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10.75 (27) Option to Purchase 500,000 Shares of Common Stock issued to Michael W. DePasquale 10.76 (27) Option to Purchase 50,000 Shares of Common Stock issued to Thomas J. Colatosti 10.77 (27) Options to Purchase 50,000 and 25,000 Shares of Common Stock issued to Jeff May 10.78 (27) Option to Purchase 50,000 Shares of Common Stock issued to Charles Romeo 10.79 (27) Option to Purchase 100,000 Shares of Common Stock issued to John Schoenherr 10.80 (28) Amendment Agreement, dated April 1, 2009, by and between the Company and Dataradio Corporation 10.81 (29) Settlement and Mutual Release Agreement, dated July 2, 2009, by and between the Company and Longview Special Finance, Inc., and Longview Fund LP 10.82 (29) Promissory Note, dated July 7, 2009, by and between the Company and The Shaar Fund Ltd 10.83 (8) Asset Purchase Agreement, dated August 13, 2009, by and between the Company and Interact911 Mobile Systems, Inc. 10.84 (8) Note Amendment and Extension Agreement, dated as of November 3, 2009, by and between the Company and The Shaar Fund Ltd 10.85 (8) Securities Exchange Agreement, dated as of November 12, 2009, by and between the Company and The Shaar Fund Ltd., and Thomas J. Colatosti 10.86 (8) Promissory Note, dated December 7, 2009, by and between the Company and InterAct911 Mobile Systems, Inc. 10.87 (8) Warrant to purchase 8,000,000 shares of Common Stock issue to Silkroad Equity, LLC on December 7, 10.88 (8) Warrant to purchase 4,750,000 shares of Common Stock issued to The Shaar Fund Ltd. on December 28, 10.89 (8) Warrant to purchase 250,000 shares of Common Stock issued to Thomas J. Colatosti on December 28, 10.90 (8) Convertible Note, dated as of December 28, 2009, by and between the Company and The Shaar Fund Ltd. 10.91 (8) Convertible Note, dated as of December 28, 2009, by and between the Company and Thomas J. Colatosti 10.92 (8) Compensation Agreement, dated January 12, 2010, by and between the Company and Mr. Colatosti 10.93 (8) Employment Agreement, effective March 25, 2010, by and between the Company and Michael W. DePasquale 21.1 (26) List of subsidiaries of BIO-key International, Inc. 23.1 (8) Consent of CCR LLP 31.1 (8) Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 (8) Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 (8) Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 (8) Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1) Filed as an exhibit to the registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on April 14, 2004 and incorporated herein by reference. |
Portions of Item 13 are submitted as separate sections of this Report: (1) Financial statements filed as part of this Report: Report of Independent Registered Public Accounting Firm Balance Sheets as at December 31, 2008 and 2007 Statements of Operations-Years ended December 31, 2008 and 2007 Statement of Stockholders’ Equity (Deficit)-Years ended December 31, 2008 and 2007 Statements of Cash Flows-Years ended December 31, 2008 and 2007 Notes to Financial Statements-December 31, 2008 and 2007 (2) The exhibits listed in the Exhibits Index immediately preceding such exhibits are filed as part of this Report ITEM 8 - FINANCIAL STATEMENTS The following financial statements of BIO-key International, Inc. are included herein at the indicated page numbers: Report of Independent Registered Public Accounting Firm, CCR LLP Balance Sheets as at December 31, 2008 and 2007 Statements of Operations-Years ended December 31, 2008 and 2007 Statement of Stockholders’ Equity (Deficit)-Years ended December 31, 2008 and 2007 Statements of Cash Flows-Years ended December 31, 2008 and 2007 Notes to the Financial Statements-December 31, 2008 and 2007 Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders BIO-key International, Inc. Marlborough, MA We have audited the accompanying consolidated balance sheets of BIO-key International, Inc. and Subsidiary as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2008. |
The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, as follows: The Company had concentrations of customers in certain industry groups which represented 10% or more of the Company’s total revenue, as follows: * Less than 10% of total revenue The Company had certain customers whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: * Less than 10% of total accounts receivable The Company had certain customers whose balance of costs and earnings in excess of billings on uncompleted contracts individually represented 10% or more of the Company’s total costs and earnings in excess of billings on uncompleted contracts, as follows: NOTE E-COSTS AND EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS The components of uncompleted contracts consisted of the following as of December 31: NOTE F-PREPAID EXPENSES Prepaid expenses consisted of the following as of December 31: NOTE G-EQUIPMENT AND LEASEHOLD IMPROVEMENTS Equipment and leasehold improvements consisted of the following as of December 31: NOTE H-OTHER ASSETS Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2008 and 2007, were as follows: Intangible Assets Intangible assets consisted of the following as of December 31: Aggregate amortization expense for the year ended December 31, 2008 and 2007, was $741,568 and $761,258 respectively. |
Description 2.1(1) Agreement and Plan of Merger dated as of March 30, 2004 by and among BIO-key International, Inc., BIO-key Acquisition Corp., Public Safety Group, Inc. (“PSG”) and each of the shareholders of PSG 2.2(2) Asset Purchase Agreement dated as of August 16, 2004 by and among BIO-key International, Inc., Aether Systems, Inc., Cerulean Technologies, Inc. and SunPro, Inc. 2.3(3) Agreement and Plan of Merger dated as of December 30, 2004 by and among BIO-key International, Inc., a Delaware corporation, and BIO-key International, Inc., a Minnesota corporation 3.1(3) Certificate of Incorporation of BIO-key International, Inc., a Delaware corporation 3.2(3) Certificate of Designation of Series A 7% Convertible Preferred Stock of BIO-key International, Inc., a Delaware corporation 3.3(3) By-Laws of BIO-key International, Inc., a Delaware corporation 3.4 (19) Certificate of Amendment of Certificate of Incorporation of BIO-key International, Inc., a Delaware corporation 3.5 (16) Certificate of Designation of the Series B Convertible Preferred Stock of the Company 3.6 (21) Certificate of Designation of the Series C Convertible Preferred Stock of the Company 4.1(4) Specimen certificates for shares of BIO-key International, Inc. common stock 10.1(4) SAC Technologies, Inc. 1996 Stock Option Plan 10.2(5) Amendment No. |
1 to the SAC Technologies, Inc. 1996 Stock Option Plan 10.3(5) SAC Technologies, Inc. 1999 Stock Option Plan 10.4(6) Warrant issued to The Shaar Fund Ltd. 10.5(6) Security Interest Provisions 10.6(6) Employment Agreement by and between BIO-key International, Inc. and Mira LaCous dated November 20, 2001 10.7(9) Option to Purchase 150,000 Shares of Common Stock issued to Thomas J. Colatosti 10.8(9) Non-Qualified Stock Option Agreement under the registrant’s 1999 Stock Incentive Plan to Purchase 200,000 Shares of Common Stock issued to Thomas J. Colatosti 10.9(9) Option to Purchase 580,000 Shares of Common Stock issued to Michael W. DePasquale 10.10(7) Securities Exchange Agreement dated March 3, 2004 by and between BIO-key International, Inc. and The Shaar Fund Ltd. 10.11(7) Registration Rights Agreement dated March 3, 2004 by and between BIO-key International, Inc. and The Shaar Fund Ltd. 10.12(7) Option to Purchase 500,000 Shares of Common Stock issued to Michael W. DePasquale 10.13(7) Option to Purchase 150,000 Shares of Common Stock issued to Thomas J. Colatosti 10.14(7) Option to Purchase 50,000 Shares of Common Stock issued to Thomas J. Colatosti 10.15(7) Option to Purchase 50,000 Shares of Common Stock issued to Jeff May 10.16(10) Amendment Agreement dated March 30, 2004 by and between BIO-key International, Inc. and The Shaar Fund Ltd. 10.17(11) Securities Purchase Agreement dated as of March 31, 2004 (the “March Securities Purchase Agreement”) by and among BIO-key International, Inc. and each of the Purchasers named therein 10.18(11) Form of Warrant issued by BIO-key International, Inc. pursuant to the March Securities Purchase Agreement 10.19(2) Securities Purchase Agreement dated as of September 29, 2004 (the “Laurus Securities Purchase Agreement”) by and between BIO-key International, Inc., Laurus Master Fund, Ltd. and the other Purchasers party thereto 10.20(2) Form of Common Stock Purchase Warrant issued by BIO-key International, Inc. pursuant to the Laurus Securities Purchase Agreement 10.21(2) Registration Rights Agreement dated as of September 29, 2004 by and between BIO-key International, Inc., Laurus Master Fund, Ltd. and the other Purchasers party thereto 10.22(2) Securities Purchase Agreement dated as of September 29, 2004 (the “Shaar Securities Purchase Agreement”) by and between BIO-key International, Inc., The Shaar Fund, Ltd. and the other Purchasers party thereto 10.23(2) Form of Common Stock Purchase Warrant issued by BIO-key International, Inc. pursuant to the Shaar Securities Purchase Agreement 10.24(2) Registration Rights Agreement dated as of September 29, 2004 by and between BIO-key International, Inc., The Shaar Fund, Ltd. and the other Purchasers party thereto 10.25(10) Option to Purchase 300,000 shares of common stock issued to Kenneth Souza 10.26(10) Employment Agreement dated as of October 4, 2004 by and between BIO-key International, Inc. and Kenneth Souza 10.27(10) BIO-key International, Inc. 2004 Stock Incentive Plan 10.28(10) Warrant to purchase 100,000 shares of Common Stock issued to The November Group Ltd. on July 14, 2004 10.29(10) Warrant to purchase 230,000 shares of Common Stock issued to Jesup & Lamont Securities Corp. on March 31, 2004 10.30(10) Warrant to purchase 105,000 shares of Common Stock issued to Douglass Bermingham on March 31, 2004 10.31(10) Warrant to purchase 60,000 shares of Common Stock issued to Mason Sexton on March 31, 2004 10.32(10) Warrant to purchase 22,000 shares of Common Stock issued to David Moss on March 31, 2004 10.33(10) Warrant to purchase 22,000 shares of Common Stock issued to Patrick Gaynes on March 31, 2004 10.34(10) Warrant to purchase 5,000 shares of Common Stock issued to Tom DuHamel on March 31, 2004 10.35(11) Option to Purchase 155,000 shares of common stock issued to Francis J Cusick 10.36(11) Option to Purchase 50,000 shares of common stock issued to Charles P. Romeo 10.37(12) Securities Purchase Agreement, dated as of June 8, 2005, by and between the Company and Laurus Fund, Ltd. 10.38(12) Common Stock Purchase Warrant issued pursuant to the Securities Purchase Agreement, dated as of June 8, 2005, by and between the Company and the Laurus Master Fund, Ltd. 10.39(12) Registration Rights Agreement, dated as of June 8, 2005, by and between the Company and Laurus Fund, Ltd. 10.40(12) Securities Purchase Agreement, effective as of May 31, 2005, by and among the Company, The Shaar Fund, Ltd. and the other pursuant that are a party thereto 10.41(12) Form of Common Stock Purchase warrant issued pursuant to the Securities Purchase Agreement, effective as of May 31, 2005, by and among the Company, The Shaar Fund, Ltd. and the other purchasers that are a party thereto 10.42(12) Registration Rights Agreement, effective as of May 31, 2005, by and among the Company, The Shaar Fund, Ltd., Jesup & Lamont and the other purchasers that are a party thereto 10.43(20) Escrow Agreement, dated as of May 31, 2005, by and among the Company, Jesup & Lamont Securities Corp. and Thelen, Reid & Priest LLP. |
10.44(13) Amendment and Waiver, dated as of August 31, 2005, by and between the Company and Laurus Master Fund, Ltd. 10.45(13) Amendment and Waiver, dated as of August 31, 2005, by and between the Company and The Shaar Fund, Ltd. 10.46(15) Amendment and Waiver, dated as of August 31, 2005, by and between the Company and Longview Special Finance 10.47(13) Amendment and Waiver, dated as of August 31, 2005, by and between the Company and Etienne Des Roys 10.48(13) Amendment and Waiver, dated as of August 31, 2005, by and between the Company and Eric Haber 10.49(13) Amendment and Waiver, dated as of August 31, 2005, by and between the Company and Investors Management Corporation 10.50(13) Amendment and Waiver, dated as of August 31, 2005, by and between the Company and The Tocqueville Fund 10.51(13) Amendment and Waiver, dated as of August 31, 2005, by and between the Company and The Tocqueville Amerique Value Fund 10.52(13) Registration Rights Agreement, dated as of August 31, 2005, by and among the Company, Laurus Master Fund, Ltd., The Shaar Fund, Ltd., Longview Special Finance, Etienne Des Roys, Eric Haber, Investors Management Corporation, The Tocqueville Fund and The Tocqueville Amerique Value Fund. |
10.53(14) Amendment and Waiver, dated as of January 23, 2006, by and between the Company and Laurus Master Fund, Ltd. 10.54(14) Registration Rights Agreement, dated as of January 23, 2006, by and between the Company and Laurus Master Fund, Ltd. 10.55(14) Amendment and Waiver, dated as of January 23, 2006, by and among the Company and the holders of Subordinated Convertible Promissory Notes of the Company 10.56(14) Securities Purchase Agreement, dated as of January 23, 2006, by and among the Company, The Shaar Fund Ltd., Longview Fund, L.P. and Longview Special Finance 10.57(14) Form of Convertible Term Note issued pursuant to the Securities Purchase Agreement, dated as of January 23, 2006, by and among the Company, The Shaar Fund Ltd., Longview Fund, L.P. and Longview Special Finance 10.58(14) Form of Common Stock Purchase Warrant issued pursuant to the Securities Purchase Agreement, dated as of January 23, 2006, by and among the Company, The Shaar Fund Ltd., Longview Fund, L.P. and Longview Special Finance 10.59(14) Registration Rights Agreement, dated as of January 23, 2006 by and among the Company, The Shaar Fund, Ltd., Longview Fund, L.P. and Longview Special Finance 10.60(14) Amendment No. |
1 to Subordinated Secured Promissory Note, dated as of January 23, 2006, by and between the Company and Aether Systems, Inc. 10.61(17) Form of Option Agreement used to grant a total of 900,000 options to Purchase common stock to Francis J. Cusick, Michael W. DePasquale, Randy Fodero, and Kenneth S. Souza 10.62(18) Amendment and Waiver, dated as of August 10, 2006, by and between the Company and Laurus Master Fund, Ltd. 10.63(18) Registration Rights Agreement, dated as of August 10, 2006, by and between the Company and Laurus Master Fund, Ltd. 10.64(18) Securities Exchange Agreement, dated as of August 10, 2006, by and among the Company, The Shaar Fund Ltd., Longview Fund, L.P., Longview Special Finance and certain other holders of the Company’s Subordinated Convertible Promissory Notes 10.65(18) Registration Rights Agreement, dated as of August 10, 2006, by and among the Company, The Shaar Fund Ltd., Longview Fund, L.P., Longview Special Finance and certain other holders of the Company’s Subordinated Convertible Promissory Notes 10.66(18) Securities Purchase Agreement, dated as of August 10, 2006, by and between the Company and Trellus Partners, L.P. 10.67(18) Form of Common Stock Purchase Warrant issued pursuant to the Securities Purchase Agreement, dated as of August 10, 2006, by and between the Company and Trellus Partners, L.P. 10.68(18) Registration Rights Agreement, dated as of August 10, 2006, by and between the Company and Trellus Partners, L.P. 10.69(18) Securities Purchase Agreement, dated as of August 10, 2006, by and between the Company and The Shaar Fund Ltd. 10.70(18) Form of Common Stock Purchase Warrant to be issued pursuant to the Securities Purchase Agreement, dated as of August 10, 2006, by and between the Company and The Shaar Fund Ltd. 10.71(18) Registration Rights Agreement, dated as of August 10, 2006, by and between the Company and The Shaar Fund Ltd. 10.72 (19) Amendment and Waiver, dated as of December 29, 2006, by and between the Company and Laurus Master Fund, Ltd. 10.73 (20) Amendment and Waiver, dated as of April 18, 2007, by and between the Company and Laurus Master Fund, Ltd. 10.74 (21) Purchase and Sale Agreement, dated as of May 22, 2007, by and between the Company and ZOLL Data Systems, Inc 10.75 (22) Compensation Agreement, dated July 12, 2007, by and between the Company and Mr. Colatosti 10.76 (8) Options to Purchase 50,000 and 65,241 Shares of Common Stock issued to Thomas J. Colatosti 10.77 (8) Options to Purchase 100,000 and 130,481 Shares of Common Stock issued to Jeff May 10.78 (8) Options to Purchase 50,000 and 32,620 Shares of Common Stock issued to Charles Romeo 10.79 (8) Options to Purchase 50,000 and 48,930 Shares of Common Stock issued to John Schoenherr 10.80 (23) Employment Agreement, effective as of May 25, 2008, by and between the Company and Michael W. DePasquale. |
10.82 (24) Office Lease Agreement, dated July 28, 2008, by and between the Company and Normandy Nickerson Road, LLC 10.83 (25) Compensation Agreement, dated as of November 17, 2008, by and between the Company and Thomas J. Colatosti 10.84 (8) Option to Purchase 500,000 Shares of Common Stock issued to Michael W. DePasquale 10.85 (8) Option to Purchase 50,000 Shares of Common Stock issued to Thomas J. Colatosti 10.86 (8) Options to Purchase 50,000 and 25,000 Shares of Common Stock issued to Jeff May 10.87 (8) Option to Purchase 50,000 Shares of Common Stock issued to Charles Romeo 10.88 (8) Option to Purchase 100,000 Shares of Common Stock issued to John Schoenherr 21.1 (26) List of subsidiaries of BIO-key International, Inc. 23.1 (8) Consent of CCR LLP 31.1 (8) Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 (8) Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 (8) Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 (8) Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1) Filed as an exhibit to the registrant’s current report on Form 8-K filed with the Securities and Exchange Commission on April 14, 2004 and incorporated herein by reference. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: ● the possibility that a government might ban or severely restrict our sales compensation and business models; ● the possibility that local civil unrest, political instability, or changes in diplomatic or trade relationships might disrupt our operations in one or more markets; ● the lack of well-established or reliable legal systems in certain areas where we operate; ● the presence of high inflation in the economies of international markets in which we operate; ● the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; ● the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and ● the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The number and productivity of our sales force is negatively impacted by several additional factors, including: ● any adverse publicity or negative public perception regarding us, our products or ingredients, our distribution channel, or our industry or competitors; ● lack of interest in, dissatisfaction with, or the technical failure of, existing or new products; ● lack of compelling products or income opportunities, including through our sales compensation plans and incentive trips and other offerings; ● negative sales force reaction to changes in our sales compensation plans; ● our actions to enforce our policies and procedures; ● any regulatory actions or charges against us or others in our industry; ● general economic, business and public health conditions, including employment levels, employment trends such as the gig and sharing economies, and pandemics or other conditions that curtail person-to-person interactions; ● changes in the policies of social media platforms used to prospect or recruit potential consumers and sales force participants; ● recruiting efforts of our competitors and changes in consumer-loyalty trends; and ● potential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Specifically, we are susceptible to adverse publicity concerning: ● suspicions about the legality and ethics of network marketing; ● continued media or regulatory scrutiny regarding our business and our business model, including in Mainland China; ● the safety or effectiveness of our or our competitors’ products or the ingredients in such products; ● inquiries, investigations, fines, legal actions, or mandatory or voluntary product recalls involving us, our competitors, our business models or our respective products; ● the actions of our current or former sales force and employees, including any allegations that our sales force or employees have overstated or made false product claims or earnings representations, or engaged in unethical or illegal activity; ● misperceptions about the types and magnitude of economic benefits offered at different levels of sales engagement in our business; and ● public, governmental or media perceptions of the direct selling, nutritional supplement or personal care industries generally. |
The number and productivity of our sales force could be negatively impacted by several additional factors, including: ● any adverse publicity regarding us, our products, our distribution channel, or our competitors; ● lack of interest in, dissatisfaction with, or the technical failure of, existing or new products; ● lack of compelling products or income opportunities, including through our sales compensation plans and other incentive trips and offerings; ● negative sales force reaction to changes in our sales compensation plans; ● any negative public perception of our products and their ingredients; ● any negative public perception of our sales force and direct selling businesses in general; ● our actions to enforce our policies and procedures; ● any regulatory actions or charges against us or others in our industry; ● general economic and business conditions, including employment levels and employment trends such as the gig and sharing economies; ● recruiting efforts of our competitors; and ● potential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: ● the possibility that a government might ban or severely restrict our sales compensation and business models; ● the possibility that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in one or more markets-for example, the ongoing social incidents in Hong Kong, which began in 2019, have negatively affected our business in that market; ● the lack of well-established or reliable legal systems in certain areas where we operate; ● the presence of high inflation in the economies of international markets in which we operate; ● the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; ● the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and ● the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
The number and productivity of our sales force could be negatively impacted by several additional factors, including: • any adverse publicity regarding us, our products, our distribution channel, or our competitors; • lack of interest in, dissatisfaction with, or the technical failure of, existing or new products; • lack of compelling products or income opportunities, including through our sales compensation plans and other incentive trips and offerings; • negative sales force reaction to changes in our sales compensation plans; • any negative public perception of our products and their ingredients; • any negative public perception of our sales force and direct selling businesses in general; • our actions to enforce our policies and procedures; • any regulatory actions or charges against us or others in our industry; • general economic and business conditions, including employment levels; • recruiting efforts of our competitors; and • potential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: • the possibility that a government might ban or severely restrict our sales compensation and business models; • the possibility that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; • the lack of well-established or reliable legal systems in certain areas where we operate; • the presence of high inflation in the economies of international markets in which we operate; • the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; • the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and • the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
The number and productivity of our sales force could be harmed by several additional factors, including: • any adverse publicity regarding us, our products, our distribution channel, or our competitors; • lack of interest in, dissatisfaction with, or the technical failure of, existing or new products; • lack of compelling products or income opportunities, including through our sales compensation plans and other incentive trips and offerings; • negative sales force reaction to changes in our sales compensation plans; • any negative public perception of our products and their ingredients; • any negative public perception of our sales force and direct selling businesses in general; • our actions to enforce our policies and procedures; • any regulatory actions or charges against us or others in our industry; • general economic and business conditions; • recruiting efforts of our competitors; and • potential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: • the possibility that a government might ban or severely restrict our sales compensation and business models; • the possibility that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; • the lack of well-established or reliable legal systems in certain areas where we operate; • the presence of high inflation in the economies of international markets in which we operate; • the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; • the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and • the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company's stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company's Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: • the possibility that a government might ban or severely restrict our sales compensation and business models; • the possibility that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; • the lack of well-established or reliable legal systems in certain areas where we operate; • the presence of high inflation in the economies of international markets in which we operate; • the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; • the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and • the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company's stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company's Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: • the possibility that a foreign government might ban or severely restrict our direct selling business model; • the possibility that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; • the lack of well-established or reliable legal systems in certain areas where we operate; • the presence of high inflation in the economies of international markets in which we operate; • the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; • the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and • the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company's stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company's Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: • the possibility that a foreign government might ban or severely restrict our business method of direct selling, or that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; • the lack of well-established or reliable legal systems in certain areas where we operate; • the presence of high inflation in the economies of international markets in which we operate; • the possibility that a government authority might impose legal, tax or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; • the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and • the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company's stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company's Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: • the possibility that a foreign government might ban or severely restrict our business method of direct selling, or that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; • the lack of well-established or reliable legal systems in certain areas where we operate; • the presence of high inflation in the economies of international markets in which we operate; • the possibility that a government authority might impose legal, tax or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets; • the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and • the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company's stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company's Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: • the possibility that a foreign government might ban or severely restrict our business method of direct selling, or that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; • the lack of well-established or reliable legal systems in certain areas where we operate; • the presence of high inflation in the economies of international markets in which we operate; • the possibility that a government authority might impose legal, tax or other financial burdens on us or our distributors, due, for example, to the structure of our operations in various markets; • the possibility that a government authority might challenge the status of our distributors as independent contractors or impose employment or social taxes on our distributors; and • the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company's stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company's Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Factors that could impact our results in the market include: • continued or increased levels of regulatory and media scrutiny and any regulatory actions taken by regulators, or any adoption of more restrictive regulations, in response to such scrutiny; • significant weakening of the Japanese yen; • increased regulatory constraints with respect to the claims we can make regarding the efficacy of products and tools, which could limit our ability to effectively market them; • risks that the initiatives we have implemented in Japan, which are patterned after successful initiatives implemented in other markets, will not have the same level of success in Japan, may not generate renewed growth or increased productivity among our distributors, and may cost more or require more time to implement than we have anticipated; • inappropriate activities by our distributors and any resulting regulatory actions against us or our distributors; • improper practices of other direct selling companies or their distributors that increase regulatory and media scrutiny of our industry; • any weakness in the economy or consumer confidence; and • increased competitive pressures from other direct selling companies and their distributors who actively seek to solicit our distributors to join their businesses. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: • the possibility that a foreign government might ban or severely restrict our business method of direct selling, or that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; • the lack of well-established or reliable legal systems in certain areas where we operate; • the presence of high inflation in the economies of international markets in which we operate; • the possibility that a government authority might impose legal, tax or other financial burdens on us or our distributors, due, for example, to the structure of our operations in various markets; • the possibility that a government authority might challenge the status of our distributors as independent contractors or impose employment or social taxes on our distributors; and • the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Factors that could impact our results in the market include: • continued or increased levels of regulatory and media scrutiny and any regulatory actions taken by regulators, or any adoption of more restrictive regulations, in response to such scrutiny; • significant weakening of the Japanese yen; • increased regulatory constraints with respect to the claims we can make regarding the efficacy of products and tools, which could limit our ability to effectively market them; • risks that the initiatives we have implemented in Japan, which are patterned after successful initiatives implemented in other markets, will not have the same level of success in Japan, may not generate renewed growth or increased productivity among our distributors, and may cost more or require more time to implement than we have anticipated; • inappropriate activities by our distributors and any resulting regulatory actions against us or our distributors; • improper practices of other direct selling companies or their distributors that increase regulatory and media scrutiny of our industry; • any weakness in the economy or consumer confidence; and • increased competitive pressures from other direct selling companies and their distributors who actively seek to solicit our distributors to join their businesses. |
Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including: ▪ the possibility that a foreign government might ban or severely restrict our business method of direct selling, or that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market; ▪ the lack of well-established or reliable legal systems in certain areas where we operate; ▪ the presence of high inflation in the economies of international markets in which we operate; ▪ the possibility that a government authority might impose legal, tax or other financial burdens on us or our distributors, due, for example, to the structure of our operations in various markets; and ▪ the possibility that a government authority might challenge the status of our distributors as independent contractors or impose employment or social taxes on our distributors. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Factors that could impact our results in the market include: • continued or increased levels of regulatory and media scrutiny and any regulatory actions taken by regulators, or any adoption of more restrictive regulations, in response to such scrutiny; • significant weakening of the Japanese yen; • increased regulatory constraints with respect to the claims we can make regarding the efficacy of products and tools, which could limit our ability to effectively market them; • risks that the new initiatives we are implementing in Japan, which are patterned after successful initiatives implemented in other markets, will not have the same level of success in Japan, may not generate renewed growth or increased productivity among our distributors, and may cost more or require more time to implement than we have anticipated; • inappropriate activities by our distributors and any resulting regulatory actions against us or our distributors; • any weakness in the economy or consumer confidence; and • increased competitive pressures from other direct selling companies and their distributors who actively seek to solicit our distributors to join their businesses. |
These forward-looking statements include, but are not limited to, statements concerning: • our plans and expectations regarding our initiatives, strategies, development and launch of new products, and other innovation efforts; • our expectations and beliefs regarding government regulations of our industry and our ability to comply with such regulations; • our expectations and beliefs regarding our distributors and our compensation plan; and • our expectation that we will spend approximately $30 million to $35 million for capital expenditures during 2010; • our expectation and plans regarding conventions; • our expectations regarding gross profit and selling expenses; • our anticipation that our board of directors will continue to declare quarterly cash dividends and that the cash flows from operations will be sufficient to fund our future dividend payments; • our belief that we have appropriately provided for income taxes for all years; • our belief that we have sufficient liquidity to be able to meet our obligations on both a short- and long-term basis and that existing cash balances together with future cash flows from operations and existing lines of credit will be adequate to fund our cash needs; and • our beliefs regarding our Japan customs matter; and • our expectations regarding the effect of foreign currency fluctuations. |
Factors that could impact our results in the market include: • continued or increased levels of regulatory and media scrutiny and any regulatory actions taken by regulators, or any adoption of more restrictive regulations, in response to such scrutiny; • any weakening of the Japanese yen; • regulatory constraints with respect to the claims we can make regarding the efficacy of products and tools, which could limit our ability to effectively market them; • risks that the new initiatives we are implementing in Japan, which are patterned after successful initiatives implemented in other markets, will not have the same level of success in Japan, may not generate renewed growth or increased productivity among our distributors, and may cost more or require more time to implement than we have anticipated; • inappropriate activities by our distributors and any resulting regulatory actions; • any weakness in the economy or consumer confidence; and • increased competitive pressures from other direct selling companies and their distributors who actively seek to solicit our distributors to join their businesses. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Factors that could impact our results in the market include: • continued or increased levels of regulatory and media scrutiny, or any adoption of more restrictive regulations in response to such scrutiny; • any weakening of the Japanese yen; • regulatory constraints with respect to the claims we can make regarding the efficacy of products and tools, which could limit our ability to introduce or effectively market them; • risks that the new initiatives we are implementing in Japan, which are patterned after successful initiatives implemented in other markets, will not have the same level of success in Japan, may not generate renewed growth or increased productivity among our distributors, and may cost more or require more time to implement than we have anticipated; • inappropriate activities by our distributors and any resulting regulatory actions against us or our distributors; • any negative distributor reaction to our efforts to increase distributor compliance efforts in this market; • any weakness in the economy or consumer confidence; and • increased competitive pressures from other direct selling companies and their distributors who actively seek to solicit our distributors to join their businesses. |
These forward-looking statements include, but are not limited to, statements concerning: • our transformation efforts in Japan and other countries; • our plans regarding new markets; • our plans to launch or to continue to roll out certain products, tools and other initiatives in our various markets, and our belief that these initiatives and other recent product launches and initiatives will positively impact our business going forward; • our plans to modify our compensation plans in most of our Asian markets in 2009; • our expectation that we will spend approximately $20 million to $25 million for capital expenditures during 2009; • our plans to open new stores in China; • our belief that our recent business transformation initiative will provide continued savings going forward; • our anticipation that our board of directors will continue to declare quarterly cash dividends and that the cash flows from operations will be sufficient to fund our future dividend payments; • our belief that we have appropriately provided for income taxes for all years; • our belief that we have sufficient liquidity to be able to meet our obligations on both a short- and long-term basis and that existing cash balances together with future cash flows from operations and existing lines of credit will be adequate to fund our cash needs; and • our belief that recent modifications to our business structure in Japan and in the United States should eliminate any further customs valuation disputes with respect to product imports in Japan. |
Factors that could impact our results in the market include: • continued or increased levels of regulatory and media scrutiny and any regulatory actions taken by regulators, or any adoption of more restrictive regulations, in response to such scrutiny; • any weakening of the Japanese yen; • regulatory constraints with respect to the claims we can make regarding the efficacy of products and tools, which could limit our ability to effectively market them; • risks that the new initiatives we are implementing in Japan, which are patterned after successful initiatives implemented in other markets, will not have the same level of success in Japan, may not generate renewed growth or increased productivity among our distributors, and may cost more or require more time to implement than we have anticipated; • inappropriate activities by our distributors and any resulting regulatory actions; • any weakness in the economy or consumer confidence; and • increased competitive pressures from other direct selling companies and their distributors who actively seek to solicit our distributors to join their businesses. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
These forward-looking statements include, but are not limited to, statements concerning: • our belief that our transformation efforts will help reduce general and administrative expenses and help generate improved earnings per share in 2008; • our plans to launch or to continue to roll out certain products, tools and other initiatives in our various markets, and our belief that these initiatives and other recent product launches and initiatives will positively impact our business going forward; • our plans to open additional stores in China and our plans to commence operations in South Africa; • our intention to vigorously defend the Bodywise International, LLC lawsuit; • our expectation that we will spend approximately $20 million to $25 million for capital expenditures during 2008; • our belief that our recent business transformation initiative will provide continued savings going forward; • our anticipation that our board of directors will continue to declare quarterly cash dividends and that the cash flows from operations will be sufficient to fund our future dividend payments; • our belief that we have sufficient liquidity to be able to meet our obligations on both a short- and long-term basis and that existing cash balances together with future cash flows from operations and existing lines of credit will be adequate to fund our cash needs; • our belief that recent modifications to our business structure in Japan and in the United States should eliminate any further customs valuation disputes with respect to product imports in Japan. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in this United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
The forward-looking statements and associated risks set forth herein relate to, among other things: • our plans to launch or continue to roll out or promote various products, tools, and initiatives, including the S2 Scanner and the ProDerm Skin Analyzer ; • the expectation that our relationship with our current primary suppliers will not end in the near term, and the belief that we could produce or source our personal care products from other suppliers and expand manufacturing capabilities in China, and replace our primary suppliers of Pharmanex products without great difficulty or increased cost; • our belief that we can produce sufficient Scanners in our manufacturing facility in China to support current and anticipated future market demands; • our plans to continue to develop and introduce new, innovative products and to improve and evolve our existing product formulations; • our plans to commit resources to research and development in the future; • our belief that providing effective distributor support will be important to our success; • our plans to further expand our direct selling model throughout China, including our expectation that our retail stores will qualify as “service” centers and our plans to add service centers throughout China as necessary; and • our belief that we do not currently foresee a shortage in qualified personnel necessary to operate our business. |
These forward-looking statements include, but are not limited to, statements concerning: • our plans to launch or to continue to roll out certain products, tools and other initiatives in our various markets, and our belief that these initiatives and other recent product launches and initiatives will positively impact our business going forward; • our plans regarding the expansion of direct selling in China, and our belief that this will positively impact our business there; • our expectation that our retail stores will qualify as “service” centers and our plans to add service centers throughout China as necessary; • our anticipation that gross margins may decrease slightly going forward; • our expectation that we will spend approximately $30 million to $35 million for capital expenditures during 2007; • our belief that our recent business transformation initiative will provide continued savings gong forward, and our plans to invest some of these savings into various growth initiatives; • our anticipation that our board of directors will continue to declare quarterly cash dividends and that the cash flows from operations will be sufficient to fund our future dividend payments; • our belief that we have sufficient liquidity to be able to meet our obligations on both a short- and long-term basis and that existing cash balances together with future cash flows from operations and existing lines of credit will be adequate to fund our cash needs; • our belief that recent modifications to our business structure in Japan and in the United States should eliminate any further customs valuation disputes with respect to product imports in Japan; and • our belief that it is not probable that we will incur a loss relating to the Taiwan audit. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in this United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Our product development philosophy across all three product categories is to develop products and related initiatives that allow customers to “live better, longer.” Some of the products introduced in the last year include: • g3, a nutrient-rich juice blend containing a highly concentrated mix of carotenoid antioxidants and micronutrients with a natural delivery system called Lipocarotenes; • LifePak Nano, a new formula of LifePak featuring novel, proprietary nano-carotenoid antioxidants delivered through a unique lipid system that maximizes nutrient absorption; • NanoCoQ10, a supplement using cutting-edge nano technology to deliver highly bioavailable coenzyme Q10; • a second generation of our top-selling Nu Skin 180º Anti-aging Skin Therapy System; • Celltrex CoQ10 Complete, a topical antioxidant network for the skin that combines coenzyme Q10 with colorless carotenoids and vitamins C and E; • Epoch Sole Solution Foot Treatment, an ethnobotanical cream for dry, cracked skin; and • Photomax, an online digital imaging service that allows consumers to preserve, organize, share and enjoy their photographs. |
These forward-looking statements include, but are not limited to, statements concerning: • our expectation that the self-manufacture of product will result in reduced cost of goods sold, and our plans to manufacture more products in China for export; • our plans to launch certain products, tools, initiatives and incentives in our various markets, such as the S2 Scanner and the Nu Skin® ProDerm™ Skin Analyzer, and our belief that these initiatives will positively impact our business in these markets; • our plans to augment our current business model in China with a direct selling component; • our plans to continue to invest resources in continued expansion and build-out of our infrasctructure in China; • our plans to implement certain organizational restructuring initiatives; • the expectation that we will spend $40 million to $45 million for capital expenditures during 2006; • the anticipation that we will continue to declare quarterly cash dividends and that cash flows from operations will be sufficient to pay future dividends; • our belief that we have sufficient liquidity to be able to meet our obligations on both a short-and long-term basis, and that existing cash together with cash flow from operations and existing lines of credit will be adequate to fund cash needs; • our plans to continue protesting and appealing assessments by the Yokohama customs authority for duties on products imported into Japan; and • our belief that recent modifications to our business structure in Japan and in the United States should eliminate any further customs valuation disputes with respect to product imports in Japan. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in this United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in this United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
The forward-looking statements and associated risks set forth herein relate to, among other things: • the expectation that our relationship with our current primary suppliers will not end in the near term, and the belief that we could produce or source our personal care products from other suppliers and expand manufacturing capabilities in China, and replace our primary suppliers of Pharmanex products without great difficulty or increased cost; • our plans to build and open a nutritional supplement manufacturing facility in China for export by the end of 2006; • our belief that we can produce sufficient BioPhotonic Scanners in our new manufacturing facility in China to support recent launches in Japan and China, as well as future launches in other markets; • our plans to continue to develop new, innovative products and to improve and evolve our existing product formulations; • our plans to commit significant resources to research and development in the future; • our plans to continue to implement an aggressive licensing and strategic research alliances in order to develop innovative product concepts; • our belief that providing effective distributor support will be important to our success; • our plans to continue to develop tools and initiatives to help our distributors market our products more effectively; • our plans to continue to enter and expand new markets, including Indonesia, Russia, and Eastern Europe, and our belief that Eastern Europe will be among the fastest growing direct selling regions in the world over the next several years; • our plans to add additional retail stores in China in order to obtain a direct selling license there in connection with the anticipated new direct selling regulations, and our belief that the new regulations should benefit us by creating a level playing field among direct sellers operating in that country; and • our belief that we do not currently foresee a shortage in qualified personnel necessary to operate our business. |
These forward-looking statements include, but are not limited to, statements concerning: • our belief that we have sufficient liquidity to be able to meet our obligations on both a short-and long-term basis, and that existing cash together with cash flow from operations and existing lines of credit will be adequate to fund cash needs; • the expectation that we will spend $40.0 million to $50.0 million for capital expenditures during 2005; • our plans to manufacture more products in China for export; • the anticipation that we will continue to declare quarterly cash dividends and that cash flows from operations will be sufficient to pay future dividends; • our plans to continue to promote certain distributor initiatives and tools, such as monthly product subscription programs and the BioPhotonic Scanner program; • our anticipation that new direct selling regulations will be adopted in China in the next several months, and our plans to add additional retail stores throughout the country in order to obtain a direct selling license under the new regulations; • our belief that we will be able to obtain a direct selling license under the anticipated new direct selling regulations in China; • our belief that the anticipated new direct selling regulations in China will positively impact our business there; • our expectation that the self-manufacture of product will result in reduced cost of goods sold, and our plans to manufacture more products in China for export; • our anticipation that the launch of Pharmanex products in China will have a negative impact on Hong Kong and Taiwan revenue in 2005; • our anticipation that we will incur expenses of approximately $6.5 million in 2005 related to a global distributor convention we plan to hold later in 2005; • our plans to commence operations in Indonesia and Russia; • our anticipation that gross margins as well as selling expenses as a percentage of revenue will each be slightly lower in 2005 compared to 2004 as a result of our continued expansion of the BioPhotonic Scanner program around the world; and • our anticipation that the remittance of permanently reinvested earnings related to our foreign operations will be postponed indefinitely. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in this United States of America and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in this United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
The forward-looking statements and associated risks set forth herein relate to, among other things: • the expectation that our relationship with our current primary suppliers will not end in the near term, and the belief that we could produce or source our personal care products from other suppliers and expand manufacturing capabilities in China, and replace our primary suppliers of Pharmanex products without great difficulty or increased cost; • our plans to continue developing new products and improving and evolving our existing product formulations; • our plans to commit significant resources to research and development in the future; • our plans to continue to enter and expand new markets and to successfully operate a retail business in China; • our belief that China will become one of the largest direct selling markets in the world over the next several years and our anticipation that we will be able to successfully navigate the regulatory challenges in this market; • our plans to launch the scanner in our international markets to promote Pharmanex products; • our belief that Eastern Europe will be among the fastest growing direct selling regions in the world and our intended expansion of operations across Eastern Europe; and • our belief that we are in material compliance with applicable laws and regulations in the countries in which we operate. |
These forward-looking statements include, but are not limited to, statements concerning: • our belief that existing cash and cash flow from operations will be adequate to fund cash needs; • the expectation that we will spend $25 million to $30 million for capital expenditures during 2004 including approximately $15 million to $20 million for purchases of additional scanners; • the anticipation that we will continue to declare quarterly cash dividends and that cash will be sufficient to pay future dividends; • our belief that additional expenses related to the transition of some of our nutritional supplements to tablet form in response to recent Japanese regulatory actions will not have a material impact on our overall projected 2004 financial results, and our expectation that all of our key Pharmanex products will remain in stock in Japan; • our belief that we can market the scanner as a non-medical device; and • our belief that the sale of our PEO and other modifications to our Big Planet strategy as well as our self-manufacturing in China will continue to have a positive impact on gross and operating margins. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights Nu Skin Enterprises, Inc. Notes to Consolidated Financial Statements and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
The forward-looking statements and associated risks set forth herein relate to, among other things: • Our belief that we could produce or source our personal care products from other suppliers and replace our primary suppliers of Pharmanex products without great difficulty or increased cost; • Our plans to continue developing new products and improving and evolving our existing product formulations; • Our plans to continue to enter and expand new markets and to successfully operate a retail business in China; • Our belief that China will become one of the largest direct selling markets in the world over the next several years and our anticipation that we will be able to successfully navigate the regulatory challenges in this market; • Our plans to launch the scanner in the United States and elsewhere to promote Pharmanex products; • The belief that Eastern Europe will be among the fastest growing direct selling regions in the world and our intended expansion of operations across Eastern Europe; and • Our belief that we are in material compliance with applicable laws and regulations in the countries in which we operate. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
Note Regarding Forward-Looking Statements Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward-looking statements,” which reflect the Company's current expectations and beliefs as of the date of this Report including, but not limited to: • the belief that operations in Taiwan have stabilized; • the belief that changes in the Company's compensation plan have helped strengthen the Company's active and executive distributors; • the Company's belief that existing cash and future cash flow will be adequate to fund cash needs; • the Company’s belief that the capital or equity markets would provide funding on comparable terms to existing debt or even provide funding at all in the event of the Company needing to raise capital; • the expectation the Company will spend approximately $21 million for capital expenditures during 2002; and • the anticipation that cash will be sufficient to pay future dividends and that the Board of Directors will continue to declare dividends in 2002. |
NU SKIN ENTERPRISES, INC. Consolidated Statements of Stockholders' Equity (U.S. dollars in thousands, except share amounts) Class A Common Stock Class B Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income Retained Earnings Deferred Compensation Total Stockholders' Equity Balance at January 1, 1999 $ 34 $ 55 $ 146,781 $ (43,604) $ 158,064 $ (6,688) $ 254,642 Net income - - - - 86,694 - 86,694 Foreign currency translation adjustments - - - (4,616) - - (4,616) Total comprehensive income 82,078 Repurchase of 1,985,000 shares of Class A common stock (Note 11) (2) - (26,860) - - - (26,862) Amortization of deferred compensation - - - - - 3,692 3,692 Termination of Nu Skin USA license fee (Note 3) - - (6,444) - - (650) (7,094) Issuance of employee stock awards and options - - 3,252 - - (3,252) - Exercise of distributor and employee stock options - - 2,923 - - - 2,923 Balance at December 31, 1999 119,652 (48,220) 244,758 (6,898) 309,379 Net income - - - - 61,700 - 61,700 Foreign currency translation adjustments - - - 2,873 - - 2,873 Total comprehensive income 64,573 Repurchase of 1,893,000 shares of Class A common stock (Note 11) (2) - (12,763) - - - (12,765) Conversion of shares (1) - - - - - Amortization of deferred compensation - - - - - 5,252 5,252 Exercise of distributor and employee stock options - - - - - Forfeiture of employee stock awards and options - - (899) - - - Balance at December 31, 2000 106,284 (45,347) 306,458 (747) 366,733 Net income - - - - 50,313 - 50,313 Foreign currency translation adjustments - - - (8,298) - - (8,298) Net unrealized gains on foreign currency cash flow hedges - - - 8,776 - - 8,776 Net gain reclassified into current earnings - - - (4,616) - - (4,616) Total comprehensive income 46,175 Repurchase of 2,491,000 shares of Class A common stock (Note 11) (3) - (18,136) - - - (18,139) Conversion of shares (5) - - - - - Amortization of deferred compensation - - - - - Exercise of distributor and employee stock options - - - - - Dividends - - - - (16,431) - (16,431) Balance at December 31, 2001 $ 33 $ 49 $ 88,953 $ (49,485) $ 340,340 $ - $ 379,890 -------- -------- --------- ---------- ----------- ------------ ----------- The accompanying notes are an integral part of these consolidated financial statements. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company’s stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company’s Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
The provision for current and deferred taxes for the years ended December 31, 1999, 2000 and 2001 consists of the following (U.S. dollars in thousands): Current Federal $ 3,030 $ 1,677 $ 1,812 State 3,030 1,589 2,078 Foreign 56,165 36,503 25,529 62,225 39,769 29,419 Deferred Federal (19,008) 4,337 3,330 State (215) (242) Foreign (1,260) (10,236) (2,959) Provision for income taxes $ 41,742 $ 34,706 $ 29,548 ----------- ----------- ----------- Nu Skin Enterprises, Inc. Notes to Consolidated Financial Statements The principal components of deferred tax assets are as follows (U.S. dollars in thousands): December 31, December 31, Deferred tax assets Inventory differences $ 5,164 $ 5,275 Foreign tax credit 60,278 47,689 Distributor stock options and employee stock awards 6,723 5,836 Capitalized legal and professional 1,427 1,089 Accrued expenses not deductible until paid 14,154 27,440 Withholding tax 2,142 2,072 Minimum tax credit 10,739 12,776 Net operating losses 7,096 5,125 Total deferred tax assets 107,723 107,302 Deferred tax liabilities: Foreign deferred tax 14,816 17,557 Exchange gains and losses 5,880 11,799 Cost of goods sold adjustment 3,220 1,845 Pharmanex intangibles step-up 18,880 17,130 Other 6,149 6,566 Total deferred tax liabilities 48,945 54,897 Valuation allowance - - Deferred taxes, net $ 58,778 $ 52,405 ---------- ---------- The actual tax rate for the years ended December 31, 1999, 2000 and 2001 compared to the statutory U.S. Federal tax rate is as follows: 14. |
The forward-looking statements and associated risks set forth herein relate to the: (i) proposed acquisitions of Big Planet and the remaining private North American Affiliates, (ii) proposed shift to a strategic, product-based divisional operating structure and related modifications of the Global Compensation Plan; (iii) expansion of the Company's market share in its current markets; (iv) Company's entrance into new markets; (v) development of new products and new product lines tailored to appeal to the particular needs of consumers in specific markets; (vi) stimulation of product sales by introducing new products and reintroducing existing products with improvements; (vii) creation of new nutritional products through the research and development capabilities of Pharmanex; (viii) establishment of relationships with major universities to assist in nutritional product development and testing; (ix) establishment of strategic relationships to expand the Company's and Big Planet's products offered for sale on the Internet; (x) enhancement and expansion of Big Planet's telecommunication and technology services and other products, including the offering of wireless services through a third-party wireless service provider and prepaid paging products through SkyTel; (xi) promotion of distributor growth, retention, and leadership through local market initiatives; (xii) upgrading of the Company's technological resources to support distributors, including using the Internet in distributing products; (xiii) utilization of technological advancements to improve the Company's direct selling efforts; and (xiv) obtaining of regulatory approvals for certain products. |
Important factors and risks that might cause such differences include, but are not limited to (a) adverse economic and political conditions in some of the Company's markets, particularly in the Company's Asian markets; (b) fluctuations in foreign currency values relative to the United States dollar, (c) factors related to the Company's reliance upon independent distributors, (d) risks related to the continued integration of recent acquisitions by the Company; (e) the possibility the proposed acquisitions of Big Planet and the remaining private North American Affiliates may not be consummated, (f) the inability of the Company to gain market acceptance of new products, including the Pharmanex products and Big Planet products and services, (g) government regulation of the Company's direct selling activities in its existing and future markets, (h) government regulation of products and marketing generally, (i) risks inherent in the importation, regulation, and sale of personal care and nutritional products in the Company's markets, (j) other regulatory issues, including regulatory action against the Company or its distributors in any of the Company's markets, (k) the Company's reliance on limited suppliers of the Company's products, (l) competition in the Company's existing and future markets, (m) risks that the Company's and its vendors' plans to remedy Year 2000 issues may be inadequate, which could result in disruptions of the Company's business, and (n) risks related to potential changes in direct selling practices, particularly those changes prompted by changes in technology. |
The forward-looking statements and associated risks set forth herein relate to the: (i) proposed NSI Acquisition, (ii) expansion of the Company's market share in its current markets; (iii) Company's entrance into new markets (iv) development of new products and new product lines tailored to appeal to the particular needs of consumers in specific markets; (v) stimulation of product sales by introducing new products; (vi) opening of new offices, walk-in distribution centers and distributor support centers in certain markets; (vii) promotion of distributor growth, retention and leadership through local initiatives; (viii) upgrading of the Company's technological resources to support distributors; (ix) obtaining of regulatory approvals for certain products, including LifePak; (x) stimulation of product purchases by inactive distributors through direct mail campaigns; (xi) retention of the Company's earnings for use in the operation and expansion of the Company's business; (xii) development of brand awareness and loyalty; (xiii) enhancing of the Company's Global Compensation Plan; (xiv) diversifying of the Company's revenue base and markets, (xv) seeking of cost reductions from vendors; and (vxi) establishment of local manufacturing. |
Important factors and risks that might cause such differences include, but are not limited to (a) factors related to the Company's reliance upon independent distributors of NSI, (b) fluctuations in foreign currency values relative to the U.S. dollar, (c) adverse economic and business conditions in the Company's markets, especially South Korea and Thailand, (d) the possibility the proposed NSI Acquisition may not be consummated, (e) the potential effects of adverse publicity, including adverse publicity regarding the Company and other direct selling companies in South Korea and the Company's other markets, (f) the potential negative impact of distributor actions, (g) seasonal and cyclical trends, (h) variations in operating results, (i) government regulation of direct selling activities in the PRC, Malaysia and other existing and future markets, (j) government regulation of products and marketing, (k) import restrictions, (l) other regulatory issues, including regulatory action against the Company or its distributors in any of the Company's markets and particularly in South Korea, (m) the Company's reliance on certain distributors, (n) the potential divergence of interests between distributors and the Company, (o) management of the Company's growth, (p) the effects on operations of the NSI distributor equity program, (q) the introduction of the Scion product line in the Philippines and Aloe-mx in Japan, (r) market acceptance in South Korea and other markets of LifePak and LifePak Trim, the Company's core IDN nutritional supplements, (s) the acceptance of new distributor walk-in centers in Japan, Thailand and Taiwan, (t) acceptance of modifications to the Company's sales compensation plan in the Philippines, (u) the Company's ability to renegotiate or adjust vendor relationships, (v) the Company's ability to establish local manufacturing capability, (w) risks inherent in the importation, regulation and sale of personal care and nutritional products in the Company's markets, (x) the Company's ability to successfully enter new markets such as Poland and Brazil and introduce new products in addition to those already referenced above, (y) the Company's ability to manage growth and deal with the possible adverse effect on the Company of the change in the status of Hong Kong, (z) the potential conflicts of interest between the Company and NSI, (aa) control of the Company by the Original Stockholders, (bb) the anti-takeover effects of dual classes of common stock, (cc) the Company's reliance on and the concentration of outside manufacturers, (dd) the Company's reliance on the operations of and dividends and distributions from the Subsidiaries, (ee) taxation and transfer pricing issues, (ff) the potential increase in distributor compensation expense, (gg) product liability issues, and (hh) competition in the Company's existing and future markets. |
Factors and risks that might cause such differences include, but are not limited to, factors related to the Company's reliance upon independent distributors of NSI, the potential effects of adverse publicity, the potential negative impact of distributor actions, government regulation of direct selling activities, government regulation of products and marketing, other regulatory issues, the Company's reliance on certain distributors, the potential divergence of interests between distributors and the Company, the Company's entering new markets, managing the Company's growth, the possible adverse effects on the Company of a change in the status of Hong Kong, the Company's relationship with and reliance on NSI, potential conflicts of interest between the Company and NSI, control of the Company by the Original Stockholders, the anti-takeover effects of dual classes of common stock, the adverse impact on the Company's income of the Distributor Option program, the allocation and vesting of the Distributor Options, the potential decrease in the number of Distributor Options available, product returns, restrictions on the resale of the shares of Class A Common Stock underlying the Distributor Options, regulatory and taxation risks, the Company's reliance on and the concentration of outside manufacturers, the Company's reliance on the operations of and dividends and distributions from the Subsidiaries, taxation and transfer pricing, the potential increase in distributor compensation expense, seasonal and cyclical trends, variations in operating results, product liability issues, market conditions and competition, the Company's operations outside the U.S., currency risks, import restrictions, duties and regulation of consumer goods, the anti-takeover effects of certain charter, contractual and statutory provisions, dilution and the absence of Company dividends. |
The following adjustments are reflected in the unaudited pro forma combined financial information set forth below: (i) the amortization over a 20-year period of a $25.0 million payment, consisting of $5.0 million in cash and $20.0 million in notes, to NSI for the exclusive rights to distribute NSI products in Thailand, Indonesia, Malaysia, the Philippines, the PRC, Singapore and Vietnam; (ii) the recognition by the Company of additional management charges of $4.4 million per year relating to certain support services provided to the Company by NSI and an NSI affiliate; (iii) estimated annual compensation expense of $1.3 million related to the employee stock bonus awards granted to employees of the Company; (iv) the recording of U.S. Federal and state income taxes as if the Company had been taxed as a C corporation rather than as an S corporation since inception; and (v) increased interest expense of $2.7 million relating to the issuance of $86.5 million of S Distribution Notes (6.0% interest per annum), which are expected to be paid during 1997, to the Original Stockholders in respect of the earned and undistributed taxable S corporation earnings at November 19, 1996. |
Nu Skin Asia Pacific, Inc. Index to Consolidated Financial Statements - -------------------------------------------------------------------------------- Page Consolidated Financial Statements: Report of Independent Accountants..........................................F-2 Consolidated Balance Sheets at December 31, 1995 and 1996..................F-3 Consolidated Statements of Income for the year ended September 30, 1994, the three months ended December 31, 1994 and the years ended December 31, 1995 and 1996...............................................F-4 Consolidated Statements of Stockholders' Equity for the year ended September 30,1994, the three months ended December 31, 1994 and the years ended December 31, 1995 and 1996...............................F-5 Consolidated Statements of Cash Flows for the year ended September 30, 1994, the three months ended December 31, 1994 and the years ended December 31, 1995 and 1996...........................F-6 Notes to Consolidated Financial Statements.................................F-7 All schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto. |
The shares of Class A common stock and Class B common stock are identical in all respects, except for voting rights and certain conversion rights and transfer restrictions, as follows: (1) each share of Class A common stock entitles the holder to one vote on matters submitted to a vote of the Company's stockholders and each share of Class B common stock entitles the holder to ten votes on each such matter; (2) stock dividends of Class A common stock may be paid only to holders of Class A common stock and stock dividends of Class B common stock may be paid only to holders of Class B common stock; (3) if a holder of Class B common stock transfers such shares to a person other than a permitted transferee, as defined in the Company's' Certificate of Incorporation, such shares will be converted automatically into shares of Class A common stock; and (4) Class A common stock has no conversion rights; however, each share of Class B common stock is convertible into one share of Class A common stock, in whole or in part, at any time at the option of the holder. |
The principal components of deferred tax assets were as follows (in thousands): November 20, December 31, 1996 1996 Deferred tax assets: Inventory reserve $ 1,455 $ 1,971 Product return reserve 1,183 1,562 Depreciation 1,535 1,592 Foreign tax credit -- 1,234 Uniform capitalization 713 763 Distributor stock options and employee stock awards -- 749 Accrued expenses not deductible until paid 5,037 6,739 Minimum tax credit -- 330 ---------- ---------- Total deferred tax assets $ 9,923 $ 14,940 ---------- ---------- Deferred tax liabilities: Withholding tax $ 3,944 $ 4,148 Net foreign deferred tax asset 1,021 2,572 Exchange gains and losses 443 399 Other 55 55 ---------- ---------- Total deferred tax liabilities 5,463 7,174 ---------- ---------- Net deferred tax assets $ 4,460 $ 7,766 ========== ========== Pro forma provision for income taxes The consolidated statements of income include a pro forma presentation for income taxes which would have been recorded if the Company had been taxed as a C corporation for all periods presented. |
Examples of forward-looking statements in this Form 10-K include, among others, statements we make regarding: •Future market conditions, including anticipated vehicle sales levels; •Anticipated impacts of the continued COVID-19 pandemic on the U.S and local economies in which we operate, our business operations and consumer demand; •Continuation of our sales and services, including in-store appointments and home deliveries; •Expectations regarding our inventory levels and manufacturer and lender incentives; •Expected growth from our e-commerce home solutions and digital strategies; •Expected operating results, such as improved store performance; continued improvement of selling, general and administrative expenses (SG&A) as a percentage of gross profit and all projections; •Anticipated integration, success and growth of acquired stores; •Anticipated ability to capture additional market share; •Anticipated ability to find accretive acquisitions; •Expected revenues from acquired stores; •Anticipated synergies, ability to monetize our investment in digital innovation; •Anticipated additions of dealership locations to our portfolio in the future; •Anticipated financial condition and liquidity, including from our cash, availability on our credit facilities and unfinanced real estate; •Anticipated use of proceeds from our financings; •Anticipated allocations, uses and levels of capital expenditures in the future; •Expectations regarding compliance with financial and restrictive covenants in our credit facility and other debt agreements; •Statements regarding furloughed employees and cost reductions; •Our strategies for customer retention, growth, market position, financial results and risk management; and •Expectations regarding programs and initiatives for employee recruitment, training and retention. |
These risks include, without limitation: •failing to assimilate the operations and personnel of acquired dealerships; •straining our existing systems, procedures, structures and personnel; •failing to achieve predicted sales levels; •incurring significantly higher capital expenditures and operating expenses, which could substantially limit our operating or financial flexibility; •entering new, unfamiliar markets; •encountering undiscovered liabilities and operational difficulties at acquired dealerships; •disrupting our ongoing business; •diverting our management resources; •failing to maintain uniform standards, controls and policies; •impairing relationships with employees, manufacturers and customers as a result of changes in management; •incurring increased expenses for accounting and computer systems, as well as integration difficulties; •failing to obtain a manufacturer’s consent to the acquisition of one or more of its dealership franchises or renew the franchise agreement on terms acceptable to us; •incorrectly valuing entities to be acquired; and •incurring additional facility renovation costs or other expenses required by the manufacturer. |
Date: February 19, 2021LITHIA MOTORS, INC. Registrant By:/s/ Bryan B. DeBoer Bryan B. DeBoer Chief Executive Officer, President, Director, and Principal Executive Officer 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 indicated on February 19, 2021: /s/ Bryan B. DeBoer/s/ Tina Miller Bryan B. DeBoerTina Miller Chief Executive Officer, President, Director, and Principal Executive OfficerChief Financial Officer, Senior Vice President, and Principal Accounting Officer /s/ Sidney B. DeBoer/s/ Susan O. Cain Sidney B. DeBoerSusan O. Cain Chairman of the Board and DirectorDirector /s/ Shauna McIntyre/s/ Louis P. Miramontes Shauna McIntyreLouis P. Miramontes DirectorDirector /s/ Kenneth E. Roberts/s/ David J. Robino Kenneth E. RobertsDavid J. Robino DirectorDirector Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Lithia Motors, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Lithia Motors, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). |
Examples of forward-looking statements in this Form 10-K include, among others, statements we make regarding: • Future market conditions and industry trends, including anticipated national new car sales levels; • Expected operating results, such as improved store performance; continued improvement of selling, general and administrative expenses (“SG&A”) as a percentage of gross profit and all projections; • Anticipated integration, success and growth of acquired stores; • Anticipated ability to capture additional market share; • Anticipated ability to find accretive acquisitions; • Expected revenues from acquired stores; • Anticipated synergies, ability to monetize our investment in Shift and digital innovation; • Anticipated additions of dealership locations to our portfolio in the future; • Anticipated availability of liquidity from our cash, availability on our credit facility and unfinanced operating real estate; • Anticipated use of proceeds from our financings; • Anticipated levels of capital expenditures in the future; and • Our strategies for customer retention, growth, market position, financial results and risk management. |
These risks include, without limitation: • failing to assimilate the operations and personnel of acquired dealerships; • straining our existing systems, procedures, structures and personnel; • failing to achieve predicted sales levels; • incurring significantly higher capital expenditures and operating expenses, which could substantially limit our operating or financial flexibility; • entering new, unfamiliar markets; • encountering undiscovered liabilities and operational difficulties at acquired dealerships; • disrupting our ongoing business; • diverting our management resources; • failing to maintain uniform standards, controls and policies; • impairing relationships with employees, manufacturers and customers as a result of changes in management; • incurring increased expenses for accounting and computer systems, as well as integration difficulties; • failing to obtain a manufacturer’s consent to the acquisition of one or more of its dealership franchises or renew the franchise agreement on terms acceptable to us; • incorrectly valuing entities to be acquired; and • incurring additional facility renovation costs or other expenses required by the manufacturer. |
(Principal Executive Officer) Bryan B. DeBoer /s/ Tina Miller Senior Vice President and Chief Financial Officer (Principal Accounting Officer) Tina Miller /s/ Sidney B. DeBoer Chairman of the Board Sidney B. DeBoer /s/ Shauna McIntyre Director Shauna McIntyre /s/ Susan O. Cain Director Susan O. Cain /s/ Louis P. Miramontes Director Louis P. Miramontes /s/ Kenneth E. Roberts Director Kenneth E. Roberts /s/ David J. Robino Director David J. Robino Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Lithia Motors, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Lithia Motors, Inc. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). |
Examples of forward-looking statements in this Form 10-K include, among others, statements we make regarding: • Future market conditions, including anticipated national new car sales levels; • Expected operating results, such as improved store performance; continued improvement of selling, general and administrative expenses (“SG&A”) as a percentage of gross profit and all projections; • Anticipated integration, success and growth of acquired stores; • Anticipated ability to capture additional market share; • Anticipated ability to find accretive acquisitions; • Expected revenues from acquired stores; • Anticipated synergies, ability to increase ownership and ability to monetize our investment in Shift; • Anticipated additions of dealership locations to our portfolio in the future; • Anticipated availability of liquidity from our unfinanced operating real estate; • Anticipated levels of capital expenditures in the future; and • Our strategies for customer retention, growth, market position, financial results and risk management. |
These risks include, without limitation: • failing to assimilate the operations and personnel of acquired dealerships; • straining our existing systems, procedures, structures and personnel; • failing to achieve predicted sales levels; • incurring significantly higher capital expenditures and operating expenses, which could substantially limit our operating or financial flexibility; • entering new, unfamiliar markets; • encountering undiscovered liabilities and operational difficulties at acquired dealerships; • disrupting our ongoing business; • diverting our management resources; • failing to maintain uniform standards, controls and policies; • impairing relationships with employees, manufacturers and customers as a result of changes in management; • incurring increased expenses for accounting and computer systems, as well as integration difficulties; • failing to obtain a manufacturer’s consent to the acquisition of one or more of its dealership franchises or renew the franchise agreement on terms acceptable to us; • incorrectly valuing entities to be acquired; and • incurring additional facility renovation costs or other expenses required by the manufacturer. |
(Principal Executive Officer) Bryan B. DeBoer /s/ John F. North, III Senior Vice President and Chief Financial Officer (Principal Accounting Officer) John F. North, III /s/ Sidney B. DeBoer Chairman of the Board Sidney B. DeBoer /s/ Thomas R. Becker Director Thomas Becker /s/ Susan O. Cain Director Susan O. Cain /s/ Louis P. Miramontes Director Louis P. Miramontes /s/ Kenneth E. Roberts Director Kenneth E. Roberts /s/ David J. Robino Director David J. Robino Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Lithia Motors, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Lithia Motors, Inc. and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes (collectively, the consolidated financial statements). |
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