NOTE 11—CONCENTRATIONS

Revenue from Waterlase systems, the Company’s principal product, which includes the iPlus, MDX systems, and the MD Turbo, comprised 58% and 61% of total net revenue for the three and six months ended June 30, 2012, respectively, and 63% and 53% of total net revenue, respectively, for the same periods in 2011. Revenue from Diode systems comprised 11% of total net revenue for both the three and six months ended June 30, 2012, and 14% and 24%, for the same periods of 2011. Revenue from consumables, service and warranty contracts comprised 23% of total net revenue for both the three and six months ended June 30, 2012, and 20% and 21%, for the same periods of 2011. Revenue from imaging systems comprised 7% and 4% of total net revenue for the three and six months ended June 30, 2012, respectively, and 0% for the same periods in 2011.

Approximately (3)% and 3% of the Company’s net revenue in the three and six months ended June 30, 2012 was generated through sales to HSIC worldwide. Approximately 26% and 30% of the Company’s net revenue in the three and six months ended June 30, 2011 was generated through sales to HSIC worldwide.

The Company maintains its cash and cash equivalent accounts with established commercial banks. Such cash deposits periodically exceed the Federal Deposit Insurance Corporation insured limit.

No individual customer represented more than 10% of the Company’s accounts receivable at June 30, 2012 and December 31, 2011.

The Company currently purchases certain key components of its products from single suppliers. Although there are a limited number of manufacturers of these key components, management believes that other suppliers could provide similar key components on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which could adversely affect the Company’s results of operations.