**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

**FORM 10 -Q**
| **x** | **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934.** |
|-------|-----------------------------------------------------------------------------------------|

 

**For thequarterly period ended March 31, 2007**

**OR**
| **o**** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-----------------|----------------------------------------------------------------------------------------------------|

 

**Forthe transition periodfrom                to                **

**CommissionFile Number - 001-32217**

**InfoSonicsCorporation**(Exact name of registrant asspecified in its charter)

| **Maryland**                                                     |   | **33-0599368**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |   | (IRS Employer  Identification Number) |

 

**5880Pacific Center Blvd San Diego, CA 92121**(Address ofprincipal executive offices including zip code)

**(858)373-1600**(Registrant’stelephone number, including area code)

**Not Applicable**(Former Name orFormer Address, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Exchange Act during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

Yes   x   No o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large AcceleratedFiler  o            AcceleratedFiler  o            Non-AcceleratedFiler  x   

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).

Yes  o   No x

As of May 10, 2007, the Registrant had 14,500,353 shares outstanding of its$.001 par value common stock.

 

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**InfoSonics Corporation and Subsidiaries**

**QuarterlyReport on Form 10-Q For The Period Ended****March 31, 2007**

**Table ofContents**
| **PART I. FINANCIAL  INFORMATION** |
|------------------------------------|
|                               |   |
| Item 1.                            | Financial Statements |   |
|                               |   |   |   |
| ·                             | Consolidated  Balance Sheets as of March 31, 2007 (unaudited) and December 31, 2006 |   |
|                               |   |   |   |
| ·                             | Consolidated Statements of Operations for the Three  Months Ended March 31, 2007 and 2006 (restated) (unaudited) |   |
|                               |   |   |   |
| ·                             | Consolidated  Statements of Cash Flows for the Three Months Ended March 31, 2007 and 2006  (restated) (unaudited) |   |
|                               |   |   |
| ·                             | Consolidated Statements of Comprehensive Operations  for the Three Months Ended March 31, 2007 and 2006 (unaudited) |   |
|                               |   |   |   |
| ·                             | Condensed  Notes to Consolidated Financial Statements (unaudited) |   |
|                               |   |   |   |
| Item 2.                            | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
|                               |   |   |   |
| Item 3.                            | Quantitative  and Qualitative Disclosures About Market Risk |   |
|                               |   |   |   |
| Item 4.                            | Controls and Procedures |   |
|                               |   |   |
| **PART  II. OTHER INFORMATION**    |
|                               |   |   |
| Item 1.                            | Legal  Proceedings |   |
|                               |   |   |
| Item 1A.                           | Risk  Factors |   |
|                               |   |   |   |
| Item 2.                            | Unregistered  Sales of Equity Securities and Use of Proceeds |   |
|                               |   |   |   |
| Item 3.                            | Defaults  Under Senior Securities |   |
|                               |   |   |   |
| Item 4.                            | Submission  of Matters to a Vote of Security Holders |   |
|                               |   |   |   |
| Item 5.                            | Other  Information |   |
|                               |   |   |   |
| Item 6.                            | Exhibits |   |

 

2

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**Part I. FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**InfoSonics Corporation and SubsidiariesConsolidated Balance Sheets**
| ** **                                                                                                                                          | ** ** | **March 31,  2007** | ** **     | **December 31,  2006** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|----------------|-----------------------------|------------|
| ** **                                                                                                                                          | ** ** | **(unaudited)**          | ** **     | ** **                  | ** ** |
| **ASSETS**                                                                                                                                          | ** ** | ** **               | ** **     | ** **                  | ** ** |
| **Current assets:**                                                                                                                                 |       |                     |           |                        |       |
| Cash and cash  equivalents                                                                                                                          |       | $                        | 12,201,544     |                        | $          | 30,243,392 |   |
| Trade accounts  receivable, net of allowance for doubtful accounts of $779,008 (unaudited)  and $679,522                                            |       | 44,885,428               |           | 37,798,284                  |       |
| Inventory, net of  reserves of $437,073 (unaudited) and $254,508                                                                                    |       | 18,342,097               |           | 11,174,200                  |       |
| Prepaid inventory                                                                                                                                   |       | 237,816                  |           | 162,146                     |       |
| Prepaid expenses                                                                                                                                    |       | 433,846                  |           | 316,919                     |       |
| Prepaid taxes                                                                                                                                       |       | 1,351,009                |           | 973,749                     |       |
| Net assets of  discontinued operations                                                                                                              |       | 4,209                    |           | 4,209                       |       |
| Deferred tax assets –  current                                                                                                                 |       | 1,115,000                |           | 1,041,000                   |       |
|                                                                                                                                                |       |                     |           |                        |       |
| Total current assets                                                                                                                                |       | 78,570,949               |           | 81,713,899                  |       |
|                                                                                                                                                |       |                     |           |                        |       |
| Property and equipment,  net                                                                                                                        |       | 1,234,093                |           | 615,185                     |       |
| Intangible assets                                                                                                                                   |       | 504,000                  |           | 504,000                     |       |
| Deferred tax assets –  non-current                                                                                                             |       | 286,298                  |           | —                      |       |
| Other assets                                                                                                                                        |       | 155,825                  |           | 137,381                     |       |
|                                                                                                                                                |       |                     |           |                        |       |
| **Total assets**                                                                                                                                    | ** ** | **$**                    | **80,751,165** | ** **                  | **$**      | **82,970,465** | ** ** |
|                                                                                                                                                |       |                     |           |                        |       |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                      | ** ** | ** **               | ** **     | ** **                  | ** ** |
|                                                                                                                                                |       |                     |           |                        |       |
| **Current liabilities:**                                                                                                                            |       |                     |           |                        |       |
| Line of credit                                                                                                                                      |       | $                        | 22,369,071     |                        | $          | 25,648,614 |   |
| Accounts payable                                                                                                                                    |       | 18,248,520               |           | 18,099,985                  |       |
| Accrued expenses                                                                                                                                    |       | 2,417,411                |           | 1,261,988                   |       |
| Income taxes payable                                                                                                                                |       | 31,870                   |           | 17,100                      |       |
|                                                                                                                                                |       |                     |           |                        |       |
| Total current  liabilities                                                                                                                          |       | 43,066,872               |           | 45,027,687                  |       |
|                                                                                                                                                |       |                     |           |                        |       |
| Deferred tax liability  non-current                                                                                                                 |       | —                   |           | 36,000                      |       |
| ** **                                                                                                                                          | ** ** | ** **               | ** **     | ** **                  | ** ** |
| **Total liabilities**                                                                                                                               |       | 43,066,872               |           | 45,063,687                  |       |
| **Commitments and contingencies**                                                                                                                   |       |                     |           |                        |       |
|                                                                                                                                                |       |                     |           |                        |       |
| **Stockholders’ equity:**                                                                                                                      |       |                     |           |                        |       |
| Preferred stock, $0.001  par value 10,000,000 shares authorized (no shares issued and outstanding as  of applicable period end)                     |       | —                   |           | —                      |       |
| Common stock, $0.001  par value 40,000,000 shares authorized (14,400,068 and 14,180,068 shares  issued and outstanding as of applicable period end) |       | 14,400                   |           | 14,180                      |       |
| Additional paid-in  capital                                                                                                                         |       | 31,101,981               |           | 30,751,372                  |       |
| Accumulated other  comprehensive loss                                                                                                               |       | (24,046                  | )              | (8,865                      | )          |
| Retained earnings                                                                                                                                   |       | 6,591,958                |           | 7,150,091                   |       |
|                                                                                                                                                |       |                     |           |                        |       |
| Total stockholders’  equity                                                                                                                    |       | 37,684,293               |           | 37,906,778                  |       |
|                                                                                                                                                |       |                     |           |                        |       |
| **Total liabilities and stockholders’ equity**                                                                                                 | ** ** | **$**                    | **80,751,165** | ** **                  | **$**      | **82,970,465** | ** ** |

 

*Accompanyingnotes are an integral part of these financial statements.*

3

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**InfoSonics Corporation and SubsidiariesConsolidated Statements of Operations(unaudited)**
| ** **                                                                                   | ** ** | **For the Three Months  Ended March 31,** | ** **   |
|----------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------|--------------|
| ** **                                                                                   | ** ** | **2007**                                                           | ** **   | **2006** | ** ** |
| ** **                                                                                   | ** ** | ** **                                                         | ** **   | **(restated)** | ** ** |
| **Net  sales**                                                                               |       | $                                                                  | 58,403,610   |   | $ | 54,127,089 |   |
| **Cost of  sales**                                                                           |       | 55,254,746                                                         |         | 49,947,224 |   |
|                                                                                         |       |                                                               |         |   |   |
| **Gross  profit**                                                                            |       | 3,148,864                                                          |         | 4,179,865 |   |
| **Operating  expenses, including non-cash expense for stock options of $97,449 and $52,443** |       | 4,031,293                                                          |         | 3,096,100 |   |
|                                                                                         |       |                                                               |         |   |   |
| **Operating  income (loss) from continuing operations**                                      |       | (882,429                                                           | )            | 1,083,765 |   |
|                                                                                         |       |                                                               |         |   |   |
| **Other  income (expense)**                                                                  |       |                                                               |         |   |   |
| Change in fair value of derivative liability                                                 |       | —                                                             |         | 399,009 |   |
| Interest expense                                                                             |       | (55,472                                                            | )            | (80,565 | ) |
|                                                                                         |       |                                                               |         |   |   |
| **Income (loss)  from continuing operations before provision for income taxes**              |       | (937,901                                                           | )            | 1,402,209 |   |
| **Provision  (benefit) for income taxes**                                                    |       | (379,768                                                           | )            | 227,038 |   |
|                                                                                         |       |                                                               |         |   |   |
| **Income  (loss) from continuing operations**                                                | ** ** | **(558,133**                                                       | **)**        | **1,175,171** | ** ** |
| **Loss  from discontinued operations, net of income tax benefit**                            |       | —                                                             | ** **   | **(1,844** | **)** |
| ** **                                                                                   | ** ** | ** **                                                         | ** **   | ** ** | ** ** |
| **Net  income (loss)**                                                                       | ** ** | **$**                                                              | **(558,133** | **)** | **$** | **1,173,327** | ** ** |
|                                                                                         |       |                                                               |         |   |   |
| **Basic  earnings (loss) per share:**                                                        |       |                                                               |         |   |   |
| From continuing operations                                                                   | ** ** | **$**                                                              | **(0.04**    | **)** | **$** | **0.09** | ** ** |
| From discontinued operations                                                                 | ** ** | **$**                                                              | **(0.00**    | **)** | **$** | **(0.00** | **)** |
| Net income (loss)                                                                            | ** ** | **$**                                                              | **(0.04**    | **)** | **$** | **0.09** | ** ** |
| **Diluted  earnings (loss) per share:**                                                      | ** ** | ** **                                                         | ** **   | ** ** | ** ** |
| From continuing operations                                                                   | ** ** | **$**                                                              | **(0.04**    | **)** | **$** | **0.08** | ** ** |
| From discontinued operations                                                                 | ** ** | **$**                                                              | **(0.00**    | **)** | **$** | **(0.00** | **)** |
| Net income (loss)                                                                            | ** ** | **$**                                                              | **(0.04**    | **)** | **$** | **0.08** | ** ** |
|                                                                                         |       |                                                               |         |   |   |
| **Basic  weighted-average number of common shares outstanding**                              | ** ** | **14,318,912**                                                     | ** **   | **12,795,822** | ** ** |
|                                                                                         |       |                                                               |         |   |   |
| **Diluted weighted-average number  of common shares outstanding**                            | ** ** | **14,318,912**                                                     | ** **   | **15,466,938** | ** ** |

 

*Accompanyingnotes are an integral part of these financial statements.*

4

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**INFOSONICS CORPORATION ANDSUBSIDIARIES****CONSOLIDATEDSTATEMENTS OF COMPREHENSIVE OPERATIONS**
| ** **                               | ** ** | **For the Three Month Ended March 31,** | ** ** |
|------------------------------------------|------------|-----------------------------------------------------------------------|------------|
| ** **                               | ** ** | **2007**                                                              | ** ** | **2006** | ** ** |
| ** **                               | ** ** | ** **                                                            | ** ** | **(restated)** | ** ** |
| Net income  (loss)                       |       | $                                                                     | (558,133   | ) | $ | 1,173,327 |   |
| Other  comprehensive loss:               |       |                                                                  |       |   |   |
| Foreign currency translation adjustments |       | (15,181                                                               | )          | — |   |
| Comprehensive income  (loss)             |       | $                                                                     | (573,314   | ) | $ | 1,173,327 |   |

 

*Accompanying notes are anintegral part of these financial statements*

5

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**InfoSonics Corporation and SubsidiariesConsolidated Statements of Cash Flows(unaudited)**
| ** **                                                                                                                    | ** ** | **For the Three Months Ended March 31,** | ** **     |
|-------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------|----------------|
| ** **                                                                                                                    | ** ** | **2007**                                                               | ** **     | **2006** | ** ** |
| ** **                                                                                                                    | ** ** | ** **                                                             | ** **     | **(restated)** | ** ** |
| **Cash  flows from operating activities:**                                                                                    |       |                                                                   |           |   |   |
| Net income (loss)                                                                                                             |       | $                                                                      | (558,133       | ) | $ | 1,175,171 |   |
| Adjustments to reconcile net income (loss) from  continuing operations to net cash provided by (used in) operating activities |       |                                                                   |           |   |   |
| Depreciation and amortization                                                                                                 |       | 43,032                                                                 |           | 31,935 |   |
| Provision for bad debt                                                                                                        |       | 99,455                                                                 |           | 312,297 |   |
| Provision for obsolete inventory                                                                                              |       | 182,565                                                                |           | 168,974 |   |
| Tax benefit from stock option exercises                                                                                       |       | —                                                                 |           | 96,409 |   |
| Stock option expense                                                                                                          |       | 97,449                                                                 |           | 52,443 |   |
| Change in fair value of derivative liability                                                                                  |       | —                                                                 |           | (399,009 | ) |
| (Increase) decrease in                                                                                                        |       |                                                                   |           |   |   |
| Trade accounts receivable                                                                                                     |       | (7,186,599                                                             | )              | (23,652,578 | ) |
| Inventory                                                                                                                     |       | (7,403,373                                                             | )              | (2,406,482 | ) |
| Prepaid inventory                                                                                                             |       | (22,759                                                                | )              | (2,432,581 | ) |
| Prepaid expenses                                                                                                              |       | (494,187                                                               | )              | (363,784 | ) |
| Other assets                                                                                                                  |       | (18,443                                                                | )              | 511 |   |
| Deferred tax asset current                                                                                                    |       | (74,000                                                                | )              | (94,000 | ) |
| Deferred tax asset non current                                                                                                |       | (322,298                                                               | )              | (19,207 | ) |
| Increase (decrease) in                                                                                                        |       |                                                                   |           |   |   |
| Accounts payable                                                                                                              |       | 148,535                                                                |           | 9,971,802 |   |
| Accrued expenses                                                                                                              |       | 1,155,423                                                              |           | 478,726 |   |
| Income tax liabilities                                                                                                        |       | 14,770                                                                 |           | 244,629 |   |
|                                                                                                                          |       |                                                                   |           |   |   |
| Cash provided by  (used in) continuing operations                                                                             |       | (14,338,563                                                            | )              | (16,834,744 | ) |
| Cash provided by  (used in) discontinued operations                                                                           |       | —                                                                 |           | 629 |   |
|                                                                                                                          |       |                                                                   |           |   |   |
| Net cash  provided by (used in) operating activities                                                                          |       | (14,338,563                                                            | )              | (16,834,115 | ) |
|                                                                                                                          |       |                                                                   |           |   |   |
| **Cash  flows from investing activities:**                                                                                    | ** ** | ** **                                                             | ** **     | ** ** | ** ** |
|                                                                                                                          |       |                                                                   |           |   |   |
| Purchase of property and equipment                                                                                            |       | (661,939                                                               | )              | (27,092 | ) |
|                                                                                                                          |       |                                                                   |           |   |   |
| Net cash  provided by (used in) investing activities                                                                          |       | (661,939                                                               | )              | (27,092 | ) |
|                                                                                                                          |       |                                                                   |           |   |   |
| **Cash  flows from financing activities:**                                                                                    | ** ** | ** **                                                             | ** **     | ** ** | ** ** |
| Borrowings from line of credit                                                                                                |       | 222,856,230                                                            |           | 23,998,241 |   |
| Payments on line of credit                                                                                                    |       | (226,135,774                                                           | )              | (16,086,310 | ) |
| Cash paid for offering costs                                                                                                  |       | —                                                                 |           | (991,680 | ) |
| Cash received for stock and warrants                                                                                          |       | 253,380                                                                |           | 14,574,354 |   |
|                                                                                                                          |       |                                                                   |           |   |   |
| Net cash provided by (used in) financing activities                                                                           |       | (3,026,164                                                             | )              | 21,494,605 |   |
|                                                                                                                          |       |                                                                   |           |   |   |
| Effect of exchange rate changes on cash                                                                                       |       | (15,181                                                                | )              | — |   |
|                                                                                                                          |       |                                                                   |           |   |   |
| Net increase  (decrease) in cash and cash equivalents                                                                         |       | (18,041,847                                                            | )              | 4,633,398 |   |
|                                                                                                                          |       |                                                                   |           |   |   |
| **Cash and cash equivalents, beginning of period**                                                                            |       | 30,243,392                                                             |           | 7,712,915 |   |
|                                                                                                                          |       |                                                                   |           |   |   |
| **Cash  and cash equivalents, end of period**                                                                                 | ** ** | **$**                                                                  | **12,201,544** | ** ** | **$** | **12,346,313** | ** ** |

 

*Accompanyingnotes are an integral part of these financial statements*.

6

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**InfoSonics CorporationCondensed Notes to Unaudited Consolidated Financial Statementsas of and at March 31, 2007(unaudited)**

**NOTE 1. Basis of Presentation**

The accompanying unaudited consolidated financialstatements and these condensed notes have been prepared in accordance withaccounting principles generally accepted in the United States (“GAAP”) forinterim financial information and with the instructions to Form 10-Q andArticle 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended(the “Exchange Act”). Accordingly, they do not include all of the informationand footnotes required by GAAP for complete financial statements. Thepreparation of financial statements requires management to make estimates andassumptions that affect amounts reported in the financial statements andaccompanying notes. Actual results are likely to differ from those estimates,but management does not believe such differences will materially affect thefinancial position or results of operations of InfoSonics Corporation (the“Company”), although they may. These unaudited consolidated financialstatements and condensed notes should be read in conjunction with the financialstatements and notes as of and for the year ended December 31, 2006 included inthe Company’s Annual Report on Form 10-K for the year ended December 31,2006.  These unaudited consolidatedfinancial statements reflect all adjustments considered, in the opinion of theCompany’s management, necessary to fairly present the results for the periodscovered herein and such adjustments are considered of a normal recurringnature.

The unauditedconsolidated financial statements include the accounts of the Company and itssubsidiaries, Axcess Mobile LLC, InfoSonics Latin America, Inc. InfoSonics deMexico S.A. de C.V., InfoSonics de Guatemala S.A., InfoSonics El Salvador S.A.de C.V., InfoSonics S.A., InfoSonics Chile y Compania Limitada and InfoSonicsColombia S.A. all of which are wholly owned. Significant intercompany accountsand transactions have been eliminated in consolidation of these consolidatedfinancial statements.

The unaudited consolidated balance sheet at March 31, 2007does not include all of the information and footnotes required by GAAP forcomplete financial statements. Due to seasonality of the Company’s business andother factors, the Company’s interim results may not be indicative of thecondition at or the results for the full fiscal year of 2007 or for any otherfuture period. The unaudited Consolidated Statements of Income for the threemonths ended March 31, 2007 and the unaudited Consolidated Statement of CashFlows for the three months ended March 31, 2007 are not necessarily indicativeof the operating results or cash flows that may be expected for the full fiscalyear of 2007 or for any future period.

Share and pershare amounts for all periods presented in this report (unless otherwisestated) have been adjusted to reflect the two-for-one common stock split in theform of a stock dividend effected on June 19, 2006.  Additionally amounts presented for the periodended March 31, 2006 are restated.

**NOTE****2. Stock-Based Compensation**

The Company has threeequity incentive plans, the 2006 Equity Incentive Plan (2006 Plan), the 2003Stock Option Plan (2003 Plan) and, the 1998 Stock Option Plan (1998 Plan).  Each of the plans has been approved by ourshareholders. The 2006 Plan is the only plan from which additional equityincentives will be granted. The 2006 Plan authorizes the grant of up to 1,000,000equity incentives. The Company is also a party to non-plan option agreementswith several non-employee directors and several institutions.

Effective January 1, 2006the Company adopted Financial Accounting Standards Board SFAS No. 123R, “ShareBased Payments” using the modified prospective method, which requiresmeasurement of compensation cost for all stock-based awards at fair value onthe date of grant and recognition of compensation over the service period forawards expected to vest. The fair value of stock options was determined usingthe Black-Scholes valuation model, which is consistent with our valuationtechniques previously utilized for stock options in footnote disclosuresrequired under SFAS 123, as amended by SFAS 148. Such fair value is recognizedas expense over the service period, net of estimated forfeitures.

7

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On March 29, 2005, theSecurities and Exchange Commission (“SEC”) published Staff Accounting Bulletin(“SAB”) No. 107, which provides the SEC Staff’s views on a variety of mattersrelating to stock-based payments. SAB 107 requires stock-based compensation tobe classified in the same expense line items as cash compensation. Informationabout stock-based compensation included in the results of operations for thethree months ended March 31, 2007 and 2006 is as follows:
|                                                                   | ** ** | **Three Months ended March 31,** | ** ** |
|-------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                        | ** ** | **2007**                                             | ** ** | **2006** | ** ** |
| Officer  compensation                                             |       | $                                                    | 46,018     |   | $ | 18,297 |   |
| Non-employee  directors                                           |       | 3,451                                                |       | — |   |
| Sales, general  and administrative                                |       | 47,980                                               |       | 34,146 |   |
| Total stock option  expense, included in total operating expenses |       | $                                                    | 97,449     |   | $ | 52,443 |   |

 

Our stock optionsvest on an annual or a monthly basis. As of March 31, 2007, there was $709,000of total unrecognized compensation costs related to the non-vested stockoptions.  The Company recognizes stock-based compensation costs on astraight-line basis over the requisite service period of the award, which isgenerally the option vesting term.  That cost is expected to be recognized over the weighted-average periodof 3.75 years.  Such amounts may changeas a result of additional grants, forfeitures, modifications in assumptions andother factors. SFAS 123R provides that income tax effects of share-basedpayments are recognized in the financial statements for those awards which willnormally result in tax deductions under existing tax law. During the firstquarter of 2007, we recorded an expense of $97,449, related to optionspreviously granted. Under current U.S. federal tax law, we would receive acompensation expense deduction related to non-qualified stock options only whenthose options are exercised and vested shares are received. Accordingly, thefinancial statement recognition of compensation cost for non-qualified stockoptions creates a deductible temporary difference which results in a deferredtax asset and a corresponding deferred tax benefit in our ConsolidatedStatements of Income.

The fair value of eachoption grant is estimated on the date of grant using the Black-Scholes optionpricing model with the following weighted-average assumptions used for grantsin 2007, 2006 and 2005: risk-free interest rate of 4.66% in 2007 and rangingfrom 4.88% to 5.04% in 2006 and 3.22% to 4.41% in 2005 based on the U.S.Treasury yields in effect at the time of grant; expected dividend yields of zeropercent as the Company has not, and does not intend to, issue dividends; andexpected lives of 3 to 7 years based upon the historical life of options. Forgrants in 2007, 2006 and 2005, the expected volatility used ranged from 62% to91%, based on the Company’s historical stock price fluctuations for a periodmatching the expected life of the options.

A summary of optionactivity under all of the above plans as of March 31, 2007, and changes duringthe three months then ended is presented in the table below:
|                                 | ** ** | **Shares** | ** ** | **Wtd. Avg.   Exercise Price** | ** ** | **Wtd. Avg.   Remaining   Contractual   Life** | ** ** | **Aggregate   Intrinsic   Value** | ** ** |
|---------------------------------|------------|------------|------------|-----------------------------------------------|------------|--------------------------------------------------------------------|------------|---------------------------------------------|------------|
| Outstanding at  January 1, 2007 |       | 3,117,324  |       | $                                             | 2.56       |                                                               |       |                                        | —     |   |
| Granted                         |       | 40,000     |       | $                                             | 3.79       |                                                               | 5.95       |                                        | —     |   |
| Exercised                       |       | 194,000    |       | $                                             | 1.71       |                                                               |       |                                        | —     |   |
| Forfeited                       |       | —     |       | $                                             | —     |                                                               |       |                                        | —     |   |
| Outstanding at  March 31, 2007  |       | 2,963,324  |       | $                                             | 2.68       |                                                               | 3.26       |                                        | —     |   |
| Vested and  expected to vest    |       | 2,963,324  |       | $                                             | 2.68       |                                                               | 3.26       |                                        | —     |   |
| Exercisable at March  31, 2007  |       | 2,799,071  |       | $                                             | 2.42       |                                                               | 3.15       |                                        | —     |   |

 

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A summary of the statusof the Company’s non vested options at March 31, 2007, and changes during thethree months ended March 31, 2007, is presented below:
|                                 | ** ** | **Shares** | ** ** | **Weighted-average   grant-date fair value** | ** ** |
|---------------------------------|------------|------------|------------|-------------------------------------------------------------|------------|
| Nonvested at  December 31, 2006 |       | 177,269    |       | $                                                           | 6.65       |   |
| Granted                         |       | 40,000     |       | $                                                           | 3.79       |   |
| Vested                          |       | 17,177     |       | $                                                           | 4.03       |   |
| Forfeited                       |       | —     |       | $                                                           | —     |   |
| Non-vested at March 31,  2007   |       | 164,253    |       | $                                                           | 7.41       |   |

 

The weighted-averagegrant-date fair value of options granted during the three months ended March31, 2007 was $3.79. The total intrinsic value of options granted during thethree months ended March 31, 2007 and 2006 was $0 and $0 respectively. Therewas $253,000 and $164,000 cash received from options exercised for the threemonths ended March 31, 2007 and 2006, respectively. The stock basedcompensation unrecognized expense for future periods as of March 31, 2007 isapproximately $709,000 with a weighted average remaining vesting period of 3.75years.

**NOTE 3. Earnings Per Share**

The Company utilizes SFAS No. 128, “*Earnings perShare*.” Basic earnings per share is computed by dividing incomeavailable to common stockholders by the weighted-average number of commonshares outstanding. Diluted earnings per share is computed similarly to basicearnings per share, except that the denominator is increased to include thenumber of additional common shares that would have been outstanding if thepotential additional common shares that were dilutive had been issued. Commonshare equivalents are excluded from the computation if their effect isanti-dilutive. The Company’s common share equivalents consist of stock optionsand warrants.

The following table represents a reconciliation of theshares used to calculate basic and diluted earnings per share for therespective periods indicated:
|                                                                                                             | ** ** | **Three Months Ended March 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                                                  | ** ** | **2006**                                             | ** ** |
| ** **                                                                                                  | ** ** | **(restated)**                                       | ** ** |
| Numerator: Net  income                                                                                      |       | $                                                    | 1,173,327  |   |
| Denominator:                                                                                                |       |                                                 |       |
| Denominator for  basic earnings per share – weighted average shares                                    |       | 12,795,822                                           |       |
| Effect of  dilutive securities                                                                              |       |                                                 |       |
| Employee stock  options                                                                                     |       | 2,671,116                                            |       |
| Denominator for  diluted earnings per share – adjusted weighted average shares and assumed  conversion |       | 15,466,938                                           |       |
|                                                                                                        |       |                                                 |       |
| Basic earnings  per share                                                                                   |       | $                                                    | 0.09       |   |
|                                                                                                        |       |                                                 |       |
| Diluted earnings per  share                                                                                 |       | $                                                    | 0.08       |   |

 

Common shares from exercise ofcertain options and warrants have been excluded from the computation of dilutedearnings per share because their exercise prices are greater than the Company’sweighted-average stock price for the period. For the three months ended March 31, 2006, the numberof shares excluded was 1,926,753.

Since their effect would have been, anti-dilutive, 2,963,324,stock options and warrants to purchase shares of common stock have beenexcluded from the computation of diluted net loss per share for the threemonths ended March 31, 2007.

**NOTE 4. Income Taxes**

The Company adopted the provisions of FIN 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109,” (FIN 48), on January 1, 2007. As a result of the implementation of FIN 48, the Company made a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by FIN 48. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial

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reporting purposes. As a result of this review, the Company concluded that at this time there are no uncertain tax positions. As a result of applying the provisions of FIN 48, there was no cumulative effect on retained earnings.

The Company is subject to US federal income tax as well asincome tax in multiple states and foreign jurisdictions. For all major taxingjurisdictions, the tax years 2002 through 2006 remain open to examination. Asof March 31, 2007, the Company does not expect any material changes tounrecognized tax positions within the next twelve months.

SFAS No. 109, “*Accounting for IncomeTaxes,*” establishes financial accounting and reporting standards forthe effect of income taxes. The objectives of accounting for income taxes areto recognize the amount of taxes payable or refundable for the current year anddeferred tax liabilities and assets for the future tax consequences of eventsthat have been recognized in an entity’s financial statements or tax returns.Judgment is required in assessing the future tax consequences of events thathave been recognized in our financial statements or tax returns. Fluctuationsin the actual outcome of these future tax consequences could materially impactour financial position or our results of operations.

**NOTE 5. Inventory**

Inventory is valued at the lower of cost or market usingstandard costs that approximate average cost. Inventories are reviewedperiodically and items considered to be slow moving or obsolete are reduced toestimated net realizable value through an appropriate reserve.  In addition, at March 31, 2007, we hadin-transit inventory of $1 million, which is under the control of a commonfreight carrier until it arrives at one of our warehouse facilities.  This inventory is owned by the Company whileit is in-transit.  Inventory consists ofthe following:
|                   | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|-------------------|------------|--------------------------|------------|-----------------------------|------------|
| Finished goods    |       | $                        | 18,779,170 |                        | $          | 11,428,708 |   |
| Inventory reserve |       | (437,073                 | )          | (254,508                    | )          |
| Net inventory     |       | $                        | 18,342,097 |                        | $          | 11,174,200 |   |

 

**NOTE 6. Property and Equipment**

Property andequipment are primarily located in the United States, with the exception of$262,000 of machinery and equipment located at our Mexico facility (installedin June 2006 and included in the table below) and consisted of the following asof the dates presented:
|                                | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|--------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Machinery and  equipment       |       | $                        | 786,547    |                        | $          | 774,465 |   |
| Furniture and  fixtures        |       | 166,921                  |       | 166,921                     |       |
| Tooling and  molds             |       | 649,858                  |       | —                      |       |
| Subtotal                       |       | 1,603,326                |       | 941,386                     |       |
| Less accumulated  depreciation |       | 369,233                  |       | 326,201                     |       |
| Total                          |       | $                        | 1,234,093  |                        | $          | 615,185 |   |

 

Depreciation expense was $43,032 and $31,935 for the threemonths ended March 31, 2007 and 2006, respectively

**NOTE 7. Line of Credit**

The Company has a line of credit from Wells Fargo HSBCTrade Bank N.A., which provides for advances not to exceed 80% of eligibledomestic accounts receivable and 85% of foreign-insured accounts receivable(depending on the country of the debtor), up to a maximum of $30,000,000. As ofMarch 31, 2007, the majority of our debt was based on foreign accountsreceivable.

Interest is payable on a monthly basis (i) at Wells Fargo’sprime rate minus 0.25% (8.25% at March 31, 2007) or (ii) at the one-month LIBORplus 1.50% (5.32% at March 31, 2007). The interest rate is floating at WellsFargo’s prime rate or is at LIBOR plus 1.5% if the debt is a fixed amount drawnupon.  The line of credit iscollateralized by substantially all of the assets of the Company, and expiresOctober 1, 2008. In addition to reporting and other non-financial covenants, theline of credit contains certain financial covenants which require the Companyto maintain a tangible net worth of not less than $30,000,000 plus 50% of netprofit after tax from January 1, 2007, a pre-tax profit of not less than $1 ona rolling four quarter basis, a quick ratio of not less than one-to-one, adebt-to-net worth ratio of not greater than two-to-one, and an annual net

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income after taxes of at least $1. Management believes theCompany was in compliance with these covenants at March 31, 2007. At March 31,2007 and December 31, 2006 the amounts drawn against the line of credit were$22,369,071 and $25,648,614, respectively.

The Company has no other notes payable.

**NOTE 8. Stockholders’ Equity**

Sale of Common Stock andWarrants

On January 30, 2006**,**the Company sold an aggregate of 2,200,000shares of its common stock at $6.55 per share with accompanying warrants, fortotal gross proceeds of $14,410,000.

Stock Options

EffectiveMarch 9, 2007, the Company granted options to purchase an aggregate of 40,000of its common stock to certain foreign contractors (the “Contractor Options”).One-fourth of the total options subject to these option grants becomeexercisable one year from the contractor’s grantee’s first date of duties, and 1/48thof the total options become exercisable each month thereafter until fullyvested.  These options have exerciseprices of $3.79 per share, which was the closing price per share of theCompany’s common stock on March 9, 2007, and expire six years from thedate of grant.

**NOTE 9. Recent Accounting Pronouncements**

In February 2006the Financial Accounting Standards Board issued Statement of FinancialAccounting Standards (SFAS) 155 “Accounting for Certain Hybrid FinancialInstruments.”  SFAS 155 amends SFAS 133 to narrow the scope exception forinterest-only and principal-only strips on debt instruments to include onlysuch strips representing rights to receive a specified portion of thecontractual interest or principal cash flows. SFAS 155 also amends SFAS 140 toallow qualifying special-purpose entities to hold a passive derivativefinancial instrument pertaining to beneficial interests that itself is aderivative financial instrument. Generally, FASB Statement of FinancialAccounting Standards SFAS No. 133, “Accounting for Derivative Instruments andHedging Activities,” requires that a derivative embedded in a host contractthat does not meet the definition of a derivative be accounted for separately(referred to as bifurcation) under certain conditions. That general rulenotwithstanding, SFAS No. 133 (prior to amendments made to it by SFAS No. 155)provides a broad exception for interest-only and principal-only stripsinitially resulting from the separation of rights to receive contractual cashflows of a financial instrument that itself does not contain an embeddedderivative that would have been accounted for separately. SFAS 155 amends SFAS133 to restrict the scope exception to strips that represent rights to receiveonly a portion of the contractual interest cash flows or of the contractualprincipal cash flows of a specific debt instrument.  Prior to amendmentsmade by SFAS 155, SFAS 140, “Accounting for Transfers and Servicing ofFinancial Assets and Extinguishments of Liabilities,” permitted a qualifyingspecial-purpose entity (SPE) to hold only passive derivative financialinstruments pertaining to beneficial interests (other than another derivativefinancial instrument) issued or sold to parties other than the transferor. SFAS155 amends SFAS 140 to allow a qualifying SPE to hold a derivative instrumentpertaining to beneficial interests that itself is a derivative financialinstrument.

In March 2006, theFASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets” (“SFASNO. 156”), which provides an approach to simplify efforts to obtain hedge-like(offset) accounting.  This Statement amends FASB Statement No. 140,“Accounting for Transfers and Servicing of Financial Assets and Extinguishmentsof Liabilities”, with respect to the accounting for separately recognizedservicing assets and servicing liabilities.  The Statement (1) requires anentity to recognize a servicing asset or servicing liability each time itundertakes an obligation to service a financial asset by entering into a servicingcontract in certain situations; (2) requires that a separately recognizedservicing asset or servicing liability be initially measured at fair value, ifpracticable;  (3) permits an entity to choose either the amortizationmethod or the fair value method for subsequent measurement for each class ofseparately recognized servicing assets or servicing liabilities; (4) permits atinitial adoption a one-time reclassification of available-for-sale securitiesto trading securities by an entity with recognized servicing rights, providedthe securities reclassified offset the entity’s exposure to changes in the fairvalue of the servicing assets or liabilities; and (5) requires separatepresentation of servicing assets and servicing liabilities subsequently measuredat fair value in the balance sheet and additional disclosures for allseparately recognized servicing assets and servicing liabilities.  SFASNo. 156 is effective for all separately recognized servicing assets andliabilities as of the beginning of an entity’s fiscal year that begins afterSeptember 15, 2006, with earlier adoption permitted in certaincircumstances.  The Statement also describes the manner in which it shouldbe initially applied.  The Company does not believe that SFAS No. 156 willhave a material impact on its financial position, results of operations or cashflows.  As a

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result, we do not believethe adoption of SFAS 156 has a material impact on the Company’s ConsolidatedFinancial Statements.

In September 2006,the Financial Accounting Standards Board (FASB) issued Statement of FinancialAccounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”), whichdefines the fair value, establishes a framework for measuring fair value andexpands disclosures about fair value measurements.  This statement iseffective for financial statements issued for fiscal years beginning afterNovember 15, 2007, and interim periods within those fiscal years.  Earlyadoption is encouraged, provided that the registrant has not yet issuedfinancial statements for that fiscal year, including any financial statementsfor an interim period within that fiscal year.

In September 2006,the Financial Accounting Standards Board (FASB) issued Statement of FinancialAccounting Standards No. 158, “Employers’ Accounting for Defined BenefitPension and Other Postretirement Plans” (“SFAS 158”), which improves financialreporting by requiring an employer to recognize the over or under funded statusof a defined benefit postretirement plan as an asset or liability in itsstatement of financial position and to recognize changes in that funded statusin the year in which the changes occur through comprehensive income of abusiness entity or changes in unrestricted net assets of a not-for-profitorganization.  This statement also improves financial reporting byrequiring an employer to measure the funded status of a plan as of the date ofits year end statement of financial position, with limited exceptions. This Statement amends Statement 87, FASB Statement No. 88, “Employers’Accounting for Settlements and Curtailments of Defined Benefit Pension Plansand for Termination Benefits”, Statement 106, and FASB Statement No. 132(revised 2003), “Employers’ Disclosures about Pensions and Other PostretirementBenefits”.  Upon the initial application of this statement andsubsequently, and employer should continue to apply the provisions inStatements, 87, 88, and 106 in measuring plan assets and benefit obligations asof the date of its statement of financial position and in determining theamount of net periodic benefit cost.  An employer with publicly tradedequity securities is required to initially recognize the funded status of adefined benefit postretirement plan and to provide the required disclosures asof the end of the fiscal year ending after December 31, 2006.  An employerwithout publicly traded equity securities is required to recognize the fundedstatus of a defined benefit postretirement plan and to provide the requireddisclosures as of the end of the fiscal year ending after June 15, 2007. Early application of the recognition or measurement date provisions isencouraged; however, early application must be for all of an employer’s benefitplans.  Retrospective application of the Statement is not permitted.

In September 2006,the United States Securities and Exchange Commission (SEC) issued StaffAccounting Bulletin (SAB) No. 108, “Considering the Effects of Prior YearMisstatements when Quantifying Misstatements in Current Year FinancialStatements.” This SAB No. 108 provides guidance on the consideration of theeffects of prior year misstatements in quantifying current year misstatementsfor the purpose of a materiality assessment. SAB No. 108 establishes anapproach that requires quantification of financial statement errors based onthe effects of each of the Company’s balance sheet and statement of operationsfinancial statements and the related financial statement disclosures. The SABNo. 108 permits existing public companies to record the cumulative effect ofinitially applying this approach in the first year ending after November 15,2006 by recording the necessary correcting adjustments to the carrying valuesof assets and liabilities as of the beginning of that year with the offsettingadjustment recorded to the opening balance of retained earnings. Additionally,the use of the cumulative effect transition method requires detailed disclosureof the nature and amount of each individual error being corrected through thecumulative adjustment and how and when it arose.  The adoption of SAB 108 did not have amaterial impact on the Company’s results of operations and financial position.

In July 2006, theFASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in IncomeTaxes” (FIN 48). FIN 48 clarifies the accounting for income taxes byprescribing a minimum probability threshold that a tax position must meetbefore a financial statement benefit is recognized. The minimum threshold isdefined in FIN 48 as a tax position, that based solely on its technical meritsis more likely than not to be sustained upon examination by the applicabletaxing authority. The tax benefit to be recognized is measured as the largestamount of benefit that is greater than fifty percent likely of being realizedupon ultimate settlement. FIN 48 must be applied to all existing tax positionsupon initial adoption. The cumulative effect of applying FIN 48 at adoption, ifany, is to be reported as an adjustment to opening retained earnings for theyear of adoption. FIN 48 is effective for fiscal years beginning after December15, 2006, although early adoption is permitted. The adoption of FIN 48 did not have a material impact on the Company’sresults of operations and financial position.

InOctober 2006, the Emerging Issues Task Force (EITF) issued EITF 06-3,How Taxes Collected from Customers and Remitted to Governmental AuthoritiesShould Be Presented in the Income Statement (That is, Gross versus NetPresentation) to clarify diversity in practice on the presentation of differenttypes of taxes in the financial statements. The Task Force concluded that, fortaxes within the scope of the issue, a company may adopt a policy of presentingtaxes either gross within revenue or net. That is, it may include charges tocustomers for taxes within revenues and the charge for the taxes from thetaxing authority within cost of sales, or, alternatively, it may net the chargeto the customer and the charge

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from the taxingauthority. If taxes subject to EITF 06-3 are significant, a company is requiredto disclose its accounting policy for presenting taxes and the amounts of suchtaxes that are recognized on a gross basis. The guidance in this consensus iseffective for the first interim reporting period beginning afterDecember 15, 2006 (the first quarter of our fiscal year 2007). Theadoption of EITF 06-3 did not have a material impact on the Company’s resultsof operations, financial position or cash flow.

In February 2007,the FASB issued Statement No. 159, “*The FairValue Option for Financial Assets and Financial Liabilities — Including anamendment of FASB Statement No. 115* “ (“SFAS 159”).  Thisstandard amends FASB Statement No. 115, “*Accountingfor Certain Investment in Debt and Equity Securities* ,” with respectto accounting for a transfer to the trading category for all entities withavailable-for-sale and trading securities electing the fair value option. This standard allows companies to elect fair value accounting for manyfinancial instruments and other items that currently are not required to beaccounted as such, allows different applications for electing the option for asingle item or groups of items, and requires disclosures to facilitatecomparisons of similar assets and liabilities that are accounted fordifferently in relation to the fair value option.  SFAS 159 is effectivefor fiscal years beginning after November 15, 2007. If elected, theimplementation of FAS 159 is not expected to have a material impact on theCompany’s consolidated financial statements.

**NOTE 10. Geographic Information**

The Company currently operates in one businesssegment.  All fixed assets are located inCompany facilities in the United States and Mexico. Net sales by geographicalarea for the three and three months ended March 31, 2007 and March 31, 2006were:
|                 | ** ** | **Three months ended** | ** ** |
|-----------------|------------|----------------------------------|------------|
| ** **      | ** ** | **March 31, 2007**     | ** ** | **March 31, 2006** | ** ** |
| United States   |       | $                                | 12,158,256 |   | $ | 1,720,699 |   |
| Central America |       | 10,860,333                       |       | 19,375,215 |   |
| South America   |       | 35,385,021                       |       | 33,031,175 |   |
| Total           |       | $                                | 58,403,610 |   | $ | 54,127,089 |   |

 

**NOTE 11.  Commitments andContingencies**

*Securities Class Actions*

Six securitiesactions, originally filed between June and July 2006, were recentlyconsolidated as In Re: InfoSonics Corporation Securities Litigation, Lead CaseNo. 06 CV 1231, before Judge Moskowitz in the Southern District ofCalifornia.  Plaintiffs’ consolidatedcomplaint was filed on February 14, 2007. Plaintiffs assert claims for violation of section 10(b) of the ExchangeAct and associated Rule 10b-5, 20(a) and 20A in connection with the Company’srestatement announced June 12, 2006 and allegedly false and/or misleadingstatements and accounting related to the Company’s distribution agreement withVK Mobile.  Plaintiffs seek a declarationthat their action is a proper class action pursuant to Rule 23(a) and (b)(3),unspecified damages, prejudgment and post-judgment interest, attorneys’ fees,expert witness fees, other costs, and other unspecified relief.  The plaintiffs purport to represent a classof purchasers of the Company’s stock during the period February 6, 2006 toAugust 9, 2006.  On April 16, 2007, thedefendants filed a motion to dismiss the consolidated complaint on the grounds,among others, that the plaintiffs have failed to adequately plead violations ofthe securities laws.  Plaintiffs’response to defendants’ motion to dismiss is due May 16, 2007 and the motion iscurrently scheduled to be heard on June 15, 2007.  As of this time, the Court has not set a datefor trial or completion of discovery.

*Derivative Lawsuits*

The threederivative lawsuits originally filed on June 27, 2006, July 14, 2006, and July28, 2006 in the United States District Court for the Southern District ofCalifornia, purportedly on behalf of the Company against certain of ourofficers and directors, and the Company as a nominal defendant, have beenconsolidated as In Re InfoSonics Corporation Derivative Litigation, Lead CaseNo. 06 CV 1336, and transferred to Judge Moskowitz in the Southern District ofCalifornia.  Plaintiffs’ consolidatedcomplaint was received on November 8, 2006. It asserts claims for disgorgement under the Sarbanes-Oxley Act of 2002,violation of Section 14(a) of the Exchange Act, violation of CaliforniaCorporations Code section 25403, violation of California Corporations Codesection 254403, breach of fiduciary duty, abuse of control, grossmismanagement, waste of corporate assets, unjust enrichment, and an accounting,in connection with the Company’s restatement of first quarter 2006 earnings andin connection with allegations of wrongdoing with respect to granting,exercising, accounting and reporting of the stock options that the Companygranted in December 2005.  Plaintiffsseek unspecified damages, declaratory relief regarding the Sarbanes-Oxley Actof 2002, Section 14(a) of the Exchange Act, and the legality of stock options,a

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constructive trust,restitution, disgorgement, modification of certain corporate governance andinternal procedures, extraordinary equitable and/or injunctive relief, costs,and such other relief as is just and proper. On January 12, 2007, defendants filed a motion to dismiss on thegrounds, among others, that the plaintiffs had failed to make a demand on theCompany’s board of directors and to adequately allege their other purportedclaims.  The two non-resident directordefendants also filed motions to dismiss based upon a lack of personaljurisdiction in California.  The motionto dismiss for failure to make a demand and failure to state a claim wassubmitted on April 27, 2007.  The hearingon the personal jurisdiction motion has been continued until May 22, 2007 toallow plaintiffs to conduct limited discovery on the personal jurisdictionissue.  As of this time, the Court hasnot set a date for trial or completion of discovery.

**NOTE 12. Restatement**

The Company hasreassessed its application of certain provisions of EITF 00-19, Accounting forDerivative Financial Instruments Indexed to, and Potentially Settled in aCompany’s Own Stock, it recorded $564,000 of other income during the quarterended March 31, 2006 related to a mark to market adjustment of certainwarrants.  Since these warrants becamepart of permanent equity on February 17, 2006, InfoSonics should have ceasedapplying the mark to market provisions of EITF 00-19, on that date.  Accordingly, the net income for the quarterended March 31, 2006 has been reduced by a non-cash amount of $564,000.

The following tables setforth for the quarter ended March 31, 2006 the amounts of the restatementadjustments and reconciliation from previously reported amounts to restatedamounts for the quarter.

Statement of Operations
| ** **                                                           | ** ** | **Three Months Ended March 31, 2006  (Unaudited)** | ** ** |
|----------------------------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|
| ** **                                                           | ** ** | **As Previously  Reported**                                            | ** ** | **Effect of  Restatement** | ** ** | **Restated** | ** ** |
| Other Income: change in  fair value of derivative liability          |       | $                                                                           | 963,351    |   | $ | (564,342 | ) | $ | 399,009 |   |
| Income from continuing  operations before provision for income taxes |       | 1,966,551                                                                   |       | (564,342 | ) | 1,402,209 |   |
| Income  from Continuing operations                                   |       | 1,739,513                                                                   |       | (564,342 | ) | 1,175,171 |   |
| Net income                                                           |       | 1,737,669                                                                   |       | (564,342 | ) | 1,173,327 |   |
| Basic earnings per  share                                            |       | $                                                                           | 0.27       |   | $ | (0.09 | ) | $ | 0.18 |   |
| Diluted earnings per share                                           |       | $                                                                           | 0.22       |   | $ | (0.07 | ) | $ | 0.15 |   |

 

**Item 2. Management’s Discussion and Analysisof Financial Condition and Results of Operations**

**Forward-Looking Statements and Other General Information**

This discussion and analysis offinancial condition and results of operations should be read in conjunctionwith the accompanying unaudited consolidated financial statements and condensednotes thereto included in this report and with our Annual Report on Form 10-K forthe year ended December 31, 2006 (including our 2006 audited consolidatedfinancial statements and related notes thereto). InfoSonics Corporation’s(“InfoSonics” or the “Company”) discussion and analysis of financial conditionand results of operations are based upon consolidated financial statements,which have been prepared in accordance with accounting principles generallyaccepted in the United States (“GAAP”). The preparation of financial statementsin conformity with GAAP requires us to make estimates and assumptions thataffect the reported amounts of assets and liabilities, disclosure of anycontingent liabilities as of and at the financial statement date, and reportedamounts of revenue and expenses during the reporting period. On an ongoing basiswe review our estimates and assumptions. Our estimates are based on ourhistorical experience and other assumptions that we believe to be reasonableunder the circumstances. Actual results are likely to differ from theseestimates under different assumptions or conditions, but we do not believe suchdifferences will materially affect our consolidated statement of operations.Our critical accounting policies, the policies we believe are most important tothe presentation of our financial statements and require the most difficult,subjective and complex judgments, are outlined below in “—Critical AccountingPolicies.”  All references to results ofoperations in this discussion are to results from continuing operations, unlessotherwise noted.

**Safe Harbor Statement**

The matters inthis report that are forward-looking statements, including without limitationto statements about future revenues, sales levels, operating income andmargins, wireless handset sales, stock-based compensation expense, gain (loss)in value of derivatives, cost synergies, operating efficiencies, profitability,market share and rates of return, are based on current management expectationsthat involve certain risks which, if realized, in whole or in part, could causesuch expectations to fail to be achieved and have a material adverse effect onInfoSonics’ business, financial condition and results of operations, including,without limitation: (1) intense competition, regionally and internationally,including competition from alternative business models, such asmanufacturer-to-carrier sales, which may lead to reduced prices, lower sales orreduced sales growth, lower gross margins, extended payment terms withcustomers, increased capital investment and interest costs, bad debt risks andproduct supply shortages; (2) inability to secure adequate supply ofcompetitive products on a timely basis and on commercially reasonable terms;(3) foreign exchange rate fluctuations, devaluation of a foreign currency,adverse governmental controls or actions, political or economic instability, ordisruption of a foreign market, and other related risks of our internationaloperations; (4) the ability to attract new sources of profitable business fromexpansion of products or services or risks associated with entry into newmarkets, including geographies, products and services; (5) an interruption orfailure of our information systems or subversion of access or other systemcontrols may result in a significant loss of business, assets, or competitiveinformation; (6) significant changes in supplier terms and relationships; (7)termination of a supply or services agreement with a major supplier or productsupply shortages; (8) continued consolidation in the wireless handset carriermarket; (9) extended general economic downturn; (10) loss of business from oneor more significant customers; (11) customer and geographical accountsreceivable concentration risk; (12) rapid product improvement and technologicalchange resulting in inventory obsolescence; (13) future terrorist or militaryactions; (14) the loss of a key executive officer or other key employees; (15)changes in consumer demand for multimedia wireless handset products andfeatures; (16) our failure to adequately adapt to industry changes and tomanage potential growth and/or contractions; (17) future periodic assessmentsrequired by current or new accounting standards such as those relating tolong-lived assets, goodwill and other intangible assets and expensing of stockoptions and valuing gain or loss on fair value of derivatives may result inadditional non-cash income or expenses; (18) seasonal buying patterns;

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(19) dependency on LatinAmerican sales; and (20) uncertain political and economic conditionsinternationally; (21) the impact, if any, of changes in EITF 00-19 or SFAS 133guidance as it relates to warrants and registration rights; (22) the resolutionof any litigation against the company and (23) the ability of the Company togenerate income in future periods in order to utilize and realize any quarterlytax benefits recorded.  Our actualresults could differ materially from those anticipated in our forward lookingstatements*.*

InfoSonics has institutedin the past and continues to institute changes to its strategies, operationsand processes to address risks and uncertainties and to mitigate their impacton InfoSonics’ results of operations and financial condition. However, noassurances can be given that InfoSonics will be successful in these efforts.For a further discussion of significant factors to consider concerningInfoSonics, see “Item 1A. Risk Factors” of InfoSonics’ Annual Report on Form10-K for the year ended December 31, 2006 and “Part II. Item 1A. RiskFactors” of this report. In addition, other risks or uncertainties may be detailedfrom time to time in InfoSonics’ future SEC filings.

**Overview**

We are one of the premierproviders and distributors of wireless handsets and accessories in LatinAmerica and the United States. We provide end-to-end handset and wirelessterminal solutions for carriers in both Latin America and the UnitedStates.   We distribute products ofseveral key original equipment manufacturers, including Samsung, Alcatel/TCL,VK Corporation, LG, Novatel and others. We also distribute semi-proprietary products under the Disney brand inLatin America, and are designing and distributing our recently announcedproprietary line of products under our own *verykoolTM*brand, which will include entry level, mid-tier and high-end products.

As an integralpart of our customers’ supply chain, we perform value added services andsolutions, including product approval and certification, light assembly,warehousing, logistics services (packing, shipping and delivery), marketingcampaigns, warranty services and end-user support. We provide these servicesfor wireless handset manufacturers in order to facilitate sales to carriers,agents, resellers, distributors, independent dealers and retailers in LatinAmerica and the United States.

Our corporate headquarters is in San Diego,California, and from our facility in Miami Florida, where we have our LatinAmerica sales and executive offices, we operate our main warehouse anddistribution center. This warehouse and distribution center services ourcustomers in the United States and Latin America. In addition, we havewarehouse and office facilities in Mexico. We have wholly-owned subsidiaries inLatin America, which conduct some of our business activities in theirrespective regions of Latin America.

Due toseasonal and other factors, our interim condition or results may not be indicativeof fiscal year 2007 or other future condition or results. Our financialcondition and operating results are influenced by several seasonal and otherfactors, which may cause our financial condition and operating results tofluctuate on a quarterly basis, including, but not limited to, the timing andintroduction of new products by our suppliers and competitors, promotions andsubsidies by network operators, technical and certification delays by industrybodies as well as the operators, purchasing patterns of customers, the timingof holidays, the introduction of our proprietary *verykoolTM*products line and other events affecting consumer demand.

**Areas of Management Focus and PerformanceIndicators**

We focus on theneeds of our customers, developing and maintaining close relationships withmanufacturers, expanding in and entering into new markets, and sourcing new andinnovative products, while maintaining close attention to operationalefficiencies and costs. We intend to increase shipping volumes and improveefficiencies to enable higher levels of profitability and earnings growth.  We provide distribution and other servicesfor original equipment manufacturers, such as Samsung, as well assemi-proprietary products, such as Disney in Latin America, and our ownproprietary line of *verykoolTM*handsets.  Performance indicators thatare key for the monitoring and management of our business include operating andnet income, cost of sales and gross margin percentage, operating expenses as apercent of revenues, and overall net sales growth. We make extensive use of ourcustomized information system to closely monitor all aspects of our business,including customer relationship management, intelligent purchasing, inventorycontrol, and inventory flow, line item margin control for every order, andweighted average cost and statistical data for every product, customer andsupplier. We believe a strong focus on providing better service to customersleads to increased customer satisfaction and retention and potential increasesin sales.

Management spends a significant amount of timetraveling with the purpose of spending time with key customers, suppliers andemployees. We believe that these relationships are vital to our success, and wewill continue to dedicate a significant amount of time to this area.

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**Industry Trends and Risks**

According to aJanuary 2007 report by Deutsche Bank, in 2006, overall worldwide wirelesshandset sales increased by approximately 20%, and are forecasted to increase12% in 2007 and 8% in 2008. A rapid decline in wireless handset sales growthcould negatively impact our net sales. Excess supply conditions can reduce themarket prices of the products we sell and therefore affect our ability togenerate net sales and gross profit at historical levels and could affect thevalue of our inventory. Conversely, should manufacturers be unable to respondto an unanticipated increase in demand on a timely basis, we, along with othersin our industry, could experience supply constraints that would affect ourability to deliver products. We are unable to quantify these effects, as it isdifficult to predict future supply conditions and demand patterns which affectour ability to meet customer demand or sell handsets at an acceptable grossprofit.

**Company Specific Trends and Risks**

Our strategy incorporates overall market growthelements for each aspect of our business, which we hope will result incontinued growth. In the quarter ended March 31, 2007, our net sales increasedby 8%, and wireless handset units sold increased by 10%, compared with thequarter ended March 31, 2006. Although we have incorporated growth into ourstrategy, there can be no assurances that this trend will continue.

During the quarter ended March 31, 2007, weexperienced significant growth in our United States region, accounting for 21%of our total net sales, as compared to 3% for the quarter ended March 31,2006.  The South American and CentralAmerican regions collectively accounted for 79% of net sales for the firstquarter of 2007, compared to 97% for the first quarter of 2006. This increasein the United States was primarily the result of increased productavailability.  By contrast the decreaseof net sales in the Central America region was a result of a significant decreasein handset demand as a result of industry wide excess inventory in the channelfor that particular region, which had an impact on our net sales to that regionand our overall gross profit.

**Results of Operations:**

***Three Months EndedMarch 31, 2007 and 2006***

**Net Sales**

For the three months ended March 31, 2007 (firstquarter of 2007), our net sales of $58.4 million represented an increase of 8%compared to $54.1 million for the same period of 2006 (first quarter of2006).  This increase was primarilyattributable to a 10% increase in wireless handset volume, partially offset bya 5% decrease in average selling price per unit sold. The geographic mix of netsales shifted in the first quarter of 2007 as sales in the United Statesincreased substantially to 21% of net sales, as compared to 3% of net sales forthe first quarter of 2006.  In contrast,our net sales in Central America significantly decreased to 18% of our netsales for the first quarter of 2007, as compared to 36% of net sales for thefirst quarter of 2006.  Our South Americaregion continued to represent the majority of our business accounting for 61%of our net sales in the first quarter of 2007 and 2006.  This regional shift in net sales was theresult of two primary factors.  Productavailability in the United States was sufficient to meet the demands of ourcustomers.  However in contrast, theCentral American region had excess inventory in the channel, resulting in areduction of opportunity for sales and gross margin.  We continued our sales and marketing effortsin all regions and in the United States we were able to achieve incrementalsales to existing customers.  In SouthAmerica our efforts enabled sales to new customers and additional sales toexisting customers.  This regioncontinues to experience a general increase in handset sales.   In the first quarter of 2007 we had a netloss of $558,000, or $0.04 per diluted share, as compared to income of $1.2million or $0.08 per diluted share in the first quarter of 2006.  The first quarter of 2006 included non-cashincome of $399,000 resulting from change in fair value of derivative liabilityof warrants issued in conjunction with a financing completed during thatquarter.  Excluding this non-cash income,we had non-GAAP net income of $774,000 or $0.05 per diluted share for the firstquarter of 2006.  (see reconciliationbelow)

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|                                                                   | ** ** | **Quarter ended March 31,**                                                                    | ** ** | **Increase** | ** ** |
|-------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------|------------|--------------|------------|
| ** **                                                        | ** ** | **2007**                                                                                                      | ** ** | **2006**     | ** ** | **(Decrease)** | ** ** |
| ** **                                                        | ** ** | **(Dollar amounts in thousands,   except per share amounts)  (unaudited)** | ** ** | ** **   | ** ** |
| Net sales                                                         |       | $                                                                                                             | 58,404     |         | $          | 54,127 |   | 8% |   |
| Gross profit                                                      |       | 3,149                                                                                                         |       | 4,180        |       | (25)% |   |
| Net income (loss) GAAP                                            |       | (558                                                                                                          | )          | 1,173        |       | (147)% |   |
| Net income (loss)  non-GAAP                                       |       | (461                                                                                                          | )          | 774          |       | (171)% |   |
|                                                              |       |                                                                                                          |       |         |       |   |   |
| Diluted earnings (loss)  per share from net income (loss) GAAP    |       | $                                                                                                             | (0.04      | )            | $          | 0.08 |   | (138)% |   |
| Diluted earnings (loss) per share from net income (loss) non-GAAP |       | $                                                                                                             | (0.03      | )            | $          | 0.05 |   | (160)% |   |

**Net sales by geographic region**
|                 | ** ** | **Quarter ended March 31,**                    | ** ** | **Increase ** | ** ** |
|-----------------|------------|---------------------------------------------------------------|------------|--------------------|------------|
| ** **      | ** ** | **2007**                                                      | ** ** | **2006**           | ** ** | **(Decrease)** | ** ** |
| ** **      | ** ** | **(Dollar amounts in thousands)  (unaudited)** | ** ** | ** **         | ** ** |
| United States   |       | $                                                             | 12,158     |               | $          | 1,721 |   | 607% |   |
| Central America |       | 10,861                                                        |       | 19,375             |       | (44)% |   |
| South America   |       | 35,385                                                        |       | 33,031             |       | 7% |   |
| Total           |       | $                                                             | 58,404     |               | $          | 54,127 |   | 8% |   |

 

**Cost ofSales, Gross Profit and Gross Margin**

For the quarter ended March 31, 2007, cost of saleswas $55.3 million, or 94.6% of net sales, compared with $49.9 million, or 92.3%of net sales, for the quarter ended March 31, 2006. The increase in our totalcost of sales was a direct result of many factors including our increased saleslevels on a consolidated basis, as well as increased product mix of higher costproducts.  In the Central America region,a significant decrease in handset demand as a result of industry wide excessinventory in the channel for that particular region, also impacted our abilityto sell higher margin products.  Our grossmargin continues to be impacted by the change of product and regional mix ofour sales, as different products and different regions can have varyingmargins.

For the quarter ended March 31, 2007, our gross profitdecreased to $3.2 million from $4.2 million, compared with the same quarter lastyear, a decrease of 25%. This decrease in gross profit was primarily the resultof increased inventory levels in the Central American region, impacting grossmargin potential on those regional sales.
|               | ** ** | **Quarter Ended March 31,**                    | ** ** | **Increase ** | ** ** |
|---------------|------------|---------------------------------------------------------------|------------|--------------------|------------|
| ** **    | ** ** | **2007**                                                      | ** ** | **2006**           | ** ** | **(Decrease)** | ** ** |
| ** **    | ** ** | **(Dollar amounts in thousands)  (unaudited)** | ** ** | ** **         | ** ** |
| Cost of sales |       | $                                                             | 55,255     |               | $          | 49,947 |   | 11% |   |
| Gross profit  |       | $                                                             | 3,149      |               | $          | 4,180 |   | (25)% |   |
| Gross margin  |       | 5.4                                                           | %          | 7.7                | %          | (30)% |   |

 

**OperatingExpenses and Operating Income (loss) from Continuing Operations**

For the quarter ended March 31, 2007, operatingexpenses were $4.0 million, an increase of 30%, compared with the same quarterlast year. As a percentage of net sales, operating expenses were 6.9% in thequarter ended March 31, 2007, compared with 5.7% in the same quarter lastyear.  During the quarter ended March 31,2007, we incurred $97,000, or 0.2% of net sales, of non-cash expense relating to stock options,compared to $52,000, or 0.1% of net sales for the quarter ended March 31, 2006.Excluding such non-cash expense, operating expenses as a percentage of netsales were 6.7%, a significant increase from the same quarter last year.  This increase was primarily the result ofinvestments in facilities, marketing, engineering and product and marketdevelopment, predominantly attributable to

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our proprietary *verykoolTM* product line. We believe such investments are necessary to help build a solidfoundation in these regions as well as for the *verykoolTM*products  to support potential future growth.  (see reconciliation below)

For the quarter ended March 31, 2007, our operatingloss from continuing operations was $882,000, including the non-cash expense of$97,000 relatingto stock options, compared with income of $1.1 million for the quarterended March 31, 2006, a decrease of 198%. As a percentage of net sales,operating loss from continuing operations was 1.5% for the quarter ended March31, 2007, compared to income of 2.0% for the quarter ended March 31, 2006. Thedecrease in operating income from continuing operations was a result of theincrease in operating expenses discussed above, in addition to the decrease ingross margin.

**Operating Expenses**
|                         | ** ** | **Quarter Ended March 31,**                    | ** ** | **Increase** | ** ** |
|-------------------------|------------|---------------------------------------------------------------|------------|--------------|------------|
| ** **              | ** ** | **2007**                                                      | ** ** | **2006**     | ** ** | **(Decrease)** | ** ** |
| ** **              | ** ** | **(Dollar amounts in thousands)  (unaudited)** | ** ** | ** **   | ** ** |
| Operating expenses      |       | $                                                             | 4,031      |         | $          | 3,096 |   | (30)% |   |
| Percentage of net sales |       | 6.9                                                           | %          | 5.7          | %          | (21)% |   |
|                         |            |                                                               |            |              |            |  |  |  |  |

 

**OperatingIncome (loss) from Continuing Operations**
|                                                     | ** ** | **Quarter Ended March 31,**                    | ** ** | **Increase** | ** ** |
|-----------------------------------------------------|------------|---------------------------------------------------------------|------------|--------------|------------|
| ** **                                          | ** ** | **2007**                                                      | ** ** | **2006**     | ** ** | **(Decrease)** | ** ** |
| ** **                                          | ** ** | **(Dollar amounts in thousands)  (unaudited)** | ** ** | ** **   | ** ** |
| Operating income (loss)  from continuing operations |       | $                                                             | (882       | )            | $          | 1,084 |   | (181)% |   |
| Percentage of net sales                             |       | (1.5                                                          | )%         | 2.0          | %          | (175)% |   |
|                                                     |            |                                                               |            |              |            |  |  |  |  |

 

**Other Income (Expense)**

Duringthe quarter ended March 31, 2007, we incurred $55,000 of interest expense, compared to interest expense of $81,000 thesame period last year.  We expect toutilize larger amounts on our revolving line of credit regularly which willimpact our interest expense in future periods. Additionally during the quarter ended March 31, 2006, we had non-cashincome from change in fair value of derivative liability of $399,000, comparedto no such income during the quarter ended March 31, 2007.

**OtherIncome**
|                                               | ** ** | **Quarter Ended March 31,**                    | ** ** | **Increase** | ** ** |
|-----------------------------------------------|------------|---------------------------------------------------------------|------------|--------------|------------|
| ** **                                    | ** ** | **2007**                                                      | ** ** | **2006**     | ** ** | **(Decrease)** | ** ** |
| ** **                                    | ** ** | **(Dollar amounts in thousands)  (unaudited)** | ** ** | ** **   | ** ** |
| Change in fair value of  derivative liability |       | $                                                             | —     |         | $          | 399 |   | 100% |   |
| Interest income  (expense)                    |       | (55                                                           | )          | (81          | )          | (32)% |   |
|                                          |       | $                                                             | (55        | )            | $          | 318 |   | (117)% |   |

 

**NetIncome (Loss)**

Duringthe quarter ended March 31, 2007, our net loss was $558,000, compared to netincome of $1.2 million in the same period last year.  This loss was primarily related to thefactors discussed above including our decreased sales in the Central Americanregion in addition to our reduced gross margin and increased operationalexpenses and investments towards the potential future of our proprietary lineof *verykoolTM* products.

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**Reconciliation of Non-GAAP Financial Measures tothe Corresponding GAAP Financial Measures for the Three Months ended March 31,2007 (unaudited)**

The following areselected results including and excluding the impact of SFAS 123R and SFAS 133:
| ** **                        | ** ** | **Three Months ended 3-31-07** | ** ** | **Three Months ended 3-31-06** | ** ** |
|-----------------------------------|------------|-----------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                        | ** ** | **GAAP**                                      | ** ** | ** **                                    | ** ** | **Non-GAAP** | ** ** | **GAAP** | ** ** | ** ** | ** ** | **Non-GAAP** | ** ** |
| ** **                        | ** ** | **Actual**                                    | ** ** | **Adjustment**                                | ** ** | **Results** | ** ** | **Actual** | ** ** | **Adjustment** | ** ** | **Results** | ** ** |
|                              |       |                                          |       | $                                             | 97,449     | (a) |   |   |   |   | $ | 52,443 | (a) |   |   |
|                              |       |                                          |       | —                                        |       |   |   |   |   | (399,009 | )(b) |   |   |
| Net income (loss)                 |       | $                                             | (558,133   | )                                             | $          | 97,449 |   | $ | (460,684 | ) | $ | 1,173,327 |   | $ | (346,566 | ) | $ | 826,761 |   |
| Diluted earnings (loss) per share |       | $                                             | (0.04      | )                                             | $          | 0.00 |   | $ | (0.03 | ) | $ | 0.08 |   | $ | (0.02 | ) | $ | 0.06 |   |

 

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(a)   Eliminates non-cash stock-option compensationcharges under SFAS 123R recorded in the three months ended March 31, 2007 and2006.

(b)   To eliminate non-cash change in fair value ofderivative liability under SFAS 133 recorded in the three months ended March31, 2006.  This derivative liability wasreclassified to equity on February 17, 2006.

Effective January 1, 2006, the Company adoptedStatement of Financial Accounting Standards (SFAS) No. 123R, “Share-BasedPayment,” which requires the cost relating to share-based payment transactionsin which an entity exchanges its equity instruments for goods or services fromeither employees or non-employees to be recognized in the consolidatedfinancial statements as the goods or services are rendered.  The cost is measured at the fair value of theequity instrument issued as it vests. The Company is no longer permitted to follow the intrinsic valueaccounting method under previous accounting guidance, which previously resultedin no expense for stock options for which the exercise price was equal to thefair value of the underlying stock on the date of grant.

The Company believes that this financial informationis useful in assessing the Company’s historical performance and year-over-yeargrowth and when planning, forecasting and analyzing future periods.  The incremental impact of SFAS 123R duringthe three months ended March 31, 2007 represents the stock option expenserelated to stock options issued prior to the adoption of SFAS 123R and vestedduring the three months ended March 31, 2007 and the impact of estimatingforfeitures related to nonvested shares.

The Company believes thatexcluding the incremental impact of SFAS 133 from net income providesmeaningful supplemental information regarding its financial results for thethree months ended March 31, 2007 as compared to the same period in 2006.  The Company believes that this financialinformation is useful in assessing the Company’s historical performance andyear-over-year growth and when planning, forecasting and analyzing futureperiods.  The incremental impact of SFAS133 during the three months ended March 31, 2006 represents the change in fairvalue of the derivative liability (for the January 2006 financing relatedwarrants).

In September 1998, FASB issued SFAS No. 133, *Accounting for Derivative Instruments and Hedging Activities*.SFAS 133 establishes accounting and reporting standards for derivativeinstruments, including certain derivative instruments embedded in othercontracts (collectively referred to as derivatives) and for hedging activities.It requires that an entity recognize all derivatives as either assets orliabilities in the statement of financial position and measure thoseinstruments at fair value.

In January 2006, the Company sold shares ofcommon stock and warrants to purchase common stock.  The Company evaluated the warrants in thetransaction as derivative liabilities in accordance with SFAS No. 133until the date that the Company’s registration statement registering the sharesof common stock underlying such warrants was declared effective on February 17,2006, after which such warrants were classified as equity.  The change in the fair value of the warrants,determined under the Black- Scholes option pricing formula from the initialtransaction date to the effectiveness date of the registration statement isrecorded as an adjustment to the liability. The income relating to the changein the fair value of the Company’s stock reflected in the change in the fairvalue of the warrants is included as other income (expense). As the warrantshave been classified as equity, the Company no longer “marks to market” thechange in fair value of such warrants.

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**Financial Condition, Liquidity and CapitalResources**

**Cash used in Operating Activities**

At March 31, 2007, we had $12.2 million in cash. During the three monthsended March 31, 2007, we continued to leverage our bank and vendor lines ofcredit to fund our growth. The net cash used by operating activities was $14.3million for the three months ended March 31, 2007, which resulted primarilyfrom increased accounts receivable and increased inventory levels. Our accountsreceivable increased $7.1 million during the three months ended March 31,2007 due to increased sales and increased net payment terms  to certain regions during that period, asdescribed in the following paragraph. The $7.2 million increase ininventory during the three months ended March 31, 2007 and was due to highersales levels and buying opportunities which were available to us at March 31,2007. Allowance for doubtful accounts at March 31, 2007 increased to $779,000,compared to $680,000 at December 31, 2006. This increase****was related to the timing of customerpurchases towards the end of the quarter during the three months ended March31, 2007. We believe that at March 31, 2007, our reserve for doubtful accountswas adequate. Our increase in accounts payable of $149,000 and increase inaccrued expenses of $1.2 million at March 31, 2007 compared to December 31,2006 was an offset to the cash used for increased accounts receivable andinventory.

**Days of sales outstanding**

Days of sales outstanding (theaverage number of days it takes to collect revenue after a sale is made) atMarch 31, 2007 were 64 days, compared with 62 days at December 31, 2006. Normalpayment terms require our customers to pay on a net 30-day or net60-day basis depending on the region. We are constantly working with ourcustomers to reduce our days of sales outstanding. The extension of net 60-dayterms was required to remain competitive in several of the regions we currentlyoperate, most notably in Central and South America.

**Cash Used in Investing Activities**

The net cash used in investingactivities was $662,000 for the three months ended March 31, 2007, comparedwith $27,000 for the three months ended March 31, 2006. This use of cash isprimarily the result of expenditures for new furniture and fixtures related toour facility in Mexico and our office, technical assembly and warehouse space,as well as the technical tools and equipment necessary for the customizationprocess of wireless handsets.

**Net Cash used in Financing Activities**

The net cash used in financingactivities for the three months ended March 31, 2007 of $3.0 million wasprimarily the result of borrowings on our bank line of credit and approximately$253,000 from the exercise of employee stock options.

**Working Capital**

Our net working capital at March31, 2007 was $35.5 million, compared with $36.7 million at December 31, 2006.This increase was primarily due to our increase in accounts receivable andinventory for the three months ended March 31, 2007.

**Borrowings**

The Companyhas a line of credit from Wells Fargo HSBC Trade Bank N.A., which provides foradvances not to exceed 80% of eligible domestic accounts receivable and 85% offoreign-insured accounts receivable (depending on the country of the debtor),up to a maximum of $30,000,000. As of March 31, 2007, the majority of our debtwas based on foreign accounts receivable.

Interest is payable on a monthly basis(i) at Wells Fargo’s prime rate minus 0.25% (8.25% at March 31, 2007) or (ii)at the one-month LIBOR plus 1.50% (5.32% at March 31, 2007). The interest rateis floating at Wells Fargo’s prime rate or is at LIBOR plus 1.5% if the debt isa fixed amount drawn upon.  The line ofcredit is collateralized by substantially all of the assets of the Company, andexpires October 1, 2008. In addition to reporting and other non-financialcovenants, the line of credit contains certain financial covenants whichrequire the Company to maintain a tangible net worth of not less than$30,000,000 plus 50% of net profit after tax from January 1, 2007, a pre-taxprofit of not less than $1 on a rolling four quarter

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basis, a quick ratio of not less than one-to-one, adebt-to-net worth ratio of not greater than two-to-one, and an annual netincome after taxes of at least $1. Management believes the Company was incompliance with these covenants at March 31, 2007.

We have no other notes payable.

At March31, 2007 and December 31, 2006 the amounts drawn against the line of creditwere $22,369,071 and $25,648,614, respectively. Our credit lines havebeen important parts of growing our business, and market changes affectingaccounts receivable could diminish the borrowing base of available funds. AtMarch 31, 2007 and December 31, 2006, advances were 75% and 84% of theavailable borrowing base.

***CriticalAccounting Policies***

We believe the following critical accounting policiesare important to the presentation of our financial condition and operatingresults, and require management’s judgments to make assumptions and estimatesabout the effects of matters that are inherently uncertain.

*RevenueRecognition and Allowance for Returns*

Revenues forwireless handset and accessory sales are recognized upon (i) shipment ofthe products to customers, (ii) when collection of the outstandingreceivables are probable and (iii) the final price of the product isdetermined. Sales are recorded net of discounts, rebates, cooperativearrangements (marketing, training and promotional funds), returns, andallowances.  Consideration is given onselect sales for cooperative arrangements related to market development,training and special promotions usually agreed upon in advance. The amountgiven is generally in the form of a credit memo, which is applied as areduction of the sale. The same amount is recorded as a current liability. Expendituresmade pursuant to the agreed upon activity reduce this liability. To the extentthat the Company incurs costs in excess of the established cooperative fund,the Company recognizes the amount as a selling or marketing expense. As part ofthe sales process, the Company may perform certain valued added services suchas programming, software loading and quality assurance testing. These valueadded services are considered an ancillary component of the sales process andamounts attributable to these processes are included to in the unit cost to thecustomer. Furthermore, these value added services are related to services priorto the shipment of the products, and no value added services are provided afterdelivery of the products.  The Companyrecognizes as a reserve against the related receivables estimates for productreturns based on historical experience and other judgmental factors, evaluatesthese estimates on an on-going basis and adjusts its estimates each periodbased on actual product return activity. The Company recognizes freight costsbilled to its customers in revenue and actual freight costs incurred as acomponent of cost of revenue.

*Allowance forDoubtful Accounts*

Credit evaluations are undertaken for all major salestransactions before shipment is authorized. Normal payment terms requirepayment on a net 30 or 60 day basis depending on the customer. On an ongoingbasis, we analyze the payment history of customer accounts, including recentcustomer purchases. We evaluate aged items in accounts receivable and providereserves for doubtful accounts. Customer creditworthiness and economicconditions may change, including increasing the risk of collectibility andsales returns, and may require additional provisions, which could negativelyimpact our operating results.

*InventoryWrite-Off and Effect on Gross Margin*

We regularly monitor inventory quantities on hand andrecord a provision for excess and obsolete inventories based primarily onhistorical usage rates and our estimated forecast of product demand for aperiod of time, generally three months. Because of obsolescence, we willgenerally provide a full reserve for the costs of our inventories in excess ofour relevant demand forecast for the applicable period. We attempt to controlour inventory levels so that we limit inventories in excess of demand for thesucceeding three months. However, because we need to place non-cancelableorders with significant lead time and because it is difficult to estimateproduct demand, we sometimes build inventories in excess of demand for theapplicable future periods. If this occurs, we provide a reserve, which may havea negative impact on our reported results of operations and financialcondition.

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**Item 3. Quantitative and QualitativeDisclosures About Market Risk**

The primary objective of the following information isto provide forward-looking quantitative and qualitative information about ourpotential exposure to market risks. The term “market risk” for us refers to therisk of loss arising from adverse changes in interest rates and various foreigncurrencies. The disclosures are not meant to be precise indicators of expectedfuture losses, but rather indicators of reasonably possible losses. Thisforward-looking information provides indicators of how we view and manage ourongoing market risk exposures.

**Interest Rate**

We are exposed to market risk from changes in interestrates on our outstanding revolving line of credit. At March 31, 2007, we had$22.4 million outstanding, which could be affected by changes in short-terminterest rates. The interest rate for our revolving line of credit is (i) WellsFargo’s prime rate minus 0.25 (8.25% at March 31, 2007) or LIBOR plus 1.50%(5.32% at March 31, 2007). For every 1% increase in Wells Fargo’s prime rate orone-month LIBOR, our interest expense increases by $224,000 assuming $22.4million remained outstanding for the entire year.

The above sensitivity analysis for interest rate riskexcludes accounts receivable, accounts payable and accrued liabilities becauseof the short-term maturity of such instruments. The analysis does not considerthe effect interest rate movement may have on other variables relating to ourbusiness, including changes in sales volumes that could be indirectlyattributed to changes in interest rates. The actions that we would take inresponse to such a change are also not considered. If it were possible toquantify this impact, the results could differ from the sensitivity effectsshown above.

**Market Risk**

Substantial portions of our revenue and expenses aretransacted in markets outside the United States; however, all salestransactions and accounts receivable are denominated in U.S. dollars. As aresult of our international sales, our future operating results could beadversely affected by a variety of factors, including changes in specificcountries’ political, economic or regulatory conditions, and trade protectionmeasures.  Our market risk managementincludes an accounts receivable insurance policy for both our domestic andforeign sales.  However, there can be noassurance that our insurance policy will substantially offset the impact offluctuations in currency exchange rates, political, economic or regulatoryconditions on its results of operations and financial position. Foreign currencyfluctuations did not have a material impact on our financial results during thethree months ended March 31, 2007.

**Item 4. Controls and Procedures**

**DisclosureControls**

Pursuant to Rule13a-15(e) and 15d-15(e) under the Exchange Act, an evaluation was performedunder the supervision and with the participation of the Company’s management,including the Chief Executive Officer and President and the Chief FinancialOfficer, of the effectiveness of the design and operation of the Company’sdisclosure controls and procedures as of the end of the period covered by thisreport.  Based on the evaluation, theChief Executive Officer and President and the Chief Financial Officer,concluded that the Company’s disclosure controls and procedures were effectiveas of the end of the period covered by the report.

**Changesin Internal Control Over Financial Reporting**

The Chief Executive Officer and President and theChief Financial Officer conducted an evaluation of our internal control overfinancial reporting (as defined in Exchange Act Rule 13a-15(f)) (“InternalControl”) to determine whether any changes in Internal Control occurred duringthe quarter ended March 31, 2007, that have materially affected or which arereasonably likely to materially affect Internal Control. Based on thatevaluation, no such change occurred during such period.

The Company is not an “accelerated filer” (i.e. theCompany’s public float is less than $75 million) for the fiscal year 2006;hence, the internal controls certification and attestation requirements ofSection 404 of the Sarbanes-Oxley act will not be applicable to the Companyuntil the fiscal year ended December 31, 2007. Notwithstanding the fact that these internal control requirements arenot applicable to the Company at this time, the Company has been reviewing itsinternal control procedures and it has retained an outside firm to assist inthis process.

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**PART II. OTHERINFORMATION**

**Item 1. Legal Proceedings**

*Securities Class Actions*

Six securitiesactions, originally filed between June and July 2006, were recentlyconsolidated as *In Re: InfoSonics Corporation SecuritiesLitigation*, Lead Case No. 06 CV 1231, before Judge Moskowitz in theSouthern District of California. Plaintiffs’ consolidated complaint was filed on February 14, 2007.  Plaintiffs assert claims for violation ofsection 10(b) of the Exchange Act and associated Rule 10b-5, 20(a) and 20A inconnection with the Company’s restatement announced June 12, 2006 and allegedlyfalse and/or misleading statements and accounting related to the Company’sdistribution agreement with VK Mobile. Plaintiffs seek a declaration that their action is a proper class actionpursuant to Rule 23(a) and (b)(3), unspecified damages, prejudgment andpost-judgment interest, attorneys’ fees, expert witness fees, other costs, andother unspecified relief.  The plaintiffspurport to represent a class of purchasers of the Company’s stock during theperiod February 6, 2006 to August 9, 2006. On April 16, 2007, the defendants filed a motion to dismiss the consolidatedcomplaint on the grounds, among others, that the plaintiffs have failed toadequately plead violations of the securities laws.  Plaintiffs’ response to defendants’ motion todismiss is due May 16, 2007 and the motion is currently scheduled to be heardon June 15, 2007.  As of this time, theCourt has not set a date for trial or completion of discovery.

*Derivative Lawsuits*

The threederivative lawsuits originally filed on June 27, 2006, July 14, 2006, and July28, 2006 in the United States District Court for the Southern District ofCalifornia, purportedly on behalf of the Company against certain of ourofficers and directors, and the Company as a nominal defendant, have beenconsolidated as *In Re InfoSonics Corporation DerivativeLitigation*, Lead Case No. 06 CV 1336, and transferred to JudgeMoskowitz in the Southern District of California.  Plaintiffs’ consolidated complaint wasreceived on November 8, 2006.  It assertsclaims for disgorgement under the Sarbanes-Oxley Act of 2002, violation ofSection 14(a) of the Exchange Act, violation of California Corporations Codesection 25403, violation of California Corporations Code section 254403, breachof fiduciary duty, abuse of control, gross mismanagement, waste of corporateassets, unjust enrichment, and an accounting, in connection with the Company’srestatement of first quarter 2006 earnings and in connection with allegationsof wrongdoing with respect to granting, exercising, accounting and reporting ofthe stock options that the Company granted in December 2005.  Plaintiffs seek unspecified damages,declaratory relief regarding the Sarbanes-Oxley Act of 2002, Section 14(a) ofthe Exchange Act, and the legality of stock options, a constructive trust,restitution, disgorgement, modification of certain corporate governance andinternal procedures, extraordinary equitable and/or injunctive relief, costs,and such other relief as is just and proper. On January 12, 2007, defendants filed a motion to dismiss on the grounds,among others, that the plaintiffs had failed to make a demand on the Company’sboard of directors and to adequately allege their other purported claims.  The two non-resident director defendants alsofiled motions to dismiss based upon a lack of personal jurisdiction inCalifornia.  The motion to dismiss forfailure to make a demand and failure to state a claim was submitted on April27, 2007.  The hearing on the personaljurisdiction motion has been continued until May 22, 2007 to allow plaintiffs toconduct limited discovery on the personal jurisdiction issue.  As of this time, the Court has not set a datefor trial or completion of discovery.

We may become involved in certainother legal proceedings and claims which arise in the normal course ofbusiness. Other than as described above, as of March 31, 2007, we did not haveany significant litigation outstanding.

**Item 1A.  Risk Factors**

Inaddition to the other information set forth in this report, you shouldcarefully consider the factors discussed in “Part I. Item 1A. Risk Factors” inour Annual Report on Form 10-K for the year ended December 31, 2006, whichcould materially affect our business, financial condition or operating results.The risk factors and uncertainties described in our Annual Report on Form 10-Kare not the only risks and uncertainties facing us. Additional risks anduncertainties not currently known to us or that we currently deem to beimmaterial also may materially affect our business, financial condition oroperating results.  Except as set forthbelow, there have been no material changes to the risk factors included in ourAnnual Report on Form 10-K during the period covered by this report.

***We buy a significant amount of our products from a limitednumber of suppliers, who may not provide us with competitive products atreasonable prices when we need them in the future.***

We purchase wireless handsets and accessoriesprincipally from wireless communications equipment manufacturers

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anddistributors. We depend on these suppliers to provide us with adequateinventories of currently popular brand name products on a timely basis and onfavorable pricing and other terms, as well as depending on our suppliers’abilities and financial stability. Forthe quarter ended March 31, 2007, two suppliers accounted for 45% and 25%, respectively,of our total cost of sales.  We currently have one exclusive and severalnon-exclusive agreements with our principal suppliers, which can be terminatedon short notice and provide for certain territorial restrictions. Our suppliersmay not offer us competitive products on favorable terms or with timelydelivery. In addition new products from other manufacturers could impact thedemand for products from manufacturers we represent. From time to time, we havebeen unable to obtain sufficient product supplies. Any failure or delay by oursuppliers, particularly our three primary vendors, in supplying us withproducts on favorable terms may severely diminish our ability to obtain anddeliver products to our customers on a timely and competitive basis. If we loseany of our principal suppliers, or if these suppliers are unable to fulfill ourproduct needs, or if any principal supplier imposes substantial price increasesand alternative sources of supply are not readily available, it would have amaterial adverse effect on our results of operations.

***The loss or reduction in orders from principal customers ora reduction in prices we are able to charge these customers will have anegative impact upon our revenues and could cause our stock price to decline.***

Our four largest customers in the quarter endedMarch 31, 2007 represented 21%, 13%,  11%and 11% of our net sales.  Thesecustomers are carriers in South America and the United States. The markets weserve are subject to significant price competition. Additionally, our customersare not contractually obligated to purchase products from us. For these andother reasons, such as competitive pricing and competitive pressures, customersmay seek to obtain products or services from us at lower prices than we havebeen able to obtain from these customers in the past. This could occur, forexample, in the case of a customer purchasing large quantities of a productfrom us, who then terminates this relationship because the customer can obtaina lower price by buying directly from the manufacturer or other supplier. Theloss of any of our principal customers, a reduction in the amount of product orservices our principal customers order from us or the inability to maintaincurrent terms, including price, with these or other customers could have anadverse effect on our financial condition, results of operations and liquidity.In addition, we have experienced losses of certain customers through industryconsolidation and in the ordinary course of business. There can be no assurancethat any of our customers will continue to purchase products or services fromus or that their purchases will be at the same or greater levels than in priorperiods.

***Approximately 79% of our revenues during thequarter ended March 31, 2007 were generated outside of the United States incountries that may have volatile currencies or other risks.***

We engage in significant sales activities interritories and countries outside of the United States, particularly LatinAmerican countries, including Argentina. All our sales transactions are completed in U.S. dollars. The fact thatwe distribute products into a number of territories and countries exposes usto, among other things, increased credit risks, customs duties, import quotasand other trade restrictions, potentially greater and more unpredictableinflationary pressures, and shipping delays. Changes may occur in social,political, regulatory and economic conditions or in laws and policies governingforeign trade and investment in the territories and countries where wecurrently distribute products. United States laws and regulations relating toinvestment and trade in foreign countries could also change to our detriment.Any of these factors could have material adverse effects on our business and operations.Although we purchase and sell products and services in U.S. dollars and do notengage in exchange swaps, futures or options contracts or other hedgingtechniques, fluctuations in currency exchange rates could reduce demand forproducts sold in U.S. dollars. We cannot predict the effect that futureexchange rate fluctuations will have on our operating results. We may in thefuture engage in currency hedging transactions, which could result in ourincurring significant additional financial risks, including losses.

***We have outstanding indebtedness, which is secured bysubstantially all our assets and could prevent us from borrowing additionalfunds, if needed.***

Wehad outstanding debt in the amount of $22.4 million at March 31, 2007 and $25.6million at December 31, 2006 in the form of a bank line of credit of up to $30million based on a borrowing base, which is based on a percentage of eligibleaccounts receivable.Any significant decrease in our level of eligible accounts receivable willreduce our ability to borrow additional funds to adequately finance ouroperations and expansion strategies. If we violate our loan covenants, defaulton our obligations or become subject to a change of control, our indebtednesswould become immediately due and payable. The terms of our credit facilityrestrict us from incurring additional indebtedness, which could limit ourability to expand our operations. We are also subject to negative covenantsthat, among other things, limit our ability to sell certain assets and makecertain payments, including but not limited to, dividends, repurchases ofcommon stock and other payments outside the normal course of business, as wellas prohibiting us from merging or consolidating with another corporation orselling all or substantially all of our assets.

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***We depend onthird parties to manufacture our proprietary verykoolTM products that wedistribute and, accordingly, rely on their quality control procedures and weassume the inventory risk associated with those products.***

Product manufacturerstypically provide no warranties on these proprietary products directly to theend consumer or to us, therefore we are solely responsible for such warranty tothe end consumer. If a product we distribute for a manufacturer has quality orperformance problems, our ability to provide products to our customers could bedisrupted.  In addition as the *verykoolTM* products are manufactured exclusively for us, weare burdened with carrying the inventory and there can be no assurance that wewill be able to sell these devices before payment is due and at prices aboveour cost. Either of these risks could have a negative effect on our operationsand future liquidity.

***Stockholders have been and may be diluted as a result ofpast or future offerings or other financings or equity grants.***

We may in the future raise additional capital throughone or more public offerings, private placements or other financings involvingour securities or make stock option or other equity grants. As a result ofthese financings or grants, ownership interests in us may be diluted,potentially substantially.

***Classaction and derivative lawsuits have been filed against us, our board ofdirectors and certain of our officers, and other lawsuits may be institutedagainst us from time to time.***

We are currently, and from time to time in thefuture may become, subject to claims and litigation, which could be expensive,lengthy, and disruptive to our normal business operations.  In addition, the outcome of any claims orlitigation may be difficult to predict and could have a material adverse effecton our business, operating results or financial condition.  For further information regarding certainclaims and litigation in which we are currently involved, see “Part II – Item1.  Legal Proceedings” above.

**Item 2.    Unregistered Sales Of Equity Securities AndUse Of Proceeds**

None.

**Item 3.    Defaults on Senior Securities**

None.

**Item 4.    Submission of Matters to a Vote of SecurityHolders**

## None

**Item 5.    Other Information**

None.

**Item 6.****   ****Exhibits**
| Exhibit Number | ** ** | **Description of Exhibit**                                                                                                                                                    |
|----------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |       |                                                                                                                                                                          |
| 3.1            |       | Amendment to the Bylaws of the Company (*)                                                                                                                                    |
|           |       |                                                                                                                                                                          |
| 10.1           |       | Distribution Agreement by and between InfoSonics  Corporation and Samsung Electronics Argentina S.A. effective as of January 1,  2007 (1)                                     |
|           |       |                                                                                                                                                                          |
| 10.2           |       | Credit Agreement Amendment by and between InfoSonics  Corporation and Wells Fargo HSBC Trade Bank, N.A. entered into February 16,  2007 (2)                                   |
|           |       |                                                                                                                                                                          |
| 10.3           |       | Amendment to Employment Agreement as of March 5,  2007, with Joseph Ram (3)                                                                                                   |
|           |       |                                                                                                                                                                          |
| 10.4           |       | Amendment to Employment Agreement as of March 5, 2007,  with Abraham Rosler (3)                                                                                               |
|           |       |                                                                                                                                                                          |
| 10.5           |       | Amendment to Employment Agreement as of March 5, 2007,  with Jeffrey Klausner (3)                                                                                             |
|           |       |                                                                                                                                                                          |
| 31.1           |       | Certification of Chief Executive Officer pursuant to  Rule 13a-14(a) of the Securities Exchange Act of 1934, implementing  Section 302 of Sarbanes-Oxley Act of 2002 (*) |
|           |       |                                                                                                                                                                          |
| 31.2           |       | Certification of Chief Financial Officer pursuant to  Rule 13a-14(a) of the Securities Exchange Act of 1934, implementing  Section 302 of Sarbanes-Oxley Act of 2002 (*) |
|           |       |                                                                                                                                                                          |
| 32.1           |       | Certification of Chief Executive Officer pursuant to  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of  Sarbanes-Oxley Act of 2002 (*)                      |

 

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| Exhibit Number | ** ** | **Description of Exhibit**                                                                                                                               |
|----------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |       |                                                                                                                                                     |
| 32.2           |       | Certification of Chief Financial Officer pursuant to  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of  Sarbanes-Oxley Act of 2002 (*) |

 

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(*)  Filed herewith.

(1)  Incorporated by reference from the Company’sCurrent Report on Form 8-K filed on January 4, 2007.

(2)  Incorporated by reference from the Company’sCurrent Report on Form 8-K filed on February 16, 2007.

(3)  Incorporated by referencefrom the Company’s Current Report on Form 8-K filed on March 8, 2007.

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**SIGNATURE**

Pursuant to the requirementsof the Securities Exchange Act of 1934, as amended, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.
|        |          |   | ** ** | **InfoSonics  Corporation** |
|--------|---------------|--------|------------|-----------------------------|
|   |          |   |       |                        |   |   |
|   |          |   |       |                        |   |   |
| Date:  | May 15,  2007 |   |       | By:                         | /s/  Joseph  Ram |   |
|   |          |   |       |                        | Joseph  Ram |
|   |          |   |       |                        | Chief  Executive Officer |
|   |          |   |       |                        |   |   |
|   |          |   |       |                        |   |   |
| Date:  | May 15,  2007 |   |       | By:                         | /s/  Jeffrey  Klausner |   |
|   |          |   |       |                        | Jeffrey  Klausner |
|   |          |   |       |                        | Chief  Financial Officer |
|        |               |        |            |                             |  |  |  |

 

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