10. Significant Risk Concentrations

Significant Customer

Honeywell International, Inc. and affiliated entities (“Honeywell”) accounted for $2.9 million or 15% of total revenue for the three months ended September 30, 2017 and $9.1 million or 15% of total revenue for the nine months ended September 30, 2017. No other customers accounted for 10% or more of total revenue for the 2017 periods noted above. No customers accounted for 10% or more of total revenue for the three and nine months ended September 30, 2018.

Honeywell had accounts receivable balances of $5.1 million or approximately 39% of total accounts receivable at September 30, 2018 and $8.7 million or approximately 48% of total accounts receivable at December 31, 2017. No other customer accounted for 10% or more of total accounts receivable at September 30, 2018 or December 31, 2017.

Significant Supplier

We have OEM Distribution Agreements (“ODAs”) with Microsoft Corporation (“Microsoft”) which enable us to sell Microsoft Windows Embedded operating systems on a non-exclusive basis 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 have been extended through February 28, 2019. We also have 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 April 30, 2022.

Software sales under these agreements constitute a significant portion of our total revenue. These agreements are typically renewed bi-annually, 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. In accordance with Microsoft rebate program rules, we allocate 30% of rebate values to reduce cost of sales and the remaining 70% to offset qualified marketing expenses in the period the expenditures are incurred.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Reductions to cost of revenue	$	159	$	126	$	577	$	323
Reductions to marketing expense	$	294	$	185	$	673	$	558

There was a balance of approximately $371,000 in qualified outstanding rebate credits at September 30, 2018, which will be accounted for as a reduction in marketing expense in the period in which qualified program expenditures are made.