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Related Party Transaction
 9 Months Ended
Sep. 30, 2012
Related Party Transaction  
Related Party Transaction

Note 8. Related Party Transaction

 

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 upon Credo achieving certain development and verification milestones towards the development of IC products and provides the Company with exclusive sales and marketing rights for such IC products.   In the first nine months of 2012, Credo achieved a number of the milestones set forth in the agreement and, in the third quarter of 2012, delivered the IC designs to its foundry for tape-out. As a result of the milestone achievements, the Company paid Credo $1.0 million, which the Company recorded as research and development expense.  As of September 30, 2012, $0.1 million is included as a current liability.  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.