Ownership and Business

12 Months Ended

Dec. 31, 2011

Ownership and Business

1. Ownership and Business

LeapFrog Enterprises, Inc. and its consolidated subsidiaries (collectively, the “Company” or “LeapFrog” unless the context indicates otherwise) is a leading developer of educational entertainment for children. The Company’s product portfolio consists of multimedia learning platforms and related content and learning toys. LeapFrog has developed a number of learning platforms, which support a broad library of content titles. LeapFrog has created hundreds of interactive content titles for our platforms, covering subjects such as phonics, reading, writing and math. In addition, we have a broad line of stand-alone learning toys. Many of our products connect to our proprietary online LeapFrog Learning Path, which provides personalized feedback on a child’s learning progress and offers product recommendations to enhance each child’s learning experience. The Company’s products are available in four languages (including Queen’s English) and are sold globally through retailers, distributors and directly to consumers via the leapfrog.com online store and the LeapFrog App Center.

Beginning April 2004 and continuing through late December 2011, LeapFrog was a “controlled company” under the rules of the New York Stock Exchange (“NYSE”), as Mollusk Holdings, LLC (“Mollusk”) held more than 50% of the voting power of the Company’s outstanding shares. On December 27, 2011, Mollusk converted, on a one-to-one basis, approximately 3.7 million shares of the Company’s Class B common stock into shares of the Company’s Class A common stock. After 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.  Mollusk is an entity indirectly controlled by Lawrence J. Ellison, Chief Executive Officer of Oracle Corporation. As a result of the conversion, Mollusk’s voting power of the Company’s outstanding shares decreased to approximately 42.8%, and therefore, LeapFrog is no longer considered a “controlled company” under the rules of the NYSE.