| Balance Sheet Components | BALANCE SHEET COMPONENTS Accounts Receivable, Net Accounts receivable are recorded at invoiced amount and do not bear interest when recorded or accrue interest when past due. Accounts receivable are stated net of an allowance for doubtful accounts, which is maintained for estimated losses that may result from the inability of our customers to make required payments. Accounts receivable consists of the following: September 30, December 31, Accounts receivable, gross $ 5,124 $ 3,150 Less: allowance for doubtful accounts (40 ) (32 ) Accounts receivable, net $ 5,084 $ 3,118 The following is the change in our allowance for doubtful accounts: Nine Months Ended September 30, 2017 2016 Balance at beginning of period $ 32 $ 60 Additions charged (reductions credited) 8 (21 ) Balance at end of period $ 40 $ 39 Inventories Inventories consist of finished goods and work-in-process, and are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market (net realizable value). Inventory acquired as part of the acquisition of ViXS is recorded at fair value. Inventories consist of the following: September 30, December 31, Finished goods $ 2,903 $ 1,707 Work-in-process 2,155 1,096 Inventories $ 5,058 $ 2,803 Property and Equipment, Net Property and equipment consists of the following: September 30, December 31, Gross carrying amount $ 27,898 $ 24,416 Less: accumulated depreciation and amortization (21,627 ) (20,623 ) Property and equipment, net $ 6,271 $ 3,793 Acquired Intangible Assets, Net In connection with the Acquisition, we recorded certain identifiable intangible assets. See Note 2: “Acquisition” for additional information. Acquired intangible assets resulting from this transaction were assigned to Pixelworks, Inc., our sole reporting unit, and consist of the following: September 30, December 31, Developed technology $ 5,050 $ — Customer relationships 1,270 — Backlog and tradename 410 — 6,730 — Less: accumulated amortization (316 ) — Acquired intangible assets, net $ 6,414 $ — Intangible assets are amortized over the following estimated useful lives: developed technology and customer relationships, 3 to 5 years; and tradename and backlog, 6 to 18 months. Amortization expense for intangible assets was $316 for the three months ended September 30, 2017, with $249 included in cost of revenue and $67 included in selling, general and administrative on the consolidated statement of operations. As of September 30, 2017, future estimated amortization expense is as follows: Three months ending December 31: 2017 $ 610 Years ending December 31: 2018 1,596 2019 1,505 2020 1,496 2021 1,117 2022 90 $ 6,414 Acquired intangible assets will be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Conditions that would trigger an impairment assessment include, but are not limited to, past, current, or expected cash flow or operating losses associated with the asset and an expectation that the asset will be significantly utilized before the end of its useful life. There were no such triggering events requiring an impairment assessment of other intangible assets during the three months ended September 30, 2017. Goodwill Goodwill resulted from our acquisition of ViXS on August 2, 2017, whereby we recorded goodwill of $18,021 . See Note 2: “Acquisition” for information concerning the acquisition. Goodwill is not amortized; however, we will review goodwill for impairment annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Conditions that would trigger an impairment assessment include, but are not limited to, a significant adverse change in our business climate and a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continued losses and adverse changes in legal factors, regulation or business environment. There were no such triggering events requiring a goodwill impairment assessment during the three months ended September 30, 2017. We expect to perform our annual impairment assessment for goodwill on November 30 of each year. Accrued Liabilities and Current Portion of Long-Term Liabilities Accrued liabilities and current portion of long-term liabilities consist of the following: September 30, December 31, Accrued payroll and related liabilities $ 4,149 $ 2,169 Accrued commissions and royalties 2,618 2,427 Accrued interest payable 2,492 2,078 Current portion of accrued liabilities for asset financings 1,822 389 Accrued costs related to restructuring 795 60 Deferred revenue 458 — Liability for warranty returns 34 28 Other 3,831 709 Accrued liabilities and current portion of long-term liabilities $ 16,199 $ 7,860 The following is the change in our liability for warranty returns: Nine Months Ended September 30, 2017 2016 Liability for warranty returns: Balance at beginning of period $ 28 $ 49 Provision (benefit) 15 (4 ) Charge-offs (9 ) (20 ) Balance at end of period $ 34 $ 25 Short-Term Line of Credit On December 21, 2010, we entered into a Loan and Security Agreement with Silicon Valley Bank (the "Bank"), which was amended on December 14, 2012, December 4, 2013, December 18, 2015, December 15, 2016 and July 21, 2017 (as amended, the "Revolving Loan Agreement"). The Revolving Loan Agreement provides a secured working capital-based revolving line of credit (the "Revolving Line") in an aggregate amount of up to the lesser of (i) $10,000 , or (ii) $1,000 plus 80% of eligible domestic accounts receivable and certain foreign accounts receivable. The Revolving Line has a maturity date of December 29, 2017. In addition, the Revolving Loan Agreement provides for non-formula advances of up to $10,000 which may be made solely during the last five business days of any fiscal month or quarter and which must be repaid by us on or before the fifth business day after the applicable fiscal month or quarter end. Due to their repayment terms, non-formula advances do not provide us with usable liquidity. The Revolving Loan Agreement, as amended, contains customary affirmative and negative covenants as well as customary events of default. The occurrence of an event of default could result in the acceleration of our obligations under the Revolving Loan Agreement, as amended, and an increase to the applicable interest rate, and would permit the Bank to exercise remedies with respect to its security interest. As of September 30, 2017, we were in compliance with all of the terms of the Revolving Loan Agreement, as amended. As of September 30, 2017 and December 31, 2016, we had no outstanding borrowings under the Revolving Line. On July 21, 2017 and in connection with our acquisition of ViXS (see Note 2: “Acquisition”), we entered into Amendment No. 5 to the Revolving Loan Agreement with the Bank which provides the Bank’s consent to the Acquisition under the Revolving Loan Agreement and stipulates that any credit extensions are at the Bank’s sole discretion and provides the Company with relief from our compliance with certain affirmative and negative covenants while no credit extensions are outstanding. |
