Concentrations of credit risk

9 Months Ended

Jul. 31, 2017

Note 8 - 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 July 31, 2017, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $4.6 million.

Two customers accounted for approximately 18% and 13% of the Company’s net sales for the nine-month period ended July 31, 2017. Of the two customers, one accounted for approximately 15% of the Company’s net sales for the nine-month period ended July 31, 2016. The same customers accounted for approximately 22% and 11% of the Company’s net sales for the three months ended July 31, 2017 and one customer accounted for approximately 16% of the Company’s net sales for the three months ended July 31, 2016. At July 31, 2017, these customers’ accounts receivable balance accounted for approximately 26% and 10% of the total net accounts receivable balance. Although these customers have been ongoing major customers of the Company, the written agreements with these customers do not have any minimum purchase obligations and the customers could stop buying the Company’s products at any time and for any reason. A reduction, delay or cancellation of orders from these customers or the loss of these customers could significantly reduce the Company’s future revenues and profits.