Youngevity International, Inc.
Q2 2015 Earnings Call Transcript

Published: 14 Aug 2015

[Operator:]

The broadcast is now starting. All attendees are in a listen-only mode.

[John Zervas:]

Good afternoon everyone and thank you for joining the Second Quarter 2015 Earnings Conference Call for Youngevity International. 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 terminologies such as may, should, potential, continue, expects, anticipates, intends, plans, believes, 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 would like to turn the call over to our Chief Executive Officer, Steve Wallach.

[Steve Wallach:]

Thank you, John. Hello, everyone. I want to welcome everyone to the Youngevity International shareholder's call. Speakers on the call today are myself and our CFO, Dave Briskie; our President, Bill Andreoli and we'll have a guest speaker joined a call in just a bit as well. We'll cover the following topics. We will highlight our Q2 performance. We will provide a review on marketing initiatives and customer and distributor acquisition activity, logistics and distribution update, acquisition metrics and we'll discuss global expansion progress as well as we'll provide a comprehensive update on our coffee operations. I'd like to introduce now, bring our CFO, Dave Briskie to giving to some other numbers.

[Dave Briskie:]

Thank you, Steve. We're very, very pleased with our second quarter financial results. We're on time with our filing, our filing has just gone through XBRL so you will be able to see the filing here very shortly if not already and first we've released the press release with the numbers that you all can cruise through following this call. For the three months ended June 30, the company reported revenue of $38.7 million compared to $32.7 million in 2004, representing a 18.4% increase in revenue. More exciting is the gross profit for the second quarter whereby we've increased 25.7% to $23.8 million as compared to $18.9 million for the three months ended June 30. Gross profit as a percentage of revenue increased 61.5% in the current quarter compared to 57.9% in the same period last year. Obviously our gross margin growth is outpacing our revenue growth and this is always a good sign for a company that's striving to improve profitability. Operating expenses for the three months ended June 30 increased approximately 21.6% to 21.5 million as compared to 17.7 million for the three months ended June 30, 2014. The main contributor to the increase was derived from distributor compensation which is directly tied to the increase in our revenue. So, this was as anticipated. For the same period, sales and marketing expenses decreased 16.4% to 1.6 million from 1.9 million and this is primarily due to the timing differences of our convention held in different quarters by comparison. For the second quarter of 2015, general and administrative expenses increased 37.8% to $4.2 million from $3 million for the three months ended June 30th, primarily due to these increases were employee compensation, legal and accounting fees and the international expansion efforts, which continued on both the direct selling front and the coffee segment. For the three months ended June 30th, total other expenses increased 3.3 million as compared to $503,000 for the three months ended June 30th. This increase was primarily due to a non-cash expense of $2.2 million as a result of the change in fair value of our warrant derivate. And I know this is complicated accounting lingo but the primary reason for this non-cash expense was due to the increase in the market price of the company's stock to $0.38 as of June 30th, compared to $0.25 as of March 31st. So, as our stock rises, this non-cash derivative expense kicks in. The warrant liability and revaluations it's important to know does not and will not have a cash impact on our working capital, our liquidity or any of our business operations. For the second quarter of 2015, the Company therefore reported a net loss of $408,000, compared to net income of $544,000 for the three months ended June 30th. The loss as mentioned above was primarily attributable to the non-cash pre-tax expense of $2.2 million related to the change in the fair value of the warrant derivative discussed above because of the increase of our stock price. Adjusted EBITDA was $3.3 million for the three months ended June 30th, compared to $2 million for the same period a year ago. We defined adjusted EBITDA as earnings before interest, taxes, depreciation and amortization. As adjusted to remove the effect of stock based compensation and of course the expense related to the change in the fair value of the warrants. I encourage all shareholders to review our financial numbers posted on virtually all financial sites today as well as on ygyi.com, our corporate site. Let's take a deeper look into the numbers, direct selling accounted for 89% of our business and coffee segment accounted for 11% for this quarter period. Of the $38.7 million in revenue, $34.5 million came from the direct selling segment and $4.2 million came from the coffee segment. The coffee segment revenue was down a little from what we anticipated primarily due to the price of green coffee commodity. The coffee market has fallen from a price of $1.80 and $1.90 a year ago quarter and during this particular quarter the price ranges went as low as $1.18 so our green coffee distribution revenue obviously went down with the price of the commodity. It's important to know that that doesn’t affect profitability. The direct sales segment grew 18.4% and as discussed with the drop in the coffee commodity coffee grew 3% over last year's quarter although the sales in towns was actually up significantly. So, where does our $6 million quarter-over-quarter revenue increase actually come from, the coffee segment was fairly flat and accounting for $100,000 of that increase or about 2% and acquisitions contributed to $2.5 million of the $6 million representing 41% of the $6 million in growth and most of the growth or the largest percentage of the growth was 57% coming from organic growth which is a number that obviously we'll like to see that represented $3.4 million of the $6 million that we grew over last year's quarter. To kind of summarize, since Youngevity became public which was in July of 2011. In 2011 sales were approximately $22.5 million at the time that Youngevity emerged with Javalution Coffee Company and as of this quarter based on our earnings annualized, we're on a run rate of $155 million. 2011 assets at the time of the merger was $24.3 million and as of Q2 $64.3 million. 2011 liabilities were $15.3 million and as of Q2 2015 $45.9 million. And equity has essentially doubled from 2011 from $9 million to $18.3 million. What is very, very interesting to know, is that in 2011, there was 385 million shares outstanding and as of today's filing we have 388 million shares outstanding or just under 1% dilution to shareholders and that is a pretty good number for us to look at once that we -- so we're able to grow revenues over four years from 22 million to 155 million and literally did that with very, very little issuance of shares, like I said, under 1% dilution. You will notice on this call and in previous calls, we continue to utilize adjusted EBITDA as the key metric for evaluating YGYI. We're obviously very pleased with our improvement over Q1, just 90 days ago. The previous reported quarter, our EBITDA for this quarter now is $3.3 million for the quarter and this represents a 151% improvement over Q1. So, we're very, very proud of that number. For Q2 2015, we posted as discussed earlier net income of negative $408,000 and I want to point out something to make sure you understand the underlying factors, particularly the non-cash items that impact our bottom line. The non-cash items as discussed earlier with a warrant liability, which and depreciation and we have also non-cash interest related to our acquisition. Those three items for Q2 totaled $2,925,000 obviously using simple math had we not had the non-cash impact, our bottom line would have been 2.5 million for Q2. The other non-cash items aside from the warrant derivative liability is interest expense and depreciation. It is important to note that we continue to invest heavily in Nicaragua and our direct selling segments international markets and expect those expenses to continue to hold back profitability as we grow our business internationally in both of those segments. But we also expect those areas to contribute greatly and significantly to the profitability of our business top line and bottom line in the future. So, we expect to continue to make those investments as -- obviously our growth trajectory is very, very important on our international growth platform. I want to come back one quick second, because I have a number of shareholders ask about derivative liability prior to this call and what it really met and they didn't really understand that how we could have a non-cash charge as the stock went up and I explain to them that is why we look at adjusted EBITDA. Adjusted EBITDA takes out those types of -- swing conversely of our stock was to move down, it would affect our net income positively and we don't think either case is a good indicator for shareholders to evaluate our business side. So, basically the swings in our stock price up or down and in our opinion really is an effect on our net income. So, that's why we drive every our calls and re-judge our performance based on adjusted EBITDA and we think that our shareholders and the smart money actually does the same. I'd like to hand the call over to our President, Bill Andreoli, who will talk about our sales and marketing conditions. Bill, are you available and speak?

[Bill Andreoli:]

Thank you, Mr. Briskie and a special thank you to our shareholders that have joined us today. Speaking on Yougevity direct sales division Q2 2015, showed an approximate 8% growth in sales over Q1 of this year, which represents an approximate 25% growth in sales over Q2 of last year and approximately 328% growth in sales over Q2 2011. So Yougevity direct sales division this was a sixth consecutive growth quarter, making '15 of the last 17 quarters positive to sales growth. Needless to say we're excited about our track record for stable growth and based on the early numbers for July, we expect this quarterly growth trend to continue throughout 2015 and into 2016. We [expected] our sustain growth to the consistency of our non-utilize product messaging, our ongoing improvements for our marketing presence which includes all media development, including web, video, social media, and printed materials, as well as our continued success with group acquisitions and their integration in the Youngevity business building system. When we coupled this with one of the strongest field leadership groups in the industry continued growth will likely be the outcome. On our last quarterly call, we spoke of our time in many different marketing and communications system. We have continued to do just that as promised. Our ongoing success demonstrates that's the smoother, simpler and more unified are our marketing methods and marketing systems are the more predictable our sales growth becomes. This is exciting because as we continue to develop our international footprint and infrastructure, these systems will be virtually plug-and-play in these emerging markets. We're continuing to enhance our web presence by implementing dozens of refinements to our simpler yet more comprehensive online shopping experience. One of our goals with this system is more easily adapt to and simulate our up and coming international market. Not only does this platform includes fully replicated and personalized site for each of our independent distributors, our dedicated Australia and New Zealand sites are now in full operation in a fully integrated Spanish site for the U.S. market, whereas it did take more than a year to develop the site chassis it is already paving the way for both household integration and seamless sales processing around the globe. Our next major corporate event is just around the corner, in mid-September, our second leadership summit in Charlotte, North Carolina. Our leadership summit is focused primarily on business building training, mentoring and put our most ambitious distributors in front of our most successful field leaders for two days of inspiration, motivation and [indiscernible] training. We put a great deal of strategy behind the look and field, as well as the training and recognition at this key event. These strategies are definitely paying off as [the tenants] up and more importantly sales are also up immediately following each event. And we do expect the capacity crowd building to increase sales mid Q3 and going into Q4. Close on the heels of the leadership summit in September will be the first international corporate event that we have organized in a nearly a decade. Dubbed the [revved] up international tour, this event will be near our New Zealand distribution center in Auckland in early November. This highly anticipated event will not only solidify and reenergize our Australian and New Zealand field leaders who will help open the door to our anticipated launch into Pacific [room] countries such as Singapore, Malaysia, the Philippines and more. 90 for Life continues to gain brand recognition and loyalty across the U.S. and around the globe. As each quarter and year passes, Youngevity because more of an industry icon and 90 for Life becomes more of a household expression. We are in a unique position to capitalize on decades of customer loyalty, while still aggressively sharing the relevancy of our message as if we were a brand-new start up. Even so, we are not resting on our laurels. We will continue to discuss management needed the aggressive strategies for our teams here in the U.S. and abroad. Our overall growth in acquisition success is rooted in sustained organic growth, which is truly the true test of any direct sales organization. As our acquisition strategy becomes more refined we find that we are becoming more discriminate with the companies and products that we choose to bring into our collective. However, we will not shy away from any leadership groups or proprietary products and services that enhance our 90 for Life core message. Most notable in Q2 was the integration of our most recent acquisition of Mialisia and MiA Body & Bath which are well underway. In addition we're just days away from the highly anticipated launch of our premier memory keeping product line Anthology lead by Lisa Bearnson our scrapbooking celebrity brand ambassador. Some other things to look forward to in the second half of 2015, simply put more of what works, less of what doesn't as we increased the size of our international footprint, we expect to continue double-digit growth in Australia, New Zealand as well as Canada as these are areas where we already have key leadership, established product lines and dedicated support staff. This is of course in addition to our new initiatives in other key international markets. We will also continue to forge ahead in the Spanish-speaking marketplace with both web and printed supporting materials as well as multimedia presentations. Trust and consistency are as critically important to give customers and distributors long term. Dr. Wallach's 90 for Life messaging is perhaps the strongest and most effective in our industry. Rest assured that as we move forward as diverse product offerings and acquisitions come on board, we will never abandon our core belief in people and the message that started this company over 18 years ago in those four words, one team, one dream aren't just a catchphrase, they're our way of life and our way of business. Again, I want to thank you all for joining us on this call today, and with that, I'll hand this call back over to you, Dave.

[Dave Briskie:]

Thanks, Bill. I appreciate all the information. I want to touch on one thing that Bill said and expand on a little bit as he mentioned our acquisition strategy how we're refining this and really our acquisition strategy really goes into one important component of the gross strategy of Youngevity and I have a very popular question among our shareholders as well as -- would we grow if we didn't acquire different businesses and I think that's a good question and why not go ahead and answer that question. Here on this call and provide some statistics that will help our shareholders to understand our acquisition strategy how it works and the real effect that we have. We talk about Youngevity all the time, we're definitely a different direct selling company with a different type of model. And we look at ourselves as stealing a page out of Amazon's playbook by offering a very, very wide array of products and a wide array of vertical, types of products and businesses and it's working for us very, very well. It creates stability, creates stability of sales, it also creates a number of transfer buying opportunities and it allows us to enter a number of vertical market segments that many, many in our industry would not attempt to do. Good examples of that of course is Heritage Makers which is our scrapbooking and digital media company, obviously MK Collaborative in Mialisia which puts us in the apparel and jewelry business. So, what I thought I'd take time to do is very quickly summarize the last nine acquisitions, if you will. So, that includes Heritage Makers, which goes all the way back to August of 2013. So what is that, almost two years ago. So, this is a kind of two year look back of every acquisition we want to eliminate, so that will include Heritage Makers, GOFoods, Biometics, Beyond Organic, Good Herbs, Restart your life, Stay Natural, JD Premium in Mialisia, which obviously just has been on boarded. So, what is that look like as we look at this particular quarter Q2, what effect did it have? So in Q2, the total revenue and what do we buy and what do we look for when we do these corporate integrations, these acquisitions? We look at two things primarily, we look at their database of customers and distributors and we look at their products. So, of those companies, all of those particular companies in the last quarter, they're down lines, their database of people buying their own products, just the product that they brought on board contributed $1.7 million in the quarter. Conversely, their products marketed to Youngevity's distributors, in other words distributors that weren't part of these acquisitions contributed $816,000. So, the total is $2.6 million that's at the total acquisition in sales of their products that they brought to Youngevity. So, we have $2,583,000 essentially of revenue of their down line sales buying their products and then those acquisition products being marketed to Youngevity's world, if you will. Well then the key piece and this was really what shows the power of Youngevity's model and why it really works, what if we now then take a look at their reps, databases, in other words, the databases that we did not own, but now we do own by the nature of these integrations. So, we take all these databases and they acquired $3.6 million of Youngevity products. So, the sales of Youngevity's current product line is actually greater than the total sales of the acquisitions product line. This is the true power of leverage in our model. So, we have organic growth taking place actually within our acquisition strategy. In fact from the time we purchased all of these acquisitions, if we look at their sales now, they're up 78%, from the time we acquired them. And where is that growth coming from? It's coming from taking different products that Youngevity has and really exploiting and leveraging our model and taking all of these different products and selling it to these large distributors and consumers that are ready to buy additional products. That is why Youngevity continues to invest heavily in technology and continues to [indiscernible] wide array of wholesome products and we're going to continue to do that, because simply put our acquisition model works and it continues to work well. To help me kind of substantiate that point, our latest acquisition was a company called Mialisia and it is my privilege to invite ton our call Sean Brown, who's the President and the Founder of Mialisia and Sean has a very-very interesting background, a financial background in fact, so I'm going to invite Sean on to the call, have him give us a little bit about his background and tell our shareholders what Mialisia is and why he chose to integrate with Youngevity. Sean are you there?

[Sean Brown:]

I am, thanks, Mr. Briskie for inviting me on and I appreciate being here to take just a few minutes and talk about, a little bit about where I come from. My last 15 years of my career before I started Mialisia with my wife Annelise, I had been a bank executive with responsibilities over the Midwest and other different states where I ran the banking operations for both HSBC and Bank of America, so I come with a long history of financial background and when my wife came up with this idea for jewellery and we call it VersaStyle, it basically allowed me to retire from that job and start this product line with her, which has been great. In fact, Annelise and I are the founders of Mialisia jewellery, our patent-pending jewellery allows women to wear each piece in multiple ways, each piece is one size fits all, can be worn as a necklace, bracelet belt and many other ways, there is nothing like it in the market, the concept was invented by Annelise and she basically replaced the traditional clasp on the necklace with hooks and allowing it to hook into itself at any point making it what we call VersaStyle. When Annelise and I were first presented with the opportunity from Mr. Briskie with the Youngevity business model and the acquisition plan, we were intrigued and having built Mialisia from our garage to a multi-million dollar business and having studied the industry, we had never seen anything like this business model. At the time and still do, we had a large sales force and we were growing at about 30%. But after hearing about the Youngevity business model, Annelise and I both got excited by opening up -- we recognized that if we opened up our VersaStyle jewellery concept to the Youngevity family and introduce as Mr. Briskie pointed out, their products from Youngevity into our team, that we could grow exponentially faster and be a much stronger and just stronger brand overall. In our very first month since joining Youngevity we have been thrilled with our results. Our Milisia family is getting healthier due to the brilliance of the 90 for Life message from Dr. [indiscernible] and they're consuming those products, they've fallen in love with other product lines such as makeup oils and others and our sales have been not just the Mialisia jewellery but overall as Mr. Briskie highlighted how leverage works in this model, it's working for us and Mialisia jewellery has been embraced by the Youngevity family and the jewellery now is being sold all over the world. We couldn't be more thrilled. I mean it is very-very exciting and we are proud to be part of the family. Let me hand it back to you Dave.

[Dave Briskie:]

Thanks, Sean. Appreciate your insight on the call and I'm sure our shareholders appreciate it as well and obviously with your background at BoA and the size of the organization you grow, I believe you have a lot of credibility and we appreciate the relationship we were able to forge and be able to bring a quality executive like you into our team and into our family of company. So, we look forward to watching Mialisia integrate, we're watching great integration right now and the collaboration of Mialisia with Marisa Kenson over MK and watching those two databases starting to share ideas with jewellery and apparel and of course mineral makeup and the essential oils as you pointed out. So, it's pretty darn exciting and we look forward to seeing exponential growth in a number of areas of the business because of this integration. With that I'm going to turn it over Steve. Steve Wallach is going to come back on to the call. We've got a lot going on in our distribution and logistics planning. So, with that let's turn it over to Steve. Steve?

[Steve Wallach:]

Thanks, Dave. Now before I get into that, I just want to touch on something that's already been discussed a little bit on -- well a lot on this call, but I wanted to touch on it a little bit further and that is we really pay attention to not only core products in terms of number of units sold but as well as dollar sales and how well the products are doing in terms of sale, but also the products, companies that we bring in to the Youngevity fold and how well those products do, and I'm sitting here looking at an item sale analysis for instance and it lists our products [giving that further] report for the top 50 by sales. And so this is not by unit sales but by dollar sales and out of the top 50, it's interesting to note that among those top 50, most of the core Youngevity products, Youngevity branded products, however, many of them are not, many of them are products as Dave had also talked about sales of the products that came in from other companies [indiscernible] Youngevity for instance are the True to Life Detox CEO Mega Pack is among our top 10 products by dollar sales sold. Heritage Makers products, various Heritage Makers products are among the top 20 products sold, [Theoretical] which is a product Escape International is among our top selling products, [indiscernible] we talk about that product quite a bit and its popular around the world and among our top selling products. And so we pay attention to how well the products of these companies coming in do and we at this point expect those products to sell very well and better than even they had been among their group and their field leaders and customers and so forth alone and obviously the Youngevity Group is traditionally much larger than the company's groups coming in, but it's great to see that the products are excepted in both directions. So, with that, I want to get into also the logistics and distribution things that have been happening and going on. We've talked about this expansion in the warehouse and so forth over the past few quarters and even over the past year, and it's been developed and deployed and implemented and it's pretty much up to speed and fully up and running but with that said, we've just recently turned on five new shipping lanes in the distribution center and what that does is, it increases the velocity and throughput of the packages. So, it not only allows us to shift more packages per day but it allows us to shift packages faster getting them to the distributors and customers quicker and that not only increases consumption of the products but also increases customer and distributor satisfaction and ultimately retention of use of our products. And so those five new shipping lanes are, we're excited to see them not only turned on but now coming up to speed and actually seeing the benefits of those already. As part of that, we just turned on also a new conveyance piece of equipment and so it's a motorized conveyer and so it moves the packages down the shipping line and lanes, right to the pick and pack or to the packing or the shipping services, whether it be UPS or USPS. This system even has an automated taping machine whereas before up to this point, we've been hand taping every box and so, while that works well, it's not a sufficient as an automated taper for instance and taping machine. Just as an example, we processed over 80,000 orders last month alone. And so it's a lot of boxes to not only create and tape but also fill and pack and [volatilize] and ship and so far. So, this automated equipment just not only moves the packages through our distribution center that much faster to our customers and distributors that much faster but also makes us much more efficient and ultimately we're looking for to also become more efficient and save the company money in the end result as well. It's a cost versus service evaluation as part of that conversation, part of that evaluation and analysis as to why we implement these purchases of new equipment and installation of new equipment and we're always looking to increase the efficiency in throughput, this facility that's currently our primary distribution location here in Southern California, we're looking for every aspect of efficiency with this facility because we are really hitting those kind of limits of efficiency of this one facility and part of that implementation of software and technology has been the goal to actually integrate third party logistic center, third party distribution centers and so, what that allows us to do, it allows expandability and additional available production if you will or productivity in terms of shipping capacity and so we're able to not only get products to people faster because we can ship from multiple locations and the software is really the dependent point at that point as long as we have the inventory, the software makes the determination of where a product or a package can ship from most efficiently. And so, I've been commenting on that as once that happens and we're right now about two weeks away from hopefully the final test and once that happens I refer to that as the golden spike in terms of distribution and logistics from the standpoint that we're no longer limited to shipping from this one location or no longer limited to our own capacity and ability to ship packages and so we now have our scalability and expandability that is virtually limitless and so we're all very excited about that and it just is another example of why we invest in technology and our end goal is to grow the company as large as possible and so we continue to remove the curbs on our ability to grow. So, the investment technology in related to distribution in growth and efficiency has been coming live in Q3, it will continue to, the three PL capable for anticipated geometric growth both in United States and that system works around the world as well, continue to come in to play as we continue to grow. Additionally from terms of equipment and capacity we've talked about things such as our essential oils, we talked about new equipment on the Q2 shareholder conference call that new equipment was just delivered here to [indiscernible] and is being installed as we speak and so what that does is it again allows us to increase capacity and throughput and production of a very popular segment of products that were also an integration from another company quite some time ago, but we're not seeing sales and growth among our essential oils for example. Our sales are up 600% over last year in terms of our essential oil products. Those products are becoming very popular as we expand around the world as well as here in North America but there are quick integration in terms of international because international markets are very familiar with the essential oils and so they're popular worldwide and so we're excited about those coming on line as well and that equipment coming on line. So, the new equipment additionally allows us to quadruple probably more than quadruple production with very little cost increase, so we've actually built out a new expanded essential oils lab with that equipment is now out and so again we're excited about that. I also want to also get into an international update as Dave and Bill have both also discussed, but I'm going to get into a little bit deeper. Now as we discussed, we currently have really five global geographic regions that we're concentrating on, we shipped to numerous countries and we'll to do so. However really where we're focusing our time, attention and resources are these geographic regions and locations. Canada for example is our number one market right now internationally approaching $5 million in annual sales. Canada is part of our North American region, but it's a fantastic market for us and has been just growing not only very well but is a great market for us. Australia, New Zealand, the Australasia geographic region is our number two market and already is over $3.5 million in annualized sales and has been growing at a rate of 50% over last year, so again excitement and enthusiasm for really what has been an established market but we're turning our attention and focus to it and you see what happens when the company as well as the field leaders turn their time and attention and resources to any given market, we see renewed activity, and increased activity in sales. And then we have the three new regions, that we're just bringing online, it's cover as well Latin America being one of those, Eastern Europe being one and Asia and the Southeast Asia. So, our Russia region, our Eastern Europe region, we've recently opened an office in Moscow, it's now fully opened, however the products approvals have been for a variety of reasons slower to materialize than we had hoped and so they've been a challenge in terms of our core product offerings being approved and license. So, we've had our non-core products approved such as essential oils, our makeup line, our coffee products, hot chocolate products, spa products but our core products have been slower to be approved. We do have as of today and we receive licenses and notification of licenses from Russia for our ESA Plus, our Pollen Burst and our Pollen Burst Plus so among our top selling products those three are among them. However, we're still anticipating our very top selling product to be approved very soon. We anticipate the [indiscernible] to be approved any time. So, we're anticipating those very quickly from this point forward. Mexico, we have our office and staff. So, we have our office open, we have that office staffed, it's already generating revenue. July was just shy of $200,000 for the month, it was also great to note that the activity really mashed well with the promotions that were going on in the United States and so that carried over in that activity and enthusiasm and excitement carried over into the Mexico market. From Mexico as that comes online and getting up to speed, we continue to anticipate opening additional Latin American markets such as Colombia for example. So, we're excited about those. As far as South East Asia or Asia, in general Singapore is really our entry point and so we've been diligently working on getting Singapore up to speed as far as product approvals, we just recently signed a lease on the office in Singapore and we have about 20 of our core products -- among our core products authorized or approved in Singapore. And so Singapore will manage and support whole of South East Asia and so we're excited about the addition of Ben Ho, who we talked about Ben joining the executing team on one of these calls not too long ago and so we're excited that that office will open and really come online and activity will begin later in this year in Q4. So, that's kind of the international update so far. Dave I want to bring you back on the call and if you'll kind of fill us in on the Coffee and CLR Roasters.

[Dave Briskie:]

Thanks Steve. I appreciate it. Obviously the international piece has been a learning experience for the company in a lot of ways. We keep implementing best practices and that's why we don't open 10 offices at the same time because we believe we can learn from the experience, we definitely change the way we enter these markets in terms of putting the product approval process in front of some of the other expenditures which will allow us to be more efficient in terms of the timing of opening an office and driving larger expenses, if you will before we get closure to that revenue stream and I believe we refine those practices pretty well. We certainly learned from some of the challenges we faced in Russia, in terms of their product approvals and we implemented some new procedures as we enter Singapore and so far so good the way Singapore has gone from start to opening, looks very, very good. Obviously we moved the timing of the office after the approval of some of these products as opposed to going and driving up our expenses and then not having anything to sell or certainly not having non-core product to sell. As the CFO of the business, obviously I'm very cognizant of when revenue starts to cover expenses and it's an exciting time at Youngevity to be able to look into Q4 and see some of these things that we talked about putting in place, starting to generate revenue and feeling very, very bullish that these regions that we set out to open will start to contribute revenue here at the certainly in Q3, we talked about Mexico already contributing, and more importantly as we enter Q4 that all three of these regions get up and running and then that allows us to start expanding our reach into other countries in Asia, then other countries of course Latin America, Steve had mentioned Colombia, we certainly are already registering products there and elsewhere and then of course in Eastern Europe as well. So, this is going to be kind of a bullish outlook from the CFO, as it relates to our international revenue streams and profitability coming from global growth and any one that's tracked our people in this space or competition if you will, they know how critical it is to have a good strong international team and to focus on international markets and global growth as we discuss on a number of calls, any company that's really scaled in the direct selling segment typically 60% to 70% of their sales take place outside of the United States, so we're really-really excited to start taking a bite out of a piece of that apple so to speak. So, we look forward to seeing things coming from the international marketplace. I'm now going to jump in on the coffee side of the business. As many of you know, I was the CEO of Javalution Coffee Company when we merged with Youngevity four -- let's say four short years ago, a lot has happened in those four years and a lot has happened in the coffee space and obviously it's near and dear of my heart and I'm very-very excited about what's going on at CLR Roasters and what we've achieved. Ad really what we've achieved is something that's very-very scalable. I've said it from the beginning if you're going get into the coffee business it's pretty much go big or go home, the coffee business is a huge opportunity, a monster marketplace and you have to make sure that you have scaled capabilities regardless of what segment you take. We have done a lot over the last four years to put those pieces in place to make CLR Roasters a company to be reckoned with. CLR Roasters is now the second largest roaster in Florida only Maxwell House is actually bigger up in Jacksonville. So, we're pretty excited about that and it's certainly started to make a name for itself. We might be the most vertical coffee operation in the world at this point. We have two of the most modern coffee plantations in Nicaragua with over 1000 acres now under management and in fact in the last geez we acquired the plantations in May, so when we go back just a little bit over a year really, we planted an additional 500,000 trees on our coffee plantations and we're anticipating adding 250,000 trees a year over the next several years. So, our goal is to actually have the most productive coffee plantation in all of Nicaragua. We're also the only coffee plantation in Nicaragua that has all of the major certifications and that is Fair Trade Certified, Organic Certified, Rainforest Alliance Certified and Bird Friendly certified and the reason why these certifications are important is because it provides you the largest differential in terms of selling coffees particularly green coffee where we can obtain significant margin improvement. In addition to the expansion, we talked about in the acquisition of our plantations, we also have expanded greatly and significantly our processing plant that sits on 28 acres in Nicaragua and supports our whole green coffee distribution market and activity. That facility now has -- is really up to speed, we've invested heavily in equipment and we've tiled now the equipment of 10 football fields and that is concrete and tiled which gives us the ability during the season when coffee comes down off the plantations and this of course is not only our plantations but all plantations, it allows us now a weakened dry and that is a key component to being able to acquire coffee to ship, you have to be able to dry it and then process it. And it takes 21 days to dry coffee, we now have the ability going into this growing season, that we can dry 7.5 million pounds of coffee in every 21 day period through the growing season, that is a large capacity, it's the largest capacity actually in Nicaragua in terms of processing capabilities. So, we've really built something to take advantage of an opportunity and we've built it up the right time as well. Nicaragua for whatever reason and there's an expression, I rather be lucky than good, and I wish we could have said that we were so smart that we knew Nicaragua is going to be the next grey frontier for coffee, but it actually is becoming that. A couple of environmental factors and world factors are contributing to this, the crops in Brazil have been struggling in drought, there is labor strike in Honduras and it forces large consumers of coffee and large purchasers of coffee to find another area to meet the demand and fortunately for us one of those areas that is doing quite well happens to be Nicaragua and we've got and we have invested heavily in capabilities to scale a big business there and we are doing quite well in terms of the opportunities that are before us. And as we move into this season we feel like we've got resources and the infrastructure in place from a processing and even a growing standpoint and a relationship standpoint with other plantations to be able to service the opportunity that's before us. We talked about on the last call that we were shipping three of the largest coffee buyers in the world and we've been shipping them but many of those orders were test type orders to see if we could deliver the quality of coffee we need to deliver, that we can make sure that we had our deep [accounts] right our quality control standards in place, our shipping procedures in place, all of our export licenses in place to be able to service these types of customers and I'm proud to say that, we passed those test very well and our Nicaraguan coffee is now being sold to Dunkin Donuts. I think we have mentioned that. Dunkin Donuts is obviously a very large purchaser of green coffee. Our coffee is now at Mother Parker. Our coffee is now being sold in McDonalds and also Tim Hortons in Canada which was recently acquired by Burger King. So our coffee is starting to get wide reach and notoriety. Our biggest challenge and I am proud to say that I've never had a situation like this, where we're in a situation where we're trying to determine how much coffee we can acquire and process and how much of the business we want. So that's a very unusual set of circumstances and a business model where your customers are ready to give you whatever you can handle. So, our challenge and obviously you know not only am I very involved in the coffee business but as the CFO of the business I look at the financial end of our business and we've been spending a very, very a large amount of time looking for the right funding partners and the right and proper funding vehicles to figure out how much of this green coffee business we want to take a crack at, and I'm very, very bullish that coming into September that we will have a funding partner in place that will allow us to take advantage of this opportunity that is before us and to be able to scale this green coffee business very, very significantly as we move into 2016. So, stay tuned for that, those types of announcements as we move in to September or so hopefully we'll be able to announce a strong partnership in terms of that financing and be able to then announce the size of the contracts that we're willing to take on and begin really growing this green coffee distribution business. Leaning over on the CLR Roaster side, important to note that CLR Roasters has all of those same certifications. We had a plant that has fair trade certifications it's organically certified as well and it's also an SQF plant which is the highest degree of food safety and that's here in Miami, Florida. So, we have all of those certifications from our own plantation, through our own processing plant, through our own roasting facility and that is a very, very unusual set of circumstances and assets that allows us to gain business. We're now roasting coffees for customers like Wal-Mart, Winn Dixie all these stores which is expanding rapid to publics now. You know of Carnival cruise lines Norwegian cruise lines, Sysco Foods has become an account of CLR Roasters and I'm proud to say that, Sam's Club when we announced the test no long ago, is now expanding with us and obviously an organization like Sam's Club moves a significant amount of coffee. We talk about growing shareholder value and we have a lot of things going on at Youngevity, YGYI as a public company. It's amazing really when you think about the conglomerate that we have become in different divisions that we're running and how we're doing things and the fact that we're able to drive positive EBITDA through all of this growth and without any dilution to our shareholders and we're excited about that and one other things that we believe will add significantly to shareholder value is going to be our company owned brands in the coffee division and two of those brands are Cafe La Rica and Josie's Java House. Cafe La Rica is expresso and Josie's Java House is really our K-Cup lien and our bag coffee. Sam's Club is now selling Cafe La Rica in nine of their stores and this continues to grow. Winn Dixie just added an additional 250 stores for Cafe La Rica starting in September. Publics is picked up both Cafe La Rica and Josie's Java House line and they have 678 locations that there will be adding to these two brands. So, it really bullish and on our own brands are beginning to do and Josies Java House is now being distributed via our K-Cup offering through our relationship with JBM and those who -- that's been tracking our business and the partnership with JBM has been very-very good for us, we make Brew La La coffee and Sarabeth branded coffee for JBM. That will actually start to be delivered in K-Cups here in September and JBM has picked up with Josies Java House brand for distribution and it looks like we now have national footprint for distribution of K-Cups through our own brand Josies Java House. And this forces us now and this is very exciting to be able to create a brand if you will just for Youngevity, the direct selling business because the direct selling arm of us Youngevity's distributors have been selling Josies Java House and they've been doing a pretty good job of it, but now we've got an opportunity that Josies Java House is going to go around the United States if you will and maybe even around the world. So based on the success we're seeing with Youngevity, Youngevity now is going to get its own private label brand and Youngevity coffee will be added in K-Cups through the Youngevity Be the Change Foundation coffee line and we're now just putting the final steps on the artwork because we're seeing such an uptick with Youngevity's distributors and customers both here and around the world, obviously we're also seeing a good uptick in Russia. In Russia coffee is known as black gold now and we have a way to reach Russia through our distribution outlet in Moscow and into that area of the world. So, we will be creating a new brand for Youngevity's distributors exclusive to them and that brand will be totally vertical brand just for Youngevity's distributors which will be Fair Trade Certified, Organic Certified, Bird Friendly certified and will only be our plantation coffee, so it's a very-very exclusive relationship when you give the very best to those and then our Josies Java House brand now will start to take on more of a national footprint. We've also added some private label business into the K-Cup area, DD's coffee is a brand we just picked up and Josies Java House is now being distributed widely through office coffee distribution, we've got distribution setup now throughout Florida and we're looking to move into the Carolinas and up into the Northeast with some distribution deals on that line. So, a lot of exciting things going on at CLR Roasters, to see the K-Cup machine now up and running and instead of producing samples, they're now starting to produce production, so we look at that higher margin business to really start to impact Q4. And in addition to that our roasted bag business is going very-very well, we made a mention on a press release that we picked up the Full Circle brand for Topco and Topco has a 50 different types of brochures that we're selling at Topco brand too, it looks like that brand now based on initial sales and initial sell through will be a $1.5 million new brand for CLR Roasters as we move into Q3 and Q4. So, a lot of good things going on at the coffee end of the business, very-very exciting, high trajectory growth for that end of the business and of course when you look at the international footprint that Youngevity is growing, we can't help but be bullish about the future of YGYI. So, with that I'm going to turn the call back over to Steve Wallach to add any additional information and to close the call.

[Steve Wallach:]

Thanks, Dave. Very comprehensive update on the coffee, obviously very exciting to all of us, I would just like thank everybody for being on the call today. Thank you to our speakers and thank you to our shareholders for being on the call and we look forward to the next one just around the corner. Thank you.

[John Zervas:]

Thank you, everybody.