BK Technologies (BKTI) 10-Q 4 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 29, 2016
Document And Entity Information
Entity Registrant Name	RELM WIRELESS CORP
Entity Central Index Key	2,186
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
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		13,730,562
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,016

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 6,345	$ 4,669
Trade accounts receivable, net	7,249	4,122
Inventories, net	17,024	16,282
Prepaid expenses and other current assets	3,145	3,081
Total current assets	33,763	28,154
Property, plant and equipment, net	2,134	1,840
Available-for-sale securities	4,338	3,402
Deferred tax assets, net	5,044	5,461
Capitalized software, net	317	370
Other assets	213	222
Total assets	45,809	39,449
Current liabilities:
Accounts payable	4,145	2,285
Accrued compensation and related taxes	1,335	1,136
Accrued warranty expense	518	538
Customer deposits	3,507	0
Accrued other expenses and other current liabilities	188	168
Deferred revenue	139	136
Total current liabilities	9,832	4,263
Deferred revenue	339	366
Total liabilities	$ 10,171	$ 4,629
Commitments and contingencies
Stockholders' equity:
Preferred stock; $1.00 par value; 1,000,000 authorized shares; none issued or outstanding
Common stock; $.60 par value; 20,000,000 authorized shares; 13,730,562 issued and outstanding shares	$ 8,238	$ 8,238
Additional paid-in capital	24,938	24,926
Retained earnings	1,772	1,259
Accumulated other comprehensive income	690	397
Total stockholders' equity	35,638	34,820
Total liabilities and stockholders' equity	$ 45,809	$ 39,449

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
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	13,730,562	13,730,562
Common stock, outstanding shares	13,730,562	13,730,562

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Sales, net	$ 12,069	$ 8,577
Expenses
Cost of products	8,240	4,894
Selling, general and administrative	3,063	2,943
Total expenses	11,303	7,837
Operating income	766	740
Other income:
Interest income	1	0
Other income	1	3
Total other income	2	3
Income before income taxes	768	743
Income tax expense	(255)	(205)
Net income	$ 513	$ 538
Net earnings per share-basic:	$ 0.04	$ 0.04
Net earnings per share-diluted:	$ 0.04	$ 0.04
Weighted average shares outstanding-basic	13,730,562	13,671,436
Weighted average shares outstanding-diluted	13,798,191	13,857,207

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Condensed Consolidated Statements Of Comprehensive Income
Net income	$ 513	$ 538
Unrealized gain on available- for-sale securities, net of tax	293	0
Total comprehensive income	$ 806	$ 538

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities
Net income	$ 513	$ 538
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Inventories reserve	43	25
Deferred tax expense	255	205
Depreciation and amortization	214	218
Share-based compensation expense	12	7
Changes in operating assets and liabilities:
Accounts receivable	(3,127)	(2,481)
Inventories	(785)	537
Prepaid expenses and other current assets	(64)	241
Other assets	9	14
Accounts payable	1,860	103
Accrued compensation and related taxes	199	39
Accrued warranty expense	(20)	30
Deferred revenue	(24)	(19)
Customer deposits	3,507	0
Accrued other expenses and other current liabilities	20	(74)
Net cash provided by (used in) operating activities	2,612	(617)
Investing activities
Purchases of property, plant and equipment	(455)	(102)
Investment in securities	(481)	0
Net cash used in investing activities	(936)	(102)
Financing activities
Proceeds from issuance of common stock	0	41
Cash provided by financing activities	0	41
Net change in cash and cash equivalents	1,676	(678)
Cash and cash equivalents, beginning of period	4,669	11,363
Cash and cash equivalents, end of period	6,345	10,685
Supplemental disclosure
Cash paid for interest	0	0
Income tax paid	0	0
Non-cash financing activity
Cashless exercise of stock options and related conversion of net shares to stockholders' equity	$ 0	$ 6

1. Condensed Consolidated Finan

1. Condensed Consolidated Financial Statements	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 1 - Condensed Consolidated Financial Statements	Basis of Presentation The condensed consolidated balance sheets as of March 31, 2016 and December 31, 2015, the condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2016 and 2015 and the condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 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, 2015 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, 2015, as filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 2016 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 March 31, 2016 and December 31, 2015, 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. There were no transfers of available-for-sale securities between level 1 and level 2 during the quarter ended March 31, 2016. Available-For-Sale Securities Investments reported on the March 31, 2016 balance sheet consist of marketable equity securities of a publicly held company. As of March 31, 2016 and December 31, 2015, the investment cost was $3,242 and $2,761, respectively. 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. 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 Other comprehensive income consists of net income and unrealized gain on available-for-sale securities, net of taxes. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU ” In July 2015, the FASB issued ASU 2015-11 “ Simplifying the Measurement of Inventory, In November 2015, the FASB released ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” In January 2016, the FASB issued ASU 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company has not yet determined the potential effects of the adoption of ASU 2016-01 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, " Leases In March 2016, the FASB issued ASU 2016-09, “ Improvements to Employee Share-Based Payment Accounting”.

2. Significant Events and Trans

2. Significant Events and Transactions	3 Months Ended
	Mar. 31, 2016
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 were for a base term of one-year that commenced 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, was specified in delivery orders. Shipments under the delivery orders commenced in the first quarter of 2016, resulting in $3.3 million of sales. The remainder of the delivery orders is anticipated to be fulfilled on or before September 30, 2016. 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	3 Months Ended
	Mar. 31, 2016
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 $7,298 at March 31, 2016 and $49 on gross trade receivables of $4,171 at December 31, 2015. 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 trade receivables.

4. Inventories, net

4. Inventories, net	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 4 - Inventories, net	The components of inventory, net of allowances for slow-moving, excess or obsolete inventory, consist of the following: March 31, 2016 December 31, 2015 Finished goods $ 4,373 $ 4,029 Work in process 8,810 8,497 Raw materials 3,841 3,756 $ 17,024 $ 16,282 Allowances for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or market. The allowances were approximately $1,728 at March 31, 2016, compared with approximately $1,685 at December 31, 2015.

5. Income Taxes

5. Income Taxes	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 5 - Income Taxes	Income tax expense totaling approximately $255 and $205 has been recorded for the three months ended March 31, 2016 and 2015, respectively. As of March 31, 2016 and December 31, 2015, the Company’s net deferred tax assets totaled approximately $5,044 and $5,461, respectively, and are primarily composed of net operating loss carryforwards (“NOLs”), and research and development costs and tax credits partially offset by deferred tax liabilities of $162 derived from the unrealized gain on available-for-sale securities. As of March 31, 2016, these NOLs total approximately $4,130 for federal and $12,330 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. The Company analyzed all positive and negative evidence to determine if, based on the weight of available evidence, the Company is more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon the Company’s conclusions regarding, among other considerations, estimates of future earnings based on information currently available, current and anticipated customers, contracts and product introductions, as well as historical operating results and certain tax planning strategies. 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 March 31, 2016. 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 March 31, 2016.

6. Capitalized Software

6. Capitalized Software	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 6 - Capitalized Software	The Company accounts for the costs of software within its products whereby certain software costs incurred subsequent to the establishment of technological feasibility are capitalized and amortized over the estimated lives of the related products. The Company determines technological feasibility to be established upon the internal release of a detailed program design. Upon the general release of the product to customers, development costs for that product are amortized over periods not exceeding five years, based on current and future revenue of the product. For the three months ended March 31, 2016, the Company did not capitalize any software costs. For the three months ended March 31, 2016, the Company’s amortization cost was approximately $53, compared with $103 for the same quarter last year. Net capitalized software costs totaled $317 and $370 as of March 31, 2016 and December 31, 2015, respectively.

7. Investment in Securities

7. Investment in Securities	3 Months Ended
	Mar. 31, 2016
Schedule of Investments [Abstract]
NOTE 7 - Investment in Securities	The Company, through its wholly owned subsidiary, has purchased approximately 1.7 million shares of Iteris (NYSE MKT: ITI), which is a non-controlling interest, where the Company does not have significant influence. At March 31, 2016, the corresponding unrealized gain of approximately $690, net of tax of $162, is included in accumulated other comprehensive income as a separate component of stockholders’ equity. There was no impact to the Company’s statement of income.

8. Stockholders' Equity

8. Stockholders' Equity	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 8 - Stockholders' Equity	The changes in consolidated stockholders’ equity for the three months ended March 31, 2016 are as follows: Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Income Retained Earnings Total Balance at January 1, 2016 13,730,562 $ 8,238 $ 24,926 $ 397 $ 1,259 $ 34,820 Share-based compensation expense − − 12 − − 12 Net income − − − − 513 513 Unrealized gain on available- for-sales securities, net of tax − − − 293 − 293 Balance at March 31, 2016 13,730,562 $ 8,238 $ 24,938 $ 690 $ 1,772 $ 35,638

9. Income per Share

9. Income per Share	3 Months Ended
	Mar. 31, 2016
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 March 31, 2016 March 31, 2015 Numerator: Net income (numerator for basic and diluted earnings per share) $ 513 $ 538 Denominator: Denominator for basic earnings per share weighted average shares 13,730,562 13,671,436 Effect of dilutive securities: Options 67,629 185,771 Denominator Denominator for diluted earnings per share weighted average shares 13,798,191 13,857,207 Basic income per share $ 0.04 $ 0.04 Diluted income per share $ 0.04 $ 0.04

10. Non-Cash Share-Based Employ

10. Non-Cash Share-Based Employee Compensation	3 Months Ended
	Mar. 31, 2016
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, the Company recorded non-cash share-based employee compensation expense of $12 for the three months ended March 31, 2016, compared with $7 for the same quarter last year. The Company considers its non-cash share-based employee compensation expenses as a component of selling, general and administrative expenses There was no non-cash share-based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented. The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The non-cash share-based employee compensation expense recorded in the three months ended March 31, 2016 was calculated using certain assumptions. Such assumptions are described more comprehensively in Note 10 (Share-Based Employee Compensation) of the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015. A summary of activity under the Company’s stock option plans during the three months ended March 31, 2016 is presented below: As of January 1, 2016 Stock Options Wgt. Avg. Exercise Price ($) Per Share Wgt. Avg. Remaining Contractual Life (Years) Wgt. Avg. Grant Date Fair Value($) Per Share Aggregate Intrinsic Value ($) Outstanding 291,936 4.07 - 2.68 - Vested 276,936 4.00 - 2.72 - Nonvested 15,000 5.35 - 1.93 - Period activity Issued 60,000 3.83 - 2.22 - Exercised - - - - - Forfeited - - - - - Expired 32,936 11.40 - 9.16 - As of March 31, 2016 Outstanding 319,000 3.27 4.71 1.93 411,560 Vested 244,000 3.00 3.46 1.86 370,160 Nonvested 75,000 4.13 8.76 2.16 41,400

11. Commitments and Contingenci

11. Commitments and Contingencies	3 Months Ended
	Mar. 31, 2016
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 March 31, 2016. Purchase Commitments As of March 31, 2016, the Company had purchase orders to suppliers for inventory of approximately $11,998. Significant Customers Sales to United States government agencies represented approximately $6,729 (55.8%) of the Company’s total sales for the three months ended March 31, 2016, compared with approximately $4,201 (49.0%) for the same quarter last year. Accounts receivable from agencies of the United States government were $4,185 as of March 31, 2016, compared with approximately $2,381 at the same date last year. Sales to a Canadian governmental agency represented approximately $1,660 (13.75%) of the Company’s total sales for the three months ended March 31, 2016, compared with approximately $282 (3.3%) for the same quarter last year. Accounts receivable from this Canadian governmental agency were $1,659 as of March 31, 2016, compared with $275at the same date last year.

12. Debt

12. Debt	3 Months Ended
	Mar. 31, 2016
Notes to Financial Statements
NOTE 12 - Debt	The Company has a secured revolving credit facility with Silicon Valley Bank with maximum borrowing availability of $2,000 (subject to a borrowing base) and a maturity date of December 28, 2016. As of March 31, 2016, 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, 2015. As of March 31, 2016, there were no borrowings outstanding under the revolving credit facility and there was $2,000 of borrowing available under the revolving credit facility.

1. Condensed Consolidated Fin19

1. Condensed Consolidated Financial Statements (Policies)	3 Months Ended
	Mar. 31, 2016
Condensed Consolidated Financial Statements Policies
Basis of Presentation	The condensed consolidated balance sheets as of March 31, 2016 and December 31, 2015, the condensed consolidated statements of income and comprehensive income for the three months ended March 31, 2016 and 2015 and the condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 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, 2015 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, 2015, as filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 2016 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 March 31, 2016 and December 31, 2015, 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. There were no transfers of available-for-sale securities between level 1 and level 2 during the quarter ended March 31, 2016.
Available-For-Sale Securities	Investments reported on the March 31, 2016 balance sheet consist of marketable equity securities of a publicly held company. As of March 31, 2016 and December 31, 2015, the investment cost was $3,242 and $2,761, respectively. 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. 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	Other comprehensive income consists of net income and unrealized gain on available-for-sale securities, net of taxes.
Recent Accounting Pronouncements	In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU ” In July 2015, the FASB issued ASU 2015-11 “ Simplifying the Measurement of Inventory, In November 2015, the FASB released ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” In January 2016, the FASB issued ASU 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company has not yet determined the potential effects of the adoption of ASU 2016-01 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, " Leases In March 2016, the FASB issued ASU 2016-09, “ Improvements to Employee Share-Based Payment Accounting”.

4. Inventories, net (Tables)

4. Inventories, net (Tables)	3 Months Ended
	Mar. 31, 2016
Inventories Net Tables
Components of inventory	March 31, 2016 December 31, 2015 Finished goods $ 4,373 $ 4,029 Work in process 8,810 8,497 Raw materials 3,841 3,756 $ 17,024 $ 16,282

8. Stockholders' Equity (Tables

8. Stockholders' Equity (Tables)	3 Months Ended
	Mar. 31, 2016
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 January 1, 2016 13,730,562 $ 8,238 $ 24,926 $ 397 $ 1,259 $ 34,820 Share-based compensation expense − − 12 − − 12 Net income − − − − 513 513 Unrealized gain on available- for-sales securities, net of tax − − − 293 − 293 Balance at March 31, 2016 13,730,562 $ 8,238 $ 24,938 $ 690 $ 1,772 $ 35,638

9. Income per Share (Tables)

9. Income per Share (Tables)	3 Months Ended
	Mar. 31, 2016
Income Per Share Tables
Computation of basic and diluted income per share	Three Months Ended March 31, 2016 March 31, 2015 Numerator: Net income (numerator for basic and diluted earnings per share) $ 513 $ 538 Denominator: Denominator for basic earnings per share weighted average shares 13,730,562 13,671,436 Effect of dilutive securities: Options 67,629 185,771 Denominator Denominator for diluted earnings per share weighted average shares 13,798,191 13,857,207 Basic income per share $ 0.04 $ 0.04 Diluted income per share $ 0.04 $ 0.04

10. Non-Cash Share-Based Empl23

10. Non-Cash Share-Based Employee Compensation (Tables)	3 Months Ended
	Mar. 31, 2016
Non-cash Share-based Employee Compensation Tables
A summary of stock option activity	As of January 1, 2016 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 291,936 4.07 - 2.68 - Vested 276,936 4.00 - 2.72 - Nonvested 15,000 5.35 - 1.93 - Period activity Issued 60,000 3.83 - 2.22 - Exercised - - - - - Forfeited - - - - - Expired 32,936 11.40 - 9.16 - As of March 31, 2016 Outstanding 319,000 3.27 4.71 1.93 411,560 Vested 244,000 3.00 3.46 1.86 370,160 Nonvested 75,000 4.13 8.76 2.16 41,400

3. Allowance for Doubtful Acc24

3. Allowance for Doubtful Accounts (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Allowance For Doubtful Accounts Details Narrative
Allowance for doubtful accounts on trade receivables	$ 49	$ 49
Gross trade receivables	$ 7,298	$ 4,171

4. Inventories, net (Details)

4. Inventories, net (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Inventories Net Details
Finished goods	$ 4,373	$ 4,029
Work in process	8,810	8,497
Raw materials	3,841	3,756
Total Inventory	$ 17,024	$ 16,282

4. Inventories, net (Details Na

4. Inventories, net (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Inventories Net Details Narrative
Reserves for slow-moving, excess, or obsolete inventory	$ 1,728	$ 1,685

5. Income Taxes (Details Narati

5. Income Taxes (Details Narative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Income tax expense	$ 255	$ 205
Net deferred tax assets	5,044		$ 5,461
Federal
Operating loss carry forwards	4,130
State
Operating loss carry forwards	$ 12,330

6. Capitalized Software (Detail

6. Capitalized Software (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Capitalized Software Details Narrative
Amortization cost of software	$ 53	$ 103
Net capitalized software costs	$ 317

8. Stockholders' Equity (Detail

8. Stockholders' Equity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Beginning Balance, Amount	$ 34,820
Beginning Balance, Shares	13,730,562
Share - based compensation expense	$ 12
Net income	513	$ 538
Unrealized gain on available- for-sales securities, net of tax	293
Ending Balance, Amount	$ 35,638
Ending Balance, Shares	13,730,562
Common Stock
Beginning Balance, Amount	$ 8,238
Beginning Balance, Shares	13,730,562
Ending Balance, Amount	$ 8,238
Ending Balance, Shares	13,730,562
Additional Paid In Capital
Beginning Balance, Amount	$ 24,926
Share - based compensation expense	12
Ending Balance, Amount	24,938
Accumulated Other Comprehensive Income
Beginning Balance, Amount	397
Unrealized gain on available- for-sales securities, net of tax	293
Ending Balance, Amount	690
Accumulated Deficit
Beginning Balance, Amount	1,259
Net income	513
Ending Balance, Amount	$ 1,772

9. Income per Share (Details)

9. Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Numerator:
Net income (numerator for basis and diluted earnings per share)	$ 513	$ 538
Denominator:
Denominator for basic earnings per share weighted average shares	13,730,562	13,671,436
Effect of dilutive securities:
Options	67,629	185,771
Denominator
Denominator for diluted earnings per share weighted average shares	13,798,191	13,857,207
Basic income per share	$ 0.04	$ 0.04
Diluted income per share	$ 0.04	$ 0.04

10. Non-Cash Share-Based Empl31

10. Non-Cash Share-Based Employee Compensation (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)$ / sharesshares
Notes to Financial Statements
Outstanding Stock Options, beginning | shares	291,936
Vested Stock Options, beginning | shares	276,936
Nonvested Stock Options, beginning | shares	15,000
Issued Stock Options | shares	60,000
Exercised Stock Options | shares	0
Forfeited Stock Options | shares	0
Expired Stock Options | shares	32,936
Outstanding Stock Options, ending | shares	319,000
Vested Stock Options, ending | shares	244,000
Nonvested Stock Options, ending | shares	75,000
Outstanding Wgt. Avg. Exercise Price, beginning	$ 4.07
Vested Wgt. Avg. Exercise Price, beginning	4
Nonvested Wgt. Avg. Exercise Price, beginning	5.35
Issued Wgt. Avg. Exercise Price	3.83
Exercised Wgt. Avg. Exercise Price	0
Forfeited Wgt. Avg. Exercise Price	0
Expired Wgt. Avg. Exercise Price	11.40
Outstanding Wgt. Avg. Exercise Price, ending	3.27
Vested Wgt. Avg. Exercise Price, ending	3
Nonvested Wgt. Avg. Exercise Price, ending	$ 4.13
Outstanding Contractual Life	4 years 8 months 16 days
Vested Contractual Life	3 years 5 months 16 days
Nonvested Contractual Life	8 years 9 months 4 days
Outstanding Grant Date Fair Value, beginning	$ 2.68
Vested Grant Date Fair Value, beginning	2.72
Nonvested Grant Date Fair Value, beginning	1.93
Issued Grant Date Fair Value	2.22
Exercised Grant Date Fair Value	0
Forfeited Grant Date Fair Value	0
Expired Grant Date Fair Value	9.16
Outstanding Grant Date Fair Value	1.93
Vested Grant Date Fair Value	1.86
Nonvested Grant Date Fair Value	$ 2.16
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 | $	$ 411,560
Vested Aggregate Intrinsic Value | $	$ 370,160
Nonvested Aggregate Intrinsic Value	$ 41,400

12. Debt (Details Narrative)

12. Debt (Details Narrative) - SiliconValleyBankMember $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)
Credit facility with maximum borrowing	$ 2,000
Maturity date	December 28, 2016
Revolving credit outstanding balance	$ 0
Borrowing available under the revolving credit facility	$ 2,000