Socket Mobile (SCKT) 10-Q 15 May 14 2014 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2014	9-May-14
Document And Entity Information	'	'
Entity Registrant Name	'Socket Mobile, Inc.	'
Entity Central Index Key	'0000944075	'
Document Type	'10-Q	'
Document Period End Date	31-Mar-14	'
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	'	4,914,563
Document Fiscal Period Focus	'Q1	'
Document Fiscal Year Focus	'2014	'

CONDENSED_BALANCE_SHEETS

CONDENSED BALANCE SHEETS (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current assets:	'	'
Cash and cash equivalents	$670,346	$606,255
Accounts receivable, net	1,708,446	1,427,590
Inventories	695,847	1,105,088
Prepaid expenses and other current assets	182,309	93,647
Total current assets	3,256,948	3,232,580
Property and equipment:	'	'
Machinery and office equipment	1,926,287	1,918,187
Computer equipment	1,033,985	1,059,943
Property and equipment, gross	2,960,272	2,978,130
Accumulated depreciation	-2,722,076	-2,683,193
Property and equipment, net	238,196	294,937
Intangible assets, net	15,000	30,000
Goodwill	4,427,000	4,427,000
Other assets	117,518	117,518
Total assets	8,054,662	8,102,035
Current liabilities:	'	'
Accounts payable and accrued expenses	3,585,350	3,524,148
Accrued payroll and related expenses	528,986	580,665
Bank line of credit	814,571	763,487
Deferred income on shipments to distributors	904,729	1,006,057
Related party and other short term notes payable	650,000	650,000
Related party convertible notes payable	777,625	777,625
Short term portion of deferred service revenue	165,116	172,474
Short term portion of capital leases and deferred rent	23,243	22,818
Total current liabilities	7,449,620	7,497,274
Long term portion of deferred service revenue	101,968	95,049
Long term portion of capital leases and deferred rent	269,557	265,002
Deferred income taxes	119,319	111,334
Total liabilities	7,940,464	7,968,659
Stockholders’ equity:	'	'
Common stock, $0.001 par value: Authorized – 20,000,000 shares, Issued and outstanding – 4,904,563 shares at March 31, 2014 and 4,867,063 shares at December 31, 2013	4,905	4,867
Additional paid-in capital	61,303,391	61,251,183
Accumulated deficit	-61,194,098	-61,122,674
Total stockholders’ equity	114,198	133,376
Total liabilities and stockholders’ equity	$8,054,662	$8,102,035

CONDENSED_BALANCE_SHEETS_Paren

CONDENSED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
LIABILITIES AND STOCKHOLDERS' EQUITY	'	'
Common stock par value	$0.00	$0.00
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	4,904,563	4,867,063
Common stock, shares outstanding	4,904,563	4,867,063

CONDENSED_STATEMENTS_OF_OPERAT

CONDENSED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]	'	'
Revenues	$3,795,339	$4,265,175
Cost of revenues	2,172,279	2,557,090
Gross profit	1,623,060	1,708,085
Operating expenses:	'	'
Research and development	553,686	524,750
Sales and marketing	475,946	559,199
General and administrative	520,923	461,062
Total operating expenses	1,550,555	1,545,011
Operating income	72,505	163,074
Interest expense and other, net	-135,944	-80,287
Net (loss) income before income taxes	-63,439	82,787
Income tax expense	-7,985	-7,985
Net (loss) income	($71,424)	$74,802
Net (loss) income per share:	'	'
Basic	($0.01)	$0.02
Diluted	($0.01)	$0.02
Weighted average shares outstanding:	'	'
Basic	4,897,896	4,861,063
Diluted	4,897,896	4,871,992

CONDENSED_STATEMENTS_OF_CASH_F

CONDENSED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Operating activities	'	'
Net (loss) income	($71,424)	$74,802
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:	'	'
Stock-based compensation	52,246	93,735
Depreciation and amortization	79,841	66,959
Deferred income tax expense	7,985	7,985
Changes in operating assets and liabilities:	'	'
Accounts receivable	-280,856	-425,228
Inventories	409,241	-66,972
Prepaid expenses and other current assets	-88,662	-148,487
Accounts payable	61,202	247,649
Accrued payroll and related expenses	-51,679	56,823
Deferred income on shipments to distributors	-101,328	-169,322
Deferred service revenue	-439	-19,028
Change in deferred rent	10,530	14,093
Net cash provided by (used in) operating activities	26,657	-266,991
Investing activities	'	'
Purchases of equipment	-8,100	'
Net cash used in investing activities	-8,100	'
Financing activities	'	'
Payments on capital leases	-5,550	-4,269
Proceeds from borrowings under bank line of credit agreement	943,871	1,597,759
Repayments of borrowings under bank line of credit agreement	-892,787	-1,532,940
Proceeds from the issuance of related party and other short term notes payable	'	550,000
Repayment of short term note payable	'	-95,289
Net cash provided by financing activities	45,534	515,261
Net increase in cash and cash equivalents	64,091	248,270
Cash and cash equivalents at beginning of period	606,255	390,513
Cash and cash equivalents at end of period	670,346	638,783
Supplemental cash flow information	'	'
Cash paid for interest	$102,329	$68,433

Basis_of_Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2014
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, 2013. 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 unprofitable in the quarter ended March 31, 2014. The Company was profitable in each of the first two quarters in 2013, but unprofitable in the third and fourth quarters, and unprofitable in total for fiscal 2013 in the amount of $620,493. As of March 31, 2014, the Company has an accumulated deficit of $61,194,098. The Company’s cash balances at March 31, 2014 were $670,346, including $814,571 advanced on its bank lines of credit. At March 31, 2014, the Company had additional unused borrowing capacity of approximately $284,000 on its bank lines of credit. The Company’s balance sheet at March 31, 2014 has a current ratio (current assets divided by current liabilities) of 0.4 to 1.0, and a working capital deficit of $4,192,672 (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. 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
	Mar. 31, 2014
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 March 31, 2014 and December 31, 2013, 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
	Mar. 31, 2014
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.
		March 31,	December 31,
		2014	2013
	Raw materials and sub-assemblies	$      662,013	$     1,045,356
	Finished goods	33,834	59,732
		$      695,847	$     1,105,088

Related_Party_Convertible_Note

Related Party Convertible Notes Payable	3 Months Ended
	Mar. 31, 2014
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. In April 2013, $25,000 of the original convertible notes were repaid. In September 2013, $350,000 of the notes were reissued as discussed previously. At March 31, 2014, $25,000 of the original notes were outstanding. These remaining original notes plus related accrued interest were repaid in April 2014. 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 the Company’s 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 issuance 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 the Company’s 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.
	Interest expense related to all convertible subordinated notes for the three months ended March 31, 2014 and 2013 was $25,686 and $14,849, respectively. The related accrued interest at March 31, 2014 and December 31, 2013 was $60,523 and $34,837, respectively.

Related_Party_and_Other_Short_

Related Party and Other Short Term Notes Payable	3 Months Ended
	Mar. 31, 2014
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 March 31, 2014 and December 31, 2013, a total of $650,000 in funds were outstanding under this line, of which $450,000 and $50,000 respectively were from the Company’s Chairman and Chief Executive Officer. The line had an expiration date of December 1, 2013, which in November 2013 was extended to June 1, 2014. 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 credit facility with its bank. Interest expense for the three month periods ended March 31, 2014 and 2013, related to the line of credit were $85,571 and $35,286 respectively.

Bank_Financing_Arrangements

Bank Financing Arrangements	3 Months Ended
	Mar. 31, 2014
Debt Disclosure [Abstract]	'
Bank Financing Arrangements	'
	NOTE 6 — Bank Financing Arrangements
	On February 27, 2014, the Company entered into a new credit facility agreement with Bridge Bank (the “Bank”). The credit facility was activated and transfer of the credit facility from the Company’s former bank was completed on March 7, 2014. The revolving credit line agreement is for a two year period ending February 27, 2016. Under the terms of the credit facility agreement with the Bank, the Company may borrow up to $2.5 million, of which up to $1.5 million is based on qualified receivables from domestic customers and up to $1.0 million is based on qualified receivables from international customers. The Company’s total borrowings under the line may not exceed 50% of the sum of cash plus qualified receivables. Advances against the domestic and international lines are calculated at 70% of qualified receivables. Borrowings under the lines bear an annual interest rate equal to the Bank’s prime rate (minimum of 3.25%) plus 1.5%. The annual interest rate in effect beginning March 7, 2014 is 4.75% per annum. There is also a collateral handling fee of 0.2% per month of the financed receivables outstanding. The applicable interest and fees are calculated based on the actual amounts borrowed. At March 31, 2014, the effective rate (interest plus all applicable fees) on actual cash advanced is 4.95% per annum. The borrowings under the credit facility are secured by a first priority security interest in the assets of the Company. All advances are at the Bank’s discretion and the Bank is not obligated to make advances. The agreement may be terminated by the Company or by the Bank at any time. The outstanding amounts borrowed under the domestic line at March 31, 2014 were $814,571, and the full amounts of accounts receivable provided as collateral were $1,160,000. There were no amounts borrowed under the international line at March 31, 2014.
	During 2013 and up through March 7, 2014, the Company had a credit facility agreement with Silicon Valley Bank (the “Former Bank”). The credit facility allowed 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 were calculated at 80% of qualified receivables except for receivables from distributors which are calculated at 60%. Advances against the international line were calculated at 90% against qualified hedged receivables and 70% against qualified non-hedged receivables and receivables from distributors. Borrowings under the lines bore an annual interest rate equal to the greater of (i) the Bank’s prime rate plus 1%, or (ii) 5%. The rate in effect through March 7, 2014 was 5%. There was also a collateral handling fee of 0.25% per month of the financed receivable balance outstanding. The applicable interest and fees were 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 2013 was 13.6% per annum. The outstanding amounts borrowed under the domestic and international lines at December 31, 2013 were $655,130 and $108,357, respectively, and the full amounts of accounts receivable provided as collateral were $1,078,053, and $153,372, respectively. The outstanding amount borrowed at March 7, 2014 was $751,906, which was transferred to our new bank line of credit with Bridge Bank.
	Total interest expense on the amounts drawn under the Company’s bank credit lines in effect during the three months ended March 31, 2014 and 2013, was $24,119 and $27,027, respectively. Accrued interest related to the amounts outstanding under the Company’s bank lines of credit at March 31, 2014 and December 31, 2013 was $2,571 and $7,019, respectively.

Segment_Information_and_Concen

Segment Information and Concentrations	3 Months Ended
	Mar. 31, 2014
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 March 31,
	Revenues:			2014	2013
	United States			$       2,682,077	$       2,577,630
	Europe			745,070	873,147
	Asia and rest of world			368,192	814,398
	Total revenues			$       3,795,339	$       4,265,175
	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 month periods ended March 31, 2014 and 2013 were as follows:
		Three Months Ended March 31,
		2014		2013
	Ingram Micro Inc.	33%		16%
	Scansource, Inc.	13%		20%
	BlueStar, Inc.	15%		*
	CF Company.	*		18%
	_____________
	* 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 original equipment manufacturers (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 March 31, 2014 and December 31, 2013 were as follows:
		March 31,		December 31,
		2014		2013
	Company A	38%		43%
	Company B	28%		28%
	Company C	16%		14%
	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 March 31, 2014 and December 31, 2013, 24% and 28%, respectively, of the Company’s accounts payable balances were concentrated in a single supplier. For the three months ended March 31, 2014, this and another supplier accounted for 65% of the inventory purchases.

StockBased_Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2014
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 months ended March 31, 2014 and 2013, was $52,246 and $93,735, respectively. In the three months ended March 31, 2014, 204,100 stock options were granted at a weighted average per share fair value estimated at $0.64.

Net_Loss_Per_Share_Applicable_

Net Loss Per Share Applicable to Common Stockholders	3 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]	'
Net Loss Per Share Applicable to Common Stockholders	'
	NOTE 9 — Net (Loss) Income Per Share Applicable to Common Stockholders
	The following table sets forth the computation of basic and diluted net loss per share:
			Three Months Ended March 31,
		2014		2013
	Numerator:
	Net (loss) income	$     (71,424)		$     74,802
	Denominator:
	Weighted average common shares outstanding
	used in computing net (loss) income per share:
	Basic	4,897,896		4,861,063
	Diluted	4,897,896		4,871,992
	Net (loss) income per share:
	Basic	$          (0.01)		$           0.02
	Diluted	$          (0.01)		$           0.02
	For the three months ended March 31, 2014, the diluted net loss per share is equal to the basic net loss per share because the Company experienced losses in this period. 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 3,594,918 shares of common stock at March 31, 2014, have been omitted from the net loss per share calculation.

Taxes

Taxes	3 Months Ended
	Mar. 31, 2014
Income Tax Disclosure [Abstract]	'
Taxes	'
	NOTE 10 — Taxes
	Income tax expense during the three months ended March 31, 2014 and 2013, 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 in each of the three month periods ended March 31, 2014 and 2013.
	At December 31, 2013, the Company has an unrecognized tax benefit of approximately $682,000, which did not change significantly during the three months ended March 31, 2014. 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
	Mar. 31, 2014
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
	2014 (April 1, 2014 to December 31, 2014)	$      285,451
	2015	393,255
	2016	408,986
	2017	425,345
	2018 to 2022	2,132,136
	Total minimum payments	$   3,645,173
	Rental expense under all operating leases was $107,065 and $106,757, for the three month periods ended March 31, 2014 and 2013, respectively. The amount of related deferred rent at March 31, 2014 and December 31, 2013 was $239,303 and $228,773, respectively.
	Capital Lease Obligations
	The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At March 31, 2014 and December 31, 2013, property and equipment with a cost of $87,945 were subject to such financing arrangements. Related accumulated amortization at March 31, 2014 and December 31, 2013, amounted to $34,448 and $28,898, respectively.
	Future minimum payments under capital lease and equipment financing arrangements as of March 31, 2014, are as follows:
	Annual minimum payments:	Amount
	2014 (April 1, 2014 to December 31, 2014)	$     19,850
	2015	26,467
	2016	11,916
	Total minimum payments	58,233
	Less amount representing interest	-4,736
	Present value of net minimum payments	53,497
	Short term portion of capital leases	-23,243
	Long term portion of capital leases	$     30,254
	Purchase Commitments
	As of March 31, 2014, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $2,081,000.
	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.

Summary_of_Significant_Account1

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2014
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 March 31, 2014 and December 31, 2013, 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
	Mar. 31, 2014
Inventory Disclosure [Abstract]	'
Inventory components	'
		March 31,		December 31,
		2014		2013
	Raw materials and sub-assemblies	$	662,013	$	1,045,356
	Finished goods		33,834		59,732
		$	695,847	$	1,105,088

Segment_Information_and_Concen1

Segment Information and Concentrations (Tables)	3 Months Ended
	Mar. 31, 2014
Notes to Financial Statements	'
Revenue by geographic areas	'
		Three Months Ended March 31,
	Revenues:	2014			2013
	United States	$	2,682,077		$	2,577,630
	Europe		745,070			873,147
	Asia and rest of world		368,192			814,398
	Total revenues	$	3,795,339		$	4,265,175
Major customers accounted for at least 10% of total revenues	'
		Three Months Ended March 31,
		2014			2013
	Ingram Micro Inc.		33	%		16	%
	Scansource, Inc.		13	%		20	%
	BlueStar, Inc.		15	%		*
	CF Company.		*			18	%
Major customers as a percentage of net accounts receivable balances	'
		March 31,			December 31,
		2014			2013
	Company A		38	%		43	%
	Company B		28	%		28	%
	Company C		16	%		14	%

Net_Loss_Per_Share_Applicable_1

Net Loss Per Share Applicable to Common Stockholders (Tables)	3 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]	'
Net loss per share applicable to common stockholders	'
		Three Months Ended March 31,
		2014			2013
	Numerator:
	Net (loss) income	$	(71,424	)	$	74,802
	Denominator:
	Weighted average common shares outstanding
	used in computing net (loss) income per share:
	Basic		4,897,896			4,861,063
	Diluted		4,897,896			4,871,992
	Net (loss) income per share:
	Basic	$	(0.01	)	$	0.02
	Diluted	$	(0.01	)	$	0.02

Commitments_and_Contingency_Ta

Commitments and Contingency (Tables)	3 Months Ended
	Mar. 31, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Future minimum payments for operating leases	'
	Annual minimum payments:				Amount
		2014 (April 1, 2014 to December 31, 2014)			$	285,451
		2015				393,255
		2016				408,986
		2017				425,345
		2018 to 2022				2,132,136
		Total minimum payments			$	3,645,173
Future minimum payments under capital lease and equipment financing arrangements	'
	Annual minimum payments:		Amount
	2014 (April 1, 2014 to December 31, 2014)		$	19,850
	2015			26,467
	2016			11,916
	Total minimum payments			58,233
	Less amount representing interest			(4,736	)
	Present value of net minimum payments			53,497
	Short term portion of capital leases			(23,243	)
	Long term portion of capital leases		$	30,254

Basis_of_Presentation_Details_

Basis of Presentation (Details Narrative) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Dec. 31, 2012
Accounting Policies [Abstract]	'	'	'	'
Net loss	($71,424)	$74,802	($620,493)	'
Accumulated deficit	-61,194,098	'	-61,122,674	'
Cash balance	670,346	638,783	606,255	390,513
Bank line of credit	814,571	'	763,487	'
Total unused borrowing capacity	284,000	'	'	'
Current ratio (current assets divided by current liabilities)	0.4	'	'	'
Working capital deficit	($4,192,672)	'	'	'

Inventories_Inventory_componen

Inventories - Inventory components (Details) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Inventory Disclosure [Abstract]	'	'
Raw materials and sub-assemblies	$662,013	$1,045,356
Finished goods	33,834	59,732
Total	$695,847	$1,105,088

Related_Party_Convertible_Note1

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

Mar. 31, 2014

Dec. 31, 2013

Aug. 31, 2012

Apr. 30, 2013

Mar. 31, 2014

Aug. 01, 2012

Sep. 04, 2013

Sep. 04, 2013

Dec. 12, 2012

Nov. 05, 2012

Mar. 31, 2014

Mar. 31, 2013

Dec. 31, 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 to Chairman on September 4, 2013

Convertible notes issued on November 5, 2012

Convertible notes issued on November 5, 2012

All convertible subordinated notes

All convertible subordinated notes

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

'

'

'

4-Sep-17

4-Sep-17

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

'

'

'

Redemption of related party convertible note payable

'

'

'

-25,000

'

'

'

'

'

'

'

'

'

Related party convertible notes payable balance

777,625

777,625

'

'

25,000

'

'

'

'

'

'

'

'

Interest expense

'

'

'

'

'

'

'

'

'

'

25,686

14,849

'

Accrued interest expense

'

'

'

'

'

'

'

'

'

'

$60,523

'

$34,837

Related_Party_and_Other_Short_1

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

0 Months Ended

0 Months Ended

3 Months Ended

0 Months Ended

Feb. 27, 2014

Oct. 12, 2011

Mar. 31, 2014

Jan. 31, 2013

Mar. 31, 2014

Mar. 31, 2013

Dec. 31, 2013

Jan. 31, 2013

Mar. 31, 2014

Dec. 31, 2013

Mar. 31, 2014

Dec. 31, 2013

Subordinated line of credit

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

Subordinated line of credit to CEO

Subordinated line of credit to CEO

Aggregate maximum advance amount

$2,500,000

$2,500,000

'

$1,000,000

'

'

'

$550,000

'

'

'

'

Weekly interest rate

'

5.00%

4.95%

1.00%

1.00%

'

1.00%

1.00%

1.00%

1.00%

1.00%

1.00%

Maturity date

27-Feb-16

28-Feb-14

'

1-Jun-14

'

'

'

1-Jun-14

'

'

'

'

Line of credit balance

'

'

'

'

650,000

'

650,000

'

450,000

450,000

50,000

50,000

Interest expense

'

'

'

'

$85,571

$35,286

'

'

'

'

'

'

Bank_Financing_Arrangements_De

Bank Financing Arrangements (Details Narrative) (USD $)	0 Months Ended			3 Months Ended		12 Months Ended
	Mar. 07, 2014	Feb. 27, 2014	Oct. 12, 2011	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Notes to Financial Statements	'	'	'	'	'	'
Aggregate maximum advance amount	'	$2,500,000	$2,500,000	'	'	'
Maximum advance amount based on qualified domestic receivables	'	1,500,000	1,500,000	'	'	'
Maximum advance amount based on qualified international receivables	'	1,500,000	1,000,000	'	'	'
Advanced rate of domestic qualified non-distributor receivables	'	70.00%	80.00%	'	'	'
Advanced rate of domestic qualified distributor receivables	'	70.00%	60.00%	'	'	'
Advanced rate of international qualified non-distributor receivables	'	70.00%	90.00%	'	'	'
Advanced rate of international qualified distributor receivables	'	70.00%	70.00%	'	'	'
Debt reference rate	'0.0475	'Bank's Prime Rate	'Bank's Prime Rate	'	'	'
Minimum interest rate on debt (as a percent)	'	3.25%	5.00%	'	'	'
Basis point added to reference rate of debt (as a percent)	'	1.50%	1.00%	1.50%	'	'
Interest rate in effect (as a percent)	'	'	5.00%	4.95%	'	'
Monthly collateral handling fee (as a percent of financed receivable balance outstanding)	'	0.20%	0.25%	0.20%	'	'
Minimum liquidity ratio (quick assets divided by line of credit balance)	'	'	2	'	'	'
Effective rate on cash advances	'	'	'	'	'	13.60%
Amount outstanding under domestic line of credit	'	'	'	814,571	'	655,130
Amount outstanding under international line of credit	'	'	'	0	'	108,357
Full amounts of domestic accounts receivable provided as collateral	'	'	'	1,160,000	'	1,078,053
Full amounts of international accounts receivable provided as collateral	'	'	'	0	'	153,372
Interest expense	'	'	'	24,119	27,027	'
Accrued interest	'	'	'	2,571	'	7,019
Amount outstanding under former bank's line of credit	$751,906	'	'	'	'	'
Line of credit expire date	'	27-Feb-16	28-Feb-14	'	'	'

Segment_Information_and_Concen2

Segment Information and Concentrations - Revenue by geographic areas (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:	$3,795,339	$4,265,175
United States	'	'
Revenues:	2,682,077	2,577,630
Europe	'	'
Revenues:	745,070	873,147
Asia and rest of world	'	'
Revenues:	$368,192	$814,398

Segment_Information_and_Concen3

Segment Information and Concentrations - Major customers accounted for at least 10% of total revenues (Details)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Ingram Micro Inc.	'	'
Percent of total revenues	33.00%	16.00%
Threshold percentage for disclosure	10.00%	10.00%
Scansource, Inc.	'	'
Percent of total revenues	13.00%	20.00%
Threshold percentage for disclosure	10.00%	10.00%
BlueStar, Inc.	'	'
Percent of total revenues	15.00%	'
Threshold percentage for disclosure	'	10.00%
CF Company	'	'
Percent of total revenues	'	18.00%
Threshold percentage for disclosure	10.00%	10.00%

Segment_Information_and_Concen4

Segment Information and Concentrations - Major customers as a percentage of net accounts receivable balances (Details)	Mar. 31, 2014	Dec. 31, 2013
Company A	'	'
Percent of net accounts receivable balances	38.00%	43.00%
Threshold percentage for disclosure	10.00%	10.00%
Company B	'	'
Percent of net accounts receivable balances	28.00%	28.00%
Threshold percentage for disclosure	10.00%	10.00%
Company C	'	'
Percent of net accounts receivable balances	16.00%	14.00%
Threshold percentage for disclosure	10.00%	10.00%

Concentration_of_Suppliers_Det

Concentration of Suppliers (Details Narrative)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Notes to Financial Statements	'	'
Accounts payable balances with a single supplier	24.00%	28.00%
Percentage of inventory purchases from top two suppliers	65.00%	'

StockBased_Compensation_Detail

Stock-Based Compensation (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]	'	'
Stock-based compensation expenses included in the statement of operations	$52,246	$93,735
Stock options granted	204,100	'
Weighted average grant price	$0.64	'

Net_Income_Loss_Per_Share_Appl

Net Income (Loss) Per Share Applicable to Common Stockholders - Net income (loss) per share applicable to common stockholders (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Numerator:	'	'	'
Net income (loss)	($71,424)	$74,802	($620,493)
Basic	4,897,896	4,861,063	'
Diluted	4,897,896	4,871,992	'
Net income (loss) per share:	'	'	'
Basic	($0.01)	$0.02	'
Diluted	($0.01)	$0.02	'

Net_Income_Loss_Per_Share_Appl1

Net Income (Loss) Per Share Applicable to Common Stockholders (Details Narrative)	Mar. 31, 2014
Accounting Policies [Abstract]	'
Common shares issuable for options, warrants and convertible notes omitted from the loss per share calculation	3,594,918

Taxes_Details_Narrative

Taxes (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Income Tax Disclosure [Abstract]	'	'	'
Deferred tax expense	$7,985	$7,985	'
Unrecognized tax benefit	'	'	$682,000

Future_minimum_payments_for_op

Future minimum payments for operating leases (Details) (USD $)	Mar. 31, 2014
Annual minimum payments:	'
2014 (April 1, 2014 to December 31, 201)	$285,451
2015	393,255
2016	408,986
2017	425,345
2018 to 2022	2,132,136
Total minimum payments	$3,645,173

Future_minimum_payments_under_

Future minimum payments under capital lease and equipment financing arrangements (Details) (USD $)	Mar. 31, 2014
Annual minimum payments:	'
2014 (April 1, 2014 to December 31, 201)	$19,850
2015	26,467
2016	11,916
Total minimum payments	58,233
Less amount representing interest	-4,736
Present value of net minimum payments	53,497
Short term portion of capital leases	-23,243
Long term portion of capital leases	$30,254

Commitments_and_Contingencies_

Commitments and Contingencies (Details Narrative) (USD $)	3 Months Ended		19 Months Ended	22 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Mar. 31, 2014
Commitments and Contingencies Disclosure [Abstract]	'	'	'	'
Rental expense for operating lease	$107,065	$106,757	'	'
Deferred rent	239,303	'	228,773	239,303
Non-cancelable purchase commitments for inventory	2,081,000	'	'	2,081,000
Capital lease obligations	87,945	'	'	87,945
Accumulated amortization	'	'	$28,898	$34,448