AL International's CEO Discusses Q1 2013 Results - Earnings Call Transcript

AL International, Inc. (JCOF.PK) Q1 2013 Earnings Conference Call May 15, 2013 4:15 PM ET


Steve Wallach - Chief Executive Officer

Dave Briskie - Chief Financial Officer

William Andreoli - President

Unidentified Company Speaker

Good afternoon everyone. Welcome to AL International’s First Quarter 2013 Earnings Conference Call.

Before we get started, I’d like to take this opportunity to read the Safe Harbor statement. The following information presented on this call includes forward-looking statements on current expectations and projections about future events. In some cases, forward-looking statements can be identified by terminology such as "may," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," “encouraged” and similar expressions. These statements are based upon current beliefs, expectations and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict. The information in the shareholder call is provided only as of the date of this release, and we undertake no obligation to update any forward-looking statements contained in this call based on new information, future events, or otherwise, except as required by law.

Now, I’d like to turn the call over to AL International’s CEO, Steve Wallach.

Steve Wallach

Hello. I want to welcome everyone to the AL International shareholders call. We have a lot of important information to share. So, let’s get right to it. Over the next hour or so, we will focus on a number of key areas within our business. Speakers on the call today are myself are President, Bill Andreoli and Dave Briskie, our CFO.

We will cover the following topics. We will highlight our Q1 performance. We will provide an update on our uplifting process. We will provide a review of our convention and marketing strategies. We will discuss our new product launches. We will provide an update on strategic initiatives. We will provide an update on our coffee operations. We will provide an update regarding Investor Relations and we will answer shareholder questions. We are pleased to deliver our shareholders much improved performance in Q1, 2012. Both our direct selling business and our coffee operations continued to show improvement Q-to-Q.

I am going to turn over the call to our CFO, Dave Briskie to discuss our first quarter numbers. Dave?

Dave Briskie

Thanks, Steve. I really appreciate it. First of all, I want to say that to our shareholders that we are very, very pleased with the progress we have made on improving our bottom line. I am very, very proud to disclose record revenue and record profit numbers for AL International in Q1.

So, I will provide a brief summary of our quarterly results. AL International consolidated Q1 2013 sales came in at just over $20.8 million versus just under $18 million in 2012, and that represents a 30.8% increase in revenues and also represents record quarterly revenue. Our annualized run rate utilizing Q1 revenue is now north of $83 million. Our gross profit for the same period is just over $12.4 million versus just over $9 million, which represents a 37.8% improvement versus prior year.

Corresponding expenses for the period are just under $11 million versus just under $9.6 million. This represents only a 14.6% increase in expenses over the period of a year ago. So, obviously, the gross profits growing at 37% and while expenses are only growing at 14.5% we are accelerating profitability for our business. Net income from operations for the three-month period ending March 31, 2013 came in at $1.1 million, and this comes against a corresponding $855,000 loss for the same period a year ago. The improvement in profitability is significant and it shows that our profitability improvement plan is working.

AL management also believes that adjusted EBITDA when viewed with our results under GAAP and the accompanying reconciliations that you can view on our financials provide useful information about our period over period growth. Adjusted EBITDA which was not a GAAP term is presented because we believe it provides additional information with respect to the performance of our fundamental business activities and is also frequently used by security analysts, investors, and other interested parties in the evaluation of comparable companies.

We also rely on adjusted EBITDA as a primary measure to review and assess our operating performance of our company and our management team is also used to evaluate itself and uses adjusted EBITDA to do so. As discussed in a number of previous calls, due to the nature of our business, including our acquisitions model, along with the high depreciation expense within our roasting operations. We have a number of non-cash occurrences that takes place within our financials. We are encouraged to report EBITDA, which is earnings before interest, taxes, depreciation and amortization as adjusted to remove the effective stock-based compensation expense for adjusted EBITDA was $2.2 million in the current quarter compared to a loss of $134,000 adjusted EBITDA for the quarter ended March 31, 2012.

Obviously, given the significant improvement in profitability and adjusted EBITDA combined with better inventory management systems our balance sheet is strengthening, our cash flow has greatly improved, up – I encourage everyone to go look at the complete consolidated income statement, balance sheet and statements of cash flow, which will be posted for you the overview on the site as well as the OTC websites immediately following this shareholder update call. I also want to encourage our shareholders to review the numbers and if you have any questions please send enquiries to that’s

I want to move on and give you an update on our progress towards the Form 10 filing and the up-listing situation that we’ve been dealing with as a company. It was the most asked question by our shareholders that we’re invited to sending questions to be asked on this call. So, rather than take those questions one-by-one would lump them together and provide you a comprehensive update and the history related to this up-listing process and this process of us becoming a fully reporting company. We filed, many of you are aware of this and have been tracking this. We filed our Form 10 on February 12 of 2013, which included financial information through Q3 of 2012.

The SEC responded with 18 comments to that filing on March 13, 2013. The largest of those comments being the financial information would have to be updated and we anticipated that because of the timing of the filing. So, that was the number one comment of the 18 and the SEC wanted us when we provided answers to the 18 comments to include the year end numbers for 2012 in our answer to their 18 comments. The SEC also notified us in their comment letter that our registration state would become effective 60 days after the original filing which of course was February 12th. We were advised we could withdraw our filing and re-file and start the clock ticking again with the new 60 days or we could choose to go effective by the 60-day rule.

We filed our amended Form 10 on April 1, 2013 and this was the timely date of file as we filed it along with our Q4 and year end 2012 numbers. On that same date we filed to the answers to the 18 comments that we received from the SEC in their 313 letter. We made a decision to not withdraw and re-file and actually Al International, JCOF became effective on April 12th of this year. The SEC responded to our filing on April 16th, with seven comments, so only asked some clarity there. We are actually effective as we speak on this call, but we have not cleared SEC comments yet. So, on the 16th of April, we’ve received seven comments. We’ve responded to those seven comments just seven days later and on April 23, 2013 we answered those seven questions.

In fact, if you review the filings on the site for April 23rd, you will see that it is titled Form 10 post-effective amendment. All the other Form 10 filings were simple Form 10s and Form 10 amendments, but the April 23rd filing which you can view on this site was titled Form 10 post-effective amendment, which basically means we have gone effective and we are currently effective as we talk to you on this call.

The SEC responded to our letter of the seven comments on May 8th. The May 8th letter from the SEC had one comment. We responded to the SEC two days later and filed our response to them on May 10th. Many of you have also asked questions why they – you cannot see the letters from the SEC or the comments. This is not something that we are in control of, this is controlled by the SEC that is all done electronically just like our Form 10 was filed and I’m told that eventually those letters and our responses will be put up on the SEC site, but that is not within our control, that is something that the SEC controls.

You will notice today sometime probably during this call or shortly after that we filed a Form 10-Q, which is a requirement of a fully reporting company. You’ll also notice today that we are filing our first 8-K which is another requirement of a fully reporting company. This is our first filings as a fully reporting company and we are under obligation now to files of fully reporting entity from here forward. We do have one-time in the hands of the SEC and when that is satisfied assuming the SEC does not have other comments, then we have – will have clear comments from the SEC. I can’t tell you that the one comment that was left regardless of how that is answered will have no effect on our bottom line of the company.

So, we feel very good where were positioned at this point. Since we now are effective we were able to make application to move to a fully reporting marketplace, we have – we started that application process. And we also made application for our Blue Sky filings with Mergent. Mergent is formerly the Moody’s company. And in fact our application was approved by Mergent and we were published yesterday May 14th on Mergent’s website under new listings. So, if we want and you looked at new listings you would see AL International and an entire synopsis on the company there and so we will be – we are qualified for all the Blue Sky regs as we move forward.

Obviously we are pretty excited this has been a long time company – coming. Shareholders have been mostly patient and some of you very impatient, but you can go forth with confidence that what we said as a leaders of the company, we did, we moved to that next step if you will and it opens up a host of opportunities for us to tell our story too. So, we are pretty excited about that. And the other today what’s going make our company great and what’s going to make shareholders happy was how we perform Q-to-Q and year-to-year. I would like to invite Bill Andreoli on to the call to give you an update on how we did at our convention kind of sales and marketing update if you will. I want you all to be aware that this was a very short period of time that is last – since we last spoke to you.

It was just basically around 45 days ago, so this update will be a little bit briefer than the last one because, simply because of the last time. So, we are going to focus on the convention and some of our new products and then some other important partner information and some of your questions.

So, with that said on that purpose, I’ll turn it over to our President, Bill Andreoli. Bill?

William Andreoli

Alright, thank you Mr. Briskie and thank you to our CEO and especially to our shareholders that have joined us today. As many of you may or may not be away we have just returned from Las Vegas in our annual convention and I am proud to report this event was not only the largest single event in company history with a sold out crowd of 1500 plus, but we also exceeded expectations in the every other way as well. As we reported on our last year call, we are focusing our collective energies on the Healthy Body Challenge marketing initiatives. In this flow to every general conference breakout and training session, our mission statement and action plan have both become simpler and easier to follow yet more comprehensive. And our independent distributors reacted with renewed excitement and deeper commitment taking our near 17-year message to the street in the massive way with the enthusiasm the brand has got up.

In addition to our marketing focus we expanded our education and compliance training with respect to our status as a publicly traded company what it mean to be part of a company that welcomes the additional scrutiny and how to take advantage of our stock options or rewards program. Again as we’ve mentioned on previous year all the calls this serves to further differentiate us from our competitors and elevates loyalty amongst both the customers and our distributor base. We shared some exciting new announcements as well from some new and improved product offerings, which Mr. Wallach will be covering momentarily to the formal introduction of Marilu Henner, our company and brand celebrity ambassador. We simply could not have wished for a better match than with Marilu. Our health and wellness knowledge is vast, as well as our timeless and timely with their continued involvement with Celebrity Apprentice in other prominent television and radio shows. We are not on stage inspiring our attendees Marilu graciously autographed books, took pictures, and even gave free dance lessons on Saturday night.

A few months ago, we announced Youngevity spotlight in the upcoming July edition of Success from Home Magazine as exciting as this has been, it thrilled everyone pallets and pallets of these magazines onsite ready for pickup. We plan to utilize its amazing third-party credibility piece and presentation piece in months to come. If a picture is worth a 1,000 words and each magazine is worth a 1,000 product income opportunity presentations. And we are one of only 12 companies that will be featured in this magazine this year. The timing couldn’t be better as Youngevity is also featured in the May edition of Direct Selling News Magazine as well. That makes three times in less than 12 months of this particular industry publication. The bottom line of that is all news is good news and we plan to continue that trend.

We continue to launch weekly, monthly, and annual incentives for leaders to boost sales as well, dream vacations, higher bonuses, and other forms of recognition and appreciation incentives continue to give us the greatest return on investment, better than in bonus or compensation increase could. We are strong believers in technology, in media, as a way to enhance relationships and the customer experience. During conventional, we also launched Phase 1 of our total revamp and redesign of our web and mobile presence. Non-utilized mobile, a smartphone application that will revolutionize the way our distributors and customers communicate with us and do business. We are very excited and we will quote more on this project on upcoming shareholder calls.

Dave, as you can tell, I can go on for hours talking about all the good things that are happening here, Youngevity and AL Global, but in closing, I will just highlight our next major event coming early this summer to Baltimore VT area, where we will introduce yet another celebrity brand ambassador and endorser of our CM Cream line of products and it’s how great Peterson. So, Dave on that note, I’ll return the call back to you.

Dave Briskie

Thanks so much, Bill. I had a great time at our convention. It was so encouraging to see the excitement in the room and to be able to speak directly to some 1,500 folks about our company and it being public and having conversations about the excitement they are experiencing with their stock options obviously many of those – earn those options, earn them at the end of last year and the beginning of this year when our stock was in the $0.15 to $0.18 range. So, this recent rise in shareholder value for them has been very excited. So, it was really a great event and you are absolutely right, Marilu Henner really stole the show and got our sales force super charged.

One of the highlights of that convention was Steve Wallach’s presentation of our new products and obviously with where we are financially as a company getting stronger and stronger, we are not picking and choosing the products, we want to bring out now. We can bring them all out when they are ready to go and Steve did a really great presentation on some of these new products, which really supports our business model.

Steve, I know you are anxious to share our new product launches with our shareholder base. So, if you could take it away and fill everyone in, that would be great, I appreciate it.

Steve Wallach

Sure, thanks guys. Just a recap briefly on our business model and the scalability of it, Dave those are fantastic numbers that you shared with everybody, and Bill absolutely a second everything you said about the convention, the excitement definitely all-time high, the event was amazing, fantastic, definitely just everybody came away from that event raring to go and share the message with their contacts and everybody they could.

One of the important things that Dave touched on and he conveyed this as part of that excitement that everybody shared in at the convention, you shared some of the numbers that you guys were already predicting, but kind of put them in perspective for everybody is the convention. And the scalability of this company, and this business model is imperative obviously, but people got a really sense and understanding of just how important that is, and so now that we are sharing these new numbers with everybody. You can see the scalability of this business opportunity. Dave mentioned that our expenses went up roughly 14.5%, but our revenues went up 37%, I believe or profits – excuse me, our gross profit.

And so you see that as the income rises and our expenses go up a little bit and our gross profit goes up more than our expense percent wise, the scalability is obviously there. We have talked expanding the business. You have seen the growth numbers. One of the things compared to last year obviously with the expenses have been fully reporting public company or transitioning into that in GAAP accounting and so forth. And you see the difference this year based on that six quarter profitability plan. Dave and Bill and I mentioned everybody a couple of quarter ago, the scalability is evident I believe. And so the ability to share this message, the 90 For Life Campaign and the Healthy Body Challenge Campaign with everybody just exemplifies that even further.

One of the things that we have talked about on these calls before, but I will reiterate it also, we are closer to a traditional online marketer than many other direct sellers or members of the direct selling community. And part of that is because of the consumer cloud that we have talked about. The fact we have more than one product, the fact that we have the number of products that we have and the ability to touch peoples’ lives throughout their purchasing life essentially, we don’t just have one supplement, we don’t just have one sports drink. For example, we have cosmetics, we have sports drinks, we have energy drinks, we have the 90 For Life Campaign in core products and so forth, and we have niche products and integrated products. And we are going to talk about some of those in just a moment. But definitely we are more like an Amazon model than essentially like our Border’s book model, both started out selling books, one started just selling books and one started introducing their model across broader range of products and we are more like that model.

One of the things that, one of the advantages that we have over a traditional brick and mortar company is essentially the same advantage that an Amazon has. We are able to deliver product from the convenient standpoint directly to the consumers’ door or the end users door. So, they don’t have to get in the car and go get it. They can shop online as Bill touched on. We are really revamping and introducing all sorts of new tools. So, people can take the ability to shop their Youngevity back office and catalog, their product catalog online right from their mobile device, their Android phones, their Apple phones, and so forth. And so we are making ourselves more available where the consumer is just like Amazon has. So, we are definitely excited about those technology plans as well definitely more people and you are hearing it and seeing it daily. More and more people are shopping online and directly from the phones from their mobile devices or iPads and so forth.

Our end consumer and we have talked about this as well, but our end user, our customer base essentially represents more than 70% of our purchases, of our sales and so I think that also bodes well for stability and growth within our product range, but we have people buying the products because they actually use the products, because they actually see the benefit and the value of our products. So, again, I think that’s an important thing to keep in mind and stay focused on.

Definitely as Dave mentioned, we launched a series of products at the convention that we are excited about. Definitely, our core products remain our core products. The 90 For Life Campaign and Healthy Body Challenge remain our core in our focus, but with that said, we introduced a new cardio on the go pack, which is a very convenient way to get cardio focused, cardiovascular support focused supplements that you can take with you to the gym to workout, put in your car, put in your pocket. I was put together with our scientific advisory board members and Dr. Melinda Silva who is a medical doctor I am very excited about this product. In fact, she has this product offered right in her private practice. And so we are very proud to introduce that product at our convention that is the cardio on the go pack. We also introduced a homecare product that is called harvest, fresh food and vegetable produce launch. It’s really the that the first product kind of in this line for us, but with the high level of interest in sort of either organic fruits and vegetables and non-GMO aspects of fruits and vegetables, this particular product helps to ensure the consumer of produce that made by at their grocery store or local markets. They can rinse it off with this product and removes any residue of pesticides that are on the outside of the fruit or vegetable and waxes and things like that people definitely seem to be very interested in that product that when we introduced it as well.

One of the things that Bill touched on Drew Pearson obviously came on as a brand ambassador and we announced that at the convention to the distributors and the distributor base there. We are extremely excited about Mr. Pearson’s involvement. But one of the things that he really has gotten excited about is our CM Cream and our CM Soft Gel products because obvious of his agent, his past career as a professional football player, he loves the CM products and what they do for minimizing pain of aches and pains, joints and muscle pains that he has experienced, and so he likes to go off and definitely he has liked these products, he is excited about them.

We are excited – he is excited about them and so we introduced to everybody a new product to go along with that line which is an internal consumption product called CM Soft Gel, the CM Creams and Natural Pain Relieving Cream has been steadfast product of ours for years and years. Athletes love it, people that work out and people that are active and lead active lifestyles love that product because it is so effective and it’s all natural. We also introduced an additional (Pedit) product specifically for dogs. We’ve had a great success with the product called Arthrydex for many years, and so we felt it was time to expand the line as well.

And so this new product is called perpetual, which is a anti-ageing supplement that secure more wafer for dogs of all sizes. So, we’re excited with that, but our product did actually move out this week I believe and so we introduce that to everybody as a coming soon product at convention. Something that we’ve been working on for quite a while one of our top selling products is a liquid product call Osteo-fx and Osteo-fx Plus and that secular product is a calcium and magnesium supplement, that obviously is great for bones and joints since supporting and promoting healthy bones and joints. And we’ve been working on a powdered version to go really hand in hand with our (indiscernible), which is now our best selling single product as a powered version.

And so the powder version Osteo-fx the aspect of creating a good tasting calcium and magnesium supplement that has that much in it has been challenging, but definitely we’ve been working on it for several years. And we now introduced the final version this last – at this convention and so that product will be out shortly as well but the case standpoint of that product was phenomenal, people love that product. It’s a great product concept, the liquid version is already among our top selling products and we believe the – and the powered version will take those calcium supplements and our calcium sales to a new high. An additional power products that we introduced was beyond any tendering 2.0 and we got incredible feedback on this product. The taste is fantastic peach citrus fusion and we are really taking the non-GMO and certified organic to the next level and the on thing again rein the current classic version which will remain in the line like I said has become our best selling product.

And based on the feedback we believe the on-thing is entering 2.0 will be just an equal smash hit really it’s just people loved it. And so that product is probably still about 5 or 6 weeks out from being ready for order and sale, but the taste testing and sampling and concept really went over great and so we’re excited about that product as well.

So, let’s see I would like to also address while we have brand ambassadors and science and sports advisory boards and we had those questions and kind of why we have them what’s associated with that. And as Bill mentioned with Marry Lubian introduced to everybody at the convention, people absolutely loved her. She is very personable I think in all the discussions we had with Marry Lubian and husband Mike leading up to that decisions to bring her on neutrally from her perspective and ours. We got that same sense and that same feeling. And as everybody got at the convention because she is so personal, because she is just so forthcoming with advice and information and experience, and she is a health advocate, and she is a very energetic and healthy person. And so that comes across and her enthusiasm for the company and the people associated with the company comes across. And I think we will see the same thing from Mr. Peterson through Peterson, but also Theo Ratliff and his wife Kristina were there. They have been at our conventions before, same sort of thing. People just absolutely love Theo and his story, his involvement with the products in the company. Mike Glenn, who is the announcer of the Atlanta Hawks, a former player in the NBA with the Theo and has known Theo for a long time as well, he was at our convention. And people absolutely love Mike Glenn. He is the Chairman of our Athletic Advisory Board.

As far as the scientific advisory board, these people help collaborate on the direction of products on product formulations, on the scientific support of these products. So, obviously, these people add awareness and credibility and contacts to what we are doing and the distributions love the fact, these people are associated and willing to put their name, stamp of approval, and their name behind the company. And so we have found incredible value with people of this awareness and reach being associated with the company and the distributors definitely see the benefit and the ability to point to those people’s involvement with the company. So, we are thrilled about that.

So, Dave, what I want to do now is turn this call back over to you if that’s okay?

Dave Briskie

Yeah, that would be great. Couple of things that just happened while you were talking Steve, just to let shareholders know,, if you go there and put JCOF, our trading symbol in there and click on filings and disclosures, you will see that the 10-Q and the 8-K is posted up on the site, so that all went fine and they can read away on that type of reporting. So, that’s exciting to see. I think the great parallel you drove to less kind of modeling what we see in the company like Amazon accomplish, which I would call the new economy really the fact that we have got tens of thousands of distributor partners out there to support an effort – an online effort if you will as a face-to-face driver. I think we have got a very intriguing model with it’s kind of like Amazon with a direct selling force behind it. So, we are very excited about that. And I appreciate both Bill and you updating the investment we are making in technology I think that drives this model even more.

But we don’t want to forget, we are also a coffee roasting operation and the coffee roasting business also reported record revenue for the month of Q1 at the month of the Q1. It had a very strong performance. And the CLR Roasters division is now 12% of company revenue. So, it’s actually improved the percentage of the business that is focused on that revenue model. One of the drivers of our growth there is our relationship with Norwegian Cruise Lines, that is being distributed by very significant distributor known as Sysco Foods, and that is all new business for us in 2013 in our coffee roasting ops, and that helped us delivered a record performance for Q1.

Obviously, I already discussed that we are only 45 days from the last update. So, I don’t want to be too repetitive, but I can provide a few updates on progress just over the last 45 days. One, our own Café La Rica brand is now penetrating pretty well up in the Northeast Wal-Mart’s. We have established a presence and growing sales there in Pennsylvania, New York, and Delaware for that particular brand. And a major initiative of CLR Roasters over this year and into next will be the growth of our own company brands at retail. And we are putting significant emphasis on this. Café La Rica also will be on store shelves. We have talked about this briefly, but will actually be available for purchase on May 20, will be the store set for the price shoppers in Connecticut. And we are very excited about this happening, because we know that test goes well. That’s a very significant retailer in the Northeast. So, we can expand our distribution with Café La Rica by having a good positive test wit them. We did hear from the 72 store discount drug marts in Ohio which has store, all store shipments of Café La Rica and Josie's Java House brand and it is selling very, very well. So, we expect that relationship to continue and in fact it’s their only coffee product that they are offering in their chain.

Café La Rica and Josie's we discussed before combines in over 14 Wal-Marts or 14 states if you will in the Wal-Mart stores and business is building. In fact the year-to-date sales are up almost 40% in Wal-Mart stores with our products there. So, we’re having a 40% improvement on dollar sales at Wal-Mart so that’s obviously a very significant number and bodes well for our future with that particular retail. Our contract with Signature Wellness Centers has been extended through August 2014 and that now includes 83 wellness centers. And there are plans from them to open up an additional 10 wellness centers in June and they are talking about significant growth the later part of this year and into next year as much as doubling the size of the wellness centers that we will be distributing our coffees to, so that’s very exciting.

One of the things we’ve been doing as we see Café La Rica brand grow we talked about a new piece of equipment that we are purchasing. That new piece of equipment is being made in a state-of-the-art facility known as OPEM manufacturing, in fact OPEM is the one of the manufactures for a cake cup manufacturing equipment. So, they are very significant entity to do business with at our President of roasting operations Ernesto Aguila is actually in Palermo, Italy as we speak and sent me video of this very significant piece of packaging equipment for me to view and it’s right on time and we are expecting it to ship to our facility in about two weeks, it will get packed up, put on the container vessel and shipped to us and of course, we will it up online here at our plant at CLR Roasters and that really gives us a (shot) in the arms of terms of being able to grow this brand of ours in a very, very significant way.

So, we are very excited to bring up that piece of equipment and have it very close to being installed here in our plant. There is also going to be a nice video presentation of CLR Roasters coming soon, it’s in production we viewed it and it will be a very nice marketing tool. A lot of our customers now we’re getting more and more enquires about CLR Roasters, its capabilities. We are certainly becoming a formidable private label manufacturer for many fine retailers and many obviously crew ship companies, hotels and so forth and to have that video piece will allow us to show exactly what we can do here at the click of a button. So, we are excited we making that investment in technology. So, things at CLR Roasters are arriving well put up a great quarter and we will move on to the next of the year and continue to work hard on that growth.

A little bit now on the IRPR strategy, I wanted to talk briefly about that obviously we are only 45 days from the call has mentioned. But we do have closed 4000 shareholders now. John Zervas has been doing a very nice job communicating with these shareholders. We did reach out to a number of our shareholders when we only had mailing aggressively offered free samples. If they would provide us with their email address and phone numbers so we could continue to expand our shareholder database. And the response was really better than we expected. We heard from a number of shareholders and we’ve already started sending out those packages and our database to be able to communicate directly with our shareholders grown significantly. We also as you know enacted our share repurchase program and we did get a lot of shareholder questions about that. So, rather than answer those questions it will be a good time to answer it here. One thing about the shareholder repurchase program, it started off very, very quickly. And we entered into purchasing stock at a fairly quick pace. When we installed that program the stock was trading in the mid-teens and essentially when the Board approved the ability to purchase up to 50 million shares and that’s the most we would be able to buy with a capital price and said we can buy stock up to $0.30 a share. So, when the stock relatively quick line interested over $0.30 it kind of took us out of the share repurchase program. The management has meant and we talked with our implementers of this program, and we have now moved that cap up, but beyond the $0.30 range. So, we can continue to buy our shares given our numbers and our current results we feel like it still is an opportunity for the business to buyback shares. So, we can start to execute on that program again.

Bill and Steve both mentioned as being in Success Magazine and Direct Selling News, I encourage you all to take a look at that piece, it’s an incredible piece. Believe it or not, we are getting a lot of inquiries from that particular magazine about an opportunity to purchase shares or purchase stock. So, the more we are in the news the better it is for our company. So, our IRPR strategy is a lot of little things is the way it really works to reach out to shareholders and so forth. Obviously, now with us being fully reporting and our Q now filed in our fillings current, there is an opportunity to market to different types of investors, and we will start that marketing rate, I’ll just say, we will start it very soon. So, we’ll get aggressive at going towards different types of investors out there.

We have reached the point in the call now, where we can go over some of the Q&A items that were submitted, John Zervas put a press release out and ask you to ask questions over our IR site. And we got a number of questions, but bulk of those questions we answered throughout this call. And I think the biggest one being where are we on the up-listing process, how did it go, how is it moving along. So, we answered a lot of those questions. We also answered the questions on the share repurchase program in a number of others. However, there were some that did not get answered and there was one from Evelyn from Ohio and her question was that she had been reviewing other companies that were significant in size and noticed that the international part of their business was a very, very significant piece of the business and she wanted to know when the company would be rolling out a more comprehensive growth strategy as it related to global markets. And I was going to see that one up to Steve Wallach. Steve?

Steve Wallach

Thanks, Dave. As far as a comprehensive international growth strategy, definitely management is obviously making that part of our internal discussions and planning. One of the things I think we touched on this on a previous shareholder call, the previous shareholder call is valuable. One of the things that we have done in years past and we continue to do it is we are responding to people ordering our products internationally, but as Dave had touched on earlier in this call, the company cash flow and balance statement has improved dramatically. And so we are shifting our strategy to looking at specific key markets in a more significant launch strategy and presence in some of these countries. So, we are discussing those types of plans right now and definitely the interest of the company is also growing has gone up as well. And so, we are looking at all of those aspects. So, I believe you’ll see much more in the near future on international growth and the rollout of that strategy.

Dave Briskie

Thanks, Steve. Hang with me just a second, because we also had a question from (indiscernible) the first one and his question was that another public entity in our space company, LifeVantage, has 63,000 reps and is doing about $200 million in revenue. And that you put that, that was $260 per rep and he said that JCOF has 70,000 reps and is doing half or so, that’s only $90 per rep per month. And I know that these numbers can move around a little bit, and you could probably add some clarity Steve, but he is asking what can we do to increase the value for each rep. So, that was kind of his question. Can you pick that one up as well?

Steve Wallach

Sure. One of the things that you have to kind of have in the back of your mind is what the actual definition of their rep and rep purchase compared to ours. What I suspect is that they are rolling customer volume up to each distributor or each rep, and the bottom line is their sales are greater or higher than ours. I do think it currently – I do think it’s a very good correlation. And Dave and I have in fact on some of these calls made reference to LifeVantage and sort of their history and that if you look at it really a few years ago LifeVantage as a public company that the stock was less active and had a significantly lower price per share.

And one of the things that I think we have as an advantage over LifeVantage in terms of marketing in my view is that we have a broader product range, which obviously creates diversity and diversification purchases and so forth. I do know that our dollar per purchase tend to be higher than many other companies I haven’t specifically looked at LifeVantage purchase, in other words per product order, but I do know that their product offering is fairly limited by comparison to ours. And so our strategy is more of that consumer cloud strategy, where people can buy their supplements and their sports products, sports drinks, energy drinks and cosmetics, for instance, or that product that isn’t really their strategy, but that is ours. So, with all of that said, the bottom line is if you look at their history in terms of being a public company, in terms of offering stock and stock options to distributors, in terms of the growth trajectory and so forth, I think it’s very good correlation to look at.

So, if you look at their history and where we are today, you can somewhat predict the future I believe, but beyond that, it kind of concerned to, they have introduced their product offering to international markets. As I just mentioned we are more intending to do the exact same thing. But ultimately their sales are currently higher than ours and that’s what it really kind of comes down to. It’s not the dollar per rep, because their definition per rep may not overlay with ours exactly. So, hopefully that answered that question?

Dave Briskie

Yeah, I think it did. And I pulled up a chart on LifeVantage and back in 2010 like in the same Q1 period that we are discussing. Their staff was basically trading about where ours is now in the low 30s or so, and even where we are readers later in LifeVantage has shown significant growth in new stocks obviously taking a nice growth from that particular situation. So, it’s always at the end of the day about driving profits and revenues and certainly is our model. (indiscernible) also asked about our partnership through Peterson as it how it was going to be structured, is it going to cost the shares dilution and that type of thing. Obviously, we can’t disclose every part of that particular agreement if you will. But I can tell you that it isn’t costing us any shares nor that is there any dilution associated with it. He is a celebrity, brand ambassador, and really it’s a success-based model based on how CM Cream really does and CM Tablets really do is the main premise around that particular arrangement that we have with Mr. Peterson, but it is not a share-based compensation in anyway. So, I wanted to answer that question.

And we have been I think pretty good since the merger of doing – of not doing anything that would create dilution events. And we have kind of held the line on that. And this is another case of that. And it was the same thing with the Marilu Henner agreement as well. So, we try to keep that on top on mind.

We also got a question from a gentleman named Robert Birch. This was a fairly loaded question asking about the particular movement of the JCOF stock and you had mentioned that you saw on May 10 that stock was up $0.04 and you said that his particular brokerage account, you didn’t see that increase. And then that’s the real simple answers, just because the stock goes up, it’s the closing price that’s recorded in anyone’s account. So, it’s not – it doesn’t show the movement, it shows where the stock would close and that would be how a stock would be valued at someone’s personal account. We also wanted to know if we felt that our stock was being manipulated and well, we do about that.

And when you are in the world of non-reporting companies, you see wild streams because of low volume, but I think any of that type of stuff has basically will go the wayside as we have make this move into a fully reporting company. So, some of those concerned about manipulation and so forth really isn’t a concern as you reach a fully reporting status. And you run a business the way we are running that. So, it’s not a concern of ours on a go-forward basis, but lower volume stocks obviously people can do what they do. We do – we see compliance reports and we know for a fact that, that sometimes our stock has been shorted. It has been shorted recently, but over the last 90 days or so, these shorts have really started to dry up and that’s probably because of the belief level that this company actually was going to be come a fully reporting entity and unusually when you have that type of situation those types of folks go and find, let’s just say other prey to deal with and companies like ours aren’t really where they want to play their game. So, we feel really strong and bullish about how we positioned the company at this point and where we are going forward and it’s great to see those filings upon the site and making the moves that we are moving towards.

Steve, I’ll turn it back up to you to ramp up the call. I appreciate everyone’s time and I’m sure we will be getting question through the IR and to the business.

Steve Wallach

Fantastic, thanks again Dave and thanks everybody for their questions. Thank you for your time today. And I definitely look forward to updating you all through future calls and obviously watch for the future press releases and news as we release it as well. So, thank you again for your time. Thanks Dave. Thanks Bill. Everybody have great afternoon.

Question-and-Answer Session

[No Q&A session for this event]

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