Note 12 – Concentrations

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade accounts receivable and cash deposits, investments and cash equivalents instruments. The Company maintains its cash in bank deposits accounts. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At May 31, 2025 and 2024, the Company held cash in various accounts of approximately $4,019,854 and $3,003,876, respectively, in excess of federally insured limits. The Company has not experienced any losses in such accounts through May 31, 2025.

Concentration of Revenue, Accounts Receivable, Product Line, and Supplier – Hearing Enhancement and Protection Products

The majority of hearing enhancement and protection products are sold direct-to-consumer. There was no single customer that accounted for greater than 10% of total sales of segment sales and consolidated sales for the years ended May 31, 2025 and 2024.

During the fiscal year ended May 31, 2025, hearing enhancement and protection sales to customers outside the United States represented approximately 5% segment net sales, which consisted of 2.9% from Canada and the remaining from various countries. During the fiscal year ended May 31, 2024, hearing enhancement and protection sales to customers outside the United States represented approximately 4% of segment net sales, which consisted of 3.5% from Canada and the remaining from various countries.

During the fiscal years ended May 31, 2025 and 2024 sales of hearing enhancement and protection products were comprised of the following: 

As of May 31, 2025, two customers accounted for accounts receivable greater than 10% of segment account receivable, aggregating to 26% consisting of 13% each. At May 31, 2024, there was no accounts receivable for hearing enhancement and protection products that accounted for more than 10% of total segment account receivable.  

Manufacturing is outsourced primarily overseas via a number of third-party vendors. The two largest vendors accounted for 67% and 23%, respectively, of all purchases related to hearing enhancement and protection products, for the year ended May 31, 2025 and one vendor accounting for 87% of all purchases in the segment for the year ended May 31, 2024.

Concentration of Revenue, Accounts Receivable, Product Line, and Supplier – Hair and Skin Care Products

During the fiscal year ended May 31, 2025, hair and skin care product sales to one customer which represented over 10% of total segment sales, aggregating to 36% of the segment’s net sales, and 2.1% of the Company’s consolidated net sales. During the fiscal year ended May 31, 2024 hair and skin care product sales to three customers, which each represented over 10% of segment net sales, aggregated to approximately 47% of the segment’s net sales at 27%, 10% and 10%, and represented 2.4% of consolidated total sales.

During the fiscal year ended May 31, 2025, hair and skin care product sales to customers outside the United States represented approximately 31% of segment net sales, which consisted of 28% from Canada and 3% from Italy and during the fiscal year ended May 31, 2024 hair and skin care product sales to customers outside the United States represented approximately 29% of segment net sales which consisted of 28% from Canada and 1% from Italy.

During the fiscal year ended May 31, 2025, hair and skin care product sales by product line which each represented over 10% of the segment sales consisted of approximately 31% from sales of hair shampoo, and 24% from sales of hair conditioner and 21% from bundle kits. During the fiscal year ended May 31, 2024, hair and skin care product sales by product line which each represented over 10% of sales consisted of approximately 22% from sales of hair shampoo, and 17% from sales of hair conditioner and 23% from bundle kits.

During the fiscal years ended May 31, 2025 and 2024, sales for the hair and skin care product lines comprised of the following:

At May 31, 2025, accounts receivable for hair and skin care products that accounted for more than 10% of the segment’s total accounts receivable aggregated to 60% and represented three customers at 28%, 17%, and 15%. At May 31, 2024, there was no accounts receivable for hair and skin care products that accounted for more than 10% of sales transactions which is due to the fact that products were sold primarily through direct-to-consumer.

Hair and skin care product purchased inventories and products from two vendors represented approximately 98% of segment purchases at 79% and 19%, during the year ended May 31, 2025, and during the year ended May 31, 2024 two vendors represented 97% of segment purchases at 77% and 20%.