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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued ADJUSTERS INTERNATIONAL, INC. AND SUBSIDIARIES December 31, 2016 and 2015 NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued Income Taxes--Continued: The Company follows FASB ASC Topic 740-10-65 to assess and record income tax uncertainties. FASB ASC Topic 740-10-65 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidaee on various related matters such as derecognition, interest and penalties, and disclosure. The Company is potentiallysubject to income tax examination or its U.S. federal and state P Y J income taxes for the years 2013 through 2016. Advertising Costs: The Company follows the policy of capitalizing the cost of its sales brochures and charges the costs to operations over the period that the brochures are used. At Yi December 31, 2016 and 2015, sales brochures totaling $87,413 and $61,385, respectively, were included in prepaid franchise fees, advertising-and deposits in the accompanying consolidated balance sheets. Advertising expense for the `years ended December 31, 2016 and 2015 was $331,539 and $755,530, respectively. ,(4 \, tk Concentrations of Credit Risk: Financial instruments which potentially subject the Company to concentrations of credit risk cons'st principally of cash and cash equivalents and accounts receivable. The Company main ains their cash and cash equivalents in bank deposit accounts which at times may exceed federally insured limits. Under FDIC deposit insurance coverage �. p o. limits, the Company's? deposit accounts are insured to a maximum limit of $250,000. At fr December 31, 201 approximately $3,059,000 of the Company's cash and cash equivalents are uninsured by the FDIC. The Company has not experienced any losses in such accounts. The Company's accounts receivable result from providing claims, grant management, emergency management and homeland security consulting services to public and private entities affected by disasters. Collateral is generally not required. Historically, the Company has not incurred any significant credit related losses. At December 31, 2016, approximately 62% of accounts receivable at the Company are due from two customers. Revenues from those same two I customers account for approximately 66% of the Company's revenue in 2016. At December 31, 2015, 80% of accounts receivable at the Company were due from one customer. Revenues from that same customer accounted for approximately 84% of the Company's revenue in 2015. Events Occurring After Report Date: The Company has evaluated events and transactions that occurred between December 31, 2016 and May 2, 2017, which is the date the consolidated financial statements were available to be issued, for possible disclosure and recognition in the consolidated financial statements. Except for the event disclosed in Notes D, there were no such events or transactions identified by the Company. -13-