Note 8 - Commitments and Contingencies

9 Months Ended

Jun. 30, 2011

Commitments and Contingencies Disclosure [Text Block]

8.  COMMITMENTS AND CONTINGENCIES

LEGAL

The Company is exposed to various claims and legal proceedings arising out of the normal course of its business. Although there can be no assurance, in the opinion of management, the ultimate outcome of these other claims and lawsuits should not have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.

CONCENTRATION OF CREDIT RISK

Zoltek's carbon fiber products are primarily sold to customers in the wind energy and composite industries and its technical fibers are primarily sold to customers in the aerospace industry. Entec Composite Machines’ products are primarily sold in the composite industry. The Company performs ongoing credit evaluations and generally requires collateral for significant export sales to new customers. The Company maintains reserves for potential credit losses and such losses have been within management's expectations.

In the three months ended June 30, 2011 and 2010, we reported aggregate sales of $10.2 million and $17.0 million, respectively, to Vestas Wind Systems, a leading wind turbine manufacturer. In the three months ended June 30, 2011, we also reported aggregate sales of $4.9 million to Saertex GMBH & Co, a manufacturer of fabrics for the composite industry, including materials for production of wind turbines.  In the nine months ended June 30, 2011 and 2010, we reported sales of $27.4 million and $39.0 million, to Vestas Wind Systems. In the nine months ended June 30, 2011, we also reported sales of $14.5 million to Saertex GMBH & Co. and $12.8 million to Cuming Corporation. These were the only customers that represented greater than 10% of consolidated net sales in these periods.

ENVIRONMENTAL

The Company's operations generate various hazardous wastes, including gaseous, liquid and solid materials. The operations of the Company's carbon fibers and technical fibers business segments utilize thermal oxidation of various by-product streams designed to comply with applicable laws and regulations. The plants produce air emissions that are regulated and permitted by various environmental authorities. The plants are required to verify by performance tests that certain emission rates are not exceeded. The Company does not believe that compliance by its carbon fibers and technical fibers operations with applicable environmental regulations will have a material adverse effect upon the Company's future capital expenditure requirements, results of operations or competitive position. There can be no assurance, however, as to the effect of interpretation of current laws or future changes in federal, state or international environmental laws or regulations on the business segment's results of operations or financial condition.

SOURCES OF SUPPLY

As part of its growth strategy, the Company has developed its own precursor acrylic fibers and all of its carbon fibers and technical fibers. The primary source of raw material for the precursor is ACN (acrylonitrile), which is a commodity product with multiple sources.