##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
 For
the transition period fromto
 Commission file number
 IdleAire Technologies Corporation
 
 (Exact name of registrant as specified in its charter)
 Delaware
    
    62-1829384(State or other jurisdiction 
of incorporation or organization)
    
    (IRS Employer Identification No.)
  
 (Address of principal executive offices)
  
 (Registrants telephone number, including area code)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of exchange on which registeredNone
    
    Not Applicable
 Securities registered pursuant to Section 12(g) of the Act:
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. Yes o No þ
 Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes o No þ
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes þ No o
 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)
is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See definition of an accelerated filer and large accelerated filer in Rule 12b-2 of the
Exchange Act. (Check one):
 Large accelerated filer: o
    
    Accelerated filer: o
    
    Non-accelerated filer: o
    
    Smaller reporting company: þ(Do not check if a smaller reporting company)
 Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes o No þ
 
 Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12,13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes o No o
  Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable
date:




---



##### 



Table of Contents
 PART IItem 1  Business
    
    
    2Item 1A  Risk Factors
    
    
    13Item 1B  Unresolved Staff Comments
    
    
    26Item 2  Property
    
    
    26Item 3  Legal Proceedings
    
    
    27Item 4  Submission of Matters to a Vote of Security Holders
    
    
    28PART IIItem 5  Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
    
    
    29Item 7  Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    31Item 8  Financial Statements and Supplementary Data
    
    
    50Item 9  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    51Item 9A(T)  Controls and Procedures
    
    
    51Item 9B  Other Information
    
    
    52PART IIIItem 10  Directors, Executive Officers and Corporate Governance
    
    
    52Item 11  Executive Compensation
    
    
    52Item 12  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    52Item 13  Certain Relationships and Related Transactions, and Director Independence
    
    
    52Item 14  Principal Accounting Fees and Services
    
    
    53PART IVItem 15  Exhibits, Financial Statement Schedules
    
    
    53Signatures
    
    
    54




---



##### 



Forward-Looking Statements or Information
   ®
  1




---



##### 



PART I
 
 Item 1. Business
 ®
   2




---



##### 



Our service offering
 ®
  3




---



##### 



Basic services
  
    
    In-cab heating, ventilation and air conditioning, or HVACOur in-cab HVAC service
allows the driver to thermostatically control the in-cab temperature and breathe clean
filtered air without the need to idle the truck engine, waste diesel fuel and pollute the
environment with diesel air emissions.
    
    Electric powerDrivers can power small appliances through our ATE system and also use
our ATE system to heat the engine block during periods of cold weather.
    
    Satellite televisionWe offer 22 channels of satellite television, two local network
channels and two IdleAire® channels with our basic service.
    
    Unlimited local telephone calls.
    
    Internet accessDrivers can access the Internet using the touch screen interface or an
optional keyboard via the USB connectors.
    
    24/7 customer supportOur customer support call center may be accessed through our ATE
service module or by telephone, and provides service and support to drivers 24 hours a day,
seven days a week.
   Premium services
  
    
    Expanded satellite television channel selectionDrivers can access 44 additional
satellite television channels, including three HBO channels, two Encore channels and five
ESPN channels.
    
    Movies-on-demandDrivers can select from a menu of over 70 current and favorite movies
of a wide variety.
 4




---



##### 




    
    High-speed Ethernet and wireless Internet accessDrivers can access the Internet using
their own computer by connecting it to our ATE system with an Ethernet cable or by using a
Wi-Fi connection.
    
    Unlimited long distance telephone serviceDrivers can purchase unlimited long distance
telephone service over a 24-hour period to stay connected to family and friends who are
often several hundred miles away.
    
    Computer-based driver skill and safety trainingSince June 2007, we have provided
remote delivery of computer-based driver skill and safety training courses through our ATE
system. Without remote delivery services such as ours, drivers often need to travel to a
fleet training facility to fulfill their ongoing training requirements, which is costly to
both fleet owners and drivers.
   Our ATE network
  No. of
    
    No. of ATESites
    
    parking spacesTravelCenters of America.
    
    
    108
    
    
    
    7,279Pilot Travel Centers
    
    
    10
    
    
    
    585Loves
    
    
    2
    
    
    
    107Flying J
    
    
    1
    
    
    
    42Sapp Bros
    
    
    1
    
    
    
    51Independents
    
    
    6
    
    
    
    359Total
    
    
    128
    
    
    
    8,423
  5




---



##### 



Our ATE network expansion
  
  6




---



##### 



Intellectual property
   ® ®
 Research and development
  7




---



##### 



Suppliers and content providers
  Eaton Corporation.
 Jaco Electronics, Inc.
 Cisco Systems, Inc.
  DirecTV, Inc.
 LodgeNet Entertainment Corporation.
 8




---



##### 



Regulatory environment
 HOS rule
 
 
    
    Drivers must rest 10 or more consecutive hours after driving 11 hours in any 14-hour
on-duty window;
    
    The 14-hour on-duty window may not be extended with off-duty time for meal and fuel
stops;
    
    There is a prohibition on driving after being on duty 60 hours in seven consecutive
days, or 70 hours in eight consecutive days, but drivers can restart the seven/eight day
period anytime a driver has 34 consecutive hours off duty; and
    
    Commercial motor vehicle drivers using the sleeper berth provision must take at least
eight consecutive hours in the sleeper berth, plus two consecutive hours either in the
sleeper berth, off duty, or any combination of the two.
  9




---



##### 



The Clean Air Act
  State and municipal anti-idling regulations
  Competition
  APUs.
 10




---



##### 



Battery systems.
 Hybrid APU-battery systems.
 Engine optimizers.
 Fuel Fired Heaters.
 Truck stop electrification.
  11




---



##### 



Motel rooms.
 Team drivers.
 Stop idling.
 Employees
  12




---



##### 



Item 1A. Risk Factors
 If any of the following risks, as well as other risks and uncertainties that are not yet identified
or that we currently think are immaterial, actually occur, our business, financial condition and
results of operations could be materially and adversely affected.
 Risks relating to our business and financial condition
 Our independent registered public accounting firm has included a going concern explanatory
paragraph in its opinion raising substantial doubt about our financial viability.
  We have liquidity problems and may need to raise capital on terms unfavorable to our stockholders,
or we may not be able to raise capital at all.
  13




---



##### 



We have a limited operating history and neither our historical results of operations, nor our
business and financial expectations, may be an accurate indicator of our future operating results
or business prospects.
  We have a history of net losses and an accumulated deficit of $246.4 million as of December 31,
2007. We cannot guarantee if, when or to what extent we will become profitable, or that we can
maintain profitability if it is achieved.
  
    
    costs associated with our ATE network expansion;
    
    our ability to obtain approval from travel center operators to install and continue to
operate our ATE network at their locations;
    
    continued success in securing additional parking spaces for installation of our ATE
systems;
    
    market acceptance of our ATE technology;
    
    adoption of our technology by fleet owners and usage by truck drivers;
    
    fluctuations in diesel prices;
    
    cyclicality of the trucking industry;
    
    changes in the regulatory environment; and
    
    changes in general economic conditions.
 14




---



##### 



Our substantial level of indebtedness could materially adversely affect our financial condition and
prevent us from fulfilling our obligations under the notes and our other indebtedness.
   
    
    make it more difficult for us to satisfy our obligations under our indebtedness which
could lead to a default by us;
    
    result in an event of default if we fail to satisfy our obligations under the senior
secured discount notes or our other indebtedness or fail to comply with the financial and
other restrictive covenants contained in the indenture or any future senior secured credit
facility, which event of default could result in all of our indebtedness becoming
immediately due and payable and could permit our lenders to foreclose on substantially all
of our assets used to secure such indebtedness;
    
    require us to dedicate a substantial portion of our cash flow from our business
operations to pay our indebtedness, thereby reducing the available cash to fund working
capital, capital expenditures, general operational requirements and other purposes;
 15




---



##### 




    
    limit our ability to obtain additional financing for working capital, capital
expenditures and other activities;
    
    limit our flexibility in planning for, or reacting to, changes in our business and the
industry in which we operate;
    
    increase our vulnerability to general adverse economic and industry conditions or a
downturn in the trucking industry; and
    
    place us at a competitive disadvantage compared to competitors that are not as highly
leveraged.
  The indenture governing our senior secured discount notes imposes, and any future revolving credit
facility may impose, significant operating and financial restrictions on us that may prevent us
from pursuing certain business opportunities and restrict our ability to operate our business.
  
    
    incur additional indebtedness or issue certain preferred stock;
    
    pay dividends, redeem subordinated debt or make other restricted payments;
    
    issue capital stock of any subsidiary we may establish;
    
    change our line of business;
    
    transfer or sell assets;
    
    make certain investments or acquisitions;
    
    grant liens on our assets;
    
    enter into certain transactions with affiliates; and
    
    merge, consolidate or transfer substantially all of our assets.
 16




---



##### 



Our success is dependent on the market acceptance of our ATE systems.
  
    
    our failure to obtain the necessary approval for individual site installation from
travel center operators;
    
    our failure to convince truck drivers of the benefits of our ATE system;
    
    fleet owners failure to encourage drivers to use our ATE system;
    
    truck drivers unwillingness to change their idling habits; and
    
    the introduction of competing products or services in the idle-reduction market.
 Demand for our services may fluctuate as the price of diesel changes.
  17




---



##### 



Assuming that we can secure substantial significant funding for
operations as well as funding to finance the ATE network expansion, we
may have difficulty managing our growth and expanding our operations successfully.
  Our business is subject to seasonal volatility and our operating results may fluctuate on a
quarterly and annual basis.
  18




---



##### 



We depend upon our key personnel to run our business and manage our business growth. The loss of
any one of them could have a material adverse effect on our business, operating results and
financial condition.
  Our expansion plan may not succeed as quickly as anticipated, if at all.
  We rely on third-party suppliers for the manufacture and assembly of our ATE system, and may not be
able to meet our expansion plan schedule if our suppliers cannot meet our quantity and quality
requirements.
  19




---



##### 



We rely on electrical power utilities and communications companies, including Internet and
bandwidth providers, data centers, satellite communications and mobile network providers, to
provide their services to customers through our ATE systems; and their failure to provide prompt
and reliable service could materially adversely affect our business, operating results and
financial condition.
    We may have difficulty scaling and adapting our existing architecture to accommodate increased
traffic and technology advances or changing business requirements, which could lead to the loss of
customers and cause us to incur expenses to make architectural and design changes.
  20




---



##### 



We could experience system failures and capacity constraints, which could materially and adversely
affect our business and operating results.
 force
majeure
 
    
    cause customers to seek damages from us for losses incurred;
    
    require us to incur expenses, either earlier or in amounts greater than originally
planned, to replace existing equipment, expand facilities or add redundant facilities;
    
    damage our reputation of reliability;
    
    cause customers and others to cancel contracts with us; and
    
    make it more difficult for us to attract new customers.
  Unauthorized disclosure of data, whether through breach of our computer systems or otherwise, could
expose us to protracted and costly litigation or cause us to lose customers.
  21




---



##### 



If we fail to adequately protect or enforce our intellectual property rights, the value of our
intellectual property rights would diminish.
     Third party claims of intellectual property infringement could require us to spend significant time
and money in litigation.
  22




---



##### 



Products developed by our competitors could reduce the demand for our ATE services.
  We are unable to predict the future availability of governmental grants.
  23




---



##### 



The impact of environmental laws and regulations and their enforcement could adversely affect us.
   Risks related to our market
 We cannot accurately predict the size of the idle-reduction market, and it may be smaller or slower
to develop than we expect.
   The trucking industry is highly fragmented and regulated.
  24




---



##### 



We are directly affected by the cyclicality of the trucking industry and general economic
conditions.
  Section 404 of the Sarbanes-Oxley Act of 2002
(Section 404) required the Company to document
and test its internal controls over financial reporting beginning with the fiscal year ended
December 31, 2007, and beginning with the fiscal year ending December 31, 2009, Section 404 will
require an independent registered public accounting firm to independently opine on the
effectiveness of these internal controls over financial reporting. Any delays or difficulty in
satisfying these requirements could cause our shareholders to lose confidence in us and adversely
affect our ability to raise additional financing through the sale of equity or debt securities.
  25




---



##### 



Item 1B. Unresolved Staff Comments
  
 Item 2. Property
      26




---



##### 



Item 3. Legal proceedings
   27




---



##### 



Item 4. Submission of Matters to a Vote of Security Holders
  28




---



##### 



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
         29




---



##### 



EQUITY COMPENSATION PLAN INFORMATION
  Number of
    
    Weightedsecurities to be
    
    averageissued upon
    
    exercise price
    
    Number ofexercise of
    
    of outstanding
    
    securitiesoutstanding
    
    options,
    
    remainingoptions, warrants
    
    warrants and
    
    available forPlan category
    
    and rights
    
    rights
    
    future issuance(a)
    
    (b)
    
    ( c)Equity compensation plans
approved by security holders
    
    
    4,953,414
    
    
    $
    2.00
    
    
    
    1,923,186Equity compensation plans not
approved by security holders
    
    
    0
    
    
    
    n/a
    
    
    
    0Total
    
    
    4,953,414
    
    
    $
    2.00
    
    
    
    1,923,186
 Incentive stock plan
  Option grants.
 30




---



##### 



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation
 The following discussion should be read in connection with our financial statements, and notes
to those financial statements, included elsewhere in this Form 10-K .
 Overview
 ®
   31




---



##### 



32




---



##### 



ATE network expansion
  
   33




---



##### 



Key performance indicators
  Year Ended December 31,2007
    
    2006System Utilization Rates:Comparable sites
    
    
    25.1
    %
    
    
    21.6
    %Overall
    
    
    22.4
    %
    
    
    19.5
    %Fleet usage rate
    
    
    40.4
    %
    
    
    36.4
    %
 System utilization rates.
 Fleet usage rate.
 34




---



##### 



Price of diesel fuel
    Year Ended December 31,2007
    
    
    2006Average retail rate per hour of basic service
    
    $
    2.18
    
    
    $
    2.12National average price of diesel per gallon(1)
    
    
    2.88
    
    
    
    2.71
 
 (1)
    
    Source: Energy Information Administration  Trucking industry and general economic conditions
  35




---



##### 



Results of operations
  Revenues
 Basic and premium services, net.
 Ancillary products.
 Grant revenues.
 Other revenues.
 Expenses
 Direct site operating costs.
 Cost of ancillary product sales.
 36




---



##### 



Depreciation and amortization expense.
 Selling, general and administrative expenses.
 Asset disposals and impairments.
 
    
    Impairment of long-lived assets.When indicators of impairment are present, we evaluate
the carrying value of constructed revenue-generating assets in relation to the operating
performance and future undiscounted cash flows of the underlying assets. Based on these
evaluations, asset impairment is determined to exist if estimated future cash flows,
undiscounted and without interest charges, are less than the carrying amount of the
respective asset.
    
    Loss on settlement of asset retirement obligation.Our installation and lease agreements
with travel centers typically require us to return the leased property to its original
condition upon termination of the lease. We accrue this obligation over the life of the
lease and record related accretion to cost of sales. When a site is closed and restored to
its original condition, we record the differences in the accrued obligation and the actual
cost to loss on settlement of asset retirement obligation.
    
    Loss on disposal of fixed assets.From time to time, we identify damaged or unusable
equipment, and write off such fixed assets. A modification to our service platform
equipment may also render certain revenue-generating equipment obsolete, resulting in a
write-off of fixed assets.
 Interest expense, net.
 37




---



##### 



Year Ended December 31,(in thousands)
    
    2007
    
    
    2006Net revenues:Basic and premium services, net
    
    $
    31,773
    
    
    $
    10,911Ancillary product sales
    
    
    1,868
    
    
    
    1,153Net product revenues
    
    
    33,641
    
    
    
    12,064Grant revenues
    
    
    3,239
    
    
    
    1,513Other revenues
    
    
    345
    
    
    
    400Total net revenues
    
    
    37,225
    
    
    
    13,977Operating expenses:Direct site operating costs (excluding depreciation and
amortization)
    
    
    50,795
    
    
    
    23,363Cost of ancillary product sales
    
    
    1,154
    
    
    
    835Depreciation and amortization
    
    
    22,583
    
    
    
    9,467Selling, general and administrative expenses
    
    
    20,974
    
    
    
    16,091Asset disposals and impairments
    
    
    1,640
    
    
    
    4,803Total operating expenses
    
    
    97,146
    
    
    
    54,559Loss from operations
    
    
    (59,921
    )
    
    
    (40,582
    )Interest expense, net
    
    
    (33,521
    )
    
    
    (19,703
    )Net loss
    
    $
    (93,442
    )
    
    $
    (60,285
    )
  Year Ended December 31,(as a percentage of net product revenues)
    
    2007
    
    
    2006Net revenues:Basic and premium services, net
    
    
    94.4
    %
    
    
    90.4
    %Ancillary product sales
    
    
    5.6
    
    
    
    9.6Net product revenues
    
    
    100.0
    
    
    
    100.0Operating expenses:Direct site operating costs (excluding depreciation
and amortization)
    
    
    151.0
    
    
    
    193.7Cost of ancillary product sales
    
    
    3.4
    
    
    
    6.9Depreciation and amortization
    
    
    67.1
    
    
    
    78.5Selling, general and administrative expenses
    
    
    62.3
    
    
    
    133.4Asset disposals and impairments
    
    
    4.9
    
    
    
    39.8Total operating expenses
    
    
    288.7
    %
    
    
    452.3
    %
 38




---



##### 



Year ended December 31, 2007 compared to year ended December 31, 2006
 Total net revenues.
    Direct site operating costs.
 39




---



##### 



Selling, general and administrative expenses.
  
    
    Corporate headcount increased 13% from 220 employees at December 31, 2006 to 249
employees at December 31, 2007. Total salaries and benefits were $14.5 million and $10.2
million for 2007 and 2006, respectively, or $10.3 million and $7.3 million, respectively,
presented net of research and development, marketing and sales personnel costs.
    
    Research and development costs increased 44% from $2.3 million for 2006 to $3.3 million
for 2007, which includes salaries and benefits of $1.9 million for 2006 and $2.7 million
for 2007, as the number of research and development personnel increased from 29 at December
31, 2006 to 38 at December 31, 2007.
    
    Marketing and sales expenses increased 81% from $1.7 million for 2006 to $3.2 million
for 2007, which includes salaries and benefits of $0.9 million and $1.5 million,
respectively. Between 2006 and 2007, staffing grew by three persons and salaries and
benefits increased $0.6 million. Marketing expense increased by $0.5 million from 2006 to
2007 primarily due to increased trade show attendance and an increase in marketing
consulting fees.
    
    Director fees increased $0.2 million for 2007 compared to 2006 principally due to stock
compensation costs.
 Asset disposals and impairments.
 40




---



##### 



Interest expense, net.
 Liquidity and capital resources
  Senior secured discount notes
    41




---



##### 




    
    incur additional indebtedness or issue certain preferred stock;
    
    pay dividends, redeem subordinated debt or make other restricted payments;
    
    issue capital stock of any subsidiary we may establish;
    
    change our line of business;
    
    transfer or sell assets;
    
    make certain investments or acquisitions;
    
    grant liens on our assets;
    
    enter into certain transactions with affiliates; and
    
    merge, consolidate or transfer substantially all of our assets.
    42




---



##### 



Cash flows
  Year Ended December 31,(in thousands)
    
    2007
    
    2006Cash used in operating activities
    
    $
    (13,093
    )
    
    $
    (34,093
    )Cash provided by investing activities
    
    
    6,414
    
    
    
    45,243Cash used in financing activities
    
    
    (1,460
    )
    
    
    (444
    )Net increase (decrease) in cash
    
    $
    (8,139
    )
    
    $
    10,706
 Operating activities.
 
    
    Customers frequently purchase gold card memberships and assorted prepaid plans for
future use. As of December 31, 2007 and December 31, 2006, we have deferred recognition of
related trade revenues of approximately $2.0 million, and $1.2 million, respectively, to
future periods.
    
    Through December 31, 2007, we have been awarded approximately $55.6 million in
cumulative-to-date grant assistance from governmental agencies. Of this amount, grants for
$19.5 million have either expired or terminated. Grants may expire or terminate for
various reasons, including layout issues with travel center operators, issues related to
local permits, or a determination that the site no longer meets our site selection
criteria. We record grant awards and the related deferred revenue at the time an invoice
is issued to the respective governmental agency. The process of recognizing revenue over
the relevant amortization period begins at the time the grant monies are received.
However, grant revenue is typically recognized over the life of the grant, which in most
cases, corresponds to the capital expenditure outlay involved in the build-out. From
inception through December 31, 2007, we have collected $25.1 million of grants and
deferred recognition of $16.9 million of related revenue to future periods. Of the
remaining $10.5 million in contractually available grant monies, we expect such amounts to
become collectible as additional sites become operational. However, there can be no
assurance that all amounts will be collected.
  43




---



##### 



Investing activities.
  Financing activities.
 Off-balance sheet arrangements
  Recently issued accounting pronouncements
  Critical accounting policies, judgments and estimates
   44




---



##### 



Revenue Recognition.
  Impairment of long-lived assets. Accounting for the Disposal or Impairment of Long-Lived Assets
   45




---



##### 



Asset retirement obligations. Accounting for Asset
Retirement Obligations Accounting for Conditional Asset Retirement
Obligationsan interpretation of FASB Statement No. 143.
  Share-based compensation. Share-Based Payment,
   Share-Based Payment
 46




---



##### 



47




---



##### 



48




---



##### 



WeightedWeighted
    
    average
    
    Weightedaverage
    
    calculated
    
    averageexercise
    
    grant date
    
    intrinsicShares
    
    price
    
    fair value
    
    valueQuarter endedMarch 31, 2006
    
    
    31,575
    
    
    $
    0.85
    
    
    $
    0.44
    
    
    $
    June 30, 2006
    
    
    824,000
    
    
    
    0.82
    
    
    
    0.44
    
    
    
    September 30, 2006
    
    
    16,500
    
    
    
    0.82
    
    
    
    0.45
    
    
    
    December 31, 2006
    
    
    36,000
    
    
    
    0.82
    
    
    
    1.69
    
    
    
    1.39March 30, 2007
    
    
    27,500
    
    
    
    0.82
    
    
    
    1.63
    
    
    
    1.39June 30, 2007
    
    
    208,579
    
    
    
    2.19
    
    
    
    0.90
    
    
    
    0.39September 30, 2007
    
    
    895,000
    
    
    
    2.21
    
    
    
    1.05
    
    
    
    0.37December 31, 2007
    
    
    500
    
    
    
    2.58
    
    
    
    1.10
    
    
    
    2,039,654
    
    
    $
    1.57
    
    
    $
    0.79
  Litigation and other contingencies.
 49




---



##### 



Accounting for income taxes.
 Accounting for Uncertainties in Income Taxes, an interpretation of SFAS No.
109, Accounting for Income Taxes
    
 Item 8. Financial Statements and Supplementary Data
  50




---



##### 



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A(T). Controls and Procedures
 Managements Annual Report on Internal Control over Financial Reporting
     Changes In Internal Control over Financial Reporting
  51




---



##### 



Item 9B. Other Information
  
 PART III
 
 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
  52




---



##### 



Item 14. Principal Accounting Fees and Services
  
 Item 15. Exhibits, Financial Statement Schedules
  1.
    
    The financial statement schedules and related data listed in the
accompanying Index beginning on page F-1 are filed as a part of this
report.2.
    
    The exhibits listed in the accompanying Index beginning on page E-1
are filed as a part of this report.
   53




---



##### 



SIGNATURES
  IdleAire Technologies CorporationDate: April 15, 2008
    By:
    /s/ Michael C. CrabtreeMichael C. CrabtreePresident and Chief Executive Officer
(Principal Executive Officer)  Signatures
    
    Title
    
    Date/s/  Michael C. Crabtree

Michael C. Crabtree
    
    President and Chief Executive Officer and Director
(Principal Executive Officer)
    
    April 15, 2008/s/  Paul W. Boyd

Paul W. Boyd
    
    Chief Financial Officer and Treasurer
(Principal Financial Officer)
    
    April 15, 2008/s/  David Everhart

David Everhart
    
    Director
    
    April 15, 2008/s/  Lana Batts

Lana Batts
    
    Director
    
    April 15, 2008/s/  Dan H. Felton III

Dan H. Felton III
    
    Director
    
    April 15, 2008/s/  Steve Kirkham

Steve Kirkham
    
    Director
    
    April 15, 2008/s/  Lewis Frazer III

Lewis Frazer III
    
    Director
    
    April 15, 2008/s/  Thomas (Mack) McLarty

Thomas (Mack) McLarty
Director
    
    Director
    
    April 15, 2008
 54




---



##### 



IdleAire Technologies Corporation
 
 EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2007
 Exhibit No.
    
    Description3.1.1
    
    Amended and Restated Certificate of Incorporation of the
Company, dated May 7, 2002 (filed with the registration
statement on Form 10-SB on May 2, 2006)3.1.2
    
    Certificate of Designation of Voting Powers, Designations,
Preferences, Limitations, Restrictions and Relative Rights of
Series A Convertible Preferred Stock of IdleAire Technologies
Corporation, dated December 30, 2002 (filed with the
registration statement on Form 10-SB on May 2, 2006)3.1.3
    
    First Certificate of Amendment to Amended and Restated
Certificate of Incorporation of IdleAire Technologies
Corporation, dated November 11, 2003 (filed with the
registration statement on Form 10-SB on May 2, 2006)3.1.4
    
    First Amendment to Certificate of Designation of Voting
Powers, Designations, Preferences, Limitations, Restrictions
and Relative Rights of Series A Convertible Preferred Stock of
IdleAire Technologies Corporation, dated November 11, 2003
(filed with the registration statement on Form 10-SB on May 2,
2006)3.1.5
    
    Certificate of Designation of Voting Powers, Designations,
Preferences, Limitations, Restrictions and Relative Rights of
Series B Convertible Preferred Stock of IdleAire Technologies
Corporation, dated November 11, 2003 (filed with the
registration statement on Form 10-SB on May 2, 2006)3.1.6
    
    First Amendment to Certificate of Designation of Voting
Powers, Designations, Preferences, Limitations, Restrictions
and Relative Rights of Series B Convertible Preferred Stock of
IdleAire Technologies Corporation, dated October 29, 2004
(filed with the registration statement on Form 10-SB on May 2,
2006)3.1.7
    
    Certificate of Designation of Voting Powers, Designations,
Preferences, Limitations, Restrictions and Relative Rights of
Series C Convertible Preferred Stock of IdleAire Technologies
Corporation, dated November 3, 2004 (filed with the
registration statement on Form 10-SB on May 2, 2006)3.1.8
    
    Second Certificate of Amendment to Amended and Restated
Certificate of Incorporation of IdleAire Technologies
Corporation, dated December 21, 2005 (filed with the
registration statement on Form 10-SB on May 2, 2006)3.1.9
    
    Third Certificate of Amendment to Amended and Restated
Certificate of Incorporation of IdleAire Technologies
Corporation, dated January 20, 2006 (filed with the
registration statement on Form 10-SB on May 2, 2006)3.2
    
    Bylaws of IdleAire Technologies Corporation (filed with the
registration statement on Form 10-SB on May 2, 2006)4.1.1
    
    Form of 13% Senior Secured Discount Note (filed with the
registration statement on Form 10-SB on May 2, 2006)4.1.2
    
    Warrant Agreement, dated as of December 30, 2005, between
IdleAire Technologies Corporation and Wells Fargo Bank,
National Association, as Warrant Agent (filed with the
registration statement on Form 10-SB on May 2, 2006)4.1.2a
    
    Amendment to Warrant Agreement, dated as of December 27, 2006,
between the Company and Wells Fargo Bank, National
Association, as Warrant Agent (filed with Form 10K-SB on
April 2, 2007)
 E-1




---



##### 



Exhibit No.
    
    Description4.1.2b
    
    Second Amendment to Warrant Agreement, dated as of September 17,
2007, between the Company and Wells Fargo Bank, National
Association, as Warrant Agent (filed with Form 8-K on
September 17, 2007)4.1.3
    
    Warrant Agreement, dated December 30, 2005, with Jefferies &
Company, Inc. (filed with the registration statement on Form 10-SB
on May 2, 2006)4.1.4
    
    Warrant Agreement, dated May 23, 2001, to Purchase Common Stock
with Lana Batts (filed with the registration statement on
Form 10-SB on May 2, 2006)4.1.4a
    
    First Amendment to Warrant Agreement to Purchase Common Stock with
Lana Batts (filed with the registration statement on Form 10-SB on
May 2, 2006)4.1.4b
    
    Second Amendment to Warrant Agreement to Purchase Common Stock,
dated May 23, 2004, with Lana Batts (filed with the registration
statement on Form 10-SB on May 2, 2006)4.1.4c
    
    Third Amendment to Warrant Agreement to Purchase Common Stock,
dated May 23, 2005, with Lana Batts (filed with the registration
statement on Form S-4 on 2006)4.1.4d
    
    Fourth Amendment to Warrant Agreement to Purchase Common Stock,
dated May 13, 2006, with Lana Batts (filed with the registration
statement on Form S-4 on July 3, 2007)4.1.5
    
    Warrant Agreement to Purchase Common Stock, dated January 18,
2002, with CIBC World Markets Corp. (filed with the registration
statement on Form 10-SB on May 2, 2006)4.1.6
    
    Warrant Agreement to Purchase Common Stock, dated April 18, 2005,
with Ralph Head (filed with the registration statement on
Form 10-SB on May 2, 2006)4.1.7
    
    Form of Series A Convertible Preferred Stock Securities Purchase
Agreement (filed with the registration statement on Form 10-SB on
May 2, 2006)4.1.8
    
    Form of Series B Convertible Preferred Stock Securities Purchase
Agreement (filed with the registration statement on Form 10-SB on
May 2, 2006)4.1.9
    
    Form of Series C Convertible Preferred Stock Securities Purchase
Agreement (filed with the registration statement on Form 10-SB on
May 2, 2006)10.1
    
    Securities Purchase Agreement, dated May 12, 2005, between the
Company, CTV Holdings, Inc. and PB Constructors, Inc. (filed with
the registration statement on Form 10-SB on May 2, 2006)10.2
    
    Purchase Agreement, dated December 28, 2005, between the Company
and Jefferies & Company, Inc. (filed with the registration
statement on Form 10-SB on May 2, 2006)10.3
    
    Indenture, dated as of December 30, 2005, among the Company and
Wells Fargo Bank, National Association, as trustee and collateral
agent (filed with the registration statement on Form 10-SB on
May 2, 2006)10.3.1
    
    First Amendment to Indenture, dated as of September 17, 2007,
among the Company and Wells Fargo Bank, National Association, as
trustee and collateral agent (filed with Form 8-K on September 17,
2007)10.4
    
    Registration Rights Agreement, dated December 30, 2005, between
the Company and Jefferies & Company, Inc. (filed with the
registration statement on Form 10-SB on May 2, 2006)10.5
    
    Subordination Agreement, dated December 30, 2005, among the
Company, the named noteholders, Wells Fargo Bank, National
Association, as the collateral agent and Dan H. Felton, III, as
administrative agent (filed with the registration statement on
Form 10-SB on May 2, 2006)
 E-2




---



##### 



Exhibit No.
    
    Description10.6
    
    Disbursement Agreement, dated as of December 30, 2005, among the
Company, Wells Fargo Bank, National Association, as disbursement
agent and the trustee (filed with the registration statement on
Form 10-SB on May 2, 2006)10.6.1
    
    Amendment to Disbursement Agreement, dated January 31, 2006 (filed
with the registration statement on Form 10-SB on May 2, 2006)10.7
    
    Security Agreement, dated as of December 30, 2005 between the
Company and the Collateral Agent (filed with the registration
statement on Form 10-SB on May 2, 2006)10.8
    
    Amended and Restated 2000 Stock Option Plan (filed with
registration statement on form S-1 on September 18, 2007)10.9.1
    
    Senior Management Agreement, dated as of September 12, 2007
between the Company and Michael C. Crabtree (filed with
registration statement on form S-1 on September 18, 2007)10.9.2
    
    Senior Management Agreement, dated as of June 17, 2002, between
the Company and David Everhart (filed with the registration
statement on Form 10-SB on May 2, 2006)10.9.3
    
    Senior Management Agreement, dated as of September 12, 2007,
between the Company and J. Tom Badgett (filed with registration
statement on form S-1 on September 18, 2007)10.9.4
    
    Senior Management Agreement, dated as of September 12, 2007,
between the Company and James H. Price (filed with registration
statement on form S-1 on September 18, 2007)10.9.5
    
    Senior Management Agreement, dated as of September 12, 2007,
between the Company and Paul W. Boyd (filed with registration
statement on form S-1 on September 18, 2007)10.9.6
    
    Senior Management Agreement, dated as of September 12, 2007,
between the Company Lynn Youngs (filed with registration
statement on form S-1 on September 18, 2007)10.10.1
    
    License and Installation Agreement, dated as of December 1, 2003,
by and between Pilot Travel Centers LLC and the Company CTR(filed
with registration statement on Form 10-SB on July 31, 2006)10.10.2
    
    Lease and Installation Agreement, dated as of April 7, 2004, by
and between Petro Shopping Centers, L.P. and the Company CTR
(filed with registration statement on Form 10-SB on July 31, 2006)10.10.3
    
    Lease and Installation Agreement, dated as of August 20, 2004, by
and between TA Operating Corporation and the Company CTR(filed
with registration statement on Form 10-SB on July 31, 2006)31.1
    
    Certification of Chief Executive Officer pursuant to section 302
of the Sarbanes Oxley Act of 2002. (filed herewith)31.2
    
    Certification of Chief Financial Officer pursuant to section 302
of the Sarbanes Oxley Act of 2002. (filed herewith)32.1
    
    Certification of Chief Executive Officer pursuant to section 906
of the Sarbanes Oxley Act of 2002. (filed herewith)32.2
    
    Certification of Chief Financial Officer pursuant to section 906
of the Sarbanes Oxley Act of 2002. (filed herewith)Legend:CTR
    
    Portions of this exhibit have been omitted pursuant to a request
for confidential treatment.
 E-3




---



##### 



PART II
 IdleAire Technologies Corporation
 Item 8. Financial Statements
 Index to financial statements
 Audited annual financial statementsReport of independent registered public accounting firm
    
    
    F-2Balance sheets as of December 31, 2007 and 2006
    
    
    F-3Statements of operations for the years ended December 31, 2007 and 2006
    
    
    F-4Statements of stockholders (deficit) equity for the years ended
December 31, 2007 and 2006
    
    
    F-5Statements of cash flows for the years ended December 31, 2007 and 2006
    
    
    F-6Notes to financial statements
    
    
    F-7
 F-1




---



##### 



Report of independent registered public accounting firm
 
       
 F-2




---



##### 



December 31,2007
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    8,493
    
    
    $
    16,632Short-term investments
    
    
    
    
    
    
    15,000Accounts receivable
    
    
    1,058
    
    
    
    5,396Accounts receivable  related parties
    
    
    
    
    
    
    192Inventories
    
    
    741
    
    
    
    951Prepaid expenses and other current assets
    
    
    2,358
    
    
    
    1,915Deposits with related party vendor
    
    
    2,136
    
    
    
    Total current assets
    
    
    14,786
    
    
    
    40,086Restricted cash and investments
    
    
    1,219
    
    
    
    39,222Deposits with related party vendor
    
    
    8,851
    
    
    
    14,104Deposits with other vendors
    
    
    2,318
    
    
    
    1,871Property and equipment, net
    
    
    153,522
    
    
    
    137,507Deferred offering costs
    
    
    1,189
    
    
    
    Deferred financing costs, net
    
    
    27,683
    
    
    
    29,453Other assets
    
    
    1,311
    
    
    
    110Total assets
    
    $
    210,879
    
    
    $
    262,353Liabilities and stockholders deficitCurrent liabilities:Accounts payable
    
    $
    1,061
    
    
    $
    4,772Accounts payable to related party vendors
    
    
    1,665
    
    
    
    2,735Accrued expenses
    
    
    5,197
    
    
    
    4,388Deferred trade revenue
    
    
    2,045
    
    
    
    1,221Deferred grant revenue
    
    
    3,945
    
    
    
    1,161Total current liabilities
    
    
    13,913
    
    
    
    14,277Deferred grant revenue
    
    
    12,999
    
    
    
    10,812Asset retirement obligations
    
    
    2,646
    
    
    
    1,767Capital lease obligations
    
    
    1,241
    
    
    
    1,198Secured convertible notes
    
    
    100
    
    
    
    100Senior secured discount notes
    
    
    272,717
    
    
    
    234,511Total liabilities
    
    
    303,616
    
    
    
    262,665Stockholders deficit:Series A convertible preferred stock, $0.001 par value; 22,000,000
shares authorized, 17,171,448 shares issued and outstanding
    
    
    30,350
    
    
    
    30,350Series B convertible preferred stock, $0.001 par value; 13,000,000
shares authorized, 12,566,774 shares issued and outstanding
    
    
    48,674
    
    
    
    49,056Series C convertible preferred stock, $0.001 par value; 11,000,000
shares authorized, 4,473,032 shares issued and outstanding
    
    
    22,155
    
    
    
    22,155Common stock, $0.001 par value; 200,000,000 shares authorized,
49,481,964 and 48,646,610 shares issued at December 31,
2007 and December 31, 2006, respectively
    
    
    49
    
    
    
    49Stockholder subscription receivable
    
    
    (925
    )
    
    
    (925
    )Treasury stock, 111,111 common shares, at cost
    
    
    (200
    )
    
    
    (200
    )Additional paid-in capital
    
    
    53,607
    
    
    
    52,208Accumulated deficit
    
    
    (246,447
    )
    
    
    (153,005
    )Total stockholders deficit
    
    
    (92,737
    )
    
    
    (312
    )Total liabilities and stockholders deficit
    
    $
    210,879
    
    
    $
    262,353
 See accompanying notes.
 F-3




---



##### 



Years Ended December 31,2007
    
    2006Net revenues:Basic and premium services, net
    
    $
    31,773
    
    
    $
    10,911Ancillary product sales
    
    
    1,868
    
    
    
    1,153Grant revenues
    
    
    3,239
    
    
    
    1,513Other revenues
    
    
    345
    
    
    
    400Total net revenues
    
    
    37,225
    
    
    
    13,977Operating expenses:Direct site operating costs (1)
    
    
    50,795
    
    
    
    23,363Cost of ancillary product sales
    
    
    1,154
    
    
    
    835Depreciation and amortization
    
    
    22,583
    
    
    
    9,467Selling, general and administrative expenses
    
    
    20,974
    
    
    
    15,781Consulting fees with related party vendor
    
    
    
    
    
    
    310Asset disposals and impairments
    
    
    1,640
    
    
    
    4,803Total operating expenses
    
    
    97,146
    
    
    
    54,559Loss from operations
    
    
    (59,921
    )
    
    
    (40,582
    )Interest income
    
    
    2,001
    
    
    
    7,162Interest expense
    
    
    (35,522
    )
    
    
    (26,865
    )Net loss
    
    $
    (93,442
    )
    
    $
    (60,285
    )
 
 (1)
    
    Excludes depreciation expense in the amount of $20,619 and $8,550 for 2007 and 2006,
respectively, reported in a separate caption. See accompanying notes.
 F-4




---



##### 



Series A
    
    Series B
    
    Series C
    
    
    
    
    
    Stockholder
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    TotalConvertible
    
    Convertible
    
    Convertible
    
    
    
    
    
    Subscription
    
    Treasury
    
    Deferred
    
    Paid-in
    
    Accumulated
    
    StockholdersPreferred
    
    Preferred
    
    Preferred
    
    Common
    
    Receivable
    
    Stock
    
    Compensation
    
    Capital
    
    Deficit
    
    (Deficit) EquityBalance at December 31, 2005
    
    $
    30,350
    
    
    $
    49,056
    
    
    $
    22,155
    
    
    $
    48
    
    
    $
    (925
    )
    
    $
    (200
    )
    
    $
    (96
    )
    
    $
    51,767
    
    
    $
    (92,720
    )
    
    $
    59,435FAS 123(R) reclassification
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96
    
    
    
    (96
    )
    
    
    
    
    
    
    Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207
    
    
    
    
    
    
    
    207Anti-dilution stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147
    
    
    
    
    
    
    
    147Issuance of warrants for goods or
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    49Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Exercise of incentive stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134
    
    
    
    
    
    
    
    134Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60,285
    )
    
    
    (60,285
    )Balance at December 31, 2006
    
    $
    30,350
    
    
    $
    49,056
    
    
    $
    22,155
    
    
    $
    49
    
    
    $
    (925
    )
    
    $
    (200
    )
    
    $
    
    
    
    $
    52,208
    
    
    $
    (153,005
    )
    
    $
    (312
    )Commission on Series B Preferred
    
    
    
    
    
    
    (382
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    382
    
    
    
    
    
    
    
    Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    732
    
    
    
    
    
    
    
    732Anti-dilution stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    
    
    
    
    161Exercise of incentive stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    
    
    
    
    122Exercise common stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (93,442
    )
    
    
    (93,442
    )Balance at December 31, 2007
    
    $
    30,350
    
    
    $
    48,674
    
    
    $
    22,155
    
    
    $
    49
    
    
    $
    (925
    )
    
    $
    (200
    )
    
    $
    
    
    
    $
    53,607
    
    
    $
    (246,447
    )
    
    $
    (92,737
    )
 See accompanying notes.
 F-5




---



##### 



Years Ended December 31,2007
    
    
    2006Operating activitiesNet loss
    
    $
    (93,442
    )
    
    $
    (60,285
    )Adjustments to reconcile net loss to net cash used in
operating activities:Non-cash interest expense, net of amounts capitalized
    
    
    33,716
    
    
    
    26,212Amortization of deferred financing costs
    
    
    1,789
    
    
    
    594Depreciation and amortization
    
    
    22,583
    
    
    
    9,467Accretion of asset retirement obligations
    
    
    480
    
    
    
    402Asset disposals and impairments
    
    
    1,640
    
    
    
    4,803Share-based compensation expense
    
    
    732
    
    
    
    207Issuance of warrants for goods or services
    
    
    
    
    
    
    49Changes in operating assets and liabilities:Accounts receivable and accounts receivable  related parties
    
    
    4,530
    
    
    
    (4,815
    )Inventories
    
    
    210
    
    
    
    (658
    )Prepaid expenses and other assets
    
    
    (1,640
    )
    
    
    (833
    )Interest income earned on restricted cash and investments
    
    
    (388
    )
    
    
    (6,159
    )Short-term investments
    
    
    15,000
    
    
    
    (15,000
    )Accounts payable and accounts payable to related party vendor
    
    
    (4,781
    )
    
    
    3,581Accrued expenses
    
    
    728
    
    
    
    3,589Deferred trade revenue
    
    
    824
    
    
    
    231Deferred grant revenue
    
    
    4,971
    
    
    
    4,981Cash settlement of asset retirement obligation
    
    
    (45
    )
    
    
    (459
    )Net cash used in operating activities
    
    
    (13,093
    )
    
    
    (34,093
    )Investing activitiesPurchases of property and equipment from related party vendors
    
    
    (9,395
    )
    
    
    (30,428
    )Purchases of property and equipment
    
    
    (25,403
    )
    
    
    (78,284
    )Proceeds from disposal of property and equipment
    
    
    183
    
    
    
    Deposits with related party vendor toward equipment purchases, net
    
    
    3,117
    
    
    
    (14,104
    )Deposits with other vendors toward equipment purchases, net
    
    
    (447
    )
    
    
    (1,638
    )Cost of patents
    
    
    (32
    )
    
    
    (12
    )Restricted cash released to operations
    
    
    38,391
    
    
    
    169,709Net cash provided by investing activities
    
    
    6,414
    
    
    
    45,243Financing activitiesProceeds from exercise of stock options and warrants
    
    
    124
    
    
    
    134Deferred financing costs incurred
    
    
    (19
    )
    
    
    (541
    )Deferred offering costs incurred
    
    
    (1,189
    )
    
    
    Payments on capital lease obligations
    
    
    (376
    )
    
    
    (37
    )Net cash used in financing activities
    
    
    (1,460
    )
    
    
    (444
    )Net increase (decrease) in cash and cash equivalents
    
    
    (8,139
    )
    
    
    10,706Cash and cash equivalents at beginning of period
    
    
    16,632
    
    
    
    5,926Cash and cash equivalents at end of period
    
    $
    8,493
    
    
    $
    16,632Supplemental non-cash activitiesAnti-dilution warrants as additional debt discount
    
    $
    161
    
    
    $
    146Receipt of free equipment as a vendor concession
    
    $
    294
    
    
    $
    1,382Warrants as finders fee in connection with sale of Series B convertible
preferred stock
    
    $
    382
    
    
    $
    
 See accompanying notes.
 F-6




---



##### 



IdleAire Technologies Corporation
 
 Notes to financial statements
 1. Organization and basis of accounting
 ®
    F-7




---



##### 



2. Significant accounting policies
 Cash and cash equivalents
  Short-term investments
  F-8




---



##### 



Restricted cash and investments
   Fair value of financial instruments
    Concentrations of credit risk
   F-9




---



##### 



Inventories
  Property and equipment, net
  Revenue-generating equipment
    
    3-15 yearsFurniture and fixtures
    
    5 yearsData processing equipment and software
    
    3 yearsAutomobiles and motorized equipment
    
    3 years
  Capitalized leases
 Determining Whether an Arrangement
Contains a Lease Accounting for Leases
 Impairment of long-lived assets
 Accounting for the Disposal or Impairment of Long-Lived Assets.
 F-10




---



##### 



Asset retirement obligations
 Accounting for Asset Retirement Obligations Accounting for Conditional Asset Retirement Obligationsan interpretation of FASB Statement No.
143
  Revenue recognition
  F-11




---



##### 



How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in
the Income Statement (That Is, Gross Versus Net Presentation).
 Senior secured discount notes
  Deferred financing charges
  Advertising and promotion
  Research and development
   F-12




---



##### 



Share-based compensation
 Share-Based Payment.
 Accounting for Stock Issued to Employees
  Income taxes
  Accounting
for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109
  F-13




---



##### 



Segment information
 Disclosures about Segments of an Enterprise and Related
Information
 Comprehensive income
 Reporting Comprehensive Income
 Use of estimates
  Reclassifications
  New accounting standards
 Fair Value Measurements Effective Date of FASB Statement No. 157
(
 F-14




---



##### 



The Fair
Value Option for Financial Assets and Financial LiabilitiesIncluding an amendment of FASB
Statement No. 115
 Business Combinations
 3. Property and equipment, net
  December 31,(In thousands)
    
    2007
    
    2006Revenue-generating equipment
    
    $
    164,565
    
    
    $
    125,411Leasehold improvements
    
    
    976
    
    
    
    826Furniture and fixtures
    
    
    668
    
    
    
    680Data processing equipment and software
    
    
    6,655
    
    
    
    4,999Automobiles and motorized equipment
    
    
    3,229
    
    
    
    1,522Service units in process
    
    
    16,148
    
    
    
    25,093192,241
    
    
    
    158,531Less accumulated depreciation and
amortization
    
    
    (38,719
    )
    
    
    (21,024
    )$
    153,522
    
    
    $
    137,507
   F-15




---



##### 



For the Year EndedDecember 31,(In thousands)
    
    2007
    
    2006Depreciation expense on revenue-
generating equipment
    
    $
    20,619
    
    
    $
    8,550Depreciation expense on
non-revenue-generating equipment
    
    
    1,964
    
    
    
    889Total depreciation expense
    
    $
    22,583
    
    
    $
    9,439
  
  4. Related party transactions
  F-16




---



##### 



F-17




---



##### 



5. Accrued expenses
  December 31,(In thousands)
    
    2007
    
    2006Salaries and related personnel liabilities
    
    $
    2,298
    
    
    $
    1,804Accrued sales taxes
    
    
    588
    
    
    
    896Other liabilities
    
    
    2,311
    
    
    
    1,688$
    5,197
    
    
    $
    4,388
 6. Senior secured discount notes with warrants
      F-18




---



##### 



7. Secured convertible notes
  F-19




---



##### 



8. Stockholders equity
 Common stock and warrants
    Preferred stock
  F-20




---



##### 



9. Share-based compensation
    For the Years Ended December 31,2007
    
    2006Expected term in years
    
    
    5.7
    
    
    
    5.6Risk-free interest rate
    
    
    4.8
    %
    
    
    4.9
    %Expected dividend rate
    
    
    
    
    
    
    Expected volatility
    
    
    36.7
    %
    
    
    51.7
    %
 F - 21




---



##### 



WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    Contractual
    
    
    AggregateOption
    
    
    Exercise
    
    
    Life in
    
    
    Intrinsic(In thousands, except share and per share amounts)
    
    Shares
    
    
    Price
    
    
    Years
    
    
    ValueOutstanding at December 31, 2005
    
    
    4,027,829
    
    
    $
    1.96
    
    
    6.70 yearsGranted
    
    
    908,075
    
    
    
    0.82Exercised
    
    
    (70,255
    )
    
    
    1.91Forfeited
    
    
    (352,568
    )
    
    
    1.99Outstanding at December 31, 2006
    
    
    4,513,081
    
    
    $
    1.73
    
    
    6.35 years
    
    $
    2,166Granted
    
    
    1,131,579
    
    
    
    2.13Exercised
    
    
    (613,738
    )
    
    
    0.20Forfeited
    
    
    (77,508
    )
    
    
    2.37Outstanding at December 31, 2007
    
    
    4,953,414
    
    
    $
    2.00
    
    
    6.23 years
    
    $
    4,082Exercisable at December 31, 2007
    
    
    3,588,688
    
    
    $
    2.02
    
    
    5.40 years
    
    $
    2,938
 F - 22




---



##### 



10. Income taxes
  Year Ended December 31,2007
    
    
    2006U.S federal statutory rate
    
    
    34.0
    %
    
    
    34.0
    %State taxes (net of federal benefit)
    
    
    5.0
    
    
    
    3.8Change in deferred tax valuation allowance
    
    
    (39.0
    )
    
    
    (37.6
    )Other
    
    
    (0.0
    )
    
    
    (0.2
    )0.0
    %
    
    
    0.0
    %
  December 31,2007
    
    
    2006(In thousands)Deferred tax assets:Net operating loss carryforward
    
    $
    94,383
    
    
    $
    56,988Accrued liabilities
    
    
    516
    
    
    
    380Deferred revenue
    
    
    7,296
    
    
    
    5,061Asset retirement obligations
    
    
    546
    
    
    
    102,741
    
    
    
    62,429Deferred tax liabilities:Depreciation
    
    
    (8,719
    )
    
    
    (4,810
    )Asset
retirement obligations
    
    
    
    
    
    
    (126
    )Net deferred tax assets
    
    
    94,022
    
    
    
    57,493Valuation allowance
    
    
    (94,022
    )
    
    
    (57,493
    )$
    
    
    
    $
    
  F - 23




---



##### 



11. Leases
   (in thousands)2008
    
    $
    1,0692009
    
    
    9982010
    
    
    7282011
    
    
    5752012
    
    
    541Thereafter
    
    
    87$
    3,998
  (in thousands)2007
    
    $
    4432008
    
    
    5262009
    
    
    5262010
    
    
    5272011
    
    
    395Thereafter
    
    
    532,470Interest
    
    
    (1,000
    )$
    1,470
   F - 24




---



##### 



12. Commitments and contingencies
   F - 25




---



##### 



13. Subsequent events
  F - 26