Akers Biosciences' (AKER) on Q4 2015 Results - Earnings Call Transcript

| About: Akers Biosciences (AKER)

Akers Biosciences, Inc. (NASDAQ:AKER)

Q4 2015 Earnings Conference Call

March 30, 2016, 09:00 ET

Executives

Ben Simons - IR

Ray Akers - Co-Founder & Executive Chairman

Gary Rauch - VP, Finance

Analysts

Jules Augus - Aegis Capital

Marc Robins - Catalyst Research

Tony Polak - Aegis Capital

Joel Marcus - Network 1 Financial

Operator

Welcome to the Akers Biosciences' Conference Call to discuss 2015 Earnings. [Operator Instructions]. I would now like to introduce your host for today's conference, Ben Simons with Akers Investor Relations team. Please go ahead, Ben.

Ben Simons

Thank you. Good morning, everyone and thank you for joining us. On the call today, we have the Co-Founder and Executive Chairman, Dr. Ray Akers; and the VP of Finance, Gary Rauch.

Following the Safe Harbor statement Ray will provide an overview of progress in 2015 and then Gary will provide a summary of the financial results before we open up the call for questions.

So before we get underway, I just would like to ask everyone to take note of the Safe Harbor paragraph that appears at the end of the news release, detailing the company's financial results, which were published this morning.

This paragraph states that any forward-looking statements of the company makes, speak only as of the date made, are subject to inherent risks and uncertainties, including those described in the company's report filed with the Securities and Exchange Commission and should not be unduly relied upon.

Except as otherwise required by Federal Securities laws, the company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein or elsewhere to reflect any change in our expectations, with regard to any changes in events, conditions or circumstances on which any such statement is based.

So with that done, I would now like to hand over to Akers Bio's Co-Founder and Executive Chairman, Dr. Ray Akers.

Ray Akers

Good morning everyone and thank you for joining us. As many of you know Akers Bio is in the business of developing and selling rapid test which deliver health information quickly. Our most developed test and the one which generates the majority of revenues today is a rapid blood test for an allergy to the widely used blood thinner heparin. We have also developed during the process of developing other rapid blood test based on the same proprietary technology platform. These include conditions like Malaria, Chlamydia and dengue fever as well as for heart attack. We have also developed proprietary and transformational ways to test a person's health by analyzing their exceled breath using simple non-mechanical breathalyzers.

With this technology we have developed or in the process of developing breath test for alcohol levels, breath test for key tone levels associated with diabetes or weight loss, breath test for monitoring oxidative stress levels and test for ashtama, chronic obstructive pulmonary disease and lung cancer. In most cases what we do is invent and sell best and better ways to replace existing diagnostic or screening tests by making tests faster and easier and less expensive we're able to help reduce the cost of health care and enable better and quicker decision making. We're targeting large segments of the diagnostic market where the impact of our test could be significant.

Akers Bio is still in a transitionary phase of turning it's proprietary technology into revenues and ultimately products. And 2015 was a very important year in laying the groundwork for growth. While revenues of 2.1 million were still quite small compared to what we believe they will be in the future and in fact what we hope they would be last year. 2015 was a year which we made significant progress in a number of important areas. In particular we made significant improvements to the senior commercial team and refined a sales execution strategy. Having transformation technologies is only have half the equation. You need the best people to commercialize it too and I believe we now have the right team in place to do this.

Last year we laid the groundwork for entry into China and we developed a product suite to target the huge personalized health and wellness network. I'm pleased to say that this preparatory work in 2015 is already paying off in 2016 with orders for our rapid heparin and allergy test already exceeding $3 million in the current year. 12 weeks into 2016 we know already that revenues will eclipse those for 2015. We already have sufficient visibility from the first 12 weeks of this year in our core heparin allergy test business to know the sales are materially outperforming last year. Not only is this being driven by orders from China but it's also coming from improvements in our domestic U.S. business. We hope to see this trend continue as the full impact of our new commercial team and execution strategy begins to be felt. For those of you who are not yet familiar with our flagship blood test Akers Bio makes the only FDA cleared rapid test to detect a potentially fatal condition known as HIT. It occurs when the blood thinner heparin has the opposite therapeutic effect what it is intended and becomes clouting agent. By providing a near instant result we can save a hospital a significant amount of money on the use of unnecessary medicines of hospital price while waiting for a lab to send back test results using existing slow diagnostic methods for HIT and we do this without compromising on accuracy.

Substantial work was undertaken in 2015 to prepare for market entry into China, in November we received clearance from the China Food and Drug Administration for the rapid heparin allergy test I just mentioned which led to our Chinese distributor placing $2.5 million worth of orders for 2016. Furthermore we worked extensively in 2015 with our Chinese joint venture partners to establish a first class manufacturing facility in Hainan Province which is now fully operational. This envisions the majority of acres products for sale in China will be manufactured in country leading to significant commercial benefit. Marketing in China commenced for four of our breath test in the prolific areas of diabetes, weight loss, business and alcohol. The Chinese health care system has identified the critical need to address soaring obesity rate and the diabetes epidemic, this highlights the very compelling opportunity to introduce our simple, and expensive bread based addressing these conditions.

One of the areas of development during 2015 which I am most excited about because it opens the door into a multi-billion dollar marketplace for health and wellness, is the development of three transformational breath test for the health and wellness industry and consumers. These include the consumer focused METRON test for the optimal state for weight loss as well as BreathScan OxiChek and KetoChek. These last two tests could be explosive. They work with a new bluetooth enabled reading device that we developed called the BreathScan link and this in turn connects with our BreathScan mobile app to enable consumers and professional users to monitor trends in health via a mobile device such as an iPhone or tablet. Being able to generate interest in health information is I believe key to the future of medicine. With our Akers Wellness test commissions, suppliers of nutritional supplements and diet plan, health coaches or consumers themselves can monitor their or their clientele over time by utilizing our products.

With the development for the Akers Wellness line now largely completed the focus has turned to marketing and sales execution and I look forward to reporting on progress of these areas later this year. Another important installment in 2015 was a European patent for blood separator technology and that is separating a fluid fraction from whole blood in less than a minute. We now have them patent protection both in the U.S. and Europe enabling us to incorporate the technology into certain of our blood based assays with the speed of our test is paramount to clinical decision making.

It also enables the company to walk with a technology under licensed to third parties for two purposes. One is the means to accelerate their own testing procedures by facilitating the blood cells separation process as a component of their test and two as an alternative to current, inexpensive and inefficient vacuum tube withdrawal method.

Multiple new distribution agreements outside of U.S. were signed in 2015 giving the company access to every major diagnostic market in the world. The primary drivers of this distribution network are the company's flagship heparin allergy test that I mentioned earlier. We are supporting our distribution partners efforts to introduce these tests in the respective territory. Introducing new test that replace existing procedures can be solo processed in our industry but we are confident that the growth in the U.S. and now China will be an example to other countries around the world to accelerate their process for diagnosing HIT.

Additionally the company's BreathScan alcohol detector continues to generate interest through our international distribution network and some sales for this product amounting to $190,000 were made into the EU and South Africa in 2015. We hope to continue to build on that this year

Towards the end of last year we’re delighted to welcome a new CEO on-board to focus entirely on product technology and commercialization. This commercial team is being led by John Gormally and is further strengthened with a number of new senior hires. The improved execution of our U.S. heparin allergy test sales strategy has led to encouraging early sales indicators from the first 12 weeks of this year which shows sales growth for this product of 70% over the equivalent period in 2015.

That is a short summary of the progress in 2015. I will be very happy to answer questions in a few minutes. But before that I'm going to turn the call over to Gary to briefly talk you through the financial highlights and then I will make some closing comments on the outlook. Gary?

Gary Rauch

Thank you, Ray. The first metric I'd like to address is the loss of -- before income taxes which is 9.6 million appears to be very large. It's very important to understand that approximately 4.7 million of this figure was non-cash and non-recurring items. A line by line breakdown of the cost is taken in the year can be found on the 10-K is now up on the website. But I'll give you a breakdown now of this $9.6 million figure and explain the content behind various components.

Firstly the biggest component in G&A is the component of G&A cost which at just under 6.2 million compared to 4 million last year. There are a number of factors which impacted this, the main one is that we made allowances for bad debt for 2.16 million of one of these bad debts was 864,000 which relates to a trade receivable for the sale of tricholesterol test which we believe carries a high risk of collectability. The other 1.3 million relates to a debt owed to us by ChubeWorkx which after their failing to meet certain payments installments caused us to place a high level risk on the collectability on that debt. Employment agency cost also accounted for $237,000 reflecting the senior hires during the year that Ray referred to earlier.

Legal costs of 737 associated with various legal affairs including those associated with aforementioned bad debt owed by ChubeWorkx and other associated litigation. Sales and marketing expenses increased to 1.3 million or from 1.3 million to 2.5 million in large part due to the increased personnel costs from the expanded sales team which in turn also increase the travel costs. R&D increased from 9.16 in 2014 to 1.4 million in 2015. Clinical trial cost, professional services are the main component behind the increase and are associated with comparing [Technical Difficulty] several key products for market including those in the Akers Wellness line that Ray mentioned earlier.

These are the main areas of cost, our income in 2015 can be broken down as follows. Product revenues totaled 1.8 million mainly consisting of heparin allergy sales in the U.S. of just under 1.4 million. There are also some sales of breathalyzer products totaling nearing nearly 300,000 and a small portion of product sales of around 100,000 of miscellaneous items. Add-in licensing fees of 320,000 and you get the total revenue of 2.1 for the year. The lower revenue was compared or when compared to 2014 are result of three orders in 2014 which did not reoccur in 2015. ChubeWorkx didn’t place any orders for alcohol breathalyzers whereas they lost 766,000 worth in 2014. There were no repeat orders from China while regulatory approval was still awaited whereas they bought a $1 million in 2014 under an emergency approval allowance.

And finally there was no cholesterol sales made in '15 as for the customer failed to make good on their payment of 864,000 [ph] worth orders in 2014. I'm pleased to say that alcohol breathalyzer business which has disappeared in France is beginning to show signs of improvement again elsewhere and the Chinese product approval that waited for an heparin allergy test came through late last year paving the way for a $2.5 million order placed earlier this year as Ray mentioned earlier. There's also some income not included in the revenue line from sale or from the sale of the New Jersey net operating losses and from interest and dividends totaling 378,000. Our overall gross margin percentage of 55% is consistent with the trends throughout 2015. It's likely lower than the 60% zone [ph] that I had previously guided due to an increase in indirect cost of sales and it's materially lower than the 73% gross margin in 2014 because the 2014 number was inflated by an order for certain tests which there was no significant cost. We're maintaining a liquid balance sheet and have cash and marketable securities at year-end of 4.4 million with some major one off cost in 2015 behind us including those associated with product development and improving revenue position we hope to eat into this cash reserve less and less as this business grows.

I will now turn the call back over to Ray to provide some closing comments.

Ray Akers

Thank you, Gary. Before we invite any questions let me give you a summary of how things are looking in the current year. Things are looking good. Looking ahead through 2016 we have had a tremendous start to the year with a receipt of $2.5 million worth of orders China for the heparin allergy test. First sales from those should begin imminently. We have approximately $600,000 worth of sales of these same tests in U.S. hospitals already recorded in the first quarter. An increase of 70% over the same quarter in 2015. We hope to see a continuing upward trajectory in U.S. heparin allergy test business. While it is by no means our core business we are hoping to see meaningful contributions beginning to flow through again from our all breathalyzers and we're really excited about the potential of our Akers Wellness line, although we are not counting on any material contribution from this line until late this year.

The real backbone this year will be our heparin allergy test because business both here in the U.S. and in China. With orders for this product totaling around $3.1 million already, we are 12 weeks into the year that 2016 is going to be materially better than 2015.

Now we will be happy to answer any questions that you might have.

Question-and-Answer Session

Operator

[Operator Instructions]. And our first question we will hear from Jules Augus with Aegis Capital.

Jules Augus

I had a couple of questions to ask. Number one, could you tell us what your cash position is at the end of last quarter?

Ray Akers

It's 4.4 million, Jules.

Jules Augus

Okay. My other question is this. It's my understanding that Akers raised the prices substantially on the heparin test, are those prices included in your forecast for the first quarter and beyond?

Ray Akers

Yes. So let me explain to you how this works. There are legacy customers out there and new customers. The new customers are paying the full price of the product which ranges anywhere from $100 to $125 a test, that’s up really up for the distributor. Our cost to the distributor for these new customers is fixed. For legacy customers that represents a 2.5 times increase in price. I'm pleased to report that we've only lost two customers as a result of this price increase. So our new team has done an exceedingly good job in managing the increase in price.

The increase in price is jointly being managed by us and the distributors and there's different levels of price increases for customers that have just been negotiated one on one. So some customers accepted the price increase immediately and although the price increase has been absorbed in equal increments over the next two years. So it's all different right now, and it's hard to tell you what the average prices because it's kind of a moving target but the reality is that the sales numbers that we have in this first quarter few will reflect this increase in pricing and they also reflect and increase in growth too.

Operator

And next we will move to Marc Robins with Catalyst Research.

Marc Robins

Help me understand the sales into China, so you've got a pretty substantial and also then to the U.S. hospitals you have a very substantial order for 2.5 million. I take it that that has not yet been delivered and then the second part of that question is what kind of period do you think the sell through should take to eat through that entire 2.5 million. Is that a full 12 months kind of a situation or will that be done in 4 to 6 months?

Ray Akers

Sure Mark. Well just to let you know literally the product left the back door here yesterday. But the shipping documentation that's required in China is quite extensive.

Marc Robins

So they now own the product?

Ray Akers

No I'm about to tell you. What happened yesterday it's been transferred to sea transport and we’re not sure if titles going to transfer this quarter or early next quarter because the shipping documentation is very complicated. But that's what sales are imminent, right?

Now we believe that and they believe that they're going -- that represents somewhere between 6 to 9 months' worth of customer demand at this stage. You know quite frankly this is you know the second order from them and their marketing is in you know full swing at the moment. So you know it's still very early in the learning curve. The second -- there is another ship into schedule for next quarter and in the balance in the fourth quarter of this year. That's our projection. Now that things could change that it could be accelerated we’re not sure, we do know that we're the only test of any kind for the heparin allergy in China. We’re the first one and so they backed with the gold standard.

Marc Robins

Okay. Then how is it working in the United States with U.S. hospitals? Do they pretty much buy what they use during a quarter or do they buy in advance and we still don't know how long will that -- I don’t think that's the right word but the use would occur?

Ray Akers

Right. Every hospital is different, some hospitals will buy a year's worth of supplier upfront so that they have one continuous lapse of whole year. Other hospitals order month by month, it's just a way to manage their inventory.

Marc Robins

But since they're roughly what 4000, 5000 hospitals there's still plenty of opportunity for the company to grow that business in the U.S.

Ray Akers

We have just scratched the surface here. I mean you know we're not even to 1% of the hospitals in the countries in this stat so. We believe that there is tremendous opportunity here.

Marc Robins

Okay. Let's move to some of the other products. Now I guess the alcohol breathalyzer test has been available and then I guess it fell flat or you had a big order and then that didn't quite work out so well. Is it not been used at all in the United States because we have breathalyzer equipment and/or what's going on, help us better understand the European and as you said South African demand for the product.

Ray Akers

Sure. So in the alcohol levels that are considered the limit in Europe and in South Africa are different than they are here, they are at a lower level. They are 0.5% and at some various 0.2%. These are areas that are difficult for a person to detect on the run. I mean here United States 0.08 is the legal limit and quite frankly all of the studies that we've done that we have to do for the FDA, most people feel noticeably drunk at that level. So you know and that is why I believe that the retail market in the U.S. to date has not really taken off because people don't need a breathalyzer to tell them that they have had too much to drink. But in these other parts of world they do and so that's why that's all -- you know a lot of our focus for consumer breathalyzers tends to be outside of the U.S., one of the -- however inside the United States -- we believe there to be a very nice industrial safety marketplace and certainly within the transportation industry. Our alcohol breathalyzers are approved by the United States Department of Transportation for the mandatory use on transportation workers. And one of our new sales team priorities this year is to reinvigorate that marketplace and come out with a much more cost effective and easier solution. Right now that marketplace is being served by electronic breathalyzers that are costing thousands of dollars and operate in more like scientific instruments versus our test better much, much easier to use. So that is a priority for us this year.

Marc Robins

And then if you accommodate me I would like ask one more question, help me better understand where the company is in addressing the wellness market while with your wellness products?

Ray Akers

Certainly this is a -- we believe and absolutely exploding and large market, it's very difficult to quantify however because we’re the first entry into this product with a clinically significant product. We do have one competitor called the Nu Skin. They analyze one anti-oxidant through skin color and they are public company, you can take a look at their revenues. We do know that their largest customer buys about $50 million a year in lease revenue through their BioPhotonic Scanner and that is just one of their customers.

So we think that just based on that and with us having the first true scientifically validated test in the market, this market is huge. I will touch briefly on where we're going to sell it. We're going to sell into the anti-aging health practices, health coaches at gyms and fitness centers. Multilevel marketing nutraceutical companies that sell nutritional supplement and last but not least diet plan.

Marc Robins

And this is a self-administered test and essentially you're measuring oxidative stress or ketones or a variety of things?

Ray Akers

Yes. The two test that we’re leading with are one is for oxidative stress and so that is testing for pre-radicals and anti-oxidants and the second is ketosis. This is a fat burning metabolism, that’s important in losing weight but it's also important in fitness and exercise programs. Initially we're going to the professionals, and positioning this as a revenue generating model for them and then we will follow up with a consumer version of the test once we’re firmly established in a professional market.

Operator

[Operator Instructions]. And we will hear from Tony Polak with Aegis.

Tony Polak

In terms of the heparin, what is the I guess lack of sales -- I mean why wouldn't every hospital in the world want your test?

Ray Akers

We think every hospital in the world does want our test and in fact we have a 90% close rate once we get in front of the decision makers in hospitals. What we're working on is getting into as many hospitals as fast as we possibly can and remember our new sales team has been on the job now for just a little over four months and they're quite frankly -- the team was not fully constructed until the middle of February. So you know these guys have hit the ground running hard, they confidently executed the increase in pricing strategy which fits only the loss of two customers which I think is terrific and they're now preceding with new strategies to multiply the feet on the street to get us in front of as many potential customers as possible.

Tony Polak

Could you give us an idea of how the sales effort is going since they've been in there I guess for a month or so?

Ray Akers

Well I think that six weeks is probably is pretty sure time to see some results but what I have seen from the full team or some new strategies that put a sales call in a much more explosive position, and they have done this by targeting integrated networks where a single network might have 10 hospitals, 20, 50 hospitals that belong to it. And so by making the value proposition pitch, of saving a hospital $2.5 million, of course, if there is 10 hospitals in the network, you're talking $25 million in savings. So that’s one of the early strategies that come from their short time here, and there is many more on the drawing board that are being tested.

Operator

And next we move on to Marc Robins with Catalyst Research.

Marc Robins

Let's go back to the higher price for the Heparin test. Is that going to benefit the gross margins substantially? Is that something that we could look forward to as the year rolls through?

Ray Akers

Well, the costs stay the same. So the cost is the same, so the market goes way, way up.

Marc Robins

Okay. So what you're saying is, this would be a good reason why we should get back to a gross profit margin or should see a gross profit margin back in the 70% range?

Ray Akers

We might get in -- my guess would be we are going to fall into the 60% to 65% range which is where I expected us last year. I don't think we will make the 70s%.

Marc Robins

Long-term, is that possible?

Ray Akers

Potentially.

Marc Robins

And then, let's talk about dengue fever. And I don't know -- I am familiar with dengue fever, but I was curious is there a different -- is there a need for a different test to tell dengue from dengue hemorrhagic or is it one and the same?

Ray Akers

Well, it is one and the same, it is actually, quite an interesting feel because there is really no good test out there. There is a lot of tests made, but all of our distributors in tropical countries are clamoring for a good dengue test. So this is definitely on our list of products to launch. What our new commercial team is doing now is bringing it -- discipline to the product launch process, a new discipline and prioritizing which one is good first. So during our next call we will introduce that prioritization so everyone knows what is coming when.

Operator

And next we will move on to Jules Augus with Aegis Capital.

Jules Augus

I have one last question that I meant to ask you before. Could you give us an idea of -- I know toward the end of last year, you had 250 or 260 hospitals you were in with the Heparin. Is there any indication what that number has risen to?

Ray Akers

Well, Jules, our new team is looking at this a little bit differently. We came up with that number last year and I was trying to give the street and especially analysts a means to quantify and measure growth going into the future. Our new team however said look, we are targeting integrated networks now and the way they look at that is that’s the customer.

Now, they may have 10 locations or 50 locations. So the way we are looking at trying to communicate our growth now is really just going to come down to a revenue model. So while we hit that number of hospitals in 2015, I think that which is a good thing, I think that going forward we are likely to communicate more that we've closed this integrated network and that integrated network with so many locations and really just blew it down to sales and percentage increases.

Operator

[Operator Instructions]. And we will take George Cannon [ph], a Private Investor.

Unidentified Analyst

I was wondering if you would shed some light on uncollectible?

Ray Akers

Sure. There is two areas of uncollectibles. The largest one relates to a former relationship we had with a distributor called Chubeworkx. Chubeworkx is a currency-based company that has sold a tube alcohol breathalyzer brand, we made the alcohol breathalyzers and received all the product certifications in France. There is a still on the book in France that requires drivers to have two alcohol breathalyzers in their glovebox at all times. This relates to what I said earlier about the legal levels being lower in continental Europe and people not being able to tell if they are above or below the level. Drunk driving in France has one of the highest rates in the world, and there is associated healthcare and other costs are enormous there.

That program got off to a very good start until there was a change in the government, and the new government decided not to enforce the law and the sales just literally dropped off a cliff. Chubeworkx did not pay for the inventory that they had and we instituted legal proceedings to recover what they owed us, which is in excess of $1.3 million today. So that’s why that provisions in bad debt.

The other part of bad debt has to do with a distributor in Australia that bought approximately $900,000 worth of product from us and had a significant delay in receiving the product approval. In fact, they still don't have it as we speak. This distributor has indicated their desire to continue to be a distributor for us and they believe the market there is very, very huge and they are seeking to extend the terms of that receivable but because that receivable has stated -- has the provisional pay date, we had to reserve for it.

Unidentified Analyst

What's the likelihood of collecting there? Do you have an opinion?

Ray Akers

Well, listen I mean, I can't tell you because I don't know when the approval will be granted. If the approval is granted in a short time, I think our chances go way up.

Unidentified Analyst

Right. Now, obviously $2 million in sales and $2 million in uncollectibles that’s a bad scenario. What is the management going to do going forward to try to prevent these large uncollectibles?

Ray Akers

Well I think that, going forward there are several things. The Chubeworkx situation sort of came out of a very unpredictable change in legal requirements in France. That customer had been paying its bills regularly and they have gone out of business as a result of this. So they are in receivership, I should say. So that is part of the problem. Going forward, we changed the terms on these international distributors that require upfront money or letters of credit.

Operator

[Operator Instructions]. And we will hear from Joel Marcus with Network 1 Financial.

Joel Marcus

Could you explain in a little more detail the state of this lawsuit? I believe it's with Chubeworkx also that you almost settled it, but you didn't settle it. Now you are suing them and they are suing you. Can we have a little more disclosure about where that stands? And also, I mean, isn't it a little bit unusual that they were a major shareholder in the Company and the relationship with them has come to this state?

Ray Akers

Very unusual, however we must protect all shareholders and that is why we have become very aggressive with collecting what is due our Company. And we are not going to be -- we are not going to leave any stone unturned until we collect what is due here. So, Joel we have sued them to collect on the note that we worked down with them to try and pay this off over time. They stopped paying on the note. However, there is collateral on that note, and we have moved to aggressively seize that collateral.

We also moved to cancel the distribution agreement with them, and that happened in the middle of 2015. And that’s why we were pleased to say that our breathalyzer business has started to return -- the alcohol breathalyzer business has started to return because we took back to those international rights. So I can't really get into much more detail than that, but other than to tell you that we are doing everything possible to get the Company whole and the product get shipped.

Operator

And next we will move to George Cannon [ph], Private Investor.

Unidentified Analyst

I had another question for you. Does the Company have any plan to raise any additional money either through stock or debt?

Ray Akers

George, one of the things that I have said repeatedly on these calls and in meetings with investors and financial institutions is that the Company's business plan does not require us to raise any additional capital until we reach breakeven sometime in the second half of this year. So we have no plans to raise the money.

Operator

And we will move on to Marc Robins, Catalyst Research.

Marc Robins

I'm getting to be like an old penny. Ray, talk to me a little bit about the market in Europe. Are there other countries that are as strict as France in Europe that could help improve the sales of the ethanol breathalyzer test?

Ray Akers

Well, you know back when the law was enforcement in France, there were a number of other countries, Italy and the Netherlands being two of them that had similar pieces of legislation in their parliaments. Quite frankly, Marc I don't know where that’s going to go. It's a possibility it comes back in a truncated form in France but with a change in government again. We just really don't know. What we do know is that there is a large industrial safety market all around the world, and that’s a steady market and something that is not subject to the whims of governmental policy. So we are focusing more on that. We will take the consumer positive hits when they come, but we believe that the way to grow that business is through industrial safety.

Operator

And there are no further questions at this time.

Ray Akers

Okay. Well, I would like to thank everyone for participating on the call and I look forward to talking to you in six short weeks about our progress in the first quarter. Thank you.

Operator

And that will conclude today's call. We thank you for your participation.

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