XML 26 R15.htm IDEA: XBRL DOCUMENT

Note 10 - Commitments and Contingencies

6 Months Ended

Jun. 30, 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 $109,851 and $219,918 for the three and six-month periods ended June 30, 2018, respectively. Rental expense was $109,237 and $218,036 for the three and six-month periods ended June 30, 2017, respectively. The Company recorded a deferred rent obligation in accrued liabilities in the amount of $263,962 and $274,388 at June 30, 2018 and December 31, 2017, respectively.

Future minimum lease payments under the operating lease at June 30, 2018 are as shown below:

Annual minimum payments:	Amount
2018 (July 1, 2018 to December 31, 2018)	$	225,516
2019		460,053
2020		478,455
2021		497,594
2022 (through June 30, 2022)		253,675
Total minimum payments	$	1,915,293

Capital Lease Obligations

The Company leases certain of its equipment under capital leases. These leases are collateralized by their underlying assets. At June 30, 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 June 30, 2018 and December 31, 2017, amounted to $65,493 and $51,400 respectively.

Future minimum payments under capital lease and equipment financing arrangements as of June 30, 2018, are as follows:

Annual minimum payments:	Amount
2018 (July 1, 2018 to December 31, 2018)	$	12,015
2019		17,892
2020		9,164
Total minimum payments		39,071
Less amount representing interest		(904	)
Present value of net minimum payments		38,167
Short term portion of capital leases		(20,071	)
Long term portion of capital leases	$	18,096

Purchase Commitments

As of June 30, 2018, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $3,215,000.

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 June 2018, the FASB issued ASU 2018-07 Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. This ASU is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance consistent with the accounting for employee share-based compensation. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2018 and is not expected to have a significant impact on the Company’s 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.