InfoSonics Clarifies Facts of Recent Restatement; Restatement of the First Quarter of 2006 Was Solely a Non-Cash Accounting Cha
14 Giugno 2006 - 2:00PM
Business Wire
InfoSonics Corporation (AMEX:IFO), one of the fastest growing
distributors of wireless handsets in the United States and Latin
America, seeks to reassure its shareholders that the June 12th
restatement of its financial statements for the quarter ended March
31, 2006 was, in the Company's view, a positive event which was
achieved after an extensive review of available regulatory and
accounting pronouncements and advisories and discussions with the
Company's independent auditors. Going forward, the Company will not
have to mark-to-market the warrants, eliminating that non-cash
adjustment to net income. "While we understand that restatements
carry a negative perception, we want to make it perfectly clear to
our shareholders that the restatement had absolutely no impact on
the Company's business or its future prospects. Additionally, the
restatement had no adverse impact on our revenues, cash flow,
income from operations or assets at any time. The restatement was
solely to adjust a non-cash accounting item, and we are greatly
surprised by the markets' response to the announcement," said Jeff
Klausner, InfoSonics' Chief Financial Officer. "We continue to
strongly believe that our Company and our executive management team
took appropriate timely steps to determine the accounting treatment
for our financing related warrants. Our initial treatment of the
warrants as a liability carried with it an obligation to mark the
warrants to market and reflect the change in their fair value on
the income statement and balance sheet on a quarterly basis. While
that treatment had the unusual effect of increasing net income for
the quarter ended March 31, 2006, absent the restatement, the
greater likelihood was that on a going forward basis, changes in
fair value would have significantly impacted earnings with non-cash
charges. As a result, the Company continues to believe that
changing the treatment of the warrants was a positive result for
the Company and its shareholders," said Joseph Ram, Chief Executive
Officer. About InfoSonics Corporation InfoSonics is one of the
fastest growing distributors of wireless handsets and accessories
in the United States and Latin America. InfoSonics provides
end-to-end handset and wireless terminal solutions for network
operators in both the United States and Latin America. These
solutions include product approval and certification, light
assembly, logistics services, marketing campaigns, warranty
services and end user support. For more information please visit
http://www.infosonics.com. Cautionary Statement for the Purpose of
the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995 The matters in this report that are
forward-looking statements, including without limitation to
statements about future revenues, sales levels, operating income
and margins, wireless handset sales, stock-based compensation
expense, gain (loss) in value of derivatives, cost synergies,
operating efficiencies, profitability, market share and rates of
return, are based on current management expectations that involve
certain risks which, if realized, in whole or in part, could cause
such expectations to fail to be achieved and have a material
adverse effect on InfoSonics' business, financial condition and
results of operations, including, without limitation: (1) intense
competition, regionally and internationally, including competition
from alternative business models, such as manufacturer-to-carrier
sales, which may lead to reduced prices, lower sales or reduced
sales growth, lower gross margins, extended payment terms with
customers, increased capital investment and interest costs, bad
debt risks and product supply shortages; (2) inability to secure
adequate supply of competitive products on a timely basis and on
commercially reasonable terms; (3) foreign exchange rate
fluctuations, devaluation of a foreign currency, adverse
governmental controls or actions, political or economic
instability, or disruption of a foreign market, and other related
risks of our international operations; (4) the ability to attract
new sources of profitable business from expansion of products or
services or risks associated with entry into new markets, including
geographies, products and services; (5) an interruption or failure
of our information systems or subversion of access or other system
controls may result in a significant loss of business, assets, or
competitive information; (6) significant changes in supplier terms
and relationships; (7) termination of a supply or services
agreement with a major supplier or product supply shortages; (8)
continued consolidation in the wireless handset carrier market; (9)
extended general economic downturn; (10) loss of business from one
or more significant customers; (11) customer and geographical
accounts receivable concentration risk; (12) rapid product
improvement and technological change resulting in inventory
obsolescence; (13) future terrorist or military actions; (14) the
loss of a key executive officer or other key employees; (15)
changes in consumer demand for multimedia wireless handset products
and features; (16) our failure to adequately adapt to industry
changes and to manage potential growth and/or contractions; (17)
future periodic assessments required by current or new accounting
standards such as those relating to long-lived assets, goodwill and
other intangible assets and expensing of stock options and valuing
gain or loss on fair value of derivatives may result in additional
non-cash income or expenses; (18) seasonal buying patterns; (19)
dependency on Latin American sales; (20) uncertain political and
economic conditions internationally; and (21) the impact, if any,
of changes in EITF 00-19 or SFAS 133 guidance as it relates to
warrants and registration rights. Our actual results could differ
materially from those anticipated in our forward-looking
statements. InfoSonics has instituted in the past and continues to
institute changes to its strategies, operations and processes to
address these risk factors and to mitigate their impact on
InfoSonics' results of operations and financial condition. However,
no assurances can be given that InfoSonics will be successful in
these efforts. For a further discussion of significant factors to
consider in connection with forward-looking statements concerning
InfoSonics, reference is made to Item 1A Risk Factors of
InfoSonics' Annual Report on Form 10-K for the year ended December
31, 2005 and Quarterly Report on Form 10-Q, as amended; other risks
or uncertainties may be detailed from time to time in InfoSonics'
future SEC filings. InfoSonics does not intend to update any
forward-looking statements.
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