LifeVantage Corporation (LFVN) Q2 2012 Earnings Report, Transcript and Summary

Good day ladies and gentlemen, thank you for standing by. Welcome to today’s LifeVantage Second Quarter Fiscal 2012 Earning Conference Call. [Operator Instructions] Hosting today’s conference will be John Mills with ICR. As a reminder, today’s conference is being recorded. And now, I would now like to turn the conference over to Mr. Mills. Please go ahead.

Thank you. Good afternoon ladies and gentlemen and welcome to LifeVantage Corporation’s fiscal second quarter 2012 conference call. On the call today from LifeVantage are Doug Robinson, President and Chief Executive Officer, Carrie McQueen, Chief Financial Officer, as well as David Brown, President of LifeVantage Network. By now, everyone should have accessed with the earnings release which went out this afternoon at approximately 4:00pm Eastern Time. If you’ve not received the release, that is available on the Investor Relations portion of LifeVantage’s website at www.lifevantage.com. This call is being webcast and a replay will be available on the company’s website as well. Before we begin, we’d like to remind everyone that the prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. These statements do not guarantee you future performance and therefore undue reliance should not be placed upon them. These statements are based on our current expectations of management and involve inherent risk and uncertainties including those identified in the Risk Factors section of LifeVantage’s most recently filed 10-Q and 10-K. These risk factors contain a more detailed discussion of the factors that could cause actual results to differ materially from those projected in the new forward-looking statements. LifeVantage assumes no obligation to update any forward-looking projections that may be made in today’s release or call. Based on the number of participants on today’s call, during the Q&A session, we ask that you please limit the number of your questions to 3. And with that, I’d like to turn the call to the company’s CEO, Doug Robinson. Go ahead, Doug.

Thanks John. Good afternoon everyone and welcome to our second quarter fiscal 2012 call. On today’s call, I will provide some highlights of our record Q2 results. I will then provide a general update on our business and growth initiatives, and we’ll also discuss some of the investments that we are making to our infrastructure, to ensure that we are positioned to capitalize on the tremendous opportunities ahead of us. After that, I will turn the call over to Carrie McQueen, our Chief Financial Officer for a more detailed discussion of second quarter results and to provide an update to our increased guidance range for the full fiscal 2012. First, let me provide a quick review of our financials. We generated record revenue of $25.3 million during the second quarter, a 239% increase compared to the second quarter of last fiscal year. Our operating income increased to $4.3 million, which translates to an operating margin of 16.9%. We also strengthened our balance sheet during the quarter and in Q2 with over $13 million in cash and no debt. Our financial performance exceeded our expectations and based on this and our expectations for the remaining 6 months of the year, we are raising our fiscal 2012 guidance range for revenue and operating income. We are increasing our revenue guidance from a range of $95 million to $105 million, to a range of $105 million to $115 million. As a reminder, our 2012 -- excuse me, our 2011 fiscal year revenue was $39 million. We’re also increasing our operating margin guidance from a range of 12% to 14% to a range of 13% to 15%. Last fiscal year’s operating margin was 9.5%. We believe that our strong first 6 months financial performance demonstrates the expanding awareness of our products Protandim and True Science. We are particularly excited about the growing recurring revenue from auto-shipped orders, a signal to us that our existing customers believe in the value of our products to improve their long-term health. We’re also successfully leveraging our business across higher sales volume while making strategic investments in our business. During the first 6 months of this fiscal year, we increased our research and development and sales and marketing spend. But we still expect a large increase in our operating margin this year compared to last year. Now let me provide a general update on our business and growth initiatives. We are continuing to benefit from new independently published studies that outlined the efficacy of Protandim and further bolster through the science behind our products. As a science based company, first and foremost, this is always core to our business and growth. Every day, we are seeing increasing attention in the science community and the media, dedicated to the Nrf2 Molecule which is the biochemical messenger that Protandim has been shown to activate. There is a tremendous proliferation of Nrf2 Research and you can go to pubmed.gov to see this research. For those of you who are new to the LifeVantage story, Protandim was shown in earlier studies to activate the transcription factor in Nrf2, a signal to the cell’s DNA to regulate a network of protective genes. A recent study further investigates Protandim’s ability to increase production of the body’s Nrf2 regulated protective genes, sometimes referred to as survival genes, which includes genes that encodes anti-oxidant enzymes as well as anti-inflammatory and anti-fibrotic proteins. As the scientific and consumer communities continue to become more aware of Nrf2 and our science backed product offerings, we expect to continue to see additional independent reports that address Protandim’s ability to increase production of the body’s protective genes. We believe that these studies will further validate our knowledge, and the value of Protandim and True Science. Turning to sales and marketing, to support the expanding awareness of our products, it is crucial that we continue to invest in our sales and marketing, to support our distributors that are in the field educating consumers and medical professionals about Protandim. An example of how we are investing in marketing and expanding the LifeVantage story is our partnership with Donny Osmond to act as spokesperson for Protandim. With the career that spans over 5 decades, Donny is famous not only for his music but also his youthful appearance. And we believe he is an ideal person to endorse our product. Donny became interested in Protandim and took the product to his doctor, who studied, validated and then recommended it to him. His personal experience together with his celebrity status has enabled him to tell the world why activating Nrf2 and reducing oxidative stress is important. You will be presenting at our distributor events and annual convention. Donny has included information about Protandim on his website donny.com and mentioned to us frequently in the social media campaigns. His generating increased national awareness about Protandim that we believe will translate into additional awareness about LifeVantage and our products that will in-turn help our distributors when they approach prospective customers. As an example, Donny was on the Dr. Phil’s Show that aired on February 8. And one of the topics he addressed was Protandim in its role in enabling him to maintain his youthful appearance and vitality. On the heels of Donny’s appearance on the show, Protandim ranked him on the top 10 Google searches in the United States on February 8 and 9. In addition the business to LifeVantage.com, were up 300% and business to Portandim.com were up over 800%. We have continued to enjoy significantly increased activity on our Facebook page, in the days following Donny’s appearance on the Dr. Phil’s Show. We are extremely happy with the positive impact that Donny endorsement has on our brand awareness. At the end of January, we held an elite academy in Las Vegas, where over 3,000 of our distributors attended, a record for an elite academy event, exceeding our numbers at our quarterly event held in San Antonio last October. To put that increase in perspective, just 2 years ago, we were thrilled to have even 500 distributors, at our elite academies. We are very pleased with the success and growth of our distributor events. We continue to evolve the events by selecting larger convention centers and more recognized keynote speakers to help motivate our dedicated distributors and ensure the event is memorable and provides them with the tools they need to be successful. In addition to our strong growth in the United States, we’re also expanding our reach in Japan and Canada, and exploring other geographic opportunities. A few months ago, we announced our exploration and preparation goals for expanding into Australia. In a continued effort, we are pleased to announce that one of our major milestones has been accomplished. In December 2011, we received approval for Protandim in the Australian market from Australia’s regulatory committee for therapeutic goods. We’re still in the process of meeting additional requirements that are hopeful about the pending opportunities of this market. We also recently introduced new packaging for Protandim. We’re getting great feedback from our distributors and consumers and believe the new packaging better aligns the product with our company’s focus of science backed products. These events combined with our additional investments and marketing are enabling us to rapidly expand our mid-level ranks of distributors and helping enable them to achieve an elite rank status. Our goal is to develop a larger middle-class of distributors, who are building large sales organizations, selling a significant amount of products and thus receiving significant monthly commission checks. We want our distributors to achieve the financial success that they are striving for and we are working to create more distributor leaders. Now, I would like to spend some time discussing investments in our infrastructure. On our fourth quarter fiscal ‘11 conference call, we outlined for you our plans to invest in our infrastructure to support our growth. And we also pointed out that we are getting to a very important leverage point in our business model. Even as we are increasing the absolute dollar investment in our infrastructure and in our human capital, we expect our operating margins for fiscal 2012 to improve by over 350 basis points over the prior year as we improve the leverage in our business. At our Annual Shareholder Meeting in January, our shareholders elected 4 new board members, and our new board elected a new Chairman of the Board, Woody Spedden, who has over 50 years of executive management experience with public and private companies, which will serve us well as he chairs our board. Each of our new director’s brings a wealth of corporate experience and expertise in areas that are critically important to the company’s growth and long-term success, including executive and board experience with publicly traded companies. The 4 new directors have held leadership positions at successful companies. We encourage you to visit our investor pages on our website to become better acquainted with our board members and their experience. As our company evolves, we recognize that it is critical that we have a strong board of directors to complement our management team and provide us with insight and expertise. Each of our new directors brings the unique and valuable perspective that will be instrumental as we grow our business through distributor growth, geographic expansion and the strategic introduction of new and complementary products. A key area in which, we continue to invest in our, personnel. Having the right human capital is critical to our long-term growth and success. During the past 6 months, we have added personal in areas such as finance, accounting, marketing, sales, customer support, lab technicians and operations. These additions to the LifeVantage team are part of our efforts to scale this company responsibly. And for all those consumers and distributors who we are yet to meet, LifeVantage must deliver and continue to scale this company strategically, proactively and cooperatively to be a strong and stable company, they can rely on and count on for years to come. In addition to our personnel updates, we also concentrated efforts on moving our corporate headquarters, to support our expanding team. Just recently, we hit the milestone of 100 employees. We outgrew our prior location and moved a few blocks away to a space that is nearly 3x the usable space. We have made tremendous strides in many areas of our business during the first 6 months of this fiscal year, including over 200% revenue growth, record operating income, improvements in our balance sheet and expanding our board of directors. These improvements have positioned us to look towards the listing on our National Stock Exchange at the appropriate time. The remaining initial listing requirement to be satisfied would be to meet the minimum share price requirements. As we evaluate the benefits and optimal timing of this listing, we currently believe that our best plan of action is to continue to strive for strong profitable growth. And based on this approach, we currently do not intend to see the reverse stock split to increase our share price in the immediate future. In summary, we are very pleased with our record second quarter results, and believe the momentum we are building in the marketplace, will lead to continued record results throughout this year. In addition to our strong sales, we are improving leverage in our business model, while strengthening our distribution network. This all leads to our ultimate and constant goal of improving our shareholder value, while educating people around the world about a way to enhance their health and wellness. Now, I will turn the call over to Carrie to review our financial results.

Thank you, Doug. As Doug said, we are very pleased with our second quarter results and our ability to continue to improve our financial performance. We are proud to be reporting our 12th consecutive quarter of net revenue growth and our sixth consecutive quarter of generating operating income. Let me review our results in more detail. In the second fiscal quarter of 2012, we generated record net revenue of $25.3 million, which represented 239% increase over the second fiscal quarter of 2011. On a sequential quarterly basis, our revenue increased 26% from $20.1 million in the first quarter of fiscal 2012. Gross profit in fiscal Q2 of 2012 increased to $21.6 million from $6.3 million in the same period last year, reflecting our higher sales. The gross margin in fiscal Q2 of 2012 was 85.4%, we are pleased with the gross margin level and believe we will sustain similar margins in coming quarters. Total operating expenses for the second fiscal quarter of 2012 were $17.3 million which represented 68.5% portion of revenue. This is a significant percentage decrease from operating expenses of $5.7 million or 75.9% of revenue in Q2 of fiscal ‘11. And a comparable percentage of our operating expenses of $13.7 million or 68.2% of revenue in Q1 of fiscal ‘12. The increase in operating expenses on a dollar basis is primarily due to increased sales commissions, which are direct results of our increased revenue. The dollar increase also reflects continued investments, personnel and infrastructure to position the company for future growth. The decrease in operating expenses as a percent of revenue from the same period in the prior year is due to increased leverage of our fixed expenses and infrastructure. As Doug mentioned, we expect to continue to make strategic investments into our infrastructure in coming quarters and we’re confident that we’ll continue to leverage these investments and achieve a higher operating margin in fiscal 2012, compared to fiscal 2011. Comprising the majority of our total operating expenses, our sales and marketing expenses, which increased to $13.9 million in Q2 fiscal ‘12, from $4.0 million in Q2 fiscal 2011, and from 10.5 million in Q1 of fiscal 2012. The increases in both periods are primarily due to commission state of distributors due to the higher sales volume. We expect sales and marketing expenses will continue to increase in proportion to our revenue growth. In the second fiscal quarter of 2012, general and administrative expenses increased to $3.0 million from $1.5 million of the second fiscal quarter of last year, and from $2.8 million in the first fiscal quarter of 2012. The increase reflects higher personnel cost related to our expanding operations. While there will be periodic increases as we continue to build infrastructure to support our rapidly expanding business, we expect general and administrative expense to reflect the growth rate much slower than that of our sales and marketing expenses. Our research and development costs increased to $312,000 from $90,000 in the prior year period and from $235,000 in Q1 of fiscal 2012. Continued investment in R&D is a priority for our company, and we have committed us to 2% of total net sales to the R&D effort. The specific timing and recognition of these expenses may vary depending on the projects we undertake. In the second fiscal quarter of 2012, we generated operating income of $4.3 million compared to $609,000 in the second fiscal quarter of last year. Operating income margin improved to 16.9% in the second fiscal quarter, compared to 8.2% in the same period last year. As we experienced periods of rapid growth, you may see fluctuations in our operating profit and expenses as we invest in our infrastructure to support our business. For those of you modeling our business, it is important to keep in mind that our second quarter spending plans were set based on our previous revenue expectations for the quarter. And when we looked towards the remaining quarters, we anticipate that operating margins maybe slightly lower than they were in Q1 and Q2 as we spend at the appropriate levels for our current revenue. Net income for the second fiscal quarter of 2012, increased to $8.8 million compared to $5.4 million of the second fiscal quarter of last year. Second quarter fiscal 2012 net income reflects the increase in revenue, leverage of operating expenses, a decrease in interest expense due to the company’s conversion of convertible debentures at the end of fiscal year ‘11, a favorable change in fair value of derivative warrant liabilities expense and an I income tax benefit related to the 1x release of the company’s valuation allowance against differed cash assets. In the upcoming quarter, we look forward to removing the remaining change in fair value fluctuations from our net income results, at which time, net income will reflect traditional expectations of operating results plus the effect of interest and tax. Turning briefly to our year-to-date results, in the first 6 months of fiscal 2012, we generated revenue of $45.4 million, a 226% increase compared to revenue of $13.9 million in the same period last year. Our gross profit increased 231% to $38.7 million compared to $11.7 million in the first half of last year. Gross margin in the first 6 months of fiscal ‘12 was 85.4%, a 130 basis points increase compared to the same period last year. Operating income increased to $7.7 million compared to $1.0 million in the same period last year. Net income doubled to $12.4 million compared to $6.2 million in the same period last year. At this time, net income, especially as compared to prior periods, does not accurately reflect operating performance due to the inclusion of profit and-or expenses, based on changes in the evaluation of the derivative warrant liability. But out of those highly variable profits and-or expenses are removed in the current and coming 2 quarters, net income will more accurately reflect our operating performance. A top priority as stated before is to continue to improve our balance sheet, which includes eliminating the derivative liability and showing positive stockholders equity, better reflecting our improved financial strength. On December 29, 2011, we received approval from warrant holders and completed our tender offer to modify certain outstanding warrants. We filed a tender offer document with the SEC and initiated tender offer for the purpose of amending certain warrants to remove the price base anti-dilution provision contained in those warrants and to extend the period during with those warrants may be exercised by 30 days. As of December 29, 2011, we received the requisite approval such that all of the 12.7 million warrants covered by the tender offer were amended. As a result, we will no longer account for these warrants as a derivative liability as otherwise required under US GAAP. With the warrant modification and the expiration of certain other warrants in March and April of this year, we will be removing all derivative liability -- derivative warrant liabilities from our balance sheet and eliminating the quarterly changes in fair value of these warrants from our income statement. By the end of the fiscal year, we will present financials which more accurately represent our operating results and financial achievements. With the stronger balance sheet, no derivative liability, positive stockholders equity and more predictable net income driven directly from our operating results with more predictable tax and interest expenses. During the process of eliminating these derivatives which creates a non-cash losses or income, we believe our operating income is still the most relevant measure of our financial performance, especially in comparison to prior year period. Now turning to our balance sheet, as of December 31, 2011, we continued to make solid improvements in our overall financial position. At the end of the second fiscal quarter of 2012, our cash and cash equivalents increased to $13.5 million up from $6.4 million at yearend fiscal 2011, reflecting the strong revenue growth and operating profits generated by the business. We generated $4.7 million of operating cash flow in the second fiscal quarter of 2012 compared to $500,000 in the same quarter last year. Total stockholders’ equity grew to $9.3 million compared to a deficit of $20.8 million as of June 30, 2011, due to strong revenue growth, operating profits and the removal of the $19.9 million of derivative liabilities as a result of the warrant modifications that were accomplished through the completion of our tender offer in December 2011. Additionally, during the second quarter, we repurchased 450,000 shares of company stock, for a total cash expenditure of approximately $651,000. We have put in place a real 10-D 5.1 repurchase plan for the broker we selected, will continue to repurchase shares of our common stock in accordance with preset criteria including the stock price. Additional share repurchases maybe made under this plan throughout the next 3 quarters. These results and arrangements are in accordance with our previously announced share repurchase program that authorizes us to purchase, up to $5 million of our common stock, over the course of the 12 months period from October 1, 2011 through September 30, 2012. Any such repurchases will be made only at a free cash flow from continuing operations. And on a quarterly basis, will not exceed 50% to free cash flow for that quarter. Turning to our outlook, as Doug mentioned, we are raising our full year fiscal ‘12 revenue and operating guidance range. For the full fiscal year ended June 30, 2012, we expect to generate revenue in the range of $105 million to $115 million, a significant increase from $38.9 million in revenue reported in fiscal 2011. We expect to generate operating income in the range of $13.7 million to $7.3 million, which equates to an operating margin between 13% and 15%, and represents a 350 to 550 basis points improvement from our operating margin of 9.5% in fiscal 2011. As evidenced in our last 2 quarters of operating margin, we are now experiencing substantial leverage from our business model. We will continue to spend through our infrastructure but we also expect to report improved operating margins over last fiscal year’s results. We are very pleased with our strong start to the year and we look forward to building on our positive moment in the second half of fiscal ‘12. Operator, we’re ready to open the call for questions.

[Operator Instructions] And first we’ll go to Jack Ford [ph].

Okay. So, I just -- mine as a distributor. And I was at the leader conference. And I’m very pleased and I’m starting to have some pretty good results. One of the questions that came up that I couldn’t find is, on the -- on the 5 -- our 5 plans, where are they growing, at what countries or what kind of policy is there, people seem to be so conscious today to you know, material are coming from -- I don’t know if that’s a fair question but I’m asking it anyway.

Sure. David, you know, Jack, as we mentioned at the top of this call, in addition to myself and Carrie fielding questions, we’ve also got David Brown, who is our President of LifeVantage Network as well. And I’m going to turn this question specifically over to him for the answer.

Let me address that in a number of ways. First, the raw materials are grown in a variety of countries, including the United States. We get raw materials from a variety of vendors, all of whom are pre-qualified. They have to meet our very stringent GMPs or good, nice action practices, which they not only certified to, we then send those results out and raw material samples to an independent lab to certify that those raw materials meet our potency and purity requirements so that the actives are present, the active ingredients for each of those materials is credited in the amount that we call for it as well as the fact there is nothing there that we don’t want, such as pesticides and heavy metals and things like that. A related question to that might be, how do, we foresee the supply of such ingredients going forward, especially in the face of such strong growth. And believe that there is no problem obtaining proper supplies. The operations, people are on top of that. And ultimately, we will further stratify so that we are really looking at things from the beginning with vendors and farmers and making sure we can always adequately supply pure and potent raw materials for our products.

[Operator Instructions] We’ll now go to David Rothman [ph] with Phoenix Capital Management.

I believe the price of the stock has been hurt by these derivative warrants and I sent you on the right track. What percentage of -- or should I say, what dollar amount of warrants are left on the books and what will be left after Q3 reported is made?

If you take a look at our current balance sheet you’ll see a line item short term derivative liabilities. That’s the remaining balance as it was valued at December 31, 2011. And 100% of that value is represented by the warrants which are expiring in March and April of this year. So, in the next 90 days, that entire balance will go to 0 as those warrants are exercised.

Yes, a question Carrie, well, how many of those warrants will be exercised by the end of March and reflected in the next quarter queue?

I expect a vast majority that 100% will be exercised before the end of the quarter. I believe there is only a few hundred thousand of approximately $7.5 million that carryover into April with expiration dates.

Super. Last question is, could you elaborate a little bit on the new product pipeline, you’re obviously spending more capital and I was wondering if there is anything specific that you can comment on at this time.

David, this is Doug. Nothing specific necessarily but sufficed to say you know, and we have made this well known in previous calls and at various different investor meetings that, you know, we enjoy a presence in the fighting and oxidative stress with our 2 products, Protandim and True Science. We think it behooves us tremendously to stay focused in that fighting and oxidative stress. And so, as we build out products that complement our 2 products, we will stay laser focused in that fight, that’s certainly our primary intent. We know that on a go forward basis to grow this company to the heights that we expect to, to take the company, we will need and will have additional products. Anything more specific at this time, we really can’t say other than that we are working very hard in this area on a go forward basis.

Next we’ll go to Jack Rukenbrod with Financial America Securities.

I noticed in the filing today that the number of studies being ongoing currently is like 25. Now that’s -- I think poor from the last I saw. Can you comment on what the new ones are and is there -- do you have a timetable on how these studies, when these studies will be completed, like, is the average, a year, 2 years, 3 years, do you have any feel for what we could expect over the next fiscal year?

Thanks for the questions Jack. I’m smiling when I hear your question because it’s a tough one to quantify, plain and simple. For this very reason, there is a growing interest in Nrf2, Nrf2 Activation, Protandim, this entire space. And as you probably well know, most of the studies that are already either underway or we’ve even published have been from very, very reputable third party research institutions importantly not us, not LifeVantage. And so, there are a number of studies that we know that are underway in various different stages. So, I’m going to try to get at the heart of all of your questions. One of your questions was how long did these studies take, really it’s tough to say because they’re all studying different effects if you will that Protandim might have on various different health conditions. And they conduct their studies in different ways. So, sufficed to say there is just a hard way to quantify how long these studies take especially since we aren’t conducting the studies ourselves. The other reason why I smile when I get this question and I get it often is can you put an actual number on the studies? We can’t, nor should we. All we know and we keep track of that there are a number of studies brewing, more studies coming online. But to say that there is 25 or 24 is really not doing anyone a service, our self-included, you included and also the researchers because they’re undertaking these studies at various different times, gaining funding for the studies, et cetera, et cetera. The last thing I’ll say in all of this is that we’re very, very heartened by the fact that more and more studies are underway. And we think with the proliferation of Nrf2 and Nrf2 Activation and Protandim and the role that it plays in Nrf2 Activation is only going to bode well for our science on a go forward basis and certainly for our company. I hope that -- that’s a long winded answer to your question if it’s helpful. But I wish I could be more specific, I just simply can’t, given the nature of this question.

The number of 25, I got from your filing today with the SEC.

Moving on to Eric Weisenberger [ph].

I’m sorry, I got into the call late because for some reason the service was asking me for a password which I didn’t have. And I tried that again, I got through. So, I missed the first part. But I was curious if you could comment on any additional countries you’re ready to launch and I know you did, you’re operating a little in Canada. Where does that stand now and what’s next?

We are constantly being beset by offers and enquiries from others in other countries by people who are interested to get the benefit to Protandim and True Science to their friends and family there. We will expand on a judicious basis, and still we’re looking at countries that we can go into from a regulatory standpoint and where we have the requisite and distributor leadership in place. As Doug mentioned, we are currently selling into [indiscernible] to preferred customers only. We have announced to our distributor force that we are currently working with the regulators in Canada to obtain approval to ultimately be able to allow distributors to function in Canada as well. And the same thing is true in Australia, which also has a rich history of network marketing and supplement specific rate. And Doug also mentioned, we received certification from the TGA, the Therapeutic Good Administration for Protandim and that opens a door to other hurdles that internally have set that we want to accomplish to fully go there. And so, sufficed to say, that we eventually would like Protandim the benefits that they provide and there to go around the globe. And will be still as our infrastructure and resources whilst to do so most effectively.

And just one quick follow-up question if I could. Is the barrier to entry in a lot of these countries getting -- happening protection for Protandim and whether they’re going to honor our passing on our product or not?

No, that’s not it. Each country has its own version of the FDA. And they are just as worried about and concerned about the product coming in for ingestion, our state and effective is ours. So, they want to make sure that we can provide that type of documentation. And also, from a business standpoint, they want to make sure that the company is coming in or will adequately funded companies so that we can apply with proper entity requirement and other registration requirement that you might expect from any company doing business in a foreign country.

And we’ll now go to Erin Lumkey [ph].

As far as the stock enlisted on the NASDAQ, what is the share price that it needs to read. Is it a combination of share price and volume?

This is Carrie. It’s a combination of 3 or 4 listings right here depending on the exchange and which category you request listing for. We’ve crossed the hurdles on volumes, size of the company. The most recent hurdle was stockholders equity which was recently swung from a deficit to stockholders equity now. The last remaining hurdle for example for the NASDAQ would be a share price requirement of $4 or $5 depending on the category we requested.

And we have no further questions at this time. So, I’ll turn it back over to Doug Robinson for any additional or closing remarks.

Well, again, thank you very much everyone. We obviously -- hopefully you gathered from our prepared remarks and the questions that we answered that were very, very excited about our Q2 performance and even more excited about our future in front of us. We will be attending a number of investor events in the coming months and we hope to see many of you there. Again, thank you very much for your participation in our call today.

Again, this does conclude today’s conference. We do thank you all for joining us.