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Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
As a result of the company's international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; • potential restrictions on transfers of funds; • import and export duties and value-added taxes; • transportation delays and interruptions; • the burden and cost of compliance with complex multi-national tax laws and regulations; • uncertainties arising from local business practices and cultural considerations; • enforcement of the Foreign Corrupt Practices Act, or similar laws of other jurisdictions; • foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; • volatility associated with sovereign debt of certain international economies; • the uncertainty surrounding the implementation and effects of Brexit; • potential military conflicts and political risks; and • currency fluctuations, which the company attempts to minimize through traditional hedging instruments. |
Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States ("GAAP"), the company also discloses certain non-GAAP financial information, including: • Sales, income, or expense items as adjusted for the impact of changes in foreign currencies (referred to as "impact of changes in foreign currencies") and the impact of acquisitions by adjusting the company's prior periods to include the operating results of businesses acquired, including the amortization expense related to acquired intangible assets, as if the acquisitions had occurred at the beginning of the earliest period presented (referred to as "impact of acquisitions"); • Operating income as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, and impairment charge; and • Net income attributable to shareholders as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, impairment charge, gain on sale of investment, loss on investment, loss on prepayment of debt, and settlement of certain international tax matters. |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
As a result of the company's international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; • potential restrictions on transfers of funds; • import and export duties and value-added taxes; • transportation delays and interruptions; • the burden and cost of compliance with complex multi-national tax laws and regulations; • uncertainties arising from local business practices and cultural considerations; • enforcement of the Foreign Corrupt Practices Act, or similar laws of other jurisdictions; • foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; • volatility associated with sovereign debt of certain international economies; • potential military conflicts and political risks; and • currency fluctuations, which the company attempts to minimize through traditional hedging instruments. |
Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States ("GAAP"), the company also discloses certain non-GAAP financial information, including: • Sales, income, or expense items as adjusted for the impact of changes in foreign currencies (referred to as "impact of changes in foreign currencies") and the impact of acquisitions by adjusting the company's prior periods to include the operating results of businesses acquired, including the amortization expense related to acquired intangible assets, as if the acquisitions had occurred at the beginning of the earliest period presented (referred to as "impact of acquisitions"); • Operating income as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, and impairment charge; and • Net income attributable to shareholders as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, impairment charge, gain on sale of investment, loss on investment, loss on prepayment of debt, and settlement of certain international tax matters. |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
As a result of the company's international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; • potential restrictions on transfers of funds; • import and export duties and value-added taxes; • transportation delays and interruptions; • the burden and cost of compliance with complex multi-national tax laws and regulations; • uncertainties arising from local business practices and cultural considerations; • enforcement of the Foreign Corrupt Practices Act, or similar laws of other jurisdictions; • foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; • volatility associated with sovereign debt of certain international economies; • potential military conflicts and political risks; and • currency fluctuations, which the company attempts to minimize through traditional hedging instruments. |
Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States ("GAAP"), the company also discloses certain non-GAAP financial information, including: • Sales, income, or expense items as adjusted for the impact of changes in foreign currencies (referred to as "impact of changes in foreign currencies") and the impact of acquisitions by adjusting the company's prior periods to include the operating results of businesses acquired, including the amortization expense related to acquired intangible assets, as if the acquisitions had occurred at the beginning of the earliest period presented (referred to as "impact of acquisitions"); • Sales adjusted for certain items that impact the year-over-year comparison, which includes the aforementioned change in presentation of sales related to certain fulfillment contracts to present these revenues on an agency basis as net fees (referred to as "change in presentation of sales"); • Operating income as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, impairment charge, and settlement of legal matters; and • Net income attributable to shareholders as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, impairment charge, gain on sale of investment, loss on prepayment of debt, and settlement of certain international tax matters. |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
As a result of the company's international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; • potential restrictions on transfers of funds; • import and export duties and value-added taxes; • transportation delays and interruptions; • the burden and cost of compliance with complex multi-national tax laws and regulations; • uncertainties arising from local business practices and cultural considerations; • enforcement of the Foreign Corrupt Practices Act, or similar laws of other jurisdictions; • foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; • volatility associated with sovereign debt of certain international economies; • potential military conflicts and political risks; and • currency fluctuations, which the company attempts to minimize through traditional hedging instruments. |
Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States ("GAAP"), the company also discloses certain non-GAAP financial information, including: • Sales, income, or expense items as adjusted for the impact of changes in foreign currencies (referred to as "impact of changes in foreign currencies") and the impact of acquisitions by adjusting the company's prior periods to include the operating results of businesses acquired, including the amortization expense related to acquired intangible assets, as if the acquisitions had occurred at the beginning of the period presented (referred to as "impact of acquisitions"); • Sales adjusted for certain items that impact the year-over-year comparison, which includes the aforementioned change in presentation of sales related to certain fulfillment contracts to present these revenues on an agency basis as net fees (referred to as "change in presentation of sales"); • Operating income as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, and settlement of legal matters; and • Net income attributable to shareholders as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, settlement of legal matters, loss on prepayment of debt, gain on bargain purchase, settlement of certain international tax matters, and reversal of valuation allowance on deferred tax assets. |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
As a result of the company's international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; • potential restrictions on transfers of funds; • import and export duties and value-added taxes; • transportation delays and interruptions; • uncertainties arising from local business practices and cultural considerations; • enforcement of the Foreign Corrupt Practices Act, or similar laws of other jurisdictions; • foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; • recent volatility associated with sovereign debt of certain international economies; • potential military conflicts and political risks; and • currency fluctuations, which the company attempts to minimize through traditional hedging instruments. |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development; • cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers; contemplation of bankruptcy; or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers). |
As a result of the company's international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; • potential restrictions on transfers of funds; • import and export duties and value-added taxes; • transportation delays and interruptions; • uncertainties arising from local business practices and cultural considerations; • enforcement of the Foreign Corrupt Practices Act, or similar laws of other jurisdictions; • foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; • recent volatility associated with sovereign debt of certain international economies; • potential military conflicts and political risks; and • currency fluctuations, which the company attempts to minimize through traditional hedging instruments. |
The following items impacted the comparability of the company's results for the years ended December 31, 2011 and 2010: • restructuring, integration, and other charges of $37.8 million ($28.1 million net of related taxes) in 2011 and $33.5 million ($24.6 million net of related taxes) in 2010; • a charge of $5.9 million ($3.6 million net of related taxes) related to the settlement of a legal matter in 2011; • a gain on bargain purchase of $1.1 million ($.7 million net of related taxes) in 2011; • a loss on prepayment of debt of $.9 million ($.5 million net of related taxes) in 2011 and $1.6 million ($1.0 million net of related taxes) in 2010; • a net reduction in the provision for income taxes of $28.9 million principally due to a reversal of a valuation allowance on certain international deferred tax assets in 2011; and • a net reduction of the provision for income taxes of $9.4 million and a reduction in interest expense of $3.8 million ($2.3 million net of related taxes) primarily related to the settlement of certain income tax matters in 2010 covering multiple years. |
As a result of the company’s international sales and locations, its operations are subject to a variety of risks that are specific to international operations, including the following: · import and export regulations that could erode profit margins or restrict exports; · the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; · potential restrictions on transfers of funds; · import and export duties and value-added taxes; · transportation delays and interruptions; · uncertainties arising from local business practices and cultural considerations; · enforcement of the Foreign Corrupt Practices Act, or similar laws of other jurisdictions; · foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction; · recent volatility associated with sovereign debt of certain international economies; · potential military conflicts and political risks; and · currency fluctuations, which the company attempts to minimize through traditional hedging instruments. |
The following table sets forth certain selected consolidated financial data and should be read in conjunction with the company’s consolidated financial statements and related notes appearing elsewhere in this annual report on Form 10-K (dollars in thousands except per share data): (a) Operating income and income from continuing operations include restructuring charges of $11.8 million ($9.0 million net of related taxes or $.07 per share on both a basic and diluted basis), a charge related to a pre-acquisition warranty claim of $2.8 million ($1.9 million net of related taxes or $.02 per share on both a basic and diluted basis), a charge related to pre-acquisition environmental matters arising out of the company’s purchase of Wyle of $1.4 million ($.9 million net of related taxes or $.01 per share on both a basic and diluted basis), and stock option expense of $13.0 million ($8.5 million net of related taxes or $.07 per share on both a basic and diluted basis) resulting from the company’s adoption of Financial Accounting Standards Board (“FASB”) Statement No. |
ARROW ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Total integration charges, comprised of the specific integrations discussed above, together with various previous acquisitions, are as follows at December 31, 2003 (in thousands): Personnel Costs Facilities Asset Write-down IT and other Total December 2000 $ 16,922 $ 38,988 $ 8,134 $ 19,290 $ 83,334 Additions (a) 4,789 (314 ) 1,217 10,009 15,701 Reversals (b) - (11,814 ) - (500 ) (12,314 ) Payments (16,036 ) (7,721 ) (898 ) (13,184 ) (37,839 ) Foreign currency translation (378 ) Non-cash usage - - (6,132 ) - (6,132 ) December 2001 5,725 19,421 2,422 15,237 42,805 Payments (2,972 ) (3,079 ) (189 ) (5,308 ) (11,548 ) Reversals - (7 ) - (407 ) (414 ) Foreign currency translation (1,153 ) (223 ) 1,108 (9 ) Non-cash usage - (30 ) (1,573 ) (2,406 ) (4,009 ) December 2002 3,012 15,152 8,224 26,825 Additions (c) 10,211 - - 8,196 18,407 Payments (11,164 ) (3,354 ) - (7,047 ) (21,565 ) Reversals (d) (2,311 ) (3,249 ) - - (5,560 ) Foreign currency translation (429 ) (59 ) (327 ) (563 ) Non-cash usage - (424 ) (89 ) (356 ) (869 ) (a) Represents costs associated with the acquisition and integration of Wyle, the open computing alliance subsidiary of Merisel, Inc., and Jakob Hatteland. |
ARROW ELECTRONICS, INC. By: /s/ Peter S. Brown Peter S. Brown Senior Vice President March 15, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: By: /s/ Daniel W. Duval March 15, 2004 Daniel W. Duval, Chairman By: /s/ William E. Mitchell March 15, 2004 William E. Mitchell, President and Chief Executive Officer By: /s/ Paul J. Reilly March 15, 2004 Paul J. Reilly, Chief Financial Officer By: /s/ Carmelo Seguinot March 15, 2004 Carmelo Seguinot, Controller By: /s/ John N. Hanson March 15, 2004 John N. Hanson, Director By: /s/ Roger King March 15, 2004 Roger King, Director By: /s/ Karen Gordon Mills March 15, 2004 Karen Gordon Mills, Director By: /s/ Stephen C. Patrick March 15, 2004 Stephen C. Patrick, Director By: /s/ Barry W. Perry March 15, 2004 Barry W. Perry, Director By: /s/ Richard S. Rosenbloom March 15, 2004 Richard S. Rosenbloom, Director By: /s/ John C. Waddell March 15, 2004 John C. Waddell, Director |
ARROW ELECTRONICS, INC. By: /s/ Peter S. Brown Peter S. Brown Senior Vice President March 27, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: By: /s/ Daniel W. Duval March 27, 2003 Daniel W. Duval, Chairman By: /s/ William E. Mitchell March 27, 2003 William E. Mitchell, President and Chief Executive Officer By: /s/ Paul J. Reilly March 27, 2003 Paul J. Reilly, Chief Financial Officer By: /s/ Robert E. Klatell March 27, 2003 Robert E. Klatell, Executive Vice President and Director By: /s/ Carlo Giersch March 27, 2003 Carlo Giersch, Director By: /s/ John N. Hanson March 27, 2003 John N. Hanson, Director By: /s/ Stephen P. Kaufman March 27, 2003 Stephen P. Kaufman, Director By: /s/ Roger King March 27, 2003 Roger King, Director By: /s/ Karen Gordon Mills March 27, 2003 Karen Gordon Mills, Director By: /s/ Barry W. Perry March 27, 2003 Barry W. Perry, Director By: /s/ Richard S. Rosenbloom March 27, 2003 Richard S. Rosenbloom, Director By: /s/ John C. Waddell March 27, 2003 John C. Waddell, Director Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, William E. Mitchell, Chief Executive Officer, certify that: 1. |
ARROW ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED The following summarizes the allocation of the aggregate consider- ation paid for the aforementioned acquisitions, except Spoerle, to the fair market value of the assets acquired and liabilities assumed by the company (in thousands): Current assets: Accounts receivable ..................$48,010 Inventories........................... 31,726 Other................................. 2,972 $ 82,708 Property, plant and equipment........... 3,876 Cost in excess of net assets of acquired businesses................... 50,797 Other assets............................ 9,113 146,494 Current liabilities: Accounts payable.....................$(30,412) Accrued expenses..................... (35,374) Other................................ (16,789) (82,575) Net consideration paid................. $ 63,919 In February 1992, the company acquired the electronics distribution businesses of Lex Service PLC ("Lex") in the U.K. and France, and Spoerle acquired the electronics distribution business of Lex in Germany. |
The following summarizes the allocation of the consideration paid for the electronics distribution businesses in the U.K. and France to the fair market value of the assets acquired and liabilities assumed by the company (in thousands): Current assets: Accounts receivable.................$ 27,479 Inventories......................... 17,947 Other............................... 1,662 $ 47,088 Property, plant and equipment......... 2,975 Cost in excess of net assets of acquired businesses.................. 21,065 Other assets......................... 3,150 74,278 Current liabilities: Accounts payable.....................$(10,397) Accrued expenses..................... (26,698) (37,095) Net consideration paid............... $ 37,183 ARROW ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED In September 1991, the company acquired the North American electronics distribution businesses of Lex, consisting of Lex Electron- ics Inc. and Almac Electronics Corporation (collectively the "North American businesses"). |
Income Taxes The provision for income taxes for 1993, 1992, and 1991 consisted of the following: 1993 1992 1991 (In thousands) Current Federal..................... $39,106 $14,080 $ 5,200 State....................... 9,432 3,744 1,000 Foreign..................... 9,376 - - 57,914 17,824 6,200 Deferred Federal..................... 2,760 9,869 (3,974) State....................... 552 2,333 - Foreign..................... 3,222 - - 6,534 12,202 (3,974) $64,448 $30,026 $ 2,226 ARROW ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED The principal causes of the difference between the U.S. statutory and effective income tax rates for 1993, 1992, and 1991 are as follows: 1993 1992 1991 (In thousands) Provision at statutory rate... $55,380 $27,292 $ 3,710 State taxes, net of federal benefit..................... 6,490 4,011 660 Minority interest............. (4,277) - - Foreign tax rate differential 3,448 - - Effect of equity income and foreign loss................ (385) (1,199) (716) Amortization of goodwill...... 1,124 775 513 Other differences............. 2,960 176 208 Tax benefit of loss and credit carryforwards............... (292) (1,029) (2,149) Income tax provision.......... $64,448 $30,026 $ 2,226 For financial reporting purposes in 1993, income before income taxes attributable to the United States and foreign operations was $120,112,000 and $38,116,000, respectively. |
Quarterly Financial Data (Unaudited) A summary of the company's quarterly results of operations for 1993 and 1992 follows: First Second Third Fourth Quarter Quarter Quarter Quarter (In thousands except per share data) 1993: Sales.......................$551,391 $584,069 $697,825 $702,299 Gross profit................ 120,091 120,847 136,876 135,517 Net income.................. 17,982 19,114 21,734 22,729 Per common share:........... Primary .................. .59 .62 .69 .72 Fully diluted............. .55 .58 .64 .67 First Second Third Fourth Quarter Quarter Quarter Quarter (In thousands except per share data) 1992: Sales.......................$378,679 $382,041 $407,421 $453,394 Gross profit................ 78,930 82,706 87,038 93,215 Earnings before extraordinary charges..... 9,270 11,518 13,323 16,133 Net income.................. 9,270 9,094 13,323 13,133 Per common share: Earnings before extraordinary charges.... .38 .41 .47 .53 Extraordinary charges ..... - (.10) - (.10) Net income.................... .38 .31 .47 .43 Item 9. |
Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss at December 31, 2017 are as follows: BADGER METER, INC. Notes to Consolidated Financial Statements (continued) December 31, 2017, 2016 and 2015 Details of reclassifications out of accumulated other comprehensive loss during 2017 are as follows: (1) These accumulated other comprehensive loss components are included in the computation of benefit plan costs in Note 7 “Employee Benefit Plans.” Components of accumulated other comprehensive loss at December 31, 2016 are as follows: Details of reclassifications out of accumulated other comprehensive loss during 2016 are as follows: (1) These accumulated other comprehensive loss components are included in the computation of benefit plan costs in Note 7 “Employee Benefit Plans.” BADGER METER, INC. Notes to Consolidated Financial Statements (continued) December 31, 2017, 2016 and 2015 Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. |
Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss at December 31, 2016 are as follows: BADGER METER, INC. Notes to Consolidated Financial Statements (continued) December 31, 2016, 2015 and 2014 Details of reclassifications out of accumulated other comprehensive loss during 2016 are as follows: (1) These accumulated other comprehensive loss components are included in the computation of benefit plan costs in Note 7 “Employee Benefit Plans.” Components of accumulated other comprehensive loss at December 31, 2015 are as follows: Details of reclassifications out of accumulated other comprehensive loss during 2015 are as follows: (1) These accumulated other comprehensive loss components are included in the computation of benefit plan costs in Note 7 “Employee Benefit Plans.” BADGER METER, INC. Notes to Consolidated Financial Statements (continued) December 31, 2016, 2015 and 2014 Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. |
Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss at December 31, 2015 are as follows: BADGER METER, INC. Notes to Consolidated Financial Statements (continued) December 31, 2015, 2014 and 2013 Details of reclassifications out of accumulated other comprehensive loss during 2015 are as follows: (1) These accumulated other comprehensive loss components are included in the computation of benefit plan costs in Note 7 “Employee Benefit Plans.” Components of accumulated other comprehensive loss at December 31, 2014 are as follows: Details of reclassifications out of accumulated other comprehensive loss during 2014 are as follows: (1) These accumulated other comprehensive loss components are included in the computation of benefit plan costs in Note 7 “Employee Benefit Plans.” BADGER METER, INC. Notes to Consolidated Financial Statements (continued) December 31, 2015, 2014 and 2013 Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. |
Accumulated Other Comprehensive Loss Components of accumulated other comprehensive loss at December 31, 2014 are as follows: BADGER METER, INC. Notes to Consolidated Financial Statements (continued) December 31, 2014, 2013 and 2012 Details of reclassifications out of accumulated other comprehensive loss during 2014 are as follows: (1) These accumulated other comprehensive loss components are included in the computation of benefit plan costs in Note 7 “Employee Benefit Plans.” Components of accumulated other comprehensive loss at December 31, 2013 are as follows: Details of reclassifications out of accumulated other comprehensive loss during 2013 are as follows: (1) These accumulated other comprehensive loss components are included in the computation of benefit plan costs in Note 7 “Employee Benefit Plans.” BADGER METER, INC. Notes to Consolidated Financial Statements (continued) December 31, 2014, 2013 and 2012 Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. |
BADGER METER, INC. By /s/ Richard A. Meeusen Richard A. Meeusen Chairman, President and Chief Executive Officer By /s/ Richard E. Johnson Richard E. Johnson Senior Vice President - Finance, Chief Financial Officer and Treasurer By /s/ Beverly L. P. Smiley Beverly L. P. Smiley Vice President - Controller Dated: February 27, 2009 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: /s/ Richard A. Meeusen /s/ Ulice Payne, Jr. Richard A. Meeusen Chairman, President and Chief Executive Officer, and Director February 27, 2009 Ulice Payne, Jr. Director February 27, 2009 /s/ Ronald H. Dix /s/ Andrew J. Policano Ronald H. Dix Director February 27, 2009 Andrew J. Policano Director February 27, 2009 /s/ Thomas J. Fischer /s/ Steven J. Smith Thomas J. Fischer Director February 27, 2009 Steven J. Smith Director February 27, 2009 /s/ Kenneth P. Manning /s/ John J. Stollenwerk Kenneth P. Manning Director February 27, 2009 John J. Stollenwerk Director February 27, 2009 EXHIBIT INDEX * A management contract or compensatory plan or arrangement. |
BADGER METER, INC. By /s/ Richard A. Meeusen Richard A. Meeusen Chairman, President and Chief Executive Officer By /s/ Richard E. Johnson Richard E. Johnson Senior Vice President - Finance, Chief Financial Officer and Treasurer By /s/ Beverly L. P. Smiley Beverly L. P. Smiley Vice President - Controller Dated: February 28, 2008 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: /s/ Richard A. Meeusen /s/ Ulice Payne, Jr. Richard A. Meeusen Chairman, President and Chief Executive Officer, and Director February 28, 2008 Ulice Payne, Jr. Director February 28, 2008 /s/ Ronald H. Dix /s/ Andrew J. Policano Ronald H. Dix Director February 28, 2008 Andrew J. Policano Director February 28, 2008 /s/ Thomas J. Fischer /s/ Steven J. Smith Thomas J. Fischer Director February 28, 2008 Steven J. Smith Director February 28, 2008 /s/ Kenneth P. Manning /s/ John J. Stollenwerk Kenneth P. Manning Director February 28, 2008 John J. Stollenwerk Director February 28, 2008 EXHIBIT INDEX * A management contract or compensatory plan or arrangement. |
Dated: March 6, 2007 By /s/ Richard A. Meeusen Richard A. Meeusen Chairman, President and Chief Executive Officer /s/ Richard E. Johnson Richard E. Johnson Senior Vice President - Finance, Chief Financial Officer and Treasurer /s/ Beverly L.P. Smiley Beverly L.P. Smiley Vice President - Controller SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: /s/ Richard A. Meeusen Richard A. Meeusen Chairman, President and Chief Executive Officer, and Director March 6, 2007 /s/ Ulice Payne, Jr. Ulice Payne, Jr. Director March 6, 2007 /s/ Ronald H. Dix Ronald H. Dix Director March 6, 2007 /s/ Andrew J. Policano Andrew J. Policano Director March 6, 2007 /s/ Thomas J. Fischer Thomas J. Fischer Director March 6, 2007 /s/ Steven J. Smith Steven J. Smith Director March 6, 2007 /s/ Kenneth P. Manning Kenneth P. Manning Director March 6, 2007 /s/ John J. Stollenwerk John J. Stollenwerk Director March 6, 2007 EXHIBIT INDEX * A management contract or compensatory plan or arrangement. |
BADGER METER, INC. Registrant By: /s/ Richard A. Meeusen -------------------------------------- Richard A. Meeusen Vice President - Finance and Treasurer Chief Financial Officer February 14, 1997 By: /s/ William J. Shinners -------------------------------------- William J. Shinners Vice President - Controller Chief Accounting Officer February 14, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: /s/ James O. Wright /s/ James L. Forbes - ------------------------- ------------------------ James O. Wright James L. Forbes Director and Chairman Director, President and February 14, 1997 Chief Executive Officer February 14, 1997 /s/ Robert M. Hoffer /s/ Pamela B. Strobel - ------------------------- ------------------------ Robert M. Hoffer Pamela B. Strobel Director Director February 14, 1997 February 14, 1997 /s/ Charles F. James, Jr. /s/ Andrew J. Policano - ------------------------- ------------------------ Charles F. James, Jr. Andrew J. Policano Director Director February 14, 1997 February 14, 1997 /s/ Donald J. Schuenke /s/ Kenneth P. Manning - ------------------------- ------------------------ Donald J. Schuenke Kenneth P. Manning Director Director February 14, 1997 February 14, 1997 /s/ John J. Stollenwerk /s/ James O. Wright, Jr. - ------------------------- ------------------------ John J. Stollenwerk James O. Wright, Jr. Director Director February 14, 1997 February 14, 1997 BADGER METER, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES Page References Annual Report to Shareholders Form 10-K Page Number Page Number ------------- ----------- Item 14(a) 1 ------------ Financial statements: Consolidated balance sheets at December 31, 1996 and 1995 18 Consolidated statements of operations for each of the three years in the period ended December 31, 1996 17 Consolidated statements of cash flows for each of the three years in the period ended December 31, 1996 19 Consolidated statements of shareholders' equity for each of the three years in the period ended December 31, 1996 20 Notes to consolidated financial statements 21 - 26 Item 14(a) 2 ------------ Financial statement schedules: Consolidated schedules for each of the three years in the period ended December 31, 1996: II - Valuation and qualifying accounts All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the financial statements and the notes thereto. |
BADGER METER, INC. Registrant By: /s/ Richard A. Meeusen By: /s/ Deirdre C. Elliott -------------------------------------- ------------------------------ Richard A. Meeusen Deirdre C. Elliott Vice President - Finance and Treasurer Vice President - Corporate Chief Financial Officer Counsel and Secretary February 16, 1996 February 16, 1996 By: /s/ William J. Shinners -------------------------------------- William J. Shinners Vice President - Controller Chief Accounting Officer February 16, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: /s/ James O. Wright /s/ James L. Forbes - ------------------------- ------------------------ James O. Wright James L. Forbes Director and Chairman Director, President and February 16, 1996 Chief Executive Officer February 16, 1996 /s/ Robert M. Hoffer /s/ Pamela B. Strobel - ------------------------- ------------------------ Robert M. Hoffer Pamela B. Strobel Director Director February 16, 1996 February 16, 1996 /s/ Charles F. James, Jr. /s/ Warren R. Stumpe - ------------------------- ------------------------ Charles F. James, Jr. Warren R. Stumpe Director Director February 16, 1996 February 16, 1996 /s/ Donald J. Schuenke /s/ Edwin P. Wiley - ------------------------- ------------------------ Donald J. Schuenke Edwin P. Wiley Director Director February 16, 1996 February 16, 1996 /s/ John J. Stollenwerk /s/ James O. Wright, Jr. - ------------------------- ------------------------ John J. Stollenwerk James O. Wright, Jr. Director Director February 16, 1996 February 16, 1996 BADGER METER, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the financial statements and the notes thereto. |
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of extensive pre-clinical laboratory tests, animal studies and formulation studies in accordance with applicable regulations, including the FDA’s Good Laboratory Practice regulations; ● submission to the FDA of an IND, which must become effective before human clinical trials may begin; ● performance of adequate and well-controlled human clinical trials in accordance with an applicable IND and other clinical study related regulations, sometimes referred to as good clinical practices, or GCPs, to establish the safety and efficacy of the proposed drug for its proposed indication; ● submission to the FDA of an NDA; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with the FDA’s cGMP requirements; ● potential FDA audit of the clinical trial sites that generated the data in support of the NDA; and ● FDA review and approval of the NDA prior to any commercial marketing or sale. |
The positive development of our product candidate will depend on several factors, including the following: ● positive commencement and completion of clinical trials; ● successful preparation of regulatory filings and receipt of marketing approvals from applicable regulatory authorities; ● obtaining and maintaining patent and trade secret protection and potential regulatory exclusivity for our product candidate and protecting our rights in our intellectual property portfolio; ● launching commercial sales of our product, if and when approved for one or more indications, whether alone or in collaboration with others; ● acceptance of the product for one or more indications, if and when approved, by patients, the medical community and third-party payors; ● protection from generic substitution based upon our own or licensed intellectual property rights; ● effectively competing with other therapies; ● obtaining and maintaining adequate reimbursement from healthcare payors; and ● maintaining a continued acceptable safety profile of our product following approval, if any. |
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidate, including: ● regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; ● clinical trials of our product candidate may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs, which would be time consuming and costly; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; ● we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; ● regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials may be greater than we anticipate; ● the supply or quality of materials necessary to conduct clinical trials of our product candidate may be insufficient or inadequate; ● our product candidate may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials; and ● interactions with other drugs. |
Factors that may have contributed to such volatility include, but are not limited to: ● developments regarding regulatory filings; ● our funding requirements and the terms of our financing arrangements; ● technological innovations; ● introduction of new technologies by us or our competitors; ● material changes in existing litigation; ● changes in the enforceability or other matters surrounding our patent portfolios; ● government regulations and laws; ● public sentiment relating to our industry; ● developments in patent or other proprietary rights; ● the number of shares issued and outstanding; ● the number of shares trading on an average trading day; ● performance of companies in the non-performing entity space generally; ● announcements regarding other participants in the technology and technology related industries, including our competitors; ● block sales of our shares by stockholders to whom we have sold stock in private placements, or the cessation of transfer restrictions with respect to those shares; and ● market speculation regarding any of the foregoing. |
The factors that may affect our quarterly operating results include the following: ● fluctuations in results of our enforcement and licensing activities or outcome of cases; ● fluctuations in duration of judicial processes and time to completion of cases; ● the timing and amount of expenses incurred to negotiate with licensees and obtain settlements from infringers; ● the impact of our anticipated need for personnel and expected substantial increase in headcount; ● fluctuations in the receptiveness of courts and juries to significant damages awards in patent infringement cases and speed to trial in the jurisdictions in which our cases may be brought and the accepted royalty rates attributable to damages analysis for patent cases generally, including the royalty rates for industry standard patents which we may own or acquire; ● worsening economic conditions which cause revenues or profits attributable to infringer sales of products or services to decline; ● changes in the regulatory environment, including regulation of NPE activities or patenting practices, that may negatively impact our or infringers practices; ● the timing and amount of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs and regulatory penalties assessed related to government enforcement actions; ● Any changes we make in our Critical Accounting Estimates described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our periodic reports; ● the adoption of new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which we account for, measure or disclose our results of operations, financial position or other financial measures; and ● costs related to acquisitions of technologies or businesses. |
The Company entered into a lock-up agreement with Hoth pursuant to which the Company has agreed not to sell any shares of Hoth common stock or common stock equivalents until February 20, 2022, which is the 36 month anniversary of the consummation of Hoth’s initial public offering, (the “Spherix Securities”) provided, however (i) Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an aggregate of 10% of the initially issued Spherix Securities, provided further that the recipients of the Spherix Securities shall not be permitted to resell such Spherix Securities until six months after the date of the Initial Public Offering, (ii) beginning 12 months after the date of Hoth’s initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an additional 10% of the initially issued Spherix Securities, (iii) beginning 24 months after the date of Hoth’s initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an additional 10% of the initially issued Spherix Securities and (iv) beginning 36 months after the date of the Hoth initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, the Spherix Securities without any restrictions. |
An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following: ●completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s Good Laboratory Practice regulations; ●submission to the FDA of an IND application, which must take effect before human clinical trials may begin; ●approval by an independent institutional review board, representing each clinical site before each clinical trial may be initiated; ●performance of adequate and well-controlled human clinical trials in accordance with good clinical practices to establish the safety and efficacy of the proposed drug product for each indication; ●preparation and submission to the FDA of an NDA requesting marketing for one or more proposed indications; ●review by an FDA advisory committee, where appropriate or if applicable; ●satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with current good manufacturing practices, requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity; ●payment of user fees and securing FDA approval of the NDA; ●compliance with any post-approval requirements, including the potential requirement to implement a risk evaluation and mitigation strategy and the potential requirement to conduct post-approval studies. |
Among the ACA’s provisions of importance to our business are the following: ● implementation of a 2.3% excise tax imposed on manufacturers and importers for certain sales of medical devices, which, due to subsequent legislation will not go into effect until January 1, 2020; ● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability; ● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; ● establishment of a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending that began on January 1, 2011. |
The positive development of our product candidate will depend on several factors, including the following: ● positive commencement and completion of clinical trials; ● successful preparation of regulatory filings and receipt of marketing approvals from applicable regulatory authorities; ● obtaining and maintaining patent and trade secret protection and potential regulatory exclusivity for our product candidate and protecting our rights in our intellectual property portfolio; ● launching commercial sales of our product, if and when approved for one or more indications, whether alone or in collaboration with others; ● acceptance of the product for one or more indications, if and when approved, by patients, the medical community and third-party payors; ● protection from generic substitution based upon our own or licensed intellectual property rights; ● effectively competing with other therapies; ● obtaining and maintaining adequate reimbursement from healthcare payors; and ● maintaining a continued acceptable safety profile of our product following approval, if any. |
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidate, including: ● regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; ● clinical trials of our product candidate may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs, which would be time consuming and costly; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; ● we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; ● regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials may be greater than we anticipate; ● the supply or quality of materials necessary to conduct clinical trials of our product candidate may be insufficient or inadequate; ● our product candidate may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials; and ● interactions with other drugs. |
Moreover, even if we are able to maintain and/or enter into such collaborations, such collaborations may pose a number of risks, including the following: ● collaborators may not perform their obligations as expected; ● disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of our product candidate, might lead to additional responsibilities for us with respect to such product candidate, or might result in litigation or arbitration, any of which would be time-consuming and expensive; ● collaborators could independently develop or be associated with products that compete directly or indirectly with our product candidate; ● collaborators could have significant discretion in determining the efforts and resources that they will apply to our arrangements with them; ● should our product candidate achieve regulatory approval, a collaborator with marketing and distribution rights to our product candidate may not commit sufficient resources to the marketing and distribution of such product; ● collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ● collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and ● collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to either find alternative collaborators (which we may be unable to do) or raise additional capital to pursue further development or commercialization of our product candidate on our own. |
To achieve any level of commercial success for any product for which we have obtained marketing approval, we will need to establish a sales and marketing organization or outsource sales and marketing functions to third parties, and achieve the following: ● successful preparation of regulatory filings and receipt of marketing approvals from applicable regulatory authorities; ● obtaining and maintaining patent and trade secret protection and potential regulatory exclusivity for our product candidate and protecting our rights in our intellectual property portfolio; ● launching commercial sales of our product, if and when approved for one or more indications, whether alone or in collaboration with others; ● acceptance of the product for one or more indications, if and when approved, by patients, the medical community and third-party payors; ● protection from generic substitution based upon our own or licensed intellectual property rights; ● effectively competing with other therapies; ● obtaining and maintaining adequate reimbursement from healthcare payors; and ● maintaining a continued acceptable safety profile of our product following approval, if any. |
The laws include: ● the federal healthcare program anti-kickback law, which prohibits, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs; ● federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, and which may apply to entities like us which provide coding and billing information to customers; ● the federal Health Insurance Portability and Accountability Act of 1996, which prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; ● the FDCA which among other things, strictly regulates drug manufacturing and product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates the distribution of drug sample; and ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts. |
In connection with the consummation of the IPO of Hoth, the Company entered into a lock-up agreement with Hoth pursuant to which the Company has agreed not to sell any shares of Hoth common stock or Spherix Securities until February 20, 2022, which is the 36 month anniversary of the consummation of Hoth’s IPO, provided, however (i) Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an aggregate of 10% of the initially issued Spherix Securities, provided further that the recipients of the Spherix Securities shall not be permitted to resell such Spherix Securities until six months after the date of the IPO, (ii) beginning 12 months after the date of Hoth’s IPO, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an additional 10% of the initially issued Spherix Securities, (iii) beginning 24 months after the date of Hoth’s IPO, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an additional 10% of the initially issued Spherix Securities and (iv) beginning 36 months after the date of the Hoth IPO, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, the Spherix Securities without any restrictions. |
2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. |
Potential Payment upon Termination or Change in Control Under the April 1, 2016 employment agreement with Mr. Hayes, we have agreed to, in the event of termination by us without “cause” or pursuant to a change in control, grant Mr. Hayes, in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during the term of the Employment Agreement, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months base salary at the then current rate to be paid in a single lump sum within thirty (30) days of Mr. Hayes’ termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time, including but not limited to group health care coverage and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Hayes was a participant as of the date of termination. |
The Company entered into a lock-up agreement with Hoth pursuant to which the Company has agreed not to sell any shares of Hoth common stock or common stock equivalents until February 20, 2022, which is the 36 month anniversary of the consummation of Hoth’s initial public offering, (the “Spherix Securities”) until February 20, 2022, which is the 36 month anniversary of the consummation of Hoth’s initial public offering, provided, however (i) Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an aggregate of 10% of the initially issued Spherix Securities, provided further that the recipients of the Spherix Securities shall not be permitted to resell such Spherix Securities until six months after the date of the Initial Public Offering, (ii) beginning 12 months after the date of Hoth’s initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an additional 10% of the initially issued Spherix Securities, (iii) beginning 24 months after the date of Hoth’s initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an additional 10% of the initially issued Spherix Securities and (iv) beginning 36 months after the date of the Hoth initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, the Spherix Securities without any restrictions. |
In connection with the consummation of the initial public offering of Hoth, the Company entered into a lock-up agreement with Hoth pursuant to which the Company has agreed not to sell any shares of Hoth common stock or common stock equivalents beneficially owned or acquired by Spherix (the “Spherix Securities”) until February 20, 2022, which is the 36 month anniversary of the consummation of Hoth’s initial public offering, provided, however (i) Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an aggregate of 10% of the initially issued Spherix Securities, provided further that the recipients of the Spherix Securities shall not be permitted to resell such Spherix Securities until six months after the date of the Initial Public Offering, (ii) beginning 12 months after the date of Hoth’s initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an additional 10% of the initially issued Spherix Securities, (iii) beginning 24 months after the date of Hoth’s initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, up to an additional 10% of the initially issued Spherix Securities and (iv) beginning 36 months after the date of the Hoth initial public offering, Spherix may offer, sell, contract to sell, hypothecate, pledge, dividend or distribute to its shareholders or otherwise dispose of, directly or indirectly, the Spherix Securities without any restrictions. |
Index to Financial Statements Page Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2018 and 2017 Consolidated Statements of Operations for the Years Ended December 31, 2018 and 2017 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2018 and 2017 Consolidated Statements of Cash Flows for the Years Ended December 31, 2018 and 2017 Notes to the Consolidated Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Spherix Incorporated Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Spherix Incorporated and Subsidiaries (the “Company”) as of December 31, 2018 and 2017, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). |
2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. |
Potential Payment upon Termination or Change in Control Under the April 1, 2016 employment agreement with Mr. Hayes, we have agreed to, in the event of termination by us without “cause” or pursuant to a change in control, grant Mr. Hayes, in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during the term of the Employment Agreement, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months base salary at the then current rate to be paid in a single lump sum within thirty (30) days of Mr. Hayes’ termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time, including but not limited to group health care coverage and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Hayes was a participant as of the date of termination. |
Under the March 14, 2014 employment agreement with Mr. Frank Reiner, in the event of a termination or non-renewal of his employment without “cause” or pursuant to the consummation of a change in control, we have agreed to grant Mr. Reiner in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during two years commencing on March 14, 2014 or any then applicable extension of the term of Mr. Reiner’s employment, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months’ base salary at the then current rate to be paid in a single lump sum within sixty (60) days of Mr. Reiner’s termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Reiner was a participant as of the date of termination. |
Description 1.1 Underwriting Agreement, dated July 18, 2017, between Spherix Incorporated and Laidlaw & Co. (UK) Ltd (incorporated by reference to Form 8-K filed July 24, 2017) 1.2 Placement Agency Agreement, dated July 15, 2015, between Spherix Incorporated and Chardan Capital Markets LLC (incorporated by reference to Form 8-K filed July 17, 2015) 3.1 Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated April 24, 2014 (incorporated by reference to Form 8-K filed April 25, 2014) 3.2 Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated March 2, 2016 (incorporated by reference to Form 8-K filed March 18, 2016) 3.3 Amended and Restated Bylaws of Spherix Incorporated (incorporated by reference to Form 8-K filed October 15, 2013) 3.4 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Spherix Incorporated, effective March 4, 2016 (incorporated by reference to Form 10-K filed March 29, 2016) 4.1 Specimen Certificate for common stock, par value $0.0001 per share, of Spherix Incorporated (incorporated by reference to Form S-3/A filed April 17, 2014) 4.2 Rights Agreement dated as of January 24, 2013, between Spherix Incorporated and Equity Stock Transfer, LLC (incorporated by reference to Form 8-K filed January 30, 2013) 4.3 Amended and Restated Rights Agreement, dated as of June 9, 2017, between Spherix Incorporated and Transfer Online Inc. (incorporated by reference to Form 8-K filed June 9, 2017) 4.4 Certificate of Designation of Preferences, Rights and Limitations of Series J Convertible Preferred Stock (incorporated by reference to Form 8-K/A filed on June 2, 2014) 4.5 Certificate of Designation of Preferences, Rights and Limitations of Series K Convertible Preferred Stock (incorporated by reference to Form 8-K filed on December 3, 2015) 4.6 Form of Warrant (incorporated by reference to Form 8-K filed on March 26, 2014) 4.7 Form of Placement Agent Warrant (incorporated by reference to Form 8-K filed on March 26, 2014) 4.8 Form of Common Stock Purchase Warrant (incorporated by reference to Form 8-K filed July 17, 2015) 4.9 Form of Warrant (incorporated by reference to Form 8-K filed December 3, 2015) 10.1 Equity Incentive Plan (incorporated by reference from the Company’s Information Statement on Definitive 14C filed November 26, 2012) 10.2 Warrant Exchange Agreement dated March 1, 2013 between the Company and certain investors (incorporated by reference to Form 8-K filed March 7, 2013) 10.3 Agreement and Plan of Merger dated April 2, 2013 (incorporated by reference to the Form 8-K filed on April 4, 2013) 10.4 First Amendment to Agreement and Plan of Merger dated August 30, 2013 (incorporated by reference to the Form 8-K filed on September 4, 2013) 10.5 Spherix Incorporated 2013 Equity Incentive Plan (incorporated by reference to the Form 8-K filed on April 4, 2013) 10.6 Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed December 20, 2013) 10.7 Amendment to Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed March 28, 2014) 10.8 Form of Indemnification Agreement (incorporated by reference to the Form 8-K filed on September 10, 2013) 10.9 Employment Agreement between Spherix Incorporated and Anthony Hayes (incorporated by reference to the Form 8-K filed on September 13, 2013) 10.10 Indemnification Agreement between Spherix Incorporated and Jeffrey Ballabon (incorporated by reference to the Form 8-K filed on June 13, 2014) 10.11** Patent Purchase Agreement between Spherix Incorporated and Rockstar Consortium US LP, including Amendment No. |
1 thereto (incorporated by reference to the Form 8-K/A filed on November 19, 2013) 10.12 Form of Series F Exchange Agreement (incorporated by reference to the Form 8-K filed on November 26, 2013) 10.13 Form of Series D Exchange Agreement (incorporated by reference to the Form 8-K filed on December 30, 2013) 10.14 Confidential Patent Purchase Agreement dated December 31, 2013 between Spherix Incorporated and Rockstar Consortium US LP (incorporated by reference to the Form S-1/A filed January 21, 2014) 10.15 Form of Subscription Agreement (incorporated by reference to the Form 8-K filed March 26, 2014) 10.16 Form of Registration Rights Agreement (incorporated by reference to the Form 8-K filed March 26, 2014) 10.17 Form of Subscription Agreement (incorporated by reference to the Form 8-K filed on May 29, 2014) 10.18 Letter of Agreement, dated January 6, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015) 10.19 Letter of Agreement, dated April 11, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015) 10.20 Securities Purchase Agreement, dated July 15, 2015, between Spherix Incorporated and the purchasers party thereto (incorporated by reference to Form 8-K filed July 17, 2015) 10.21 Employment Agreement, dated as of March 14, 2014, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 10-K filed March 29, 2016) 10.22 Amendment to Employment Agreement, dated as of June 30, 2015, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 10-K filed March 29, 2016) 10.23 Settlement and License Agreement, dated October 13, 2015, between Spherix Incorporated and Huawei Technologies Co., Ltd. (incorporated by reference to Form 10-K filed March 29, 2016) 10.24 Patent License Agreement, dated as of November 23, 2015, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 8-K filed November 30, 2015 10.25 Securities Purchase Agreement, dated as of December 2, 2015, between Spherix Incorporated and the investors party thereto (incorporated by reference to Form 8-K filed December 3, 2015) 10.26 Engagement Agreement, dated September 16, 2015, as amended, between Spherix Incorporated and H.C. Wainwright & Co., LLC (incorporated by reference to Form 8-K filed December 3, 2015) 10.27 Employment Agreement, effective as of April 1, 2016, between Spherix Incorporated and Anthony Hayes (incorporated by reference to Form 8-K filed May 26, 2016) 10.28 Amendment to Employment Agreement between Spherix Incorporated and Anthony Hayes (incorporated by reference to the Form 8-K filed on October 25, 2017) 10.29 Separation Agreement and Release, dated March 10, 2017, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 8-K filed March 15, 2017) 10.30 Patent License Agreement, dated as of May 23, 2016, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 10-Q filed August 15, 2016) 10.31 Technology Monetization Agreement, dated as of March 11, 2016, and amended as of April 22, 2016, April 27, 2016 and May 22, 2016, between Spherix Incorporated and Equitable IP Corporation (incorporated by reference to Form 8-K filed August 2, 2016) 10.32 Underwriting Agreement, dated as of August 2, 2016, by and among Spherix Incorporated and the underwriters named on Schedule I thereto (incorporated by reference to Form 8-K filed August 3, 2016) 10.33 Assignment and Assumption of Rights Agreement, dated as of June 16, 2016, by and between Spherix Incorporated and Transfer Online, Inc. (incorporated by reference to Form 8-K filed June 21, 2016) 10.34 Securities Purchase Agreement, dated as of June 30, 2017, by and between Spherix Incorporated and Hoth Therapeutics, Inc. (incorporated by reference to Form 8-K filed July 3, 2017) 10.35 Registration Rights Agreement, dated as of June 30, 2017, by and between Spherix Incorporated and Hoth Therapeutics, Inc. (incorporated by reference to Form 8-K filed July 3, 2017) 10.36 Form of Shareholders Agreement, dated as of June 30, 2017 (incorporated by reference to Form 8-K filed July 3, 2017) 10.37 Agreement and Plan of Merger, dated as of March 12, 2018, by and among Spherix Incorporated, Spherix Merger Subsidiary Inc., DatChat, Inc. and Darin Myman (incorporated by reference to Form 8-K filed March 14, 2018) 10.38 Placement Agency Agreement, dated as of March 14, 2018, between Spherix Incorporated and Laidlaw & Company (UK) Ltd. (incorporated by reference to Form 8-K filed March 19, 2018) 10.39 First Amendment to Agreement and Plan of Merger, dated as of May 3, 2018, by and among Spherix Incorporated, Spherix Merger Subsidiary Inc., DatChat, Inc. and Darin Myman (incorporated by reference to Form 8-K filed May 7, 2018) 10.40 Agreement and Plan of Merger, dated as of October 10, 2018, by and among Spherix Incorporated, Spherix Delaware Merger Sub Inc., Scott Wilfong and CBM Biopharma, Inc. (incorporated by reference to Form 8-K filed October 16, 2018) 21.1* List of Subsidiaries 23.1* Consent of Marcum LLP, independent registered public accounting firm 31.1* Certification of Principal Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. |
Merger Consideration At or prior to the Closing, Spherix, the Stockholder Representative, and a mutually agreeable escrow agent (the “Escrow Agent”), shall enter into an Escrow Agreement, effective as of the Effective Time, in form and substance reasonably satisfactory to the Parties (the “Escrow Agreement”), pursuant to which Spherix shall deposit with the Escrow Agent from the Stockholder Merger Consideration (as defined below) the following numbers of shares of Spherix common stock (the sum of such amounts, the “Escrow Shares” ): (i) a number of shares Spherix common stock equal to 10% of the Stockholder Merger Consideration shares (including any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted, the “ Indemnity Escrow Shares ”), to be held in a segregated escrow account (the “Indemnity Escrow Account”) and disbursed by the Escrow Agent and (ii) a number of shares Spherix common stock equal 90% of the Stockholder Merger Consideration shares (including any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted, the “ Distribution Escrow Shares ”), to be held in a segregated escrow account (the “Distribution Escrow Account”) and disbursed by the Escrow Agent. |
Indemnification From and after the closing, DatChat Stockholders and their respective successors and assigns are required to severally indemnify Spherix, and its affiliates and officers, directors, managers, employees, successors and permitted assigns from and against any losses from (a) the breach of any of DatChat’s representations and warranties, (b) the breach of any of DatChat’s covenants, (c) any actions by persons or entities who were holders of equity securities (including options, warrants, convertible securities or other rights) of DatChat prior to the Closing arising out of the sale, purchase, termination, cancellation, expiration, redemption or conversion of any such securities (d) any liabilities for taxes arising prior to the closing or (e) any liability of DatChat incurred in the operation of the business on or prior to the closing From and after the closing, Spherix, Merger Sub and their respective successors and assigns are required to severally indemnify DatChat, and its affiliates and officers, directors, managers, employees, successors and permitted assigns from and against any losses from (a) the breach of any of Spherix and Merger Sub’s representations and warranties, and (b) the breach of any of Spherix and Merger Sub’s covenants. |
Spherix agreed, as promptly as practicable after the date of the Merger Agreement, to prepare, with the reasonable assistance of DatChat, and use its commercially reasonable efforts to file with the Securities and Exchange Commission (the “SEC”), a registration statement on Form S-4 (the “Registration Statement”) in connection with the registration under the Securities Act of the issuance of shares of Spherix common stock to the DatChat stockholders, and containing a joint proxy statement/prospectus for the purpose of (i) Spherix soliciting proxies from the stockholders of Spherix to approve the Merger Agreement, the transactions contemplated thereby and related matters (the “Spherix Stockholder Approval”) at a special meeting of Spherix’s stockholders (the “Spherix Special Meeting”) and (ii) DatChat soliciting proxies from the stockholders of DatChat to approve the Merger Agreement, the transactions contemplated thereby and related matters (the “DatChat Stockholder Approval”) at a special meeting of DatChat’s stockholders (the “DatChat Special Meeting”). |
Termination The Merger Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including: ● by mutual written consent of Spherix and DatChat; ● by written notice by either Spherix or DatChat if the Closing has not occurred on or prior to November 15, 2018; ● by written notice by either Spherix or DatChat if a governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement, and such order or other action has become final and non-appealable; ● by written notice by either party of the other party’s uncured breach (subject to certain materiality qualifiers); ● by written notice by Spherix if there has been a Material Adverse Effect on DatChat since the date of the Merger Agreement which is continuing and uncured; ● by written notice by Spherix or DatChat if Spherix holds the Spherix Special Meeting and it does not receive the Spherix Stockholder Approval; or ● by written notice by Spherix or DatChat if DatChat holds the DatChat Special Meeting and it does not receive the DatChat Stockholder Approval. |
Factors that may have contributed to such volatility include, but are not limited to: • developments regarding regulatory filings; • our funding requirements and the terms of our financing arrangements; • technological innovations; • introduction of new technologies by us or our competitors; • material changes in existing litigation; • changes in the enforceability or other matters surrounding our patent portfolios; • government regulations and laws; • public sentiment relating to our industry; • developments in patent or other proprietary rights; • the number of shares issued and outstanding; • the number of shares trading on an average trading day; • performance of companies in the non-performing entity space generally; • announcements regarding other participants in the technology and technology related industries, including our competitors; • block sales of our shares by stockholders to whom we have sold stock in private placements, or the cessation of transfer restrictions with respect to those shares; and • market speculation regarding any of the foregoing. |
The factors that may affect our quarterly operating results include the following: • fluctuations in results of our enforcement and licensing activities or outcome of cases; • fluctuations in duration of judicial processes and time to completion of cases; • the timing and amount of expenses incurred to negotiate with licensees and obtain settlements from infringers; • the impact of our anticipated need for personnel and expected substantial increase in headcount; • fluctuations in the receptiveness of courts and juries to significant damages awards in patent infringement cases and speed to trial in the jurisdictions in which our cases may be brought and the accepted royalty rates attributable to damages analysis for patent cases generally, including the royalty rates for industry standard patents which we may own or acquire; • worsening economic conditions which cause revenues or profits attributable to infringer sales of products or services to decline; • changes in the regulatory environment, including regulation of NPE activities or patenting practices, that may negatively impact our or infringers practices; • the timing and amount of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs and regulatory penalties assessed related to government enforcement actions; • Any changes we make in our Critical Accounting Estimates described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our periodic reports; • the adoption of new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which we account for, measure or disclose our results of operations, financial position or other financial measures; and • costs related to acquisitions of technologies or businesses. |
Index to Financial Statements Page Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2017 and 2016 Consolidated Statements of Operations for the Years Ended December 31, 2017 and 2016 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2017 and 2016 Consolidated Statements of Cash Flows for the Years Ended December 31, 2017 and 2016 Notes to the Consolidated Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Spherix Incorporated Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Spherix Incorporated and Subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). |
2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. |
“Fundamental Transaction” means directly or indirectly, in one or more related transactions: (a) the Company of any subsidiary realizes net proceeds from any financing, recovery, sale, license fee or other revenue received by the Company (including on account of any intellectual property rights held by the Company and not just in respect of the patents) during any fiscal quarter in an amount which would cause the cash or cash equivalents of the Company to exceed $5,000,000, (b) the Company consolidates or merges with or into (whether or not the Company or any of its subsidiaries is the surviving corporation) any other person, or (c) the Company or any of its subsidiaries sells, leases, licenses, assigns, transfers, conveys or otherwise disposes of all or substantially all of its respective properties or assets to any other Person, provided that, in the event of a Fundamental Transaction under clause (b) or (c), neither such Fundamental Transaction may proceed without the consent of the holders holding a majority of the shares of Series I Preferred Stock unless (A) all shares of Series I Preferred Stock held by the holders are redeemed with interest upon closing of such Fundamental Transaction, and (B) all shares of Common Stock of the Company then held by the holders are redeemed or otherwise purchased for cash or freely tradable securities of a publicly traded company at a price at or above the then-current market value of such Common Stock. |
Merger Consideration At or prior to the Closing, Spherix, the Stockholder Representative, and a mutually agreeable escrow agent (the “Escrow Agent”), shall enter into an Escrow Agreement, effective as of the Effective Time, in form and substance reasonably satisfactory to the Parties (the “Escrow Agreement”), pursuant to which Spherix shall deposit with the Escrow Agent from the Stockholder Merger Consideration (as defined below) the following numbers of shares of Spherix common stock (the sum of such amounts, the “Escrow Shares” ): (i) a number of shares Spherix common stock equal to 10% of the Stockholder Merger Consideration shares (including any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted, the “Indemnity Escrow Shares”), to be held in a segregated escrow account (the “Indemnity Escrow Account”) and disbursed by the Escrow Agent and (ii) a number of shares Spherix common stock equal 90% of the Stockholder Merger Consideration shares (including any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted, the “ Distribution Escrow Shares ”), to be held in a segregated escrow account (the “Distribution Escrow Account”) and disbursed by the Escrow Agent. |
Potential Payment upon Termination or Change in Control Under the April 1, 2016 employment agreement with Mr. Hayes, we have agreed to, in the event of termination by us without “cause” or pursuant to a change in control, grant Mr. Hayes, in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during the term of the Employment Agreement, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months base salary at the then current rate to be paid in a single lump sum within thirty (30) days of Mr. Hayes’ termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time, including but not limited to group health care coverage and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Hayes was a participant as of the date of termination. |
Under the March 14, 2014 employment agreement with Mr. Frank Reiner, in the event of a termination or non-renewal of his employment without “cause” or pursuant to the consummation of a change in control, we have agreed to grant Mr. Reiner in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during two years commencing on March 14, 2014 or any then applicable extension of the term of Mr. Reiner’s employment, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months’ base salary at the then current rate to be paid in a single lump sum within sixty (60) days of Mr. Reiner’s termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Reiner was a participant as of the date of termination. |
Description 1.1 Underwriting Agreement, dated July 18, 2017, between Spherix Incorporated and Laidlaw & Co. (UK) Ltd (incorporated by reference to Form 8-K filed July 24, 2017) 1.2 Placement Agency Agreement, dated July 15, 2015, between Spherix Incorporated and Chardan Capital Markets LLC (incorporated by reference to Form 8-K filed July 17, 2015) 3.1 Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated April 24, 2014 (incorporated by reference to Form 8-K filed April 25, 2014) 3.2 Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated March 2, 2016 (incorporated by reference to Form 8-K filed March 18, 2016) 3.3 Amended and Restated Bylaws of Spherix Incorporated (incorporated by reference to Form 8-K filed October 15, 2013) 3.4 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Spherix Incorporated, effective March 4, 2016 (incorporated by reference to Form 10-K filed March 29, 2016) 4.1 Specimen Certificate for common stock, par value $0.0001 per share, of Spherix Incorporated (incorporated by reference to Form S-3/A filed April 17, 2014) 4.2 Rights Agreement dated as of January 24, 2013, between Spherix Incorporated and Equity Stock Transfer, LLC (incorporated by reference to Form 8-K filed January 30, 2013) 4.3 Amended and Restated Rights Agreement, dated as of June 9, 2017, between Spherix Incorporated and Transfer Online Inc. (incorporated by reference to Form 8-K filed June 9, 2017) 4.4 Certificate of Designation of Preferences, Rights and Limitations of Series J Convertible Preferred Stock (incorporated by reference to Form 8-K/A filed on June 2, 2014) 4.5 Certificate of Designation of Preferences, Rights and Limitations of Series K Convertible Preferred Stock (incorporated by reference to Form 8-K filed on December 3, 2015) 4.6 Form of Warrant (incorporated by reference to Form 8-K filed on March 26, 2014) 4.7 Form of Placement Agent Warrant (incorporated by reference to Form 8-K filed on March 26, 2014) 4.8 Form of Common Stock Purchase Warrant (incorporated by reference to Form 8-K filed July 17, 2015) 4.9 Form of Warrant (incorporated by reference to Form 8-K filed December 3, 2015) 10.1 2012 Equity Incentive Plan (incorporated by reference from the Company’s Information Statement on Definitive 14C filed November 26, 2012) 10.2 Warrant Exchange Agreement dated March 1, 2013 between the Company and certain investors (incorporated by reference to Form 8-K filed March 7, 2013) 10.3 Agreement and Plan of Merger dated April 2, 2013 (incorporated by reference to the Form 8-K filed on April 4, 2013) 10.4 First Amendment to Agreement and Plan of Merger dated August 30, 2013 (incorporated by reference to the Form 8-K filed on September 4, 2013) 10.5 Spherix Incorporated 2013 Equity Incentive Plan (incorporated by reference to the Form 8-K filed on April 4, 2013) 10.6 Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed December 20, 2013) 10.7 Amendment to Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed March 28, 2014) 10.8 Form of Indemnification Agreement (incorporated by reference to the Form 8-K filed on September 10, 2013) 10.9 Employment Agreement between Spherix Incorporated and Anthony Hayes (incorporated by reference to the Form 8-K filed on September 13, 2013) 10.10 Indemnification Agreement between Spherix Incorporated and Jeffrey Ballabon (incorporated by reference to the Form 8-K filed on June 13, 2014) 10.11** Patent Purchase Agreement between Spherix Incorporated and Rockstar Consortium US LP, including Amendment No. |
1 thereto (incorporated by reference to the Form 8-K/A filed on November 19, 2013) 10.12 Form of Series F Exchange Agreement (incorporated by reference to the Form 8-K filed on November 26, 2013) 10.13 Form of Series D Exchange Agreement (incorporated by reference to the Form 8-K filed on December 30, 2013) 10.14 Confidential Patent Purchase Agreement dated December 31, 2013 between Spherix Incorporated and Rockstar Consortium US LP (incorporated by reference to the Form S-1/A filed January 21, 2014) 10.15 Form of Subscription Agreement (incorporated by reference to the Form 8-K filed March 26, 2014) 10.16 Form of Registration Rights Agreement (incorporated by reference to the Form 8-K filed March 26, 2014) 10.17 Form of Subscription Agreement (incorporated by reference to the Form 8-K filed on May 29, 2014) 10.18 Letter of Agreement, dated January 6, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015) 10.19 Letter of Agreement, dated April 11, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015) 10.20 Securities Purchase Agreement, dated July 15, 2015, between Spherix Incorporated and the purchasers party thereto (incorporated by reference to Form 8-K filed July 17, 2015) 10.21 Employment Agreement, dated as of March 14, 2014, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 10-K filed March 29, 2016) 10.22 Amendment to Employment Agreement, dated as of June 30, 2015, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 10-K filed March 29, 2016) 10.23 Settlement and License Agreement, dated October 13, 2015, between Spherix Incorporated and Huawei Technologies Co., Ltd. (incorporated by reference to Form 10-K filed March 29, 2016) 10.24 Patent License Agreement, dated as of November 23, 2015, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 8-K filed November 30, 2015 10.25 Securities Purchase Agreement, dated as of December 2, 2015, between Spherix Incorporated and the investors party thereto (incorporated by reference to Form 8-K filed December 3, 2015) 10.26 Engagement Agreement, dated September 16, 2015, as amended, between Spherix Incorporated and H.C. Wainwright & Co., LLC (incorporated by reference to Form 8-K filed December 3, 2015) 10.27 Employment Agreement, effective as of April 1, 2016, between Spherix Incorporated and Anthony Hayes (incorporated by reference to Form 8-K filed May 26, 2016) 10.28 Amendment to Employment Agreement between Spherix Incorporated and Anthony Hayes (incorporated by reference to the Form 8-K filed on October 25, 2017) 10.29 Separation Agreement and Release, dated March 10, 2017, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 8-K filed March 15, 2017) 10.30 Patent License Agreement, dated as of May 23, 2016, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 10-Q filed August 15, 2016) 10.31 Technology Monetization Agreement, dated as of March 11, 2016, and amended as of April 22, 2016, April 27, 2016 and May 22, 2016, between Spherix Incorporated and Equitable IP Corporation (incorporated by reference to Form 8-K filed August 2, 2016) 10.32 Underwriting Agreement, dated as of August 2, 2016, by and among Spherix Incorporated and the underwriters named on Schedule I thereto (incorporated by reference to Form 8-K filed August 3, 2016) 10.33 Assignment and Assumption of Rights Agreement, dated as of June 16, 2016, by and between Spherix Incorporated and Transfer Online, Inc. (incorporated by reference to Form 8-K filed June 21, 2016) 10.34 Securities Purchase Agreement, dated as of June 30, 2017, by and between Spherix Incorporated and Hoth Therapeutics, Inc. (incorporated by reference to Form 8-K filed July 3, 2017) 10.35 Registration Rights Agreement, dated as of June 30, 2017, by and between Spherix Incorporated and Hoth Therapeutics, Inc. (incorporated by reference to Form 8-K filed July 3, 2017) 10.36 Form of Shareholders Agreement, dated as of June 30, 2017 (incorporated by reference to Form 8-K filed July 3, 2017) 10.37 Agreement and Plan of Merger, dated as of March 12, 2018, by and among Spherix Incorporated, Spherix Merger Subsidiary Inc., DatChat, Inc. and Darin Myman (incorporated by reference to Form 8-K filed March 14, 2018) 10.38 Placement Agency Agreement, dated as of March 14, 2018, between Spherix Incorporated and Laidlaw & Company (UK) Ltd. (incorporated by reference to Form 8-K filed March 19, 2018) 21.1* List of Subsidiaries 23.1* Consent of Marcum LLP, independent registered public accounting firm 31.1* Certification of Principal Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. |
Factors that may have contributed to such volatility include, but are not limited to: • developments regarding regulatory filings; • our funding requirements and the terms of our financing arrangements; • technological innovations; • introduction of new technologies by us or our competitors; • material changes in existing litigation; • changes in the enforceability or other matters surrounding our patent portfolios; • government regulations and laws; • public sentiment relating to our industry; • developments in patent or other proprietary rights; • the number of shares issued and outstanding; • the number of shares trading on an average trading day; • performance of companies in the non-performing entity space generally; • announcements regarding other participants in the technology and technology related industries, including our competitors; • block sales of our shares by stockholders to whom we have sold stock in private placements, or the cessation of transfer restrictions with respect to those shares; and • market speculation regarding any of the foregoing. |
The factors that may affect our quarterly operating results include the following: • fluctuations in results of our enforcement and licensing activities or outcome of cases; • fluctuations in duration of judicial processes and time to completion of cases; • the timing and amount of expenses incurred to negotiate with licensees and obtain settlements from infringers; • the impact of our anticipated need for personnel and expected substantial increase in headcount; • fluctuations in the receptiveness of courts and juries to significant damages awards in patent infringement cases and speed to trial in the jurisdictions in which our cases may be brought and the accepted royalty rates attributable to damages analysis for patent cases generally, including the royalty rates for industry standard patents which we may own or acquire; • worsening economic conditions which cause revenues or profits attributable to infringer sales of products or services to decline; • changes in the regulatory environment, including regulation of NPE activities or patenting practices, that may negatively impact our or infringers practices; • the timing and amount of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs and regulatory penalties assessed related to government enforcement actions; • Any changes we make in our Critical Accounting Estimates described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our periodic reports; • the adoption of new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which we account for, measure or disclose our results of operations, financial position or other financial measures; and • costs related to acquisitions of technologies or businesses. |
2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. |
“Fundamental Transaction” means directly or indirectly, in one or more related transactions: (a) the Company of any subsidiary realizes net proceeds from any financing, recovery, sale, license fee or other revenue received by the Company (including on account of any intellectual property rights held by the Company and not just in respect of the patents) during any fiscal quarter in an amount which would cause the cash or cash equivalents of the Company to exceed $5,000,000, (b) the Company consolidates or merges with or into (whether or not the Company or any of its subsidiaries is the surviving corporation) any other person, or (c) the Company or any of its subsidiaries sells, leases, licenses, assigns, transfers, conveys or otherwise disposes of all or substantially all of its respective properties or assets to any other Person, provided that, in the event of a Fundamental Transaction under clause (b) or (c), neither such Fundamental Transaction may proceed without the consent of the holders holding a majority of the shares of Series I Preferred Stock unless (A) all shares of Series I Preferred Stock held by the holders are redeemed with interest upon closing of such Fundamental Transaction, and (B) all shares of Common Stock of the Company then held by the holders are redeemed or otherwise purchased for cash or freely tradable securities of a publicly traded company at a price at or above the then-current market value of such Common Stock. |
Outstanding Equity Awards at December 31, Potential Payment upon Termination or Change in Control Under the April 1, 2016 employment agreement with Mr. Hayes, we have agreed to, in the event of termination by us without “cause” or pursuant to a change in control, grant Mr. Hayes, in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during the term of the Employment Agreement, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months base salary at the then current rate to be paid in a single lump sum within thirty (30) days of Mr. Hayes’ termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time, including but not limited to group health care coverage and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Hayes was a participant as of the date of termination. |
Under the March 14, 2014 employment agreement with Mr. Frank Reiner, in the event of a termination or non-renewal of his employment without “cause” or pursuant to the consummation of a change in control, we have agreed to grant Mr. Reiner in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during two years commencing on March 14, 2014 or any then applicable extension of the term of Mr. Reiner’s employment, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months’ base salary at the then current rate to be paid in a single lump sum within sixty (60) days of Mr. Reiner’s termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Reiner was a participant as of the date of termination. |
Description 1.1 Placement Agency Agreement, dated July 15, 2015, between Spherix Incorporated and Chardan Capital Markets LLC (incorporated by reference to Form 8-K filed July 17, 2015) 3.1 Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated April 24, 2014 (incorporated by reference to Form 8-K filed April 25, 2014) 3.2 Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Spherix Incorporated, dated March 2, 2016 (incorporated by reference to Form 8-K filed March 18, 2016) 3.2 Amended and Restated Bylaws of Spherix Incorporated (incorporated by reference to Form 8-K filed October 15, 2013) 3.3 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Spherix Incorporated, effective March 4, 2016 (incorporated by reference to Form 10-K filed March 29, 2016) 4.1 Specimen Certificate for common stock, par value $0.0001 per share, of Spherix Incorporated (incorporated by reference to Form S-3/A filed April 17, 2014) 4.2 Rights Agreement dated as of January 24, 2013, between Spherix Incorporated and Equity Stock Transfer, LLC (incorporated by reference to Form 8-K filed January 30, 2013) 4.3 Certificate of Designation of Preferences, Rights and Limitations of Series J Convertible Preferred Stock (incorporated by reference to Form 8-K/A filed on June 2, 2014) 4.4 Certificate of Designation of Preferences, Rights and Limitations of Series K Convertible Preferred Stock (incorporated by reference to Form 8-K filed on December 3, 2015) 4.5 Form of Warrant (incorporated by reference to Form 8-K filed on March 26, 2014) 4.6 Form of Placement Agent Warrant (incorporated by reference to Form 8-K filed on March 26, 2014) 4.7 Form of Common Stock Purchase Warrant (incorporated by reference to Form 8-K filed July 17, 2015) 4.8 Form of Warrant (incorporated by reference to Form 8-K filed December 3, 2015) 10.1 2012 Equity Incentive Plan (incorporated by reference from the Company’s Information Statement on Form DEF 14c filed November 26, 2012) 10.2 Warrant Exchange Agreement dated March 1, 2013 between the Company and certain investors (incorporated by reference to Form 8-K filed March 7, 2013) 10.3 Agreement and Plan of Merger dated April 2, 2013 (incorporated by reference to the Form 8-K filed on April 4, 2013) 10.4 First Amendment to Agreement and Plan of Merger dated August 30, 2013 (incorporated by reference to the Form 8-K filed on September 4, 2013) 10.5 Spherix Incorporated 2013 Equity Incentive Plan (incorporated by reference to the Form 8-K filed on April 4, 2013) 10.6 Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed December 20, 2013) 10.7 Amendment to Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed March 28, 2014) 10.8 Form of Indemnification Agreement (incorporated by reference to the Form 8-K filed on September 10, 2013) 10.9 Employment Agreement between Spherix Incorporated and Anthony Hayes (incorporated by reference to the Form 8-K filed on September 13, 2013) 10.10 Indemnification Agreement between Spherix Incorporated and Alexander Poltorak (incorporated by reference to the Form 8-K filed on October 29, 2013) 10.11 Indemnification Agreement between Spherix Incorporated and Richard Cohen (incorporated by reference to the Form 8-K filed on January 9, 2014) 10.12 Indemnification Agreement between Spherix Incorporated and Jeffrey Ballabon (incorporated by reference to the Form 8-K filed on June 13, 2014) 10.13** Patent Purchase Agreement between Spherix Incorporated and Rockstar Consortium US LP, including Amendment No. |
1 thereto (incorporated by reference to the Form 8-K/A filed on November 19, 2013) 10.14 Form of Series F Exchange Agreement (incorporated by reference to the Form 8-K filed on November 26, 2013) 10.15 Form of Series D Exchange Agreement (incorporated by reference to the Form 8-K filed on December 30, 2013) 10.16 Confidential Patent Purchase Agreement dated December 31, 2013 between Spherix Incorporated and Rockstar Consortium US LP (incorporated by reference to the Form S-1/A filed January 21, 2014) 10.17 Form of Subscription Agreement (incorporated by reference to the Form 8-K filed March 26, 2014) 10.18 Form of Registration Rights Agreement (incorporated by reference to the Form 8-K filed March 26, 2014) 10.19 Form of Subscription Agreement (incorporated by reference to the Form 8-K filed on May 29, 2014) 10.20 Letter of Agreement, dated January 6, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015) 10.21 Letter of Agreement, dated April 11, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015) 10.22 Securities Purchase Agreement, dated July 15, 2015, between Spherix Incorporated and the purchasers party thereto (incorporated by reference to Form 8-K filed July 17, 2015) 10.23 Employment Agreement, dated as of March 14, 2014, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 10-K filed March 29, 2016) 10.24 Amendment to Employment Agreement, dated as of June 30, 2015, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 10-K filed March 29, 2016) 10.25 Consulting Services Agreement, dated as of August 10, 2015, between Spherix Incorporated and Howard E. Goldberg d/b/a Forward Vision Associates (incorporated by reference to Form 8-K filed August 19, 2015) 10.26 Settlement and License Agreement, dated October 13, 2015, between Spherix Incorporated and Huawei Technologies Co., Ltd. (incorporated by reference to Form 10-K filed March 29, 2016) 10.27 Patent License Agreement, dated as of November 23, 2015, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 8-K filed November 30, 2015 10.28 Securities Purchase Agreement, dated as of December 2, 2015, between Spherix Incorporated and the investors party thereto (incorporated by reference to Form 8-K filed December 3, 2015) 10.29 Engagement Agreement, dated September 16, 2015, as amended, between Spherix Incorporated and H.C. Wainwright & Co., LLC (incorporated by reference to Form 8-K filed December 3, 2015) 10.30 Employment Agreement, effective as of April 1, 2016, between Spherix Incorporated and Anthony Hayes (incorporated by reference to Form 8-K filed May 26, 2016) 10.31 Separation Agreement and Release, dated March 10, 2017, between Spherix Incorporated and Frank Reiner (incorporated by reference to Form 8-K filed March 15, 2017) 10.32 Patent License Agreement, dated as of May 23, 2016, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 10-Q filed August 15, 2016) 10.33 Technology Monetization Agreement, dated as of March 11, 2016, and amended as of April 22, 2016, April 27, 2016 and May 22, 2016, between Spherix Incorporated and Equitable IP Corporation (incorporated by reference to Form 8-K filed August 2, 2016) 10.34 Underwriting Agreement, dated as of August 2, 2016, by and among Spherix Incorporated and the underwriters named on Schedule I thereto (incorporated by reference to Form 8-K filed August 3, 2016) 10.35 Assignment and Assumption of Rights Agreement, dated as of June 16, 2016, by and between Spherix Incorporated and Transfer Online, Inc. (incorporated by reference to Form 8-K filed June 21, 2016) 21.1* List of Subsidiaries 23.1* Consent of Marcum LLP, independent registered public accounting firm 31.1* Certification of Principal Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. |
Factors that may have contributed to such volatility include, but are not limited to: • developments regarding regulatory filings; • our funding requirements and the terms of our financing arrangements; • technological innovations; • introduction of new technologies by us or our competitors; • material changes in existing litigation; • changes in the enforceability or other matters surrounding our patent portfolios; • government regulations and laws; • public sentiment relating to our industry; • developments in patent or other proprietary rights; • the number of shares issued and outstanding; • the number of shares trading on an average trading day; • performance of companies in the non-performing entity space generally; • announcements regarding other participants in the technology and technology related industries, including our competitors; • block sales of our shares by stockholders to whom we have sold stock in private placements, or the cessation of transfer restrictions with respect to those shares; and • market speculation regarding any of the foregoing. |
The factors that may affect our quarterly operating results include the following: • fluctuations in results of our enforcement and licensing activities or outcome of cases; • fluctuations in duration of judicial processes and time to completion of cases; • the timing and amount of expenses incurred to negotiate with licensees and obtain settlements from infringers; • the impact of our anticipated need for personnel and expected substantial increase in headcount; • fluctuations in the receptiveness of courts and juries to significant damages awards in patent infringement cases and speed to trial in the jurisdictions in which our cases may be brought and the accepted royalty rates attributable to damages analysis for patent cases generally, including the royalty rates for industry standard patents which we may own or acquire; • worsening economic conditions which cause revenues or profits attributable to infringer sales of products or services to decline; • changes in the regulatory environment, including regulation of NPE activities or patenting practices, that may negatively impact our or infringers practices; • the timing and amount of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs and regulatory penalties assessed related to government enforcement actions; • Any changes we make in our Critical Accounting Estimates described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our periodic reports; • the adoption of new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which we account for, measure or disclose our results of operations, financial position or other financial measures; and • costs related to acquisitions of technologies or businesses. |
2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. |
“Fundamental Transaction” means directly or indirectly, in one or more related transactions: (a) the Company of any subsidiary realizes net proceeds from any financing, recovery, sale, license fee or other revenue received by the Company (including on account of any intellectual property rights held by the Company and not just in respect of the patents) during any fiscal quarter in an amount which would cause the cash or cash equivalents of the Company to exceed $5,000,000, (b) the Company consolidates or merges with or into (whether or not the Company or any of its subsidiaries is the surviving corporation) any other person, or (c) the Company or any of its subsidiaries sells, leases, licenses, assigns, transfers, conveys or otherwise disposes of all or substantially all of its respective properties or assets to any other Person, provided that, in the event of a Fundamental Transaction under clause (b) or (c), neither such Fundamental Transaction may proceed without the consent of the holders holding a majority of the shares of Series I Preferred Stock unless (A) all shares of Series I Preferred Stock held by the holders are redeemed with interest upon closing of such Fundamental Transaction, and (B) all shares of Common Stock of the Company then held by the holders are redeemed or otherwise purchased for cash or freely tradable securities of a publicly traded company at a price at or above the then-current market value of such Common Stock. |
Outstanding Equity Awards at December 31, 2015 Potential Payment upon Termination or Change in Control Under the September 10, 2013 Employment Agreement with Mr. Hayes, we have agreed to, in the event of termination by us without “cause” or pursuant to a change in control, grant Mr. Hayes, in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during two years commencing on September 10, 2013 or any then applicable extension of the term of Mr. Hayes’ employment, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months base salary at the then current rate to be paid in a single lump sum within sixty (60) days of Mr. Hayes’ termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Hayes was a participant as of the date of termination. |
Under our March 14, 2014 employment agreement with Mr. Frank Reiner, in the event of a termination of his employment without “cause” or pursuant to the consummation of a change in control, we have agreed to grant Mr. Reiner in addition to reimbursement of any documented, unreimbursed expenses incurred prior to such date, (i) any unpaid compensation and vacation pay accrued during two years commencing on March 14, 2014 or any then applicable extension of the term of Mr. Reiner’s employment, and any other benefits accrued to him under any of our benefit plans outstanding at such time, (ii) twelve (12) months’ base salary at the then current rate to be paid in a single lump sum within sixty (60) days of Mr. Reiner’s termination, (iii) continuation for a period of twelve (12) months of any benefits as extended to our executive officers from time to time and (iv) payment on a pro rata basis of any annual bonus or other payments earned in connection with any bonus plans to which Mr. Reiner was a participant as of the date of termination. |
Description 1.1 Placement Agency Agreement, dated July 15, 2015, between Spherix Incorporated and Chardan Capital Markets LLC (incorporated by reference to Form 8-K filed July 17, 2015) 3.1 Amended and Restated Certificate of Incorporation of Spherix Incorporated (incorporated by reference to Form 8-K filed April 25, 2014) 3.2 Amended and Restated Bylaws of Spherix Incorporated (incorporated by reference to Form 8-K filed October 15, 2013) 4.1 Specimen Certificate for common stock, par value $0.0001 per share, of Spherix Incorporated (incorporated by reference to Form S-3/A filed April 17, 2014) 4.2 Rights Agreement dated as of January 24, 2013, between Spherix Incorporated and Equity Stock Transfer, LLC (incorporated by reference to Form 8-K filed January 30, 2013) 4.3 Certificate of Designation of Preferences, Rights and Limitations of Series J Convertible Preferred Stock (incorporated by reference to Form 8-K/A filed on June 2, 2014) 4.4 Certificate of Designation of Preferences, Rights and Limitations of Series K Convertible Preferred Stock (incorporated by reference to Form 8-K filed on December 3, 2015) 4.5 Form of Warrant (incorporated by reference to Form 8-K filed on March 26, 2014) 4.6 Form of Placement Agent Warrant (incorporated by reference to Form 8-K filed on March 26, 2014) 4.7 Form of Common Stock Purchase Warrant (incorporated by reference to Form 8-K filed July 17, 2015) 4.8 Form of Warrant (incorporated by reference to Form 8-K filed December 3, 2015) 4.9* Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Spherix Incorporated, effective March 4, 2016. |
10.1 2012 Equity Incentive Plan (incorporated by reference from the Company’s Information Statement on Form DEF 14c filed November 26, 2012) 10.2 Warrant Exchange Agreement dated March 1, 2013 between the Company and certain investors (incorporated by reference to Form 8-K filed March 7, 2013) 10.3 Agreement and Plan of Merger dated April 2, 2013 (incorporated by reference to the Form 8-K filed on April 4, 2013) 10.4 First Amendment to Agreement and Plan of Merger dated August 30, 2013 (incorporated by reference to the Form 8-K filed on September 4, 2013) 10.5 Spherix Incorporated 2013 Equity Incentive Plan (incorporated by reference to the Form 8-K filed on April 4, 2013) 10.6 Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed December 20, 2013) 10.7 Amendment to Spherix Incorporated 2014 Equity Incentive Plan (incorporated by reference from the Company’s Proxy Statement on Form DEF 14A filed March 28, 2014) 10.8 Form of Indemnification Agreement (incorporated by reference to the Form 8-K filed on September 10, 2013) 10.9 Employment Agreement between Spherix Incorporated and Anthony Hayes (incorporated by reference to the Form 8-K filed on September 13, 2013) 10.10 Indemnification Agreement between Spherix Incorporated and Alexander Poltorak (incorporated by reference to the Form 8-K filed on October 29, 2013) 10.11 Indemnification Agreement between Spherix Incorporated and Richard Cohen (incorporated by reference to the Form 8-K filed on January 9, 2014) 10.12 Indemnification Agreement between Spherix Incorporated and Jeffrey Ballabon (incorporated by reference to the Form 8-K filed on June 13, 2014) 10.13** Patent Purchase Agreement between Spherix Incorporated and Rockstar Consortium US LP, including Amendment No. |
1 thereto (incorporated by reference to the Form 8-K/A filed on November 19, 2013) 10.14 Form of Series F Exchange Agreement (incorporated by reference to the Form 8-K filed on November 26, 2013) 10.15 Form of Series D Exchange Agreement (incorporated by reference to the Form 8-K filed on December 30, 2013) 10.16 Confidential Patent Purchase Agreement dated December 31, 2013 between Spherix Incorporated and Rockstar Consortium US LP (incorporated by reference to the Form S-1/A filed January 21, 2014) 10.17 Form of Subscription Agreement (incorporated by reference to the Form 8-K filed March 26, 2014) 10.18 Form of Registration Rights Agreement (incorporated by reference to the Form 8-K filed March 26, 2014) 10.19 Form of Subscription Agreement (incorporated by reference to the Form 8-K filed on May 29, 2014) 10.20 Letter of Agreement, dated January 6, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015) 10.21 Letter of Agreement, dated April 11, 2014, between Spherix Incorporated and Chord Advisors, LLC (incorporated by reference to the Form 10-K filed on March 30, 2015) 10.22 Securities Purchase Agreement, dated July 15, 2015, between Spherix Incorporated and the purchasers party thereto (incorporated by reference to Form 8-K filed July 17, 2015) 10.23* Employment Agreement, dated as of March 14, 2014, between Spherix Incorporated and Frank Reiner 10.24* Amendment to Employment Agreement, dated as of June 30, 2015, between Spherix Incorporated and Frank Reiner 10.25 Consulting Services Agreement, dated as of August 10, 2015, between Spherix Incorporated and Howard E. Goldberg d/b/a Forward Vision Associates (incorporated by reference to Form 8-K filed August 19, 2015) 10.26* Settlement and License Agreement, dated October 13, 2015, between Spherix Incorporated and Huawei Technologies Co., Ltd. 10.27 Patent License Agreement, dated as of November 23, 2015, between Spherix Incorporated and RPX Corporation (incorporated by reference to Form 8-K filed November 30, 2015 10.28 Securities Purchase Agreement, dated as of December 2, 2015, between Spherix Incorporated and the investors party thereto (incorporated by reference to Form 8-K filed December 3, 2015) 10.29 Engagement Agreement, dated September 16, 2015, as amended, between Spherix Incorporated and H.C. Wainwright & Co., LLC (incorporated by reference to Form 8-K filed December 3, 2015) 21.1* List of Subsidiaries 23.1* Consent of Marcum LLP, independent registered public accounting firm 31.1* Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Interim Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. |
Factors that may have contributed to such volatility include, but are not limited to: · developments regarding regulatory filings; · our funding requirements and the terms of our financing arrangements; · technological innovations; · introduction of new technologies by us or our competitors; · material changes in existing litigation; · changes in the enforceability or other matters surrounding our patent portfolios; · government regulations and laws; · developments in patent or other proprietary rights; · the number of shares issued and outstanding; · the number of shares trading on an average trading day; · performance of companies in the non-performing entity space generally; · announcements regarding other participants in the technology and technology related industries, including our competitors; · block sales of our shares by stockholders to whom we have sold stock in private placements, or the cessation of transfer restrictions with respect to those shares; and · market speculation regarding any of the foregoing. |
The factors that may affect our quarterly operating results include the following: · fluctuations in results of our enforcement and licensing activities or outcome of cases; · fluctuations in duration of judicial processes and time to completion of cases; · the timing and amount of expenses incurred to negotiate with licensees, litigate cases and obtain settlements from infringers; · the impact of our anticipated need for personnel and expected substantial increase in headcount; · fluctuations in the receptiveness of courts and juries to significant damages awards in patent infringement cases and speed to trial in the jurisdictions in which our cases may be brought and the accepted royalty rates attributable to damages analysis for patent cases generally, including the royalty rates for industry standard patents which we may own or acquire; · worsening economic conditions which cause revenues or profits attributable to infringer sales of products or services to decline; · changes in the regulatory environment, including regulation of NPE activities or patenting practices, that may negatively impact our or infringers practices; · the timing and amount of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs and regulatory penalties assessed related to government enforcement actions; · Any changes we make in our Critical Accounting Estimates described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our periodic reports; · the adoption of new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which we account for, measure or disclose our results of operations, financial position or other financial measures; and · costs related to acquisitions of technologies or businesses. |
“Fundamental Transaction” means directly or indirectly, in one or more related transactions: (a) the Company of any subsidiary realizes net proceeds from any financing, recovery, sale, license fee or other revenue received by the Company (including on account of any intellectual property rights held by the Company and not just in respect of the patents) during any fiscal quarter in an amount which would cause the cash or cash equivalents of the Company to exceed $5,000,000, (b) the Company consolidates or merges with or into (whether or not the Company or any of its subsidiaries is the surviving corporation) any other person, or (c) the Company or any of its subsidiaries sells, leases, licenses, assigns, transfers, conveys or otherwise disposes of all or substantially all of its respective properties or assets to any other Person, provided that, in the event of a Fundamental Transaction under clause (b) or (c), neither such Fundamental Transaction may proceed without the consent of the holders holding a majority of the shares of Series I Preferred Stock unless (A) all shares of Series I Preferred Stock held by the holders are redeemed with interest upon closing of such Fundamental Transaction, and (B) all shares of common stock of the Company then held by the holders are redeemed or otherwise purchased for cash or freely tradable securities of a publicly traded company at a price at or above the then-current market value of such common stock. |
Awards with service conditions only were granted as follows: · 750,000 stock options to the Company’s former interim Chief Executive Officer which vest in four equal installments of 187,500 options each on October 4, 2013, April 4, 2014, October 4, 2014 and April 4, 2015, subject to a time based service condition only; · 250,000 stock options to the former Chief Executive Officer of North South, who became the Company’s Chief Executive Officer upon the completion of the acquisition of North South on September 10, 2013, which vest in four equal installments of 62,500 options each on October 4, 2013, April 4, 2014, October 4, 2014 and April 4, 2015, subject to a time based service condition only; · An aggregate of 225,000 options to three directors that fully vested on October 4, 2013, subject to each of these directors’ continued service to the Company through that date; and · An aggregate of 30,000 options to two consultants and one employee that fully vested on August 16, 2013 upon shareholder approval of the plan. |
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