Concentrations of credit risk

6 Months Ended

Apr. 30, 2016

Note 9 - 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 April 30, 2016, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $4.2 million.

One customer accounted for approximately 15% and 25% of the Company’s net sales for the six-month period ended April 30, 2016 and 2015, respectively. This same customer accounted for approximately 15% and 22% of the Company’s net sales for the three months ended April 30, 2016 and 2015, respectively. At April 30, 2016 and October 31, 2015, this customers’ accounts receivable balance accounted for approximately 16% and 17% of the Company’s total net accounts receivable balances. Although this customer has been an ongoing 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.