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Note 10 - Commitments and Contingencies

9 Months Ended

Sep. 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 annually on July 1^st of each year. Rental expense was $109,285 and $329,203 for the three and nine-month periods ended September 30, 2018, respectively. Rental expense was $108,473 and $326,509 for the three and nine-month periods ended September 30, 2017, respectively. The Company’s accrued liabilities include a deferred rent obligation in the amount of $254,412 and $274,388 at September 30, 2018 and December 31, 2017, respectively.

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

Annual minimum payments:	Amount
2018 (October 1, 2018 to December 31, 2018)	$	112,758
2019		460,053
2020		478,455
2021		497,594
2022 (through June 30, 2022)		253,675
Total minimum payments	$	1,802,535

Capital Lease Obligations

The Company leases certain of its equipment under capital leases. The leases are collateralized by the underlying assets. At September 30, 2018 and December 31, 2017, property and 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 September 30, 2018 and December 31, 2017, amounted to $72,539 and $51,400 respectively.

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

Annual minimum payments:	Amount
2018 (October 1, 2018 to December 31, 2018)	$	4,192
2019		16,838
2020		8,454
Total minimum payments		29,484
Less amount representing interest		(1,752	)
Present value of net minimum payments		27,732
Short term portion of capital leases		(15,400	)
Long term portion of capital leases	$	12,332

Purchase Commitments

As of September 30, 2018, the Company has non-cancelable purchase commitments for inventory to be used in the ordinary course of business of approximately $5,139,000.

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.