Note 5 – Accounts Receivable and Concentration of Credit Risk

The Company’s standard credit terms vary from 30 to 120 days, depending on the class of trade and customary terms within a territory, so accounts receivable is affected by the mix of sales within the period. As is typical in the Company’s business, extended credit terms may occasionally be offered as a sales promotion or for certain sales. For sales to the Company’s distributor in Brazil, the Company has agreed to credit terms of up to one year. 

The components of accounts receivable consist of the following at September 30, 2024 and 2023:

The opening balance of the Company's net accounts receivable at October 1, 2022 was $3.6 million.

No customer had a current accounts receivable balance that represented 10% of current assets at September 30, 2024 and 2023.

At September 30, 2024, two customers had an accounts receivable balance greater than 10% of net accounts receivable, representing 64% of net accounts receivable in the aggregate. At September 30, 2023, three customers had an accounts receivable balance greater than 10% of net accounts receivable, representing 71% of the Company’s net accounts receivable in the aggregate.

For the year ended September 30, 2024, there were four customers whose individual net revenue to the Company exceeded 10% of the Company’s net revenues, representing 60% of the Company’s net revenues in the aggregate. For the year ended September 30, 2023, there were two customers whose individual net revenue to the Company exceeded 10% of the Company’s net revenues, representing 47% of the Company’s net revenues in the aggregate, including The Pill Club that represented 24% of the Company’s net revenues.

The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments on accounts receivable. Management determines the allowance for credit losses by identifying troubled accounts and by using historical experience applied to an aging of accounts. Management also periodically evaluates individual customer receivables and considers a customer’s financial condition, credit history, and the current economic conditions. Accounts receivable are charged-off when deemed uncollectible. During the year ended September 30, 2023, the Company recorded a provision for credit losses of $3.9 million related to the total amount of receivables due from The Pill Club due to its Chapter 11 bankruptcy, filed on April 18, 2023.

The table below summarizes the change in the allowance for credit losses on trade receivables for the years ended September 30, 2024 and 2023:

Recoveries of accounts receivable previously charged-off are recorded when received. In the global public health sector, the Company’s customers are primarily health care distributors, large global agencies, non-government organizations, ministries of health and other governmental agencies which purchase and distribute FC2 for use in HIV/AIDS prevention and family planning programs. In the U.S. prescription channel, the Company’s customers include primarily telemedicine providers.