Note 8 - Concentrations of Credit Risk

6 Months Ended

Apr. 30, 2020

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note

8

–

Con

centrations of credit r

isk

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

April 30, 2020,

we had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately

$12.5

million.

For the

three

months ending

April 30, 2020,

two

customers, both distributors, accounted for approximately

11%

and

17%

of net sales. These same

two

distributors accounted for

11%

and

14%,

respectively, of net sales for the

six

months ending

April 30, 2020,

while in the same

six

-month period another customer, a wireless carrier, accounted for

11%

of net sales. The

two

distributors had accounts receivable balances that accounted for

14%

and

19%,

respectively, of the total net accounts receivable balance at

April 30, 2020.

For the

three

months ending

April 30, 2019,

one

of the aforementioned distributors and the wireless carrier accounted for approximately

28%

and

14%,

respectively, of net sales. This same distributor and a different wireless carrier accounted for approximately

32%

and

10%,

respectively, of net sales for the

six

months ending

April 30, 2019.

At

April 30, 2019,

the

two

wireless carrier customers had accounts receivable balances that accounted for approximately

10%

and

21%

of the total net accounts receivable balance, while the

two

distributors accounted for

18%

and

15%

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.