We currently have 75 active domestic and international distributors and dealers
that sell and/or service the Puradyn system; however, the majority of our products
are sold through a limited number of distributors. Currently, international sales
are administered by Puradyn from the United States. The international distributors
are located primarily in South America, Europe, Africa, India, and Asia. Our international
distributors purchase product directly from the Company and sell to their existing
or new customers. All distributor agreements can be terminated by either party
with a 30 to 60 day written notice.
Direct Sales
The Company directly and/or with the assistance of its manufacturer's representatives,
distributors or other agents, markets its products directly to OEMs, other distributors
and national accounts. We are dependent upon sales to a limited number of customers.
During 2015 three customers together accounted for 53.5% of the Company’s
net sales and during 2014 five customers together accounted for 57.8% of the
Company’s net sales. There were two customers at December 31, 2015, whose
trade receivable balances equaled or exceeded 10% of total receivables, representing
approximately 47%, and 32%, respectively of total receivables. There were two
customers at December 31, 2014, whose accounts receivable balances equaled or
exceeded 10% of total receivables, representing approximately 40%, and 20%,
respectively of total receivables. Additionally, contractual agreements previously
announced with two current distributors Marine Equipment Repair, Inc. in the
commercial marine industry and HongHua America for the territory of China, have
not fully materialized with the agreed-upon sales volume.
The loss of business from one or a combination of the Company’s significant
customers could adversely affect its operations.
International Sales
The Company, directly and/or with the assistance of commission-based manufacturer's
representatives, has established primarily non-exclusive distributors and sales
representation in various countries, including Germany, South Africa, Turkey,
United Kingdom, Thailand, Colombia, and others. The ultimate success of these
and other distributors primarily depends upon their ability to successfully
introduce and sell the product in their respective territories, including obtaining
local evaluations, establishing distribution, and other factors similar to those
faced by the Company in the United States. Unlike domestic sales, the Company
has a policy that international sales be paid in advance or secured by a letter
of credit before shipping. The Company’s credit risk is minimal with international
sales as a result of this policy. Total international sales amounted to approximately
13% of net sales in both 2015 and 2014.
