Note 12 - Significant Concentrations

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

12. Significant Concentrations

Significant customer

No customers accounted for 10% or more of total revenue and accounts receivable during 2022 or 2021.

Significant supplier

We are authorized to sell Microsoft Windows IoT operating systems in Canada, the United States, Argentina, Brazil, Chile, Mexico, Peru, Venezuela, Puerto Rico, Columbia, and several Caribbean countries.

We were previously party to certain Original Equipment Manufacturer Distribution Agreements ("ODAs") with Microsoft pursuant to which we were 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 expired on April 30, 2022 and were not renewed thereafter.

Our current distribution agreements with Microsoft have no automatic renewal provisions and may 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. Based on the nature of the incentives, we record a portion of the incentive earnings as a reduction to Partner Solutions cost of revenue with the remaining portion recorded as an offset to qualified marketing expenses in the period the expenditures are claimed and approved.

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

	Year Ended December 31,
	2022		2021
Reductions to Partner Solutions cost of revenue	$	327	$	311
Reductions to marketing expense		290		373