View Filing Data

Document and Entity Information	3 Months Ended
Document and Entity Information	Jun. 30, 2012 USD ($) shares
Document and Entity Information
Entity Registrant Name	CLEARONE COMMUNICATIONS INC
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Entity Central Index Key	0000840715
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding \| shares	9,125,774
Entity Public Float \| $	$ 24,170,900
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

Condensed Consolidated Balance Sheets - Figures for 06/30/12 Unaudited - USD ($) $ in Thousands	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 10,418	$ 16,683
Receivables net of allowance for doubtful accounts	7,409	8,457
Inventories	15,064	12,565
Deferred income taxes	3,025	2,987
Prepaid Expenses and other assets	1,501	740
Total current assets	37,417	41,432
Long-term inventories, net	2,064	1,905
Property and equipment, net	2,135	2,338
Intangibles, net	5,858	2,690
Goodwill	1,939	1,153
Other assets	64	41
Total assets	49,477	49,559
Current Liabilities:
Accounts Payable	1,285	2,814
Accrued Liabilities	2,648	2,534
Deferred product revenue	3,451	3,404
Total current liabilities	7,384	8,752
Deferred income taxes	128	101
Deferred rent	487	494
Other long-term liabilities	686	548
Total liabilities	8,685	9,895
Shareholders' equity:
Common stock	9	9
Additional paid in capital	40,265	40,073
Treasury Stock, Value	(92)
Retained earnings (accumulated deficit)	610	(418)
Total shareholders' equity	40,792	39,664
Total liabilities and shareholders' equity	$ 49,477	$ 49,559
Stockholders' Equity, Number of Shares, Par Value and Other Disclosures
Common Stock, Shares Authorized	50,000,000	50,000,000
Common Stock, Shares Issued	9,125,774	9,098,152
Common Stock, Shares Outstanding	9,125,774	9,098,152

Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenue, net	$ 11,655	$ 11,890	$ 21,809	$ 22,591
Cost of goods sold	4,562	4,734	8,608	9,133
Gross profit	7,093	7,156	13,201	13,458
Operating expense:
Sales and marketing	2,254	2,106	4,388	4,089
Research and product development	2,029	1,816	4,037	3,453
General and administrative	1,686	1,361	3,191	2,833
Proceeds from litigation			(250)
Total operating expenses	5,969	5,283	11,366	10,375
Operating income	1,124	1,873	1,835	3,083
Other income (expense), net	(5)	7	11	18
Income before income taxes	1,119	1,880	1,846	3,101
Provision (benefit) for income taxes	544	559	818	968
Net income	$ 575	$ 1,321	$ 1,028	$ 2,133
Basic Earnings per common shares	$ 0.06	$ 0.15	$ 0.11	$ 0.24
Diluted Earnings per common share	$ 0.06	$ 0.14	$ 0.11	$ 0.23
Basic weighted average number of shares outstanding	9,107,420	8,992,500	9,102,786	8,962,171
Diluted weighted average Number of shares outstanding	9,226,426	9,433,650	9,224,727	9,279,800

Unaudited Condensed Consolidated Cash Flow Statements - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net income	$ 1,028	$ 2,133
Adjustments to reconcile net income to cash provided by (used in) operating activities
Depreciation and amortization expense	754	587
Stock-based compensation	111	83
Provision for (recovery of) doubtful accounts	(64)	53
Increase (decrease) in reserves against inventories	278	(193)
Changes in operating assets and liabilities:
Accounts receivable	1,112	792
Inventories	(2,616)	(647)
Prepaid expense and other assets	(39)	(253)
Accounts payable	(1,529)	68
Income taxes payable	(750)	288
Accrued liabilities	121	(2,162)
Deferred product revenue	47	(553)
Other long-term assets and liabilities	138	35
Net Cash Provided by (used in) operating activities	(1,420)	496
Cash flows from investing activities:
Payment towards acquisition of VCON business	(4,632)	0
Purchase of property and equipment	(202)	(248)
Net Cash used in investing activities	(4,834)	(248)
Cash flows from financing activities:
Proceeds from issuance of common stock - options	81	717
Treasury Stock purchased	(92)
Net cash provided by (used in) financing activities	(11)	717
Net increase in cash and cash equivalents	(6,106)	2,045
Cash and cash equivalents at the beginning of the period	16,683	11,431
Cash and cash equivalents at the end of the period	10,418	13,476
Supplemental tatement of Cash Flows
Cash paid for income taxes	$ 1,393	$ 269

Supplemental Disclosure of Non-cash Activities:

3 Months Ended

Jun. 30, 2012

Supplemental Disclosure of Non-cash Activities: [Abstract]

Supplemental Disclosure of Non-cash Activities:

Supplemental disclosure of non-cash activities:

	Six months ended June 30, 2012	Six months ended June 30, 2011
Supplemental disclosure of non-cash activities:
Exchanged accounts receivable from a vendor with accounts payable to the same vendor	$ -	$ 182
The Company acquired the business of VCON Video Conferencing, Ltd. in February 2012 and recorded the following assets and liabilities:
Inventory	$ 320	$ -
Property and equipment	34	-
Product warranty liability	(8)	-
Tradename	500	-
Patents and technological know-how	2,300	-
Proprietary software	500	-
In-process research and development	200	-
Goodwill	786	-
Cash paid	$ 4,632	$ -

1. Business Description, Basis of Presentation and Significant Accounting Policies

3 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

1. Business Description, Basis of Presentation and Significant Accounting Policies

1. Business Description, Basis of Presentation and Significant Accounting Policies

Business Description:

ClearOne Communications, Inc. and its subsidiaries (collectively, “ClearOne” or the “Company”) is a global company that designs, develops and sells conferencing, collaboration, streaming and digital signage solutions for audio, video and data multimedia communication. The performance and simplicity of its advanced comprehensive solutions enhance the quality of life. ClearOne products are designed for business and residential use, offering unprecedented levels of functionality, reliability and scalability.

Basis of Presentation:

The fiscal year for ClearOne is the 12 months ending on December 31st. The consolidated financial statements include the accounts of ClearOne and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

These accompanying interim condensed consolidated financial statements for the three and six months ended June 30, 2012 and 2011 respectively have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and are not audited. Certain information and footnote disclosures that are usually included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been either condensed or omitted in accordance with SEC rules and regulations. The accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of June 30, 2012 and December 31, 2011, the results of operations for the three and six months ended June 30, 2012 and 2011, and the statements of cash flows for the six months ended June 30, 2012 and 2011. The results of operations for the three and six months ended June 30, 2012 and 2011 are not necessarily indicative of the results for a full-year period. These interim condensed consolidated financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC.

Significant Accounting Policies:

The significant accounting policies were described in Note 2 to the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2011. There have been no significant changes to these policies during the six months ended June 30, 2012, that are of significance or potential significance to the Company.

Warranty Costs – The Company accrues for warranty costs based on estimated warranty return rates and estimated costs to repair. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty returns, and repair cost. The Company reviews the adequacy of its recorded warranty accrual on a quarterly basis.

The details of changes in the Company’s warranty accrual are as follows:

	As of June 30, 2012	As of December 31, 2011
Balance at the beginning of year	$ 467	$ 363
Accruals/additions	166	439
Usage	(196)	(335)
Balance at end of period	$ 437	$ 467

Earnings Per Share – The following table sets forth the computation of basic and diluted earnings per common share:

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Numerator:
Net income	$ 575	$ 1,321	$ 1,028	$ 2,133
Denominator:
Basic weighted average shares	9,107,420	8,992,500	9,102,786	8,962,171
Dilutive common stock equivalents using treasury stock method	119,006	441,150	121,941	317,629
Diluted weighted average shares	9,226,426	9,433,650	9,224,727	9,279,800

Basic earnings per common share:	$ 0.06	$ 0.15	$ 0.11	$ 0.24
Diluted earnings per common share:	$ 0.06	$ 0.14	$ 0.11	$ 0.23

Weighted average options outstanding	1,207,302	1,133,449	1,185,414	1,169,975
Anti-dilutive options not included in the computations	630,737	5,000	630,737	5,000

2. Business Combination

3 Months Ended

Jun. 30, 2012

Business Combinations [Abstract]

2. Business Combination

2. Business Combination

On February 16, 2012, the Company completed the acquisition of the video conferencing business of Israel-based VCON Video Conferencing, Ltd. (“VCON”) through an asset purchase agreement. VCON is a pioneer in software based video conferencing solutions with product offerings that include group video conferencing endpoints, desktop video conferencing endpoints, video conferencing infrastructure solutions and software development kits. This acquisition and the combination of streaming and digital signage technologies will provide us with complimentary technology opportunities allowing us to enter new growth markets.

Pursuant to the asset purchase agreement, the Company paid initial consideration of $4,632 in cash. This initial consideration is subject to a final working capital adjustment.

The estimated fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that such information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is waiting for additional information necessary to finalize those fair values. The measurement period for purchase price allocation ends as soon as information on the facts and circumstances becomes available, but will not exceed twelve months from the date of acquisition. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to intangible assets and possible allocation to goodwill, retroactive to the period in which the acquisition occurred. Therefore, the preliminary measurements of fair value reflected are subject to change and any such changes could be significant.

The preliminary fair value of identified assets and liabilities acquired and goodwill was as follows:

Inventory	$ 320
Property and equipment	34
Product warranty liability	(8)
Tradename	500
Patents and technology	2,300
Proprietary software	500
In-process research and development	200
Goodwill	786
	$ 4,632

The Company incurred $40 and $227 towards acquisition related expenses, all of which are categorized under general and administrative expenses in the condensed consolidated statements of operations for the three and six months ended June 30, 2012, respectively.

Supplemental Pro Forma information

1) Revenue and net loss from the VCON business from February 16, 2012 to June 30, 2012 was $417 and ($435), respectively.

2) Revenue and earnings of the combined entity as though the business combination occurred as of January 1, 2011:

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Revenue	$ 11,656	$ 12,560	$ 22,022	$ 23,363
Net income	575	1,317	984	1,963

3) There were no material, nonrecurring pro forma adjustments directly attributable to the acquisition included in this supplemental Pro Forma information.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

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-Name Emerging Issues Task Force (EITF)
-Number 88-16
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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-Paragraph 51, 52
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

3. Goodwill and Intangibles

3 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

3. Goodwill and Intangibles

3. Goodwill and Intangibles

Goodwill

The goodwill of $786 related to the acquisition of VCON is composed of expected synergies in utilizing VCON technology in ClearOne product offerings, reduction in future combined research and development expenses, and intangible assets including acquired workforce that do not qualify for separate recognition.

The goodwill balance of $786 related to the acquisition of the VCON business is deductible for tax purposes.

Intangible Assets

Intangible assets as of June 30, 2012 and December 31, 2011 consisted of the following:

	Estimated useful lives	As of June 30, 2012	As of December 31, 2011
Tradename	7 years	$ 935	$ 435
Patents and technology	10 years	4,370	2,070
Proprietary software	3 to 5 years	894	394
In-process research and development	Indefinite	759	559
Other	5 years	49	49
		7,007	3,507
Accumulated Amortization		(1,149)	(817)
		$ 5,858	$ 2,690

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Amortization of intangibles with finite lives	$ 205	$ 87	$ 331	$ 175

The estimated future amortization expense of intangible assets is as follows:

Years ending December 31,
2012	$ 415
2013	799
2014	797
2015	598
2016	560
2017	508
Thereafter	1,422
	$ 5,099

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

4. Inventories

3 Months Ended

Jun. 30, 2012

Inventory Disclosure [Abstract]

4. Inventories

4. Inventories

Inventories, net of reserves, as of June 30, 2012 and December 31, 2011 consisted of the following:

	As of June 30, 2012	As of December 31, 2011
Current:
Raw materials	$ 951	$ 1,091
Finished goods	14,113	11,474
	$ 15,064	$ 12,565

Long-term:
Raw materials	$ 653	$ 444
Finished goods	1,411	1,461
	$ 2,064	$ 1,905

Long-term inventory represents inventory held in excess of our current requirements for the next twelve months based on our recent sales and forecasted level of sales. We expect to sell the above inventory, net of reserves, at or above the stated cost and believe that no loss will be incurred on its sale.

Current finished goods include consigned inventory in the amounts of approximately $1,246 and $1,199 as of June 30, 2012 and December 31, 2011, respectively. Consigned inventory represents inventory at distributors and other customers where revenue recognition criteria have not been achieved.

The following table summarizes the losses incurred on valuation of inventory at lower of cost or market value and write-off of obsolete inventory during the three and six months ended June 30, 2012 and 2011, respectively.

Three months ended June 30 2012: $188

Six months ended June 30 2012: $278

5. Share-based Compensation

3 Months Ended

Jun. 30, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

5. Share-based Compensation

5. Share-based Compensation

Share-based compensation expense has been recorded as follows:

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Cost of goods sold	$ -	$ -	$ 1	$ -
Sales and marketing	17	6	30	10
Research and product development	10	4	17	8
General and administrative	33	34	63	65
	$ 60	$ 44	$ 111	$ 83

As of June 30, 2012, the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $594 which will be recognized over a weighted average period of 2.79 years.

During the three and six months ended June 30, 2012, we granted 65,000 and 95,000 stock options, respectively. During the three and six months ended June 30, 2011, we granted 5,000 stock options. We use judgment in determining the fair value of the share-based payments on the date of grant using an option-pricing model with assumptions regarding a number of highly complex and subjective variables. These variables include the risk-free interest rate of the awards, the expected life of the awards, the expected volatility over the term of the awards, the expected dividends of the awards, and an estimate of the amount of awards that are expected to be forfeited. We use the Black-Scholes option pricing model to determine the fair value of share-based payments granted under ASC Topic 718.

In applying the Black-Scholes methodology to the options granted, the Company used the following assumptions:

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Risk-free interest rate, average	1.2%	2.5%	1.5%	2.5%
Expected option life, average	7.02 years	6.9 years	7.11 years	6.9 years
Expected price volatility, average	51.7%	52.5%	51.6%	52.5%
Expected dividend yield	0.0%	0.0%	0.0%	0.0%

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

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+ Details

6. Shareholders' Equity

3 Months Ended

Jun. 30, 2012

Stockholders' Equity Note [Abstract]

6. Shareholders' Equity

6. Shareholders’ Equity

The following table summarizes the change in shareholders’ equity during the three and six months ended June 30, 2012 and 2011, respectively:

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Balance at the beginning of the period	$ 40,168	$ 32,607	$ 39,664	$ 31,735
Net income during the period	575	1,321	1,028	2,133
Treasury stock purchased	(92)	-	(92)	-
Stock-based compensation	60	44	111	83
Exercise of stock options	81	696	81	717
Balance at end of the period	$ 40,792	$ 34,668	$ 40,792	$ 34,668

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph d

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Chapter 1
-Section B
-Paragraph 7, 11A
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 3, 4, 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Article 4

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section C

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187085-122770

Reference 12: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 505
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-Paragraph 2
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-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21564-112644

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 17: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Name Accounting Standards Codification
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Reference 20: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 310
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-Paragraph 2
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-URI http://asc.fasb.org/extlink&oid=6228006&loc=d3e74512-122707

Reference 21: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Section S99
-Paragraph 4
-Subparagraph (SAB TOPIC 4.C)
-URI http://asc.fasb.org/extlink&oid=6959260&loc=d3e187143-122770

+ Details

7. Proceeds from litigation	3 Months Ended
7. Proceeds from litigation	Jun. 30, 2012
Proceeds from litigation {1}
Proceeds from litigation	<!--egx--><font style="LINE-HEIGHT:115%"> <p style="LINE-HEIGHT:115%; MARGIN:0in 0in 10pt"><b><font style="LINE-HEIGHT:115%">7. Proceeds from Litigation</font></b><font style="LINE-HEIGHT:115%"></font></p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt; TEXT-AUTOSPACE:">During the six months ended June 30, 2012, $250 was received as a settlement of amounts due from a defendant in our litigation related to the “Theft of Intellectual Property and Related Cases” described in detail in in Note 8 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements in our Form 10-K for the year ended December 31, 2011. </p> <p style="LINE-HEIGHT:115%; MARGIN:0in 0in 10pt"></p> </font>

8. Income Taxes

3 Months Ended

Jun. 30, 2012

Income Taxes

Income Tax Disclosure [Text Block]

8. Income Taxes

The Company’s forecasted effective tax rate at June 30, 2012 is 37.4%, a 2.8 percentage-point increase from the 34.6% effective tax rate recorded at December 31, 2011. The increase is primarily attributable to the expiration of the U.S. research and development credit on December 31, 2011. The effective tax rate recorded for the quarter ending June 30, 2012 is 48.6%. The difference between the forecasted effective tax rate and the rate recorded is primarily due to discrete items related to uncertain tax positions. The reserve for uncertain tax positions increased by approximately $123 during the quarter ended June 30, 2012 as a result of derecognition of tax benefits recognized in a prior period.

Accrued liabilities as of June 30, 2012 and December 31, 2011 include accrued income taxes payable of $294 and $300, respectively.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
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-Paragraph 15
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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

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-Topic 740
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-Topic 740
-SubTopic 10
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-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

+ Details

9. Commitments and Contingencies	3 Months Ended
9. Commitments and Contingencies	Jun. 30, 2012
Commitments and Contingencies {1}
Commitments and Contingencies Disclosure [Text Block]	The Company entered in to a consulting arrangement for a period of 12 months for transition related work with respect to our VCON acquisition. The consulting arrangement provides for a fixed fee of approximately $180 with additional maximum incentive based fees of approximately $20 associated with accomplishing specific milestones.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-SubTopic 10
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-Paragraph 8
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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

10. Subsequent Events

3 Months Ended

Jun. 30, 2012

Subsequent Events

Subsequent Events [Text Block]

10. Subsequent Events

The Company evaluated its consolidated financial statements as of and for the three months ended June 30, 2012 for subsequent events through the date the financial statements were issued. The Company is not aware of any subsequent event which would require recognition or disclosure in the financial statements.

1. Business Description, Basis of Presentation and Significant Accounting Policies (Tables)

3 Months Ended

Jun. 30, 2012

Earnings Per Share - The Following Table Sets Forth The Computation of Basic and Diluted Earnings Per Common Share: [Abstract]

Earnings Per Share - The Following Table Sets Forth The Computation of Basic and Diluted Earnings Per Common Share:

Earnings Per Share – The following table sets forth the computation of basic and diluted earnings per common share:

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Numerator:
Net income	$ 575	$ 1,321	$ 1,028	$ 2,133
Denominator:
Basic weighted average shares	9,107,420	8,992,500	9,102,786	8,962,171
Dilutive common stock equivalents using treasury stock method	119,006	441,150	121,941	317,629
Diluted weighted average shares	9,226,426	9,433,650	9,224,727	9,279,800

Basic earnings per common share:	$ 0.06	$ 0.15	$ 0.11	$ 0.24
Diluted earnings per common share:	$ 0.06	$ 0.14	$ 0.11	$ 0.23

Weighted average options outstanding	1,207,302	1,133,449	1,185,414	1,169,975
Anti-dilutive options not included in the computations	630,737	5,000	630,737	5,000

- Definition

Tabular disclosure of the effect of income (loss) on an entity's diluted earnings per share.

+ References + Details

Business Combinations (Tables)

3 Months Ended

Jun. 30, 2012

Business Combinations

Purchase Price Allocation for VCON business acquired

The preliminary fair value of identified assets and liabilities acquired and goodwill was as follows:

Inventory	$ 320
Property and equipment	34
Product warranty liability	(8)
Tradename	500
Patents and technology	2,300
Proprietary software	500
In-process research and development	200
Goodwill	786
	$ 4,632

Intangible Assets, Goodwill and Other (Tables)

3 Months Ended

Jun. 30, 2012

Intangible Assets, Goodwill and Other

Schedule of Intangible Assets

Intangible assets as of June 30, 2012 and December 31, 2011 consisted of the following:

	Estimated useful lives	As of June 30, 2012	As of December 31, 2011
Tradename	7 years	$ 935	$ 435
Patents and technology	10 years	4,370	2,070
Proprietary software	3 to 5 years	894	394
In-process research and development	Indefinite	759	559
Other	5 years	49	49
		7,007	3,507
Accumulated Amortization		(1,149)	(817)
		$ 5,858	$ 2,690

Schedule of future amortization of intangible assets

Years ending December 31,
2012	$ 415
2013	799
2014	797
2015	598
2016	560
2017	508
Thereafter	1,422
	$ 5,099

Inventory (Tables)

3 Months Ended

Jun. 30, 2012

Inventory

Schedule of Current Inventory

	As of June 30, 2012	As of December 31, 2011
Current:
Raw materials	$ 951	$ 1,091
Finished goods	14,113	11,474
	$ 15,064	$ 12,565

Schedule of Long-term Inventory, net of reserves

	As of June 30, 2012	As of December 31, 2011
Long-term:
Raw materials	$ 653	$ 444
Finished goods	1,411	1,461
	$ 2,064	$ 1,905

Equity (Tables)

3 Months Ended

Jun. 30, 2012

Equity

Schedule of Shareholders' Equity

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Balance at the beginning of the period	$ 40,168	$ 32,607	$ 39,664	$ 31,735
Net income during the period	575	1,321	1,028	2,133
Treasury stock purchased	(92)	-	(92)	-
Stock-based compensation	60	44	111	83
Exercise of stock options	81	696	81	717
Balance at end of the period	$ 40,792	$ 34,668	$ 40,792	$ 34,668

Compensation Related Costs, Share Based Payments (Tables)

3 Months Ended

Jun. 30, 2012

Share-based compensation Black-Scholes assumptions

	Three months ended June 30,		Six months ended June 30,
	2012	2011	2012	2011
Risk-free interest rate, average	1.2%	2.5%	1.5%	2.5%
Expected option life, average	7.02 years	6.9 years	7.11 years	6.9 years
Expected price volatility, average	51.7%	52.5%	51.6%	52.5%
Expected dividend yield	0.0%	0.0%	0.0%	0.0%