7.	REVENUE AND VENDOR CONCENTRATIONS

Revenue Concentration

Revenue from customers that generated revenues in excess of 10% of the Company's total revenue was approximately $302,000 and $1,430,000 and totaled approximately 25% and 50% of total revenue for the three months ended March 31, 2012 and 2011, respectively. For the six months ended March 31, 2012 and 2011, the Company recorded revenue from customers that generated revenues in excess of 10% of the Company's total revenue of approximately $2,806,000 and $2,016,000 for a total of approximately 60% and 47% of total revenue, respectively. The corresponding accounts receivable balances were approximately $1,003,000 and $1,400,000 at March 31, 2012 and 2011, respectively.

The Company's revenue is derived primarily from the sale by the Company to channel partners, including systems integrators and resellers, and end-users of licenses to sell products covered by the Company's patented technologies. These contractual arrangements do not obligate the Company's channel partners to order, purchase or distribute any fixed or minimum quantities of the Company's products. In most cases, the channel partners purchase the license from the Company after they receive an order from an end-user. The channel partners receive orders from various individual end-users; therefore, the sale of a license to a channel partner may represent sales to multiple end-users. End-users can purchase the Company's products through more than one channel partner.

For the six months ended March 31, 2012, the Company recorded 21% of its revenues from a direct customer and 16%, 13% and 10% of its revenues from three different channel partners. For the six months ended March 31, 2011, the Company recorded 34% and 14% of its revenues from two different channel partners. Revenues can fluctuate based on the timing of license renewals by channel partners. When a channel partner purchases or renews a license, the Company receives a license fee in consideration for the grant of a license to sell the Company's products and there are no future payment obligations related to such agreement; therefore the license fee the Company receives with respect to a particular license renewal in one period does not have a correlation with revenue in future periods. During the last several quarters, sales of licenses to one or more channel partners have comprised a significant part of our revenue. This is attributable to the timing of renewals or purchases of licenses and does not represent a dependence on any single channel partner. The Company believes that it is not dependent upon any single channel partner, even those from which revenues were in excess of 10% of the Company's total revenue in a specific reporting period, and that the loss or termination of the Company's relationship with any such channel partner would not have a material adverse effect on the Company's future operations.

International sales accounted for approximately 10% and 4% of the Company's total revenue for the three and six months ended March 31, 2012, respectively. During the three and six months ended March 31, 2011, international sales accounted for approximately 3% and 18%, respectively, of the Company's total revenue. The Company sells its products in U.S. currency only.

Vendor Concentration

The Company purchases its integrated software components from multiple third-party software providers at competitive prices. For the three and six months ended March 31, 2012, the Company did not make purchases from any one vendor comprising 10% or more of the Company's total purchases. For the three months ended March 31, 2011, the Company made purchases from one vendor that comprised approximately 11% of total purchases. The Company did not make purchases from any one vendor comprising 10% or more of the Company's total purchases for the six months ended March 31, 2011. The Company does not believe it is substantially dependent upon nor exposed to any significant concentration risk related to purchases from any single vendor, given the availability of alternative sources from which the Company may purchase necessary integrated software components.