Concentrations

12 Months Ended

Dec. 31, 2019

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash with high credit quality financial institutions. The Company maintains its cash in bank deposit accounts, which, at times, exceed federally insured limits. The Company has not experienced any losses in cash accounts for the years ended December 31, 2019, 2018, and 2017.

As of December 31, 2019, Verizon Wireless (“Verizon”) and Best Buy Co., Inc. (“Best Buy”) exceeded 10% of the Company's accounts receivable. As of December 31, 2018, Superior Communications, Inc. (“Superior”) and Best Buy exceeded 10% of the Company's accounts receivable. The amount of accounts receivable for each of these customers are outlined as follows:


	December 31,
	2019		2018

Verizon	24	%	1	%
Best Buy	14	%	15	%
Superior	5	%	50	%

The Company began transitioning to a direct sales relationship with Verizon during the second half of 2018, which has continued to progress throughout 2019. Previous to the Company's direct sales relationship with Verizon, Verizon purchased the Company's products through Superior.

Other than the customers noted in the table above, no other customer account balances exceeded 10% of accounts receivable as of December 31, 2019 and 2018. If one or more of the Company’s significant customers were to become insolvent or were otherwise unable to pay for the products provided, it would have a material adverse effect on the Company’s financial condition and results of operations.

Concentration of Supplier

The Company does not directly manufacture any of its products, rather the Company employs various third-party manufacturing partners in the U.S. and Asia to perform these services on its behalf. The services employed by these third-parties include the selection of sub-suppliers that provide raw materials and other components used in the manufacturing process. The Company has endeavored to use common components and readily available raw materials in the design of its products that can be sourced from multiple sub-suppliers. However, raw film used in its InvisibleShield Film and ISOD products has been produced by a single supplier for over 10 years. The Company's film supplier has contractually agreed to not sell the raw materials to any of its competitors.

Below is a high-level summary by product category of the manufacturing sources used by the Company:

•Protection (Screen Protection and Cases) – The screen protection product line is comprised of InvisibleShield Glass products (approximately 75% of 2019 screen protection sales or 33% of net sales), InvisibleShield Film products (approximately 13% of 2019 screen protection sales or 6% of net sales), and ISOD film blanks (approximately 12% of 2019 screen protection sales or 5% of net sales). The InvisibleShield Glass products are sourced from factories in Asia with protective glass expertise, each of which uses a number of sub-suppliers for raw materials and other components. The InvisibleShield Film and ISOD products are sourced through the Company's third-party logistics partner, who purchases the raw film inventory from a single supplier (as discussed above). The VisionGuard raw materials are provided to the Company's manufacturers through an exclusive licensing agreement with a third-party partner.

The protective case product line consists of (1) ZAGG cases designed to protect device-specific mobile devices, and (2) Gear4 cases featuring D3O technology designed to protect smartphones and tablets. The Company’s protective cases are sourced from factories in Asia with expertise in case protection manufacturing, each of which uses a number of sub-suppliers for raw materials and other components. The D3O raw materials are provided to the manufacturers through an exclusive licensing agreement with a third-party partner who is the sole manufacturer of D3O materials.

•Power (Power Management and Power Cases) – The power management product line consists of power products that are designed to provide on-the-go power for tablets, smartphones, smartwatches, cameras, and virtually all other electronic mobile devices. With the addition of HALO, the Company's power management product line includes power stations, wireless charging, car and wall chargers, portable power, power wallets, and more. The power products are sourced from factories in Asia with battery expertise, each of which uses a number of sub-suppliers for raw materials and other components.

•Audio – The audio product line consists of earbuds, headphones, and speakers that are designed to be compatible with virtually all electronic mobile devices. The audio products are sourced from factories in Asia with audio expertise, each of which uses a number of sub-suppliers for raw materials and other components.

•Productivity (Keyboards and Other) – The keyboard product line consists of (1) device-specific keyboards designed to fit individual tablets produced by original equipment manufacturers, and (2) keyboards that are designed to be device-agnostic and can be used on virtually any mobile device. The keyboard products are sourced from factories in Asia with keyboard expertise, each of which uses a number of sub-suppliers for raw materials and other components.

The Company's product and operations teams work closely with suppliers from initial product development and throughout the manufacturing process to ensure that (1) the supplier understands and will build according to product specifications, (2) appropriate quality is maintained for the finished goods and for all sub-components, and (3) the supplier can meet the Company's supply needs.

Concentration of Sales

For the year ended December 31, 2019, Verizon and Best Buy exceeded 10% of net sales. For the year ended December 31, 2018, Superior and Best Buy exceeded 10% of net sales. For the year ended December 31, 2017, Superior exceeded 10% of net sales. The amount of net sales for each of these customers are outlined as follows:


	For the Years Ended December 31,
	2019		2018		2017

Verizon	17	%	1	%	—	%
Best Buy	10	%	10	%	9	%
Superior	2	%	23	%	30	%

For the years ended December 31, 2019, 2018, and 2017, no other customers exceeded 10% of net sales.

Although the Company has contracts in place governing the relationships with its retail distribution customers (“retailers”), the contracts are not long-term and all the retailers generally purchase from the Company on a purchase order basis. As a result, these retailers generally may, with little or no notice or penalty, cease ordering and selling the Company’s products, or materially reduce their orders. If any of these retailers cease selling the Company’s products, slow their rate of purchase of its products, or decrease the number of products they purchase, the Company’s results of operations could be adversely affected.

As of December 31, 2019 and 2018, net assets located overseas in international locations totaled $28,944 and $45,387, respectively.