9. Business Risks and Credit Concentration

9 Months Ended

Sep. 30, 2011

Concentration Risk Disclosure [Text Block]

9. Business Risks and Credit Concentration

The Company’s cash is maintained with a limited number of commercial banks, and is invested in the form of demand deposit accounts.  Deposits in these institutions may exceed the amount of FDIC insurance provided on such deposits.

The Company markets its products to resellers and end-users primarily in the United States.  Management performs ongoing credit evaluations of the Company’s customers and maintains an allowance for potential credit losses.  There can be no assurance that the Company’s credit loss experience will remain at or near historic levels.  One customer accounted for 14% of gross accounts receivable at September 30, 2011.  One customer accounted for 12% of gross accounts receivable at September 30, 2010.

No one customer accounted for more than 10% of the Company’s revenue during the three and nine months ended September 30, 2011 or September 30, 2010.  During the first quarter of 2010, the Company received notice from two of its customers that they would be terminating service during the course of 2010. This service is an older product offering that had been in place with these customers for several years.  The Company had known for some time that the customers would move away from the service eventually and the revenue generated by these customers had been declining over recent years. Revenue received from these customers accounted for approximately 0.00% during the three and nine months ended September 30, 2011, as compared to 2% and 9% of revenue during the three and nine months ended September 30, 2010.

The Company relies on primarily one third party network service provider for network services.  If this service provider failed to perform on its obligations to the Company, such failure could materially impact future operating results, financial position and cash flows.