NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial
Reporting Release No. 60 requires all companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements. The significant accounting policies that we believe are most
critical to aid in fully understanding our reported financial results are the
following:
Significant
Estimates--we have made a number of estimates and assumptions related to the
reporting of assets and liabilities in preparation of the consolidated financial
statements in conformity with accounting principles generally accepted in the
United States of America. The most significant estimates relate to the allowance
for doubtful accounts, the reserve for inventory obsolescence and the deferred
tax value allowance.
In
determining the adequacy of the allowance for doubtful accounts, we consider
number of factors including the aging of the receivable portfolio, customer
payment trends, and financial condition of the customer, industry conditions and
overall credibility of the customer. Actual amounts could differ significantly
from our estimates.
In
determining the adequacy of the reserve for inventory obsolescence, we consider
a number of factors including the aging of the inventory, recent sales trends,
availability of the product in the market, industry market conditions and
overall economic conditions. Actual amounts could differ significantly from our
estimates.
In
assessing the reliability of deferred income tax assets, we consider whether it
is more likely than not that the deferred income assets will be realized through
the future generation of taxable income.
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash
equivalents- The Company considers all highly liquid investments with a maturity
date of three months or less from the date of purchase or high-grade money
market funds to be cash equivalents.
Concentration
of Risk- the Company has not experienced any losses on its cash accounts or
short-term investments. The Company sells its products to commercial businesses.
Through its continuing relationships with these customers, the Company performs
credit evaluations and generally does not require collateral.
The
Company maintains a reserve for potential credit losses. In 2006 and 2007 the
Company had one Customer accounted for 6.5% and 5.2% of sales, respectively. No
other customers in either 2006 or 2007 accounted for more than 5% of net
sales.
In 2007,
the Company purchased approximately 55% of its products from foreign sources,
principally the Far East and 45% from domestic sources. One Foreign vendor
accounted for approximately 22% of total purchases in 2007. No other vendor
accounted for 10% or more of our purchases in 2007.
A Far
East supplier accounted for approximately 26.7% of total purchases in 2006. No
other vendor accounted for 10% or more of our purchases in 2006.
Inventories-
Inventories, which consist solely of finished goods, are carried at the lower of
cost, determined on a first-in, first-out basis (FIFO), or market
value.
Property
and Equipment- Property and equipment are stated at cost. Additions and
improvements are capitalized. Maintenance and repairs are expensed as incurred.
Depreciation and amortization of property and equipment is calculated under the
straight-line method over the estimated useful lives of the respective assets.
Estimated useful lives are five to seven years for furniture and fixtures and
three to ten years for machinery and equipment. Leasehold
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
improvements
are amortized over the shorter of their estimated useful lives or the terms of
their leases. Depreciation and amortization expense was $ 160,124 and $209,259
in 2007 and 2006 respectively, and is included in selling, general and
administrative expense in the consolidated statements of
operations.
Revenue
Recognition -- Revenue is recognized at the point of shipment in accordance with
our standard shipping terms which is FOB shipping point, which includes all
groups of products and services we provide to our Customers. Any shipment not in
accordance with our standard shipping terms would recognize revenue at the point
of destination.
We
uniformly warrant most of our products from defectives and provide limited stock
rotation rights on selected product within 60 days of purchase from our
Customers. The Company total percentage of Customer returns is less than 3.0% of
its net sales and the Company provides reserves and allowances to provide for
this exposure, which are applied against net sales.
Shipping
and Handling Fees- the Company records revenues derived from shipping and
handling in net sales and the costs associated with shipping and handling in
cost of sales.
Income
Taxes - The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.”
Under the liability method specified by SFAS No. 109, a deferred tax asset or
liability is determined based on the difference between the financial reporting
basis and tax basis of assets and liabilities, measured using enacted tax rates.
The impact of changes in tax rates is reflected in income in the period in which
the change is enacted.
Earnings
per share- Basic earning per share (EPS) is computed using the weighted average
number of common shares outstanding for the period while diluted EPS is computed
assuming conversion of all dilutive securities such as options.
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Included
below is a reconciliation of shares for the basic and diluted EPS
computations.
|
|
|
2007
|
|
|
2006
|
|
|
Basic
EPS Shares
|
|
|
4,415,727
|
|
|
|
4,464,710
|
|
|
Dilutive
effect of stock options
|
|
|
149,781
|
|
|
|
163,230
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS shares
|
|
|
4,565,508
|
|
|
|
4,627,940
|
|
Options
to purchase 170,781 and 172,781 shares with exercise prices ranging from $.28 to
$4.68 respectively were outstanding at December 31, 2007 and 2006 respectively,
which shares were included in the computation of diluted EPS.
Disclosures
about Fair Value of Financial Instruments- the carrying values of cash, and cash
equivalents, and long-term debt approximate their respective fair
values.
Employee
Stock Options-The Company applies Accounting Principles Board Opinion No. 25
(“APB No. 25”), “Accounting for Stock Issued to Employees,” which recognizes
compensation costs based on the intrinsic value of an equity instrument. The
Company has applied APB No. 25 to its stock compensation awards to employees and
has disclosed the required pro forma effect on net income (loss) income per
share in accordance with the provisions of SFAS No. 123, “Accounting for
Stock-Based Compensation” and has adopted the enhanced disclosure provisions of
SFAS No. 148 “Accounting for Stock-Based Compensation- Transition and
Disclosure, an amendment of SFAS No. 123” (See Note 5).
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reclassifications-
certain prior year amounts may have been reclassified to conform to current year
presentation.
Use of
Estimates in the Preparation of Financial Statements- The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECENTLY
ISSUED AND PROPOSED ACCOUNTING STANDARDS
The
following are accounting standards adopted or issued in 2007 that could have an
impact to our Company.
In July 2006, the FASB
issued FASB Interpretation No. 48, “
Accounting for Uncertainty
in Income Taxes
—
an interpretation of FASB
Statement No. 109”
(“
FIN 48”
), which became effective
for the Company on January 1, 2007. The Interpretation prescribes a recognition
threshold and a measurement attribute for the financial statement recognition
and measurement o
f
tax positions
taken or expected to be taken in a tax return. For those benefits to be
recognized, a tax position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The amount recognized is measured as the
largest amount of benefit that is greater than 50 percent likely of being
realized upon ultimate settlement. For 2007, there were no tax positions taken
or expected to be taken in a tax return by the company that would require a
recognition threshold and a measurement as outlined in this FASB
Interpretation No 48.
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In
September 2006, t
he
FASB issued Statement of Financial Accounting Standards (“
SFAS”
) No. 157, “
Fair Value
Measurements,”
which defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. SFAS No. 157 applies
u
nder other
accounting pronouncements that require or permit fair value measurements, but it
does not require any new fair value measurements. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. SFAS No. 157 could impact fair values assigned to assets and
liabilities in any future acquisition.
Assets and Financial
Liabilities-including an amendment of SFAS No. 115,”
which permits an entity
to measure certain financial assets and financ
ial liabilities at fair
value. Entities that elect the fair value option will report unrealized gains
and losses in earnings at each subsequent reporting date. SFAS No. 159 is
effective as of the first fiscal year beginning after November 15, 2007. At this
time, we do not expect to adopt the fair value option for assets and
liabilities; however, future events and circumstances may impact that
decision.
In December 2007, the FASB
issued SFAS No. 141 (Revised 2007), “
Business
Combinations.”
SFAS No. 141(R)
w
ill significantly change the accounting for business combinations. Under
SFAS No. 141(R), an acquiring entity will be required to recognize all the
assets acquired and liabilities assumed in a transaction at the acquisition-date
fair value with limited exceptions. SFAS No. 141(R) will change the accounting
treatment for certain specific items, including:
·
|
Acquisition
costs will be generally expensed as
incurred;
|
·
|
Assets
that an acquirer does not intend to use will be recorded at fair value
reflecting the ass
ets
’
highest and best
use.
|
·
|
Noncontrolling
interests (formerly known as “minority interests” — see Statement 160
discussion below) will be valued at fair value at the acquisition
date;
|
·
|
Acquired
contingent liabilities will be recorded at fair value at the acquisition
date and subsequently measured at either the higher of such amount or the
amount determined under existing guidance for non-acquired
contingencies;
|
·
|
In-process
research and development will be recorded at fair value as an
indefinite-lived intangible asset at the acquisition
date;
|
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE 1 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
·
|
Restructuring
costs associated with a business combination will be generally expensed
subsequent to the acquisition date;
and
|
·
|
Changes
in deferred tax asset valuation allowances and income tax uncertainties
after the acquisition date generally will affect income tax
expense.
|
SFAS No.
141(R) also includes a substantial number of new disclosure requirements. SFAS
No. 141(R) applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. Earlier adoption is prohibited.
We are currently evaluating the impact of this statement on our financial
statements.
In
December 2007, the FASB also issued SFAS No. 160,
“Noncontrolling Interests
In Consolidated Financial Statements – An Amendment of Accounting Research
Bulletin No. 51,” the provisions of which are effective for periods beginning
after December 15, 2008. This statement requires an entity to classify
noncon
trolling interests in subsidiaries as a separate component of
equity. Additionally, transactions between an entity and noncontrolling
interests are required to be treated as equity transactions. We are currently
evaluating the impact of this statement on our financial
statements.
NOTE 2 -
PROPERTY AND EQUIPMENT - NET
Property
and equipment consists of the following:
|
|
|
DECEMBER 31,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Machinery
and equipment
|
|
$
|
511,882
|
|
|
$
|
2,255,911
|
|
|
Furniture
and fixtures
|
|
|
396,993
|
|
|
|
419,979
|
|
|
Leasehold
improvements
|
|
$
|
253,482
|
|
|
|
253,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,162,357
|
|
|
$
|
2,929,372
|
|
|
Less
accumulated depreciation
|
|
|
|
|
|
|
|
|
|
and
amortization
|
|
$
|
(873,665
|
)
|
|
$
|
(2,589,634
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
$
|
288,692
|
|
|
$
|
339,738
|
|
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007 AND 2006
NOTE
2- PROPERTY AND EQUIPMENT – NET CONTINUED
During
the 2007 year the Company retired $1,876,094 of Assets with accumulated
depreciation of $ 1,876,094, a net book value of $ 0.
NOTE 3 -
INVESTMENTS
In August 2006, the
Company purchased 28,500 shares of stock in Anycom Technologies A.G.
“
Anycom”
Monchengladbach, Germany,
a
t 7 Euros per share for a total investment of approximately $259,000 in
US dollars. The approximate market value of the investment in U.S
dollars on February 29, 2008 was $ 43,690 based on the closing price of the
stock on February 29, 2008.
NOTE 4 -
STOCKHOLDERS’ EQUITY
PREFERRED
STOCK - The Board of Directors of the Company, without action by the
stockholders,
is authorized to issue shares of Preferred Stock in one or more series and,
within certain limitations, to determine the voting rights (including the right
to vote as a series on particular matters), preferences as to dividends and in
liquidation, conversion, redemption, and other rights of each such series. The
Board of Directors could issue series with rights more favorable with respect to
dividends, liquidation and voting than those held by the holders of any class of
Common Stock.
COMMON
STOCK - the shares of Common Stock have one vote per share. None of the shares
have preemptive or cumulative voting rights, redemption rights, are or will be
liable for assessment or further calls. The holders of the Common Stock are
entitled to dividends when declared from funds legally available
therefore.
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER
31, 2007 AND 2006
NOTE 4 -
STOCKHOLDERS’ EQUITY (CONTINUED)
On
December 5, 2007, the Board authorized a Company Stock buy back program for a
one year
period
which expires on December 4, 2008 whereby management may make purchases from
time to time on the open market at prevailing prices or in privately negotiated
transactions of a total of up to 200,000 shares of its Common Stock. Under this
program the Company purchased 39,927 shares at an average of $ 1.52 per share or
a total cost of approximately $ 60,606 under this program.
STOCK
OPTIONS- The Company, on June 6, 1995, adopted the Company’s Stock Option Plan
(the “Plan”), which as amended in December 1995, authorizes the Board of
Directors or a Stock Option Committee appointed by the Board to grant up to
250,000 qualified stock options and non-qualified stock options to officers and
key employees, directors, and independent consultants. Directors who are not
employees and consultants are eligible only to receive non-qualified stock
options.
In 2000,
the stockholders of the Company approved an amendment to the Plan increasing the
number of shares reserved for issuance by 400,000 to an aggregate of 1,000,000
under the Plan. In addition in 2000, the Company granted, under the Plan,
ten-year options to purchase an aggregate of 138,500 shares of Common Stock to
directors and employees of the Company. In
2001, the
Company granted, under the Plan, ten-year options to purchase a total of 65,000
shares of Common Stock at $.375 per share to the directors of the Company. In
2002, the Company granted, under the plan, ten-year options to purchase a total
of 51,000 shares of Common Stock at $0.28 per share to the directors of the
Company. In 2003, the Company did not grant any options under the plan. In
December, 2004, a Director of the Company exercised a total of 33,000 options
from three different issuances at their respective fair market value’s at their
respective date of issuance totaling at an average price of $.67 per
share.
In 2005,
the Company granted, under the plan, 10-year options totaling 2,427 shares to
each of its four non-employee directors at $2.06 per share and 10,000 shares at
$4.68 to Dan Kenderdine, the Company’s Facility Director and warehouse manager
and husband of Company Officer Dawn Kenderdine and 2,000 shares to another non
officer employee.
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER
31, 2007 AND 2006
NOTE 4 -
STOCKHOLDERS’ EQUITY (CONTINUED)
At
December 31, 2007 and 2006, there were no shares available for
grant.
The
following information pertains to the stock options outstanding for the years
ending December 31, 2007:
|
|
Options outstanding
|
|
|
Options exercisable
|
|
|
|
Weighted
Number Of Shares
|
|
|
Exercisable
Average Share Price
|
|
|
Wtd.
Avg.Options Shares
|
|
|
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2005
|
|
|
205,208
|
|
|
$
|
1.37
|
|
|
|
205,208
|
|
|
$
|
1.37
|
|
Exercised
|
|
|
(32,427
|
)
|
|
$
|
1.46
|
|
|
|
(32,427
|
)
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2006
|
|
|
172,781
|
|
|
$
|
1.30
|
|
|
|
172,781
|
|
|
$
|
1.30
|
|
Cancelled
|
|
|
(2,000
|
)
|
|
$
|
4.68
|
|
|
|
(2,000
|
)
|
|
$
|
4.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
outstanding at December 31, 2007
|
|
|
170,781
|
|
|
$
|
1.31
|
|
|
|
170,781
|
|
|
$
|
1.31
|
|
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER
31, 2007 AND 2006
NOTE 4 -
STOCKHOLDERS’ EQUITY (CONTINUED)
The
following table summarizes information as of December 31, 2007 concerning
currently outstanding and exercisable options:
Options
outstanding and exercisable
Weighted
Average Remaining Contractual Life
Range
of Exercise Price
|
Number
Outstanding
|
Weighted
Average Life (Years)
|
Exercise
Price
|
Number
Exercisable
|
Weighted
Average Exercise Price
|
$0.28-$3.75
|
80,000
|
3.7
|
$0.33
|
80,000
|
$0.33
|
$1.01-$200
|
62,500
|
2.2
|
$1.41
|
62,500
|
$1.42
|
$2.06-$2.06
|
7,281
|
7.1
|
$2.06
|
7,281
|
$2.06
|
$4.01-$5.00
|
21,000
|
4.9
|
$4.57
|
21,000
|
$4.55
|
The
outstanding stock options as of December 31, 2007 vest as follows:
(a) All
of the option shares are vested on the date of the grant (10,000 options
outstanding at December 31, 2007)
(a) Half
of the options shares are vested on the date of the grant with an additional
one-half vesting in the first anniversary there from (133,281 options
outstanding at December 31, 2007) or (b) one-fifth of the options shares are
vested on the date of grant with an additional one-fifth vesting on the first,
second, third, and forth anniversaries there from, respectively (27,500 shares
outstanding at December 31, 2007).
As
provided for in SFAS No. 123, “According for Stock-Based Compensation,”
The
Company
utilizes the intrinsic value method of expense recognition under APB
No.
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER
31, 2007 AND 2006
NOTE 4 -
STOCKHOLDERS’ EQUITY (CONTINUED)
25.
Accordingly, no compensation cost has been recognized for the stock option plans
as all options have been issued with exercise prices equal to fair market
value.
There
were no options granted during the years ended December 31 2007 and 2006,
respectively.
NOTE 5 -
INCOME TAXES
The
provision for income taxes on continuing operations consists of:
|
|
2007
|
|
|
2006
|
|
Current:
|
|
|
|
|
|
|
Federal
|
|
$
|
285,047
|
|
|
$
|
454,411
|
|
State
|
|
|
99,078
|
|
|
|
77,474
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
384,125
|
|
|
$
|
531,885
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
744
|
|
|
|
(365,771
|
)
|
State
|
|
|
(2,592
|
)
|
|
|
(36,175
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,848
|
)
|
|
$
|
(401,946
|
)
|
|
|
|
|
|
|
|
|
|
Total
provision
|
|
|
|
|
|
|
|
|
For
income taxes
|
|
$
|
382,277
|
|
|
$
|
129,939
|
|
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER
31, 2007 AND 2006
NOTE 5 -
INCOME TAXES (CONTINUED)
In
conformity with SFAS No. 109, deferred tax assets and liabilities are classified
based on the financial reporting classification of the related assets and
liabilities, which give rise to temporary book/tax differences. Deferred taxes
related to the following temporary differences:
|
|
DECEMBER 31,
|
|
|
|
2007
|
|
|
2006
|
|
Deferred
income tax assets:
|
|
|
|
|
|
|
Accrued
compensation
|
|
$
|
19,000
|
|
|
$
|
19,000
|
|
Unrealized
Losses on Investments
|
|
|
83,550
|
|
|
_
|
|
Inventory
reserve
|
|
|
62,448
|
|
|
|
101,590
|
|
Bad
debts reserve
|
|
|
34,306
|
|
|
|
29,767
|
|
Sales
returns and allowances
|
|
|
34,262
|
|
|
|
57,000
|
|
Goodwill
|
|
|
170,130
|
|
|
|
197,430
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
403,696
|
|
|
$
|
404,787
|
|
|
|
|
|
|
|
|
|
|
Deduct: Deferred
income tax liabilities:
|
|
|
|
|
|
|
|
|
State
taxes
|
|
$
|
11,585
|
|
|
$
|
12,262
|
|
Deferred
Revenue
|
|
$
|
47,985
|
|
|
$
|
46,569
|
|
Depreciation
|
|
$
|
47,500
|
|
|
$
|
28,500
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
296,626
|
|
|
$
|
317,456
|
|
|
|
|
|
|
|
|
|
|
Deduct:
Valuation allowance
|
|
|
—
|
|
|
$
|
20,991
|
|
|
|
|
|
|
|
|
|
|
Net
deferred tax asset
|
|
$
|
296,626
|
|
|
$
|
296,465
|
|
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER
31, 2007 AND 2006
NOTE 5 -
INCOME TAXES (CONTINUED)
The
effective income tax rate varied from the U.S. Federal statutory tax rate as
follows:
|
|
|
2007
|
|
|
2006
|
|
|
Statutory
income tax rate
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
|
State
income taxes, net of
|
|
|
|
|
|
|
|
|
|
Federal
tax benefit
|
|
|
5.3
|
|
|
|
4.7
|
|
|
Meals
and entertainment
|
|
|
0.1
|
|
|
|
0.1
|
|
|
Prior
years state tax audit net of federal tax benefit.
|
|
|
2.2
|
|
|
|
—
|
|
|
Other
|
|
|
2.4
|
|
|
|
1.5
|
|
|
Valuation
allowance
|
|
|
—
|
|
|
|
(30.5
|
)
|
|
Effective
tax rate
|
|
|
44.0
|
%
|
|
|
9.8
|
%
|
As of
December 31, 2007 the Company has fully utilized all its federal and state net
operating loss carry forwards. SFAS No. 109 requires the establishment of a
deferred tax asset for all deductible temporary difference, which has included
operating loss carry forwards. In 2006, The Company provided a valuation
allowance of $20,991, which it applied against its deferred tax asset balance of
$317,456, leaving a balance of $296,465, which is classified as a current asset
for financial presentation purposes.
In 2006,
The Company based on the past two years profitable operation ( 2006 and 2005)
reduced the valuation allowance by $195,583 which represents the reduction in
the Deferred tax assets from December 31, 2006 to December 31,
2005.
In 2007,
The Company did not feel a valuation allowance was required to offset any of the
balance in its Deferred tax Asset totaling $296,626.
NOTE 6 -
COMMITMENTS AND CONTINGENCIES
The
Company is, from time to time, party to litigation arising in the normal course
of its business. Based on consultation with legal counsel, management of the
Company does not believe that any such claims or litigation will have a material
adverse effect on the financial position or results of operations of the
Company.
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER
31, 2007 AND 2006
NOTE 5-
CONTINGENCIES (CONTINUED)
The
Company leases various types of warehouse and other space and equipment,
furniture, and fixtures under non-cancelable operating lease agreements, which
expire at various dates. Certain leases for warehouse and other space contain
rental escalation clauses based on the Consumer Price Index. Future minimum
lease payments under non-cancelable operating leases for the years ending
December 31 are as follows:
2008
|
|
$
|
480,618
|
|
2009
|
|
$
|
161,494
|
|
Thereafter
|
|
|
—
|
|
|
|
|
|
|
Total:
|
|
$
|
642,112
|
|
Rent
expense all operating leases for the years ended December 31, 2007 and 2006 was
$380,247 and 364,367, respectively.
NOTE 7 -
RELATED PARTY TRANSACTIONS
We employ
Susan Rade, wife of Stephen Rade, current CEO, as a high volume and senior sales
person with certain administrative functions. In this role, Mrs. Rade earns the
bulk of her compensation as part of our sales incentive commission programs
earning $183,042 in both the twelve months December 31, 2007 and 2006
respectively, including draws, commission and a $36,000 salary for
administrative duties.
We employ
Dan Kenderdine, husband of Dawn Kenderdine our Vice President, as our Facilities
Manager since mid 2004. Mr. Kenderdine earns the bulk of his compensation from
salary and bonuses earning $64,895 for the year ended December 31, 2007 and $
52,273 for the year ending December 31, 2006.
WIRELESS
XCESSORIES GROUP, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER
31, 2007 AND 2006
NOTE 8 -
SEGMENT DISCLOSURE
The
Company effectively operates in one business segment, the Wireless Products
Segment, which distributes cellular telephone accessory products including
batteries, chargers, and antennas throughout North America. The Wireless
Products Segment is headquartered in Huntingdon Valley, Pennsylvania. All
revenue and essentially all long-lived assets were related to operations in the
United States as of and for the years ended December 31, 2007, and
2006.
PART
IV
ITEM 15 -
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The
following documents are filed as a part of this Report.
1. And 2.
FINANCIAL STATEMENTS -- The financial statements and schedules required by this
item begin on page F-1 of this report. The Reports of Independent Certified
Public Accountants appear on pages F-2, F-3 and F-4 of this report.
3.
EXHIBITS -- The following is a list of exhibits. Where so indicated by footnote,
exhibits, which were previously filed, are incorporated by
reference.
(b) On
Sept. 1, 2004 we filed a Form 8-K relating to the Board of Director approval of
an increase in the amount of shares authorized to be repurchased under the
Company’s stock Buy Back program to 1,250,000 shares at a cost not to exceed
$500,000.
(c) On
December 7, 2005, the Board of Directors of the Registrant has authorized the
repurchase of up to 250,000 shares of the Registrant’s common stock at a total
cost not to exceed $1,000,000. The stock repurchase program will expire on
December 7, 2006.
(d) On
DECEMBER 5, 2007, THE Board of Directors of the registrant has authorized the
repurchase of up to 200,000 sharers of its Company stock effective December 5,
2007. The stock repurchase program will expire on December 4, 2008.
(e) On
March 25, 2008, The Company filed an 8k, announcing the Resignation of Mr.
Bradley Mac Donald as a member of the Board of Directors of Wireless Xcessories
Group, Inc and Chairman of its Audit committee effective March 12, 2008. Mr. Mac
Donald cited his desire to reduce his work load, and in particular, his numerous
outside business commitments as the reason for his resignation.
NUMBER
3.1
|
Certificate
of Incorporation of Company and amendments
thereto*
|
4.1
|
Form
of Common Stock Certificate*
|
10.1
|
Warrant
Agreement related to Redeemable Stock Purchase
Warrants*
|
10.2
|
Form
of Purchase Option issued to underwriter of initial public
offering*
|
10.3
|
Form
of Preferred Stock, Series A
Certificate*
|
10.4
|
1995
Stock Option Plan of Company*
|
10.5
|
Forms
of Option Agreement under the Plan
|
10.6
|
Option
issued to Mr. Robert W. Tauber*
|
10.7
|
Management
Services Agreement between the Company and Founders Management
Services,
Inc., as amended*
|
10.8
|
Lease
between Advanced Fox Antenna, Inc. and Rade Limited
Partners*
|
10.9
|
Registration
Rights Agreement between the Company and Messrs. Tauber and
Rade*
|
10.10
|
Revolving
Credit, Term Loan and Security Agreement, dated January 6, 1997among IBJ
Schroder Bank & Trust Company as Agent and the Company, Advanced Fox
Antenna, Inc., Tauber Electronics Inc., Battery Acquisition Corp.,
Specific Energy Corporation, Battery Network, Inc. and W.S.Battery &
Sales Company, Inc.**
|
10.11
|
Amendment
No. 1 and Joinder Agreement dated __________ among the Company, certain of
its affiliates and IBJ Schroder Bank & Trust
Company***
|
10.12
|
Waiver
and Amendment to Revolving Credit, Term Loan and Security Agreement dated
__________ by and among the Company, certain of its affiliates and IBJ
Schroder Bank & Trust
Company****
|
10.13
|
Waiver
and Amendment to Revolving Credit, Term Loan and Security Agreement dated
__________ by and among the Company, certain of its affiliates and IBJ
Schroder Bank & Trust
Company*****
|
10.14
|
Asset
Purchase Agreement dated Jan 26, 2000 with respect to the sale of
substantially all of the assets of Tauber Electronics,
Inc.******
|
10.15
|
Agreement
and Plan of Merger dated February 28, 2001, by and among Wireless
Xcessories Group, Inc., Accessory Solutions.com Inc., Advanced Fox
Antenna, Inc. and Cliffco of Tampa
Bay.
|
10.16
|
Waiver
and Amendment to Revolving Credit, Term Loan and Security Agreement dated
March 30, 2001 by and among the Company, certain of its affiliates and IBJ
Schroder Bank & Trust Company
|
10.17
|
Form
of Warrant issued to each of Warren H. Haber and John L. Teeger** List of
Subsidiaries
|
31.1
|
Certification
Pursuant to Rule 13a-14 and 15d-14 of
The
Securities and Exchange Act of
1934
|
31.2
|
Certification
Pursuant to Rule 13a-14 and 15d-14 of
The
Securities and Exchange Act of
1934
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
|
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
|
* Filed
as an exhibit to the Company’s Registration Statement on Form S-1(File No.
33-80939) and incorporated by reference thereto.
** Filed
as an exhibit to the Company’s Current Report on Form 8-K for January 7, 1997
and incorporated by reference thereto.
*** Filed
as an exhibit to the Company’s Quarterly Report on Form 10-Q for the three
months ended June 30, 1997 and incorporated by reference thereto.
****
Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year
ended December 31, 1997 and incorporated by reference hereto.
*****
Filed as an exhibit to the Company’s Quarterly Report for the three months ended
June 30, 1998 and incorporated by reference thereto.
******
Filed as an exhibit to the Company’s Current Report on Form 8-K for January 27,
2000 and incorporated by reference thereto.