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Restructuring
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12 Months Ended |
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Nov. 30, 2014
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| Restructuring and Related Activities [Abstract] | |
| Restructuring |
RESTRUCTURING
On January 20, 2014, the Company announced that its Board of Directors has approved management’s plan to restructure the Company’s operations, and enter into a key business partnership with The Emerson Group, a premier sales and marketing company located in Wayne, Pennsylvania. As part of this change, the Company has outsourced to Emerson certain sales and administrative functions effective February 1, 2014. In addition, warehousing and shipping was outsourced to Ozburn-Hessey Logistics "OHL", one of the largest integrated global supply chain management companies in the United States. The Company’s inventory was moved to an OHL-managed facility in Indianapolis, Indiana and shipping commenced from there as of the week of February 3, 2014. A key benefit of the outsourcing move is that it shifted a substantial portion of the Company’s current fixed costs into a variable cost structure moving forward which can ultimately help keep expenses in better alignment with any future revenue generated by its brands. As part of the outsourcing plan, the Company reduced its work force from 98 to 37 employees during fiscal 2014. The Company has planned for additional personnel to leave in the first and second quarters of fiscal 2015. The restructuring plan should be complete by the end of the second quarter of fiscal 2015. The Company incurred severance costs related to the reduction in work force of $2,738,570 during fiscal 2014. Of this amount, $1,694,673 was paid in fiscal 2014, with the unpaid amount of $1,043,897 recorded as an accrued expense on the Company's consolidated balance sheet.
The Company entered into a contract with Suite-K Value Added Services on December 16, 2014 to provide turn-key contract manufacturing services for all products other than oral care in order to reduce and control operating costs. The contract requires a commitment to inventory purchases six months in advance and can be canceled upon 90 days notice. Under the terms of the agreement, Suite-K is responsible for purchasing the raw materials and components that are required to manufacture the products subject to the agreement. The Company will be receiving the first deliveries of product under the Suite-K turn-key contract in February 2015. The Company is discussing turn-key manufacturing with other vendors to meet its goal of being 100% turn-key for all products, which will allow the Company to operate more efficiently.
The facility that the Company occupies in East Rutherford, New Jersey is subject to a long term lease that expires in May 2022. The facility consists of a warehouse and office space. With the move of inventory to the OHL managed facility in Indianapolis, the warehouse was closed as of the end of the 2014 fiscal year. The reduction in work force as a result of the Company's restructuring plan has also resulted in the Company utilizing less than 50% of the current facilities office space. The Company is endeavoring to sub-lease the warehouse and unused portion of the office space in order to reduce overhead costs, which management believes will be completed within the third quarter of fiscal 2015.
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