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Segment Information and Concentrations

9 Months Ended

Sep. 30, 2016

NOTE 7 — Segment Information and Concentrations

Segment Information

The Company operates in one segment—mobile systems solutions for businesses. Mobile systems solutions typically consist of mobile devices such as smartphones or tablets, some with data collection peripherals, and third-party vertical applications software. The Company markets its products in the United States and foreign countries through two-tier distribution. Revenues for the geographic areas for three and nine months ended September 30, 2016 and 2015 were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Revenues:
United States	$	4,030,547	$	3,698,721	$	12,308,704	$	10,107,697
Europe		821,782		519,765		2,237,439		1,919,880
Asia and rest of world		249,801		299,412		811,515		981,318
Total revenues	$	5,102,130	$	4,517,898	$	15,357,658	$	13,008,895

Export revenues are attributable to countries based on the location of the Company’s customers. The Company does not hold long-lived assets in foreign locations.

Major Customers

Customers who accounted for at least 10% of the Company’s total revenues in the three and nine month periods ended September 30, 2016 and 2015 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Ingram Micro Inc.		29	%		30	%		27	%		29	%
BlueStar, Inc.		21	%		27	%		23	%		23	%
ScanSource, Inc.		19	%		19	%		16	%		20	%
Spinal Modulation, Inc.		*			*			10	%		*

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* Customer accounted for less than 10% of total revenues for the period

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk include cash, cash equivalents and accounts receivable. The Company invests its cash in demand deposit accounts in banks. To date, the Company has not experienced losses on the investments. The Company’s trade accounts receivables are primarily with distributors. The Company performs ongoing credit evaluations of its customers’ financial condition but the Company generally requires no collateral. Reserves are maintained for potential credit losses, and such losses have been within management’s expectations. Customers who accounted for at least 10% of the Company’s accounts receivable balances at September 30, 2016 and December 31, 2015 were as follows:

	September 30,			December 31,
	2016			2015
Ingram Micro Inc.		27	%		35	%
ScanSource, Inc.		22	%		17	%
BlueStar, Inc.		21	%		22	%
ScanSource Europe SPRL		11	%		*

_____________

* Customer accounted for less than 10% of net accounts receivable balance at period end

Concentration of Suppliers

Several of the Company’s component parts are produced by a sole or limited number of suppliers. Shortages could occur in these essential materials due to increased demand, or to an interruption of supply. Suppliers may choose to restrict credit terms or require advance payments causing delays in the procurement of essential materials. If the Company were unable to procure certain of such materials, it could have a material adverse effect upon its results. At September 30, 2016, 28% of the Company’s accounts payable balances was concentrated in the top two suppliers. For the nine months ended September 30, 2016, these two suppliers accounted for 62% of the inventory purchases.

Concentration of Suppliers Several of the Company’s component parts are produced by a sole or limited number of suppliers. Shortages could occur in these essential materials due to increased demand, or to an interruption of supply. Suppliers may choose to restrict credit terms or require advance payments causing delays in the procurement of essential materials. If the Company were unable to procure certain of such materials, it could have a material adverse effect upon its results. At September 30, 2016, 28% of the Company’s accounts payable balances was concentrated in the top two suppliers. For the nine months ended September 30, 2016, these two suppliers accounted for 62% of the inventory purchases.