Significant Risk Concentrations

12 Months Ended

Dec. 31, 2013

Risks And Uncertainties [Abstract]

Significant Risk Concentrations

11. Significant Risk Concentrations

Significant Customer

No customer accounted for 10% or more of total revenue in 2013 or 2012.

Future Electronics, Inc. had an accounts receivable balance of $3.7 million, or 23% of total accounts receivable, as of December 31, 2013. Mitsubishi Electric Corporation had an accounts receivable balance of $2.8 million, or 18% of total accounts receivable, as of December 31, 2013, all of which was subsequently collected. Bluebird Soft, Inc. had an accounts receivable balance of $2.1 million, or 13% of total accounts receivable, as of December 31, 2012. No other customer accounted for 10% or more of total accounts receivable at December 31, 2013 or 2012.

Significant Supplier

We have ODAs with Microsoft which enable us to sell Microsoft Windows Embedded operating systems to our customers in the United States, Canada, the Caribbean (excluding Cuba), Mexico, the European Union and the European Free Trade Association, which expire on June 30, 2014. We also have ODAs with Microsoft which allow us to sell Microsoft Windows Mobile operating systems in the Americas, Japan, Taiwan, Europe, the Middle East, and Africa. Our current distribution agreements related to Windows Mobile expire on June 30, 2014. Our rights to distribute Windows Mobile operating systems in Korea expired on October 31, 2012. We sold $4.5 million of Windows Mobile operating systems in Korea in 2012.

Software sales under these agreements constitute a significant portion of our software revenue and total revenue. These agreements are typically renewed annually or semi-annually; however, there is no automatic renewal provision in any of these agreements. Further, these agreements can be terminated unilaterally by Microsoft at any time. Microsoft currently offers a rebate program to sell Microsoft Windows Embedded operating systems pursuant to which we earn money for achieving certain predefined objectives. Prior to the third quarter of 2013, the earned rebate amount was treated as a reduction in software cost of sales in the quarter earned. Beginning in the third quarter of 2013, as a result of program modifications, we began treating a portion of the rebate as marketing development funds which are accounted for as a reduction in marketing expense if and when qualified program expenditures are made.

Under this rebate program, we earned $774,000 in 2013 and $888,000 in 2012, which was treated as a reduction in cost of sales. Additionally, in 2013, we earned $409,000 which will be accounted for as a reduction in marketing expense if and when qualified program expenditures are made.