Socket Mobile (SCKT) 10-Q 13 Nov 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 08, 2013
Document And Entity Information	'	'
Entity Registrant Name	'Socket Mobile, Inc.	'
Entity Central Index Key	'0000944075	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-13	'
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	'	4,867,063
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2013	'

CONDENSED_BALANCE_SHEETS_Unaud

CONDENSED BALANCE SHEETS (Unaudited) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current assets:	'	'
Cash and cash equivalents	$401,794	$390,513
Accounts receivable, net	1,773,204	1,509,094
Inventories	1,056,393	941,067
Prepaid expenses and other current assets	121,643	129,434
Total current assets	3,353,034	2,970,108
Property and equipment:	'	'
Machinery and office equipment	1,900,780	1,865,137
Computer equipment	1,139,389	1,204,957
Property and equipment, gross	3,040,169	3,070,094
Accumulated depreciation	-2,707,788	-2,727,323
Property and equipment, net	332,381	342,771
Intangible assets, net	45,000	90,000
Goodwill	4,427,000	4,427,000
Other assets	91,518	91,518
Total assets	8,248,933	7,921,397
Current liabilities:	'	'
Accounts payable and accrued expenses	3,367,723	3,771,763
Accrued payroll and related expenses	471,852	478,084
Bank line of credit	846,460	810,686
Deferred income on shipments to distributors	1,088,724	854,159
Related party and other short term notes payable	550,000	95,289
Related party convertible notes payable	777,625	750,000
Short term portion of deferred service revenue	184,418	214,537
Short term portion of capital leases and deferred rent	22,837	17,400
Total current liabilities	7,309,639	6,991,918
Long term portion of deferred service revenue	101,150	153,877
Long term portion of capital leases and deferred rent	259,712	227,022
Deferred income taxes	103,350	79,395
Total liabilities	7,773,851	7,452,212
Stockholders' equity:	'	'
Common stock, $0.001 par value: Authorized - 20,000,000 shares, Issued and outstanding – 4,867,063 shares at September 30, 2013 and 4,861,063 at December 31, 2012	4,867	4,861
Additional paid-in capital	61,174,953	60,966,505
Accumulated deficit	-60,704,738	-60,502,181
Total stockholders' equity	475,082	469,185
Total liabilities and stockholders' equity	$8,248,933	$7,921,397

CONDENSED_BALANCE_SHEETS_Paren

CONDENSED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
LIABILITIES AND STOCKHOLDERS' EQUITY	'	'
Common stock par value	$0.00	$0.00
Common stock, shares authorized	20,000,000	10,000,000
Common stock, shares issued	4,867,063	4,861,063
Common stock, shares outstanding	4,867,063	4,861,063

CONDENSED_STATEMENTS_OF_OPERAT

CONDENSED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Income Statement [Abstract]	'	'	'	'
Revenues	$3,291,639	$2,796,354	$11,992,245	$10,787,615
Cost of revenues	2,008,701	1,813,958	7,196,632	6,783,899
Gross profit	1,282,938	982,396	4,795,613	4,003,716
Operating expenses:	'	'	'	'
Research and development	577,609	634,948	1,696,499	2,158,853
Sales and marketing	498,820	798,280	1,643,107	2,740,712
General and administrative	395,317	454,025	1,305,074	1,563,724
Total operating expenses	1,471,746	1,887,253	4,644,680	6,463,289
Operating income (loss)	-188,808	-904,857	150,933	-2,459,573
Interest expense and other, net	-124,075	-69,981	-329,535	-126,469
Net loss before income taxes	-312,883	-974,838	-178,602	-2,586,042
Income tax expense	-7,985	-7,985	-23,955	-23,955
Net loss	($320,868)	($982,823)	($202,557)	($2,609,997)
Net loss per share:	'	'	'	'
Basic and Diluted	($0.07)	($0.20)	($0.04)	($0.54)
Weighted average shares outstanding:	'	'	'	'
Basic and Diluted	4,867,063	4,861,063	4,864,360	4,851,152

CONDENSED_STATEMENTS_OF_CASH_F

CONDENSED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Operating activities	'	'
Net loss	($202,557)	($2,609,997)
Adjustments to reconcile net loss to net cash used in operating activities:	'	'
Stock-based compensation	201,974	469,117
Depreciation and amortization	203,193	255,331
Deferred income tax expense	23,955	23,955
Changes in operating assets and liabilities:	'	'
Accounts receivable	-264,110	1,503,014
Inventories	-115,326	266,992
Prepaid expenses and other current assets	7,791	52,584
Other assets	'	-1,442
Accounts payable	-351,415	18,579
Accrued payroll and related expenses	-6,232	-37,717
Deferred income on shipments to distributors	234,565	-578,088
Deferred service revenue	-82,846	-24,821
Change in deferred rent	38,716	-5,949
Net cash used in operating activities	-312,292	-668,442
Investing activities	'	'
Purchases of equipment	-133,203	-224,005
Net cash used in investing activities	-133,203	-224,005
Financing activities	'	'
Payments on capital leases	-15,189	-10,366
Proceeds from borrowings under bank line of credit agreement	6,280,846	5,158,618
Repayments of borrowings under bank line of credit agreement	-6,245,072	-5,613,470
Stock options exercised	6,480	14,015
Warrants exercised	'	29,999
Proceeds from the issuance of related party and other short term notes payable	600,000	800,000
Repayment of short term notes payable	-145,289	-36,160
Redemption of related party convertible note payable	-25,000	'
Net cash provided by financing activities	456,776	342,636
Net increase (decrease) in cash and cash equivalents	11,281	-549,811
Cash and cash equivalents at beginning of period	390,513	957,022
Cash and cash equivalents at end of period	401,794	407,211
Supplemental cash flow information	'	'
Cash paid for interest	$268,055	$129,968

Basis_of_Presentation

Basis of Presentation	3 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Basis of Presentation	'
	NOTE 1 — Basis of Presentation
	The accompanying unaudited condensed financial statements of Socket Mobile, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals considered necessary for fair presentation have been included. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted.
	These condensed financial statements should be read in conjunction with the audited financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The financial statements in the Company’s annual report on Form 10-K were prepared on a going concern basis.
	Liquidity and Going Concern
	The Company was profitable in each of the first two quarters of 2013, but unprofitable in the third quarter and unprofitable for the first three quarters of 2013 in total. In the year ended December 31, 2012, the Company incurred a net loss of $3,298,082. As of September 30, 2013, the Company has an accumulated deficit of $60,704,738. The Company’s cash balances at September 30, 2013 were $401,794, including $846,460 advanced on its bank lines of credit. At September 30, 2013, the Company had additional unused borrowing capacity of approximately $144,000 on its bank lines of credit. The Company’s balance sheet at September 30, 2013 has a current ratio (current assets divided by current liabilities) of 0.5 to 1.0, and a working capital deficit of $3,956,605 (current assets less current liabilities). These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.
	In the last three years the Company has taken actions to reduce its expenses and to align its cost structure with economic conditions. The Company has the ability to further reduce expenses if necessary. Steps taken by the Company to reduce operating losses and achieve profitability include reduction of headcount to manage payroll costs, the introduction of new products, and continued close support of the Company’s distributors and application development partners as they establish their mobile applications in key vertical markets. The Company believes it will be able to further improve its liquidity and secure additional sources of financing by managing its working capital balances, use of its bank lines of credit, and raising additional capital as needed including development funding from development partners and the issuance of additional equity securities. However, there can be no assurance that additional capital will be available on acceptable terms, if at all, and any such terms may be dilutive to existing stockholders. The Company’s bank lines of credit may be terminated by the bank or by the Company at any time, and expire on January 10, 2014 unless renewed or further extended (see “NOTE 6 — Bank Financing Arrangements”). If the Company cannot maintain profitability, it will not be able to support its operations from positive cash flows, and would use its existing cash to support operating losses. If the Company is unable to secure the necessary capital for its business, it may need to suspend some or all of its current operations.
	If the Company can maintain revenue growth and attain ongoing profitability, it anticipates requirements for cash will include funding of higher receivable and inventory balances, and increased expenses, including an increase of costs relating to new employees to support our growth and increases in salaries, benefits, and related support costs for employees.
	The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the Company’s inability to continue as a going concern.

Summary_of_Significant_Account

Summary of Significant Accounting Policies	3 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Summary of Significant Accounting Policies	'
	NOTE 2 — Summary of Significant Accounting Policies
	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates, and such differences may be material to the financial statements.
	Cash Equivalents and Fair Value of Financial Instruments
	The Company considers all highly liquid investments purchased with an original maturity date of 90 days or less at date of purchase to be cash equivalents. At September 30, 2013 and December 31, 2012, all of the Company’s cash and cash equivalents consisted of amounts held in demand and money market deposits in banks. The carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, debt and foreign exchange contracts approximate fair value due to the relatively short period of time to maturity.

Inventories

Inventories	3 Months Ended
	Sep. 30, 2013
Inventory Disclosure [Abstract]	'
Inventories	'
	NOTE 3 — Inventories
	Inventories consist principally of raw materials and sub-assemblies, which are stated at the lower of cost (first-in, first-out) or market.
		September 30,		December 31,
		2013		2012
	Raw materials and sub-assemblies	$	994,388	$	921,677
	Finished goods		62,005		19,390
		$	1,056,393	$	941,067

Related_Party_Convertible_Note

Related Party Convertible Notes Payable	3 Months Ended
	Sep. 30, 2013
Related Party Transactions [Abstract]	'
Related Party Convertible Notes Payable	'
	NOTE 4 — Related Party Convertible Notes Payable
	On September 4, 2013, the Company replaced $350,000 of convertible notes plus accrued interest (total of $380,696) originally issued to officers and directors of the Company on August 1, 2012 and maturing on August 1, 2014, with four year convertible notes expiring September 4, 2017. The replacement notes have an interest rate of 8% per annum that compounds quarterly, and contain a holder call provision that becomes effective on September 4, 2014. The replacement notes are convertible into common stock at the option of the holder at $2.44 per share as long as warrants issued on November 19, 2010 are outstanding (expire May 20, 2016), or at $1.25 per share. The original issuance of convertible notes on August 1, 2012 was in the amount of $400,000. The notes are being used for working capital purposes. During the nine months ended September 30, 2013, $25,000 of the original convertible notes were repaid, $350,000 of the notes were reissued as discussed previously, and $25,000 of the original notes remain outstanding. The remaining original notes accrue interest at 8% per annum, contain a holder call provision, and mature on August 1, 2014. Accrued interest is payable upon redemption. The remaining original notes are convertible into common stock at the option of the holder at $2.44 per share as long as warrants issued on November 19, 2010 are outstanding (expire May 20, 2016), or at $2.00 per share. The convertible notes are secured by all of the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with Silicon Valley Bank.
	On September 4, 2013, the Company also replaced $350,000 of convertible notes plus accrued interest (total of $371,929) issued to the Company’s Chairman at various dates in the fourth quarter of 2012 and maturing on August 1, 2014, with four year convertible notes expiring September 4, 2017. The replacement notes are convertible into common stock at the option of the holder at $2.44 per share as long as warrants previously issued on November 19, 2010 are outstanding (expire May 20, 2016), or at the closing market price on the date of note issue of $1.25 per share, have eliminated the holder call provision contained in the original notes, and have an interest rate that compounds quarterly of 18% per annum during the period in which the November 19, 2010 warrants are outstanding, or 12% per annum. Previously on November 5, 2012, the Company’s Board of Directors approved the issue of up to $350,000 in convertible subordinated notes to its Chairman to be used for working capital purposes. At various dates beginning November 7, 2012 through December 12, 2012 the Company issued in total $350,000 of such notes to its Chairman. The original notes were identical to the notes issued on August 1, 2012 as described in the preceding paragraph, with the exception of the conversion price of which the weighted average fair market value conversion price was $1.04 per share as long as warrants previously issued on November 19, 2010 were no longer outstanding. The notes are secured by all of the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with Silicon Valley Bank.
	The Company determined per ASC 470-50-40-10a, that the fair value of the embedded conversion option in the reissued convertible notes as a result of the change in conversion price and term, increased by more than 10% from the original notes. Therefore, debt extinguishment accounting rules apply. Accordingly, the reissued convertible notes payable were initially recorded at fair value; however, as there was no difference between the reissued amount of the notes and the net carrying amount of the original notes, no gain or loss was recorded. Accrued interest expense at September 30, 2013 related to all convertible subordinated notes outstanding was $9,512.

Related_Party_and_Other_Short_

Related Party and Other Short Term Notes Payable	3 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Related Party and Other Short Term Notes Payable	'
	NOTE 5 — Related Party and Other Short Term Notes Payable
	On January 31, 2013, the Company’s Board of Directors approved a subordinated line of credit of up to $1,000,000 including up to $550,000 in advances by the Company’s Chairman. The funds raised are being used for working capital purposes. On September 30, 2013, a total of $550,000 in funds were outstanding under this line, of which $350,000 and $50,000 respectively were from the Company’s Chairman and Chief Executive Officer. The line has an expiration date of December 1, 2013. Interest accrues at the rate of 1% per week and is paid weekly. Balances outstanding under the line of credit are to be repaid in full on or before the maturity date. Balances under the line of credit are secured by all of the assets of the Company and are subordinated to amounts outstanding under the Company’s working capital bank line of credit with Silicon Valley Bank. Interest expense in the three and nine months ended September 30, 2013 related to the line of credit was $71,986 and $178,772, respectively. In October 2013, the Company raised an additional $100,000 in funds from the Company’s Chairman.
	On August 31, 2012, the Company issued a promissory note to a lender for $400,000. The promissory note matured on January 31, 2013 and had an implied monthly compounded interest rate of 9.7%. The Company was required to pay a total of $528,000 principal and interest on the promissory note in weekly installments of approximately $25,000. The note was secured by substantially all the Company’s assets including intangible assets. This promissory note was subordinated to the bank financing arrangement as described in Note 6. During the first quarter 2013, the Company completed the repayment of the remaining principle and interest in the amounts of $95,289, and $7,711, respectively.

Bank_Financing_Arrangements

Bank Financing Arrangements	3 Months Ended
	Sep. 30, 2013
Debt Disclosure [Abstract]	'
Bank Financing Arrangements	'
	NOTE 6 — Bank Financing Arrangements
	On October 12, 2011, the Company entered into a new credit facility agreement with Silicon Valley Bank (the “Bank”). This credit facility allows the Company to borrow up to $2,500,000 based on the level of qualified domestic and international receivables, up to a maximum of $1,500,000 and $1,000,000, respectively. Advances against the domestic line are calculated at 80% of qualified receivables except for receivables from distributors which are calculated at 60%. Advances against the international line are calculated at 90% against qualified hedged receivables and 70% against qualified non-hedged receivables and receivables from distributors. Borrowings under the lines bear an annual interest rate equal to the greater of (i) the Bank’s prime rate plus 1%, or (ii) 5%. The rate in effect has been 5% to date. There is also a collateral handling fee of 0.25% per month of the financed receivable balance outstanding. The applicable interest and fees are calculated based on the full amount of the accounts receivable provided as collateral for the actual amounts borrowed. The effective rate (interest plus all applicable fees) on actual cash advances in the first nine months of 2013 was 13.5% per annum. The credit facility agreement was to expire on October 12, 2013 unless renewed. On October 12, 2013, the Company and the Bank agreed to extend the agreement for an additional three month period ending January 10, 2014. The agreement may be terminated by the Company or by the Bank at any time. Upon such termination, the Bank would no longer make advances under the credit agreement and outstanding advances would be repaid as receivables are collected. All advances are at the Bank’s discretion and the Bank is not obligated to make advances. In addition, the Company must maintain a minimum liquidity ratio at all times based on quick assets (unrestricted cash equivalents at the Bank plus net eligible accounts receivable) to outstanding obligations to the Bank of not less than 2.0 to 1.0. The outstanding amounts borrowed under the domestic and international lines at September 30, 2013 were $720,811 and $125,649, respectively, and the full amounts of accounts receivable provided as collateral were $1,191,423, and $178,015, respectively. The outstanding amounts borrowed under the domestic and international lines at December 31, 2012 were $479,647 and $331,039, respectively, and the full amounts of accounts receivable provided as collateral were $777,987, and $464,731, respectively. Interest expense on the amounts drawn during the three and nine months ended September 30, 2013 was $30,685 and $90,512, respectively. Accrued interest related to the amounts outstanding at September 30, 2013 and December 31, 2012 was $6,996 and $7,237, respectively.

Segment_Information_and_Concen

Segment Information and Concentrations	3 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Segment Information and Concentrations	'
	NOTE 7 — Segment Information and Concentrations
	Segment Information
	The Company operates in one segment—mobile systems solutions for businesses. Mobile systems solutions typically consist of a handheld computer or other mobile device such as a smartphone or tablet, some with data collection peripherals, and third-party vertical applications software. The Company markets its products in the United States and foreign countries through its sales personnel and distributors. Revenues for the geographic areas were as follows:
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2013			2012			2013			2012
	Revenues:
	United States	$	2,492,640		$	1,971,957		$	8,296,712		$	6,450,535
	Europe		656,571			494,343			2,140,903			2,884,395
	Asia and rest of world		142,428			330,054			1,554,630			1,452,685
	Total revenues	$	3,291,639		$	2,796,354		$	11,992,245		$	10,787,615
	Export revenues are attributable to countries based on the location of the Company’s customers. The Company does not hold long-lived assets in foreign locations.
	Major Customers
	Customers who accounted for at least 10% of the Company’s total revenues in the three and nine month periods ended September 30, 2013 and 2012 were as follows:
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2013			2012			2013			2012
	Ingram Micro Inc.		22	%		19	%		19	%		18	%
	ScanSource, Inc.		26	%		24	%		22	%		21	%
	BlueStar, Inc.		18	%		16	%		14	%		*
	_____________
	* Customer accounted for less than 10% of total revenues for the period
	Concentration of Credit Risk
	Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. The Company invests its cash in demand and money market deposit accounts in banks. To the extent of the amounts recorded on the balance sheet, cash is concentrated at the Company’s bank to the extent needed to comply with the minimum liquidity ratio of the bank line agreement. To date, the Company has not experienced losses on these investments. The Company’s trade accounts receivables are primarily with distributors and OEMs. The Company performs ongoing credit evaluations of its customers’ financial conditions but the Company generally requires no collateral. Reserves are maintained for potential credit losses, and such losses have been within management’s expectations. Customers who accounted for at least 10% of the Company’s accounts receivable balances at September 30, 2013 and December 31, 2012 were as follows:
		September 30,			December 31,
		2013			2012
	Company A		34	%		28	%
	Company B		26	%		12	%
	Company C		10	%		16	%
	Company D		*			11	%
	Company E		*			12	%
	_____________
	* Customer accounted for less than 10% of total accounts receivable for the period
	Concentration of Suppliers
	Several of the Company’s component parts are produced by a sole or limited number of suppliers. Shortages could occur in these essential materials due to increased demand, or to an interruption of supply. Suppliers may choose to restrict credit terms or require advance payments causing delays in the procurement of essential materials. If the Company were unable to procure certain of such materials, it could have a material adverse effect upon its results. At September 30, 2013 and December 31, 2012, 26% and 32% respectively, of the Company’s accounts payable balances were concentrated in a single supplier. For the three months ended September 30, 2013, this and another supplier accounted for 43% of the inventory purchases.

StockBased_Compensation

Stock-Based Compensation	3 Months Ended
	Sep. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]	'
Stock-Based Compensation	'
	NOTE 8 — Stock-Based Compensation
	The Company recognizes stock-based compensation in the financial statements for all share-based awards to employees, including grants of employee stock options, based on their fair values. The Company uses a binomial lattice valuation model to estimate the fair value of stock option grants. The binomial lattice model incorporates calculations for expected volatility, risk-free interest rates, employee exercise patterns and post-vesting employment termination behavior, and these factors affect the estimate of the fair value of the Company's stock option grants. Total stock-based compensation expense for the three and nine months ended September 30, 2013 was $50,683 and $201,974, respectively. Total stock-based compensation expense for the three and nine months ended September 30, 2012 was $105,657 and $469,117, respectively. In the three and nine months ended September 30, 2013, 45,000 and 239,500, stock options were granted, respectively, at weighted average per share fair values estimated at $0.73 and $0.77, respectively.

Net_Loss_Per_Share_Applicable_

Net Loss Per Share Applicable to Common Stockholders	3 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Net Loss Per Share Applicable to Common Stockholders	'
	NOTE 9 — Net Loss Per Share Applicable to Common Stockholders
	The following table sets forth the computation of basic and diluted net loss per share:
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2013			2012			2013			2012
	Numerator:
	Net loss	$	(320,868	)	$	(982,823	)	$	(202,557	)	$	(2,609,997	)
	Denominator:
	Weighted average common shares outstanding used in computing net loss per share:
	Basic and Diluted		4,867,063			4,861,063			4,864,360			4,851,152
	Net loss per share:
	Basic and Diluted	$	(0.07	)	$	(0.20	)	$	(0.04	)	$	(0.54	)
	For the three and nine months ended September 30, 2013 and 2012, the diluted net loss per share is equal to the basic net loss per share because the Company experienced losses in these periods. Thus no potential common shares underlying stock options and warrants have been included in the net loss per share calculation, as their effect is anti-dilutive. Options and warrants to purchase 2,307,274 shares and 2,137,113 shares of common stock at September 30, 2013, and 2012, respectively, have been omitted from the net loss per share calculation.

Taxes

Taxes	3 Months Ended
	Sep. 30, 2013
Income Tax Disclosure [Abstract]	'
Taxes	'
	NOTE 10 — Taxes
	Income tax expense during the three and nine months ended September 30, 2013 and 2012, and the deferred income tax amounts shown on the Company’s Condensed Balance Sheets, is related entirely to the deferred tax liability on the portion of the Company’s goodwill amortized for tax purposes. Due to the indefinite characteristic of this deferred tax liability, it cannot be offset against deferred tax assets. As a result, the Company recognized deferred tax expense of $7,985 and $23,955 in each of the three and nine month periods ended September 30, 2013 and 2012.
	At December 31, 2012, the Company has an unrecognized tax benefit of approximately $633,000, which did not change significantly during the three and nine months ended September 30, 2013. Future changes in the unrecognized tax benefit are unlikely to have an impact on the effective tax rate due to the full valuation allowance recorded on the Company’s deferred tax assets, as realization of the deferred tax assets is dependent upon future taxable income.

Commitments_and_Contingency

Commitments and Contingency	3 Months Ended
	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]	'
Commitments and Contingency	'
	NOTE 11 — Commitments and Contingencies
	Operating Lease
	The Company operates its headquarters under a non-cancelable operating lease which provides for the lease by the Company of approximately 37,100 square feet of space in Newark, California. On December 28, 2012, the Company amended its commercial building lease agreement to extend the term of the lease to June 30, 2022. The base rent under the facilities lease was $29,705 per month for the period from July 1, 2012 through June 30, 2013. The base rent increased 4% to $30,893 beginning July 1, 2013 through June 30, 2014. The base rent increases annually thereafter at a rate of four percent per year for the remaining term of the lease ending June 30, 2022.
	Future minimum lease payments under all operating leases are as shown below:
	Annual minimum payments:				Amount
		2013 (October 1, 2013 to December 31, 2013)			$	92,679
		2014				378,130
		2015				393,255
		2016				408,986
		2017 to 2022				2,557,481
		Total minimum payments			$	3,830,531
	Rental expense under all operating leases for the three and nine month periods ended September 30, 2013 was $106,439 and $320,289, respectively. Rental expense under all operating leases for the three and nine month periods ended September 30, 2012 was $93,166 and $276,795, respectively. The amount of deferred rent at September 30, 2013 and December 31, 2012 was $218,244 and $179,527, respectively.
	Capital Lease Obligations
	The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At September 30, 2013 and December 31, 2012, property and equipment with a cost of $87,946 and $73,275, respectively, were subject to such financing arrangements. Related accumulated amortization at September 30, 2013 and December 31, 2012, amounted to $23,640 and $8,380, respectively.
	Future minimum payments under capital lease and equipment financing arrangements as of September 30, 2013, are as follows:
	Annual minimum payments:		Amount
	2013 (October 1, 2013 to December 31, 2013)		$	6,379
	2014			25,516
	2015			25,516
	2016			11,442
	Total minimum payments			68,853
	Less amount representing interest			(4,548	)
	Present value of net minimum payments			64,305
	Short term portion of capital leases			(22,836	)
	Long term portion of capital leases		$	41,469
	Legal Matters
	The Company is subject to disputes, claims, requests for indemnification and lawsuits arising in the ordinary course of business. Under the indemnification provisions of the Company’s customer agreements, the Company routinely agrees to indemnify and defend its customers against infringement of any patent, trademark, copyright, trade secrets, or other intellectual property rights arising from customers’ legal use of the Company’s products or services. The exposure to the Company under these indemnification provisions is generally limited to the total amount paid for the indemnified products. However, certain indemnification provisions potentially expose the Company to losses in excess of the aggregate amount received from the customer. To date, there have been no claims against the Company by its customers pertaining to such indemnification provisions, and no amounts have been recorded.
	On October 9, 2013, Hudson Bay Master Fund Ltd. filed a complaint in the United States District Court for the Northern District of Illinois, Eastern Division, alleging that the Company had triggered anti-dilution provisions of its warrant and was entitled to adjustment of the exercise price and the number of shares. The warrant was issued on November 19, 2010 for 500,000 shares at an exercise price of $2.44 per share. The Company is evaluating the claim.

Subsequent_Event

Subsequent Event	3 Months Ended
	Sep. 30, 2013
Subsequent Events [Abstract]	'
Subsequent Event	'
	NOTE 12 — Subsequent Events
	Extension of Bank Line Credit Agreements
	On October 12, 2011, the Company entered into domestic and international working capital revolving credit line agreements with Silicon Valley Bank (“the Bank) with an initial expiration date of October 12, 2013. On October 12, 2013, the Company and its Bank entered into an agreement to extend the credit line agreements for a three month period ending January 10, 2014 (see “NOTE 6 — Bank Financing Arrangements” for more information).
	Related Party Short Term Notes Payable
	In October 2013, the Company raised a total of $100,000 in funds from the Company’s Chairman under a subordinated line of credit agreement previously approved by the Company’s Board of Directors. The funds raised are being used for working capital purposes (see “NOTE 5 — Related Party and Other Short Term Notes Payable” for more information).

Summary_of_Significant_Account1

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Use of Estimates	'
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates, and such differences may be material to the financial statements.
Cash Equivalents and Fair Value of Financial Instruments	'
	The Company considers all highly liquid investments purchased with an original maturity date of 90 days or less at date of purchase to be cash equivalents. At September 30, 2013 and December 31, 2012, all of the Company’s cash and cash equivalents consisted of amounts held in demand and money market deposits in banks. The carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, debt and foreign exchange contracts approximate fair value due to the relatively short period of time to maturity.

Inventories_Tables

Inventories (Tables)	3 Months Ended
	Sep. 30, 2013
Inventory Disclosure [Abstract]	'
Inventory components	'
		September 30,		December 31,
		2013		2012
	Raw materials and sub-assemblies	$	994,388	$	921,677
	Finished goods		62,005		19,390
		$	1,056,393	$	941,067

Segment_Information_and_Concen1

Segment Information and Concentrations (Tables)	3 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Revenue by geographic areas	'
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2013			2012			2013			2012
	Revenues:
	United States	$	2,492,640		$	1,971,957		$	8,296,712		$	6,450,535
	Europe		656,571			494,343			2,140,903			2,884,395
	Asia and rest of world		142,428			330,054			1,554,630			1,452,685
	Total revenues	$	3,291,639		$	2,796,354		$	11,992,245		$	10,787,615
Major customers accounted for at least 10% of total revenues	'
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2013			2012			2013			2012
	Ingram Micro Inc.		22	%		19	%		19	%		18	%
	ScanSource, Inc.		26	%		24	%		22	%		21	%
	BlueStar, Inc.		18	%		16	%		14	%		*
Major customers as a percentage of net accounts receivable balances	'
		September 30,			December 31,
		2013			2012
	Company A		34	%		28	%
	Company B		26	%		12	%
	Company C		10	%		16	%
	Company D		*			11	%
	Company E		*			12	%

Net_Loss_Per_Share_Applicable_1

Net Loss Per Share Applicable to Common Stockholders (Tables)	3 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Net loss per share applicable to common stockholders	'
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2013			2012			2013			2012
	Numerator:
	Net loss	$	(320,868	)	$	(982,823	)	$	(202,557	)	$	(2,609,997	)
	Denominator:
	Weighted average common shares outstanding used in computing net loss per share:
	Basic and Diluted		4,867,063			4,861,063			4,864,360			4,851,152
	Net loss per share:
	Basic and Diluted	$	(0.07	)	$	(0.20	)	$	(0.04	)	$	(0.54	)

Commitments_and_Contingency_Ta

Commitments and Contingency (Tables)	3 Months Ended
	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]	'
Future minimum payments for operating leases	'
	Annual minimum payments:				Amount
		2013 (October 1, 2013 to December 31, 2013)			$	92,679
		2014				378,130
		2015				393,255
		2016				408,986
		2017 to 2022				2,557,481
		Total minimum payments			$	3,830,531
Future minimum payments under capital lease and equipment financing arrangements	'
	Annual minimum payments:		Amount
	2013 (October 1, 2013 to December 31, 2013)		$	6,379
	2014			25,516
	2015			25,516
	2016			11,442
	Total minimum payments			68,853
	Less amount representing interest			(4,548	)
	Present value of net minimum payments			64,305
	Short term portion of capital leases			(22,836	)
	Long term portion of capital leases		$	41,469

Basis_of_Presentation_Details_

Basis of Presentation (Details Narrative) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies [Abstract]	'	'	'	'	'	'
Net loss	($320,868)	($982,823)	($202,557)	($2,609,997)	($3,298,082)	'
Accumulated deficit	-60,704,738	'	-60,704,738	'	-60,502,181	'
Cash balance	401,794	407,211	401,794	407,211	390,513	957,022
Bank line of credit	846,460	'	846,460	'	810,686	'
Total unused borrowing capacity	144,000	'	144,000	'	'	'
Current ratio (current assets divided by current liabilities)	0.5	'	0.5	'	'	'
Working capital deficit	($3,956,605)	'	($3,956,605)	'	'	'

Inventories_Inventory_componen

Inventories - Inventory components (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Inventory Disclosure [Abstract]	'	'
Raw materials and sub-assemblies	$994,388	$921,677
Finished goods	62,005	19,390
Total	$1,056,393	$941,067

Related_Party_Convertible_Note1

Related Party Convertible Notes Payable (Details Narrative) (USD $)

9 Months Ended

0 Months Ended

9 Months Ended

0 Months Ended

0 Months Ended

1 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Dec. 31, 2012

Aug. 31, 2012

Sep. 30, 2013

Aug. 01, 2012

Sep. 30, 2013

Sep. 04, 2013

Sep. 30, 2013

Sep. 04, 2013

Sep. 30, 2013

Dec. 12, 2012

Sep. 30, 2013

Nov. 05, 2012

Sep. 30, 2013

Convertible notes issued on August 1, 2012

Convertible notes issued on August 1, 2012

Convertible notes issued on August 1, 2012

Convertible notes issued on August 1, 2012

Convertible notes issued on September 4, 2013

Convertible notes issued on September 4, 2013

Convertible notes issued to Chairman on September 4, 2013

Convertible notes issued to Chairman on September 4, 2013

Convertible notes issued on November 5, 2012

Convertible notes issued on November 5, 2012

Convertible notes issued on November 5, 2012

All convertible subordinated notes

Proceeds of convertible subordinated notes payable

'

'

'

$400,000

'

'

'

$380,696

'

$371,929

'

$350,000

'

'

'

Annual interest rate if warrants issued on November 19, 2012 are outstanding

'

'

'

8.00%

'

'

'

8.00%

'

18.00%

'

8.00%

'

'

'

Annual interest rate if warrants issued on November 19, 2012 are not outstanding

'

'

'

8.00%

'

'

'

8.00%

'

12.00%

'

8.00%

'

'

'

Convertible subordinated notes payable maturity date

'

'

'

1-Aug-14

'

'

'

1-Aug-14

'

1-Aug-14

'

3-Sep-13

'

'

'

Conversion price if warrants issued on November 19, 2012 are outstanding

'

'

'

'

'

$2.44

'

$2.44

'

$2.44

'

'

'

$2.44

'

Conversion price if warrants issued on November 19, 2012 are not outstanding

'

'

'

'

'

$2

'

$1.25

'

$1.25

'

'

'

$1.04

'

Accrued interest expense

'

'

'

'

'

'

'

'

'

'

'

'

'

'

9,512

Redemption of related party convertible note payable

-25,000

'

'

'

'

'

-25,000

'

'

'

'

'

'

'

'

Related party convertible notes payable balance

$777,625

'

$750,000

'

$25,000

'

'

'

$380,696

'

$371,929

'

$0

'

'

Related_Party_and_Other_Short_1

Related Party and Other Short Term Notes Payable (Details Narrative) (USD $)

9 Months Ended

3 Months Ended

5 Months Ended

3 Months Ended

9 Months Ended

1 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Aug. 31, 2012

Oct. 12, 2011

Mar. 31, 2013

Feb. 01, 2013

Sep. 30, 2013

Sep. 30, 2013

Feb. 01, 2013

Oct. 31, 2013

Sep. 30, 2013

Feb. 01, 2013

Promissory note issued on 8/31/12

Promissory note issued on 8/31/12

Subordinated line of credit

Subordinated line of credit

Subordinated line of credit

Subordinated line of credit to Chariman

Subordinated line of credit to Chariman

Subordinated line of credit to Chariman

Aggregate maximum advance amount

'

'

'

$2,500,000

'

'

'

'

$1,000,000

'

'

$550,000

Weekly interest rate

'

'

'

5.00%

'

'

'

'

1.00%

'

'

1.00%

Line of credit balance

'

'

'

'

'

'

550,000

550,000

'

'

350,000

'

Proceeds from issuance of related party and other short term notes payable

600,000

800,000

'

'

'

'

'

'

'

100,000

'

'

Interest expense

'

'

'

'

'

'

71,986

178,772

'

'

'

'

Promissory note payable

'

'

400,000

'

'

'

'

'

'

'

'

'

Monthly compounded interest rate

'

'

9.70%

'

'

'

'

'

'

'

'

'

Total repayment

'

'

'

'

'

528,000

'

'

'

'

'

'

Weekly installment

'

'

'

'

'

25,000

'

'

'

'

'

'

Principal payment

'

'

'

'

95,289

'

'

'

'

'

'

'

Interest payment

'

'

'

'

$7,711

'

'

'

'

'

'

'

Bank_Financing_Arrangements_De

Bank Financing Arrangements (Details Narrative) (USD $)	0 Months Ended	3 Months Ended	9 Months Ended
	Oct. 12, 2011	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2012
Notes to Financial Statements	'	'	'	'
Aggregate maximum advance amount	$2,500,000	'	'	'
Maximum advance amount based on qualified domestic receivables	1,500,000	'	'	'
Maximum advance amount based on qualified international receivables	1,000,000	'	'	'
Advanced rate of domestic qualified non-distributor receivables	80.00%	'	'	'
Advanced rate of domestic qualified distributor receivables	60.00%	'	'	'
Advanced rate of international qualified non-distributor receivables	90.00%	'	'	'
Advanced rate of international qualified distributor receivables	70.00%	'	'	'
Debt reference rate	'Bank's Prime Rate	'	'	'
Basis point added to reference rate of debt (as a percent)	1.00%	'	'	'
Minimum interest rate on debt (as a percent)	5.00%	'	'	'
Interest rate in effect (as a percent)	5.00%	'	'	'
Monthly collateral handling fee (as a percent of financed receivable balance outstanding)	0.25%	'	'	'
Minimum liquidity ratio (quick assets divided by line of credit balance)	2	'	'	'
Effective rate on cash advances	'	'	13.50%	'
Amount outstanding under domestic line of credit	'	720,811	720,811	479,647
Amount outstanding under international line of credit	'	125,649	125,649	331,039
Full amounts of domestic accounts receivable provided as collateral	'	1,191,423	1,191,423	777,987
Full amounts of international accounts receivable provided as collateral	'	178,015	178,015	464,731
Interest expense	'	30,685	90,512	'
Accrued interest	'	$6,996	$6,996	$7,237

Segment_Information_and_Concen2

Segment Information and Concentrations - Revenue by geographic areas (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues:	$3,291,639	$2,796,354	$11,992,245	$10,787,615
United States	'	'	'	'
Revenues:	2,492,640	1,971,957	8,296,712	6,450,535
Europe	'	'	'	'
Revenues:	656,571	494,343	2,140,903	2,884,395
Asia and rest of world	'	'	'	'
Revenues:	$142,428	$330,054	$1,554,630	$1,452,685

Segment_Information_and_Concen3

Segment Information and Concentrations - Major customers accounted for at least 10% of total revenues (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Ingram Micro Inc.	'	'	'	'
Percent of total revenues	22.00%	19.00%	19.00%	18.00%
Threshold percentage for disclosure	10.00%	10.00%	10.00%	10.00%
Scansource, Inc.	'	'	'	'
Percent of total revenues	26.00%	24.00%	22.00%	21.00%
Threshold percentage for disclosure	10.00%	10.00%	10.00%	10.00%
BlueStar, Inc.	'	'	'	'
Percent of total revenues	18.00%	16.00%	14.00%	'
Threshold percentage for disclosure	10.00%	10.00%	10.00%	10.00%

Segment_Information_and_Concen4

Segment Information and Concentrations - Major customers as a percentage of net accounts receivable balances (Details)	Sep. 30, 2013	Dec. 31, 2012
Company A	'	'
Percent of net accounts receivable balances	34.00%	28.00%
Threshold percentage for disclosure	10.00%	10.00%
Company B	'	'
Percent of net accounts receivable balances	26.00%	12.00%
Threshold percentage for disclosure	10.00%	10.00%
Company C	'	'
Percent of net accounts receivable balances	10.00%	16.00%
Threshold percentage for disclosure	10.00%	10.00%
Company D	'	'
Percent of net accounts receivable balances	'	11.00%
Threshold percentage for disclosure	10.00%	10.00%
Company E	'	'
Percent of net accounts receivable balances	'	12.00%
Threshold percentage for disclosure	10.00%	10.00%

Concentration_of_Suppliers_Det

Concentration of Suppliers (Details Narrative)	3 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Notes to Financial Statements	'	'
Accounts payable balances with a single supplier	26.00%	32.00%
Percentage of inventory purchases from top two suppliers	43.00%	'

StockBased_Compensation_Detail

Stock-Based Compensation (Details Narrative) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]	'	'	'	'
Stock-based compensation expenses included in the statement of operations	$50,683	$105,657	$201,974	$469,117
Stock options granted	45,000	'	239,500	'
Weighted average grant price	$0.73	'	$0.77	'

Net_Loss_Per_Share_Applicable_2

Net Loss Per Share Applicable to Common Stockholders - Net income (loss) per share applicable to common stockholders (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Numerator:	'	'	'	'	'
Net income (loss)	($320,868)	($982,823)	($202,557)	($2,609,997)	($3,298,082)
Basic	4,867,063	4,861,063	4,864,360	4,851,152	'
Diluted	4,867,063	4,861,063	4,864,360	4,851,152	'
Net income (loss) per share:	'	'	'	'	'
Basic	($0.07)	($0.20)	($0.04)	($0.54)	'
Diluted	($0.07)	($0.20)	($0.04)	($0.54)	'

Net_Loss_Per_Share_Applicable_3

Net Loss Per Share Applicable to Common Stockholders (Details Narrative)	Sep. 30, 2013	Sep. 30, 2012
Accounting Policies [Abstract]	'	'
Common shares issuable for options, warrants and convertible notes omitted from the loss per share calculation	2,307,274	2,137,113

Taxes_Details_Narrative

Taxes (Details Narrative) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Income Tax Disclosure [Abstract]	'	'	'	'	'
Deferred tax expense	$7,985	$7,985	$23,955	$23,955	'
Unrecognized tax benefit	'	'	'	'	$633,000

Commitments_and_Contingency_Fu

Commitments and Contingency - Future minimum payments for operating leases (Details) (USD $)	Sep. 30, 2013
Annual minimum payments:	'
2013 (October 1, 2013 to December 31, 2013)	$92,679
2014	378,130
2015	393,255
2016	408,986
2017 to 2022	2,557,481
Total minimum payments	$3,830,531

Commitments_and_Contingency_Fu1

Commitments and Contingency - Future minimum payments under capital lease and equipment financing arrangements (Details) (USD $)	Sep. 30, 2013
Annual minimum payments:	'
2013 (July 1, 2013 to December 31, 2013)	$6,379
2014	25,516
2015	25,516
2016	11,442
Total minimum payments	68,853
Less amount representing interest	-4,548
Present value of net minimum payments	64,305
Short term portion of capital leases	-22,836
Long term portion of capital leases	$41,469

Commitments_and_Contingency_De

Commitments and Contingency (Details Narrative) (USD $)	3 Months Ended		7 Months Ended	9 Months Ended		16 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]	'	'	'	'	'	'
Rental expense for operating lease	$106,439	$93,166	'	$320,289	$276,795	'
Deferred rent	218,244	'	179,527	218,244	'	218,244
Capital lease obligations	87,946	'	73,275	87,946	'	87,946
Accumulated amortization	'	'	$8,380	'	'	$23,640