CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE

9 Months Ended

Sep. 30, 2012

CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE

CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE

NOTE 2 - CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE

Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and accounts receivable.

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements.

Cash and Cash Equivalents

The Company at times has cash and cash equivalents with its financial institution in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits.  The Company places its cash and cash equivalents with high credit quality financial institutions which minimize these risks.  As of September 30, 2012, the Company had no cash in excess of FDIC limits.

Accounts Receivable

The Company grants credit to its customers, substantially all of whom are retail establishments located throughout the United States.  The Company typically does not require collateral from customers.  Credit risk is limited due to the financial strength of the customers comprising the Company’s customer base and their dispersion across different geographical regions.  The Company monitors exposure of credit losses and maintains allowances for anticipated losses considered necessary under the circumstances.

Major Customers

The Company had three customers who comprised at least ten percent (10%) of gross revenue during the fiscal years ended December 31, 2011 and 2010.  The loss of these customers would adversely impact the business of the Company.  The percentage of gross revenue and the accounts receivable from each of these customers is as follows:

	Gross Revenue %			Accounts Receivable
	2011	2010		2011		2010
Customer A	55%	42%	$	1,014,690	$	82,041
Customer B	19%	23%		488,468		987,231
Customer C	13%	6%		0		48,046
	87%	71%	$	1,503,158	$	1,117,318

Major Vendors

The Company had three vendors from which it purchased at least ten percent (10%) of merchandise during the fiscal year ended December 31, 2011 and four vendors from which it purchased at least ten percent (10%) of merchandise during the fiscal year ended December 31, 2010.  The loss of these suppliers would adversely impact the business of the Company.  The percentage of purchases, and the related accounts payable from each of these vendors is as follows:

	Purchases %			Accounts Payable
	2011	2010		2011		2010
Vendor A	62%	71%	$	291,350	$	24,597
Vendor B	35%	17%		350		14,701
Vendor C	2%	9%		-		-
	99%	97%	$	291,700	$	39,298