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SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS
3 Months Ended
Mar. 31, 2023
Risks and Uncertainties [Abstract]  
SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS

(8) SIGNIFICANT CUSTOMER AND DEPENDENCY ON KEY SUPPLIERS

 

Relatively few companies account for a substantial portion of the Company’s revenues. In the three months ended March 31, 2023, two companies, including a marketplace facilitator, accounted for 10% or greater individually and 88% in the aggregate of the Company’s total net sales. At March 31, 2023, two companies with an accounts receivable balance of 10% or greater individually accounted for a combined 84% of the Company’s accounts receivable. In the three months ended March 31, 2022, two companies, including a marketplace facilitator, accounted for 10% or greater individually and 90% in the aggregate of the Company’s total net sales. At March 31, 2022, two companies with an accounts receivable balance of 10% or greater individually accounted for a combined 88% of the Company’s 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 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. The Company participates in the PC peripherals industry, which is characterized by aggressive pricing practices, continually changing customer demand patterns and rapid technological developments. The Company’s operating results could be adversely affected should the Company be unable to successfully anticipate customer demand accurately; manage its product transitions, inventory levels and manufacturing process efficiently; distribute its products quickly in response to customer demand; differentiate its products from those of its competitors or compete successfully in the markets for its new products.

 

The Company depends on many third-party suppliers for key components contained in its product offerings. For some of these components, the Company may only use a single source supplier, in part due to the lack of alternative sources of supply. During the three months ended March 31, 2023 and 2022, the Company had one supplier and two suppliers, respectively, that provided 90% and 99%, respectively, of the Company’s purchased inventory.