Note 10 - Significant Risk Concentrations

3 Months Ended

Mar. 31, 2021

Concentration Risk Disclosure [Text Block]

10.

Significant Risk Concentrations

Significant Customers

customers accounted for

10%

or more of total revenue for each of the

three

months ended

March 31, 2021

and

2020

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

$563,000

or approximately

10%

of total accounts receivable at

March 31, 2021

and

$680,000

or approximately

12%

of total accounts receivable at

December 31, 2020

. Kodak Alaris had accounts receivable balances of

$866,000

or approximately

15%

of total accounts receivable at

December 31, 2020

other customer accounted for

10%

or more of total accounts receivable at

March 31, 2021

December 31, 2020

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 have also entered into Original Equipment Manufacturer Distribution Agreements ("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

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 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):

	Three Months Ended March 31,
	2021		2020
Reductions to cost of revenue	$	106	$	113
Reductions to marketing expense	$	57	$	219