Concentrations of credit risk

6 Months Ended

Apr. 30, 2018

Note 8 - Concentrations of credit risk

Financial instruments that 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, 2018, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $7.5 million.

One customer accounted for approximately 59% of the Company’s net sales for the six-month period ended April 30, 2018. This same customer accounted for approximately 69% of the Company’s net sales for the three-month period ended April 30, 2018. At April 30, 2018, this customer’s accounts receivable balance accounted for approximately 74% of the total net accounts receivable balance. For the six-month period ended April 30, 2017, two customers accounted for approximately 15% and 14% of the Company’s net sales. These same two customers accounted for approximately 16% and 17% of the Company’s net sales for the three months ended April 30, 2017. At April 30, 2017, these customers’ accounts receivable balances accounted for approximately 16% and 24% of the Company’s total net accounts receivable balance. Although these customers have been on-going major customers of the Company, the written agreements with these customers do not have any minimum purchase obligations and they 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.