Note 5 - Significant Risks and Uncertainties

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note

5.

Significant Risks and Uncertainties

(

a

) Major Customers.

For the

three

months ended

March 31, 2020

and

2019,

approximately

91%

and

92%,

of consolidated net sales, respectively, were derived from

two

customers. These

two

customers are in the Company’s Contract Manufacturing Segment and represented approximately

64%

and

26%

and

72%

and

22%

in the

three

months ended

March 31, 2020

and

2019,

respectively. In each of the

nine

months ended

March 31, 2020

and

2019,

approximately

92%

of consolidated net sales were derived from the same

two

customers and net sales to these

two

customers represented approximately

67%

and

27%

in the

nine

month periods ended

March 31, 2020

and

71%

and

24%

of net sales in the

nine

months ended

March 31, 2019,

respectively. Accounts receivable from these

two

major customers represented approximately

82%

and

88%

of total net accounts receivable as of

March 31, 2020

and

June 30, 2019,

respectively. 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

71%

of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The contract was renewed on

September 1, 2018

and will expire on

August 31, 2021.

The Covid-

19,

or coronavirus, outbreak has the potential to cause a disruption in the Company's supply chain. Currently, some of the Company's suppliers of certain materials used in the production of our supplements are located in China, other impacted countries or states within the United States. Most of these materials

may

be obtained by more than

one

supplier. However, due to port closures and other restrictions resulting from the coronavirus outbreak throughout the world, these suppliers, located both inside and outside of the United States,

may

have limited supply of the materials, which will cause the price of such materials to increase. These and other disruptions would likely impact the Company's sales and operating results. If we are unable to obtain the necessary materials to produce a supplement within the Company's standard lead times, it

may

delay the production and shipment of those supplements, thereby shifting the timing of recognizing the resulting sale to the Company's customers. In addition, the significant outbreak of this contagious disease in the human population has resulted in a widespread health crisis that could adversely affect the economies and financial markets of many countries, including the United States, resulting in an economic downturn that could affect demand for the Company's products and impact the Company's operating results.