15. Operating Risk

Concentrations of Credit Risk and Major Customers — A substantial percentage of the Company’s net revenue comes from sales made to a small number of customers and typically are made on an open account basis. Details of customers accounting for 10% or more of total net sales for the six months ended June 30, 2011 and 2010, respectively are as follows (in thousands):


	Six Months Ended
Customer	June 30, 2011		June 30, 2010
380 Middlesex Solar, LLC	$	8,705	$	—
North Palm Springs Investment, LLC*		5,033		—
Solarmarkt Sued GmbH		—		2,053
Bayer & Raach GmbH		—		2,899

Details of customers representing 10% or more of accounts receivable balances and costs and estimated earnings in excess of billings on uncompleted contracts at June 30, 2011 and December 31, 2010, respectively are (in thousands):


Customer	June 30, 2011		December 31, 2010
North Palm Springs Investment, LLC*	$	5,033	$	—
380 Middlesex Solar, LLC		6,109		—
Temescal Canyon RV Park		2,512		1,897


*		North Palm Springs Investment, LLC is a wholly owned subsidiary of LDK Solar USA, Inc.

Product Warranties — The Company offers the industry standard of 25 years for our solar modules and industry standard five (5) years on inverter and balance of system components. Due to the warranty period, we bear the risk of extensive warranty claims long after we have shipped product and recognized revenue. In our cable, wire and mechanical assemblies business, historically our warranty claims have not been material. In our solar photovoltaic business, our greatest warranty exposure is in the form of product replacement. Until the third quarter of 2007, the Company purchased its solar panels from third-party suppliers and since the third-party warranties are consistent with industry standards we considered our financial exposure to warranty claims immaterial. Certain photovoltaic construction contracts entered into during the year ended December 31, 2007 included provisions under which the Company agreed to provide warranties to the buyer, and during the quarter ended September 30, 2007 and continuing through the fourth quarter of 2010, the Company installed its own manufactured solar panels. As a result, the Company recorded the provision for the estimated warranty exposure on these contracts within cost of sales. Since the Company does not have sufficient historical data to estimate its exposure, we have looked to our own historical data in combination with historical data reported by other solar system installers and manufacturers. The Company now only installs panels manufactured by unrelated third parties and its parent LDK Solar Co., Ltd. We provide their pass through warranty and reserve for unreimbursed costs to replace these panels. The Company has recorded a warranty expense of $103,000 and $100,000 for the three months ended June 30, 2011 and 2010, respectively, and has recorded a warranty expense of $109,000 and $177,000 for the six months ended June 30, 2011 and 2010, respectively.

The accrual for warranty claims consisted of the following at June 30, 2011 and 2010 (in thousands):


	2011			2010

Beginning balance, January 1,	$	1,542		$	1,246
Provision charged to warranty expense		109			177
Less: warranty claims		(72	)		—

Ending balance, June 30	$	1,579		$	1,423

Current portion of warranty liability	$	200		$	—
Non-current portion of warranty liability	$	1,379		$	—