Emerson Radio Corp. engages in the design, sourcing, importation, and marketing of a variety of houseware and consumer electronic products, and licenses its trademarks to others on a worldwide basis. Its products include Microwave Ovens, Compact Refrigerators, Wine Products, Toaster Ovens, Clock Radios, Bluetooth Speakers, Wireless Charging, Massagers, Toothbrushes and Security Products. The company was founded in 1912 and is headquartered in Hackensack, NJ.
If the Company’s third party sales representatives fail to adequately promote, market and sell the Company’s products, the Company’s revenues could significantly decrease.
Increases in costs of products may materially reduce the Company’s profitability.
The Company relies on a third-party logistics provider for the storage and distribution of its products in the United States and, if such third party logistics provider incurs any damage to the facilities where the Company’s products are stored or is unable to distribute its products as needed, it could have a material adverse effect on the Company’s results of operations and business.
The Company is subject to intense competition in the industry in which it operates, which could cause material changes in the selling price of its products or losses of its market share.
The Company could be exposed to product liability or other claims for which its product liability or other insurance may be inadequate.
Net product sales — Net product sales for the first quarter of fiscal 2020 were $1.5 million as compared to $2.1 million for the first quarter of fiscal 2019, a decrease of $0.6 million, or 27.4%. The Company’s sales during the first quarters of fiscal 2020 and fiscal 2019 were highly concentrated among the Company’s three largest customers – Wal-Mart, Amazon.com and Fred Meyer – where net product sales comprised approximately 75% and 84%, respectively, of the Company’s total net product sales.
Net product sales may be periodically impacted by adjustments made to the Company’s sales allowance and marketing support accrual to record unanticipated customer deductions from accounts receivable or to reduce the accrual by any amounts which were accrued in the past but not taken by customers through deductions from accounts receivable within a certain time period. In the aggregate, these adjustments had the effect of increasing net product sales and operating income by approximately nil and $5,000 for the first quarters of fiscal 2020 and fiscal 2019, respectively. Net product sales are comprised primarily of the sales of houseware and audio products which bear the Emerson® brand name. The major elements which contributed to the overall decrease in net product sales were as follows:
Business operations — The Company expects to continue to expand its existing distribution channels and to develop and promote new products to regain shelf spaces with retailers in the USA. The Company is also investing in products and marketing activities to expand its sales through internet and ecommerce channels. These efforts require investments in appropriate human resources, media marketing and development of products in various categories in addition to the traditional home appliances and audio products on which the Company has historically focused. The Company also is continuing its efforts to identify strategic courses of