Note G - Economic Dependency

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

G

. Economic Dependency

We had substantial net sales to certain customers during the periods shown in the following table. The loss of any of these customers, or a significant decline in (i) sales to these customers, (ii) the growth rate of sales to these customers, or (iii) these customers’ ability to make payments when due, each individually could have a material adverse impact on our net sales and net income. Net sales to any

one

customer representing

10%

or more of the respective period's consolidated net sales were as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	20 20		2019		2020		2019
Customer 1	$	9,271	$	18,731	$	36,047	$	58,396
Customer 2		7,599		7,294		17,108		17,220
	$	16,870	$	26,025	$	53,155	$	75,616

We buy certain products, including beta-alanine, from a limited number of raw material suppliers who meet our quality standards. The loss of any of these suppliers could have a material adverse impact on our net sales and net income. Raw material purchases from any

one

supplier representing

10%

or more of the respective period’s total raw material purchases were as follows (dollars in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	20 20		2019		2020		2019
Supplier 1	$	1,930	(a)		(a)		(a)
Supplier 2	(a)		(a)		(a)			6,312
	$	1,930		—	$	—		6,312

(a)          Purchases were less than

10%

of the respective period’s total raw material purchases.

Financial instruments that subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with highly rated financial institutions. Credit risk with respect to receivables is concentrated with

two

of our largest customers, whose receivable balances collectively represented

65.5%

of gross accounts receivable at

March 31, 2020

and

59.4%

at

June 

30,

2019.

Additionally, amounts due related to our beta-alanine raw material sales were

8.6%

of gross accounts receivable at

March 31, 2020,

and

8.0%

of gross accounts receivable at

June 30, 2019.

As of

March 31, 2020,

we terminated our ongoing relationship with

one

customer, Kaged Muscle. We are working with this former customer to deliver the remaining products we completed, and to assist them with their obligations to us, transition to a replacement manufacturer, and the transfer of inventory items we hold specific to this customer. Due to uncertainty regarding the future operations of this former customer as of

March 31, 2020,

we reserved

$3.3M,

or

100%

of their outstanding accounts receivable balance. Concentrations of credit risk related to the remaining accounts receivable balances are limited due to the number of customers comprising our remaining customer base.