John Mills - Partner, ICR, IR Darren Jensen - President and CEO Mark Jaggi - CFO.

Analysts:.

Good day everyone and welcome to LifeVantage's Q4 Fiscal Year 2015 Conference Call. Today’s call is being recorded. At this time I would like to turn the call over to Mr. John Mills of ICR. Please go ahead, sir..

Thank you. Good afternoon, ladies and gentlemen, and welcome to LifeVantage Corporation’s fiscal fourth quarter and full year 2015 conference call. On the call today from LifeVantage with prepared remarks are Darren Jensen, Chief Executive Officer; and Mark Jaggi, Chief Financial Officer.

By now everyone should have access to the earnings release which went out this afternoon at approximately 4 pm. Eastern Time. If you have not received the release, it is available on the Investor Relations portion of LifeVantage’s website at lifevantage.com. This call is being webcast and a replay will be available on the company’s website as well.

Before we begin we would 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 future performance and therefore, undue reliance should not be placed upon them.

These statements are based on current expectations of the management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of LifeVantage’s most recently filed Form 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 any forward-looking statements. Please note that during today's call we'll be discussing non-GAAP financials measures, including results on adjusted basis.

We believe these financials measures can facilitate a more complete analysis and greater transparency in to LifeVantage's ongoing results of operations, particularly when comparing underlying results from period-to-period. We have included a reconciliation to these non-GAAP measures with today's press release.

This also contains time sensitive information that is accurate only as of the date of this live broadcast, today September 1, 2015. LifeVantage assumes no obligation to update any forward-looking projection that maybe made in today's call or release.

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 three. Now I will turn the call over to the company's CEO, Darren Jensen. .

Thank you, John and good afternoon everyone. As many of you are likely aware this is my first earnings call as part of LifeVantage. In order to provide some background of myself, my career has been focused on direct marketing and I have over 25 years of global network marketing and direct selling experience.

Before joining LifeVantage, I served as President of the Americas and Chief Sales Officer at Jeunesse Global, a personal care nutrition network marketing company. During my tenure at Jeunesse the company was ranked number 258 on The 2014 Inc.

500 with over 1500% revenue growth over a three-year period, and was the fastest growing Direct Selling Association Company in America for 2014. Before Jeunesse I served in senior roles in USANA Health Sciences, Agel, Synergy Worldwide, Amway Global, and Nu Skin Enterprises.

In these roles I led the development and execution of global sales, product development and service expansion strategies.

I was also responsible for international business development, performance improvement, and global sales and marketing efforts in more than 100 countries within the Asia Pacific Rim, Latin America, the Caribbean, Europe, the Middle East and Africa.

I'm very excited to be the CEO of LifeVantage and I look forward to leveraging my many years of experience in an effort to reignite growth at LifeVantage and return us to one of the leaders in the industry. Today, I'm pleased to have the opportunity to speak with our shareholders and to share with everyone our vision and turnaround plans.

Mark is going to review our financials in more detail, but as a high level overview, our fourth quarter fiscal 2015 financial results were in-line with our expectations and reflect stability in our revenue and operating results.

Revenue for the fourth fiscal quarter of 2015 was $45 million, which is essentially flat when compared sequentially to the third quarter of fiscal 2015. Adjusted EBITDA was $3.1 million, down just slightly from $3.3 million in the third quarter of fiscal 2015.

We've strategically implemented $4 million of annual cost savings in order to better align our cost structure with current sales trends and believe we are positioned for stronger EBITDA and net income in fiscal 2016. Fiscal 2016 represents a turnaround opportunity for LifeVantage.

The financial performance of the company during the past few years is not indicative of our full potential. Since I joined the company in May in 2015, we have taken a deliberate approach to position LifeVantage for success. We've already began taking the right steps to position ourselves for growth.

Recently we announced a couple of new hires that further strengthened our senior management team. Justin Rose joined LifeVantage in July as our new Chief Sales Officer. Justin has significant experience in our industry having served for 26 years in senior sales and marketing roles.

Justin has a proven track record of successfully developing regional sales teams and executing field training programs that generate unity and stimulate growth which is exactly what LifeVantage needs. In addition, Mark Jaggi came on board a few weeks ago in August as our new Chief Financial Officer.

Mark is a highly experienced finance and operations executive, having spent the past 20 years in lead financial operational and strategic planning roles.

Mark brings the perfect mix of business acumen and financial expertise to the company and his years of financial experience in the nutritional supplement industry gives him a clear understanding of what needs to be accomplished to successfully and responsively position LifeVantage for long-term sustainable growth.

Our executive leadership team has more than 75 years of combined experience and demonstrated success within the direct selling industry. We are confident that we have the right team in place to lead the execution on our turnaround plan.

Beyond enhancing our senior management we also announced a couple of months ago that our flagship product, Protandim has been registered in Mexico as a Herbal Medicine and we anticipate that we will begin shipping Protandim to Mexico no later than October.

This is extremely important for LifeVantage, as prior to this we were not able to take advantage of the significant opportunity that Mexico represents.

According to the World Federation of Direct Selling Associations, the network marketing and direct selling industry in Mexico generates nearly $8 billion per year and approximately 2.2 million distributors reside in the country.

Furthermore we view Mexico was a gateway market for successful expansion throughout the Latin American region, which represents another tremendous opportunity.

I'd now like to take a few moments to review our eight point plan which outlines the key areas of focus, that we believe will enable us to execute on our turnaround and return LifeVantage to long-term profitable growth.

This is the same messaging that we are communicating to our distributor base and I think will provide our investors with an understanding of the steps we are taking to put ourselves on a path to accelerated profitable growth.

I also want to make it very clear that I have purposely launched as many of the plan initiatives as early as possible in fiscal 2016 in order to maximize gain in this fiscal year. Before we discuss these eight points I think that it is important to understand where we are at as a company in our business cycle.

Those that have been in direct selling for as long as I have, know that there are milestones in the growth of a direct selling company. At each milestone a company needs to evolve in order to progress to the next level of growth. One of the most important milestones occurs when it achieves approximately $200 million in annual sales.

Typically at this level of sales companies experience some challenges as they pass through this evolutionary transition towards the next stage of long term predictable growth. Many in the direct selling industry call the challenges associated with the transition for this key milestone, white water [ph].

If the CEO has not been in this industry he or she may not recognize or understand this important evolutionary transition in direct selling companies and fail to make the needed changes for growth to get out of this white water period.

As I evaluate to join LifeVantage I immediately recognized that the recent challenges this company has experienced appear to be part of this evolution and it has been my goal as CEO to take the steps necessary to navigate us through this white water space as quickly as possible, as I have done with other companies in the past.

The path to get out of white water is simple but not easy. If we look at our run rate for the final two quarters of the year and we annualized them it would put us approximately at $180 million in sales.

This decline from fiscal year 2014 revenue of $214 million emphasizes that management has not recognized that they were in white water and taken the steps necessary to navigate through it and enter into the next growth stage.

Since arriving at LifeVantage I have begun implementing an eight point plan to exit white water and get us through a predictable growth period. The first points of this plan were announced and implemented at our recent major corporate event, called Elite Academy which was held this year in Kansas City on July 24th through the 25th.

Events represent an ideal launch pad for major initiatives of a direct selling company. At these meetings we have many of our most active independent sales representatives and most field leadership present and it allows us to explain the plan in depth and elicit their support.

Being reliant on a voluntary sales force makes this support and belief essential to the success of new initiatives. So let’s talk about the plan. Our first point is to establish a focused, simple and concise message that tells our unique story in a way that is repeatable, duplicatable and evokes emotion.

Then this messages needs to be internalized into the culture of the corporate staff and all distributor organizations worldwide. It needs to be clear and consistent across all marketing materials, recruitment tools, websites, social media event and distributor trainings.

This is critical because I found that the one thing which promotes growth in this industry is maintaining and leveraging focus. An interesting story; when I arrived at LifeVantage I met with our Board, our top management and our top field leaders. I asked each individual present to silently write the company’s purpose on a sheet of paper.

This was to be done in 30 seconds or less and in 20 words or less. Each person then read their answer to the group. Although many of the answers were similar there appeared to be no clear consistent message that was emotionally compelling.

To resolve this we engaged a highly specialized marketing group, that focuses primarily on direct selling companies and I feel is one of the best in the world to help us define the message or define this message and support us as we spread it throughout our organization.

We are in the final stages of this initiative and we will begin introducing this focused messaging and the associated tools during our global convention held October 23rd and 24th in Phoenix Arizona.

Over the last couple of months I have attended a number of our distributor events and I have been impressed with the enthusiasm and quality of our distributor base, but I know that we can do a better job engaging our distributors at all levels in order to help them set and achieve higher goals.

So the second point of our plan is to introduce enhancements to our business model, designed to modify the purchasing habits of our existing distributor base. We did this by simplifying our enrollment options and the process by which new distributors enter the business.

Due to the complexity of the commission structure surrounding these enrollment options many of our existing distributors couldn’t explain to a new recruit the various advantages of each option. As a result the majority of new recruits opted to enroll by purchasing our middle and lowest price enrollment packages.

So we set out to simplify the commission structure of each enrollment option to make it easier to explain and to train. Then we added additional incentives which created compelling business reasons to join with our most advantageous package.

Historically we are finding that only a small percentage of new distributors were joining with our top package, when our goal should have been to have the majority join with this top enrollment option.

It’s been my experience that distributors who make a greater commitment at the time of enrollment tend to stay with the company longer and are overall more engaged with building their businesses.

Keep in mind that we still have multiple points of entry that provide enrollment options which are appropriate to help distributors achieve whatever goals they may have, but our initiative here is to help incentivize those that are looking to build a sizable business.

Thus far in the United States, in the last month since introduction we have seen a faster rate of adoption than what I anticipated. We are now working on getting these enhancements implemented in our other markets and look forward to giving you a further update on our progress during our first quarter call.

Our third point is to incentivize our distributors to achieve higher monthly sales production. At our July event we also announced the introduction of a new bonus pool, which offers an additional performance incentive for distributions who joined us, a large enrollment package and then sell approximately $5,000 per month of product.

Our current bonus pool incentives only target to a $100 of monthly sales production. This enhancement is designed to incentivize our distributors to quadruple their current monthly sales targets.

The fourth point of our plan for returning to growth is that we must create an environment that will engage, ignite and incentivize both new and existing distributors to shorten the time it takes for them to build large sales organization and advance to our key leadership ranks.

At our July event, we launched a program to incentivize this and initial numbers are showing that this program is having the intended effect of changing behavior within our distributor organization.

Under this program, new distributors that enroll with large -- with our largest enrollment option and achieve the key distributor range of Pro5, which is our middle rank in 60 days or less will receive an additional bonus.

There are two important benefits of this new program, first to create a sense of urgency for people to accelerate their rank advancement at a more rapid speed than what we had previously experienced. In the past, there was not this type of time or urgency component built into our compensation plan.

Second it provides a significant incentive for our new distributors to achieve the important rank of Pro5. Pro5 is important to our growth because this ranks first as the basic building block of leadership in our compensation plan. We are currently working on expanding this program to our other markets.

Fifth, we will introduce new mobile technologies designed to enable business expansion. Right now there is a tremendous shift occurring in the way business is conducted. I like to say that this shift, which is primarily being driven by technology and social media, is a tectonic shift.

Companies are struggling to adapt to our ever changing digital and mobile world including within the network marketing industry. Either a company has to embrace this new paradigm or it will be run over by it. As a company it's my mission to place LifeVantage at the forefront of technology in this industry.

We recently begin introducing new and existing distributors -- to allow new and existing distributors to use mobile devices to sign-up and order product and we will continue to evaluate more ways to utilize technology to make it easier for our distributors to grow and expand their businesses.

The world of tech is moving over to mobile, so our business must also be operable from our mobile phones. At our July event, we introduced our first new mobile app. Our distributors now have access to their business at all times on their mobile devices.

We are proud of the app that we've launched in relatively short order, but there is still so much more technology that we can incorporate. At our October convention, we plan to release a new app with technology and features that I believe will put us on the -- at the forefront of the direct selling industry.

This app will be designed to help our distributors manage their businesses in a simple way and intuitively lead our distributors through the necessary steps for growing their businesses. It will allow our distributors to begin prospecting contacts on their own phones, like sending text messages or videos as soon as they enroll.

Another important feature of this app will help us with one of our greatest challenges in the direct selling industry, which is field communication and training.

Typically direct selling companies attempt to communicate with their distributors force via email, but due to the small percentage of emails that are actually opened and read this method is largely ineffective. Once we launch our new app we'll be able to communicate using push notifications.

This ability will provide us with tremendous opportunity to communicate and train. And I believe this will enable us to positively change the culture of our company. I cannot overemphasize my enthusiasm for the importance of this new technology for the growth of our business and I am eagerly awaiting its expected introduction in October.

This sixth point is product line expansion. In order to continually spur growth we intend to introduce new products with a regular cadence. Our target is on products which are activated by science and focused heavily on demand stability that will enable users to see or feel results immediately.

It is our intention to introduce our next new product at our global convention in October and another before the end of this calendar year. Seventh, we need to implement programs and strategies to attract new leaders to our distributor team. There is frequent churn within the direct selling industry with field leaders at a premium.

I firmly believe that with the changes we are implementing, LifeVantage will provide these leaders with a unique product and a compelling platform from which to grow their individual businesses. As such, we intend to work with our field leaderships to put ourselves in front of these new prospective leaders and bring them onboard.

As an example, we have recently rolled out a program that we call the Red Carpet Experience. This program first began on August 25th in Salt Lake City. The essence of the program is that a distributor leader at another direct selling company can show that he or she has a proven track record of success in the industry.

We will foster that person's travel to visit our corporate offices where we then have an opportunity to meet and develop a relationship with this person and have our corporate leadership team explain to the potential distributor the LifeVantage story and how he or she can become part of it.

In my prior experience I have found that the conversion rate for this type of program to be extremely high and we anticipate that as time progresses this will be a major factor in attracting strong field leadership to our company. And lastly the eighth point is to continue to expand globally.

We are currently in the United States, Japan, Hong Kong, Canada, Thailand, Australia, Mexico and the Philippines and the fact is that the vast majority of our sales are in just two of these markets, the US and Japan. LifeVantage aims to be a global company. And it is our goal to be in many more countries in the future.

Our focus is to begin by targeting certain gateway markets, which in turn opens up opportunities in more and more markets in any given region.

We have been encouraged at the rate our distributors are adopting our eight point plan but it will naturally take time to communicate this plan and implement it across our tens of thousands of distributors around the world. Before I conclude my remarks I would like to briefly address our plan to maintain our NASDAQ listing.

We meet all financial standards necessary for continued listing on NASDAQ. However, our current stock price does not meet the minimum bid price required requirement of $1 per share.

In an effort to meet this minimum share price requirement and ensure continued listing on NASDAQ, we are now filing a preliminary proxy statement that outlines our proposal to implement a reverse stock split. Our Board of Directors has unanimously approved the reverse stock split, with the primary intent of increasing the price of our common stock.

Our Board of Directors believes that in addition to increasing the price of our common stock the reverse stock split will also make our common stock more attractive to a broader range of institutional and other investors.

As you saw from our earnings release today we generated over $190 million of revenues this past year, have solid EBITDA and expect both metrics to improve in fiscal 2016. We are submitting the reverse stock split proposal to our stockholders for approval from a position of strength not of weakness.

We currently have just under a 100 million shares outstanding, and as many of you have mentioned to us that is too many. If approved we would expect the reverse stock split to enable us to meet the minimum bid price to continue listing on NASDAQ which is extremely important as we look to enhance and maximize long term shareholder value.

During the past three years we have been very open about our desire to significantly reduce our shares outstanding and we have repurchased approximately 30 million shares. Many institutional funds we have spoken to have also expressed their view that companies our size should have fewer shares outstanding.

We believe that having fewer shares outstanding and a higher stock price will make our company more attractive to institutional money managers.

While we are confident that the plan that I've outlined will drive improved financial results which should have ultimately be reflected in our stock price, it is important that we take this step in the near future. We hope that our shareholders will vote in favor of the proposal.

This first fiscal year at the helm of this company will be a lot of hard work. But we have a very solid platform to operate from. I look forward to applying understood principles that have been successful in my past experiences. It will take time for these to be adopted globally and drive success that is translated into our financial results.

The first preliminary step began midway through the first quarter and the speed at which this is adopted throughout our global organization will directly impact when we start to see the anticipated financial improvements.

Our first quarter of fiscal 2016 results reflect continued stabilization in our business and we expect that we will began to see meaningfully improved results beginning in the back half of fiscal 2016 as our new initiatives began to take hold across our organization. Now with that I'll turn the call over to Mark Jaggi..

Thank you, Darren. Good afternoon everyone. I'm glad to be on first of many calls with you. I want to start with expressing my excitement for this business personally. I worked in the consumer products field for many years. I have a great passion for the nutraceuticals and healthy living category.

The direct selling industry is extremely interesting to me and I look forward to working with Darren and the rest of the LifeVantage team. And honestly I have been enjoying every minute that I have been here. For the fourth quarter ended June 30 we reported revenue of approximately $45.3 million.

This was essentially flat on a sequential basis compared to $45.2 million in the third quarter of fiscal 2015 and compared to revenue of $56 million in the fourth quarter of fiscal 2014. On a sequential basis revenue in the Americas increased 2.5% and revenue in the Asia Pacific region declined 5.5% primarily due to the lower sales in Japan.

On the year-over-year basis fourth quarter fiscal 2015 revenue in the America decreased 15% and revenue in the Asia Pacific region declined 29%, primarily due to lower sales in Japan. Revenue for the quarter was negatively impacted $2 million or approximately 3.6% by foreign currency fluctuation.

Now looking at our customers, at the end of the fourth quarter of fiscal 2015 we ended the year with 65,000 total active distributors. This represents the decline from 66,000 at the end of third quarter fiscal 2015. But the decline rate is slowing compared to previous sequential period and the decline is all in the Asia Pacific region.

The number of preferred customers at the end of the fourth quarter of fiscal 2015 was 115,000, an increase compared to 114,000 at the end of the third quarter 2015.

And it's important to note that this marks the first preferred customer increase in the number of quarter in the company and it's a positive sign that we are moving in the right direction.

Our gross profit margin and gross profit for the fourth quarter was 83.9% and $38 million respectively compared to 83.3% and $37.6 million in the third fiscal quarter of 2015 and compared to 84% and $47.1 million for the prior year quarter.

Commission and incentives expense for the fourth quarter was 47.8% of revenue compared to 47.9% of revenue in the third fiscal quarter of 2015 and compared to 48.1% of revenue in the same period last year.

SG&A expense for the fourth quarter was 32.6% of revenue compared to 32.1% of revenue in the prior sequential quarter and compared to 27.4% of revenue in the same period last year.

And our SG&A expense in the fourth fiscal quarter of 2015 included $700,000 in one-time expenses related to the engagement of an executive search firm and $700,000 in severance cost.

Operating income for the fourth quarter of fiscal 2015 was $1.6 million compared to $1.5 million in the third fiscal quarter of 2015 and compared to $4.7 million in the fourth fiscal quarter of last year.

As a reminder we do expect to begin benefitting from the over $4 million of annual cost savings that was implemented during the fourth quarter of 2015 here. Adjusted EBITDA was $3.1 million for the quarter of 2015 -- for the fourth quarter of 2015 compared to $6.1 million in the prior year period.

As Darren stated though on a sequential basis adjusted EBITDA was slightly down compared to $3.3 million in the third quarter of fiscal 2015. This underscores in my opinion that we have begun to see some stability in our operating results.

Net income for the fourth quarter was $200,000 or $0.00 per diluted share calculated on approximately 96.5 million fully diluted shares. This compares to $2.4 million or $0.02 per diluted share calculated on 105.6 million fully diluted shares in the same period last year.

Now turning to our full year results, in fiscal 2015 revenue was $190.3 million, compared to $214 million in the prior year. Revenue in the Americas decreased 2.2%, while revenue in Asia Pacific decreased 28.2%, due primarily to the continuing challenges in the Japan market.

Foreign currency fluctuation negatively impacted revenue by $6 million or 2.8%. Operating income for fiscal 2015 was $13.9 million compared to $19.4 million in the prior year.

For modeling purposes recall that fiscal 2015 operating income also included the benefit of approximately $2 million from proceeds recovered and related to the company’s December 2012 product recall. Adjusted EBITDA was $17.4 million for fiscal 2015 compared to $24.5 million in the prior year.

Net income for fiscal 2015 was $7 million or $0.07 per diluted share compared to $11.4 million or $0.10 per diluted share in the prior year. Now turning to our balance sheet, our cash and cash equivalents as of June 30, 2015 were $13.9 million compared to $20.4 million at the end of fiscal year 2014.

For the full year we generated cash flow from operations of $13.1 million. Cash flow benefited from a onetime cash settlement -- from that same onetime cash settlement of $2 million in the first quarter. In fiscal 2015 LifeVantage repaid $9.2 million of debt and returned $9.9 million to the shareholders by repurchasing a total of 7.6 million shares.

We don’t foresee any further stock buybacks in this fiscal year but intend to continue to pay down debt as aggressively as possible. Now I'd like to review guidance for fiscal year 2016 with everybody. In fiscal 2016 we expect to generate full year revenue in the range of $195 million to $210 million.

This represents a 2% to 10% increase over fiscal year 2015. As our last several quarters have represented an annualized run rate of approximately $180 million this guidance reflects confidence in our ability to grow the business from where it stands today.

We're modeling the United States to increase between 4% and 12%, while Japan declines between approximately 2% and 11%, with the remaining countries yielding a modest increase primarily driven by Hong Kong, Mexico and Thailand.

We expect our operating margin to be in the range of 8.5% to 10.5%, and earnings per diluted share in the range of $0.08 to $0.11 based on an estimated 100 million diluted shares before adjusting for the proposed reverse stock split. And we expect somewhere between a 36% and a 37% effective tax rate.

As our revenue run rate has been near $180 million and the initiatives described by Darren are only recently underway we expect that our growth to the $195 million to $210 million range will be primarily accomplished in the back half of the year as our programs and initiatives rollout globally.

And that's it from me so at this point I'd like to open up the call for questions. .

[Operator Instructions]. We'll take our first question from Eric Weisenberger [ph], a Private Investor..

Yes hi, thanks for taking my call and Darren and Mark welcome on board and good luck. We're all very hopeful. As you know the shareholders of this company have been beaten up very badly for the last three years or so and we're all desperate for some good news and new direction.

One of the things Darren mentioned was another new product announcement in October and a second one by a calendar year end. Yet we've heard nothing at all today about the skincare product, the K9 product or the energy drink.

Are we abandoning those three or if not, how are their sales progressing and their outlook?.

All right. Well thank you Eric for that the question. So let me first discuss. First of all we're not abandoning any of our product line at all.

And if anything, when I -- taking a look at being here just a few weeks, a couple of months, if you look at the branding that we have with the company I think there has been some confusion where some of the products have mixed in with the actual brand of the company.

And so what we're doing right now is trying to separate the various product brands from LifeVantage brand itself and form a federation of brands below it, so that we can more aggressively and targeted market each of these products. We talked about the -- you'd mentioned about the true science product line.

I think the true science as well is Protandim. Protandim's our hero product for sure. And as well as AXIO is a wonderful product. We've seen -- we're getting some preliminary study facts on that product and there is some fantastic results from it.

But what we're looking at doing is initially we'll be focusing a little bit more on the true science line, on expanding and driving some business through that. As we roll out globally typically the true science line or skincare can go into markets more rapidly. So I see that product line growing in importance with this.

But as well, we're going to be expanding into some new categories.

So I really don't see that we're abandoning any products, but we're reinforcing existing products as well as we're in the process of redoing the materials for our existing products and new products, so that we can do a better job of selling those and empowering our distributors to be able to share the benefits and the benefits of those products.

So that's the plan right now. .

Thank you. Okay, my second question that I have three is what's specifically were the cost cuts the $4 million in cuts that we've made.

Can you give us more color on what that was?.

I'll turn that one over to Mark.

Mark do you want to cover those cost cuts?.

Yes absolutely. The cost cuts were a plethora of multitude of different things in SG&A. The company did not really aggressively engage in SG&A cost reductions in the past. I can give you some texture to it. There was a good bundle of headcount. A little over a fourth of it was straight headcounts.

And then we had somewhere in the range of another just under $1 million and also more headcount in temp agency work. A couple of other things, we had some facilities that were unused that we sub-leased. We had an event reduction from four events to three in the year.

That was fairly substantial along with some professional services that was duplicative with our base business and with our -- the people we have. We have some other smaller things travel and other things like that that we're looked at and aggressively pursued.

And just to give you a little bit of texture around that, I've got a lot of experience in cost reductions in my career. And we're implementing a lot of control to ensure that those cost reductions are seen.

At the same time we are looking to grow next year and so we're targeting any spending inside of the current budget and possibly some small amount outside of the current budget that will help spur that growth into the $195 million to the $210 range.

Does that help?.

Yes that does help a little bit, thank you. My last question is and I know we are restricted to three, I have lots more but I'll only take my three and this is one I have mentioned several times in prior calls before you guys arrived.

I am mystified that there is no public purchase of our stock by directors or officers of LifeVantage and I am mystified about it because the stock as you know has plummeted down to $0.50-$0.40 even I think opened at $0.20 again on that Monday when the market was down 1,000 points but no matter what I can’t understand how you could expect shareholders to stay with the company when the officers and directors don’t even think it’s worth purchasing even at these levels.

I’d love to have your comment on that..

Can I jump in John, just going to say something on that? So as I was interviewing for the job, if I could have bought I would have bought in a heartbeat. And so that wasn’t it, it was I was not prepared at the time to do that and if I had a lot of inside information, then I wasn’t going to do that until I got into the company and got hold of that.

So absolutely it’s a great stock to buy, that’s an easy one but John….

And this is Darren too, yes the moment that I am available to purchase I see no better time from my standpoint.

And then John you have any comment?.

Eric yes, hi it’s John Mills from ICR. We obviously publicly traded companies go through certain blackout periods. If you do look back over the past four or five months you will notice that some directors did buy stock when they were able to buy stocks.

Unfortunately, during the past -- over the past month we have been in a blackout period where no one in management was allowed to purchase stock.

I think fortunately we are having some institutions that are looking at our stock now and moving from $0.50 up to the mid-80s and the market has had a meaningful correction we are certainly very pleased with that..

[Operator Instructions] And with no further questions I would like to turn the call back over to Darren Jansen with any additional or closing remarks..

Well thank you everyone for joining us today. We appreciate your continued interest and loyalty to our company. And Mark and I both look forward to speaking and meeting with many of you over the next few months. Thank you for joining us today and have a wonderful day. Good bye..

This does conclude today’s conference. We thank you for your participation..