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Commitments and Contingencies

9 Months Ended

Sep. 30, 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 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 of each year. Rental expense was $107,352 and $321,950 for the three and nine month periods ended September 30, 2015, respectively. Rental expense for the three and nine month periods ended September 30, 2014 was $107,249 and $321,717, respectively. The Company recorded a deferred rent obligation in accrued liabilities in the amount of $280,087 and $263,476 at September 30, 2015 and December 31, 2014, respectively.

Future minimum lease payments under the operating lease at September 30, 2015 are shown below:

Annual minimum payments:				Amount
	2015 (October 1, 2015 to December 31, 2015)			$	100,242
	2016				408,986
	2017				425,345
	2018				442,359
	2019 to 2022				1,689,777
	Total minimum payments			$	3,066,709

Capital Lease Obligations

The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At September 30, 2015 and December 31, 2014, property and equipment with a cost of $87,945 were subject to such financing arrangements. Related accumulated amortization at September 30, 2015 and December 31, 2014, amounted to $71,272 and $53,761, respectively.

Future minimum payments under capital lease and equipment financing arrangements as of September 30, 2015 are as follows:

Annual minimum payments:		Amount
2015 (October 1, 2015 to December 31, 2015)		$	7,180
2016			13,045
Total minimum payments			20,225
Less amount representing interest			(645	)
Present value of net minimum payments			19,580
Short term portion of capital leases			(19,580	)
Long term portion of capital leases		$	—

Purchase Commitments

As of September 30, 2015, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $2,936,000.

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. The Company is currently not a party to any material legal proceedings.

Recently Issued Financial Accounting Standards

The original effective date for ASU 2014-09 would have required the Company to adopt beginning January 1, 2017. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for one year and permits early adoption as early as the original effective date of ASU 2014-09. Accordingly, the Company may adopt the standard on either January 1, 2017 or 2018. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the timing of its adoption and the impact of adopting the new revenue standard on its consolidated financial statements.

With the exception of the new standard discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2015, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, that are of significance or potential significance to us.