Concentration of Credit Risk

3 Months Ended

Jan. 31, 2014

Risks and Uncertainties [Abstract]

Concentration of Credit Risk

Note 6 - Concentrations of credit risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At January 31, 2014, the Company had cash and cash equivalent balances in excess of Federally insured limits in the amount of approximately $12.4 million.

One customer accounted for approximately 35% and 53% of the Company’s net sales for the three month periods ended January 31, 2014 and 2013, respectively. At January 31, 2014 and October 31, 2013, this customer’s account receivable balance accounted for approximately 24% and 27%, respectively, of the Company’s total net accounts receivable balances.  Although this customer has been an on-going major customer of the Company continuously during the past 15 years, the written agreements with this customer do not have any minimum purchase obligations and the customer could stop buying the Company’s products at any time and for any reason. A reduction, delay or cancellation of orders from this customer or the loss of this customer could significantly reduce the Company’s future revenues and profits.

Sales of one product line accounted for $1.1 million or 18% of net sales and $3.6 million or 34% of net sales for the three months ended January 31, 2014 and 2013, respectively. The Company has a standard written purchase order with this customer and, therefore, this customer does not have any minimum purchase obligations and could stop buying the product at any time. A reduction, delay or cancellation of orders for this product or the loss of this customer could significantly reduce the Company’s revenues and profits.