NOTE 10—CONCENTRATIONS

Revenue from Waterlase systems, the Company’s principal product line, which includes the iPlus and the MD Turbo, comprised 60%, 32%, and 53% of total net revenues for the years ended December 31, 2011, 2010, and 2009, respectively. Revenue from Diode systems comprised 19%, 30%, and 20% of total revenue for the same periods. Revenue from consumables, service, and warranty contracts comprised 20%, 32%, and 24% of total revenue for the same periods.

Approximately 19%, 38% and 75% of the Company’s revenue in 2011, 2010 and 2009, respectively, 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.

There were no accounts receivable concentrations at December 31, 2011. Accounts receivable concentrations from one international distributor totaled $430,000, or 13%, at December 31, 2010.

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 delays in manufacturing and a possible loss of sales, which could adversely affect the Company’s results of operations.