Restatement

6 Months Ended

Jun. 30, 2011

Recent Accounting Pronouncements/Restatement [Abstract]

Restatement

16. Restatement

The company has restated the condensed consolidated financial statements for the three and six months ended June 30, 2011 to correct an error in the accounting for share-based compensation. The Company identified an accounting misstatement related to share-based compensation recorded in its interim financial statements related to the PCTEL Secure LLC joint venture (“PCTEL Secure” or “joint venture”) with Eclipse Design Technologies, Inc. (“Eclipse”).

On January 5, 2011, the Company formed PCTEL Secure, a joint venture limited liability company, with Eclipse. PCTEL Secure designs software and secure digital-based solutions for commercial Android cellular phone platforms. The Company contributed $2.5 million in cash on the formation of the joint venture in return for 51% ownership of the joint venture. In return for 49% ownership of the joint venture, Eclipse contributed $2.4 million of intangible assets in the form of intellectual property and a services agreement, including an assembled workforce, to provide services. This assembled workforce included an employee of PCTEL Secure and two contractors for Eclipse that Eclipse identified as key contributors of services. Eclipse entered into cash bonus arrangements with the three key contributors that were indexed to the future amount that would be received by Eclipse under one of the call features in the joint venture agreement by which the Company would gain ownership of the last 30% of PCTEL Secure. The cash bonus arrangements were subject to the accounting guidance of share-based payments to employees and to non-employees because of the indexing of the cash bonuses to the ultimate equity value of PCTEL Secure. The company concluded that at the date of the joint venture formation, it was probable that the Company would exercise its rights under that call option, based on its majority control over PCTEL Secure, its intent, and its financial resources available. The Company miscalculated the fair value of the share-based payment arrangements for the participants as well as the appropriate cost attribution under the guiding accounting literature.

The restated Net Loss Available to Common Shareholders in the three months ended June 30, 2011 is $(68,000) instead of the $(81,000) previously reported and the restated Net Loss Available to Common Shareholders in the six months ended June 30, 2011 is ($749,000) instead of the ($1,365,000) previously reported. The effect of the restatement is that the Company lost $13,000 and $616,000 less than previously reported. The restated earnings per share for the six months ended June 30, 2011 is net loss of $(0.04) instead of $(0.08) as previously reported, or $0.04 different than previously reported. There was no change to the earning per share of $0.00 for the three months ended June 30, 2011. The Company’s revenues and cash flows are unaffected by this restatement.

The tables below reflect the quarterly and year to date effect of the errors in accounting for share-based payments on the condensed consolidated financial statements as originally reported.

	Three Months Ended June 30, 2011									Six Months Ended June 30, 2011
	As Previously Reported			Restatement amount			As Restated			Previously Reported			Restatement amount			As Restated
Statements of Operations (unaudited):
Research and development	$	3,041		$	(68	)	$	2,973		$	9,196		$	(3,241	)	$	5,955
OPERATING LOSS	$	(298	)	$	68		$	(230	)	$	(4,231	)	$	3,241		$	(990	)
Other income, net	$	125		$	(34	)	$	91		$	1,855		$	(1,653	)	$	202
LOSS BEFORE INCOME TAXES	$	76		$	(215	)	$	(139	)	$	(2,376	)	$	1,588		$	(788	)
NET LOSS	$	(249	)	$	34		$	(215	)	$	(2,148	)	$	1,588		$	(560	)
Less: Net loss attributable to noncontrolling interests	$	(274	)	$	34		$	(240	)	$	(2,055	)	$	1,588		$	(467	)
Less: Adjustments to redemption value of noncontrolling interest	$	(106	)	$	13		$	(93	)	$	(1,272	)	$	616		$	(656	)
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS	$	(81	)	$	13		$	(68	)	$	(1,365	)	$	616		$	(749	)
Basic Earnings per share:
Net loss available to common shareholders	$	0.00		$	0.00		$	0.00		$	(0.08	)	$	0.04		$	(0.04	)
Diluted Earnings per share:
Net loss available to common shareholders	$	0.00		$	0.00		$	0.00		$	(0.08	)	$	0.04		$	(0.04	)

	Six Months Ended June 30, 2011
	As			Restatement			As
	Previously			amount			Restated
Statements of Cash Flows (unaudited):
Net loss	$	(2,148	)	$	1,588		$	(560	)
Share based payments	$	1,648		$	(1,588	)	$	60
	At June 30, 2011
	Previously Reported			Restatement amount			As Restated
Balance Sheet (unaudited):
Noncontrolling interest	$	2,334		$	(616	)	$	1,718
Retained earnings	$	(21,943	)	$	616		$	(21,327	)