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8. Concentrations of Risk
 12 Months Ended
Dec. 31, 2012
Concentrations Of Risk  
NOTE 8. Concentrations of Risk

Credit Risk

 

At times, the Company’s cash balances held in financial institutions are in excess of federally insured limits. The Company performs periodic evaluations of the relative credit standing of financial institutions and seeks to limit the amount of risk by selecting financial institutions with a strong credit standing. The Company believes it is not exposed to any significant credit risk with respect to its cash and cash equivalents.

 

The Buzztime network provides services to group viewing locations, generally restaurants, sports bars and lounges throughout North America. Concentration of credit risk with respect to trade receivables is limited due to the large number of customers comprising the Company’s customer base, and their dispersion across many different geographic locations. The Company performs credit evaluations of new customers and generally requires no collateral. The Company maintains an allowance for doubtful accounts to provide for credit losses.

 

Significant Customer

 

For the years ended December 31, 2012 and 2011, the Company generated approximately 23% and 21%, respectively, of total revenue from a national chain, Buffalo Wild Wings together with its franchisees. As of December 31, 2012 and 2011, approximately $123,000 and $95,000, respectively, was included in accounts receivable from this customer.

 

Single Source Suppliers

 

The Company currently purchases its Classic playmakers from an unaffiliated Taiwanese manufacturer subject to the terms of a supply agreement dated April 23, 2007 with a term that automatically renews for one year periods. The Company purchases certain Next-Gen playmaker tablet equipment from another unaffiliated manufacturer located in China, and it purchases its Next-Gen playmaker tablets from a single unaffiliated manufacturer. In preparation for the Next-Gen pilot in 32 of a large customer’s locations, the Company made a verbal commitment with the tablet manufacturer to purchase approximately $320,000 of tablets. As of December 31, 2012, the Company has purchased approximately $101,000 of tablets and is expected to purchase the remaining tablets during the first quarter of 2013. The Company currently does not have alternative sources for its playmaker equipment. Management believes other manufacturers could be identified to produce the equipment on comparable terms. A change in manufacturers, however, could cause delays in supply and may have an adverse effect on the Company’s operations. As of December 31, 2012 and 2011, approximately $15,000 and $70,000, respectively, were included in accounts payable or accrued expenses for these suppliers.