Youngevity International, Inc.
Q3 2014 Earnings Call Transcript

Published: 14 Nov 2014

[Operator:]

Good afternoon everyone and thank you for joining the Third Quarter 2014 Earnings Conference Call for Youngevity International. Before we get started, I would 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," 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:]

Hi, everyone. I want to welcome everyone to the Yongevity International shareholders call today. Speakers on the cal toady are myself our CFO, Dave Briskie; our President, Bill Andreoli; and we’ll also have a couple of special guests on today’s call. Topics will cover we’ll highlight our Q3 performance, we’ll provide a review on marketing initiatives and customer and distributor acquisition activity. We’ll take a deeper dive into the numbers, we’ll provide a comprehensive update on our coffee operations and we will provide an update on our international expansion activities, we will also discuss how our acquisition strategy works and how we get leverage relationships to benefit YGYI. We’re pleased to deliver our shareholders accelerating growth and continued profitability. The financial review we’ll turnover to Dave to update us on.

[Dave Briskie:]

Thanks Steve and I would like to welcome all the shareholders to the call and all our distributor shareholders as well I know our distributor base has been getting more and more involved in YGYI and I appreciate everyone attending the call. We are defiantly becoming a growth story here at YGYI Youngevity, but we are doing growth very responsibly and as you will see this will be our ninth straight quarter of profitability and accelerating adjusted EBITDA and strengthening revenue growth in a very, very big way. For the three-months ended September 30, 2014 Youngevity reported net revenue of $37.6 million compared to $21.2 million for the same period in 2013. That represents an increase of 77.3%. The increase in revenue is attributed to a number of factors including acquisitions organic growth, the growth of the Green Coffee distribution business increases in our product offerings in a number of distributors and customers that have been growing each month-over-month then are now selling our products. Gross profit for the third quarter ended September 30, increased to just under $21 million compared to just under $12 million in the same period last year. And that represents an increase of 62.8%. Operating income was just over $1.2 million versus $935,000 in the previous year. So that’s a 32% increase in our operating income. Net income for the three months ended September 30, decreased to $185,000 as compared to net income of $516,000 for the same period last year. Net income was impacted primarily due to $603 increase in other expenses and this was related to increase in interest expenses. Corresponding to contingent acquisition debt in amortization of the debt, discount in notes payable interest associated with the private placement transaction that took place during this quarter as many of you remember, we did do a capital raise and we were required to report that rates according to GAAP and that is the effect of that particular transaction. We also experienced $578,000 in increased expenses related to international expansion a launch of the MK Collaborative the acquisition, integration expenses related to our holdings in Nicaragua as well. EBITDA which is earnings before interest taxes, depreciation and amortization as adjusted to remove the effect of stock-based compensation as well as the non-cash debt discount related to the convertible notes on the capital raise that we discussed just a little bit earlier is how we define adjusted EBITDA as we back out in non-cash effect. Adjusted EBITDA came in at just under $2.1 million for the three-months ended September 30 and that compares to just under $1.7 million in the year ago period and this represents a 23.5% improvement in adjusted EBITDA. Our balance sheet continues to look very good. In a review of our balance sheet you’re going to notice that our assets have grown significantly since the beginning of the year. I’m using as a comparison 12/31/2013 which is basically nine-months ago in that reporting period at year end. Our total assets have grown from that time since the beginning of the year from $34.9 million to $51.7 million and the following is worth highlighting Cash and cash equivalents increased from $4.3 million to $5.4 million, inventory increased by $5.3 million that’s predominantly due to our growing business at our direct selling areas to support that growth and also the growth in our Coffee business. Property and equipment also increased by around $5 million primary investment there is in plan improvements at our Chula Vista headquarters as well as the Nicaragua Processing Center in our Green Coffee Distribution Business. Intangible assets increased by another $2.8 million and that’s related primarily to acquisitions as you will know we have completed three acquisitions so far this year. While our assets have increased by over $16.8 million, our liability have increased by only $14.3 million, so shareholders equity has improved from $11.5 million to $14 million. I encourage all the shareholders to review the financial numbers which will be posted on virtually all the financial sites today probably by the conclusion of the call. If you will I’d like to take a deeper dive into our revenues. Direct selling now accounts for 83% of our business, and the Coffee segment now accounts for 17% of our business. A year ago direct selling represented 91% of our revenue while Coffee represented just 9%. So, we’re seeing accelerated growth in both business segments and we’re actually seeing a balancing effect as the Coffee business rose at really substantial rate primarily due to the Green Coffee segment that we added when we acquired the plantations and processing plants in Nicaragua. In Q3, 2014 our consolidated revenue as mentioned a little bit earlier experienced the $16.4 million improvement, which is a 77% growth over last year on a consolidated basis. Of that $37.6 million in sales for the Q $31.3 million of it comes from the direct selling business while $6.3 million is now being contributed from the coffee section. The coffee now as we mentioned accounts for 17% of overall revenue, both segments experienced significant growth direct selling grew by 62.7% over the same period last year and coffee grew by 218% over the last year with the largest part of that growth coming from the launch of our Green Coffee Distribution business. That part of our business contributed $4 million of the $16 million in growth. The direct selling segment contributed organically $8.3 million of the growth and the acquisitions contributed just under $4 million of the growth. So out of the $16.4 million of revenue growth 25% came from acquisitions. Another 25% came primarily from the Green Coffee Distribution which obviously is organic growth as a new business segment launched by the company. And 50% of the balance came from organic growth from the direct selling segment. So overall 75% of our growth was from organic growth activities and we are pretty proud of that number. Our acquisition model continues to prove to be proven effective and we are really proud of the success that the acquisition models experiencing. Is important for us to point out, because we get a lot of calls from shareholders why we don’t put out numbers when we do acquisitions. And the reason for that as many times our acquisitions are not public and therefore their numbers are not audited. So we are reluctant to put out their numbers, but we can go back and look at their performance based on the amount of revenue they generated at the time we purchase them. We don’t do have that information based on their merchant account activity, so we are able to audit and track our success based at the time of acquisition. We provided examples of this before and I would like to just bring those examples back up again. One such acquisition that was in process last year was a little company called Biometics that was contributing about a $100,000 in monthly revenue at the time we acquired that business. In Q3, now that same business plugged in and bolted on to the Youngevity model is now contributing over $1 million in revenue for the quarter. So it’s a really nice number from $300,000 at the time of acquisition essentially tripling since our purchase. Heritage Makers another acquisition which was in a different product set altogether and many of you know that we acquired that business because of the strong women network that was evident in that particular business model and we felt we could bolt-on and get these ladies involved with our general make-up and essential oils among other things. And that particular acquisition has really done some nice things for the business. At the time we acquired Heritage Makers it was doing about a $1 million in revenues for the quarter. And we reported last quarter that’s the quarter two the last quarter that Heritage was already contributing a $1 million of incremental revenue since we acquired it. Well, in Q3 just the next quarter Heritage Makers now is contributing $1.7 million in incremental revenue. So 170% growth since we acquired Heritage Makers. So, once again our acquisition model continues to be successful and continues to add organic growth to our business. In Q3 as was the same for Q2, we did experience significant expenses in non-cash events impacting our bottom line results. In Q3 it was no different MK Collaborative, the Nicaragua win acquisitions, the integration in fertilization of all of our plantation activity which is yet to generate revenue. The international set up expenses including the various growing teams of our international team in various countries that are opening our professional fees and all of our legal set up fees. The increase in amortization costs from successful in growing acquisitions as well as the non-cash charges that were associated with the private placement we did in Q3. All of that combined amounted for a little over actually $1,180,000 million drag on our bottom line numbers. So with all that carrying cost we still are able to deliver a profitable business and this becomes very evident. And I would like everyone to take a look at adjusted EBITDA, because you will notice that although we have a lower performance in net bottom line profits, you will notice that our adjusted EBITDA improved by 23.5% in spite of a decline in net income. So that tells you it shows you the strength of our business model and how it’s working for you. I’d like to now hand off the call to our President Bill Andreoli, he is going to talk about sales and marketing initiatives. Bill can you take it away.

[William Andreoli:]

I’m ready thank you, Mr. Briskie and special thank you to our shareholders that have joined us today. 2014 so far has indeed benefiting year of Youngevity direct sales force. As we discussed in Q2 call that trend we guided in December of 2013 be continued in Q2 also persisted through Q3 and are carrying on so far in Q4. Just as calendar year 2012 was one of transition railing all of Youngevity’s hundreds of products around Dr. Wallach's 90 For Life Health message. 2014 is becoming another year of transition railing our mid and legacy teams and recently acquired skilled organization around our One Team, One Dream, and unifying message. As 90 For Life has become perhaps the strongest health message in the industry, One Team, One Dream is rapidly becoming the principal theme of our message of unity in greater wealth which comes in many forms other than just compensation. When depreciation wealth these as well. As we discussed on last quarters call, all these principals come together in our standing and laying value which allows become our central product in business trainings a lot to result of guiding our product focus in unifying our keys to the staying away initiatives really speaks for itself. In editing the growth in the growth sales figures as Dave have already discussed new customer and distributor enrollments are up even after discounting recent acquisitions. This is a result of sustained organic growth which is true test of any direct sales organization. This consistent level of growth although not unprecedented in key indicative as these fundamental philosophies are rather than strongly with our core there is also an indicator of our overall reputation and status within the industry as a whole distributor and consumers alike are attracted to noticeable success. Needless to say we’re pleased with our current growth and anticipate continued upward movement. The importance of replicating our simple product story growth strategy and distributor appreciation campaign did not be over stated and it has been our focus to just over three years now. As we’ve mentioned on nearly everyone of these shareholder calls one of the key vehicles for distributor education and recognition is our quarterly CEO training schools as well as our annual convention in recently added annual leadership summit. At the time, of our last shareholder call we’ve not yet posted our first annual leadership summit held in Las Vegas, September 25 to 27 and stated that was a success is an understatement. We can appoint the regular tenants or the [indiscernible] of world-class speakers, but the real measure of any event success is in distributor, in sales growth following the event. Typically we expect sales are flatten or even drop in the month of major events as so many of our key producers are taken out of field for a week or more during the event. However, despite this September was a growth month which speaks strongly for the balance of training, recognition and of course we after mentioned product and team themes. For in this event was successful by design, we expect to repeat similar success at our next CEO school that starts this evening here in Miami as well as our annual convention in Southern California in March of next year. Events like our annual convention, leadership summit and CEO schools are critical to growth and success of our distributor force. The tangible attributes like workshops, great speakers and award banquets are easy to describer that the intangible affect of thousands of likeminded people come in together with One Team, One Dream and One Mission is often difficult to put into words. But ultimately is a most powerful and strongest motivator of growth that we can master. Before we go deep into plans for 2015 lets review some items still to come in Q4 of this year. In addition, to the Miami CEO school, which unofficially begins right after we have done with this call. We are in the midst of the most comprehensive website and online shopping experience make over a Youngevity history. Over the years of Youngevity has grown, we accumulated several different online shopping card, multiple customer and distributor portals as well as in only partially integrated SmartPhone application. With this rollout our main web presence will not only be completely new, the customer and distributor portals as well as replicated distributor sales price will be fully integrated modern looking with a focus on efficiency and intuitive operation. Data Testing is guiding this week is full release expected by December 1. For those of you that remember of our conversation from last quarter’s call, you may recall that I identified December of 2013 and starting point of our current sales in growth trend. I also pointed out that December is traditionally the slowest sales and growth month of the year. Whereas I cannot saying exactly where our plans are for this December, I will say that we will try everything that we’ve learned over the past 12-month and anticipate that we will have another exciting December. Something to look forward to in 2015, simply put more and more work in less web browsing, as we increase the size of our international footprint we expect to see double-digit growth in Australia, New Zealand, as well as Canada and these are the areas where we already have key leadership, established product lines and dedicated support staff. This is of course in addition to our new initiatives, we move forward in Russia, Israel, and Mexico which Dave will discuss in just a few minutes. We will also continue to force ahead in the Spanish speaking marketplace with both web and print supporting material as well as multi-media presentation. The Youngevity continues to grow both through organic growth and strategic acquisition, we’ve been fortunate enough to attract some of the industry greatest leaders, both inside of our corporate team and in the field force. As you have heard me say on previous shareholder calls, I’m proud to say that Youngevity grows in product sales and diversity; we’ve also become more efficient corporately, setting the stage for even greater growth in the field without the need to the same degree of growth within our corporate staff. Today's consumers as well as today's independent distributors are attracted to variety and diversification. Like investing approach people find strength and safety with a diversified portfolio, however in business at the same time they rely on stability culminating these opposing forces, one of the things that separates us not only from other direct sales and network marketing companies, but from the health and wellness industry as well. At Youngevity we are fortunate enough not just to have diversified products, but diversified products that each stand on their own deletion and marketplace and this is evident by the high number of loyal customers that have been purchasing our products year-after-year after year. It’s ironic that the more things changed the more they stay the same. With the continued influence of the internet, social networking and assumingly ever decreasing level of brand and personnel loyalty in the world, Youngevity continues to shine. This is because we’re embracing the changes while staying true to our roots and never forgetting where we came from. Establishing and cultivating relationship is important to any business, believe in more so in direct sales. Trust and consistency are critical important to customers and distributors long-term. As we reiterate it today Dr. Wallach’s 90 For Life messaging is perhaps the strongest and most effective in the industry. Life assured that as we move forward in a diverse product offerings and acquisition come on board we’ll never have been our core believe in people and in a message that tied to this company over 17-years ago. In those four words One Team, One Dream aren’t just a cash rate, they are our way of life and our way of business. With that Dave I’ll hand this call back over to you.

[Dave Briskie:]

Thanks Bill, I appreciate the update and I got to say I really enjoyed the effect of the leadership summit and obviously we’re really excited about the investment we’ve made in technology and getting that rolled out on December 1, I believe is really going to expand our growth, so really exciting stuff there. Steve Wallach, is going to be brought back on to the call as many of you know besides being our passionate leader and CEO, he is a very, very gifted product development visionary and he leads all of our new product initiatives and he is going to talk about the power of how we leverage our acquisitions and I’m going to turn it over to Steve. So Steve,, take it away.

[Steve Wallach:]

Thanks Dave, thanks Bill. As Bill mentioned we are actually hosting a distributor event here in Miami starting later today and then through Saturday and so even that form you heard which wasn’t the phone system, it was actually a cruise ship going by and probably the CLR fantastic coffee onboard, so that’s even exciting. As Dave talked about one of my passion is definitely on the product side and the products we develop and with that said, I’m going talk about the products, the acquisitions and products through acquisition as well as development internally, but as many of you know Dave and I actually Dave, Ernesto and I went to Nicaragua, Tuesday and came back yesterday Wednesday and I’ll tell you being passionate about the products that this company produces and provides to many of you on this call and certainly many others as well, just seeing the Nicaraguan operation and the farm, the plantation the processing plants, Dave mentioned some numbers at capital improvement and the fact that we knew this would be the growing and maintenance time frame of the plantation leading into the upcoming harvest. So there wouldn’t income derived from the plantation just yet, but processing plant green coffee aspect certainly are contributed as Dave mentioned earlier, but I'll tell you the growing aspect, a production aspect of the coffee coming from Nicaragua from plantation from processing from processing that part of this company is nothing short how amazing it is just so impactful to see it in person to walk among the field and meet the people to walk through the processing plant and spend hours just in the whole process is just amazing. From a product standpoint it’s amazing; from just the people aspect it’s truly amazing as well. On the Youngevity product side as Dave mentioned again its one of my passions, I have grown up around the nutrition industry, I have a passion for helping people, their health and the wellness such forming and promoting those aspects, obviously full heartedly believe that there is a need worldwide for all of our products and so I’m excited about the opportunity that leads to for all of us, but on the product side and the creation of those products. As Dave mentioned and Bill from the acquisition side we've brought on some great products, but obviously starting with my father’s full philosophy and experience around the nutritional and wellness aspects this company has provided, and formulated, and created some amazing products and certainly the 90 For Life campaign which is our core message and our core product set comes from that experience and that development and certainly I had a role in that I don’t take for credit for obviously, but this is an area I get excited about and by somebody today, what I’m almost proud of around the products and the aspects of the company and so forth. And certainly one of those if the add or near the topical list will be the fact that people gets great benefit from the products that we create, that we provide that we offer them the testimonials and the science that comes back based on what this company produces, or team of people produce is just amazing. And so I am certainly very proud of those aspects. As far as other products aspects it kind of leads to the international conversation and discussion, which I’ll talk about a little bit later. One of the special guests that we have on the call today is Sanjeev Javia. And Sanjeev is on our Scientific Advisory Board, he is on our staff, he lectures, he writes. He has an international MBA from Thunderbird University which is very prestigious goal undergrad degree at – from the University of Michigan. And Sanjeev works closely with the university aspects of what we do to studying the research of our products and what comes into our products as well. And so I think we are going to bring him on to the call next. So Sanjeev are you on the call.

[Sanjeev Javia:]

That’s great, I am Steve. Can you hear me? Fantastic, well thank you so much Steve, and Dave and Bill. It has been really exciting both on the product end as well as the international end I just returned from 16-days in Australia and New Zealand visiting six major cities there to evaluate our current business and the growth and most importantly our leadership skill set there. It’s just exciting to see such a positive response and awareness in these international countries of Dr. Wallach message. And I think that one of the biggest reasons why you see such immediate growth in these areas, it’s because international people always look at what’s happening domestically and the last few years of Youngevity have been tremendously successful, we’ve had incredible growth and that has been heard all over the world and especially New Zealand and Australia because they are kind of the transition countries when network marketing companies do really well domestically, it’s obviously easier to do business there et cetera et cetera. And so we – the tour of 16-days I was able to see the growth, I was able to understand where the leadership was and there is a lot of leadership and I think that kind of place to what Dave was talking about with the acquisition strategy, one of the values of the Youngevity acquisition strategy is that you are able to access leadership that you may not have organically grown. And because you are able to access that leadership it takes you to different demographics to different lane and that’s what we saw in Australia and New Zealand that although we had a very strong base of distributors and leadership there with a few of our acquisitions specifically Heritage Makers and some of the women that came from Heritage Makers or associated with Heritage Makers. Previous to their relationship with Youngevity, there was a great business there in Australia and New Zealand and so there was leadership there that will now be able to take this very simplified and consistent message of One Team, One Dream got staying in the lane and what those lanes are and be able to grow that. And this kind of comes is no surprise as I mentioned whether it’s Australia, New Zealand previously I was in Malaysia, Barbados, Mexico. The core product message of health and wellness and the issues with health concern, diseases, illnesses whatever it is being linked specifically to nutrient deficiencies which is essentially the deficiency syndrome that Dr. Wallach has talked about for 40-years, it’s relevant all around the world. And so with new initiatives in all of these different countries who are focusing on the simple vitamins and minerals, amino acid, the essential nutrients that are needed for greater development and prevention of illness and disease, all of these major worldwide organizations that are already talking about this and then with Youngevity having that message for the past 40-years and being able to develop products that lifestyles education, information that can go into that so easily allows for immediate growth in all of the international markets. Because it’s no longer is the market valuing height, it’s less height, it’s more credible tangible science and fortunately for Youngevity we jumped into this several years with the relationship with Clemson University and then subsequent to that with University of Boston, University of Rhode Island, University of Minnesota do incredible scientific research into our products and with the market truly appreciating that and valuing that. It allows our message to be even strong and then obviously, we have a continued effort in the science with the University of Manitoba specifically Richardson Center for Human Nutrition, which is one the largest and most prominent nutraceutical and nutrition lab in North America. With doing a study there just a few months ago and continuing with other clinical work that will further substantiate the value of our products and then just move real quickly, obviously they are working with us on a collaboration of information regarding the essential fatty acid claim which is one of the most important nutrients and growing nutrients, it’s the hottest category in supplementations, so its great to be involved with an amazing university and our distributors and customers will value the fact that Youngevity has associated themselves with also promoting a healthy claim that is in one of the hottest categories in supplementation. So just lastly you know as in New Zealand and Australia, because we were able to leverage the relationship that we had with other companies due to our acquisition strategy, it also allows us to scientifically reinvent ourselves sometimes, because with every new acquisition comes new knowledge, new science, new research, new experts and all of these companies that we acquire have incredibly powerful products and so that allows us to have even stronger and stronger campaign case in point we have had tremendous success with our weight loss campaign called the transformation experience this year 2014 with thousands of individuals who choose to jump on the weight loss campaign and be part of that transformation experience. But because of some of the new relationship, that we have specifically with Beyond Organic and Jordan Rubin who will speak later, we are able to enhance that campaign and even bring – even greater amounts of people into that movement. And on January 4, we’ll be introducing all of his great work that Jordan Rubin and his team at beyond organic have done to complement what we’ve done for the past two years for – in the transformation experience program. And really allow to have an incredible program that unite all of these amazing philosophies. So we expect to see even greater growth which is kind of hard to imagine when we had phenomenal growth this 2014 at the beginning of 2015 for this program. And so adding to this nutritional philosophy we obviously have the opportunity with all of these amazing experts. And we got somebody on the line here Jordan Rubin who will be able to take this philosophy that has worked so well for us at Youngevity and to complement it with his research and his work and allow our distributors and customers to feel like they are on the truly cutting edge of nutrition and supplementation and ingredients and I’ll let Jordan Rubin to talk more about that. Jordan, are you on the call.

[Jordan Rubin:]

I am thanks Sanjeev I appreciate it. I am very excited to be on this update call and thank all the shareholders and certainly the Youngevity Executive Team Sanjeev for giving me this opportunity. We have been having some great discussions over the last months and even in the last days of how to integrate something that we have build not just over the last few years at Beyond Organic, but in the last 16-years from my days at Garden of Life in natural products retail. There is a concept that we have always felt is that [indiscernible] not just in retail, but even more importantly in direct selling, is that if you can engage people on a program where you give them information and health tools that will transform their life for free they will be glad to purchase additional tools that will make it even greater difference, and as Sanjeev will test you when we can encourage people to change their behavior with [indiscernible] their exercise habit and of course certain things they avoid they get even greater benefit and they often attributed to the products that we are in fact offering. And so the opportunity for us to marry what we call the jumpstart your health program which is a two week Cleanse, 14-day transformation which is a guided interactive health experience with the health transformation challenge that Sanjeev has pioneered is really amazing. In addition where we have a three-day what we call a Suero Cleanse which utilizes the best selling Beyond Organic product over a 1.5 million bottle sold in just over two years, this three-day Cleanse has produced sensational results. And so Sanjeev and I are going to be working together not only to begin this integration January 4 through 17 of 2015 to make these programs essentially one. And once we do that it will allow the Youngevity distributor and customer to have better results and be more connected to a broader array of product and of course on the financial side. Like you would call there market best, it was their purchasing on a monthly basis, increases and some of it, because there is food involved in the beyond organic offering is what you call transfer spending which is really, really amazing. So they’re getting something they would normally purchase at a store, and healthy store or progressive grocery, and replacing it with the Youngevity product through beyond organic, so that really, really exciting, we believe the results are going to be incredible we would love to seek every three-months, every quarter we jump start your health program. And a monthly three-days vertically-integrated into the transformation program which already been successful. So we are looking forward that in addition I have worked over the last year, on developing a new technology and I would say nutritious verticals. And this has involves the next generation of nutritional and what 90 For Life date and is doing providing the minerals we believe that we now have the next generation or addition which is effectively the hundreds of Osteo nutrients that are also essential and without going into details. I formulated this concept in 2007 and have been working diligently the last year on this technology it is now pattern protected and truly incredible designed to be a continuity program as an addition to 90 For Life with the added benefit, that you will cover the 12 systems of the body, each on a monthly with content and presentations that will allow Youngevity to combine some of their top brands in promotions such as 90 For Life. In addition, to phase like the Essential Oils and the Beyond Organic, Food and Beverages as well as MK Collaborative, fashion, skincare et cetera. So we will have seen a long with these clinically relevant product and they will be first-to-market indirect sales as we have develop them and essentially grow these products. So its really unique concept they will include the Dr. Wallach minerals that so [indiscernible] we believe that in addition of 90 For Life having a new nutritional supplemental line that is given towards transforming the body based on each of the 12 systems using the Majestic Earth Minerals and a form that is differentiated is really ground breaking in the industry. And so I am really excited that I have the opportunity now to take some of this content and technology and share it with a larger and growing audience and its really to have pleasure working with his team I am looking forward to tomorrow morning sharing and message similar to this at the Miami CEO school and really looking forward to March when we launch this next phase. So thank you Sanjeev, thank you Bill, Dave and Steve and all the shareholders for allowing me to be a part of this great company. And I look forward to playing a big role on the future growth.

[Steve Wallach:]

Fantastic, thank you, Jordan and Sanjeev. All right, so what I want to do now is giving some just international updates numbers associated with some of the international growth that have been talking about and international growth on Sanjeev talked about obviously our products are needed around the world all of them and certainly those demand for many if not most on all of our products around the world. And as Dave talked about the expenses associated with international expansion growth tends to be around regulatory and setup of the corporation, of the products approvals, these are the things that are costly and takes time, there is a built in demand an awareness for our products, for our product concept for my father’s experience in history and knowledge and our name brand products. So that’s a great part about the international expansion. The slow part is really the ground preparation of the legal aspects and the accounting and so forth as we've talked about. So just real quick, let me give you a breakdown of some of our international numbers for example, Canada makes up now our second largest market, our first largest – I guess single largest international market with just over $5 million in sales around just over $5 million in sales this year. That represents 35% increase over this time last year. Australia and New Zealand is a region, Australian share if you will just under $3 million in contribution of sales and that represents a 64% almost 65% increase over last year. Mexico is a prelaunch market, we've been talking about for example and has very quickly moved into our military size wise international market and obviously we expect huge things from Mexico, they are certainly at a great demand and excitement and interest and so we are excited about what we've already seen in results from Mexico we've been announcing prelaunch. Additionally, we have Russia which many of you saw the online opening of the office for example and so that’s still in prelaunch, however we have a lot of the approvals completed for Russia and sales began there very, very soon. We just recently opened our support office in Guadalajara, Mexico to support that interest and excitement that I mentioned in Mexico. So we are excited about that as well. Our distribution is setup through a third-party distribution center in Mexico as well as Russia, obviously we have our own office and distribution facilities and staff on the ground Auckland, New Zealand to support the offshore Asia region and so that’s already in place as you have mentioned, just going there and really spending a little bit of time with the groups already in existence there. We are seeing great increase in results and excitements and interest with a team that’s already together distributors in the field. Currently, International only represents including Canada 7% of our overall direct selling revenue and while we've grown tremendously it still represents 7% and so what that means is international is growing as quickly U.S. but as Bill had mentioned also on this call, as these markets opened and you have heard Dave talk about this as well in previous calls and this call. As these international markets open and revenue begins flowing in which is starting to now, you will see that growth of international expand more rapidly and obviously it represents a huge opportunity for this company, the rest of the world is much bigger than – obviously the U.S. market for direct sales by itself, the U.S. market is largely a single market for direct selling, but the rest of the world is by far much larger of an opportunity and we realize that and that’s why it’s both the investment of time and financial resources that this team has been putting into this effort. So I guess one of the thing I would like to just touch on as well I talked about Nicaragua and I just want to I guess I can’t stress enough how massive of an opportunity for this company that whole operation is I mean we were talking with the people in the Nicaragua that work with us on this day event and [indiscernible] on a daily basis. And some of the things that they emphasis is really there are no other companies certainly not within the Nicaragua in coffee export region that do what this company does, what this team does from field to cup from growing the coffee to producing or processing, the coffee to importing into the United States and for roasting the coffee into packaging, finishing, packaging the coffee and providing it to people right into their cup. And so when you realize that coffee represents the second largest consumed beverage in the world, again thinking globally this is such a massive additional opportunity for this company I just can’t stress it enough or just immensely impressed with the whole thing. So with that I going to turn it back over to Dave.

[Dave Briskie:]

Thanks Steve, I want to just reiterate some of what Dave just mentioned on the opportunity there I mean first of all the fact that our international business is really just 7% revenue and it’s been said many times as it relates to our industry that the player is in our industry that are just scaled up into that North of $400 million or $500 million typically the international revenues in the 60% to 70% and higher 75% range. And hardest market is the U.S. market and we seem to have the U.S. market dialed in at a pretty nice rate, so our growth really most of it is coming from the U.S. market. So right now the international market we are not seeing those that percentage of revenue coming from international market yet, but with the opening of Mexico and Russia I believe that’s going to be the beginning of substantial growth, but I think our U.S. model the way we are so diversified with products and our bolt-on acquisition model it’s still going to be challenging in the beginning for our international market to ramp up and catch what’s going on domestically. But when it heats up and we execute the same models internationally. I think you are going to see very, very interesting and maybe unprecedented growth available for this company, so we are very, very excited about that. Back to the coffee piece that’s a really intriguing piece, Steve touched upon it and one of things we have talked about is our field to cup capability. And what was the strategy behind that and why do we go ahead and make such an investment in our own plantations with our own wet processing on plantation with our own dry processing on an 18-acre dry processing facility with our own export company to export that product to our own roasting operation in Miami which is now over 50 feet. Now why would we make that interesting investment and interesting transition and really what we’ve been looking to do is look for that pivotal point when we could make an integration a true vertical integration play finally from the coffee business to the direct selling piece and the K-Cup opportunity is going to be that piece. There is interest for K-Cups not only in the U.S. but around the world and there is no direct seller out there that in this space. We will be the first and I don’t not believe it’s going to be – able to be duplicated by our competition because of the pears investment it would require to be able to vertically integrate and do what we done and have the stories we have from a high mountain seed grown, Rainforest Alliance, Fair Trade Organic run by ourselves, supported by minerals that we make in our own plantations all the way through our own facility to now deliver K-Cups. We’ve talked about this before, our K-Cup equipment is in manufacturing, it will ship in December and we expect to be testing the K-Cups of the line in February and launch to not only our wholesale companies, but more importantly to our direct selling division as well in March and we really are excited to see what that can do not only here in the U.S., but on a worldwide basis. It’s very, very exciting, we are marketing our K-Cup capabilities to our wholesale accounts, needless to say we are booking business and filling that up, we have made a commitment and we have allocated space within our distribution facility and roasting facility to expand to buy K-Cup pieces of equipment, obviously we’ve got the one on order and we’ll keep monitoring how that growth is going before we add machines two, three, four and five essentially as we role out this program on a global basis. Our green coffee distribution business is obviously doing well, I can go over some highlights, but suffice it to say last year CLR Roasters as a coffee roasting segment was doing about just over $8 million in revenue. And in this quarter the coffee business has contributed $6.3 million in the quarter. So on an annualized basis if you would just extrapolate out, what if we did that four times you are already looking at a $24 million run rate for this business and I think we are just scraping the surface here. Our own brands are growing Café La Rica has an example not to be left out when some of these astounding growth numbers. So a lot of it comes in small bytes and Café La Ricais now been expanded we just found out recently to another 180 more Winn Dixie stores by example which brings us to 270. Our SQS certification we talked about that several years ago what it could mean and finally some of the big opportunities to bid on business is coming to us and we are bidding on major, major business. Business opportunities of the sides that are bigger than what CLR currently is just on one or two customers and we have many of those bids that were involved in bidding out. So it’s pretty exciting what we’ve got going down as coffee roasting operation and how big this potential is to really grow a business. So and then integration into Youngevity our direct selling business just makes this opportunity all that sweeter if you will. With that said as we look into the future one of the things that we’ve been challenged with and frustrated with I know the shareholders have is been our share price and the question we keep asking all this great activity when is the share price going to follow. And I think that day is coming and I think it’s coming sooner rather than later. It’s hard to hold down a company that’s growing like this that’s prudently growing, delivering profitability, not taking any loads of capital and covering the burn, but actually growing the business. I believe that there are companies out there, you could just look at our coffee growing operations and what we’ve got going there in the investment capital that’s there and the opportunity that we’ve created there. I believe that our market capital alone could probably just be covered by the Coffee segment and we start adding on the Youngevity International play in everything else and I have to believe that eventually our share price is going to follow that we are going to get out there and do the things that we need to do to tell this story and get the financial markets understanding what, who Youngevity is how we’re doing it why were different and why the future is so bright. With that I think its time to close the call. We did a little different format we read the all shareholder questions on this particular time before the call and we integrated those answers to into the call. So with that, we are going to close the call. Thank you everybody.

[Steve Wallach:]

Thank you. [No formal Q&A for this event]