CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

6 Months Ended

Jun. 30, 2016

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 that together accounted for 10% or more of our net sales during the three and six months ended June 30, 2016 and 2015. One division accounted for approximately 20% and 19% of net sales for the three and six months ended June 30, 2016, respectively, and approximately 17% of net sales for the three and six months ended June 30, 2015. The second division accounted for approximately 4% and 5% of net sales for the three and six months ended June 30, 2016, respectively, and approximately 8% of net sales for the three and six months ended June 30, 2015. Together they accounted for approximately 24% of net sales for the three and six months ended June 30, 2016 and approximately 25% of net sales for the three and six months ended June 30, 2015. Accounts receivable from the customer at June 30, 2016 and December 31, 2015 represented approximately 18% and 17% of our total accounts receivable, respectively.

Export sales represented approximately 13% of net sales for the three months ended June 30, 2016 and 2015, respectively. Export sales represented 12% of net sales for the six months ended June 30, 2016 and 2015, respectively.