Stockholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity

15. Stockholders’ Equity

The Company is authorized to issue 180,000 shares of common stock at a par value of $0.0001 per share, of which 139,500 shares are designated as Class A and 40,500 shares are designated as Class B. Class A shares outstanding at December 31, 2011 and 2010 were 54,923 and 43,783, respectively. Class B shares outstanding at December 31, 2011 and 2010 were 11,113 and 20,961, respectively.

Class A stockholders are entitled to one vote per share and Class B stockholders are entitled to ten votes per share. The Class B stockholders have the right to convert their Class B shares into an equal number of Class A shares.

Beginning April 2004 and continuing through late December 2011, LeapFrog was a “controlled company” under the rules of the NYSE, as Mollusk Holdings, LLC (“Mollusk”) held more than 50% of the voting power of our outstanding shares. On December 27, 2011, Mollusk converted, on a one-to-one basis, 3,704 shares of the Company’s Class B common stock into shares of the Company’s Class A common stock. After giving effect to the conversion, Mollusk holds approximately 6.7 million shares of the Company’s Class B common stock and 3.8 million shares of the Company’s Class A common stock, which together represent approximately 16.0% of the outstanding capital stock of the Company.  As a result of the conversion, Mollusk’s voting power of LeapFrog’s outstanding shares decreased to approximately 42.8%, therefore, LeapFrog is no longer considered a “controlled company” under the rules of the NYSE. In addition, in 2011, 2010 and 2009, certain Class B stockholders elected to convert 6,144, 6,179 and 0 shares, respectively, of their Class B common stock into the same number of shares of Class A common stock at par value. These transactions had no material impact on the Company’s financial statements.

Class A and B stockholders are entitled to dividends paid in equal amounts per share on all shares of Class A and Class B common stock. The terms of the Company’s asset-backed line of credit facility prohibit the payment of cash dividends.

From the inception of the Company through the date of this report, no dividends have been declared or paid and management has no plans at this time to pay dividends in the foreseeable future.

In the event of liquidation, Class A and B common stockholders are equally entitled to all assets of the Company available for distribution.