Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 23, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Control4 Corp | |
Entity Central Index Key | 1259515 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 24,406,181 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $14,637 | $29,187 |
Restricted cash | 297 | 311 |
Short-term investments | 50,707 | 53,523 |
Accounts receivable, net | 18,749 | 20,155 |
Inventories | 19,762 | 14,212 |
Prepaid expenses and other current assets | 2,473 | 2,075 |
Total current assets | 106,625 | 119,463 |
Property and equipment, net | 5,987 | 5,089 |
Long-term investments | 18,770 | 14,509 |
Intangible assets, net | 5,923 | 1,409 |
Goodwill | 2,753 | 231 |
Other assets | 1,319 | 1,329 |
Total assets | 141,377 | 142,030 |
Current liabilities: | ||
Accounts payable | 17,479 | 15,016 |
Accrued liabilities | 4,233 | 4,750 |
Deferred revenue | 929 | 843 |
Current portion of notes payable | 842 | 915 |
Total current liabilities | 23,483 | 21,524 |
Notes payable | 719 | 913 |
Other long-term liabilities | 1,011 | 1,291 |
Total liabilities | 25,213 | 23,728 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.0001 par value; 500,000,000 shares authorized; 24,305,381 and 24,402,371 shares issued and outstanding at December 31, 2014 and March 31, 2015 (unaudited), respectively | 2 | 2 |
Additional paid-in capital | 214,728 | 212,388 |
Accumulated deficit | -98,159 | -93,928 |
Accumulated other comprehensive loss | -407 | -160 |
Total stockholders' equity | 116,164 | 118,302 |
Total liabilities and stockholders' equity | $141,377 | $142,030 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 24,402,371 | 24,305,381 |
Common stock, shares outstanding | 24,402,371 | 24,305,381 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenue | $32,083 | $31,855 |
Cost of revenue | 16,472 | 15,619 |
Gross margin | 15,611 | 16,236 |
Operating expenses: | ||
Research and development | 7,995 | 6,775 |
Sales and marketing | 7,367 | 6,301 |
General and administrative | 4,621 | 3,688 |
Total operating expenses | 19,983 | 16,764 |
Loss from operations | -4,372 | -528 |
Other income (expense): | ||
Interest, net | 21 | -19 |
Other income (expense), net | -410 | 8 |
Total other expense | -389 | -11 |
Loss before income taxes | -4,761 | -539 |
Income tax benefit | -530 | 0 |
Net loss | ($4,231) | ($539) |
Net loss per common share: | ||
Basic (in dollars per share) | ($0.17) | ($0.02) |
Diluted (in dollars per share) | ($0.17) | ($0.02) |
Weighted-average number of shares: | ||
Basic (in shares) | 24,344 | 23,117 |
Diluted (in shares) | 24,344 | 23,117 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
Net loss | ($4,231) | ($539) |
Other comprehensive loss: | ||
Foreign currency translation adjustment, net of tax | -180 | 1 |
Net unrealized gains (losses) on available-for-sale investments, net of tax | 25 | -21 |
Total other comprehensive loss | -155 | -20 |
Comprehensive loss | ($4,386) | ($559) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating activities | ||
Net loss | ($4,231) | ($539) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 603 | 608 |
Amortization of intangible assets | 325 | 98 |
Provision for doubtful accounts | 71 | 59 |
Stock-based compensation | 1,849 | 1,247 |
Changes in assets and liabilities: | ||
Accounts receivable | 1,716 | -603 |
Inventories | -3,389 | -1,783 |
Prepaid expenses and other current assets | -375 | -246 |
Other assets | 47 | -23 |
Accounts payable | 519 | 1,038 |
Accrued liabilities | -1,049 | -1,408 |
Deferred revenue | 86 | 122 |
Other long-term liabilities | -347 | -17 |
Net cash used in operating activities | -4,175 | -1,447 |
Investing activities | ||
Purchases of available-for-sale investments | -25,500 | -59,775 |
Proceeds from sales of available-for-sale investments | 1,043 | |
Proceeds from maturities of available-for-sale investments | 24,095 | |
Purchases of property and equipment | -808 | -389 |
Business acquisitions, net of cash acquired | -8,380 | |
Net cash used in investing activities | -10,593 | -59,121 |
Financing activities | ||
Proceeds from exercise of options for common stock | 491 | 3,199 |
Repayment of notes payable | -267 | -297 |
Net cash provided by financing activities | 224 | 2,902 |
Effect of exchange rate changes on cash and cash equivalents | -6 | 5 |
Net decrease in cash and cash equivalents | -14,550 | -57,661 |
Cash and cash equivalents at beginning of period | 29,187 | 84,546 |
Cash and cash equivalents at end of period | 14,637 | 26,885 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 36 | 39 |
Cash paid for taxes | 66 | 93 |
Supplemental schedule of non-cash investing and financing activities | ||
Landlord paid tenant improvements | 53 | |
Net unrealized gains (losses) on available-for-sale investments | $40 | ($33) |
Description_of_Business_and_Su
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Description of Business and Summary of Significant Accounting Policies | ||||||||
Description of Business and Summary of Significant Accounting Policies | ||||||||
1. Description of Business and Summary of Significant Accounting Policies | ||||||||
Control4 Corporation (‘‘Control4’’ or the ‘‘Company’’) is a leading provider of automation and control solutions for the connected home. The Company unlocks the potential of connected devices, making entertainment systems easier to use, homes more comfortable, appliances more energy efficient, and families more secure. The Company was incorporated in the state of Delaware on March 27, 2003. | ||||||||
Unaudited Interim Financial Statements | ||||||||
The accompanying condensed consolidated balance sheets and the condensed consolidated statements of operations, comprehensive loss, and cash flows are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’) on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, considered necessary to present fairly the Company’s financial position, results of operations and cash flows. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015, or any other future interim or annual period. | ||||||||
These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2015. The December 31, 2014 consolidated balance sheet included herein was derived from the audited financial statements as of that date. | ||||||||
Basis of Presentation | ||||||||
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the unaudited condensed consolidated financial statements. | ||||||||
Segment Reporting | ||||||||
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, the Chief Executive Officer, in making decisions regarding resource allocation and accessing performance. To date, the Company has viewed its operations and manages its business as one operating segment. | ||||||||
Concentrations of Risk | ||||||||
The Company’s accounts receivable are derived from revenue earned from its worldwide network of independent dealers and distributors. The Company’s sales to dealers and distributors located outside the United States are generally denominated in United States dollars, except for sales to dealers and distributors located in the United Kingdom and the European Union, which are generally denominated in pounds sterling and the euro, respectively. There were no individual account balances greater than 10% of total accounts receivable at December 31, 2014 and March 31, 2015. | ||||||||
No dealer or distributor accounted for more than 10% of total revenue for the three months ended March 31, 2014 and 2015. | ||||||||
The Company relies on a limited number of suppliers for its contract manufacturing. A significant disruption in the operations of these manufacturers would impact the production of the Company’s products for a substantial period of time, which could have a material adverse effect on the Company’s business, financial condition and results of operations. | ||||||||
Geographic Information | ||||||||
The Company’s revenue includes amounts earned through sales to dealers and distributors located outside of the United States. With the exception of Canada, no single foreign country accounted for more than 10% of total revenue for the three months ended March 31, 2014 and 2015. The following table sets forth revenue from the U.S., Canadian and all other international dealers and distributors combined (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Revenue-United States | $ | 21,043 | $ | 21,217 | ||||
Revenue-Canada | 3,230 | 3,086 | ||||||
Revenue-all other international sources | 7,582 | 7,780 | ||||||
Total revenue | $ | 31,855 | $ | 32,083 | ||||
International revenue (excluding Canada) as a percent of total revenue | 24 | % | 24 | % | ||||
Use of Accounting Estimates | ||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to revenue recognition, sales returns, provisions for doubtful accounts, product warranty, inventory obsolescence, litigation, determination of fair value of stock options, deferred tax asset valuation allowances and income taxes. Actual results may differ from those estimates. | ||||||||
Product Warranty | ||||||||
The Company provides its customers a limited product warranty of two years, which requires the Company, at its option, to repair or replace defective products during the warranty period at no cost to the customer or refund the purchase price. The Company estimates the costs that may be incurred to replace, repair or issue a refund for defective products and records a reserve at the time revenue is recognized. Factors that affect the Company’s warranty liability include the number of installed systems, the Company’s historical experience and management’s judgment regarding anticipated rates of product warranty returns, net of refurbished products. The Company assesses the adequacy of its recorded warranty liability each period and makes adjustments to the liability as necessary. Warranty costs accrued includes amounts accrued for products at the time of shipment, adjustments for changes in estimated costs for warranties on products shipped in the period, and changes in estimated costs for warranties on products shipped in prior periods. It is not practicable for the Company to determine the amounts applicable to each of these components. | ||||||||
The following table presents the changes in the product warranty liability (in thousands): | ||||||||
Warranty Liability | ||||||||
Balance at December 31, 2014 | $ | 1,191 | ||||||
Warranty costs accrued | 750 | |||||||
Warranty claims | (612 | ) | ||||||
Balance at March 31, 2015 | $ | 1,329 | ||||||
Net Loss Per Share | ||||||||
Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options. In a net loss position, diluted net loss per share is computed using only the weighted-average number of common shares outstanding during the period, as any additional common shares would be anti-dilutive. | ||||||||
The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Numerator: | ||||||||
Net loss | $ | (539 | ) | $ | (4,231 | ) | ||
Denominator: | ||||||||
Weighted average common stock outstanding for basic net loss per common share | 23,117 | 24,344 | ||||||
Effect of dilutive securities—stock options | — | — | ||||||
Weighted average common shares and dilutive securities outstanding | 23,117 | 24,344 | ||||||
The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net loss per share (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Options to purchase common stock | 4,853 | 4,815 | ||||||
Recent Accounting Pronouncements | ||||||||
In May 2014, the FASB issued ASU 2004-09, “Revenue from Contracts with Customers (Topic 606),” which amends the guidance in ASC 605, “Revenue Recognition.” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is still evaluating the impact of adopting this guidance as well as whether the Company will apply the amendments retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of applying this update at the date of initial application. | ||||||||
In August 2014, the FASB issued ASU 2014-15, ‘‘Presentation of Financial Statements — Going Concern (Subtopic 205-40).’’ The amended guidance requires an entity to prepare financial statements under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting, if liquidation of the entity becomes imminent. The guidance is effective for the annual period ending on December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not expect the adoption of this guidance will impact its results of operations, financial position, or cash flows. | ||||||||
Balance_Sheet_Components
Balance Sheet Components | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Balance Sheet Components | ||||||||
Balance Sheet Components | ||||||||
2. Balance Sheet Components | ||||||||
Inventories consisted of the following (in thousands): | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Finished goods | $ | 13,324 | $ | 16,796 | ||||
Component parts | 888 | 2,966 | ||||||
$ | 14,212 | $ | 19,762 | |||||
Property and equipment, net consisted of the following (in thousands): | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Computer equipment and software | $ | 4,390 | $ | 4,588 | ||||
Manufacturing tooling and test equipment | 2,777 | 2,928 | ||||||
Manufacturing equipment | — | 794 | ||||||
Furniture and fixtures | 2,298 | 2,618 | ||||||
Lab and warehouse equipment | 2,652 | 2,786 | ||||||
Marketing equipment | 662 | 662 | ||||||
Leasehold improvements | 2,357 | 2,730 | ||||||
15,136 | 17,106 | |||||||
Less: accumulated depreciation | (10,047 | ) | (11,119 | ) | ||||
$ | 5,089 | $ | 5,987 | |||||
Other assets consisted of the following (in thousands): | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Prepaid licensing | $ | 632 | $ | 609 | ||||
Deposits | 697 | 710 | ||||||
$ | 1,329 | $ | 1,319 | |||||
Accrued liabilities consisted of the following (in thousands): | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Sales returns and warranty accruals | $ | 2,019 | $ | 2,148 | ||||
Compensation accruals | 1,614 | 1,305 | ||||||
Other accrued liabilities | 1,117 | 780 | ||||||
$ | 4,750 | $ | 4,233 | |||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||
3. Fair Value Measurements | |||||||||||||||||||||||
Assets Measured and Recorded at Fair Value on a Recurring Basis | |||||||||||||||||||||||
The Company’s financial assets that are measured at fair value on a recurring basis consist of money market funds and available-for-sale investments. The following three levels of inputs are used to measure the fair value of financial instruments: | |||||||||||||||||||||||
Level 1: Quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||||||||
Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||||||||||||
Level 3: Unobservable inputs are used when little or no market data is available. | |||||||||||||||||||||||
The fair values for substantially all of the Company’s financial assets are based on quoted prices in active markets or observable inputs. For Level 2 securities, the Company uses a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application and corroborative information. | |||||||||||||||||||||||
The Company determines realized gains or losses on the sale of marketable securities on a specific identification method. During the three months ended March 31, 2015, the Company did not record significant realized gains or losses on the sales of available-for-sale investments. The following tables show the Company’s cash and available-for-sale investments’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments as of December 31, 2014 and March 31, 2015 (in thousands): | |||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair Value | Cash and | Short-term | Long-term | |||||||||||||||||
Cost | Gains | Losses | Cash | Investments | Investments | ||||||||||||||||||
Equivalents | |||||||||||||||||||||||
Cash | $ | 13,077 | $ | — | $ | — | $ | 13,077 | $ | 13,077 | $ | — | $ | — | |||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | 16,110 | — | — | 16,110 | 16,110 | — | — | ||||||||||||||||
Subtotal | 16,110 | — | — | 16,110 | 16,110 | — | — | ||||||||||||||||
Level 2: | |||||||||||||||||||||||
Asset-backed securities | 4,458 | — | (3 | ) | 4,455 | — | — | 4,455 | |||||||||||||||
Corporate bonds | 54,321 | 2 | (46 | ) | 54,277 | — | 46,726 | 7,551 | |||||||||||||||
Commercial paper | 6,797 | — | — | 6,797 | — | 6,797 | — | ||||||||||||||||
U.S. agency securities | 2,503 | — | — | 2,503 | — | — | 2,503 | ||||||||||||||||
Subtotal | 68,079 | 2 | (49 | ) | 68,032 | — | 53,523 | 14,509 | |||||||||||||||
Total | $ | 97,266 | $ | 2 | $ | (49 | ) | $ | 97,219 | $ | 29,187 | $ | 53,523 | $ | 14,509 | ||||||||
March 31, 2015 | |||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair Value | Cash and | Short-term | Long-term | |||||||||||||||||
Cost | Gains | Losses | Cash | Investments | Investments | ||||||||||||||||||
Equivalents | |||||||||||||||||||||||
Cash | $ | 4,875 | $ | — | $ | — | $ | 4,875 | $ | 4,875 | $ | — | $ | — | |||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | 9,762 | — | — | 9,762 | 9,762 | — | — | ||||||||||||||||
U.S. government notes | 1,000 | — | — | 1,000 | — | — | 1,000 | ||||||||||||||||
Subtotal | 10,762 | — | — | 10,762 | 9,762 | — | 1,000 | ||||||||||||||||
Level 2: | |||||||||||||||||||||||
Asset-backed securities | 7,056 | 1 | (2 | ) | 7,055 | — | — | 7,055 | |||||||||||||||
Corporate bonds | 52,525 | 14 | (26 | ) | 52,513 | — | 43,307 | 9,206 | |||||||||||||||
Commercial paper | 4,397 | — | — | 4,397 | — | 4,397 | — | ||||||||||||||||
U.S. agency securities | 4,509 | 3 | — | 4,512 | — | 3,003 | 1,509 | ||||||||||||||||
Subtotal | 68,487 | 18 | (28 | ) | 68,477 | — | 50,707 | 17,770 | |||||||||||||||
Total | $ | 84,124 | $ | 18 | $ | (28 | ) | $ | 84,114 | $ | 14,637 | $ | 50,707 | $ | 18,770 | ||||||||
As of March 31, 2015, the Company considers the declines in market value of its investment portfolio to be temporary in nature and does not consider any of its investments other-than-temporarily impaired. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy requires investments generally to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. The maturities of the Company’s long-term investments range from one to two years. When evaluating an investment for other-than-temporary impairment the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates, and the Company’s intent to sell, as well as the fact it is not more likely than not that the Company will be required to sell the investment before recovery of the investment’s cost basis, which may be maturity. During the three months ended March 31, 2015, the Company did not recognize any significant impairment charges. | |||||||||||||||||||||||
Fair Value of Other Financial Instruments | |||||||||||||||||||||||
The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, restricted cash, accounts payable and accrued liabilities approximate their fair value because of the short term nature of the accounts. The fair value of the notes payable approximates its carrying value based on the variable nature of interest rates and current market rates available to the Company (see Note 5). As a result, the balance of the notes payable is categorized within the Level 2 fair value hierarchy. | |||||||||||||||||||||||
Goodwill_and_Intangible_assets
Goodwill and Intangible assets | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Goodwill and Intangible Assets | |||||||||||
Goodwill and Intangible Assets | |||||||||||
4. Goodwill and Intangible Assets | |||||||||||
On January 30, 2015, the Company, through its newly formed, wholly owned subsidiary, Control4 Australia Pty., Ltd (“Control4 Australia”), completed the acquisition of Nexus Technologies Pty Ltd. (“Nexus”), an Australia-based provider of audio/video distribution products (under the brand of “Leaf”), pursuant to a Share Sale Agreement dated January 30, 2015, by and among Control4 Australia and all of the shareholders of Nexus, under which Control4 Australia purchased all of the issued and outstanding shares of Nexus from its shareholders and Nexus became a wholly owned subsidiary of Control4 Australia. The total consideration transferred was $8.5 million in cash. Of the cash consideration, $750,000 of cash was deposited in escrow as partial security for the indemnification obligations of the Nexus shareholders pursuant to the Share Sale Agreement, which will be released to the Nexus shareholders one year from the acquisition date, provided that there are no claims made against the escrow amount. Additionally, the Company incurred approximately $0.6 million in acquisition-related expenses accounted for in general and administrative expenses. The Company had previously sold select Leaf products to its North American dealer network. Through this acquisition, the Company believes it will be able to offer a complete array of video distribution solutions under the Control4 brand to Control4 customers worldwide, gain market share in the growing audio and video (A/V) category, and leverage Leaf’s valuable engineering expertise to develop new and innovative A/V solutions. | |||||||||||
The Company determined the Nexus acquisition was not a significant acquisition under Rule 3-05 of Regulation S-X. | |||||||||||
Total consideration transferred was allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values at the acquisition date as set forth below. Management estimated the fair values of tangible and intangible assets and liabilities in accordance with the applicable accounting guidance for business combinations. The preliminary amount of consideration transferred is subject to potential adjustments in the event that the preliminary estimates of inventory or intangible assets prove to be inaccurate, and due to tax-related matters that could have a material impact on the consolidated financial statements.The Company expects the allocation of the consideration transferred to be final within the measurement period (up to one year from the acquisition date). | |||||||||||
The Company’s preliminary allocation of consideration transferred for Nexus is as follows (in thousands): | |||||||||||
Estimated Fair Value | |||||||||||
Cash | $ | 121 | |||||||||
Inventory | 2,346 | ||||||||||
Other assets acquired | 1,247 | ||||||||||
Intangible assets | 5,030 | ||||||||||
Goodwill | 2,618 | ||||||||||
Total assets acquired | 11,362 | ||||||||||
Accounts payable | 2,273 | ||||||||||
Other liabilities assumed | 589 | ||||||||||
Net assets acquired | $ | 8,500 | |||||||||
Amortizable Intangible assets | |||||||||||
The Company’s intangible assets and related accumulated amortization consisted of the following as of December 31, 2014 and March 31, 2015 (in thousands): | |||||||||||
December 31, 2014 | |||||||||||
Gross Carrying | Accumulated | Net | |||||||||
Amount | Amortization | ||||||||||
Acquired technology | $ | 2,597 | $ | (1,214 | ) | $ | 1,383 | ||||
Non-competition agreements | 53 | (27 | ) | 26 | |||||||
Total intangible assets | $ | 2,650 | $ | (1,241 | ) | $ | 1,409 | ||||
March 31, 2015 | |||||||||||
Gross Carrying | Accumulated | Net | |||||||||
Amount | Amortization | ||||||||||
Acquired technology | $ | 7,076 | $ | (1,524 | ) | $ | 5,552 | ||||
Customer relationships | 360 | (12 | ) | 348 | |||||||
Non-competition agreements | 53 | (30 | ) | 23 | |||||||
Total intangible assets | $ | 7,489 | $ | (1,566 | ) | $ | 5,923 | ||||
The weighted average amortization period for acquired technology, customer relationships and non-competition agreements is 4.8 years, 5.0 years, and 2.0 years, respectively; and 4.8 years for all amortizable intangible assets in total. | |||||||||||
The Company recorded amortization expense during the respective periods for these intangible assets as follows: (in thousands): | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2014 | 2015 | ||||||||||
Amortization of intangible assets | $ | 98 | $ | 325 | |||||||
Amortization of finite lived intangible assets as of March 31, 2015 for the next five years is as follows (in thousands): | |||||||||||
Amount | |||||||||||
2015 | $ | 1,177 | |||||||||
2016 | 1,384 | ||||||||||
2017 | 1,204 | ||||||||||
2018 | 1,109 | ||||||||||
2019 | 968 | ||||||||||
2020 | 81 | ||||||||||
$ | 5,923 | ||||||||||
Goodwill | |||||||||||
Changes in the carrying amount of goodwill consisted of the following (in thousands): | |||||||||||
Amount | |||||||||||
Balance at December 31, 2014 | $ | 231 | |||||||||
Current period acquisitions | 2,618 | ||||||||||
Foreign currency translation adjustment | (96 | ) | |||||||||
Balance at March 31, 2015 | $ | 2,753 | |||||||||
Goodwill represents the excess of consideration transferred over the fair value of assets acquired and liabilities assumed and is attributable to assembled workforces as well as the benefits expected from combining the Company’s research and engineering operations with the acquired companies. The Company’s goodwill associated with Nexus has tax basis but is not currently deductible for income tax purposes, due to Australian tax laws. The Company’s remaining goodwill does not have tax basis and, therefore, is not deductible for income tax purposes. | |||||||||||
LongTerm_Obligations
Long-Term Obligations | 3 Months Ended |
Mar. 31, 2015 | |
Long-Term Obligations | |
Long-Term Obligations | |
5. Long-Term Obligations | |
Loan and Security Agreement | |
In June 2013, the Company entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (the “SVB Agreement”), which consists of a revolving credit facility of $13.0 million (subject to certain borrowing base restrictions) and term borrowings to fund purchases of property and equipment. All borrowings under the SVB Agreement are collateralized by the general assets of the Company. The revolving credit facility has a variable rate of interest of prime (as published in the Wall Street Journal) or LIBOR plus 2.50%, as selected by the Company. The rate was 3.25% at March 31, 2015. In addition, the Company pays an annual commitment fee of $20,000 and a quarterly unused line fee of 0.375% based on the difference between the borrowing commitment of $13.0 million and the then-current balance. In addition, the SVB Agreement provided for term borrowings to fund purchases of property and equipment through May 2014. Term borrowings are payable in 42 equal monthly payments of principal plus interest and bear interest at prime plus 0.50%, which was 3.75% at March 31, 2015. | |
Borrowing under the revolving credit facility is subject to certain collateral restrictions relating primarily to the Company’s accounts receivable and inventory levels. As of March 31, 2015, the total borrowing capacity was approximately $13.0 million, and no borrowings were outstanding. The revolving credit facility has a maturity date of May 29, 2015. The Company believes that it has sufficient working capital to fund its operating and investing activities and does not intend to renew the revolving credit facility. | |
The SVB Agreement contains various restrictive and financial covenants and the Company was in compliance with each of these covenants as of March 31, 2015. | |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Taxes | |
Income Taxes | |
6. Income Taxes | |
In order to determine the quarterly provision for income taxes, the Company considers the estimated annual effective tax rate, which is based on expected annual taxable income and statutory tax rates in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter. | |
Income tax benefit was $0 and $0.5 million for the three months ended March 31, 2014 and 2015, respectively, or approximately 0% and 11% of income before income taxes, respectively. The effective tax rate for the three months ended March 31, 2015 differs from the U.S. federal statutory rate of 34% primarily due to the domestic valuation allowance offsetting most of the statutory rate, state income taxes, and the impact of incentive stock options as well as other permanent differences. The rate is increased by foreign income taxes and the U.S. federal alternative minimum tax. | |
Significant judgment is required in determining the provision for income taxes, recording valuation allowances against deferred tax assets and evaluating uncertain tax positions. In evaluating the Company’s ability to recover deferred tax assets, in full or in part, the Company considers all available positive and negative evidence, including past operating results, the forecast of future market growth, forecasted earnings, future taxable income and prudent and feasible tax planning strategies. Due to historical net losses incurred and the uncertainty of realizing the deferred tax assets, for all the periods presented, the Company has a full valuation allowance against all deferred tax assets. To the extent that the Company generates positive income and expects, with reasonable certainty, to continue to generate positive domestic income, the Company may release all or a portion of the valuation allowance in a future period. This release would result in the recognition of certain deferred tax assets, a decrease to income tax expense for the period such release is made. In addition, the effective tax rate in subsequent periods would increase, and more closely approximate the federal statutory rate of 34%, after giving consideration to state income taxes, foreign income taxes and the effect of exercising incentive stock options. | |
The Company files income tax returns in the United States, including various state and local jurisdictions. The Company’s subsidiaries file income tax returns in the United Kingdom, Australia, Hong Kong, China, Germany, and India. The Company is subject to examination in the United States, the United Kingdom, Australia, Hong Kong, China, Germany, and India as well as various state jurisdictions. As of March 31, 2015, the Company was not under examination by any tax authorities. Tax years beginning in 2011 are subject to examination by tax authorities in the United States, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used. Tax years beginning in 2011 are subject to examination by the taxing authorities in Australia and Hong Kong. Tax years beginning in 2012 are subject to examination by the taxing authorities in China, Hong Kong, and India. Tax years beginning in 2013 are subject to examination by the taxing authorities in the United Kingdom. Tax years beginning in 2014 are subject to examination by the taxing authorities in Germany. | |
Equity_Compensation
Equity Compensation | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Equity Compensation | |||||||||||||
Equity Compensation | |||||||||||||
7. Equity Compensation | |||||||||||||
Stock Options | |||||||||||||
In 2003, the Board of Directors adopted the 2003 Equity Incentive Plan (the “2003 Plan”), which provided for the granting of nonqualified and incentive stock options, stock appreciation rights, stock awards and restricted stock. Under the 2003 Plan, the Company was able to grant nonqualified and incentive stock options to directors, employees and non-employees providing services to the Company. On June 11, 2013, the Company’s Board of Directors adopted the 2013 Stock Option and Incentive Plan (the “2013 Plan”), which was subsequently approved by the Company’s stockholders. The 2013 Plan became effective as of the closing of the Company’s initial public offering. To the extent that any awards outstanding under the 2003 Plan are forfeited or lapse unexercised subsequent to August 1, 2013, the shares of common stock subject to such awards will become available for issuance under the 2013 Plan. The 2013 Plan provides for annual increases in the number of reserved shares of up to 5% of the outstanding number of shares of the Company’s Common Stock as of the preceding December 31. On January 1, 2015, the number of reserved shares was increased by 1,215,269 shares in accordance with the provisions of the 2013 Plan. | |||||||||||||
A summary of stock option activity for the three months ended March 31, 2015 is presented below: | |||||||||||||
Shares | Weighted | Weighted | Weighted | ||||||||||
Subject to | Average | Average | Average | ||||||||||
Options | Grant Date | Exercise | Remaining | ||||||||||
Outstanding | Fair Value | Price | Contractual | ||||||||||
Life (Years) | |||||||||||||
Balance at December 31, 2014 | 4,851,221 | $ | 10.57 | ||||||||||
Granted | 41,000 | $ | 6.87 | 13.14 | |||||||||
Exercised | (96,990 | ) | 5.05 | ||||||||||
Expired | (5,074 | ) | 11.41 | ||||||||||
Forfeited | (14,081 | ) | 12.35 | ||||||||||
Balance at March 31, 2015 | 4,776,076 | 10.7 | |||||||||||
Exercisable options at March 31, 2015 | 2,721,289 | 7.49 | 5.7 | ||||||||||
Vested and expected to vest at March 31, 2015 | 4,596,162 | 10.5 | 6.9 | ||||||||||
The following table summarizes information about stock options outstanding and exercisable at March 31, 2015: | |||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||
Range of Exercise Prices | Weighted | Number of | Weighted- | Number of | Weighted- | ||||||||
Average | Underlying | Average | Underlying | Average | |||||||||
Exercise | Shares | Remaining | Shares | Remaining | |||||||||
Price | Contractual | Contractual | |||||||||||
Life (in | Life (in | ||||||||||||
years) | years) | ||||||||||||
$0.78 - 1.72 | $ | 1.10 | 26,639 | 0.5 | 26,639 | 0.5 | |||||||
1.97 - 3.38 | 2.57 | 238,762 | 1.6 | 238,762 | 1.6 | ||||||||
3.58 - 6.14 | 5.66 | 1,510,318 | 5.4 | 1,412,151 | 5.4 | ||||||||
6.34 - 9.94 | 8.29 | 981,727 | 7.0 | 668,671 | 6.9 | ||||||||
11.28 - 16.97 | 13.91 | 1,214,668 | 8.8 | 162,600 | 6.2 | ||||||||
17.66 - 22.92 | 21.00 | 803,962 | 8.9 | 212,466 | 8.8 | ||||||||
4,776,076 | 2,721,289 | ||||||||||||
For the stock option awards vested during the three months ended March 31, 2015, the total fair value was $2.9 million. The following table summarizes the aggregate intrinsic-value of options exercised, exercisable and vested and expected to vest (in thousands): | |||||||||||||
For the three months ended | |||||||||||||
and as of March 31, 2015 | |||||||||||||
Options Exercised | $ | 782 | |||||||||||
Options Exercisable | 14,232 | ||||||||||||
Options Vested and Expected to Vest | 15,915 | ||||||||||||
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2014 | 2015 | ||||||||||||
Expected volatility | 56 – 60 | % | 54 – 55 | % | |||||||||
Expected dividends | 0 | % | 0 | % | |||||||||
Expected terms (in years) | 3.8 – 6.1 | 6.1 | |||||||||||
Risk-free rate | 1.1 – 2.0 | % | 1.3 – 1.6 | % | |||||||||
Total stock-based compensation expense has been classified as follows in the accompanying statements of operations (in thousands): | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2014 | 2015 | ||||||||||||
Cost of revenue | $ | 20 | $ | 47 | |||||||||
Research and development | 478 | 772 | |||||||||||
Sales and marketing | 222 | 454 | |||||||||||
General and administrative | 527 | 576 | |||||||||||
Total stock-based compensation expense | $ | 1,247 | $ | 1,849 | |||||||||
At March 31, 2015, there was $16.9 million of total unrecognized compensation cost related to non-vested stock option awards that will be recognized over a weighted-average period of 2.9 years. | |||||||||||||
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Related Party Transactions | ||||||||
Related Party Transactions | ||||||||
8. Related Party Transactions | ||||||||
The former owner of Nexus, who is now an employee of the Company, owns and operates a Control4 authorized distributorship in Dubai. The following table sets forth revenue from product sales to that distributor for the period from the acquisition date to March 31, 2015 (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Dubai authorized distributor | $ | — | $ | 145 | ||||
As of March 31, 2015, the Company had accounts receivable from this related party totaling $0.3 million. Original purchase and payment terms with this related party are consistent with other non-affiliated companies. Pursuant to the purchase agreement, future purchases will require cash payment in advance of delivery, and the former owner has agreed to use his best efforts to sell the distributorship. | ||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies | |||||
Commitments and Contingencies | |||||
9. Commitments and Contingencies | |||||
Operating Leases | |||||
The Company leases office and warehouse space under operating leases that expire between 2015 and 2018. The terms of the leases include periods of free rent, options for the Company to extend the leases (three to five years) and increasing rental rates over time. The Company recognizes rental expense under these operating leases on a straight line basis over the lives of the leases and has accrued for rental expense recorded but not paid. | |||||
Rental expense was approximately $0.3 million and $0.5 million for the three months ended March 31, 2014 and 2015, respectively. | |||||
Future minimum rental payments required under non-cancelable operating leases with initial or remaining terms in excess of one year consist of the following as of March 31, 2015 (in thousands): | |||||
2015 | $ | 1,573 | |||
2016 | 1,995 | ||||
2017 | 1,770 | ||||
2018 | 875 | ||||
$ | 6,213 | ||||
Purchase Commitments | |||||
The Company had non-cancellable purchase commitments for the purchase of inventory, which extend through September 2015 totaling approximately $28.6 million at March 31, 2015. | |||||
Indemnification | |||||
The Company has agreed to indemnify its officers and directors for certain events or occurrences, while the officer or director is or was serving at the Company’s request in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that provides corporate reimbursement coverage that limits its exposure and enables it to recover a portion of any future amounts paid. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements since these obligations are not capped but are conditional to the unique facts and circumstances involved. Accordingly, the Company has no liabilities recorded for these agreements as of March 31, 2015. | |||||
Employment Agreements | |||||
The Company has signed employment agreements with certain executive officers who are entitled to receive certain benefits if their employment is terminated by the Company, including severance payments, accelerated vesting of stock options and continuation of certain insurance benefits. | |||||
Legal Matters | |||||
On August 12, 2014 and September 16, 2014, respectively, the Company received letters from Nokia Corporation alleging that the Company manufactures or supplies products that practice IEEE 802.11 Standards related to wireless technology, and that Nokia is the owner of a portfolio of patents essential to that standard. The Company is conducting an investigation of the claims made by Nokia regarding its patent portfolio. Nokia has not initiated litigation against the Company, but the Company believes that Nokia may do so. The Company intends to defend itself vigorously with respect to this and any other related claims or litigation. Since no complaint has been filed and the outcome of any potential legal proceedings related to these claims is uncertain at this time, we cannot estimate the amount of liability, if any, that could result from an adverse resolution of this matter. | |||||
On April 15, 2015, Intuitive Building Controls, Inc. (“IBC”), a corporation organized under the laws of Texas, filed a Complaint against the Company in the Eastern District of Texas. During April 2015, IBC filed similar complaints against many other companies. IBC’s Complaint asserts that the Company’s lighting control systems, specifically including its controllers and in-wall touch screens, infringe three United States patents that IBC owns by assignment: U.S. Patent Nos. 6,118,230 (the “‘230 patent”), 6,160,359 (the “‘359 patent”) and 5,945,993 (the “‘993 patent). The Complaint seeks injunctive relief and monetary damages. Based on the Company’s preliminary investigation of the patents at issue, the Company does not believe its products infringe any valid or enforceable claim of these patents; and, therefore, the Company will vigorously defend the lawsuit. | |||||
On April 28, 2015, the Company received a letter from Certified Measurement, LLC (“Certified Measurement”), alleging that some of the Company’s products infringe three patents owned by assignment by Certified Measurement because they acquire physical measurements (such as motion, temperature, lighting, etc.), time-stamp the measurement data, and then perform cryptographic operations. Certified Measurement is a wholly owned subsidiary of Patent Properties, Inc. (“Patent Properties”). The Company is conducting an investigation of the claims made by Certified Measurement regarding its three patents. Certified Measurement has not initiated litigation against the Company, but the Company believes that Certified Measurement may do so. The Company intends to defend itself vigorously with respect to this and any other related claims or litigation. Since no complaint has been filed and the outcome of any potential legal proceedings related to these claims is uncertain at this time, the Company cannot estimate the amount of liability, if any, which could result from an adverse resolution of this matter. | |||||
The Company establishes reserves for specific liabilities in connection with legal actions that it deems to be probable and estimable. In management’s opinion, the Company is not currently involved in any legal proceedings other than specifically identified above, that individually or in the aggregate, could have a material effect on the Company’s financial condition, operations, or cash flows. Currently, a range of loss associated with any individual material legal proceeding cannot be reasonably estimated. | |||||
Description_of_Business_and_Su1
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Description of Business and Summary of Significant Accounting Policies | ||||||||
Basis of Presentation | ||||||||
Basis of Presentation | ||||||||
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the unaudited condensed consolidated financial statements. | ||||||||
Segment Reporting | ||||||||
Segment Reporting | ||||||||
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, the Chief Executive Officer, in making decisions regarding resource allocation and accessing performance. To date, the Company has viewed its operations and manages its business as one operating segment. | ||||||||
Concentrations of Risk | ||||||||
Concentrations of Risk | ||||||||
The Company’s accounts receivable are derived from revenue earned from its worldwide network of independent dealers and distributors. The Company’s sales to dealers and distributors located outside the United States are generally denominated in United States dollars, except for sales to dealers and distributors located in the United Kingdom and the European Union, which are generally denominated in pounds sterling and the euro, respectively. There were no individual account balances greater than 10% of total accounts receivable at December 31, 2014 and March 31, 2015. | ||||||||
No dealer or distributor accounted for more than 10% of total revenue for the three months ended March 31, 2014 and 2015. | ||||||||
The Company relies on a limited number of suppliers for its contract manufacturing. A significant disruption in the operations of these manufacturers would impact the production of the Company’s products for a substantial period of time, which could have a material adverse effect on the Company’s business, financial condition and results of operations. | ||||||||
Geographic Information | ||||||||
Geographic Information | ||||||||
The Company’s revenue includes amounts earned through sales to dealers and distributors located outside of the United States. With the exception of Canada, no single foreign country accounted for more than 10% of total revenue for the three months ended March 31, 2014 and 2015. The following table sets forth revenue from the U.S., Canadian and all other international dealers and distributors combined (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Revenue-United States | $ | 21,043 | $ | 21,217 | ||||
Revenue-Canada | 3,230 | 3,086 | ||||||
Revenue-all other international sources | 7,582 | 7,780 | ||||||
Total revenue | $ | 31,855 | $ | 32,083 | ||||
International revenue (excluding Canada) as a percent of total revenue | 24 | % | 24 | % | ||||
Use of Accounting Estimates | ||||||||
Use of Accounting Estimates | ||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates including those related to revenue recognition, sales returns, provisions for doubtful accounts, product warranty, inventory obsolescence, litigation, determination of fair value of stock options, deferred tax asset valuation allowances and income taxes. Actual results may differ from those estimates. | ||||||||
Product Warranty | ||||||||
Product Warranty | ||||||||
The Company provides its customers a limited product warranty of two years, which requires the Company, at its option, to repair or replace defective products during the warranty period at no cost to the customer or refund the purchase price. The Company estimates the costs that may be incurred to replace, repair or issue a refund for defective products and records a reserve at the time revenue is recognized. Factors that affect the Company’s warranty liability include the number of installed systems, the Company’s historical experience and management’s judgment regarding anticipated rates of product warranty returns, net of refurbished products. The Company assesses the adequacy of its recorded warranty liability each period and makes adjustments to the liability as necessary. Warranty costs accrued includes amounts accrued for products at the time of shipment, adjustments for changes in estimated costs for warranties on products shipped in the period, and changes in estimated costs for warranties on products shipped in prior periods. It is not practicable for the Company to determine the amounts applicable to each of these components. | ||||||||
The following table presents the changes in the product warranty liability (in thousands): | ||||||||
Warranty Liability | ||||||||
Balance at December 31, 2014 | $ | 1,191 | ||||||
Warranty costs accrued | 750 | |||||||
Warranty claims | (612 | ) | ||||||
Balance at March 31, 2015 | $ | 1,329 | ||||||
Net Loss Per Share | ||||||||
Net Loss Per Share | ||||||||
Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the period that have a dilutive effect on net income per share. Potentially dilutive common shares result from the assumed exercise of outstanding stock options. In a net loss position, diluted net loss per share is computed using only the weighted-average number of common shares outstanding during the period, as any additional common shares would be anti-dilutive. | ||||||||
The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Numerator: | ||||||||
Net loss | $ | (539 | ) | $ | (4,231 | ) | ||
Denominator: | ||||||||
Weighted average common stock outstanding for basic net loss per common share | 23,117 | 24,344 | ||||||
Effect of dilutive securities—stock options | — | — | ||||||
Weighted average common shares and dilutive securities outstanding | 23,117 | 24,344 | ||||||
The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net loss per share (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Options to purchase common stock | 4,853 | 4,815 | ||||||
Recent Accounting Pronouncements | ||||||||
Recent Accounting Pronouncements | ||||||||
In May 2014, the FASB issued ASU 2004-09, “Revenue from Contracts with Customers (Topic 606),” which amends the guidance in ASC 605, “Revenue Recognition.” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is still evaluating the impact of adopting this guidance as well as whether the Company will apply the amendments retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of applying this update at the date of initial application. | ||||||||
In August 2014, the FASB issued ASU 2014-15, ‘‘Presentation of Financial Statements — Going Concern (Subtopic 205-40).’’ The amended guidance requires an entity to prepare financial statements under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting, if liquidation of the entity becomes imminent. The guidance is effective for the annual period ending on December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not expect the adoption of this guidance will impact its results of operations, financial position, or cash flows. | ||||||||
Description_of_Business_and_Su2
Description of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Description of Business and Summary of Significant Accounting Policies | ||||||||
Schedule of revenue from United States, Canada and all other international dealers and distributors combined | The following table sets forth revenue from the U.S., Canadian and all other international dealers and distributors combined (in thousands): | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Revenue-United States | $ | 21,043 | $ | 21,217 | ||||
Revenue-Canada | 3,230 | 3,086 | ||||||
Revenue-all other international sources | 7,582 | 7,780 | ||||||
Total revenue | $ | 31,855 | $ | 32,083 | ||||
International revenue (excluding Canada) as a percent of total revenue | 24 | % | 24 | % | ||||
Schedule of changes in the product warranty liability | ||||||||
The following table presents the changes in the product warranty liability (in thousands): | ||||||||
Warranty Liability | ||||||||
Balance at December 31, 2014 | $ | 1,191 | ||||||
Warranty costs accrued | 750 | |||||||
Warranty claims | (612 | ) | ||||||
Balance at March 31, 2015 | $ | 1,329 | ||||||
Schedule of reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share | ||||||||
The following table presents the reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Numerator: | ||||||||
Net loss | $ | (539 | ) | $ | (4,231 | ) | ||
Denominator: | ||||||||
Weighted average common stock outstanding for basic net loss per common share | 23,117 | 24,344 | ||||||
Effect of dilutive securities—stock options | — | — | ||||||
Weighted average common shares and dilutive securities outstanding | 23,117 | 24,344 | ||||||
Schedule of anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net loss per share | ||||||||
The following weighted-average common stock equivalents were anti-dilutive and therefore were excluded from the calculation of diluted net loss per share (in thousands): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Options to purchase common stock | 4,853 | 4,815 | ||||||
Balance_Sheet_Components_Table
Balance Sheet Components (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Balance Sheet Components | ||||||||
Schedule of inventories | ||||||||
Inventories consisted of the following (in thousands): | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Finished goods | $ | 13,324 | $ | 16,796 | ||||
Component parts | 888 | 2,966 | ||||||
$ | 14,212 | $ | 19,762 | |||||
Schedule of property and equipment, net | ||||||||
Property and equipment, net consisted of the following (in thousands): | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Computer equipment and software | $ | 4,390 | $ | 4,588 | ||||
Manufacturing tooling and test equipment | 2,777 | 2,928 | ||||||
Manufacturing equipment | — | 794 | ||||||
Furniture and fixtures | 2,298 | 2,618 | ||||||
Lab and warehouse equipment | 2,652 | 2,786 | ||||||
Marketing equipment | 662 | 662 | ||||||
Leasehold improvements | 2,357 | 2,730 | ||||||
15,136 | 17,106 | |||||||
Less: accumulated depreciation | (10,047 | ) | (11,119 | ) | ||||
$ | 5,089 | $ | 5,987 | |||||
Schedule of other assets | ||||||||
Other assets consisted of the following (in thousands): | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Prepaid licensing | $ | 632 | $ | 609 | ||||
Deposits | 697 | 710 | ||||||
$ | 1,329 | $ | 1,319 | |||||
Schedule of accrued liabilities | ||||||||
Accrued liabilities consisted of the following (in thousands): | ||||||||
December 31, | March 31, | |||||||
2014 | 2015 | |||||||
Sales returns and warranty accruals | $ | 2,019 | $ | 2,148 | ||||
Compensation accruals | 1,614 | 1,305 | ||||||
Other accrued liabilities | 1,117 | 780 | ||||||
$ | 4,750 | $ | 4,233 | |||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||
Schedule of cash and available-for-sale investments' adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments | The following tables show the Company’s cash and available-for-sale investments’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term investments as of December 31, 2014 and March 31, 2015 (in thousands): | ||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair Value | Cash and | Short-term | Long-term | |||||||||||||||||
Cost | Gains | Losses | Cash | Investments | Investments | ||||||||||||||||||
Equivalents | |||||||||||||||||||||||
Cash | $ | 13,077 | $ | — | $ | — | $ | 13,077 | $ | 13,077 | $ | — | $ | — | |||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | 16,110 | — | — | 16,110 | 16,110 | — | — | ||||||||||||||||
Subtotal | 16,110 | — | — | 16,110 | 16,110 | — | — | ||||||||||||||||
Level 2: | |||||||||||||||||||||||
Asset-backed securities | 4,458 | — | (3 | ) | 4,455 | — | — | 4,455 | |||||||||||||||
Corporate bonds | 54,321 | 2 | (46 | ) | 54,277 | — | 46,726 | 7,551 | |||||||||||||||
Commercial paper | 6,797 | — | — | 6,797 | — | 6,797 | — | ||||||||||||||||
U.S. agency securities | 2,503 | — | — | 2,503 | — | — | 2,503 | ||||||||||||||||
Subtotal | 68,079 | 2 | (49 | ) | 68,032 | — | 53,523 | 14,509 | |||||||||||||||
Total | $ | 97,266 | $ | 2 | $ | (49 | ) | $ | 97,219 | $ | 29,187 | $ | 53,523 | $ | 14,509 | ||||||||
March 31, 2015 | |||||||||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair Value | Cash and | Short-term | Long-term | |||||||||||||||||
Cost | Gains | Losses | Cash | Investments | Investments | ||||||||||||||||||
Equivalents | |||||||||||||||||||||||
Cash | $ | 4,875 | $ | — | $ | — | $ | 4,875 | $ | 4,875 | $ | — | $ | — | |||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | 9,762 | — | — | 9,762 | 9,762 | — | — | ||||||||||||||||
U.S. government notes | 1,000 | — | — | 1,000 | — | — | 1,000 | ||||||||||||||||
Subtotal | 10,762 | — | — | 10,762 | 9,762 | — | 1,000 | ||||||||||||||||
Level 2: | |||||||||||||||||||||||
Asset-backed securities | 7,056 | 1 | (2 | ) | 7,055 | — | — | 7,055 | |||||||||||||||
Corporate bonds | 52,525 | 14 | (26 | ) | 52,513 | — | 43,307 | 9,206 | |||||||||||||||
Commercial paper | 4,397 | — | — | 4,397 | — | 4,397 | — | ||||||||||||||||
U.S. agency securities | 4,509 | 3 | — | 4,512 | — | 3,003 | 1,509 | ||||||||||||||||
Subtotal | 68,487 | 18 | (28 | ) | 68,477 | — | 50,707 | 17,770 | |||||||||||||||
Total | $ | 84,124 | $ | 18 | $ | (28 | ) | $ | 84,114 | $ | 14,637 | $ | 50,707 | $ | 18,770 | ||||||||
Goodwill_and_Intangible_assets1
Goodwill and Intangible assets (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Goodwill and Intangible Assets | |||||||||||
Schedule of preliminary allocation of consideration transferred | |||||||||||
The Company’s preliminary allocation of consideration transferred for Nexus is as follows (in thousands): | |||||||||||
Estimated Fair Value | |||||||||||
Cash | $ | 121 | |||||||||
Inventory | 2,346 | ||||||||||
Other assets acquired | 1,247 | ||||||||||
Intangible assets | 5,030 | ||||||||||
Goodwill | 2,618 | ||||||||||
Total assets acquired | 11,362 | ||||||||||
Accounts payable | 2,273 | ||||||||||
Other liabilities assumed | 589 | ||||||||||
Net assets acquired | $ | 8,500 | |||||||||
Schedule of company's intangible assets and related accumulated amortization | |||||||||||
The Company’s intangible assets and related accumulated amortization consisted of the following as of December 31, 2014 and March 31, 2015 (in thousands): | |||||||||||
December 31, 2014 | |||||||||||
Gross Carrying | Accumulated | Net | |||||||||
Amount | Amortization | ||||||||||
Acquired technology | $ | 2,597 | $ | (1,214 | ) | $ | 1,383 | ||||
Non-competition agreements | 53 | (27 | ) | 26 | |||||||
Total intangible assets | $ | 2,650 | $ | (1,241 | ) | $ | 1,409 | ||||
March 31, 2015 | |||||||||||
Gross Carrying | Accumulated | Net | |||||||||
Amount | Amortization | ||||||||||
Acquired technology | $ | 7,076 | $ | (1,524 | ) | $ | 5,552 | ||||
Customer relationships | 360 | (12 | ) | 348 | |||||||
Non-competition agreements | 53 | (30 | ) | 23 | |||||||
Total intangible assets | $ | 7,489 | $ | (1,566 | ) | $ | 5,923 | ||||
Schedule of amortization expense during the respective periods | |||||||||||
The Company recorded amortization expense during the respective periods for these intangible assets as follows: (in thousands): | |||||||||||
Three Months Ended | |||||||||||
March 31, | |||||||||||
2014 | 2015 | ||||||||||
Amortization of intangible assets | $ | 98 | $ | 325 | |||||||
Schedule of amortization of finite-lived intangible assets | |||||||||||
Amortization of finite lived intangible assets as of March 31, 2015 for the next five years is as follows (in thousands): | |||||||||||
Amount | |||||||||||
2015 | $ | 1,177 | |||||||||
2016 | 1,384 | ||||||||||
2017 | 1,204 | ||||||||||
2018 | 1,109 | ||||||||||
2019 | 968 | ||||||||||
2020 | 81 | ||||||||||
$ | 5,923 | ||||||||||
Schedule of changes in carrying amount of goodwill | |||||||||||
Changes in the carrying amount of goodwill consisted of the following (in thousands): | |||||||||||
Amount | |||||||||||
Balance at December 31, 2014 | $ | 231 | |||||||||
Current period acquisitions | 2,618 | ||||||||||
Foreign currency translation adjustment | (96 | ) | |||||||||
Balance at March 31, 2015 | $ | 2,753 | |||||||||
Equity_Compensation_Tables
Equity Compensation (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Equity Compensation | |||||||||||||
Summary of stock option activity | |||||||||||||
Shares | Weighted | Weighted | Weighted | ||||||||||
Subject to | Average | Average | Average | ||||||||||
Options | Grant Date | Exercise | Remaining | ||||||||||
Outstanding | Fair Value | Price | Contractual | ||||||||||
Life (Years) | |||||||||||||
Balance at December 31, 2014 | 4,851,221 | $ | 10.57 | ||||||||||
Granted | 41,000 | $ | 6.87 | 13.14 | |||||||||
Exercised | (96,990 | ) | 5.05 | ||||||||||
Expired | (5,074 | ) | 11.41 | ||||||||||
Forfeited | (14,081 | ) | 12.35 | ||||||||||
Balance at March 31, 2015 | 4,776,076 | 10.7 | |||||||||||
Exercisable options at March 31, 2015 | 2,721,289 | 7.49 | 5.7 | ||||||||||
Vested and expected to vest at March 31, 2015 | 4,596,162 | 10.5 | 6.9 | ||||||||||
Summary of stock options outstanding and exercisable | |||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||
Range of Exercise Prices | Weighted | Number of | Weighted- | Number of | Weighted- | ||||||||
Average | Underlying | Average | Underlying | Average | |||||||||
Exercise | Shares | Remaining | Shares | Remaining | |||||||||
Price | Contractual | Contractual | |||||||||||
Life (in | Life (in | ||||||||||||
years) | years) | ||||||||||||
$0.78 - 1.72 | $ | 1.10 | 26,639 | 0.5 | 26,639 | 0.5 | |||||||
1.97 - 3.38 | 2.57 | 238,762 | 1.6 | 238,762 | 1.6 | ||||||||
3.58 - 6.14 | 5.66 | 1,510,318 | 5.4 | 1,412,151 | 5.4 | ||||||||
6.34 - 9.94 | 8.29 | 981,727 | 7.0 | 668,671 | 6.9 | ||||||||
11.28 - 16.97 | 13.91 | 1,214,668 | 8.8 | 162,600 | 6.2 | ||||||||
17.66 - 22.92 | 21.00 | 803,962 | 8.9 | 212,466 | 8.8 | ||||||||
4,776,076 | 2,721,289 | ||||||||||||
Summary of aggregate intrinsic-value of options exercised, exercisable, and vested and expected to vest | The following table summarizes the aggregate intrinsic-value of options exercised, exercisable and vested and expected to vest (in thousands): | ||||||||||||
For the three months ended | |||||||||||||
and as of March 31, 2015 | |||||||||||||
Options Exercised | $ | 782 | |||||||||||
Options Exercisable | 14,232 | ||||||||||||
Options Vested and Expected to Vest | 15,915 | ||||||||||||
Schedule of assumptions used to estimate fair value of option awards | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2014 | 2015 | ||||||||||||
Expected volatility | 56 – 60 | % | 54 – 55 | % | |||||||||
Expected dividends | 0 | % | 0 | % | |||||||||
Expected terms (in years) | 3.8 – 6.1 | 6.1 | |||||||||||
Risk-free rate | 1.1 – 2.0 | % | 1.3 – 1.6 | % | |||||||||
Schedule of total stock-based compensation expense classified in statements of operations | Total stock-based compensation expense has been classified as follows in the accompanying statements of operations (in thousands): | ||||||||||||
Three Months Ended March 31, | |||||||||||||
2014 | 2015 | ||||||||||||
Cost of revenue | $ | 20 | $ | 47 | |||||||||
Research and development | 478 | 772 | |||||||||||
Sales and marketing | 222 | 454 | |||||||||||
General and administrative | 527 | 576 | |||||||||||
Total stock-based compensation expense | $ | 1,247 | $ | 1,849 | |||||||||
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Related Party Transactions | ||||||||
Schedule of revenue from product sales to companies affiliated with investors | The following table sets forth revenue from product sales to that distributor for the period from the acquisition date to March 31, 2015 (in thousands): | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2015 | |||||||
Dubai authorized distributor | $ | — | $ | 145 | ||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies | |||||
Schedule of future minimum rental payments required under non-cancelable operating leases | |||||
Future minimum rental payments required under non-cancelable operating leases with initial or remaining terms in excess of one year consist of the following as of March 31, 2015 (in thousands): | |||||
2015 | $ | 1,573 | |||
2016 | 1,995 | ||||
2017 | 1,770 | ||||
2018 | 875 | ||||
$ | 6,213 | ||||
Description_of_Business_and_Su3
Description of Business and Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
item | ||
Revenue from U.S., Canadian and all other international dealers and distributors combined | ||
Total revenue | $32,083 | $31,855 |
International revenue (excluding Canada) as a percent of total revenue | 24.00% | 24.00% |
Number of operating segments | 1 | |
United States | ||
Revenue from U.S., Canadian and all other international dealers and distributors combined | ||
Total revenue | 21,217 | 21,043 |
Canada | ||
Revenue from U.S., Canadian and all other international dealers and distributors combined | ||
Total revenue | 3,086 | 3,230 |
All other international sources | ||
Revenue from U.S., Canadian and all other international dealers and distributors combined | ||
Total revenue | $7,780 | $7,582 |
Description_of_Business_and_Su4
Description of Business and Summary of Significant Accounting Policies (Details 4) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Product Warranty | |
Product warranty period | 2 years |
Changes in the product warranty liability | |
Balance at beginning of period | $1,191 |
Warranty costs accrued | 750 |
Warranty claims | -612 |
Balance at end of period | $1,329 |
Description_of_Business_and_Su5
Description of Business and Summary of Significant Accounting Policies (Details 5) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Numerator: | ||
Net loss | ($4,231) | ($539) |
Denominator: | ||
Weighted average common stock outstanding for basic net loss per common share (in shares) | 24,344 | 23,117 |
Weighted average common shares and dilutive securities outstanding | 24,344 | 23,117 |
Description_of_Business_and_Su6
Description of Business and Summary of Significant Accounting Policies (Details 6) (Options to purchase common stock) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Options to purchase common stock | ||
Anti-dilutive weighted-average common stock equivalents excluded from the calculation of diluted net income per share | ||
Total (in shares) | 4,815 | 4,853 |
Balance_Sheet_Components_Detai
Balance Sheet Components (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Inventories | ||
Finished goods | $16,796 | $13,324 |
Component parts | 2,966 | 888 |
Total inventories | 19,762 | 14,212 |
Property and equipment, net | ||
Property and equipment, gross | 17,106 | 15,136 |
Less: accumulated depreciation | -11,119 | -10,047 |
Property and equipment, net | 5,987 | 5,089 |
Computer equipment and software | ||
Property and equipment, net | ||
Property and equipment, gross | 4,588 | 4,390 |
Manufacturing tooling and test equipment | ||
Property and equipment, net | ||
Property and equipment, gross | 2,928 | 2,777 |
Manufacturing Equipment | ||
Property and equipment, net | ||
Property and equipment, gross | 794 | |
Furniture and fixtures | ||
Property and equipment, net | ||
Property and equipment, gross | 2,618 | 2,298 |
Lab and warehouse equipment | ||
Property and equipment, net | ||
Property and equipment, gross | 2,786 | 2,652 |
Marketing equipment | ||
Property and equipment, net | ||
Property and equipment, gross | 662 | 662 |
Leasehold improvements | ||
Property and equipment, net | ||
Property and equipment, gross | $2,730 | $2,357 |
Balance_Sheet_Components_Detai1
Balance Sheet Components (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Other assets | ||
Prepaid licensing | $609 | $632 |
Deposits | 710 | 697 |
Other assets total | 1,319 | 1,329 |
Accrued liabilities | ||
Sales returns and warranty accruals | 2,148 | 2,019 |
Compensation accruals | 1,305 | 1,614 |
Other accrued liabilities | 780 | 1,117 |
Total accrued liabilities | $4,233 | $4,750 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Minimum | ||
Fair Value Measurements | ||
Maturity period of long-term investments | 1 year | |
Maximum | ||
Fair Value Measurements | ||
Maturity period of long-term investments | 2 years | |
Measured on a recurring basis | ||
Fair Value Measurements | ||
Assets, Adjusted Cost | 84,124 | $97,266 |
Assets, Unrealized Gains | 18 | 2 |
Assets, Unrealized Losses | -28 | -49 |
Assets, Fair Value | 84,114 | 97,219 |
Measured on a recurring basis | Cash and Cash Equivalents | ||
Fair Value Measurements | ||
Assets, Fair Value | 14,637 | 29,187 |
Measured on a recurring basis | Short-term investments | ||
Fair Value Measurements | ||
Assets, Fair Value | 50,707 | 53,523 |
Measured on a recurring basis | Long-term investments | ||
Fair Value Measurements | ||
Assets, Fair Value | 18,770 | 14,509 |
Measured on a recurring basis | Cash | ||
Fair Value Measurements | ||
Assets, Adjusted Cost | 4,875 | 13,077 |
Assets, Fair Value | 4,875 | 13,077 |
Measured on a recurring basis | Cash | Cash and Cash Equivalents | ||
Fair Value Measurements | ||
Assets, Fair Value | 4,875 | 13,077 |
Measured on a recurring basis | Level 1 | ||
Fair Value Measurements | ||
Assets, Adjusted Cost | 10,762 | 16,110 |
Assets, Fair Value | 10,762 | 16,110 |
Measured on a recurring basis | Level 1 | Cash and Cash Equivalents | ||
Fair Value Measurements | ||
Assets, Fair Value | 9,762 | 16,110 |
Measured on a recurring basis | Level 1 | Long-term investments | ||
Fair Value Measurements | ||
Assets, Fair Value | 1,000 | |
Measured on a recurring basis | Level 1 | Money market funds | ||
Fair Value Measurements | ||
Assets, Adjusted Cost | 9,762 | 16,110 |
Assets, Fair Value | 9,762 | 16,110 |
Measured on a recurring basis | Level 1 | Money market funds | Cash and Cash Equivalents | ||
Fair Value Measurements | ||
Assets, Fair Value | 9,762 | 16,110 |
Measured on a recurring basis | Level 1 | U.S. government notes | ||
Fair Value Measurements | ||
Assets, Adjusted Cost | 1,000 | |
Assets, Fair Value | 1,000 | |
Measured on a recurring basis | Level 1 | U.S. government notes | Long-term investments | ||
Fair Value Measurements | ||
Assets, Fair Value | 1,000 | |
Measured on a recurring basis | Level 2 | ||
Fair Value Measurements | ||
Adjusted cost, Available-for-sale investments | 68,487 | 68,079 |
Unrealized Gains, available-for-sale investments | 18 | 2 |
Unrealized Losses, available-for-sale investments | -28 | -49 |
Fair value, Available-for-sale investments | 68,477 | 68,032 |
Measured on a recurring basis | Level 2 | Short-term investments | ||
Fair Value Measurements | ||
Fair value, Available-for-sale investments | 50,707 | 53,523 |
Measured on a recurring basis | Level 2 | Long-term investments | ||
Fair Value Measurements | ||
Fair value, Available-for-sale investments | 17,770 | 14,509 |
Measured on a recurring basis | Level 2 | Asset-backed securities | ||
Fair Value Measurements | ||
Adjusted cost, Available-for-sale investments | 7,056 | 4,458 |
Unrealized Gains, available-for-sale investments | 1 | |
Unrealized Losses, available-for-sale investments | -2 | -3 |
Fair value, Available-for-sale investments | 7,055 | 4,455 |
Measured on a recurring basis | Level 2 | Asset-backed securities | Long-term investments | ||
Fair Value Measurements | ||
Fair value, Available-for-sale investments | 7,055 | 4,455 |
Measured on a recurring basis | Level 2 | Corporate bonds | ||
Fair Value Measurements | ||
Adjusted cost, Available-for-sale investments | 52,525 | 54,321 |
Unrealized Gains, available-for-sale investments | 14 | 2 |
Unrealized Losses, available-for-sale investments | -26 | -46 |
Fair value, Available-for-sale investments | 52,513 | 54,277 |
Measured on a recurring basis | Level 2 | Corporate bonds | Short-term investments | ||
Fair Value Measurements | ||
Fair value, Available-for-sale investments | 43,307 | 46,726 |
Measured on a recurring basis | Level 2 | Corporate bonds | Long-term investments | ||
Fair Value Measurements | ||
Fair value, Available-for-sale investments | 9,206 | 7,551 |
Measured on a recurring basis | Level 2 | Commercial paper | ||
Fair Value Measurements | ||
Adjusted cost, Available-for-sale investments | 4,397 | 6,797 |
Fair value, Available-for-sale investments | 4,397 | 6,797 |
Measured on a recurring basis | Level 2 | Commercial paper | Short-term investments | ||
Fair Value Measurements | ||
Fair value, Available-for-sale investments | 4,397 | 6,797 |
Measured on a recurring basis | Level 2 | U.S. agency securities | ||
Fair Value Measurements | ||
Adjusted cost, Available-for-sale investments | 4,509 | 2,503 |
Unrealized Gains, available-for-sale investments | 3 | |
Fair value, Available-for-sale investments | 4,512 | 2,503 |
Measured on a recurring basis | Level 2 | U.S. agency securities | Short-term investments | ||
Fair Value Measurements | ||
Fair value, Available-for-sale investments | 3,003 | |
Measured on a recurring basis | Level 2 | U.S. agency securities | Long-term investments | ||
Fair Value Measurements | ||
Fair value, Available-for-sale investments | 1,509 | $2,503 |
Goodwill_and_Intangible_assets2
Goodwill and Intangible assets (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Jan. 30, 2015 | Dec. 31, 2014 | |
Preliminary allocation of consideration | ||||
Goodwill | $2,753,000 | $231,000 | ||
Estimated life of intangible assets | 4 years 9 months 18 days | |||
Intangible assets | ||||
Gross Carrying Amount | 7,489,000 | 2,650,000 | ||
Accumulated Amortization | -1,566,000 | -1,241,000 | ||
Intangible assets, net | 5,923,000 | 1,409,000 | ||
Weighted average amortization period | 4 years 9 months 18 days | |||
Amortization expense | ||||
Amortization of intangible assets | 325,000 | 98,000 | ||
Amortization of finite-lived intangible assets | ||||
2015 | 1,177,000 | |||
2016 | 1,384,000 | |||
2017 | 1,204,000 | |||
2018 | 1,109,000 | |||
2019 | 968,000 | |||
2020 | 81,000 | |||
Intangible assets, net | 5,923,000 | 1,409,000 | ||
Nexus | ||||
Preliminary allocation of consideration | ||||
Cash | 121,000 | |||
Inventory | 2,346,000 | |||
Other assets acquired | 1,247,000 | |||
Intangible assets | 5,030,000 | |||
Goodwill | 2,618,000 | |||
Total assets acquired | 11,362,000 | |||
Accounts Payable | 2,273,000 | |||
Other liabilities assumed | 589,000 | |||
Net assets acquired | 8,500,000 | |||
Escrow Deposit | 750,000 | |||
Total Consideration | 8,500,000 | |||
Acquisition related costs associated with Extra Vegetables | 600,000 | |||
Acquired technology | ||||
Preliminary allocation of consideration | ||||
Estimated life of intangible assets | 4 years 9 months 18 days | |||
Intangible assets | ||||
Gross Carrying Amount | 7,076,000 | 2,597,000 | ||
Accumulated Amortization | -1,524,000 | -1,214,000 | ||
Intangible assets, net | 5,552,000 | 1,383,000 | ||
Weighted average amortization period | 4 years 9 months 18 days | |||
Amortization of finite-lived intangible assets | ||||
Intangible assets, net | 5,552,000 | 1,383,000 | ||
Customer Relationships | ||||
Preliminary allocation of consideration | ||||
Estimated life of intangible assets | 5 years | |||
Intangible assets | ||||
Gross Carrying Amount | 360,000 | |||
Accumulated Amortization | -12,000 | |||
Intangible assets, net | 348,000 | |||
Weighted average amortization period | 5 years | |||
Amortization of finite-lived intangible assets | ||||
Intangible assets, net | 348,000 | |||
Non-competition agreement | ||||
Preliminary allocation of consideration | ||||
Estimated life of intangible assets | 2 years | |||
Intangible assets | ||||
Gross Carrying Amount | 53,000 | 53,000 | ||
Accumulated Amortization | -30,000 | -27,000 | ||
Intangible assets, net | 23,000 | 26,000 | ||
Weighted average amortization period | 2 years | |||
Amortization of finite-lived intangible assets | ||||
Intangible assets, net | $23,000 | $26,000 |
Goodwill_and_Intangible_assets3
Goodwill and Intangible assets (Details 2) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Business Combination - goodwill | |
Balance at beginning of the period | $231 |
Current period acquisitions | 2,618 |
Foreign currency translation adjustment | -96 |
Balance at end of the period | $2,753 |
LongTerm_Obligations_Details
Long-Term Obligations (Details) (USD $) | 1 Months Ended | |
Jun. 30, 2013 | Mar. 31, 2015 | |
Revolving credit facility | ||
Long-Term Obligations | ||
Maximum borrowing capacity | $13,000,000 | |
Interest rate at the end of period (as a percent) | 3.25% | |
Annual commitment fee | 20,000 | |
Commitment fee for quarterly unused capacity (as a percent) | 0.38% | |
Current borrowing capacity | 13,000,000 | |
Borrowings outstanding | $0 | |
Revolving credit facility | LIBOR | ||
Long-Term Obligations | ||
Variable interest rate basis | LIBOR | |
Basis spread on variable rate (as a percent) | 2.50% | |
Revolving credit facility | Prime rate | ||
Long-Term Obligations | ||
Variable interest rate basis | prime | |
Term borrowings | ||
Long-Term Obligations | ||
Interest rate at the end of period (as a percent) | 3.75% | |
Number of equal monthly payments of principal plus interest | 42 | |
Term borrowings | Prime rate | ||
Long-Term Obligations | ||
Variable interest rate basis | prime | |
Basis spread on variable rate (as a percent) | 0.50% |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income (loss) before income taxes: | ||
Loss before income taxes | ($4,761) | ($539) |
Components of provision (benefit) for income taxes | ||
Income tax benefit | ($530) | $0 |
Reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate | ||
U.S. federal statutory rate (as a percent) | 34.00% | |
Effective income tax rate (as a percent) | 11.00% | 0.00% |
Income_Taxes_Details_2
Income Taxes (Details 2) | 3 Months Ended |
Mar. 31, 2015 | |
Income Taxes | |
Minimum period for which net operating loss and credit carryforwards are subject to examinations and adjustments | 3 years |
Equity_Compensation_Details
Equity Compensation (Details) (Stock options, USD $) | 3 Months Ended | 0 Months Ended | |
Mar. 31, 2015 | Jan. 01, 2015 | Jun. 11, 2013 | |
Shares Subject to Options Outstanding | |||
Balance at the beginning of the period (in shares) | 4,851,221 | 4,851,221 | |
Granted (in shares) | 41,000 | ||
Exercised (in shares) | -96,990 | ||
Expired (in shares) | -5,074 | ||
Forfeited (in shares) | -14,081 | ||
Balance at the end of the period (in shares) | 4,776,076 | ||
Exercisable options (in shares) | 2,721,289 | ||
Vested and expected to vest at the end of the period (in shares) | 4,596,162 | ||
Weighted Average Grant Date Fair Value | |||
Granted (in dollars per share) | $6.87 | ||
Weighted Average Exercise Price | |||
Balance at the beginning of the period (in dollars per share) | $10.57 | 10.57 | |
Granted (in dollars per share) | $13.14 | ||
Exercised (in dollars per share) | $5.05 | ||
Expired (in dollars per share) | $11.41 | ||
Forfeited (in dollars per share) | $12.35 | ||
Balance at the end of the period (in dollars per share) | $10.70 | ||
Exercisable options at the end of the period (in dollars per share) | $7.49 | ||
Vested and expected to vest (in dollars per share) | $10.50 | ||
Weighted-Average Remaining Contractual Life | |||
Exercisable options | 5 years 8 months 12 days | ||
Vested and expected to vest | 6 years 10 months 24 days | ||
2013 Plan | |||
Stock options | |||
Annual increase in shares authorized for issuance as a percentage of shares outstanding as of the preceding December 31 | 5.00% | ||
Increase in number of shares authorized for issuance | 1,215,269 |
Equity_Compensation_Details_2
Equity Compensation (Details 2) (Stock options, USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Options Outstanding | |
Number of Underlying Shares | 4,776,076 |
Options Exercisable | |
Number of Underlying Shares | 2,721,289 |
0.78-1.72 | |
Equity compensation | |
Range of Exercise Price, low end of range (in dollars per share) | $0.78 |
Range of Exercise Price, high end of range (in dollars per share) | $1.72 |
Options Outstanding | |
Weighted Average Exercise Price (in dollars per share) | $1.10 |
Number of Underlying Shares | 26,639 |
Weighted-Average Remaining Contractual Life | 6 months |
Options Exercisable | |
Number of Underlying Shares | 26,639 |
Weighted-Average Remaining Contractual Life | 6 months |
1.97-3.38 | |
Equity compensation | |
Range of Exercise Price, low end of range (in dollars per share) | $1.97 |
Range of Exercise Price, high end of range (in dollars per share) | $3.38 |
Options Outstanding | |
Weighted Average Exercise Price (in dollars per share) | $2.57 |
Number of Underlying Shares | 238,762 |
Weighted-Average Remaining Contractual Life | 1 year 7 months 6 days |
Options Exercisable | |
Number of Underlying Shares | 238,762 |
Weighted-Average Remaining Contractual Life | 1 year 7 months 6 days |
3.58-6.14 | |
Equity compensation | |
Range of Exercise Price, low end of range (in dollars per share) | $3.58 |
Range of Exercise Price, high end of range (in dollars per share) | $6.14 |
Options Outstanding | |
Weighted Average Exercise Price (in dollars per share) | $5.66 |
Number of Underlying Shares | 1,510,318 |
Weighted-Average Remaining Contractual Life | 5 years 4 months 24 days |
Options Exercisable | |
Number of Underlying Shares | 1,412,151 |
Weighted-Average Remaining Contractual Life | 5 years 4 months 24 days |
6.34-9.94 | |
Equity compensation | |
Range of Exercise Price, low end of range (in dollars per share) | $6.34 |
Range of Exercise Price, high end of range (in dollars per share) | $9.94 |
Options Outstanding | |
Weighted Average Exercise Price (in dollars per share) | $8.29 |
Number of Underlying Shares | 981,727 |
Weighted-Average Remaining Contractual Life | 7 years |
Options Exercisable | |
Number of Underlying Shares | 668,671 |
Weighted-Average Remaining Contractual Life | 6 years 10 months 24 days |
11.28-16.97 | |
Equity compensation | |
Range of Exercise Price, low end of range (in dollars per share) | $11.28 |
Range of Exercise Price, high end of range (in dollars per share) | $16.97 |
Options Outstanding | |
Weighted Average Exercise Price (in dollars per share) | $13.91 |
Number of Underlying Shares | 1,214,668 |
Weighted-Average Remaining Contractual Life | 8 years 9 months 18 days |
Options Exercisable | |
Number of Underlying Shares | 162,600 |
Weighted-Average Remaining Contractual Life | 6 years 2 months 12 days |
17.66-22.92 | |
Equity compensation | |
Range of Exercise Price, low end of range (in dollars per share) | $17.66 |
Range of Exercise Price, high end of range (in dollars per share) | $22.92 |
Options Outstanding | |
Weighted Average Exercise Price (in dollars per share) | $21 |
Number of Underlying Shares | 803,962 |
Weighted-Average Remaining Contractual Life | 8 years 10 months 24 days |
Options Exercisable | |
Number of Underlying Shares | 212,466 |
Weighted-Average Remaining Contractual Life | 8 years 9 months 18 days |
Equity_Compensation_Details_3
Equity Compensation (Details 3) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Stock options | ||
Total fair value for the awards vested during the period | $2,900,000 | |
Stock options | ||
Intrinsic-value | ||
Options Exercised | 782,000 | |
Options Exercisable | 14,232,000 | |
Options Vested and Expected to Vest | $15,915,000 | |
Assumptions used to estimate fair value of stock options | ||
Expected dividends (as a percent) | 0.00% | 0.00% |
Stock options | Minimum | ||
Assumptions used to estimate fair value of stock options | ||
Expected volatility (as a percent) | 54.00% | 56.00% |
Expected term | 3 years 9 months 18 days | |
Risk-free rate (as a percent) | 1.30% | 1.10% |
Stock options | Maximum | ||
Assumptions used to estimate fair value of stock options | ||
Expected volatility (as a percent) | 55.00% | 60.00% |
Expected term | 6 years 1 month 6 days | 6 years 1 month 6 days |
Risk-free rate (as a percent) | 1.60% | 2.00% |
Equity_Compensation_Details_4
Equity Compensation (Details 4) (Stock options, USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Total stock-based compensation expense | ||
Total stock-based compensation expense | $1,849,000 | $1,247,000 |
Total unrecognized compensation cost related to non-vested stock option awards | 16,900,000 | |
Weighted-average period over which unrecognized compensation cost will be recognized | 2 years 10 months 24 days | |
Cost of revenue | ||
Total stock-based compensation expense | ||
Total stock-based compensation expense | 47,000 | 20,000 |
Research and development | ||
Total stock-based compensation expense | ||
Total stock-based compensation expense | 772,000 | 478,000 |
Sales and marketing | ||
Total stock-based compensation expense | ||
Total stock-based compensation expense | 454,000 | 222,000 |
General and administrative | ||
Total stock-based compensation expense | ||
Total stock-based compensation expense | $576,000 | $527,000 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions | |
Accounts receivable | $300,000 |
Dubai authorized distributor | |
Related Party Transactions | |
Revenue from product sales | $145,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Operating Leases | ||
Rental expense | $500,000 | $300,000 |
Future minimum rental payments | ||
2015 | 1,573,000 | |
2016 | 1,995,000 | |
2017 | 1,770,000 | |
2018 | 875,000 | |
Total | 6,213,000 | |
Purchase Commitments | ||
Non-cancellable purchase commitments | $28,600,000 | |
Minimum | ||
Operating Leases | ||
Extension term of leases | 3 years | |
Maximum | ||
Operating Leases | ||
Extension term of leases | 5 years |