Other Risks and Concentrations

12 Months Ended

May 31, 2014

Other Risks and Concentrations

Other Risks and Concentrations

Note R – Other Risks and Concentrations

Concentration of Credit Risk

As of May 31, 2014 the Company’s investment securities of approximately $9,200,000 are solely comprised of mortgage-backed securities, fixed maturity municipal bonds, equity investments, and money-market mutual funds that invest principally in obligations issued by the U.S government, its agencies or instrumentalities. Such instruments are generally considered to be of the highest credit quality investment available.

The Company transacts the majority of its business with three financial institutions, one for commercial banking services and the others for brokerage and custodial services. Periodically, the amount on deposit in financial institutions providing commercial banking services exceeds federally insured limits. Management believes these financial institutions are financially sound. With respect to the financial institutions providing brokerage and custodial services, amounts on deposit are invested in money market funds that invest principally in obligations issued by the U.S government, its agencies or instrumentalities.

Management believes that substantially all receivables are collectible, and therefore has not established an allowance for estimated uncollectible accounts.

Concentration in Products, Markets and Customers

The Company’s insurance subsidiary currently writes only the surety line of business, is licensed to write surety only in West Virginia and Ohio and has focused its primary efforts towards coal permit bonds. Such business, including investment advisory fees from managed collateral accounts, accounted for approximately 66% and 56% of the Company’s fiscal 2014 and 2013 revenues, respectively. Furthermore, the Company provides surety bonds to companies that share common ownership interests that constitute 40% and 37% of the Company’s fiscal 2014 and 2013 revenues, respectively, as follows:

	2014				2013
		Surety Premium		Investment Advisory Fees		Surety Premium		Investment Advisory Fees
Customer group #1	$	178,000	$	—	$	133,000	$	—
Customer group #2		134,000		21,000		117,000		40,000
Customer group #3		135,000		3,000		242,000		3,000
Customer group #4		193,000		3,800		138,000		3,700
Total	$	640,000	$	27,800	$	630,000	$	46,700