Note 9 - Significant Risk Concentrations

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

9. Significant Risk Concentrations

Significant Customers

No customers accounted for 10% or more of total revenue for each of the three months ended March 31, 2023 and 2022.

No customers accounted for more than 10% of total accounts receivable at March 31, 2023. Continental Resources, Inc. had accounts receivable balances of $757,000, or approximately 16% of total accounts receivable at March 31, 2022. 

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. 

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 of Partner Solutions cost of revenue with the remaining portion recorded as an offset to qualified marketing expenses in the period the expenditures are approved. 

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

	Three Months Ended March 31,
	2023		2022
Reductions to cost of revenue	$	131	$	136
Reductions to marketing expense		289		105