The Company operates in one industry segment, in what may be generally described
as fast moving consumer goods, selling numerous products in several health-and-beauty
aids over the counter drug and remedies and cosmeceutical categories. All of
the Company’s products are manufactured by contract manufacturers, pursuant
to the Company’s specifications and formulations.
The Company owns registered trademarks, or exclusive licenses to use registered
trademarks, that identify its products by brand-name. Under most of the brand
names, the Company markets several different but categorically-related products.
The principal brand and trademark names include “Plus+White” (oral
health-care products),“Sudden Change” (skin-care products), “Nutra
Nail” (nail treatments), “Bikini Zone” (pre and after-shave
products), “Hair Off” (depilatories), “Solar Sense”
(sun-care products), “Sunset Cafe” (perfumes), “Lobe Miracle”
(ear-care product) and “Scar Zone” (scar diminishing cream).
All Company products are marketed and sold to major drug, food chains, mass
merchandisers and wholesale beauty aids distributors throughout the United States,
as well as internet sales. In addition, certain of the Company’s products
are sold internationally, through distributors.
The Company recognizes sales at the time its products are shipped to customers.
However, while sales are not formally subject to any contract contingency, returns
are accepted if it is in the best interests of the Company’s relationship
with the customer. The Company thus estimates ‘unit returns’ based
upon a review of the market’s recent-historical acceptance of subject
products as well as current market-expectations, and calculates its reserves
for estimated returns based on the historical returns as a percentage of sales
in the five preceding months, adjusting for returns that can be put back into
inventory, and a specific reserve based on customer circumstances,
ny targets the following demographic segments and utilizes these specific marketing
approaches for each of these core brands:
Bikini Zone: Designed to help women relieve the bumps, irritation and redness
that can accompany hair removal in the bikini area, the brand is targeted primarily
to women aged 18-35 years who remove body hair. Sales volume is seasonal with
peak volume occurring between Memorial Day and the July 4th holiday as people
prepare for outdoor activity and the swimming season. Marketing efforts are
concentrated around this peak season and include in-store displays and secondary
placement.
Nutra Nail: Designed to help treat women’s problem nails (weak, brittle),
the brand is marketed to women aged 18-54 years, who are concerned about the
health and appearance of their nails and cuticles. Nail treatments sales volume
tends to be steady throughout the year, while sales volume for nail color tends
to experience peak volume during summer months. Marketing efforts have traditionally
occurred during all seasons for Nutra Nail treatments. Programs focus around
driving in-store consumer trial and include displays, secondary placement and
promotional coupons throughout the year.
Plus White: Designed to help consumers whiten their teeth and maintain good
oral hygiene, the brand is targeted primarily to women aged 18-49 years, and
secondarily to men aged 18-39 years who are concerned about the health and appearance
of their teeth. Marketing efforts include national television advertising, in-store
displays and secondary placement, and in-pack cross-promotional coupons throughout
the year.
Sudden Change: Designed to help women look their best by reducing the appearance
of these signs of aging: wrinkles, dark circles, and dullness. Sudden Change
brand is targeted primarily to women, aged 34 years and older. Marketing efforts
include national TV advertising, in-store displays and in-pack cross-promotional
coupons.
The Company’s in-house marketing personnel are responsible for the creation
of its media advertising. Placement is accomplished either directly or through
media-service companies.
The majority of the Company’s sales revenues are from sales of the Company’s
“wholly-owned” product lines (i.e., products sold under trademark
names owned by the Company, and not subject to any other party’s interest
or license), which include principally “Plus+White”, “Sudden
Change”, “Bikini Zone”, “Sunset Cafe”, and “Scar
Zone”.
Alleghany Pharmacal
In 1986, the Company entered into a license agreement with Alleghany Pharmacal
Corporation (the “Alleghany Pharmacal License”). The license agreement,
which is for the exclusive rights to Nutra Nail, Hair Off, Properm and IPR-3
was amended in 2011. The Alleghany Pharmacal License agreement, as amended,
requires the Company to pay a royalty rate of 2.5% on net sales of said licensed
products, and a minimum royalty of $250,000 per annum. The Company incurred
the minimum royalty of $250,000 as the royalty incurred was $78,308 for Alleghany
Pharmacal for the fiscal year ended November 30, 2015.
Solar Sense, Inc.
CCA commenced the marketing of its sun-care products line following a May 1998
License Agreement with Solar Sense, Inc. (the “Solar Sense License”),
pursuant to which it acquired the exclusive right to use the trademark names
“Solar Sense” and “Kids Sense” and the exclusive right
to market mark-associated products. The Solar Sense License requires the Company
to pay a royalty of 5% on net sales of said licensed products until $2 million
total royalties are paid, at which time the royalty rate will be reduced to
1% for a period of twenty-five years. The Company incurred royalties of $44,563
for Solar Sense, Inc. for the fiscal year ended November 30, 2015. Since the
contract inception through November 30, 2015, the Company has incurred a total
of $895,746 in royalties to Solar Sense, Inc.
Continental Quest Corp.
Effective November 3, 2008, the Company entered into an agreement with Continental
Quest Corp., to purchase certain United States trademarks and inventory relating
to the Pain Bust*R II business for $285,106 paid at closing. In addition, the
Company agreed to pay a royalty equal to 2% of net sales of all Pain Bust*R
II products, which are topical analgesics, until an aggregate royalty of $1,250,000
is paid, at which time the royalty payments will cease. The Company incurred
royalties to Continental Quest Corp. totaling $2,924 for the fiscal year ended
November 30, 2015. Since contract inception through November 30, 2015, the Company
has incurred a total of $75,151 in royalties to Continental Quest Corp.
