Note 6 - Customer and Supplier Concentrations

9 Months Ended

Oct. 31, 2013

Customer And Supplier Concentrations [Abstract]

Customer And Supplier Concentrations [Text Block]

6. Customer and Supplier Concentrations

Substantially all of the Company’s revenue is derived from a single customer, Lenovo. As discussed in Note 2 above, Lenovo notified us of their intention to cease offering Comarco’s product to its customers. We shipped approximately 20,000 of our Constellation units to Lenovo and 11,000 field replacement units to Lenovo affiliates during our third fiscal quarter, and we have no further orders from Lenovo or their affiliates. The loss of Lenovo will have a material adverse impact on our future revenues and results of operations.

The customers providing 10 percent or more of the Company’s revenue for any of the periods presented below are listed here:

	Three Months Ended October 31,
	2013				2012
	(In thousands)
Total revenue	$	1,508	100	%	$	1,135	100	%

Customer concentration:
Lenovo Information Products Co., Ltd.		1,465	97	%		1,119	99	%
	$	1,465	97	%	$	1,119	99	%

	Nine Months Ended October 31,
	2013				2012
	(In thousands)
Total revenue	$	4,429	100	%	$	5,018	100	%

Customer concentration:
Lenovo Information Products Co., Ltd.		4,319	98	%		4,913	98	%
	$	4,319	98	%	$	4,913	98	%

The customers comprising 10 percent or more of the Company’s gross accounts receivable due from customers at either October 31, 2013 or January 31, 2013 are listed below (in thousands):

	October 31, 2013				January 31, 2013
Total gross accounts receivable due from customers	$	1,477	100	%	$	1,307	100	%

Customer concentration:
Lenovo Information Products Co., Ltd.		1,439	97	%		1,291	99	%
	$	1,439	97	%	$	1,291	99	%

The suppliers comprising 10 percent or more of the Company’s gross accounts receivable due from suppliers at either July 31, 2013 or January 31, 2013 are listed below (in thousands).

	October 31, 2013				January 31, 2013
Total gross accounts receivable due from suppliers	$	634	100	%	$	1,156	100	%

Customer concentration:
Power Systems Technologies, Inc.		473	75	%		1,008	87	%
Zheng Ge Electrical Co., Ltd.		122	19	%		122	11	%
	$	595	94	%	$	1,130	98	%

The decrease in the receivables due from Power Systems Technologies, Inc. (“Power,” formerly Flextronics Electronics) is driven by an increased frequency in payment in early fiscal 2014 coupled with a reduction in component sales late in the third quarter of fiscal 2014 in conjunction with the final sales to Lenovo, which has caused a drop in the receivable balance as of October 31, 2013.

Zheng Ge Electrical Co., Ltd. (“Zheng Ge”) was a tip supplier for one of our prior product offerings (referred to as the Bronx product), which was subject to a recall during 2010. We previously sourced some of the component parts that Zheng Ge used in the manufacture of the tips. We ceased paying Zheng Ge during the course of the product recall while we investigated the manufacturing defect that caused the recall and, likewise, Zheng Ge ceased paying us.

We expect to offset the receivables due from Power and Zheng Ge from amounts owed, which are included in accrued liabilities in our consolidated balance sheet. Subsequent to the final delivery and sales of our Constellation product to Lenovo, we have attempted to work with Power to collect the outstanding receivable balance, but to date Power has been non-responsive.

The companies comprising 10 percent or more of our gross accounts payable at either October 31, 2013 or January 31, 2013 are listed below (in thousands, except percentages).

	October 31, 2013				January 31, 2013
Total gross accounts payable	$	4,394	100	%	$	3,688	100	%

Accounts payable concentration:
Chicony Power Technology, Co. Ltd		1,100	25	%		1,100	30	%
Pillsbury Winthrop Shaw Pittman, LLP.		1,953	44	%		1,614	44	%
	$	3,053	69	%	$	2,714	74	%

Chicony was the manufacturer of the Bronx product, which was subject to a recall during 2010 and we are currently in litigation with Chicony (see Note 11). We have made no payments to this supplier during either fiscal 2014 or 2013. The outcome of such litigation is not determinable at this time and we do not know whether or not we will be obligated to pay this liability. If we prevail in this case, based upon our causes of action, it is likely we will be relieved of this liability. There is no assurance, however, as to the outcome of this litigation (see Note 11).

Pillsbury Winthrop Shaw Pittman, LLP (“Pillsbury”) was our former legal counsel for the Kensington litigation as well as other patent and intellectual property matters (See Note 11). We have made no payments to Pillsbury during fiscal 2014.

Historically, a significant portion of our inventory purchases had been derived from a limited number of contract manufacturers (“CM’s”) and other suppliers. However we ceased procuring inventory during the third quarter of fiscal 2014 in conjunction with the final manufacture and delivery of Constellation units to Lenovo.