Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 05, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | IFON | |
Entity Registrant Name | INFOSONICS CORP | |
Entity Central Index Key | 1,274,032 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 14,386,645 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Net sales | $ 10,945 | $ 10,445 | $ 25,462 | $ 22,069 |
Cost of sales | 9,337 | 8,416 | 21,300 | 17,967 |
Gross profit | 1,608 | 2,029 | 4,162 | 4,102 |
Operating expenses: | ||||
Selling, general and administrative | 2,205 | 1,737 | 4,101 | 3,522 |
Research and development | 157 | 384 | ||
Total operating expenses | 2,205 | 1,894 | 4,101 | 3,906 |
Operating income (loss) | (597) | 135 | 61 | 196 |
Other income (expense): | ||||
Other income (expense) | 1 | (2) | ||
Interest, net | (81) | (27) | (204) | (27) |
Income (loss) before provision for income taxes | (678) | 109 | (143) | 167 |
Provision for income taxes | (3) | (3) | ||
Net income (loss) | $ (678) | $ 109 | $ (146) | $ 164 |
Net income (loss) per share: | ||||
Basic | $ (0.05) | $ 0.01 | $ (0.01) | $ 0.01 |
Diluted | $ (0.05) | $ 0.01 | $ (0.01) | $ 0.01 |
Weighted-average number of common shares outstanding: | ||||
Basic | 14,381 | 14,356 | 14,371 | 14,288 |
Diluted | 14,381 | 14,814 | 14,371 | 14,812 |
Comprehensive income (loss): | ||||
Net income (loss) | $ (678) | $ 109 | $ (146) | $ 164 |
Foreign currency translation adjustments | (168) | 5 | (289) | (8) |
Comprehensive income (loss) | $ (846) | $ 114 | $ (435) | $ 156 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 2,509 | $ 1,464 |
Trade accounts receivable, net of allowance for doubtful accounts of $95 and $95, respectively | 8,950 | 15,644 |
Other accounts receivable | 71 | 70 |
Inventory | 6,854 | 5,880 |
Prepaid assets | 2,302 | 2,778 |
Total current assets | 20,686 | 25,836 |
Property and equipment, net | 191 | 137 |
Other assets | 54 | 31 |
Total assets | 20,931 | 26,004 |
Current liabilities: | ||
Accounts payable | 2,495 | 4,371 |
Accrued expenses | 2,640 | 2,804 |
Line of credit borrowings | 2,725 | |
Total current liabilities | $ 5,135 | $ 9,900 |
Commitments and Contingencies (Note 11) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 10,000 shares authorized (no shares issued and outstanding) | ||
Common stock, $0.001 par value, 40,000 shares authorized; 14,387 and 14,358 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively | $ 14 | $ 14 |
Additional paid-in capital common stock | 32,741 | 32,614 |
Accumulated other comprehensive loss | (1,015) | (726) |
Accumulated deficit | (15,944) | (15,798) |
Total stockholders' equity | 15,796 | 16,104 |
Total liabilities and stockholders' equity | $ 20,931 | $ 26,004 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 95 | $ 95 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 14,387,000 | 14,358,000 |
Common stock, shares outstanding | 14,387,000 | 14,358,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (146) | $ 164 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation | 48 | 78 |
Loss on disposal of fixed assets | 11 | |
Recovery of bad debts | (43) | |
Provision for obsolete inventory | (120) | 94 |
Stock-based compensation expense | 103 | 41 |
(Increase) decrease in: | ||
Trade accounts receivable | 6,694 | (876) |
Other accounts receivable | (1) | 96 |
Inventory | (854) | (1,568) |
Prepaids | 476 | 1,179 |
Other assets | (23) | 120 |
Increase (decrease) in: | ||
Accounts payable | (1,876) | 758 |
Accrued expenses | (164) | (502) |
Net cash provided by (used in) operating activities | 4,137 | (448) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (102) | (43) |
Net cash used in investing activities | (102) | (43) |
Cash flows from financing activities: | ||
Borrowings on line of credit | 4,460 | 1,249 |
Repayments on line of credit | (7,185) | (1,249) |
Cash received from exercise of stock options | 24 | 135 |
Net cash provided by (used in) financing activities | (2,701) | 135 |
Effect of exchange rate changes on cash | (289) | (8) |
Net increase (decrease) in cash and cash equivalents | 1,045 | (364) |
Cash and cash equivalents, beginning of period | 1,464 | 2,369 |
Cash and cash equivalents, end of period | 2,509 | 2,005 |
Cash paid for interest | 245 | 28 |
Cash paid for income taxes | $ 0 | $ 0 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | NOTE 1. Basis of Presentation The accompanying unaudited consolidated financial statements and these condensed notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results are likely to differ from those estimates, but management does not believe such differences will materially affect the financial position or results of operations of InfoSonics Corporation (the “Company”), although they may. These unaudited consolidated financial statements and condensed notes should be read in conjunction with the financial statements and notes as of and for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K. The Company’s consolidated financial statements include assets, liabilities and operating results of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. In the opinion of management, these unaudited consolidated financial statements reflect all normal recurring adjustments considered necessary to fairly present the Company’s results of operations, financial position and cash flows as of June 30, 2015 and for all periods presented. The results reported in these consolidated financial statements for the three and six months ended June 30, 2015 are not necessarily indicative of the operating results, financial condition or cash flows that may be expected for the full fiscal year of 2015 or for any future period. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Stock-Based Compensation | NOTE 2. Stock-Based Compensation The Company has two stock-based compensation plans: the 2006 Equity Incentive Plan (“2006 Plan”) and the 2015 Equity Incentive Plan (“2015 Plan”), both of which were approved by our stockholders. As of June 30, 2015, options to purchase 944,000 and 20,000 shares were outstanding under the 2006 Plan and 2015 Plan, respectively, and a total of 1,186,000 shares were available for grant under the 2015 Plan. No options are available for grant under the 2006 Plan. The Company’s stock options vest on an annual or a monthly basis. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. Such amount may change as a result of additional grants, forfeitures, modifications in assumptions and other factors. Income tax effects of share-based payments are recognized in the financial statements for those awards which will normally result in tax deductions under existing tax law. During the three and six months ended June 30, 2015, we recorded an expense of $52,000 and $103,000, respectively, related to options previously granted. During the three and six months ended June 30, 2014, we recorded an expense of $20,000 and $41,000, respectively, related to options previously granted. Under current U.S. federal tax law, we receive a compensation expense deduction related to non-qualified stock options only when those options are exercised and vested shares are received. Accordingly, the financial statement recognition of compensation expense for non-qualified stock options creates a deductible temporary difference that results in a deferred tax asset and a corresponding deferred tax benefit in our consolidated statements of operations. During the six months ended June 30, 2015, the Company granted a stock option on 20,000 shares. The fair value of the option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 1.86% based on the U.S. Treasury yields in effect at the time of grant; expected dividend yields of 0% as the Company has not, and does not intend to, declare dividends; and an expected life of 6 years based upon the historical life of options. The expected volatility used in the calculation was 96.6% based on the Company’s historical stock price fluctuations for a period matching the expected life of the options. No options were granted during the six months ended June 30, 2014. As of June 30, 2015, there was $220,000 of total unrecognized compensation expense related to non-vested stock options. That expense is expected to be recognized over the remaining weighted-average period of 1.56 years. A summary of option activity under both the 2006 Plan and the 2015 Plan as of June 30, 2015 and changes during the six months then ended is presented in the table below (shares in thousands): Shares Wtd. Avg. Wtd. Avg. Outstanding at December 31, 2014 980 $ 0.85 Granted 20 $ 2.82 Exercised (28 ) $ 0.86 Forfeited (8 ) $ 1.31 Outstanding at June 30, 2015 964 $ 0.89 4.31 Vested and expected to vest 922 $ 0.87 4.22 Exercisable at June 30, 2015 675 $ 0.72 3.48 A summary of the status of the Company’s non-vested options at June 30, 2015 and changes during the six months then ended is presented below (shares in thousands): Shares Weighted-average grant-date fair value Non-vested at December 31, 2014 412 $ 0.82 Granted 20 $ 2.19 Vested (135 ) $ 0.76 Forfeited (8 ) $ 0.93 Non-vested at June 30, 2015 289 $ 0.94 The Company’s share-based compensation is classified in the same expense line items as cash compensation. Information about share-based compensation included in the unaudited results of operations for the three and six months ended June 30, 2015 and 2014 is as follows (in thousands): For the Three Months Ended For the Six Months Ended 2015 2014 2015 2014 Officer compensation $ 24 $ 9 $ 47 $ 18 Non-employee directors 11 4 22 9 Sales, general and administrative 17 7 34 14 Total stock option/warrant expense, included in total operating expenses $ 52 $ 20 $ 103 $ 41 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 3. Earnings Per Share Basic earnings per share are computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed similarly to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential additional common shares that were dilutive had been issued. Common share equivalents are excluded from the computation if their effect is anti-dilutive. The Company’s common share equivalents consist of stock options. Because their effect would have been anti-dilutive, common shares from exercise of in-the-money options for the three and six months ended June 30, 2015 of 550,000 and 466,000, respectively, have been excluded from the computation of net loss per share. For the three and six months ended June 30, 2014, no such shares were excluded. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 4. Income Taxes The Company made a comprehensive review of its portfolio of uncertain tax positions in accordance with applicable standards of the Financial Accounting Standards Board (“FASB”). In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. As a result of this review, the Company concluded that at this time there are no uncertain tax positions, and there has been no cumulative effect on retained earnings. The Company is subject to U.S. federal income tax as well as income tax in multiple states and foreign jurisdictions. For all major taxing jurisdictions, the tax years 2004 through 2014 remain open to examination or re-examination. As of June 30, 2015, the Company does not expect any material changes to unrecognized tax positions within the next twelve months. The Company recognizes the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Fluctuations in the actual outcome of these future tax consequences could materially impact the Company’s financial position or results of operations. For the three and six months ended June 30, 2015, deferred income tax assets and the corresponding valuation allowance decreased by $68,000 and $173,000, respectively. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory | NOTE 5. Inventory Inventory is stated at the lower of cost (first-in, first-out) or market and consists primarily of cellular phones and cellular phone accessories. The Company records a reserve against inventories to account for obsolescence and possible price concessions required to liquidate inventories below cost. During the six months ended June 30, 2015, the inventory reserve balance was decreased by $120,000. As of June 30, 2015 and December 31, 2014, the inventory reserve was $219,000 and $339,000, respectively. From time to time, the Company has prepaid inventory as a result of payments for products which have not been received by the balance sheet date. As of June 30, 2015 and December 31, 2014, the prepaid inventory balances were $1,324,000 and $2,055,000, respectively, which are included in prepaid assets in the accompanying consolidated balance sheets. Inventory consists of the following (in thousands): June 30, December 31, Finished goods $ 7,073 $ 6,219 Inventory reserve (219 ) (339 ) Net inventory $ 6,854 $ 5,880 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 6. Property and Equipment Property and equipment are primarily located in the United States and China and consisted of the following as of the dates presented (in thousands): June 30, December 31, Machinery and equipment $ 314 $ 275 Tooling and molds 58 56 Furniture and fixtures 163 102 Subtotal 535 433 Less accumulated depreciation (344 ) (296 ) Total $ 191 $ 137 Depreciation expense for the three and six months ended June 30, 2015 was $26,000 and $48,000, respectively, and for the three and six months ended June 30, 2014 was $30,000 and $78,000, respectively. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | NOTE 7. Accrued Expenses As of June 30, 2015 and December 31, 2014, accrued expenses consisted of the following (in thousands): June 30, December 31, Accrued product costs (including warranty) $ 1,426 $ 1,465 Income taxes payable 109 116 Other accruals 1,105 1,223 Total $ 2,640 $ 2,804 |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Line of Credit | NOTE 8. Line of Credit On March 27, 2014, the Company entered into a Loan and Security Agreement and an attendant Intellectual Property Security Agreement (collectively the “Agreement”) with Silicon Valley Bank, pursuant to which the Company could borrow up to $2 million based upon both its domestic and foreign eligible accounts receivable multiplied by an advance rate of 80% and 70%, respectively, with eligibility determined in accordance with the Agreement (the “Credit Facility”). The Credit Facility is secured by substantially all of the Company’s assets. Borrowings under the Credit Facility bear interest based on the face amount of the financed receivables at the prime rate plus 4.5% for domestic receivables and 3.53% for foreign receivables. The Credit Facility, which was set to expire September 27, 2015, contains representations and warranties, affirmative, restrictive and financial covenants, and events of default which are customary for credit facilities of this type. On December 5, 2014, the Agreement was amended to increase the availability of borrowings under the Credit Facility from $2 million to $4 million and to temporarily relax the adjusted quick ratio financial covenant from 1.75 to 1.00 to 1.25 to 1.00 through March 31, 2015. On May 26, 2015, the Agreement was amended to reduce the Adjusted Quick Ratio covenant from 1.75 to 1.00 to 1.25 to 1.00 and to reduce the test frequency of the covenant from monthly to quarterly beginning April 1, 2015. At June 30, 2015, the Company was in compliance with all covenants, no amounts were drawn against the Credit Facility and $4,000,000 was available. On August 4, 2015, the Agreement was amended to increase the availability of borrowings under the Credit Facility from $4 million to $7 million, extend the maturity date to September 27, 2017 and reset the minimum threshold for the tangible net worth requirement to $15 million, effective June 30, 2015. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | NOTE 9. Recent Accounting Pronouncements Recently Adopted: In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, which changed the criteria for determining which disposals can be presented as discontinued operations and modified related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of and represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. The new guidance was effective on a prospective basis for annual fiscal periods beginning on or after December 15, 2014. The Company adopted this guidance effective January 1, 2015, which adoption did not have an impact on the Company’s consolidated financial statements. Issued (Not adopted yet): In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605).” This update provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. ASU 2014-09 is effective for annual and interim reporting periods beginning after December 15, 2016, and early application is not permitted. This update permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements as well as the expected adoption method. In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements Going Concern (Subtopic 205-40) -Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the ASU (1) provides a definition of the term substantial doubt, (2) requires an evaluation every reporting period, including interim periods, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). This standard is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements. Other accounting standards updates effective after June 30, 2015 are not expected to have a material effect on our consolidated financial statements. |
Geographic Information
Geographic Information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Geographic Information | NOTE 10. Geographic Information The Company currently operates in one business segment. Fixed assets are principally located in Company or third-party facilities in the United States and Asia. The unaudited net sales by geographical area for the three and six months ended June 30, 2015 and 2014 were (in thousands): For the Three Months Ended For the Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Central America $ 1,474 $ 4,205 $ 4,772 $ 8,042 South America 3,188 2,470 6,365 7,097 Mexico 2,138 940 5,933 1,167 U.S.-based Latin American distributors 2,571 1,740 5,833 3,534 United States 1,574 727 2,559 891 Europe, Middle East and Africa (“EMEA”) — 353 — 1,282 Asia Pacific (“APAC”) — 10 — 56 Total $ 10,945 $ 10,445 $ 25,462 $ 22,069 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 11. Commitments and Contingencies Blue Spike Litigation On October 8, 2013, Blue Spike, LLC (“Blue Spike”) filed a patent infringement lawsuit against the Company in the U.S. District Court for the Eastern District of Texas, alleging that certain of our products infringe claims of U.S. Patent No. 5,745,569. Blue Spike is seeking recovery of unspecified monetary damages. We do not believe we infringe any valid claim of the Blue Spike patent and intend to defend ourselves vigorously. On February 10, 2014, we filed an answer with the Court stating that we do not infringe and setting forth multiple defenses, including invalidity of the asserted patent. A scheduling conference was held with the Court on July 31, 2015, after which the judge issued a scheduling order. Trial is currently set for January 23, 2017. Due to the inherent uncertainty of litigation, we cannot identify probable or estimable damages related to the lawsuit at this time. Morpho Komodo Litigation On June 19, 2015, Morpho Komodo LLC (“Morpho Komodo”) filed a patent infringement lawsuit against the Company in the U.S. District Court for the Eastern District of Texas, alleging that certain of our products infringe claims of U.S. Patents No. 7,350,078, No. 7,725,725 and No. 8,429,415. Morpho Komodo is seeking injunctive relief as well as the recovery of unspecified monetary damages. We do not believe we infringe any valid claim of the Morpho Komodo patents and intend to defend ourselves vigorously. On July 21, 2015, we filed an answer with the Court stating that we do not infringe and setting forth multiple defenses, including invalidity of the asserted patents. Due to the inherent uncertainty of litigation, we cannot identify probable or estimable damages related to the lawsuit at this time. ParkerVision Litigation On July 20, 2015, ParkerVision, Inc. (“ParkerVision”) filed a patent infringement lawsuit against the Company in the U.S. District Court for the Middle District of Florida, alleging that certain of our products infringe claims of U.S. Patents No. 7,016,663, No. 8,160,534 and No. 8,195,149. ParkerVision is seeking injunctive relief as well as the recovery of unspecified monetary damages. There currently is no due date for our response to the complaint. However, we intend to defend ourselves vigorously. Due to the inherent uncertainty of litigation, we cannot identify probable or estimable damages related to the lawsuit at this time. The Company may become involved in certain other legal proceedings and claims which arise in the normal course of business. Other than as described above, as of the filing date of this report, the Company did not have any significant litigation outstanding. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 12. Fair Value of Financial Instruments The FASB accounting guidance requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying consolidated balance sheets. Fair value as defined by the guidance is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Effective April 1, 2008 the Company adopted and follows ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which established a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s cash and cash equivalents and restricted cash are measured at fair value in the Company’s consolidated financial statements and are valued using unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs under ASC 820). The carrying amount of our accounts receivable, other accounts receivable, prepaid expenses, accounts payable and accrued expenses reported in the consolidated balance sheets approximates fair value because of the short maturity of those instruments. At June 30, 2015 and December 31, 2014, we did not have any material applicable nonrecurring measurements of nonfinancial assets and nonfinancial liabilities. |
Recent Accounting Pronounceme18
Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncement | Recently Adopted: In April 2014, the FASB issued ASU No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, which changed the criteria for determining which disposals can be presented as discontinued operations and modified related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of and represents a strategic shift that has, or will have, a major effect on an entity’s operations and financial results. The new guidance was effective on a prospective basis for annual fiscal periods beginning on or after December 15, 2014. The Company adopted this guidance effective January 1, 2015, which adoption did not have an impact on the Company’s consolidated financial statements. Issued (Not adopted yet): In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605).” This update provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. ASU 2014-09 is effective for annual and interim reporting periods beginning after December 15, 2016, and early application is not permitted. This update permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements as well as the expected adoption method. In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements Going Concern (Subtopic 205-40) -Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the ASU (1) provides a definition of the term substantial doubt, (2) requires an evaluation every reporting period, including interim periods, (3) provides principles for considering the mitigating effect of management’s plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). This standard is effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements. Other accounting standards updates effective after June 30, 2015 are not expected to have a material effect on our consolidated financial statements. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Summary of Option Activity | A summary of option activity under both the 2006 Plan and the 2015 Plan as of June 30, 2015 and changes during the six months then ended is presented in the table below (shares in thousands): Shares Wtd. Avg. Wtd. Avg. Outstanding at December 31, 2014 980 $ 0.85 Granted 20 $ 2.82 Exercised (28 ) $ 0.86 Forfeited (8 ) $ 1.31 Outstanding at June 30, 2015 964 $ 0.89 4.31 Vested and expected to vest 922 $ 0.87 4.22 Exercisable at June 30, 2015 675 $ 0.72 3.48 |
Summary of Non-Vested Options | A summary of the status of the Company’s non-vested options at June 30, 2015 and changes during the six months then ended is presented below (shares in thousands): Shares Weighted-average grant-date fair value Non-vested at December 31, 2014 412 $ 0.82 Granted 20 $ 2.19 Vested (135 ) $ 0.76 Forfeited (8 ) $ 0.93 Non-vested at June 30, 2015 289 $ 0.94 |
Share-Based Compensation Included in Unaudited Results of Operations | The Company’s share-based compensation is classified in the same expense line items as cash compensation. Information about share-based compensation included in the unaudited results of operations for the three and six months ended June 30, 2015 and 2014 is as follows (in thousands): For the Three Months Ended For the Six Months Ended 2015 2014 2015 2014 Officer compensation $ 24 $ 9 $ 47 $ 18 Non-employee directors 11 4 22 9 Sales, general and administrative 17 7 34 14 Total stock option/warrant expense, included in total operating expenses $ 52 $ 20 $ 103 $ 41 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consists of the following (in thousands): June 30, December 31, Finished goods $ 7,073 $ 6,219 Inventory reserve (219 ) (339 ) Net inventory $ 6,854 $ 5,880 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment are primarily located in the United States and China and consisted of the following as of the dates presented (in thousands): June 30, December 31, Machinery and equipment $ 314 $ 275 Tooling and molds 58 56 Furniture and fixtures 163 102 Subtotal 535 433 Less accumulated depreciation (344 ) (296 ) Total $ 191 $ 137 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | As of June 30, 2015 and December 31, 2014, accrued expenses consisted of the following (in thousands): June 30, December 31, Accrued product costs (including warranty) $ 1,426 $ 1,465 Income taxes payable 109 116 Other accruals 1,105 1,223 Total $ 2,640 $ 2,804 |
Geographic Information (Tables)
Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Sales by Geographical Area | The unaudited net sales by geographical area for the three and six months ended June 30, 2015 and 2014 were (in thousands): For the Three Months Ended For the Six Months Ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 Central America $ 1,474 $ 4,205 $ 4,772 $ 8,042 South America 3,188 2,470 6,365 7,097 Mexico 2,138 940 5,933 1,167 U.S.-based Latin American distributors 2,571 1,740 5,833 3,534 United States 1,574 727 2,559 891 Europe, Middle East and Africa (“EMEA”) — 353 — 1,282 Asia Pacific (“APAC”) — 10 — 56 Total $ 10,945 $ 10,445 $ 25,462 $ 22,069 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($)shares | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)Plansshares | Jun. 30, 2014USD ($)shares | Dec. 31, 2014shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of equity incentive plans | Plans | 2 | ||||
Shares outstanding under equity incentive plans | 964,000 | 964,000 | 980,000 | ||
Expense related to options granted under equity incentive plan | $ | $ 52,000 | $ 20,000 | $ 103,000 | $ 41,000 | |
Stock options granted under equity incentive plans | 20,000 | 0 | |||
Fair value assumption, risk-free interest rates | 1.86% | ||||
Fair value assumption, expected dividend yields | 0.00% | ||||
Fair value assumption, expected term (years) | 6 years | ||||
Fair value assumption, expected volatility | 96.60% | ||||
Unrecognized compensation expense related to non-vested stock options | $ | $ 220,000 | $ 220,000 | |||
Recognition of unrecognized compensation expense, weighted-average period (in years) | 1 year 6 months 22 days | ||||
2006 Equity Incentive Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares outstanding under equity incentive plans | 944,000 | 944,000 | |||
Shares available for grant under equity incentive plans | 0 | 0 | |||
2015 Equity Incentive Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares outstanding under equity incentive plans | 20,000 | 20,000 | |||
Shares available for grant under equity incentive plans | 1,186,000 | 1,186,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Option Activity (Detail) - $ / shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Shares, Outstanding, Beginning balance | 980 | |
Shares, Granted | 20 | 0 |
Shares, Exercised | (28) | |
Shares, Forfeited | (8) | |
Shares, Outstanding, Ending balance | 964 | |
Shares, Vested and expected to vest | 922 | |
Shares, Exercisable, Ending balance | 675 | |
Wtd. Avg. Exercise Price Outstanding, Beginning balance | $ 0.85 | |
Wtd. Avg. Exercise Price, Granted | 2.82 | |
Wtd. Avg. Exercise Price, Exercised | 0.86 | |
Wtd. Avg. Exercise Price, Forfeited | 1.31 | |
Wtd. Avg. Exercise Price, Outstanding, Ending balance | 0.89 | |
Wtd. Avg. Exercise Price, Vested and expected to vest | 0.87 | |
Wtd. Avg. Exercise Price, Exercisable, Ending balance | $ 0.72 | |
Wtd. Avg. Remaining Contractual Life, Outstanding | 4 years 3 months 22 days | |
Wtd. Avg. Remaining Contractual Life, Vested and expected to vest | 4 years 2 months 19 days | |
Wtd. Avg. Remaining Contractual Life, Exercisable | 3 years 5 months 23 days |
Stock-Based Compensation - Su26
Stock-Based Compensation - Summary of Non-Vested Options (Detail) - 6 months ended Jun. 30, 2015 - $ / shares shares in Thousands | Total |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Shares, Non-vested, Beginning balance | 412 |
Shares, Granted | 20 |
Shares, Vested | (135) |
Shares, Forfeited | (8) |
Shares, Non-vested, Ending balance | 289 |
Weighted-average grant-date fair value, Non-vested, Beginning balance | $ 0.82 |
Weighted-average grant-date fair value, Granted | 2.19 |
Weighted-average grant-date fair value, Vested | 0.76 |
Weighted-average grant-date fair value, Forfeited | 0.93 |
Weighted-average grant-date fair value, Non-vested, Ending balance | $ 0.94 |
Stock-Based Compensation - Shar
Stock-Based Compensation - Share-Based Compensation Included in Unaudited Results of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock option/warrant expense, included in total operating expenses | $ 52 | $ 20 | $ 103 | $ 41 |
Officer compensation [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock option/warrant expense, included in total operating expenses | 24 | 9 | 47 | 18 |
Non-employee directors [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock option/warrant expense, included in total operating expenses | 11 | 4 | 22 | 9 |
Sales, general and administrative [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock option/warrant expense, included in total operating expenses | $ 17 | $ 7 | $ 34 | $ 14 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 0 | 0 | ||
Stock Options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 550,000 | 466,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - Jun. 30, 2015 - USD ($) | Total | Total |
Income Tax Disclosure [Abstract] | ||
Cumulative effect on retained earnings | $ 0 | |
Unrecognized tax benefits | $ 0 | $ 0 |
Year under examination | 2,004 | |
Year under examination, one | 2,014 | |
Deferred tax assets, decrease in valuation allowance | $ (68,000) | $ (173,000) |
Inventory - Additional Informat
Inventory - Additional Information (Detail) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Inventory Disclosure [Abstract] | ||
Decrease in inventory reserve | $ (120,000) | |
Inventory reserve | 219,000 | $ 339,000 |
Prepaid inventory balances included in prepaid assets | $ 1,324,000 | $ 2,055,000 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 7,073 | $ 6,219 |
Inventory reserve | (219) | (339) |
Net inventory | $ 6,854 | $ 5,880 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 535 | $ 433 |
Less accumulated depreciation | (344) | (296) |
Total | 191 | 137 |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 314 | 275 |
Tooling and molds [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 58 | 56 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 163 | $ 102 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 26 | $ 30 | $ 48 | $ 78 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Accrued product costs (including warranty) | $ 1,426 | $ 1,465 |
Income taxes payable | 109 | 116 |
Other accruals | 1,105 | 1,223 |
Total | $ 2,640 | $ 2,804 |
Line of Credit - Additional Inf
Line of Credit - Additional Information (Detail) | Aug. 04, 2015USD ($) | Mar. 27, 2014USD ($) | Jun. 30, 2015USD ($) | May. 26, 2015 | Dec. 05, 2014USD ($) |
Line of Credit Facility [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 2,000,000 | $ 4,000,000 | |||
Line of credit facility, interest rate description | Borrowings under the Credit Facility bear interest based on the face amount of the financed receivables at the prime rate plus 4.5% for domestic receivables and 3.53% for foreign receivables. | ||||
Adjusted quick ratio covenant | 1.75 | 1.25 | 1.25 | ||
Amounts drawn against the Credit Facility | $ 0 | ||||
Line of credit facility expiry date | Sep. 27, 2015 | ||||
Line of credit facility available | $ 4,000,000 | ||||
Line of credit facility covenant term | Through March 31, 2015 | ||||
Subsequent Event [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 7,000,000 | ||||
Line of credit facility expiry date | Sep. 27, 2017 | ||||
Line of credit facility minimum threshold tangible net worth requirement | $ 15,000,000 | ||||
Domestic receivables [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Eligible accounts receivable, advance rate | 80.00% | ||||
Domestic receivables [Member] | Prime rate [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Credit Facility interest rate | 4.50% | ||||
Foreign receivables [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Eligible accounts receivable, advance rate | 70.00% | ||||
Foreign receivables [Member] | Prime rate [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Credit Facility interest rate | 3.53% |
Geographic Information - Additi
Geographic Information - Additional Information (Detail) | Jun. 30, 2015Segment |
Segment Reporting [Abstract] | |
Number of business segment operated currently | 1 |
Geographic Information - Schedu
Geographic Information - Schedule of Sales by Geographical Area (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales by geographical area | $ 10,945 | $ 10,445 | $ 25,462 | $ 22,069 |
Central America [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales by geographical area | 1,474 | 4,205 | 4,772 | 8,042 |
South America [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales by geographical area | 3,188 | 2,470 | 6,365 | 7,097 |
Mexico [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales by geographical area | 2,138 | 940 | 5,933 | 1,167 |
U.S.-based Latin American distributors [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales by geographical area | 2,571 | 1,740 | 5,833 | 3,534 |
United States [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales by geographical area | $ 1,574 | 727 | $ 2,559 | 891 |
Europe, Middle East and Africa ("EMEA") [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales by geographical area | 353 | 1,282 | ||
Asia Pacific ("APAC") [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Net sales by geographical area | $ 10 | $ 56 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2015 | |
Blue Spike Litigation [Member] | |
Loss Contingencies [Line Items] | |
Lawsuit filing date | Oct. 8, 2013 |
Morpho Komodo Litigation [Member] | |
Loss Contingencies [Line Items] | |
Lawsuit filing date | Jun. 19, 2015 |
Parker Vision Litigation [Member] | |
Loss Contingencies [Line Items] | |
Lawsuit filing date | Jul. 20, 2015 |