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Theoretical results for modeling source-based smart pixel arrays are presented. Attention is focused on modeling the nonlinearities in sources, as well as electrical and optical couplings and interactions within a single pixel. A matrix formalism is used to generalize the theory to include the behavior of an entire smart pixel array consisting of interacting pixels with arbitrary optical and electrical interconnections. A vertical cavity surface emitting laser (VCSEL)-based smart pixel array is used for experimental demonstration of the application of the theory in the design and implementation of an optoelectronic flip-flop, where the nonlinear characteristics of the VCSELs are utilized in a positive feedback scheme to achieve bistability.