iGo, Inc. (Nasdaq: IGOI), a leading provider of eco-friendly power management solutions and mobile electronic device accessories, today announced the acquisition of AERIAL7, a designer and marketer of innovative headphones for mobile electronic devices and professional audio equipment. The acquisition expands iGo’s line of accessories for popular devices like laptops, tablets, iPods®, iPhones® and other portable media devices.
AERIAL7 headphones combine superior acoustic technology with eye-catching design. AERIAL7 offers a wide range of styles and features that turn headphones from just a functional accessory to a bold fashion statement that allows consumers to express their unique and personal style. Additional information about AERIAL7’s products can be found at www.aerial7.com.
AERIAL7’s headphones are sold through fashion, action sports and professional audio retailers. They can be found domestically at lifestyle and music retailers, such as Urban Outfitters and select Tilly’s and F.Y.E. locations. AERIAL7 also uses an international distribution network to sell its products in more than 50 countries, which accounts for approximately 60% of the company’s sales. AERIAL7 is currently generating annualized revenue of approximately $2.0 million.
“The acquisition of AERIAL7 further expands our presence in the mobile device accessories market, increases our international footprint, and provides another catalyst for driving profitable growth in the future,” said Michael D. Heil, President and Chief Executive Officer of iGo. “With their exceptional designs and effective grassroots marketing campaigns, AERIAL7 has created a strong niche in the young adult and professional audio markets. Further, the three founders that will be joining our team bring outstanding experience in design and marketing, not just in audio, but in all categories of mobile electronics accessories from their experience with companies such as Amp’d Mobile, Boost Mobile, Plantronics, Altec-Lansing and Rivet International. With the additional capital that we can provide to this business, the product design and marketing expertise that we are adding, and the synergies that can be created through our established distribution network, we believe we can develop additional products that can be taken into the mass market retail channel and accelerate our growth in the United States and abroad.”
Total consideration for the AERIAL7 acquisition was $3.34 million in cash. The Company has signed multi-year employment agreements with three key employees of AERIAL7. Each of the key employees of AERIAL7, Seth Egorin, Phil Johnson and Eljay Driessens, has also received 150,000 restricted stock units (RSUs) from iGo as inducement grants without stockholder approval pursuant to Nasdaq Marketplace Rule 5635(c)(4). The RSUs will vest one-third per year over a three-year time period.
Given that iGo’s last acquisition lead to a soon thereafter deal with Cisco, one has to be a bit excited to see what this may lead to. With we see iGo chargers in AERIAL7 sales channels? Not likey. Their distribution is in fashion, sports and professional audio retailers, which typically don’t carry chargers. The revenue synergies would be expected to come from using iGo’s distribution system to get their products into more mass market retailers.
Once again we are seeing the diversity of revenues streams continue to widen for iGo. Even after this deal iGo is sitting on ~$30M + in cash (= to 1/2 their market cap) and carries zero debt. With a slew of new products being produce internally and ones acquired in these deals as well at the recent patent news, one has to be excited to see the effect this has on the bottom line.
iGo will report results in early November. I have to think there will be more than the usual zero to one analysts on the call to ask questions….