Concentrations of Risk and Major Customers

12 Months Ended

Feb. 28, 2019

Concentrations of Risk and Major Customers

Note 10. Concentrations of Risk and Major Customers

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, accounts receivable and historically investments prior to liquidation. At times, such cash in banks are in excess of the FDIC insurance limit.

The Company sells to a variety of domestic and international customers on an open-unsecured account basis, in certain cases requiring letters of credit. These customers principally operate in the medical, military, and avionics industries. The Company had direct and indirect net sales to the U.S. government, primarily the Department of Defense for training and simulation programs, which comprised approximately 53% and 50% of consolidated net sales in fiscal 2019 and 2018, respectively. Sales to foreign customers were 11% and 16% of consolidated net sales in fiscal 2019 and 2018, respectively. The Company had three customers who each comprised more than 10% of the Company’s sales in fiscal year 2019 (aggregated 45%). These accounts are in good standing with the Company.

The Company attempts to minimize credit risk by reviewing all customers’ credit history before extending credit, by monitoring customers’ credit exposure on a daily basis and requiring letters of credit for certain sales. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.