DELAWARE
|
20-2783217
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification Number)
|
1330
Avenue of the Americas, 34th
Floor, New York, N.Y.
|
10019-5400
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
PART
I
|
|||
Item
1
|
Business
|
2
|
|
Item
1A
|
Risk
Factors
|
8
|
|
Item
1B
|
Unresolved
Staff Comments
|
15
|
|
Item
2
|
Properties
|
15
|
|
Item
3
|
Legal
Proceedings
|
15
|
|
Item
4
|
[Removed
and Reserved]
|
17
|
|
PART
II
|
|||
Item
5
|
Market
for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
18
|
|
Item
6
|
Selected
Financial Data
|
19
|
|
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
20
|
|
Item
7A
|
Quantitative
and Qualitative Disclosures About Market Risk
|
30
|
|
Item
8
|
Financial
Statements and Supplementary Data
|
31
|
|
Item
9
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
63
|
|
Item
9A(T)
|
Controls
and Procedures
|
63
|
|
Item
9B
|
Other
Information
|
64
|
|
PART
III
|
|||
Item
10
|
Directors,
Executive Officers and Corporate Governance
|
65
|
|
Item
11
|
Executive
Compensation
|
65
|
|
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
65
|
|
Item
13
|
Certain
Relationships and Related Transactions, and Director
Independence
|
65
|
|
Item
14
|
Principal
Accounting Fees and Services
|
65
|
|
PART
IV
|
|||
Item
15
|
Exhibits,
Financial Statement Schedules
|
66
|
|
·
|
The Athlete’s Foot (acquired
November 7, 2006)
|
|
·
|
MaggieMoo’s (acquired February
28, 2007)
|
|
·
|
Marble Slab Creamery (acquired
February 28, 2007)
|
|
·
|
Pretzel Time (acquired August 7,
2007)
|
|
·
|
Pretzelmaker (acquired August 7,
2007)
|
|
·
|
Shoebox New York (joint
venture interest – January 15,
2008)
|
|
·
|
Great
American Cookies (acquired January 29,
2008)
|
Location
|
Stores
|
Location
|
Stores
|
|||
Alabama
|
41
|
Missouri
|
26
|
|||
Alaska
|
1
|
Montana
|
4
|
|||
Arizona
|
13
|
Nebraska
|
5
|
|||
Arkansas
|
14
|
Nevada
|
11
|
|||
California
|
42
|
New
Hampshire
|
4
|
|||
Colorado
|
22
|
New
Jersey
|
20
|
|||
Connecticut
|
17
|
New
Mexico
|
1
|
|||
Delaware
|
4
|
New
York
|
50
|
|||
District
of Columbia
|
2
|
North
Carolina
|
50
|
|||
Florida
|
80
|
North
Dakota
|
4
|
|||
Georgia
|
69
|
Ohio
|
31
|
|||
Hawaii
|
8
|
Oklahoma
|
23
|
|||
Idaho
|
8
|
Oregon
|
4
|
|||
Illinois
|
35
|
Pennsylvania
|
19
|
|||
Indiana
|
19
|
Rhode
Island
|
–
|
|||
Iowa
|
24
|
South
Carolina
|
40
|
|||
Kansas
|
7
|
South
Dakota
|
4
|
|||
Kentucky
|
13
|
Tennessee
|
56
|
|||
Louisiana
|
50
|
Texas
|
233
|
|||
Maine
|
1
|
Utah
|
20
|
|||
Maryland
|
18
|
Vermont
|
–
|
|||
Massachusetts
|
10
|
Virginia
|
34
|
|||
Michigan
|
21
|
Washington
|
9
|
|||
Minnesota
|
8
|
West
Virginia
|
9
|
|||
Mississippi
|
12
|
Wisconsin
|
9
|
|||
Wyoming
|
3
|
Location
|
Stores
|
Location
|
Stores
|
|||
Antigua
|
1
|
Palau
|
1
|
|||
Aruba
|
2
|
Peru
|
2
|
|||
Australia
|
132
|
Philippines
|
10
|
|||
Bahamas
|
2
|
Portugal
|
11
|
|||
Bahrain
|
7
|
Puerto
Rico
|
4
|
|||
Botswana
|
1
|
Qatar
|
2
|
|||
Canada
|
119
|
Russia
|
4
|
|||
China
|
2
|
Saipan
|
2
|
|||
Curacao
|
1
|
Saudi
Arabia
|
9
|
|||
Denmark
|
1
|
South
Korea
|
33
|
|||
Ecuador
|
4
|
Singapore
|
2
|
|||
Guam
|
3
|
St.
Kitts/Nevis
|
1
|
|||
Indonesia
|
28
|
Sweden
|
2
|
|||
Kuwait
|
18
|
Trinidad
& Tobago
|
2
|
|||
Lebanon
|
3
|
United
Arab Emirates
|
18
|
|||
Mexico
|
60
|
United
Kingdom
|
2
|
|||
New
Zealand
|
8
|
Venezuela
|
5
|
|||
Oman
|
1
|
Vietnam
|
1
|
|||
Pakistan
|
1
|
|
·
|
across multiple categories,
ranging from footwear to baked goods to ice
cream;
|
|
·
|
across geographies (both within
the United States and
internationally);
|
|
·
|
across channels of distribution,
ranging from mall-based stores to strip shopping centers to stand-alone
stores;
|
|
·
|
across franchisees/licensees,
ranging from individuals to multi-unit developers;
and
|
|
·
|
across multiple demographic
groups.
|
|
·
|
increase our vulnerability to
general adverse economic and industry
conditions;
|
|
·
|
limit our flexibility in planning
for, or reacting to, changes in our business and the industries in which
we operate;
|
|
·
|
place us at a competitive
disadvantage if any of our competitors have less debt;
and
|
|
·
|
limit our ability to borrow
additional funds.
|
|
·
|
Political and economic
instability or civil unrest;
|
|
·
|
Armed conflict, natural disasters
or terrorism;
|
|
·
|
Health concerns or similar
issues, such as a pandemic or
epidemic;
|
|
·
|
Multiple foreign regulatory
requirements that are subject to change and that differ between
jurisdictions;
|
|
·
|
Changes in trade protection laws,
policies and measures, and other regulatory requirements affecting trade
and investment;
|
|
·
|
Differences from one country to
the next in legal protections applicable to intellectual property assets,
including trademarks and similar assets, enforcement of such protections
and remedies available for
infringements;
|
|
·
|
Fluctuations in foreign currency
exchange rates and interest rates;
and
|
|
·
|
Adverse consequences from changes
in tax laws.
|
2009
|
2008
|
|||||||||||||||
QUARTER
ENDED
|
HIGH
|
LOW
|
HIGH
|
LOW
|
||||||||||||
March 31
|
$ | 0.14 | $ | 0.05 | $ | 4.82 | $ | 2.83 | ||||||||
June 30
|
$ | 0.25 | $ | 0.10 | $ | 3.49 | $ | 0.41 | ||||||||
September 30
|
$ | 0.36 | $ | 0.17 | $ | 0.67 | $ | 0.24 | ||||||||
December 31
|
$ | 0.25 | $ | 0.13 | $ | 0.30 | $ | 0.07 |
Plan Category
|
Plan Name
|
Number of
securities
to
be issued upon
exercise
of outstanding
options,
and
restricted stock
|
Weighted-average
exercise price of
outstanding
options,
and restricted
stock
|
Number of
securities
remaining
available for
future
issuance under
equity
compensation
plans
|
||||||||||
Equity
compensation plans approved by security holders
|
1999
Equity Incentive Plan
|
391,000 | $ | 3.74 | — | |||||||||
2006
Equity Incentive Plan
|
2,691,999 | $ | 1.22 | 808,001 | ||||||||||
Equity
compensation plans not approved by security holders
|
2000
Plan
|
24,571 | $ | 2.90 | — | |||||||||
Total
as of December 31, 2009
|
3,107,570 | $ | 1.55 | 808,001 |
|
·
|
TAF (acquired November 7,
2006)
|
|
·
|
MaggieMoo’s (acquired February
28, 2007)
|
|
·
|
Marble Slab Creamery (acquired
February 28, 2007)
|
|
·
|
Pretzel Time (acquired August 7,
2007)
|
|
·
|
Pretzelmaker (acquired August 7,
2007)
|
|
·
|
Shoebox New York (joint
venture interest – January 15,
2008)
|
|
·
|
Great American Cookies (acquired
January 29, 2008)
|
|
·
|
On
August 6, 2009, we entered into long-term license agreements with the
master franchisee for TAF for the territories of Australia and New
Zealand through our wholly owned subsidiary TAF Australia, LLC
(“TAFA”). Pursuant to these TAFA license agreements, which replaced all
prior franchise agreements among the parties, we granted exclusive
licenses of the TAF trademarks and trade dress for the territories of
Australia and New Zealand for an initial 99-year term. In consideration
for these TAFA license agreements, we were paid one-time, non-refundable
licensing fees of $6.2 million and ceased receiving royalties from
franchised stores in Australia and New
Zealand.
|
|
·
|
On
August 6, 2009, in connection with the TAFA license transaction,
NexCen entered into an amendment of the BTMUCC Credit Facility whereby the
Company used $5.0 million of the licensing proceeds to pay down a portion
of the Class B Franchise Note and BTMUCC released its security interest in
the intellectual property that is the subject of the license agreements.
The balance of the Class B Franchise Note following the re-payment was
approximately $36.4 million, and the Company’s repayment resulted in
interest expense savings of $0.4 million on an annualized
basis.
|
|
·
|
We
acquired Great American Cookies on January 29, 2008. Thus, our
financial results for the year ended December 31, 2009 reflect a full year
of ownership of Great American Cookies, whereas our financial results for
the year ended December 31, 2008 reflect approximately 11 months of
ownership.
|
|
·
|
In
2008, we exited the licensing business for consumer branded products and
ceased all activities of UCC Capital. We report the Bill Blass, Waverly
and UCC Capital businesses as discontinued operations for all periods
presented.
|
|
·
|
Starting in late May 2008, we
began reducing non-essential corporate staff and incurred restructuring
charges that continued through the remainder of 2008. Corporate selling,
general and administrative expenses thus decreased starting in second
quarter 2008, although these decreases were offset in the fourth quarter
of 2008 by a stock compensation charge of $2.1 million associated with the
voluntary cancellation of stock option
grants.
|
|
·
|
Professional fees related to
special investigations, corporate and franchising, increased throughout
most of 2008, due to the increased legal costs and auditing costs
associated with the events of May 2008, the growth of the Company and the
integration of acquisitions.
|
|
·
|
As
a result of the events of May 2008 and the general downturn of the
economy, the Company recorded material impairments of its intangible
assets in the second and third quarters of
2008.
|
|
·
|
We recognize income taxes using
the asset and liability method. Under this method, we recognize deferred
tax assets and liabilities for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. We measure deferred
tax assets and liabilities using enacted tax rates expected to apply to
taxable income in the years in which we expect to recover or settle those
temporary differences. We recognize the effect of a tax rate change on
deferred tax assets and liabilities as income in the period that includes
the enactment date. In assessing the likelihood of realization of deferred
tax assets, we consider whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during periods in which these
temporary differences become
deductible.
|
|
·
|
We classify intangible assets
into three categories: (1) goodwill; (2) intangible assets with indefinite
lives not subject to amortization; and (3) intangible assets with definite
lives subject to amortization. We do not amortize goodwill and
indefinite-lived intangible assets. We evaluate the remaining useful
life of an intangible asset that is not being amortized each reporting
period to determine whether events and circumstances continue to support
an indefinite useful life. If an intangible asset that is not being
amortized is subsequently determined to have a finite useful life, we
amortize the intangible asset prospectively over its estimated remaining
useful life. Amortizable intangible assets are amortized on a
straight-line basis.
|
|
·
|
We account for share-based
payments, such as grants of stock options, restricted shares, warrants,
and stock appreciation rights, at fair value as an expense in our
financial statements over the requisite service period. We estimate
forfeitures in calculating the fair value of each award. See Note 12
– Stock Based
Compensation, for
the assumptions used to calculate the stock compensation expense under the
fair-value method discussed above. We use the Black-Scholes option pricing
model to value the compensation expense associated with our stock option
awards. In addition, we estimate forfeitures when recognizing compensation
expense associated with our stock options, and adjust our estimate of
forfeitures when we anticipate changes in the rate. Key input
assumptions used to estimate the fair value of stock options included the
market value of the underlying shares at the date of grant, the exercise
price of the award, the expected option term, the expected volatility
(based on historical volatility) of our stock over the option’s expected
term, the risk-free interest rate over the option’s expected term, and the
expected annual dividend yield, if
any.
|
|
·
|
We maintain an allowance for
doubtful accounts for estimated losses resulting from the inability of our
customers to make required payments. In evaluating the collectability of
accounts receivable, we consider a number of factors, including the age of
the accounts, changes in status of the customers’ financial condition and
other relevant factors. We revise estimates of uncollectible amounts each
period, and record changes in the period we become aware of
them.
|
Year Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Total
revenues
|
$ | 45,119 | $ | 46,956 | ||||
Total
operating expenses
|
(38,913 | ) | (194,173 | ) | ||||
Adjustments
for special charges:
|
||||||||
Special
investigations (1)
|
91 | 3,897 | ||||||
Impairment
of intangible assets (2)
|
- | 137,881 | ||||||
Restructuring
charges (3)
|
527 | 1,096 | ||||||
Total
operating expenses, as adjusted
|
(38,295 | ) | (51,299 | ) | ||||
Operating
income (loss), as adjusted
|
6,824 | (4,343 | ) | |||||
Total
non-operating expenses
|
(9,159 | ) | (12,349 | ) | ||||
Loss
from continuing operations before income taxes, as
adjusted
|
(2,335 | ) | (16,692 | ) | ||||
Income
taxes
|
(395 | ) | 5,994 | |||||
Deferred
income tax adjustments (2)
|
- | (6,331 | ) | |||||
Income
taxes, as adjusted
|
(395 | ) | (337 | ) | ||||
Loss
from continuing operations, as adjusted
|
$ | (2,730 | ) | $ | (17,029 | ) |
(1)
|
The
Company incurred outside legal fees related to special investigations,
namely, investigations conducted at the direction of the Audit Committee
of the Board of Directors, the Company and the SEC, respectively,
regarding the Company's public disclosure on May 19, 2008 of previously
undisclosed terms of a January 2008 amendment of the BTMUCC Credit
Facility.
|
(2)
|
During
2008, the Company determined that it was necessary to evaluate goodwill
and trademarks for impairment between annual tests due to, among other
factors, a decline in the Company's stock price and deterioration of the
economy. As a result, the Company recognized deferred tax benefits related
to the reversal of deferred tax liabilities associated with the intangible
assets.
|
(3)
|
Restructuring
charges relate primarily to employee separation benefits in connection
with staff reductions in the New York corporate
office.
|
Year Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Net
income (loss) adjusted for non-cash activities
|
$ | 4,059 | $ | (8,578 | ) | |||
Working
capital changes
|
(2,453 | ) | 693 | |||||
Discontinued
operations
|
511 | (2,524 | ) | |||||
Net
cash provided by (used in) operating activities
|
2,117 | (10,409 | ) | |||||
Net
cash provided by (used in) investing activities
|
3,806 | (56,601 | ) | |||||
Net
cash (used in) provided by financing activities
|
(6,406 | ) | 28,734 | |||||
Net
decrease in cash and cash equivalents
|
$ | (483 | ) | $ | (38,276 | ) |
Balance
|
% of Total
|
|||||||
Fixed
Rate Debt
|
$ | 52.8 | 38 | % | ||||
Variable
Rate Debt
|
85.4 | 62 | % | |||||
Total
debt
|
$ | 138.2 | 100 | % |
Report
of Independent Registered Public Accounting Firm
|
32
|
|
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
33
|
|
Consolidated
Statements of Operations for the years ended December 31, 2009 and
2008
|
34
|
|
Consolidated
Statements of Stockholders’ Equity (Deficit) for the years ended
December 31, 2009 and 2008
|
35
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2009 and
2008
|
36
|
|
Notes
to Consolidated Financial Statements
|
37
|
December 31,
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 7,810 | $ | 8,293 | ||||
Short-term
restricted cash
|
1,436 | — | ||||||
Trade
receivables, net of allowances of $1,472 and $1,367,
respectively
|
4,061 | 5,617 | ||||||
Other
receivables
|
946 | 834 | ||||||
Inventory
|
1,123 | 1,232 | ||||||
Prepaid
expenses and other current assets
|
1,379 | 2,439 | ||||||
Total
current assets
|
16,755 | 18,415 | ||||||
Property
and equipment, net
|
3,262 | 4,395 | ||||||
Investment
in joint venture
|
335 | 87 | ||||||
Trademarks
and other non-amortizable intangible assets
|
72,522 | 78,422 | ||||||
Other
amortizable intangible assets, net of amortization
|
5,020 | 6,158 | ||||||
Deferred
financing costs and other assets
|
3,770 | 5,486 | ||||||
Long-term
restricted cash
|
980 | 940 | ||||||
Total
assets
|
$ | 102,644 | $ | 113,903 | ||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
||||||||
Accounts
payable and accrued expenses
|
$ | 6,596 | $ | 9,220 | ||||
Restructuring
accruals
|
312 | 153 | ||||||
Deferred
revenue
|
3,151 | 4,044 | ||||||
Current
portion of debt, net of debt discount of $853 and $541,
respectively
|
137,330 | 611 | ||||||
Acquisition
related liabilities
|
820 | 4,689 | ||||||
Total
current liabilities
|
148,209 | 18,717 | ||||||
Long-term
debt, net of debt discount of $0 and $852, respectively
|
— | 140,262 | ||||||
Acquisition
related liabilities
|
196 | 480 | ||||||
Other
long-term liabilities
|
3,231 | 3,937 | ||||||
Total
liabilities
|
151,636 | 163,396 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
deficit:
|
||||||||
Preferred
stock, $0.01 par value; 1,000,000 shares authorized; 0 shares issued and
outstanding as of December 31, 2009 and 2008,
respectively
|
— | — | ||||||
Common
stock, $0.01 par value; 1,000,000,000 shares authorized; 57,146,302 shares
issued and 56,951,730 outstanding at December 31, 2009; and 56,865,215
shares issued and 56,670,643 outstanding as of December 31,
2008
|
571 | 569 | ||||||
Additional
paid-in capital
|
2,684,936 | 2,681,600 | ||||||
Treasury
stock, at cost; 194,572 shares at December 31, 2009 and
2008
|
(1,757 | ) | (1,757 | ) | ||||
Accumulated
deficit
|
(2,732,742 | ) | (2,729,905 | ) | ||||
Total
stockholders’ deficit
|
(48,992 | ) | (49,493 | ) | ||||
Total
liabilities and stockholders’ deficit
|
$ | 102,644 | $ | 113,903 |
Year Ended
December 31,
|
||||||||
2009
|
2008
|
|||||||
Revenues:
|
||||||||
Royalty
revenues
|
$
|
23,158
|
$
|
24,735
|
||||
Factory
revenues
|
17,369
|
17,310
|
||||||
Franchise
fee revenues
|
3,490
|
3,616
|
||||||
Licensing
and other revenues
|
1,102
|
1,295
|
||||||
Total
revenues
|
45,119
|
46,956
|
||||||
Operating
expenses:
|
||||||||
Cost
of sales
|
(10,921)
|
(11,484
|
)
|
|||||
Selling,
general and administrative expenses:
|
||||||||
Franchising
|
(13,025)
|
(17,078
|
)
|
|||||
Corporate
|
(7,412)
|
(15,460
|
)
|
|||||
Professional
fees:
|
||||||||
Franchising
|
(2,114)
|
(1,685
|
)
|
|||||
Corporate
|
(2,146)
|
(2,696
|
)
|
|||||
Special
Investigations
|
(91)
|
(3,897
|
)
|
|||||
Impairment
of intangible assets
|
—
|
(137,881
|
)
|
|||||
Depreciation
and amortization
|
(2,677)
|
(2,896
|
)
|
|||||
Restructuring
charges
|
(527)
|
(1,096
|
)
|
|||||
Total
operating expenses
|
(38,913)
|
(194,173
|
)
|
|||||
Operating
income (loss)
|
6,206
|
(147,217
|
)
|
|||||
Non-operating
income (expense):
|
||||||||
Interest
income
|
202
|
439
|
||||||
Interest
expense
|
(10,905)
|
(10,690
|
)
|
|||||
Financing
charges
|
(146)
|
(1,814
|
)
|
|||||
Other
income (expense), net
|
1,690
|
(284
|
)
|
|||||
Total
non-operating expense
|
(9,159)
|
(12,349
|
)
|
|||||
Loss
from continuing operations before income taxes
|
(2,953)
|
(159,566
|
)
|
|||||
Income
taxes:
|
||||||||
Current
|
(395)
|
(337
|
)
|
|||||
Deferred
|
—
|
6,331
|
||||||
Loss
from continuing operations
|
(3,348)
|
(153,572
|
)
|
|||||
Income
(loss) from discontinued operations, net of tax benefits of $233
and $19,923
|
511
|
(102,207
|
)
|
|||||
Net
loss
|
$
|
(2,837)
|
$
|
(255,779
|
)
|
|||
Loss
per share (basic and diluted) from continuing operations
|
$
|
(0.06)
|
$
|
(2.71
|
)
|
|||
Income
(loss) per share (basic and diluted) from discontinued
operations
|
0.01
|
(1.81
|
)
|
|||||
Net
loss per share – basic and diluted
|
$
|
(0.05)
|
$
|
(4.52
|
)
|
|||
Weighted
average shares outstanding - basic and diluted
|
56,882
|
56,550
|
ADDITIONAL
|
||||||||||||||||||||||||
PREFERRED
|
COMMON
|
PAID-IN
|
TREASURY
|
ACCUMULATED
|
||||||||||||||||||||
STOCK
|
STOCK
|
CAPITAL
|
STOCK
|
DEFICIT
|
TOTAL
|
|||||||||||||||||||
Balance
as of December 31, 2007
|
$
|
-
|
$
|
557
|
$
|
2,668,289
|
$
|
(1,757
|
)
|
$
|
(2,474,126
|
)
|
$
|
192,963
|
||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(255,779
|
)
|
(255,779
|
)
|
||||||||||||||||
Total
comprehensive loss
|
(255,779
|
)
|
||||||||||||||||||||||
Exercise
of options and warrants
|
-
|
1
|
4
|
-
|
-
|
5
|
||||||||||||||||||
Stock-based
compensation
|
-
|
-
|
8,657
|
-
|
-
|
8,657
|
||||||||||||||||||
Common
stock issued
|
-
|
11
|
4,650
|
-
|
-
|
4,661
|
||||||||||||||||||
Balance
as of December 31, 2008
|
-
|
569
|
2,681,600
|
(1,757
|
)
|
(2,729,905
|
)
|
(49,493
|
)
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
(2,837)
|
(2,837)
|
|||||||||||||||||||
Total
comprehensive loss
|
(2,837)
|
|||||||||||||||||||||||
Stock-based
compensation
|
-
|
-
|
384
|
-
|
-
|
384
|
||||||||||||||||||
Common
stock issued
|
-
|
2
|
2,952
|
-
|
-
|
2,954
|
||||||||||||||||||
Balance
as of December 31, 2009
|
$
|
-
|
$
|
571
|
$
|
2,684,936
|
$
|
(1,757)
|
$
|
(2,732,742)
|
$
|
(48,992)
|
Year Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (2,837 | ) | $ | (255,779 | ) | ||
Add:
Net (income) loss from discontinued operations
|
(511 | ) | 102,207 | |||||
Net
loss from continuing operations
|
(3,348 | ) | (153,572 | ) | ||||
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:
|
||||||||
Provision
for doubtful accounts
|
698 | 1,816 | ||||||
Impairment
of intangible assets
|
— | 137,881 | ||||||
Restructuring
charges
|
— | 443 | ||||||
Depreciation
and amortization
|
2,814 | 3,016 | ||||||
Stock
based compensation
|
384 | 5,291 | ||||||
Deferred
income taxes
|
— | (6,331 | ) | |||||
Unrealized
(gain) loss on investment in joint venture
|
(307 | ) | 266 | |||||
Realized
gain on sale of licensing agreement
|
(41 | ) | — | |||||
Amortization
of debt discount
|
540 | 507 | ||||||
Amortization
of deferred financing costs
|
952 | 2,064 | ||||||
Accrued
interest on Deficiency Note
|
2,323 | 41 | ||||||
Loss
on disposal of property and equipment
|
44 | — | ||||||
Changes
in assets and liabilities, net of acquired assets and
liabilities:
|
||||||||
Decrease
(increase) in trade receivables
|
858 | (2,723 | ) | |||||
(Increase)
decrease in other receivables
|
(112 | ) | 3,378 | |||||
Decrease
in inventory
|
109 | 427 | ||||||
Decrease
(increase) in prepaid expenses and other assets
|
1,824 | (1,530 | ) | |||||
(Decrease)
increase in accounts payable and accrued expenses
|
(4,399 | ) | 1,401 | |||||
Increase
in restructuring accruals
|
159 | 140 | ||||||
Decrease
in deferred revenue
|
(892 | ) | (400 | ) | ||||
Net
cash provided by (used in) operating activities from continuing
operations
|
1,606 | (7,885 | ) | |||||
Net
cash provided by (used in) operating activities from discontinued
operations
|
511 | (2,524 | ) | |||||
Net
cash provided by (used in) operating activities
|
2,117 | (10,409 | ) | |||||
Cash
flows from investing activities:
|
||||||||
(Increase)
decrease in restricted cash
|
(1,476 | ) | 5,890 | |||||
Purchases
of property and equipment
|
(846 | ) | (676 | ) | ||||
Investment
in joint venture
|
— | (725 | ) | |||||
Proceeds
from sale of licensing agreements
|
6,200 | — | ||||||
Purchase
of trademarks, including registration costs
|
— | (46 | ) | |||||
Distributions
from joint venture
|
59 | 371 | ||||||
Acquisitions,
net of cash acquired
|
(131 | ) | (95,000 | ) | ||||
Cash
provided by discontinued operations for investing
activities
|
— | 33,585 | ||||||
Net
cash provided by (used in) investing activities
|
3,806 | (56,601 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from debt borrowings
|
— | 70,000 | ||||||
Financing
costs
|
— | (2,549 | ) | |||||
Principal
payments on debt
|
(6,406 | ) | (37,353 | ) | ||||
Proceeds
from the exercise of options and warrants
|
— | 5 | ||||||
Cash
used in discontinued operations for financing activities
|
— | (1,369 | ) | |||||
Net
cash (used in) provided by financing activities
|
(6,406 | ) | 28,734 | |||||
Net
decrease in cash and cash equivalents
|
(483 | ) | (38,276 | ) | ||||
Cash
and cash equivalents, at beginning of year
|
8,293 | 46,569 | ||||||
Cash
and cash equivalents, at end of year
|
$ | 7,810 | $ | 8,293 |
(1)
|
BUSINESS
AND BASIS OF PRESENTATION
|
December 31,
2009
|
December 31,
2008
|
|||||||
Cash
|
$
|
3,874
|
$
|
6,632
|
||||
Money
market accounts
|
3,936
|
1,661
|
||||||
Total
|
$
|
7,810
|
$
|
8,293
|
December 31,
2009
|
December 31,
2008
|
|||||||
Beginning
balance
|
$
|
1,367
|
$
|
1,401
|
||||
Additions
|
698
|
1,816
|
||||||
Write-offs
|
(593)
|
(1,850)
|
||||||
Total
|
$
|
1,472
|
$
|
1,367
|
December 31,
2009
|
December 31,
2008
|
|||||||
Finished
goods
|
$
|
590
|
$
|
728
|
||||
Raw
materials
|
533
|
504
|
||||||
Total
|
$
|
1,123
|
$
|
1,232
|
•
|
Level 1 —
inputs to the valuation methodology based on quoted prices (unadjusted)
for identical assets or liabilities in active
markets.
|
•
|
Level 2 —
inputs to the valuation methodology based on quoted prices for similar
assets and liabilities in active markets for substantially the full term
of the financial instrument; quoted prices for identical or similar
instruments in markets that are not active for substantially the full term
of the financial instrument; and model-derived valuations whose inputs or
significant value drivers are
observable.
|
•
|
Level 3 —
inputs to the valuation methodology based on unobservable prices or
valuation techniques that are significant to the fair value
measurement.
|