Concentrations of credit risk

3 Months Ended

Jan. 31, 2020

Concentrations of credit risk

Concentrations of credit risk

Note 8 - Concentrations of credit risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We maintain our cash and cash equivalents with high-credit quality financial institutions. At January 31, 2020, we had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $13.1 million.

For the three months ending January 31, 2020, two customers, both distributors, each accounted for approximately 11% of net sales, while one other customer, a wireless carrier, accounted for approximately 17% of net sales. The two distributors had accounts receivable balances that each accounted for 12% of the total net accounts receivable balance at January 31, 2020. For the three months ending January 31, 2019, two customers, a distributor and a wireless carrier, accounted for approximately 38% and 14%, respectively, of net sales. At January 31, 2019, these two customers’ accounts receivable balances accounted for approximately 30% and 22%, respectively, of the 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 our 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 our future revenues and profits.