XML 35 R23.htm IDEA: XBRL DOCUMENT

Concentrations of Risk	3 Months Ended
Concentrations of Risk	Jun. 30, 2020
Risks and Uncertainties [Abstract]
Concentrations of Risk	Concentrations of Risk Our revenues are concentrated in the area of OTC Healthcare. We sell our products to mass merchandisers, drug, food, dollar, convenience and club stores and e-commerce channels. During the three months ended June 30, 2020 and 2019, approximately 48.0% and 44.1% of our gross revenues were derived from our five top selling brands. Two customers, Walmart and Amazon, accounted for more than 10% of our gross revenues for the three months ended June 30, 2020. Walmart accounted for approximately 22.0% and 24.2% of our gross revenues for the three months ended June 30, 2020 and 2019, respectively. Amazon accounted for approximately 13.3% and 3.3% of our gross revenues for the three months ended June 30, 2020 and 2019, respectively. Our product distribution in the United States is managed by a third party through one primary distribution center in Clayton, Indiana. In addition, we operate one manufacturing facility for certain of our products located in Lynchburg, Virginia. A natural disaster, such as tornado, earthquake, flood, or fire, could damage our inventory and/or materially impair our ability to distribute our products to customers in a timely manner or at a reasonable cost. In addition, a serious disruption caused by performance or contractual issues with our third party distribution manager or COVID-19 or other public health emergencies could also materially impact our product distribution. Any disruption as a result of third party performance at our distribution center could result in increased costs, expense and/or shipping times, and could cause us to incur customer fees and penalties. In addition, any serious disruption to our Lynchburg manufacturing facility could materially impair our ability to manufacture many of the products associated with our acquisition of Fleet, which would also limit our ability to provide those products to customers in a timely manner or at a reasonable cost. We could also incur significantly higher costs and experience longer lead times if we need to replace our distribution center, the third party distribution manager or the manufacturing facility. As a result, any serious disruption could have a material adverse effect on our business, financial condition and results of operations. At June 30, 2020, we had relationships with 113 third party manufacturers. Of those, we had long-term contracts with 19 manufacturers that produced items that accounted for approximately 60.6% of gross sales for the three months ended June 30, 2020. At June 30, 2019, we had relationships with 113 third party manufacturers. Of those, we had long-term contracts with 30 manufacturers that produced items that accounted for approximately 67.1% of gross sales for the three months ended June 30, 2019. The fact that we do not have long-term contracts with certain manufacturers means that they could cease manufacturing our products at any time and for any reason or initiate arbitrary and costly price increases, which could have a material adverse effect on our business and results of operations. Although we are continually in the process of negotiating long-term contracts with certain key manufacturers, we may not be able to reach a timely agreement, which could have a material adverse effect on our business and results of operations.