BK Technologies (BKTI) 10-Q 4 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 30, 2015
Document And Entity Information
Entity Registrant Name	RELM WIRELESS CORP
Entity Central Index Key	2,186
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		13,718,396
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,015

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 7,856	$ 11,363
Trade accounts receivable (net of allowance for doubtful accounts of $49 at September 30, 2015 and December 31, 2014, respectively)	4,216	3,266
Inventories, net	13,834	12,112
Deferred tax assets	3,310	3,743
Prepaid expenses and other current assets	2,569	1,921
Total current assets	31,785	32,405
Property, plant and equipment, net	1,771	1,282
Available-for-sale securities, at fair value	3,893	0
Deferred tax assets, net	1,937	2,290
Capitalized software, net	445	753
Other assets	234	256
Total assets	40,065	36,986
Current liabilities:
Accounts payable	2,602	1,403
Accrued compensation and related taxes	1,381	1,246
Accrued warranty expense	517	384
Accrued other expenses and other current liabilities	191	217
Deferred revenue	132	291
Total current liabilities	4,823	3,541
Deferred revenue	371	212
Total liabilities	5,194	3,753
Stockholders' equity:
Preferred stock; $1.00 par value; 1,000,000 authorized shares none issued or outstanding.	0	0
Common stock; $.60 par value; 20,000,000 authorized shares: 13,718,396 and 13,665,087 issued and outstanding shares at September 30, 2015 and December 31, 2014, respectively	8,231	8,199
Additional paid-in capital	24,893	24,816
Retained earnings	1,047	218
Accumulated other comprehensive income	700	0
Total stockholders' equity	34,871	33,233
Total liabilities and stockholders' equity	$ 40,065	$ 36,986

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
ASSETS
Allowance for doubtful accounts, net	$ 49	$ 49
Stockholders equity:
Preferred stock, par value	$ 1	$ 1
Preferred stock, authorized shares	1,000,000	1,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value	$ .60	$ .60
Common stock, authorized shares	20,000,000	20,000,000
Common stock, issued shares	13,718,396	13,665,087
Common stock, outstanding shares	13,718,396	13,665,087

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Sales, net	$ 7,606	$ 8,670	$ 22,773	$ 25,552
Expenses
Cost of products	4,120	4,881	13,217	14,739
Selling, general and administrative	3,186	2,756	8,407	8,141
Total expenses	7,306	7,637	21,624	22,880
Operating income	300	1,033	1,149	2,672
Other income (expense)
Net interest income	1	0	1	1
Other (expense) income	(4)	3	37	(7)
Total other income (expense)	(3)	3	38	(6)
Income before income taxes	297	1,036	1,187	2,666
Income tax expense	(85)	(380)	(358)	(864)
Net income	$ 212	$ 656	$ 829	$ 1,802
Net earnings per share-basic:	$ 0.02	$ 0.05	$ 0.06	$ 0.13
Net earnings per share-diluted:	$ 0.02	$ 0.05	$ 0.06	$ 0.13
Weighted average shares outstanding-basic	13,718,396	13,655,988	13,699,355	13,641,520
Weighted average shares outstanding-diluted	13,794,276	13,781,534	13,857,746	13,741,750

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Condensed Consolidated Statements Of Comprehensive Income
Net income	$ 212	$ 656	$ 829	$ 1,802
Unrealized gain on available- for-sale securities, net of tax	700	0	700	0
Total comprehensive income	$ 912	$ 656	$ 1,529	$ 1,802

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating activities
Net income	$ 829	$ 1,802
Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for doubtful accounts	0	38
Inventories reserve	(30)	9
Deferred tax expense	354	881
Depreciation and amortization	697	930
Share-based compensation expense	33	36
Changes in operating assets and liabilities:
Accounts receivable	(950)	(1,741)
Inventories	(1,692)	(118)
Prepaid expenses and other current assets	(648)	(208)
Other assets	22	37
Accounts payable	1,199	898
Accrued compensation and related taxes	135	527
Accrued warranty expense	133	60
Note payable	0	23
Deferred revenue	0	107
Accrued other expenses and other current liabilities	(26)	19
Net cash provided by operating activities	56	3,300
Investing activities
Purchases of property, plant and equipment	(878)	(483)
Investment in securities	(2,761)	0
Net cash used in investing activities	(3,639)	(483)
Financing activities
Proceeds from issuance of common stock	76	144
Cash provided by financing activities	76	144
Net change in cash and cash equivalents	(3,507)	2,961
Cash and cash equivalents, beginning of period	11,363	7,945
Cash and cash equivalents, end of period	7,856	10,906
Supplemental disclosure
Cash paid for interest	0	0
Income tax paid	25	0
Non-cash financing activity
Cashless exercise of stock options and related conversion of net shares to stockholders' equity	$ 15	$ 2

1. Condensed Consolidated Finan

1. Condensed Consolidated Financial Statements	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 1 - Condensed Consolidated Financial Statements	Basis of Presentation The condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014, the condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014 have been prepared by RELM Wireless Corporation (the “Company”), and are unaudited. In the opinion of management, all adjustments, which include normal recurring adjustments, necessary for a fair presentation have been made. The condensed consolidated balance sheet at December 31, 2014 has been derived from the Company’s audited consolidated financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the operating results for a full year. Fair Value The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable and available-for-sale securities, accounts payable, accrued expenses and other liabilities. As of September 30, 2015 and December 31, 2014, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments. The Company uses observable market data or assumptions (Level 1 inputs as defined in accounting guidance) that it believes market participants would use in pricing the available-for-sale securities. There were no sales of available-for-sale securities, nor gains or losses reclassified out of accumulated other comprehensive income as a result of an other-than-temporary impairment of the available-for-sale securities. Available-For-Sale Securities Investments reported on the September 30, 2015 balance sheet consist of marketable equity securities of publicly held companies. Management intends to hold such securities for a sufficient period in which to realize a reasonable return, which periods may range between one to several years, although there is no assurance that positive returns will be realized or that such securities will not be liquidated in a shorter-than-expected time frame to accommodate future liquidity requirements. Accordingly, investments were classified as non-current and available-for-sale in conformity with ASC Section 320. Investments are marked to market at each measurement date, with unrealized gains or losses presented as adjustments to accumulated other comprehensive income or loss. Other Comprehensive Income The Company reports its comprehensive income in accordance with FASB ASC Topic 220, Comprehensive Income, which establishes standards for reporting and presenting comprehensive income and its components in a full set of financial statements. Other comprehensive income consists of net income and unrealized gain on available-for-sale securities, net of taxes. Recent Accounting Pronouncements There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the nine month periods ended September 30, 2015 and 2014, or which are expected to impact future periods, which were not previously disclosed in prior periods. The FASB issued ASU 2015-11 “ Simplifying the Measurement of Inventory In May 2014, the FASB issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2017, and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method and early adoption is not permitted. However, the FASB recently decided to delay the effective date by one year for all entities with the option to adopt the standard as of the original effective date. The Company is in the process of evaluating the effect this standard will have, if any, on its condensed consolidated financial statements and related disclosures.

2. Significant Events and Trans

2. Significant Events and Transactions	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 2 - Significant Events and Transactions	In September 2015, the Company received awards under the U.S. Department of Homeland Security (DHS) Tactical Communications Contract totaling approximately $26.2 million for portable radios, repeaters, accessories and service. The equipment will be deployed by the U.S. Transportation Security Administration (TSA) at over 400 airports both inside and outside the continental United States. The awards are for a base term of one-year that commencing on September 28, 2015 with four one-year options. The first option year was partially exercised immediately. Approximately $15.5 million, or almost 60% of the total amount, is specified in delivery orders. The precise timing for fulfilling these orders has not yet been determined as several logistical variables are addressed. Accordingly, the impact to sales revenue in any particular quarter is uncertain. The Company anticipates that shipments will commence during the first quarter of 2016. No equipment under these awards was shipped during the third quarter 2015, and consequently no sales revenue was recorded. The exercise, if any, of the remaining option years, which total $10.7 million, is not specified or guaranteed.

3. Allowance for Doubtful Accou

3. Allowance for Doubtful Accounts	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 3 - Allowance for Doubtful Accounts	The allowance for doubtful accounts on trade receivables was approximately $49 on gross trade receivables of $4,265 at September 30, 2015 and $49 on gross receivables of $3,315 at December 31, 2014. This allowance is used to state trade receivables at a net realizable value or the amount that the Company estimates will be collected of the Company’s gross receivables.

4. Inventories, net

4. Inventories, net	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 4 - Inventories, net	The components of inventory, net of reserves for slow-moving, excess or obsolete inventory, consist of the following: September 30, 2015 December 31, 2014 Finished goods $ 2,999 $ 3,826 Work in process 6,892 5,127 Raw materials 3,943 3,159 $ 13,834 $ 12,112 Reserves for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or market. The reserves were approximately $1,673 at September 30, 2015, compared with approximately $1,703 at December 31, 2014.

5. Income Taxes

5. Income Taxes	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 5 - Income Taxes	Income tax expense totaling approximately $85 and $358 has been recorded for the three and nine months ended September 30, 2015, respectively. As of September 30, 2015 and December 31, 2014, the Company’s net deferred tax assets totaled approximately $5,247 and $6,033, respectively, and are primarily composed of net operating loss carryforwards (“NOLs”), partially offset by deferred tax liabilities of $432 derived from the unrealized gain on available-for-sale securities. These NOLs total approximately $5,194 for federal and $13,813 for state purposes, with expirations starting in 2018 through 2030. In order to fully utilize the net deferred tax assets, the Company will need to generate sufficient taxable income in future years to utilize its NOLs prior to their expiration. ASC Topic 740, “ Income Taxes The Company has evaluated the available evidence and the likelihood of realizing the benefit of its net deferred tax assets. From its evaluation the Company has concluded that based on the weight of available evidence, it is more likely than not that the Company will realize the full benefit of its net deferred tax assets recorded at September 30, 2015. The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets may be deemed appropriate in the future. If the Company incurs future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of September 30, 2015.

6. Capitalized Software

6. Capitalized Software	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 6 - Capitalized Software	The Company accounts for the costs of software within its products in accordance with ASC Topic 985-20, “ Costs of Software to be Sold, Leased or Marketed”

7. Investment in Securities

7. Investment in Securities	9 Months Ended
	Sep. 30, 2015
Schedule of Investments [Abstract]
NOTE 7 - Investment in Securities	In July 2015 the Company, through its new wholly owned subsidiary, purchased approximately 1.6 million shares of Iteris (NYSE MKT: ITI), which is a non-controlling interest, where the Company does not have significant influence. As the fair value of the investment is a quoted price in an active market, the investment is classified as Level 1 under the fair value hierarchy of ASC Topic 820. The investment is recorded at market value on the Company’s balance sheet as of September 30, 2015 as a non-current asset totaling approximately $3,900, with cost of approximately $2,800. At September 30, 2015 the corresponding unrealized gain of approximately $700, net of tax of $432, is included in accumulated other comprehensive income as a separate component of stockholders’ equity. There was no impact to the Company’s statement of operations.

8. Stockholders' Equity

8. Stockholders' Equity	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 8 - Stockholders' Equity	The changes in consolidated stockholders’ equity for the nine months ended September 30, 2015 are as follows: Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Income Retained Earnings Total Balance at December 31, 2014 13,665,087 $ 8,199 $ 24,816 $ − $ 218 $ 33,233 Common stock option exercise and issued 53,309 32 44 − 76 Share-based compensation expense − − 33 − 33 Net income − − − 829 829 Unrealized gain on available- for-sales securities, net of tax − − − 700 − 700 Balance at September 30, 2015 13,718,396 $ 8,231 $ 24,893 $ 700 $ 1,047 $ 34,871

9. Income per Share

9. Income per Share	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 9 - Income per Share	The following table sets forth the computation of basic and diluted income per share: Three Months Ended Nine months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Numerator: Net income (numerator for basic and diluted earnings per share) $ 212 $ 656 $ 829 $ 1,802 Denominator: Denominator for basic earnings per share weighted average shares 13,718,396 13,655,988 13,699,355 13,641,520 Effect of dilutive securities: Options 75,880 125,546 158,392 100,230 Denominator Denominator for diluted earnings per share weighted average shares 13,794,276 13,781,534 13,857,746 13,741,750 Basic income per share $ 0.02 $ 0.05 $ 0.06 $ 0.13 Diluted income per share $ 0.02 $ 0.05 $ 0.06 $ 0.13

10. Non-Cash Share-Based Employ

10. Non-Cash Share-Based Employee Compensation	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 10 - Non-Cash Share-Based Employee Compensation	The Company has employee and non-employee director stock option programs. Related to these programs, and in accordance with ASC Topic 718, “ Compensation-Stock Compensation The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The non-cash share-based employee compensation expense recorded in the three and nine months ended September 30, 2015 was calculated using certain assumptions. Such assumptions are described more comprehensively in Note 10 (Share-Based Employee Compensation) of the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014. A summary of activity under the Company’s stock option plans during the nine months ended September 30, 2015 is presented below: As of January 1, 2015 Stock Options Wgt. Avg. Exercise Price ($) Per Share Wgt. Avg. Remaining Contractual Life (Years) Wgt. Avg. Grant Date Fair Value($) Per Share Aggregate Intrinsic Value ($) Outstanding 414,778 3.79 - 2.29 - Vested 361,443 3.91 - 2.55 - Nonvested 53,335 3.00 - 0.54 - Period activity Issued 30,000 5.53 - 1.99 - Exercised 87,002 3.16 - 1.31 - Forfeited - - - - - Expired 15,000 5.70 - 2.05 - As of September 30, 2015 Outstanding 342,776 4.02 3.31 2.52 376,780 Vested 327,776 3.96 3.25 2.55 376,780 Nonvested 15,000 5.35 4.68 1.93 -

11. Commitments and Contingenci

11. Commitments and Contingencies	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 11 - Commitments and Contingencies	Legal Proceedings From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of its business. There were no pending material claims or legal matters as of September 30, 2015. Other As of September 30, 2015, the Company had purchase orders to suppliers of approximately $9,474. Significant Customers Sales to United States government agencies represented approximately $3,539 (46.0%) and $9,809 (42.8%) of the Company’s total sales for the three and nine months ended September 30, 2015, respectively, compared with approximately $3,962 (44.2%) and $10,579 (40.3%) for the same periods last year. Accounts receivable from agencies of the United States government were $1,896 as of September 30, 2015 compared with approximately $2,002 at the same date last year.

12. Debt

12. Debt	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 12 - Debt	The Company has a secured revolving credit facility with Silicon Valley Bank with maximum borrowing availability of $5,000 (subject to a borrowing base) and a maturity date of December 31, 2015. As of September 30, 2015, the Company was in compliance with all covenants under the loan and security agreement, as amended, governing this revolving credit facility. For a description of such covenants and the other terms and conditions of the loan and security agreement, as amended, reference is made to Note 6 (Debt) of the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014. As of September 30, 2015, there were no borrowings outstanding under the revolving credit facility and there was approximately $4,003 of borrowing available under the revolving credit facility.

1. Condensed Consolidated Fin19

1. Condensed Consolidated Financial Statements (Policies)	9 Months Ended
	Sep. 30, 2015
Condensed Consolidated Financial Statements Policies
Basis of Presentation	The condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014, the condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014 have been prepared by RELM Wireless Corporation (the “Company”), and are unaudited. In the opinion of management, all adjustments, which include normal recurring adjustments, necessary for a fair presentation have been made. The condensed consolidated balance sheet at December 31, 2014 has been derived from the Company’s audited consolidated financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the Securities and Exchange Commission. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the operating results for a full year.
Fair Value	The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable and available-for-sale securities, accounts payable, accrued expenses and other liabilities. As of September 30, 2015 and December 31, 2014, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments. The Company uses observable market data or assumptions (Level 1 inputs as defined in accounting guidance) that it believes market participants would use in pricing the available-for-sale securities. There were no sale of available-for-sale securities, nor gain or losses reclassified out of accumulated other comprehensive income as a result of an other-than-temporary impairment of the available-for-sale securities.
Available-For-Sale Securities	Investments reported on the September 30, 2015 balance sheet consist of marketable equity securities of publicly held companies. Management intended to hold such securities for a sufficient period in which to realize a reasonable return, which periods may range between one and several years, although there is no assurance that positive returns will be realized or that such securities will not be liquidated in a shorter-than-expected time frame to accommodate future liquidity requirements. Accordingly, investments were classified as non-current and available-for-sale in conformity with ASC Section 320. Investments are marked to market at each measurement date, with unrealized gains or losses presented as adjustments to accumulated other comprehensive income or loss.
Other Comprehensive Income	The Company reports its comprehensive income in accordance with FASB ASC Topic 220, Comprehensive Income, which establishes standards for reporting and presenting comprehensive income and its components in a full set of financial statements. Other comprehensive income consists of net income and unrealized gain on available-for-sale securities, net of taxes.
Recent Accounting Pronouncements	There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the nine month periods ended September 30, 2015 and 2014, or which are expected to impact future periods, which were not previously disclosed in prior periods. The FASB issued ASU 2015-11 “ Simplifying the Measurement of Inventory In May 2014, the FASB issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2016, and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method and early adoption is not permitted. However, the FASB recently decided to delay the effective date by one year for all entities with the option to adopt the standard as of the original effective date. The Company is in the process of evaluating the effect this standard will have, if any, on its condensed consolidated financial statements and related disclosures.

4. Inventories, net (Tables)

4. Inventories, net (Tables)	9 Months Ended
	Sep. 30, 2015
Inventories Net Tables
Components of inventory	September 30, 2015 December 31, 2014 Finished goods $ 2,999 $ 3,826 Work in process 6,892 5,127 Raw materials 3,943 3,159 $ 13,834 $ 12,112

8. Stockholders' Equity (Tables

8. Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2015
Stockholders Equity Tables
Changes in consolidated stockholders' equity	Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Income Retained Earnings Total Balance at December 31, 2014 13,665,087 $ 8,199 $ 24,816 $ − $ 218 $ 33,233 Common stock option exercise and issued 53,309 32 44 − 76 Share-based compensation expense − − 33 − 33 Net income − − − 829 829 Unrealized gain on available- for-sales securities, net of tax − − − 700 − 700 Balance at September 30, 2015 13,718,396 $ 8,231 $ 24,876 $ 700 $ 1,047 $ 34,871

9. Income per Share (Tables)

9. Income per Share (Tables)	9 Months Ended
	Sep. 30, 2015
Income Per Share Tables
Computation of basic and diluted income per share	Three Months Ended Nine months Ended September 30, 2015 September 30, 2014 September 30, 2015 September 30, 2014 Numerator: Net income (numerator for basic and diluted earnings per share) $ 212 $ 656 $ 829 $ 1,802 Denominator: Denominator for basic earnings per share weighted average shares 13,718,396 13,655,988 13,699,355 13,641,520 Effect of dilutive securities: Options 75,880 125,546 158,392 100,230 Denominator Denominator for diluted earnings per share weighted average shares 13,794,276 13,781,534 13,857,746 13,741,750 Basic income per share $ 0.02 $ 0.05 $ 0.06 $ 0.13 Diluted income per share $ 0.02 $ 0.05 $ 0.06 $ 0.13

10. Non-Cash Share-Based Empl23

10. Non-Cash Share-Based Employee Compensation (Tables)	9 Months Ended
	Sep. 30, 2015
Non-cash Share-based Employee Compensation Tables
A summary of stock option activity	As of January 1, 2015 Stock Options Wgt. Avg. Exercise Price ($) Per Share Wgt. Avg. Remaining Contractual Life (Years) Wgt. Avg. Grant Date Fair Value($) Per Share Aggregate Intrinsic Value ($) Outstanding 414,778 3.79 - 2.29 - Vested 361,443 3.91 - 2.55 - Nonvested 53,335 3.00 - 0.54 - Period activity Issued 30,000 5.53 - 1.99 - Exercised 87,002 3.16 - 1.31 - Forfeited - - - - - Expired 15,000 5.70 - 2.05 - As of September 30, 2015 Outstanding 342,776 4.02 3.31 2.52 376,780 Vested 327,776 3.96 3.25 2.55 376,780 Nonvested 15,000 5.35 4.68 1.93 -

3. Allowance for Doubtful Acc24

3. Allowance for Doubtful Accounts (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Allowance For Doubtful Accounts Details Narrative
Allowance for doubtful accounts on trade receivables	$ 49	$ 49
Gross trade receivables	$ 4,265	$ 3,315

4. Inventories, net (Details)

4. Inventories, net (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Inventories Net Details
Finished goods	$ 2,999	$ 3,826
Work in process	6,892	5,127
Raw materials	3,943	3,159
Total Inventory	$ 13,834	$ 12,112

4. Inventories, net (Details Na

4. Inventories, net (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Inventories Net Details Narrative
Reserves for slow-moving, excess, or obsolete inventory	$ 1,673	$ 1,703

5. Income Taxes (Details Narati

5. Income Taxes (Details Narative) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Net deferred tax assets	$ 5,247	$ 6,033
Federal
Operating loss carry forwards	5,194
State
Operating loss carry forwards	$ 13,813

6. Capitalized Software (Detail

6. Capitalized Software (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Capitalized Software Details Narrative
Amortization cost of software	$ 103	$ 197	$ 308	$ 591
Net capitalized software costs	$ 445		$ 445

8. Stockholders' Equity (Detail

8. Stockholders' Equity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Beginning Balance, Amount			$ 33,233
Beginning Balance, Shares			13,665,087
Common stock option exercise and issued, Amount			$ 76
Share - based compensation expense			33
Net income	$ 212	$ 656	829	$ 1,802
Unrealized gain on available- for-sales securities, net of tax			700
Ending Balance, Amount	$ 34,871		$ 34,871
Ending Balance, Shares	13,718,396		13,718,396
CommonStockMember
Beginning Balance, Amount			$ 8,199
Beginning Balance, Shares			13,665,087
Common stock option exercise and issued, Amount			$ 32
Common stock option exercise and issued, Shares			53,309
Ending Balance, Amount	$ 8,231		$ 8,231
Ending Balance, Shares	13,718,396		13,718,396
AdditionalPaidInCapitalMember
Beginning Balance, Amount			$ 24,816
Common stock option exercise and issued, Amount			44
Share - based compensation expense			33
Ending Balance, Amount	$ 24,893		24,893
Accumulated Other Comprehensive Income
Beginning Balance, Amount			0
Common stock option exercise and issued, Amount			0
Unrealized gain on available- for-sales securities, net of tax			700
Ending Balance, Amount	700		700
AccumulatedDeficitMember
Beginning Balance, Amount			218
Common stock option exercise and issued, Amount			0
Net income			829
Ending Balance, Amount	$ 1,047		$ 1,047

9. Income per Share (Details)

9. Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Numerator:
Net income (numerator for basis and diluted earnings per share)	$ 212	$ 656	$ 829	$ 1,802
Denominator:
Denominator for basic earnings per share weighted average shares	13,718,396	13,655,988	13,699,355	13,641,520
Effect of dilutive securities:
Options	75,880	125,546	158,392	100,230
Denominator
Denominator for diluted earnings per share weighted average shares	13,794,276	13,781,534	13,857,746	13,741,750
Basic income per share	$ 0.02	$ 0.05	$ 0.06	$ 0.13
Diluted income per share	$ 0.02	$ 0.05	$ 0.06	$ 0.13

10. Non-Cash Share-Based Empl31

10. Non-Cash Share-Based Employee Compensation (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)$ / sharesshares
Notes to Financial Statements
Outstanding Stock Options, beginning | shares	414,778
Vested Stock Options, beginning | shares	361,443
Nonvested Stock Options, beginning | shares	53,335
Issued Stock Options | shares	30,000
Exercised Stock Options | shares	87,002
Forfeited Stock Options | shares	0
Expired Stock Options | shares	15,000
Outstanding Stock Options, ending | shares	342,776
Vested Stock Options, ending | shares	327,776
Nonvested Stock Options, ending | shares	15,000
Outstanding Wgt. Avg. Exercise Price, beginning	$ 3.79
Vested Wgt. Avg. Exercise Price, beginning	3.91
Nonvested Wgt. Avg. Exercise Price, beginning	3
Issued Wgt. Avg. Exercise Price	5.53
Exercised Wgt. Avg. Exercise Price	3.16
Forfeited Wgt. Avg. Exercise Price	0
Expired Wgt. Avg. Exercise Price	5.70
Outstanding Wgt. Avg. Exercise Price, ending	4.02
Vested Wgt. Avg. Exercise Price, ending	3.96
Nonvested Wgt. Avg. Exercise Price, ending	$ 5.35
Outstanding Contractual Life	3 years 3 months 22 days
Vested Contractual Life	3 years 3 months
Nonvested Contractual Life	4 years 8 months 5 days
Outstanding Grant Date Fair Value, beginning	$ 2.29
Vested Grant Date Fair Value, beginning	2.55
Nonvested Grant Date Fair Value, beginning	0.54
Issued Grant Date Fair Value	1.99
Exercised Grant Date Fair Value	1.31
Forfeited Grant Date Fair Value	0
Expired Grant Date Fair Value	2.05
Outstanding Grant Date Fair Value	2.52
Vested Grant Date Fair Value	2.55
Nonvested Grant Date Fair Value	$ 1.93
Outstanding Aggregate Intrinsic Value | $	$ 0
Vested Aggregate Intrinsic Value | $	$ 0
Nonvested Aggregate Intrinsic Value	$ 0
Issued Aggregate Intrinsic Value	$ 0
Exercised Aggregate Intrinsic Value | $	$ 0
Forfeited Aggregate Intrinsic Value	$ 0
Expired Aggregate Intrinsic Value	$ 0
Outstanding Aggregate Intrinsic Value | $	$ 376,780
Vested Aggregate Intrinsic Value | $	$ 376,780
Nonvested Aggregate Intrinsic Value	$ 0

12. Debt (Details Narrative)

12. Debt (Details Narrative) - SiliconValleyBankMember $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Credit facility with maximum borrowing	$ 5,000
Maturity date	12-31-2015
Revolving credit outstanding balance	$ 0
Borrowing available under the revolving credit facility	$ 4,003