Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 28, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Socket Mobile, Inc. | |
Entity Central Index Key | 944,075 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,814,098 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Revenues | $ 5,043,786 | $ 4,005,744 |
Cost of revenues | 2,537,506 | 2,198,106 |
Gross profit | 2,506,280 | 1,807,638 |
Operating expenses: | ||
Research and development | 657,018 | 575,051 |
Sales and marketing | 686,768 | 618,266 |
General and administrative | 562,551 | 603,226 |
Total operating expenses | 1,906,337 | 1,796,543 |
Operating income | 599,943 | 11,095 |
Interest expense | (43,644) | (74,670) |
Net income (loss) before income taxes | 556,299 | (63,575) |
Income tax expense | (7,985) | (7,985) |
Net income (loss) | $ 548,314 | $ (71,560) |
Net income (loss) per share: | ||
Basic | $ 0.10 | $ (0.01) |
Diluted | $ 0.08 | $ (0.01) |
Weighted average shares outstanding: | ||
Basic | 5,646,397 | 5,513,588 |
Diluted | 6,590,877 | 5,513,588 |
Balance Sheets
Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 1,027,808 | $ 938,155 |
Accounts receivable, net | 2,387,663 | 2,358,883 |
Inventories | 1,510,770 | 1,326,090 |
Prepaid expenses and other current assets | 125,929 | 87,556 |
Total current assets | 5,052,170 | 4,710,684 |
Property and equipment: | ||
Machinery and office equipment | 2,137,211 | 2,124,297 |
Computer equipment | 1,084,675 | 1,049,234 |
Property and equipment, gross | 3,221,886 | 3,173,531 |
Accumulated depreciation | (2,754,425) | (2,698,828) |
Property and equipment, net | 467,461 | 474,703 |
Goodwill | 4,427,000 | 4,427,000 |
Other assets | 75,918 | 75,918 |
Total assets | 10,022,549 | 9,688,305 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,327,694 | 2,214,467 |
Accrued payroll and related expenses | 555,367 | $ 602,888 |
Bank line of credit | 350,000 | |
Net deferred revenue on shipments to distributors | 924,104 | $ 1,004,260 |
Customer deposit | $ 321,581 | 640,440 |
Related party short term notes payable | 500,000 | |
Related party convertible notes payable-current portion | $ 380,696 | 380,696 |
Short term portion of deferred service revenue | 75,899 | 85,578 |
Short term portion of capital leases and deferred rent | 17,789 | 24,440 |
Total current liabilities | 4,953,130 | 5,452,769 |
Related party convertible notes payable | 371,929 | 371,929 |
Long term portion of deferred service revenue | 36,320 | 39,800 |
Long term portion of capital leases and deferred rent | 304,798 | 305,016 |
Deferred income taxes | 183,199 | 175,214 |
Total liabilities | 5,849,376 | 6,344,728 |
Stockholders’ equity: | ||
Common stock, $0.001 par value: Authorized – 20,000,000 shares, Issued and outstanding – 5,805,998 shares at March 31, 2016 and 5,620,455 shares at December 31, 2015 | 5,806 | 5,620 |
Additional paid-in capital | 62,491,938 | 62,210,842 |
Accumulated deficit | (58,324,571) | (58,872,885) |
Total stockholders’ equity | 4,173,173 | 3,343,577 |
Total liabilities and stockholders’ equity | $ 10,022,549 | $ 9,688,305 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Common stock par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 5,805,998 | 5,620,455 |
Common stock, shares outstanding | 5,805,998 | 5,620,455 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating activities | ||
Net income (loss) | $ 548,314 | $ (71,560) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Stock-based compensation | 65,219 | 46,568 |
Depreciation and amortization | 64,333 | 50,301 |
Deferred income tax expense | 7,985 | 7,985 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (28,780) | 226,122 |
Inventories | (184,680) | 149,450 |
Prepaid expenses and other current assets | (38,373) | 31,145 |
Accounts payable and accrued expenses | 113,227 | (351,113) |
Accrued payroll and related expenses | (47,521) | (4,800) |
Net deferred revenue on shipments to distributors | (80,156) | $ (90,718) |
Customer deposit | (318,859) | |
Deferred service revenue | (13,159) | $ (15,708) |
Change in deferred rent | 2,967 | 6,822 |
Net cash provided by (used in) operating activities | 90,517 | (15,506) |
Investing activities | ||
Purchases of equipment | (57,091) | (28,232) |
Net cash used in investing activities | (57,091) | (28,232) |
Financing activities | ||
Payments on capital leases | (9,836) | (6,063) |
Proceeds from borrowings under bank line of credit agreement | $ 350,000 | 14,515 |
Repayments of borrowings under bank line of credit agreement | $ (14,515) | |
Repayments of related party notes payable | $ (500,000) | |
Stock options exercised | 57,918 | $ 29,152 |
Warrants exercised | 158,145 | 131,250 |
Net cash provided by financing activities | 56,227 | 154,339 |
Net increase in cash and cash equivalents | 89,653 | 110,601 |
Cash and cash equivalents at beginning of period | 938,155 | 632,631 |
Cash and cash equivalents at end of period | 1,027,808 | 743,232 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 8,859 | 43,036 |
Supplemental disclosure of non-cash investing and financing activities | ||
Cashless exercise of warrants | $ 35 | $ 20 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Basis Of Presentation | |
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. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future period. These financial statements should be read in conjunction with the audited financial statements and notes included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
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 a maturity date of 90 days or less at date of purchase to be cash equivalents. At March 31, 2016 and December 31, 2015, all of the Companys cash and cash equivalents consisted of amounts held in demand deposit accounts in banks. The aggregate cash balance on deposit in these accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has never experienced any losses in such accounts. The carrying value of the Companys 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, 2016 | |
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. Inventories at March 31, 2016 and December 31, 2015 were as follows: March 31, December 31, 2016 2015 Raw materials and sub-assemblies $ 2,654,686 $ 2,521,585 Finished goods 77,339 39,083 Inventory reserves (1,221,255 ) (1,234,578 ) Inventories, net $ 1,510,770 $ 1,326,090 |
Related Party Convertible Notes
Related Party Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2016 | |
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 were $380,696 at March 31, 2016 and December 31, 2015. Issued on September 4, 2013 to officers and directors of the Company and maturing 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 was $86,167 and $77,037 at March 31, 2016 and December 31, 2015, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three months ended March 31, 2016 and 2015 was $9,130 and $8,342, respectively. The notes and accrued interest are convertible into common stock at the option of the holder 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 Companys working capital bank line of credit with the Companys bank. Long Term Related Party Convertible Note Payable Long term related party convertible note payable was $371,929 at March 31, 2016 and December 31, 2015. Issued to the Companys Chairman on September 4, 2013 and maturing on September 4, 2017, the note has an interest rate that compounds quarterly at 18% per annum through March 30, 2016 and at 12% thereafter. Accrued interest was $213,402 and $188,350 at March 31, 2016 and December 31, 2015, respectively and was included in Accounts Payable and Accrued Expenses. Interest expense for the three months ended March 31, 2016 and 2015 was $25,051 and $20,853, respectively. Principal and accrued interest on the note payable are convertible into common stock at the option of the holder at $1.25 per share. The convertible note is secured by all of the assets of the Company and is subordinated to amounts outstanding under the Companys working capital bank line of credit with the Companys bank. |
Related Party Short Term Notes
Related Party Short Term Notes Payable | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Short Term Notes Payable | NOTE 5 Related Party Short Term Notes Payable On May 15, 2014, the Companys Board of Directors approved the issue of subordinated notes totaling $650,000 to replace subordinated line of credit notes in the same amount maturing on June 1, 2014. The replacement subordinated notes are two-year notes maturing 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. Notes payable of $500,000 were outstanding at December 31, 2015. On January 29, 2016, the Company completed repayment of all outstanding credit line notes to the note holders. Interest expense for the three month periods ended March 31, 2016 and 2015 related to the line of credit were $7,645 and $26,630, respectively. |
Bank Financing Arrangements
Bank Financing Arrangements | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Bank Financing Arrangements | NOTE 6 Bank Financing Arrangements On February 26, 2016, the Company completed a Business Financing Modification Agreement by and between the Company and Western Alliance Bank (the Bank) to extend the expiration date of the revolving credit lines for both domestic and international portions to February 27, 2018. Under the terms of the credit facility agreement with the Bank, the Company may borrow up to $2.5 million, of which up to $2.0 million is based on qualified receivables from domestic customers and up to $0.5 million is based on qualified receivables from international customers. In addition, the Company must maintain a minimum liquidity ratio calculated at the end of each month of quick assets (cash plus qualified accounts receivable) to outstanding obligations to the Bank not less than 1.75 to 1.0. 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 Banks prime rate (minimum of 3.25%) plus 1.5%. There is also a collateral handling fee of 0.1% per month of the financed receivables outstanding. The applicable interest and fees are calculated based on the actual amounts borrowed. At March 31, 2016, the effective rate (interest plus all applicable fees) on actual cash advanced was 6.2% 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 Banks 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. At March 31, 2016, the Company had $350,000 borrowed under the bank lines of credit and had additional borrowing capacity of approximately $1,221,000. Total interest expense on the amounts drawn under the Companys bank credit lines in effect during the three months ended March 31, 2016 and 2015, was $1,188 and $14,568, respectively. Accrued interest related to the amounts outstanding under the Companys bank lines of credit at March 31, 2016 was $604. |
Segment Information and Concent
Segment Information and Concentrations | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Information and Concentrations | NOTE 7 Segment Information and Concentrations Segment Information The Company operates in one segmentmobile systems solutions for businesses. Mobile systems solutions typically consist of mobile devices such as smartphones or tablets, 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 for three months ended March 31, 2016 and 2015 were as follows: Three Months Ended March 31, Revenues: 2016 2015 United States $ 4,083,412 $ 2,833,945 Europe 729,190 683,163 Asia and rest of world 231,184 488,636 Total revenues $ 5,043,786 $ 4,005,744 Export revenues are attributable to countries based on the location of the Companys customers. The Company does not hold long-lived assets in foreign locations. Major Customers Customers who accounted for at least 10% of the Companys total revenues for the three months ended March 31, 2016 and 2015 were as follows: Three Months Ended March 31, 2016 2015 BlueStar, Inc. 25 % 21 % Ingram Micro Inc. 24 % 25 % Scansource, Inc. 13 % 19 % Spinal Modulation, Inc. 13 % * _____________ * 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 include cash, cash equivalents and accounts receivable. The Company invests its cash in demand deposit accounts in banks. To date, the Company has not experienced losses on the investments. The Companys trade accounts receivables are primarily with distributors. The Company performs ongoing credit evaluations of its customers financial condition but the Company generally requires no collateral. Reserves are maintained for potential credit losses, and such losses have been within managements expectations. Customers who accounted for at least 10% of the Companys accounts receivable balances at March 31, 2016 and December 31, 2015 were as follows: March 31, December 31, 2016 2015 Ingram Micro Inc. 35 % 35 % BlueStar, Inc. 35 % 22 % ScanSource, Inc. 15 % 17 % Concentration of Suppliers Several of the Companys 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, 2016 and December 31, 2015, 26% and 29%, respectively, of the Companys accounts payable balances were concentrated in a single supplier. For the three months ended March 31, 2016, this and two other suppliers accounted for 79% of the inventory purchases. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-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, 2016 and 2015, was $65,219 and $46,568, respectively. During the three months ended March 31, 2016, 255,500 stock options were granted at a weighted average per share fair value estimated at $1.87. |
Net Income (Loss) Per Share App
Net Income (Loss) Per Share Applicable to Common Stockholders | 3 Months Ended |
Mar. 31, 2016 | |
Income Statement [Abstract] | |
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 income (loss) per share: Three Months Ended March 31, 2016 2015 Numerator: Net income (loss) $ 548,314 $ (71,560 ) Denominator: Weighted average shares outstanding used in computing Basic 5,646,397 5,513,588 Effect of dilutive stock options and warrants (treasury stock method) 944,480 Diluted 6,590,877 5,513,588 Net income (loss) per share applicable to common stockholders: Basic $ 0.10 $ (0.01 ) Diluted $ 0.08 $ (0.01 ) |
Taxes
Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Taxes | NOTE 10 Taxes Income tax expense during the three months ended March 31, 2016 and 2015, and the deferred income tax amounts shown on the Companys Balance Sheets, is related entirely to the deferred tax liability on the portion of the Companys 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, 2016 and 2015. At December 31, 2015, the Company has an unrecognized tax benefit of approximately $754,000, which did not change significantly during the three months ended March 31, 2016. 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 Companys deferred tax assets, as realization of the deferred tax assets is dependent upon future taxable income. The Company has not consistently generated taxable income in any jurisdiction for the prior 12 quarters. Currently, the Company has maintained a full valuation allowance for all deferred tax assets due to negative evidence outweighing the positive evidence. The primary negative evidence includes the Companys history of losses, the phase out of the SoMo product line with diminishing revenue for 2016, and no contractual commitment assuring future revenue except for the remainder of SoMo related orders for OEM customers. However, the Companys short term trend of net income for the last two years allows for the possible reversal of existing taxable temporary differences. If the Company continues to remain profitable and determines that the positive evidence outweighs the negative evidence, projected future taxable income could be included in the evaluation. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Commitments and Contingencies | NOTE 11 Commitments and Contingencies Operating Lease The Company leases office space under a non-cancelable operating lease that provides the Company approximately 37,100 square feet in Newark, California. The lease agreement expires on June 30, 2022. Monthly base rent increases four percent per year annually on July 1 st Future minimum lease payments under the operating lease at March 31, 2016 are shown below: Annual minimum payments: Amount 2016 (April 1, 2016 to December 31, 2016) $ 308,744 2017 425,345 2018 442,359 2019 460,053 2020 to 2022 1,229,724 Total minimum payments $ 2,866,225 Capital Lease Obligations The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At March 31, 2016 and December 31, 2015, property and equipment with a cost of $124,427 were subject to such financing arrangements. Related accumulated amortization at March 31, 2016 and December 31, 2015, amounted to $9,836 and $28,795, respectively. Future minimum payments under capital lease and equipment financing arrangements as of March 31, 2016 are as follows: Annual minimum payments: Amount 2016 (April 1, 2016 to December 31, 2016) $ 15,724 2017 13,146 2018 9,859 Total minimum payments 38,729 Less amount representing interest (2,162 ) Present value of net minimum payments 36,567 Short term portion of capital leases (17,626 ) Long term portion of capital leases $ 18,941 Purchase Commitments 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 Companys 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 Companys 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. The Company is currently not a party to any material legal proceedings. Recently Issued Financial Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Companys financial position, results of operations or cash flows upon adoption. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
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 a maturity date of 90 days or less at date of purchase to be cash equivalents. At March 31, 2016 and December 31, 2015, all of the Companys cash and cash equivalents consisted of amounts held in demand deposit accounts in banks. The aggregate cash balance on deposit in these accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company has never experienced any losses in such accounts. The carrying value of the Companys 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, 2016 | |
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. Inventories at March 31, 2016 and December 31, 2015 were as follows: March 31, December 31, 2016 2015 Raw materials and sub-assemblies $ 2,654,686 $ 2,521,585 Finished goods 77,339 39,083 Inventory reserves (1,221,255 ) (1,234,578 ) Inventories, net $ 1,510,770 $ 1,326,090 |
Segment Information and Conce19
Segment Information and Concentrations (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Revenue by geographic areas | Segment Information The Company operates in one segmentmobile systems solutions for businesses. Mobile systems solutions typically consist of mobile devices such as smartphones or tablets, 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 for three months ended March 31, 2016 and 2015 were as follows: Three Months Ended March 31, Revenues: 2016 2015 United States $ 4,083,412 $ 2,833,945 Europe 729,190 683,163 Asia and rest of world 231,184 488,636 Total revenues $ 5,043,786 $ 4,005,744 Export revenues are attributable to countries based on the location of the Companys customers. The Company does not hold long-lived assets in foreign locations. |
Major customers accounted for at least 10% of total revenues | Customers who accounted for at least 10% of the Companys total revenues for the three months ended March 31, 2016 and 2015 were as follows: Three Months Ended March 31, 2016 2015 BlueStar, Inc. 25 % 21 % Ingram Micro Inc. 24 % 25 % Scansource, Inc. 13 % 19 % Spinal Modulation, Inc. 13 % * _____________ * Customer accounted for less than 10% of total revenues for the period |
Major customers as a percentage of net accounts receivable balances | Customers who accounted for at least 10% of the Companys accounts receivable balances at March 31, 2016 and December 31, 2015 were as follows: March 31, December 31, 2016 2015 Ingram Micro Inc. 35 % 35 % BlueStar, Inc. 35 % 22 % ScanSource, Inc. 15 % 17 % |
Net Income (Loss) Per Share A20
Net Income (Loss) Per Share Applicable to Common Stockholders (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Net income (loss) per share: | |
Net income (loss) per share applicable to common stockholders | The following table sets forth the computation of basic and diluted net income (loss) per share: Three Months Ended March 31, 2016 2015 Numerator: Net income (loss) $ 548,314 $ (71,560 ) Denominator: Weighted average shares outstanding used in computing Basic 5,646,397 5,513,588 Effect of dilutive stock options and warrants (treasury stock method) 944,480 Diluted 6,590,877 5,513,588 Net income (loss) per share applicable to common stockholders: Basic $ 0.10 $ (0.01 ) Diluted $ 0.08 $ (0.01 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum payments for operating leases | Future minimum lease payments under the operating lease at March 31, 2016 are shown below: Annual minimum payments: Amount 2016 (April 1, 2016 to December 31, 2016) $ 308,744 2017 425,345 2018 442,359 2019 460,053 2020 to 2022 1,229,724 Total minimum payments $ 2,866,225 |
Future minimum payments under capital lease and equipment financing arrangements | Future minimum payments under capital lease and equipment financing arrangements as of March 31, 2016 are as follows: Annual minimum payments: Amount 2016 (April 1, 2016 to December 31, 2016) $ 15,724 2017 13,146 2018 9,859 Total minimum payments 38,729 Less amount representing interest (2,162 ) Present value of net minimum payments 36,567 Short term portion of capital leases (17,626 ) Long term portion of capital leases $ 18,941 |
Inventory Components (Details)
Inventory Components (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials and sub-assemblies | $ 2,654,686 | $ 2,521,585 |
Finished goods | 77,339 | 39,083 |
Inventory reserves | (1,221,255) | (1,234,578) |
Inventories, net | $ 1,510,770 | $ 1,326,090 |
Related Party Convertible Not23
Related Party Convertible Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Notes to Financial Statements | |||
Short term related party convertible notes payable | $ 380,696 | $ 380,696 | |
Long term related party convertible notes payable | $ 371,929 | $ 371,929 | |
Conversion price | $ 1.25 | $ 1.25 | |
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 through March 30, 2016 | 18.00% | 18.00% | |
Annual interest rate on long term convertible notes payable, compounded quarterly after March 30, 2016 | 12.00% | 12.00% | |
Related party convertible notes payable maturity date | Sep. 4, 2017 | ||
Accrued interest on short term related party convertible notes payable | $ 86,167 | $ 77,037 | |
Accrued interest on long term related party convertible notes payable | 213,402 | $ 188,350 | |
Interest expense on short term related party convertible notes payable | 9,130 | $ 8,342 | |
Interest expense on long term related party convertible notes payable | $ 25,051 | $ 20,853 |
Related Party Short Term Note24
Related Party Short Term Notes Payable (Details Narrative) - USD ($) | May. 15, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | Jan. 29, 2016 | Dec. 31, 2015 |
Related party short term notes payable | |||||
Annual interest rate payable monthly | 18.00% | ||||
Maturity date | Jun. 1, 2016 | ||||
Related party short term notes payable | $ 650,000 | $ 500,000 | |||
Interest expense | $ 7,645 | $ 26,630 | |||
Related party short term notes payable to Chairman | |||||
Repayment of short-term notes payable | $ 450,000 | ||||
Related party short term notes payable to CEO | |||||
Repayment of short-term notes payable | $ 50,000 |
Bank Financing Arrangements (De
Bank Financing Arrangements (Details Narrative) - USD ($) | Feb. 26, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Interest expense | $ 43,644 | $ 74,670 | |
Domestic Line of Credit | |||
Aggregate maximum advance amount | 2,000,000 | ||
Borrowing capacity description | 70% of qualified receivables | ||
Debt reference rate | 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 | 0.10% | ||
Effective rate on cash advances | 6.20% | ||
Amount outstanding | 350,000 | ||
Amount of accounts receivable provided as collateral | 1,221,000 | ||
Interest expense | 1,188 | $ 14,568 | |
Accrued interest | 604 | ||
Line of credit expiration date | Feb. 27, 2018 | ||
Foreign Line of Credit | |||
Aggregate maximum advance amount | $ 500,000 | ||
Borrowing capacity description | 70% of qualified receivables | ||
Debt reference rate | 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 | 0.10% | ||
Line of credit expiration date | Feb. 27, 2018 |
Revenue by geographic areas (De
Revenue by geographic areas (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | $ 5,043,786 | $ 4,005,744 |
United States | ||
Revenues: | 4,083,412 | 2,833,945 |
Europe | ||
Revenues: | 729,190 | 683,163 |
Asia and rest of world | ||
Revenues: | 231,184 | 488,636 |
Total | ||
Revenues: | $ 5,043,786 | $ 4,005,744 |
Major customers accounted for a
Major customers accounted for at least 10% of total revenues (Details) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
BlueStar, Inc. | ||
Percent of total revenues | 25.00% | 21.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Ingram Micro Inc. | ||
Percent of total revenues | 24.00% | 25.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Scansource, Inc. | ||
Percent of total revenues | 13.00% | 19.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Spinal Modulation, Inc. | ||
Percent of total revenues | 13.00% | |
Threshold percentage for disclosure | 10.00% |
Major Customers as a Percentage
Major Customers as a Percentage of Net Accounts Receivable Balances (Details) | Mar. 31, 2016 | Dec. 31, 2015 |
Ingram Micro Inc. | ||
Percent of net accounts receivable balances | 35.00% | 35.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
BlueStar, Inc. | ||
Percent of net accounts receivable balances | 35.00% | 22.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Scansource, Inc. | ||
Percent of net accounts receivable balances | 15.00% | 17.00% |
Threshold percentage for disclosure | 10.00% | 10.00% |
Concentration of Suppliers (Det
Concentration of Suppliers (Details Narrative) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Notes to Financial Statements | ||
Accounts payable balances with a single supplier | 26.00% | 29.00% |
Percentage of inventory purchases from top three suppliers | 79.00% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock-based compensation expenses | $ 65,219 | $ 46,568 |
Stock options granted | 255,500 | |
Weighted average grant price | $ 1.87 |
Net Income (Loss) Per Share A31
Net Income (Loss) Per Share Applicable to Common Stockholders (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Numerator: | ||
Net income (loss) | $ 548,314 | $ (71,560) |
Denominator: Weighted average common shares outstanding used in computing net income (loss) per share: | ||
Basic | 5,646,397 | 5,513,588 |
Effect of dilutive stock options and warrants (treasury stock method) | 944,480 | 0 |
Diluted | 6,590,877 | 5,513,588 |
Net income (loss) per share: | ||
Basic | $ 0.10 | $ (0.01) |
Diluted | $ 0.08 | $ (0.01) |
Taxes (Details Narrative)
Taxes (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Deferred tax expense | $ 7,985 | $ 7,985 | |
Unrecognized tax benefit | $ 754,000 |
Commitments and Contingencies33
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rental expense for operating lease | $ 108,538 | $ 107,098 | |
Deferred rent | 286,020 | $ 283,053 | |
Original cost of equipment under capital leases | 124,427 | 124,427 | |
Capital lease accumulated amortization | 9,836 | $ 28,795 | |
Non-cancelable purchase commitments for inventory | $ 2,374,000 |
Future Minimum Payments for Ope
Future Minimum Payments for Operating Lease (Details) | Mar. 31, 2016USD ($) |
Annual minimum payments: | |
2016 (April 1, 2016 to December 31, 2016) | $ 308,744 |
2,017 | 425,345 |
2,018 | 442,359 |
2,019 | 460,053 |
2020 to 2022 | 1,229,724 |
Total minimum payments | $ 2,866,225 |
Future Minimum Payments Under C
Future Minimum Payments Under Capital Lease And Equipment Financing Arrangements (Details) | Mar. 31, 2016USD ($) |
Annual minimum payments: | |
2016 (April 1, 2016 to December 31, 2016) | $ 15,724 |
2,017 | 13,146 |
2,018 | 9,859 |
Total minimum payments | 38,729 |
Less amount representing interest | (2,162) |
Present value of net minimum payments | 36,567 |
Short term portion of capital leases | (17,626) |
Long term portion of capital leases | $ 18,941 |