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6. Customer Concentrations
9 Months Ended
Sep. 30, 2014
Notes to Financial Statements  
Customer Concentrations

The Company sells its products primarily through high-volume retailers and distributors, Internet service providers, value-added resellers, PC system integrators, and original equipment manufacturers ("OEMs"). The Company supports its major accounts in their efforts to offer a well-chosen selection of attractive products and to maintain appropriate inventory levels.

 

 

Relatively few customers have accounted for a substantial portion of the Company’s revenues.  In the third quarter of 2014, three customers accounted for 72% of our total net sales with our largest customer accounting for 51% of our net sales. In the first nine months of 2014, three customers accounted for 73% of the Company’s total net sales with our largest customer accounting for 54% of our net sales. At September 30, 2014 three customers accounted for 88% of our gross accounts receivable, with our largest customer representing 65% of our gross accounts receivable. In the third quarter of 2013, three customers accounted for 68% of our net sales with our largest customer accounting for 47% of our net sales. In the first nine months of 2013, three customers accounted for 67% of our total net sales with our largest customer accounting for 49% of our net sales. At September 30, 2013 three customers accounted for 83% of our gross accounts receivable, with our largest customer representing 68% of our gross accounts receivable.

 

The Company’s customers generally do not enter into long-term agreements obligating them to purchase products. The Company may not continue to receive significant revenues from any of these or from other large customers. A reduction or delay in orders from any of the Company’s significant customers, or a delay or default in payment by any significant customer, could materially harm the Company’s business and prospects. Because of the Company’s significant customer concentration, its net sales and operating income (loss) could fluctuate significantly due to changes in political or economic conditions, or the loss, reduction of business, or less favorable terms for any of the Company's significant customers.