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7. CONCENTRATIONS AND UNCERTAINTIES
9 Months Ended
May 31, 2018
Risks and Uncertainties [Abstract]  
CONCENTRATIONS AND UNCERTAINTIES

NOTE 7: CONCENTRATIONS AND UNCERTAINTIES

 

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, cash equivalents, and trade accounts receivable. The Company holds cash and cash equivalents at banks located in California and North Carolina with balances that often exceed FDIC insured limits. Historically, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. However, considering the current banking environment, the Company is investigating alternative ways to minimize its exposure to such risks. While the Company may be exposed to credit losses due to the nonperformance of its counterparties, the Company does not expect the settlement of these transactions to have a material effect on its results of operations, cash flows, or financial condition. The Company maintains cash at financial institutions that may, at times, exceed federally insured limits. At May 31, 2018 the Company had cash and cash equivalents exceeding insured limits by $6,254,000.

 

Revenue concentration shows that international sales accounted for 41% and 34% of net sales for the nine months ended May 31, 2018 and 2017, respectively. Three customers accounted for 9% (a dealer account in Japan representing various customers), 7%, and 5% of net sales during the nine months ended May 31, 2018. Three customers accounted for 8%, 6% (a dealer account in Japan representing various customers), and 5% of sales for the nine months ended May 31, 2017.

  

Accounts receivable concentration shows that six customers comprised 13% (a dealer account in Japan representing various customers), 9%, 6%, 6%, 5%, and 5% of accounts receivable at May 31, 2018, compared to three customers comprising 14% and 12% (a dealer account in Japan representing various customers) and 8% of accounts receivable at May 31, 2017.

 

We operate in the computer software industry, which is highly competitive and changes rapidly. Our operating results could be significantly affected by our ability to develop new products and to find new distribution channels for new and existing products.

 

The majority of our customers are in the pharmaceutical industry. Consolidation and downsizing in the pharmaceutical industry could have an impact on our revenues and earnings going forward.