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Revenue and Vendor Concentrations
6 Months Ended
Jun. 30, 2012
Revenue and Vendor Concentrations [Abstract]  
REVENUE AND VENDOR CONCENTRATIONS
7. REVENUE AND VENDOR CONCENTRATIONS

Revenue Concentration

For the three months ended June 30, 2012, the Company derived revenue of approximately $2,006,000 from three customers, totaling 40%, 13% and 10% of the Company’s total revenue, compared to revenue of approximately $2,082,000 from three customers, totaling 36%, 23% and 11% of the Company’s total revenue in the three months ended June 30, 2011. The Company derived revenue of approximately $3,510,000 from three customers, totaling 17%, 15% and 13% of the Company’s total revenue for the nine months ended June 30, 2012, compared to approximately $3,415,000 from three customers, totaled 20%, 15% and 13% of the Company’s total revenue for the nine months ended June 30, 2011. The corresponding accounts receivable balances of customers from which revenues were in excess of 10% of total revenue were approximately $2,099,000 and $1,739,000 at June 30, 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.

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 because either we or another channel partner could sell our products to the end-user that purchased from the channel partner we lost.

International sales accounted for approximately 3% and 4% of the Company’s total revenue for the three and nine months ended June 30, 2012, respectively. During the three and nine months ended June 30, 2011, international sales accounted for approximately 13% and 16%, 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 nine months ended June 30, 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 June 30, 2011, the Company made purchases from one vendor that comprised approximately 10% 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 nine months ended June 30, 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.