NOTE 9 - COMMITMENTS AND CONTINGENCIES

 

OBLIGATIONS UNDER OPERATING LEASES

 

The Company leases approximately 1,700 square feet for its principal offices in Boca Raton, Florida at a monthly rental of approximately $3,200. The lease, which provides for annual increases of base rent of 4%, expires on November 30, 2018.

 

The Company subleased a portion of its principal offices to a third party on a month to month basis until November 30, 2014 at which time the sublessee negotiated its own lease . For the years ended September 30, 2014 and 2013 the Company's rent was reduced by approximately $30,000 and $26,000 as a result of the sublease agreement.

 

 

Rental expense incurred during the years ended September 30, 2014 and 2013 was $51,549 and $56,212, respectively.

 

MAJOR CUSTOMERS

 

Approximately 44% and 36% of the Company's revenues for the years ended September 30, 2014 and 2013 was derived from 3 customers, respectively.

 

MAJOR SUPPLIER AND SOLE MANUFACTURING SOURCE

 

During 2014, the Company developed a proprietary interoperable communications solution. Prior to 2014, the Company's unified group communication services business relied primarily on one major vendor to supply its software development platform. During the year ended September 30, 2013, purchases from this vendor represented approximately 17% of the total cost of revenue. The Company had no purchases from this vendor in the year ended September 30, 2014. The Company has contracted with a single local manufacturing facility to provide completed circuit boards used in the assembly of its IP gateway devices. Interruption to the manufacturing source presents additional risk to the Company. The Company believes that other commercial facilities exist at competitive rates to match the resources and capabilities of its existing manufacturing source.