NOTE 11 – CONCENTRATIONS

Revenue from Waterlase systems, the Company’s principal product line, which includes the iPlus, MDX systems, and the MD Turbo, comprised 65% and 41% of total net revenues for the three months ended March 31, 2012 and 2011, respectively. Revenue from Diode systems comprised 11% and 36% of total net revenue for the same periods. Revenue from consumables, service and warranty contracts comprised 23% and 22% of total net revenue for the same periods.

Approximately 8% and 35% of the Company’s net revenue in the quarters ended March 31, 2012 and 2011, 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.

Accounts receivable concentrations from one international distributor totaled $1.3 million, or 15%, at March 31, 2012 and $716,000, or 8%, at 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 delays in manufacturing and a possible loss of sales, which could adversely affect the Company’s consolidated results of operations.