Concentrations of credit risk

3 Months Ended

Jan. 31, 2015

Note 7 - 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, 2015, the Company had cash and cash equivalent balances in excess of Federally insured limits in the amount of approximately $10.6 million.

One customer accounted for approximately 17% and 35% of the Company’s net sales for the three month periods ended January 31, 2015 and 2014, respectively. At January 31, 2015 and October 31, 2014, this customer’s account receivable balance accounted for approximately 19% and 22%, 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.

There was no product line that was significant for the three months ended January 31, 2015. Sales of one product line accounted for $1.1 million or 18% of net sales for the three months ended January 31, 2014.

- Definition

The entire disclosure for any concentrations existing at the date of the financial statements that make an entity vulnerable to a reasonably possible, near-term, severe impact. This disclosure informs financial statement users about the general nature of the risk associated with the concentration, and may indicate the percentage of concentration risk as of the balance sheet date.

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