CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND SUPPLIERS - Note 4

9 Months Ended

Sep. 30, 2016

Risks and Uncertainties [Abstract]

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND SUPPLIERS - Note 4

4. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS AND SUPPLIERS

Concentration of credit risk

Financial instruments that potentially subject us to a concentration of credit risk are primarily cash equivalents and accounts receivable. We typically do not require collateral from our customers. As of September 30, 2016, our cash and cash equivalents are comprised of operating checking accounts and short-term, highly rated money market savings accounts.

Concentration of major customers and suppliers

For the three and nine months ended September 30, 2016, one commercial customer accounted for $3.9 million and $10.8 million of our total revenue, representing 99% and 91% of total revenue, respectively. For the three and nine months ended September 30, 2015, the same commercial customer accounted for $2.3 million and $7.2 million of our total revenue, representing 96% and 98% of total revenue, respectively. One commercial customer accounted for $1.7 million of our net accounts receivable balance at September 30, 2016 and the same commercial customer accounted for $567,000 of our net accounts receivable balance at September 30, 2015, representing 92% and 99%, respectively.

A significant concentration of our components and the products we sell are currently manufactured and obtained from single or limited-source suppliers. The loss of any single or limited-source supplier, the failure of any of these suppliers to perform as expected, or the disruption in the supply chain of components from these suppliers could subject us to risks and uncertainties including, but not limited to, increased cost of sales, possible loss of revenues, or significant delays in product deliveries, any of which could adversely affect our financial condition and operating results.