Note 5 - Significant Risks and Uncertainties

9 Months Ended

Mar. 31, 2025

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note 5. Significant Risks and Uncertainties

(a) Major Customers.  In the three months ended March 31, 2025 and 2024, approximately 85% and 90%, respectively, of consolidated net sales were derived from two customers.  These two customers are in the Company’s Contract Manufacturing Segment and represented approximately 58% and 31% and 72% and 20% in the three months ended March 31, 2025 and 2024, respectively of the Contract Manufacturing Segment net sales.  In the nine months ended March 31, 2025 and 2024, approximately 83% and 90% of consolidated net sales, respectively, were derived from the same two customers and net sales to these two customers represented approximately 62% and 26% and 73% and 21% of net sales of the Contract Manufacturing Segment net sales in the nine months ended March 31, 2025 and 2024, respectively.  Accounts receivable from these two major customers represented approximately 74% and 84% of total net accounts receivable as of March 31, 2025 and June 30, 2024, respectively.  Two other customers in the Other Nutraceutical Segment, while not significant customers of the Company’s consolidated net sales, represented approximately 40% and 20% and 40% and 23% of net sales of the Other Nutraceutical Segment in the three months ended March 31, 2025 and 2024, respectively.  In the nine months ended March 31, 2025 and 2024, three customers represented 38%, 26% and 12% and 43%, 10% and 10%, of net sales of the Other Nutraceutical Segment, respectively.

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The loss of any of these customers could have an adverse effect on the Company’s operations. Major customers are those customers who account for more than 10% of net sales.

(b) Other Business Risks.  Approximately 78% of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The contract was renewed effective September 1, 2022 and will expire on August 31, 2026.

The Company has seen a slight negative impact in its margins due to inflation and tightened labor markets as the Company strives to increase prices to customers as its operating costs increase.  The Company may not be able to timely increase its selling prices to its customer resulting from price increases from its suppliers due to various economic factors, including tariffs and other inflationary costs, labor and shipping costs and its own increases in shipping, labor and other operating costs.  The Company’s results of operations may also be affected by economic conditions, including tariffs and other inflationary pressures, that can impact consumer disposable income levels and spending habits, thereby reducing the orders it may receive from the Company’s significant customers.