Securities
Purchase Agreement dated December 13, 2005 by and between the Company and
named Private Investors.
|
10.15(10)
|
|
Form
of Retention Bonus Agreement, dated as of January 13,
2006.
|
10.16(11)
|
|
Employment
Agreement dated May 1, 2006 between NeoMagic Corporation and Douglas R.
Young.
|
10.17(11)
|
|
Employment
Agreement dated May 1, 2006 between NeoMagic Corporation and Scott
Sullinger.
|
10.18(19)
|
|
2006
Employee Stock Purchase Plan, as amended July 12, 2007.
|
10.19(12)
|
|
Form
of Bonus Agreement.
|
10.20(12)
|
|
Patent
Sale Agreement dated June 22, 2006 by and between NeoMagic Corporation and
Samsung Electronics Co. Ltd.
|
10.21(13)
|
|
Form
of Subscription Agreement, dated as of November 30, 2006, between the
Company and the investor signatories thereto.
|
10.22(19)
|
|
Employment
Agreement dated June 7, 2007 between NeoMagic Corporation and Steven P.
Berry.
|
10.23(17)
|
|
Description
of oral consulting agreement with Steven P. Berry.
|
10.24(18)
|
|
Description
of oral bonus agreement.
|
10.25(19)
|
|
Employment
Agreement dated December 5, 2007 between NeoMagic Corporation and Syed
Zaidi.
|
10.26(20)
|
|
Employment
Agreement dated December 5, 2007 between NeoMagic Corporation and Deepraj
Puar.
|
10.27(21)
|
|
Patent
Purchase Agreement with an effective date of January 17, 2008 by and
between the Company, NeoMagic Israel Ltd. and Faust Communications
Holdings, LLC.
|
10.28(22)
|
|
Employment
Agreement dated June 11, 2008 between NeoMagic Corporation and Pierre-Yves
Couteau.
|
21.1
|
|
NeoMagic
Subsidiaries
|
23.1
|
|
Consent
of Stonefield Josephson, Inc., Independent Registered Public Accounting
Firm
|
31.1
|
|
Certification
of the Chief Executive Officer pursuant to Securities Exchange Act Rules
13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
31.2
|
|
Certification
of the Chief Financial Officer pursuant to Securities Exchange Act Rules
13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
32.1
|
|
Certification
by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
|
Certification
by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
(1)
|
Incorporated
by reference to an exhibit to the Company’s registration statement on Form
S-1, registration no.
333-20031.
|
(2)
|
Incorporated
by reference to an exhibit to the Company’s Form 10-Q for the period ended
October 26, 1997.
|
(3)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-A filed
December 23, 2002.
|
(4)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-K filed
December 23, 2002.
|
(5)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-K filed August 20,
2004.
|
(6)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-A/A filed
August 23, 2004.
|
(7)
|
Incorporated
by reference to an exhibit to the Company’s Form 10-Q for the quarter
ended July 31, 2005.
|
(8)
|
Incorporated
by reference to an exhibit to the Company’s Form 10-Q for the quarter
ended October 30, 2005.
|
(9)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-K filed
December 16, 2005.
|
(10)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-K filed
January 19, 2006.
|
(11)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-K filed May 4,
2006.
|
(12)
|
Incorporated
by reference to an exhibit to the Company’s Form 10-Q for the quarter
ended July 30, 2006.
|
(13)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-K filed
December 1, 2006.
|
(14)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-K filed April 12,
2007.
|
(15)
|
Incorporated
by reference to an exhibit to the Company’s Form 8-A/A filed
April 12, 2007.
|
(16)
|
Incorporated
by reference to an exhibit to the Company’s Schedule TO-I filed
June 28, 2007.
|
(17)
|
Incorporated
by reference to the Company’s Form 8-K filed June 13,
2007.
|
(18)
|
Incorporated
by reference to the Company’s Form 8-K filed June 15,
2007.
|
(19)
|
Incorporated
by reference to an exhibit to the Company’s Form 10-Q for the quarter
ended July 29, 2007.
|