Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of demand deposits with a financial institution. At February 28, 2013, there are no balances exceeding FDIC insurance of $250,000. The Company believes there is minimal credit risk relative to its cash and investment accounts.
The Company is also potentially subject to concentrations of credit risk in its accounts receivable. Credit risk with respect to receivables is limited due to the number of companies comprising the Company’s customer base. Although the Company is directly affected by the financial condition of its customers, management does not believe significant credit risks exist at February 28, 2013. Generally, the Company does not require collateral or other securities to support its accounts receivable.
Major Customer
The Company has one major customer that accounted for approximately 43% and $1,932,202 of sales for the year ended February 28, 2013. The Company expects to maintain this relationship with the customer.
Major Vendor
The Company has one major vendor that accounted for approximately 18% and $815,983 of cost of sales for the year ended February 28, 2013. The Company expects to maintain this relationship with the vendor.