Note 13 - Significant Concentrations

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

13. Significant Concentrations

Significant customer

No

customers accounted for

10%

or more of total revenue during

2020

or

2019.

Kodak Alaris had accounts receivable balances of approximately

$866,000,

or

15%

of total accounts receivable, at

December 31, 2020. 

Honeywell International, Inc. and affiliated entities (“Honeywell”) had accounts receivable balances of approximately

$680,000,

or

12%

of total accounts receivable, at

December 31, 2020.

Honeywell had accounts receivable balances of approximately

$1.2

million, or

13%

of total accounts receivable, at

December 31, 2019.

Significant supplier

We are authorized to sell Windows IoT operating systems in Canada, the United States, Argentina, Brazil, Chile, Mexico, Peru, Venezuela, Puerto Rico, Columbia, and several Caribbean countries. Our distribution agreement for sales of Windows IoT operating systems in the European Union (“E.U.”), the European Free Trade Association, Turkey and Africa, expired on

June 30, 2019

and was

not

renewed thereafter. We generated approximately

3%

of our Partner Solutions software sales under this agreement in

2019.

We have also entered into ODAs with Microsoft pursuant to which we are licensed to sell Microsoft Windows Mobile operating systems to customers in North America, South America, Central America (excluding Cuba), Japan, Taiwan, Europe, the Middle East, and Africa. The ODAs to sell Windows Mobile operating systems are effective through

April 30, 2022.

There is

no

automatic renewal provision in any of these agreements, and these agreements can be terminated unilaterally by Microsoft at any time.

The majority of our revenue continues to be derived from reselling Microsoft Windows Embedded and IoT operating system software to device makers. The sale of Microsoft operating systems has historically accounted for substantially all of our Partner Solutions revenue.

Microsoft currently offers a distributor incentives program through which we earn rebates pursuant to predefined objectives related to sales of Microsoft Windows IoT operating systems. In accordance with program rules, we allocate a portion of the incentive earnings to reduce cost of revenue with the remaining portion utilized to offset qualified marketing expenses in the period the expenditures are claimed and approved. During

2019,

20%

was allocated to offset cost of revenue and the remaining

80%

was potentially available to offset qualified marketing expenses. During the

second

quarter of

2020

the program allocation was changed by Microsoft to a

50/50

split between the

two

components.

Under this rebate program, we recorded rebate credits as follows (in thousands):

	Year Ended December 31,
	2020		2019
Reductions to cost of revenue	$	757	$	314
Reductions to marketing expense	$	1,115	$	1,217