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Note 10 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

NOTE 10 — 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^stof each year. Rental expense was $110,067 and $108,799 for the three periods ended March 31, 2018 and 2017, respectively. The Company recorded a deferred rent obligation in accrued liabilities in the amount of $269,175 and $274,388 at March 31, 2018 and December 31, 2017, respectively.

Future minimum lease payments under the operating lease at March 31, 2018 are shown below:

Annual minimum payments:	Amount
2018 (April 1, 2018 to December 31, 2018)	$	333,938
2019		460,053
2020		478,455
2021		497,594
2022 (through June 30, 2022)		253,675
Total minimum payments	$	2,023,715

Capital Lease Obligations

The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At March 31, 2018 and December 31, 2017, equipment with a cost of $100,584 was subject to such financing arrangements. The accumulated depreciation of the assets associated with the capital leases as of March 31, 2018 and December 31, 2017, amounted to $58,446 and $51,400 respectively.

Future minimum payments under capital lease and equipment financing arrangements as of March 31, 2018 are as follows:

Annual minimum payments:	Amount
2018 (April 1, 2018 to December 31, 2018)	$	19,457
2019		17,893
2020		9,164
Total minimum payments		46,514
Less amount representing interest		(1,195	)
Present value of net minimum payments		45,319
Short term portion of capital leases		(22,982	)
Long term portion of capital leases	$	22,337

Purchase Commitments

As of March 31, 2018, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $2,740,000.

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

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This ASU adds SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income Taxes, in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act was signed into law. This ASU is effective for annual and interim periods beginning after December 15, 2018. The Company is in the process of assessing the impact of this guidance on its condensed financial statements.

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 Company’s financial position, results of operations or cash flows upon adoption.