CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

3 Months Ended

Mar. 31, 2014

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 which accounted for 10% or more of our net sales for the three months ended March 31, 2014 and 2013.  The first division accounted for 24% and 20% of our net sales for the three months ended March 31, 2014 and 2013, respectively.  The second division accounted for 5% and 4% of net sales for the three months ended March 31, 2014 and 2013, respectively.  Together the divisions accounted for 29% and 24% of net sales for the three months ended March 31, 2014 and 2013, respectively.

Combined accounts receivable from both divisions represented 21% and 20% of total accounts receivable at March 31, 2014 and December 31, 2013, respectively.

Export sales represented 13% of net sales for the three months ended March 31, 2014.  Export sales represented 11% of net sales for the three months ended March 31, 2013.  The increase in export sales relates to increased sales volume to existing customers.