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Related Party Transactions
 6 Months Ended
Jun. 30, 2012
Related Party Transactions  
Related Party Transactions

Note 8. Related Party Transactions

 

In February 2012, the Company entered into a strategic development and marketing agreement with Credo Semiconductor (Hong Kong) Ltd. (Credo), a privately-funded fabless semiconductor company, to develop, market and sell integrated circuits.  Two of the Company’s executive officers are investors in Credo.  The agreement calls for the Company to pay approximately $1.4 million to Credo and its hardware vendors upon Credo achieving certain development and verification milestones, of which the Company paid $0.3 million in the first half of 2012, which was accounted for as research and development expense.  The first $1.2 million of gross profits generated by the sale of these integrated circuits will be retained by the Company.  Thereafter, the gross profits will be shared equally by the two companies.