CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

3 Months Ended

Mar. 31, 2013

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

NOTE 2. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and accounts receivable.  With regard to cash, we maintain our excess cash balances in checking accounts at two high-credit quality financial institutions.  These accounts may at times exceed federally insured limits.  We grant credit to customers in the normal course of business and do not require collateral on our accounts receivable.

Our largest customer has two divisions and accounted for 10% or more of our net sales during the past two years.  One division accounted for 20% and 17% of net sales for the three months ended March 31, 2013 and 2012, respectively.  The other division accounted for 4% and 5% of net sales for the three months ended March 31, 2013 and 2012, respectively.  Together, they accounted for 24% and 22% of net sales for the three months ended March 31, 2013 and 2012, respectively.  Accounts receivable from both divisions represented 15% of total accounts receivable at March 31, 2013 and December 31, 2012, respectively.

Export sales represented 11% and 7% of consolidated net sales for the three months ended March 31, 2013 and 2012.