Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | SOCKET MOBILE, INC. | |
Entity Central Index Key | 944075 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
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 | 5,544,230 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
Balance_Sheets
Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $743,232 | $632,631 |
Accounts receivable, net | 1,670,579 | 1,896,701 |
Inventories | 807,877 | 957,327 |
Prepaid expenses and other current assets | 94,562 | 125,707 |
Total current assets | 3,316,250 | 3,612,366 |
Property and equipment: | ||
Machinery and office equipment | 2,041,191 | 2,025,397 |
Computer equipment | 996,538 | 984,099 |
Property and equipment, gross | 3,037,729 | 3,009,496 |
Accumulated depreciation | -2,815,266 | -2,764,964 |
Property and equipment, net | 222,463 | 244,532 |
Goodwill | 4,427,000 | 4,427,000 |
Other assets | 85,918 | 85,918 |
Total assets | 8,051,631 | 8,369,816 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,655,935 | 3,007,048 |
Accrued payroll and related expenses | 523,355 | 528,155 |
Bank line of credit | 815,981 | 815,981 |
Deferred income on shipments to distributors | 887,837 | 978,555 |
Related party and other short term notes payable | 600,000 | 600,000 |
Related party convertible notes payable-current portion | 380,696 | 380,696 |
Short term portion of deferred service revenue | 122,675 | 131,344 |
Short term portion of capital leases and deferred rent | 25,680 | 25,102 |
Total current liabilities | 6,012,159 | 6,466,881 |
Related party convertible notes payable | 371,929 | 371,929 |
Long term portion of deferred service revenue | 76,262 | 83,301 |
Long term portion of capital leases and deferred rent | 275,770 | 275,589 |
Deferred income taxes | 151,259 | 143,274 |
Total liabilities | 6,887,379 | 7,340,974 |
Stockholders' equity: | ||
Common stock, $0.001 par value: Authorized – 20,000,000 shares, Issued and outstanding – 5,544,230 shares at March 31, 2015 and 5,403,851 shares at December 31, 2014 | 5,544 | 5,404 |
Additional paid-in capital | 61,920,825 | 61,713,995 |
Accumulated deficit | -60,762,117 | -60,690,557 |
Total stockholders’ equity | 1,164,252 | 1,028,842 |
Total liabilities and stockholders’ equity | $8,051,631 | $8,369,816 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
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 | 5,544,230 | 5,403,851 |
Common stock, shares outstanding | 5,544,230 | 5,403,851 |
Statements_of_Operations
Statements of Operations (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
Revenues | $4,005,744 | $3,795,339 |
Cost of revenues | 2,198,106 | 2,172,279 |
Gross profit | 1,807,638 | 1,623,060 |
Operating expenses: | ||
Research and development | 575,051 | 553,686 |
Sales and marketing | 618,266 | 475,946 |
General and administrative | 603,226 | 520,923 |
Total operating expenses | 1,796,543 | 1,550,555 |
Operating income | 11,095 | 72,505 |
Interest expense and other, net | -74,670 | -135,944 |
Net loss before income taxes | -63,575 | -63,439 |
Income tax expense | -7,985 | -7,985 |
Net loss | ($71,560) | ($71,424) |
Net loss per share: | ||
Basic and Diluted | ($0.01) | ($0.01) |
Weighted average shares outstanding: | ||
Basic and Diluted | 5,513,588 | 4,897,896 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Operating activities | ||
Net loss | ($71,560) | ($71,424) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 46,568 | 52,246 |
Depreciation and amortization | 50,301 | 79,841 |
Deferred income tax expense | 7,985 | 7,985 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 226,122 | -280,856 |
Inventories | 149,450 | 409,241 |
Prepaid expenses and other current assets | 31,145 | -88,662 |
Accounts payable and accrued expenses | -351,113 | 61,202 |
Accrued payroll and related expenses | -4,800 | -51,679 |
Deferred income on shipments to distributors | -90,718 | -101,328 |
Deferred service revenue | -15,708 | -439 |
Change in deferred rent | 6,822 | 10,530 |
Net cash (used in) provided by operating activities | -15,506 | 26,657 |
Investing activities | ||
Purchases of equipment | -28,232 | -8,100 |
Net cash used in investing activities | -28,232 | -8,100 |
Financing activities | ||
Payments on capital leases | -6,063 | -5,550 |
Proceeds from borrowings under bank line of credit agreement | 14,515 | 943,871 |
Repayments of borrowings under bank line of credit agreement | -14,515 | -892,787 |
Stock options exercised | 29,152 | |
Warrants exercised | 131,250 | |
Net cash provided by financing activities | 154,339 | 45,534 |
Net increase in cash and cash equivalents | 110,601 | 64,091 |
Cash and cash equivalents at beginning of period | 632,631 | |
Cash and cash equivalents at end of period | 743,232 | 670,346 |
Supplemental cash flow information | ||
Cash paid for interest | $43,036 | $102,329 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Disclosure Text Block [Abstract] | |
Basis of Presentation | NOTE 1 — Basis of Presentation |
The accompanying unaudited 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 omitted. | |
These 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, 2014. 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 first quarter of 2015 and 2014. As of March 31, 2015, the Company has an accumulated deficit of $60,762,117. The Company’s cash balances at March 31, 2015 were $743,232, including $815,981 advanced on its bank lines of credit. At March 31, 2015, the Company had additional unused borrowing capacity of approximately $258,000 on its bank lines of credit. The Company’s balance sheet at March 31, 2015 has a current ratio (current assets divided by current liabilities) of 0.55 to 1.0, and a working capital deficit of $2,695,909 (current assets less current liabilities). These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. | |
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 intended 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 its distributors and registered developers whose applications support the use of the Company’s barcode scanning products. 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 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. | |
To maintain revenue growth and profitability, the Company 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 its 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, 2015 | |
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, 2015 and December 31, 2014, 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, 2015 | |||||||||
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, | ||||||||
2015 | 2014 | ||||||||
Raw materials and sub-assemblies | $ | 787,818 | $ | 930,886 | |||||
Finished goods | 20,059 | 26,441 | |||||||
$ | 807,877 | $ | 957,327 | ||||||
Related_Party_Convertible_Note
Related Party Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Convertible Notes Payable | NOTE 4 — Related Party Convertible Notes Payable |
Short Term Related Party Convertible Notes Payable | |
Short term related party convertible notes payable at March 31, 2015 and December 31, 2014 were $380,696. The notes were issued on September 4, 2013 to officers and directors of the Company and mature on September 4, 2017. The notes have an interest rate of 8% per annum that compounds quarterly, and contain a holder call provision that became effective on September 4, 2014. Accrued interest convertible into common stock was $50,520 and $42,179 at March 31, 2015 and December 31, 2014, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three months ended March 31, 2015 and 2014 was $8,342 and $8,200, respectively. The notes and accrued interest 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 (warrants expire May 20, 2016) or at $1.25 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 the Company’s bank. | |
Long Term Related Party Convertible Notes Payable | |
Long term related party convertible notes payable at March 31, 2014 and December 31, 2014 were $371,929. The notes were issued on September 4, 2013 to the Company’s Chairman and mature on September 4, 2017. The notes have an interest rate of 18% per annum that compounds quarterly. Accrued interest was $118,752 and $97,900 at March 31, 2015 and December 31, 2014, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three months ended March 31, 2015 and 2014 was $20,853 and $17,486, respectively. The notes and accrued interest 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 (warrants expire May 20, 2016) or at $1.25 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 the Company’s bank. |
Related_Party_and_Other_ShortT
Related Party and Other Short-Term Notes Payable | 3 Months Ended |
Mar. 31, 2015 | |
Debt Disclosure [Abstract] | |
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, 2015 and December 31, 2014, a total of $600,000 in notes payable were outstanding under this line, of which $450,000 and $50,000 respectively were from the Company’s Chairman and Chief Executive Officer. The notes mature on June 1, 2016 are repayable by the Company at any time, and have an interest rate of 18% per annum payable monthly in cash. Beginning October 1, 2014, investors may request note repayment. 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, 2015 and 2014 related to the line of credit were $26,630 and $83,571, respectively. |
Bank_Financing_Arrangements
Bank Financing Arrangements | 3 Months Ended |
Mar. 31, 2015 | |
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, 2015, the effective rate (interest plus all applicable fees) on actual cash advanced is 7.15% 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, 2015 were $815,981, 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, 2015. | |
On March 23, 2015, the Company signed a Business Financing Modification Agreement by and between the Company and the Bank to extend the expiration date of a revolving credit line agreement for the domestic (U.S. based) portion of the line from February 27, 2016 to February 27, 2017. All other terms of the revolving credit line agreement remain unchanged. | |
Total interest expense on the amounts drawn under the Company’s bank credit lines in effect during the three months ended March 31, 2015 and 2014, was $14,568 and $24,119, respectively. Accrued interest related to the amounts outstanding under the Company’s bank lines of credit at March 31, 2015 and December 31, 2014 was $3,981. |
Segment_Information_and_Concen
Segment Information and Concentrations | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Segment Reporting [Abstract] | |||||||||
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: | 2015 | 2014 | |||||||
United States | $ | 2,833,945 | $ | 2,682,077 | |||||
Europe | 683,163 | 745,070 | |||||||
Asia and rest of world | 488,636 | 368,192 | |||||||
Total revenues | $ | 4,005,744 | $ | 3,795,339 | |||||
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, 2015 and 2014 were as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Ingram Micro Inc. | 25 | % | 33 | % | |||||
BlueStar, Inc. | 21 | % | 15 | % | |||||
Scansource, Inc. | 19 | % | 13 | % | |||||
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. 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, 2015 and December 31, 2014 were as follows: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Company A | 25 | % | 42 | % | |||||
Company B | 24 | % | 25 | % | |||||
Company C | 22 | % | 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 was unable to procure certain of such materials, it could have a material adverse effect upon its results. At March 31, 2015 and December 31, 2014, 21% and 22%, respectively, of the Company’s accounts payable balances were concentrated in a single supplier. For the three months ended March 31, 2015, this and three other suppliers accounted for 78% of the inventory purchases. |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | NOTE 8 — Stock-Based Compensation |
The Company recognizes the compensation cost in the financial statements for all stock-based awards to employees, including grants of employee stock options, based on the fair value of the awards as of the date that the awards are issued. The fair values of stock options are generally determined using a binomial lattice valuation model which incorporates assumptions about expected volatility, risk-free interest rate, dividend yield, and expected life. Compensation cost for stock-based awards is recognized on a straight-line basis over the vesting period. Total stock-based compensation expense for the three months ended March 31, 2015 and 2014, was $46,568 and $52,246, respectively. In the three months ended March 31, 2015, 201,200 stock options were granted at a weighted average per share fair value estimated at $1.61. |
Net_Income_Loss_Per_Share_Appl
Net Income (Loss) Per Share Applicable to Common Stockholders | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Net loss per share: | ||||||||
Net Income (Loss) Per Share Applicable to Common Stockholders | NOTE 9 — Net Income (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 March 31, | ||||||||
2015 | 2014 | |||||||
Numerator: | ||||||||
Net loss | $ | (71,560 | ) | $ | (71,424 | ) | ||
Denominator: | ||||||||
Weighted average common shares outstanding used in computing net loss per share: | ||||||||
Basic and Diluted | 5,513,588 | 4,897,896 | ||||||
Net loss per share: | ||||||||
Basic and Diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
For the three months ended March 31, 2015, 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 2,914,321 shares of common stock at March 31, 2015, have been omitted from the net loss per share calculation. | ||||||||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10 — Income Taxes |
Income tax expense during the three months ended March 31, 2015 and 2014, and the deferred income tax amounts shown on the Company’s 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, 2015 and 2014. | |
At December 31, 2014, the Company has an unrecognized tax benefit of approximately $730,000, which did not change significantly during the three months ended March 31, 2015. 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_Contingencies
Commitments and Contingencies | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Commitments and Contingencies | NOTE 11 — Commitments and Contingencies | ||||
Operating Lease | |||||
The Company leases office space under a non-cancelable operating lease which provides the Company approximately 37,100 square feet in Newark, California. Rental expense was $107,098 and $107,065, for the three month periods ended March 31, 2015 and 2014, respectively. The Company recorded a deferred rent obligation in accrued liabilities in the amount of $270,298 and $263,476 at March 31, 2015 and December 31, 2014, respectively. | |||||
Future minimum lease payments under the operating lease at March 31, 2015, are as shown below: | |||||
Annual minimum payments: | Amount | ||||
2015 (April 1, 2015 to December 31, 2015) | $ | 296,869 | |||
2016 | 408,986 | ||||
2017 | 425,345 | ||||
2018 | 442,359 | ||||
2019 to 2022 | 1,689,777 | ||||
Total minimum payments | $ | 3,263,336 | |||
Capital Lease Obligations | |||||
The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At March 31, 2015 and December 31, 2014, property and equipment with a cost of $87,945 were subject to such financing arrangements. Related accumulated amortization at March 31, 2015 and December 31, 2014, amounted to $56,793 and $50,729, respectively. | |||||
Future minimum payments under capital lease and equipment financing arrangements as of March 31, 2015, are as follows: | |||||
Annual minimum payments: | Amount | ||||
2015 (April 1, 2015 to December 31, 2015) | $ | 20,648 | |||
2016 | 12,449 | ||||
Total minimum payments | 33,097 | ||||
Less amount representing interest | (1,945 | ) | |||
Present value of net minimum payments | 31,152 | ||||
Short term portion of capital leases | (25,680 | ) | |||
Long term portion of capital leases | $ | 5,472 | |||
Purchase Commitments | |||||
As of March 31, 2015, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $1,853,000. | |||||
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. We are currently not a party to any material legal proceedings. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 12 — Subsequent Events |
On April 1, 2015, 10,000 stock options at a price of $2.07 per share were granted from the 2004 Plan subsequent to March 31, 2015. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates | 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 | 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, 2015 and December 31, 2014, 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, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Inventory components | 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, | ||||||||
2015 | 2014 | ||||||||
Raw materials and sub-assemblies | $ | 787,818 | $ | 930,886 | |||||
Finished goods | 20,059 | 26,441 | |||||||
$ | 807,877 | $ | 957,327 | ||||||
Segment_Information_and_Concen1
Segment Information and Concentrations (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Segment Reporting [Abstract] | |||||||||
Revenue by geographic areas | Revenues for the geographic areas were as follows: | ||||||||
Three Months Ended March 31, | |||||||||
Revenues: | 2015 | 2014 | |||||||
United States | $ | 2,833,945 | $ | 2,682,077 | |||||
Europe | 683,163 | 745,070 | |||||||
Asia and rest of world | 488,636 | 368,192 | |||||||
Total revenues | $ | 4,005,744 | $ | 3,795,339 | |||||
Major customers accounted for at least 10% of total revenues | Customers who accounted for at least 10% of the Company’s total revenues in the three month periods ended March 31, 2015 and 2014 were as follows: | ||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
Ingram Micro Inc. | 25 | % | 33 | % | |||||
BlueStar, Inc. | 21 | % | 15 | % | |||||
Scansource, Inc. | 19 | % | 13 | % | |||||
Major customers as a percentage of net accounts receivable balances | Customers who accounted for at least 10% of the Company’s accounts receivable balances at March 31, 2015 and December 31, 2014 were as follows: | ||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
Company A | 25 | % | 42 | % | |||||
Company B | 24 | % | 25 | % | |||||
Company C | 22 | % | 14 | % |
Net_Income_Loss_Per_Share_Appl1
Net Income (Loss) Per Share Applicable to Common Stockholders (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Net loss per share: | ||||||||
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 March 31, | ||||||||
2015 | 2014 | |||||||
Numerator: | ||||||||
Net loss | $ | (71,560 | ) | $ | (71,424 | ) | ||
Denominator: | ||||||||
Weighted average common shares outstanding used in computing net loss per share: | ||||||||
Basic and Diluted | 5,513,588 | 4,897,896 | ||||||
Net loss per share: | ||||||||
Basic and Diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Future minimum payments for operating leases | Future minimum lease payments under the operating lease at March 31, 2015, are as shown below: | ||||
Annual minimum payments: | Amount | ||||
2015 (April 1, 2015 to December 31, 2015) | $ | 296,869 | |||
2016 | 408,986 | ||||
2017 | 425,345 | ||||
2018 | 442,359 | ||||
2019 to 2022 | 1,689,777 | ||||
Total minimum payments | $ | 3,263,336 | |||
Future minimum payments under capital lease and equipment financing arrangements | Future minimum payments under capital lease and equipment financing arrangements as of March 31, 2015, are as follows: | ||||
Annual minimum payments: | Amount | ||||
2015 (April 1, 2015 to December 31, 2015) | $ | 20,648 | |||
2016 | 12,449 | ||||
Total minimum payments | 33,097 | ||||
Less amount representing interest | (1,945 | ) | |||
Present value of net minimum payments | 31,152 | ||||
Short term portion of capital leases | (25,680 | ) | |||
Long term portion of capital leases | $ | 5,472 | |||
Liquidity_and_Going_Concern_De
Liquidity and Going Concern (Details Narrative) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
Disclosure Text Block [Abstract] | |||
Accumulated deficit | $60,762,117 | ||
Cash balance | 743,232 | 632,631 | 670,346 |
Total unused borrowing capacity | 258,000 | ||
Current ratio (current assets divided by current liabilities) | 0.55 | ||
Working capital deficit | $2,695,909 |
Inventory_Components_Details
Inventory Components (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials and sub-assemblies | $787,818 | $930,886 |
Finished goods | 20,059 | 26,441 |
Total | $807,877 | $957,327 |
Related_Party_Convertible_Note1
Related Party Convertible Notes Payable (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Related Party Convertible Notes Payable Details Narrative | |||
Short term related party convertible notes payable | $380,696 | $380,696 | |
Long term related party convertible notes payable | 371,929 | 371,929 | |
Conversion price if warrants issued on November 19, 2010 (warrants expire May 20, 2016) are outstanding | $2.44 | $2.44 | |
Conversion price if warrants issued on November 19, 2010 (warrants expire May 20, 2016) are not outstanding | $1.25 | $1.25 | |
Redemption of short term related party convertible notes payable | 25,000 | ||
Annual interest rate on short term convertible notes payable, compounded quarterly | 8.00% | 8.00% | |
Annual interest rate on long term convertible notes payable, compounded quarterly | 18.00% | 18.00% | |
Related party convertible notes payable maturity date | 4-Sep-17 | ||
Accrued interest on short term related party convertible notes payable | 50,520 | 42,179 | |
Accrued interest on long term related party convertible notes payable | 118,752 | 97,900 | |
Interest expense on short term related party convertible notes payable | 8,342 | 8,200 | |
Interest expense on long term related party convertible notes payable | $20,853 | $17,486 |
Related_Party_and_Other_Short_
Related Party and Other Short Term Notes Payable (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Aggregate principal amount of notes | $1,000,000 | ||
Related party and other short term notes payable | 600,000 | 600,000 | |
Interest expense for notes payable | 74,670 | 135,944 | |
Related party and other short term notes payable | |||
Subordinated line of credit initiation date | 31-Jan-13 | ||
Annual interest rate payable monthly | 18.00% | 18.00% | |
Maturity date | 1-Jun-16 | ||
Interest expense for notes payable | 26,630 | 83,571 | |
Notes payable to Chairman | |||
Aggregate principal amount of notes | 550,000 | ||
Related party and other short term notes payable | 450,000 | 450,000 | |
Notes payable to CEO | |||
Related party and other short term notes payable | $50,000 | $50,000 |
Bank_Financing_Arrangements_De
Bank Financing Arrangements (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | ||
Mar. 07, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Line of credit initiation date | 27-Feb-14 | |||
Aggregate maximum advance amount | $2,500,000 | |||
Borrowing capacity description | Advances against the domestic and international lines are calculated at 70% of qualified receivables. | |||
Debt reference rate | 0.0475 | Bank's Prime Rate | ||
Minimum interest rate on debt (as a percent) | 3.25% | |||
Basis point added to reference rate of debt | 1.50% | |||
Monthly collateral handling fee | 0.20% | |||
Effective rate on cash advances | 7.15% | |||
Amount outstanding | 815,981 | 815,981 | ||
Interest expense | 74,670 | 135,944 | ||
Domestic Line of Credit | ||||
Aggregate maximum advance amount | 1,500,000 | |||
Amount outstanding | 815,981 | |||
Amount of accounts receivable provided as collateral | 1,160,000 | |||
Interest expense | 14,568 | 24,119 | ||
Accrued interest | 3,981 | 3,981 | ||
Line of credit expiration date | 27-Feb-17 | |||
Foreign Line of Credit | ||||
Aggregate maximum advance amount | $1,000,000 | |||
Line of credit expiration date | 27-Feb-16 |
Revenue_by_Geographic_Areas_De
Revenue by Geographic Areas (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues: | $4,005,744 | $3,795,339 |
United States | ||
Revenues: | 2,833,945 | 2,682,077 |
Europe | ||
Revenues: | 683,163 | 745,070 |
Asia and rest of world | ||
Revenues: | $488,636 | $368,192 |
Major_Customers_Accounted_for_
Major Customers Accounted for at Least 10% of Total Revenues (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Ingram Micro Inc. | ||
Percent of total revenues | 25.00% | 33.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
BlueStar, Inc. | ||
Percent of total revenues | 21.00% | 15.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Scansource, Inc. | ||
Percent of total revenues | 19.00% | 13.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Major_Customers_as_a_Percentag
Major Customers as a Percentage of Net Accounts Receivable Balances (Details) | Mar. 31, 2015 | Dec. 31, 2014 |
Company A | ||
Percent of net accounts receivable balances | 25.00% | 42.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Company B | ||
Percent of net accounts receivable balances | 24.00% | 25.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Company C | ||
Percent of net accounts receivable balances | 22.00% | 14.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Concentration_of_Suppliers_Det
Concentration of Suppliers (Details Narrative) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting [Abstract] | ||
Accounts payable balances with a single supplier | 21.00% | 22.00% |
Percentage of inventory purchases from top three suppliers | 78.00% |
StockBased_Compensation_Detail
Stock-Based Compensation (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock-based compensation expenses | $46,568 | $52,246 |
Stock options granted | 201,200 | |
Weighted average grant price | $1.61 |
Net_Income_Loss_Per_Share_Appl2
Net Income (Loss) Per Share Applicable to Common Stockholders (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Numerator: | ||
Net loss | ($71,560) | ($71,424) |
Denominator: Weighted average common shares outstanding used in computing net income (loss) per share: | ||
Basic and Diluted | 5,513,588 | 4,897,896 |
Net loss per share: | ||
Basic and Diluted | ($0.01) | ($0.01) |
Net_Income_Loss_Per_Share_Appl3
Net Income (Loss) Per Share Applicable to Common Stockholders (Details Narrative) | Mar. 31, 2015 |
Net loss per share: | |
Common shares issuable for options, warrants and convertible notes omitted from the loss per share calculation | 2,914,321 |
Taxes_Details_Narrative
Taxes (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Deferred tax expense | $7,985 | $7,985 | |
Unrecognized tax benefit | $730,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rental expense for operating lease | $107,098 | $107,065 | |
Deferred rent | 270,928 | 263,476 | |
Capital lease obligations | 87,945 | 87,945 | |
Capital lease accumulated amortization | 56,793 | 50,729 | |
Non-cancelable purchase commitments for inventory | $1,853,000 |
Future_Minimum_Payments_For_Op
Future Minimum Payments For Operating Leases (Details) (USD $) | Mar. 31, 2015 |
Annual minimum payments: | |
2015 (April 1, 2015 to December 31, 2015) | $296,869 |
2016 | 408,986 |
2017 | 425,345 |
2018 | 442,359 |
2019 to 2022 | 1,689,777 |
Total minimum payments | $3,263,336 |
Future_Minimum_Payments_Under_
Future Minimum Payments Under Capital Lease And Equipment Financing Arrangements (Details) (USD $) | Mar. 31, 2015 |
Annual minimum payments: | |
2015 (April 1, 2015 to December 31, 2015) | $20,648 |
2016 | 12,449 |
Total minimum payments | 33,097 |
Less amount representing interest | -1,945 |
Present value of net minimum payments | 31,152 |
Short term portion of capital leases | -25,680 |
Long term portion of capital leases | $5,472 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) | 4 Months Ended |
11-May-15 | |
Subsequent Events [Abstract] | |
Subsequent events | On April 1, 2015, 10,000 stock options at a price of $2.07 per share were granted from the 2004 Plan subsequent to March 31, 2015. |