Significant Risk Concentrations

12 Months Ended

Dec. 31, 2014

Risks And Uncertainties [Abstract]

Significant Risk Concentrations

11. Significant Risk Concentrations

Significant Customer

One customer, Future Electronics, Inc. accounted for 12% of total revenues in 2014. No other customers accounted for 10% or more of total revenue in either 2014 or 2013.

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. Each of these balances was subsequently collected. No other customer accounted for 10% or more of total accounts receivable at December 31, 2014 or 2013.

Significant Supplier

We have two ODAs with Microsoft which enable us to sell Microsoft Windows Embedded operating systems to our customers in the United States, Canada, Argentina, Brazil, Chile, Columbia, Mexico, Peru, Puerto Rico, the Caribbean (excluding Cuba), the European Union, the European Free Trade Association, Turkey and Africa, which expire on June 30, 2016. We also have four ODAs with Microsoft which allow us to sell Microsoft Windows Mobile operating systems in the Americas (excluding Cuba), Japan, Taiwan, Europe, the Middle East, and Africa, which expire on June 30, 2015.

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 recognized $298,000 in 2014 and $774,000 in 2013, which was treated as a reduction in cost of sales. Additionally, we qualified for $685,000 in 2014 and $409,000 in 2013, in rebate credits which will be accounted for as a reduction in marketing expense if and when qualified program expenditures are made.