Live Ventures Inc (LIVE) 2007 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Second Quarter 2007 YP Corporation Earnings Conference Call. My name is Rob, and I will be your coordinator for today.

At this time, all participants are in listen-only mode. We will conduct a question and answer session toward the end of this conference.

(OPERATOR INSTRUCTIONS)

At this time, I would now like to turn the call over to Mr. John Evans. Please proceed.

Good afternoon, my name is John Evans. Thank you for your interest in YP Corp.

With me today are Chief Executive Officer Daniel Coury, Chief Financial Officer Gary Perschbacher and John Raymond, the Chief Operating Officer. They will be discussing the Company's fiscal results for the second quarter of 2007. At the conclusion of their prepared remarks, we'll open the conference for questions.

Some of the discussion today will involve forward-looking statements, and I will now read to you the following warnings about reliance on forward-looking statements.

During the course of this presentation, we may discuss YP Corp's business outlook which contains forward-looking statements. These particular forward-looking statements and all other statements that may be made during the presentation that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially.

Please refer to our periodic filings on Forms 10-K and 10-Q, made with the SEC, for more information on the risk factors that can cause actual results to differ.

Important factors that could cause actual results to differ materially from the Company's expectations include, but are not limited to, those factors that are disclosed under the heading "Risk Factors" and elsewhere in Company's documents filed from time to time with the United States Securities and Exchange Commission and other regulatory authorities.

Forward-looking statements made during today's call are only made as of the date of this conference call, and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events.

This conference call is being webcast and will be available on our website for replay following the call.

Now, let me turn it over to Gary Perschbacher, Chief Financial Officer, to discuss the financials.

Good afternoon, everybody, and welcome to YP's Second Quarter Fiscal 2007 Earnings Call. I just want to highlight a few financial items for this quarter and then turn it over to John Raymond, our COO, and to Dan Coury, our CEO, to discuss matters that you really want to hear about.

For the quarter ended March 31, 2007, we incurred a net profit of $626,000 despite a drop in revenue of $1.9 million. For the six months ended, we are currently at $1.1 million versus a loss of $197,000 in fiscal 2006.

The increases in profitability are really related to reductions in operating cost. $3 million of operating cost was cut in the second quarter, and $4.6 million were cut for the six-month period just ended.

These cost savings are primarily related to the cessation of the check mailer through headcount reductions and a direct cost of mail campaigns. Also impacting the reductions were reduced telemarketing costs and one-time charges in fiscal 2006 for the termination of former officers of the corporation.

Net revenues dropped primarily due to the impact of the Attorney General's settlement. Despite this, we still had the profit. Revenues ended at $6.1 million for the quarter, $13.2 million for the six-month period ended in March 31, 2007. This compared to $8 million for the second quarter of 2006 and $15 million for the six-month period ended in March 31, 2006.

On the plus side, average revenue per customer has increased each quarter of this fiscal year. Currently, we're at $29.49. First quarter ended at $28, and prior year's end number was $27.23. Sales and marketing expanses were the main reason for the reduction in our operating costs.

Excuse me, I have a cold. We cut out $2.1 million and $2.8 million in the quarter and the six-month period. Again, this is all related to the cessation of the activation check.

G&A expenses decreased $771,000 for the quarter and $1.5 million, respectively, for the six months, as compared to 2006. The primary reason for these reductions was again the cessation of the check activator, as we reduced headcounts in our call center and other administrative functions as they related to these activities.

G&A costs should remain stable over the coming months as they are mostly fixed, with the general exception of consulting fees related to operational activities, and both of these are based upon customer counts. Sales and marketing costs should also remain stable with the possible exception for the build-up of our telemarketing program in Las Vegas.

Our balance sheets remain strong, with cash and cash equivalents and short-term investments exceeding $9 million. Current liabilities decreased to less than $2 million, and there is no long-term debt on our books.

Shareholder equity grew to $24 million from $23 million prior year, and working capital also grew by approximately $1 million to reach approximate $15 million.

Now I'll turn it over to Dan Coury, our CEO.

Thank you, Gary, and welcome, everyone, to our conference call.

As many of you know, this quarter represents the end of the results from the AG settlement and the beginning of our successful new telemarketing methods, and the start of many developments at YP.com. On this call, we are going to explain our strategy to sustain this performance over the long term.

For the second quarter we generated $626,000 in profit, or $0.01 a share of diluted basis, and showed that even in difficult times our business model has continued to remain profitable. In addition, our cash has grown to over $9 million. At the end of the day, I always look -- use this as a partial guide to how well we are doing.

While this quarter saw the lowest point of our customer count, it also marked the beginning of an improvement in customer retention and the acquisition of some customers with an average ARPU of over $2,300 per year from our Las Vegas office.

During the quarter, we received the final effect of the refunds that were offered as part of the settlement. And as we said in our last conference call, our inability to utilize activation checks hurt our customer count for that quarter. But we have gained paid listings and customers that pay us more, and they get more value than ever before.

And as we continue to improve the Yellow Page product, we believe we shall see continued growth in our paid listings and our customer count. As we said in the press release, our customer count hit the low 70s. Now we are adding new customers, and we expect to be above 75,000 when we report the current third quarter of 2007.

We're guiding to 5,000 per quarter, including both Las Vegas and our Philippine call center. And as of today, we are well above 73,000 billed listings. We hope to exceed our own expectations as we continue to ramp up this telemarketing effort.

The local internet Yellow Page market that we operate in is expected to grow to $1.5 billion over the next few years as more companies see the advantage of an internet Yellow Page ad. This is versus a print Yellow Page ad.

We are improving our website experience for our visitors as well as our value proposition for our advertisers. We have the oldest Yellow Page internet company or URL that's on the web today, and we have one of the most experienced management teams in the industry.

We have begun to expand our offerings from a simple premium listing to geo-targeted ads that make our advertisers easy to find on the internet. We are also increasing the ad network and the channels for traffic to our site so that more internet searchers can find our customers. This is the best way to increase value for our customers, which helps to secure long-term customer retention.

Typically, consumers spend about 80% of their income within 50 miles of their home. Research shows that 25% of all searchers on the internet are looking for local companies. These are the customers that businesses are looking for. Our goal is to increase the number of small to medium-sized businesses who have a YP.com Yellow Page listing and to drive customers to those businesses.

Going forward, the way to take advantage of this considerable market opportunity is to implement our triad business model that we discussed in a recent press release. In this triad model, YP leverages its unrivaled customer service, billing relationships that officiously process payments to maximize the billing channels used when acquiring and keeping customers.

This triad model acquires customers through three district channels. One, direct acquisition to telemarketing. Two, syndication of other local surge or web-hosting customers. Three, the acquisition of independent Yellow Page and other related companies.

Our goal is to continue to update you so that you can see our progress over time. We're continuing to pursue other strategic partnerships, which will provide an opportunity to cross-sell into each other's customer base as well as improve our product and distribution to the YP value proposition, which makes us significantly stronger. This includes syndicating our online Yellow Page to publisher sites, participating in Yellow Page ad networks, adding online business tools and services.

At the year-end conference call, we provide a year-end 2007 guidance. Many people have inquired about the guidance in light of the effects of the Attorney General settlement. We can say the effect was greater than we anticipated, and this only put us back a quarter or two from our initial goals.

The full effects of our triad model should begin to be felt during the third and fourth quarter of '07, especially during the first quarter of fiscal 2008. We are in the process of updating our forecast for the year. We will release it when updated.

I know that I've told many of you that I would keep this company profitable and grow it into a formidable local Yellow Page company. Our team has been doing just that. In the face of some headwinds, and hard work, it is now time for our headwinds to be replaced by tailwinds and have some wind at our backs.

I'd now like to turn it over to our COO, John Raymond.

Thank you, Dan. Most internet search business has been focused on search outside of a local market. Only about 1% of business are search advertisers today and a small percentage of small to medium-size businesses today have a web presence or internet Yellow Page listings.

We have a directory of about 17 million small to medium U.S. businesses of which a small percentage is advertising on the internet. These numbers continue to show we are still at the very beginning of internet Yellow Page growth and local internet search.

We are very pleased with the telemarketing progress that we've seen so far. In our Las Vegas office, as you know, we have set up a team that has been marketing to the premier small business segment. In that market, we've been able to sign up customers for an average of 2,300 per year, or about 200 per month, which translates into a 7x multiple to our current and past customers.

As we continue to build out this business, we hope to see a growth in the number of customers and these businesses increasing our overall average revenue per unit. We expect individual unit sales to continue to increase in the medium to high-end sales market as we continue to restructure are basic monthly subscriptions. In the past, the basic monthly subscription included a citywide search result. As we mentioned last quarter, the subscriber will now pay a basic fee for each zip code to be included in.

We continue to develop additional products, which will be sold at higher initial entry price points beginning at $49.95 and $99.95 per unit, respectively. Again, these additional products will have incentives and discounts for volume and longevity.

The key to sustaining sales growth in the future is to have enough territory to generate sales. We mentioned last quarter we needed to reopen all territories closed since the summer of 2004.

I'm pleased to report following a stringent approval process, review of our sales cycle, product offering and customer management process, we received approval last month from both Quest and Verizon to sell in their territories, which means we are now -- we have 100% access to all regional Bell territories in the United States.

As we have said before, we've also begun several business development projects, such as strategic alliances with independent Yellow Page directories, small business webservice companies and services-related companies that will increase our product offerings to our customers and increase the number of partner customers we might have at YP.

We have completed a partnership with Web.com, which will provide an opportunity to cross-sell into each other's customer base. The terms of this type of agreement will vary from partnership to partnership. However, we plan to collect negotiated fees for each customer placed on our directory from those partnerships, and as a part of the cross-selling process, upsell additional services from both companies. The best practices learned from this partnership will also serve as a model and basis for future cross-sell agreements.

One of the goals last quarter was to shift and optimize our lead generation systems from direct mail marketing to telemarketing, which requires more accurate information and contact information about key decision-makers, which should increase the likelihood of a sales conversion. We have completely overhauled this quarter our lead generation systems to now include newly formed and unpublished businesses as well as businesses that only operate by cell phone, which may create an opportunity to close a higher value sale.

On the technology front, we've identified a clear strategy and primary technology partner for the next generation product. We plan to fully engage with a likely partner this quarter and execute on that strategy during our third fiscal quarter.

The goal is to continue to add value by implementing a best-in-class platform with a well-recognized leader in the space to power our advertiser, distribution network, directory and mobile product offerings as well as other enhanced services.

Now I'd like to turn it back over to Dan Coury.

Thank you, John. I would like to point out, we are guiding towards 5,000 per quarter, but our goal is to exceed 100,000 paid listings by the end of the calendar year 2007. And this is something that we feel is very possible with what we have going and with the direction we're going now.

I'd like to now open it up for questions.

(OPERATOR INSTRUCTIONS) Your first question is from the line of Reed Ferma of Guten Associates.

Hey, Dan, Gary. Congratulations on getting through a tough time.

Thank you.

Thank you.

What are your largest categories now? In other words, in terms of restaurants or accommodations, what are your largest categories?

Let me turn that over to John Raymond. He's very up on that. We were just looking at that yesterday.

Yes. Hi, Reed. Our top categories are pretty much -- number one is generally restaurants followed by -- your top five are going to be restaurants, automotive, travel, hotels -- which is related to travel. It's a subcategory of the travel segment -- and then lawyers, doctors, physicians.

But generally speaking, the number-one category, the most-crowded category, the majority of businesses out there is the restaurant area.

What's really interesting is they actually separate restaurants and pizza places, and pizza places are usually number one. And so that whole category is the largest.

Just another couple, and then I'll get back in the queue. What's your headcount now, and what do you anticipate it will be by the end of your fiscal year?

Well, we've reduced -- in the past we've operated as high as 145 to 150. 170?

We're down to 70 right now.

We're down to 70 right now is where I was going with that. That's correct. So our headcount model is right around 70.

We're anticipating growth, obviously, as we build out our Las Vegas facility. That's organic headcount. That excludes the headcounts in our external call centers, which generate our sales for us, the bulk of our $29.95, 300 a year ARPU-type of sales. But our mid to high-end sales program is going have internal headcount associated with that.

But obviously, if the headcount's growing, there's going to be anticipated sales volume attached to that.

Yes. We're looking at increasing the headcount only in the sales area. We know that the Company that is telemarketing for us overseas has 120 seats, 120 employees, which, I understand, every single one of them are college educated. And they are the ones that are marketing the bulk of our numbers at the present time, and we hope to increase our headcount in Las Vegas.

But this type of headcount all brings money in. It's not a cost to go to the bottom line.

Dan, you mentioned you're going to release guidance sometime in the future. How, and approximately when might you do that?

What we're going to do right now is because we've just turned around and implemented all the new marketing packages, we're going to let them go about another month or two, see how it's progressing up.

We know that it's going to do better than it's doing, yet it's very successful now, and we are in the positive growth. And we'd like to have a little bit of a track record so that we can have the guidance as accurate as it possibly can be. And then we'll probably give guidance on a quarter-by-quarter basis, and nothing longer.

Great. Thank you very much.

Your next question is from the line of [Juan Nobile] of Taglich Brothers.

Hi, good afternoon, everybody. Nice quarter, considering.

You had indicated that, going forward, your G&A and S&M margins would be relatively stable with the exception, maybe, of changes caused by some variables relating to sales. But maybe you could help us out by telling us how we should view your gross margins? I mean, it's up pretty significantly. Are you looking for stability there, too, or are you looking for further improvements in light of the higher revenue per billing that you talked about?

I would look for a higher percentage there, Juan, for a couple of reasons. One, this is a highly leveraged model, and we've made some adjustments and reclassifications on our expenses, such as moving dilution out of cost of sales and putting it into -- charge against net revenues.

Consequently, what's sitting in there now is really the true variable portion of our Company. When you look at G&A, the big expense there is compensation, and that's relatively fixed even on the hourly people. They just work the same number of hours, and we can leverage them up as sales increase.

The only thing, as I said earlier, that changes in G&A is the professional piece for consulting services from our operational consultant, who gets paid based upon customer count.

That's helpful, Gary. You said that it could go high. This may not be a fair question, but what would you consider a practical maximum? What would be a cap on that, let's say over the next one-and-a-half, two years?

I really can't answer that, Juan, at this point. Again, as Dan said, there's just too many ball up in the air right now, and we need to get a little more experience behind us.

But I do expect some of the costs of services for the LEC billings channels to go down. We've been negotiating some new contracts with them, and there is one particular aggregator that we're dealing with now that could save us $15,000 to $18,000 a month in inquiry fees.

It's sort of a leverage bottle. As we grow, and as we add more customers, these costs are going to continue to creep down as we go forward. I really don't see them climbing any more at all.

And so, as they go down, our costs are going to get better, our buying power becomes stronger, and it should be positive all the way around.

Okay. That's helpful. Thanks very much.

(OPERATOR INSTRUCTIONS) And your next one is from the line of Rick D'Auteuil of Columbia Management.

Yes, just to follow up on your targeted customer account. What I heard was it troughed in the low 70s in the current quarter that you're reporting. Presently, it's around 73,000 and targeted to be 75,000 by the end of June. Is that correct?

Yes, that's correct.

And then you said you were going to -- that your goal was to add 5,000 a quarter. If we obviously could get to a number to like 85,000 by the December year end, and yet you threw out this 100,000 target or reach target -- I don't know how you want to classify it. To me, you're implying that you're going to do -- or maybe you can answer this. Are you going to acquire customers in some sort of bulk purchase? What does that mean?

We are handling some projects that we're working on now where we'll be able to cross-sell at a higher rate. And so though the model we have going right now, as we stand, we do nothing new, we can add 5,000 customers per quarter the way we are. And we're profitable at 70,000 customers. So we are solid, and we're solid with 5,000 per.

If these new projects come online, okay -- or excuse me, when the new project comes online, we have the opportunity to grow at a faster pace. But as we are right now, with the net growth in paid listings, we can add 5,000 per quarter. I hope that helps to answer your question.

Okay. And a follow-up question. On the LEC billing, this is a company that was predominately LEC, and then you went to ACH, and then you're kind of transitioning back to LEC. And I understand that the direct marketing or the mail marketing model that lends itself probably better to the ACH, but we were told the benefits of the check -- getting paid by check was that you got your money a lot sooner, and you had a better sense of whether the customer would stick longer term.

I guess we're kind of going back to the LEC billing. That's still -- I assume the terms are -- there's quite a delay in actually receiving payments. I guess that's one issue.

And then the reserves, historically, or your ability to recognize revenues, maybe you can talk about that at this point?

Yes, this is John Raymond. Yes, LEC, what we've been doing is looking for the optimum blend because, obviously, the various billing techniques, they lend themselves to certain sales types of techniques. So I try to optimize the billing method either for the sales technique or at the direct request of the customer.

So what you've been seeing over the last few months is sort of a -- we're taking those three different types of billing methods and looking for the optimum blend based on sales performance and/or customer requests.

In terms of LEC charges, yes, there is a delay. However, in the future, one of the things we've done over the last year was negotiate the timeframe in which we settle out with LEC to a much shorter window. The general guidance in the past has been around a 90-day settle. We're averaging 50, 55 days now, and we continue to drive that number down as agreements come up for renewal and we come up with ways to incentivize the LEC billing aggregator to settle funds with us sooner.

One of the things we've been trying to do is we want to make sure we're not dependent on any one type of billing. So this way we have a balance. In Las Vegas, all of our billing there has been done on credit cards so far, okay, and that seems to be what works best in that particular scenario. And there's going to be some direct billing, too, where they're going to just send us a check.

The telemarketing seems to lend itself to the LEC billing, and the LEC billing seems to be the way a lot of the small customers prefer to pay it on their phone bill because it feels it's part of it, and then they seem to stay longer. And so where we're keeping ourselves is that we're never dependent on any one area.

Now, we're doing such a good job in LEC billing, in our customer relations there, that's why we're being opened up now in Verizon, we're opened up everywhere, because we can manage it and maintain it. And that's what happened before. They lost management of it, which caused a lot of loss of customers back in the old days. So one of the things we're doing, we have a nice balance. I'll add one more comment to that LEC scenario. As I've mentioned before, we had gone through a stringent approval process with all of the major RBOCs. As a part of that process, they reviewed everything from what we're selling the product for, what we're pitching it, what it was, verified the call center inquiry, verified every aspect of the company and the product that we're pitching in their territory.

As a result of that, we are required -- we have less flexibility. We have to get pre-approval on every price point that we bill on the telephone bill. So we have less price elasticity in that area.

In the high end to medium size sales that we're doing out of our Las Vegas facility, that's going to be variable because that's a negotiated type of sale. In some cases, we'll negotiate higher margins. In some cases, we set a floor on it. So that lends itself to some form of prepayment or some type of variable price terms, negotiated directly with us.

To blend this quarter and this six month is somewhat distorted, too, particularly in the second quarter because of the AG settlement. Most of the customers that we lost were being billed on ACH channels. So, consequently, the revenue coming through those channels was obviously lower than what is has been in the past.

In fact, LEC channel comprised 65% and 55% for the second quarter and for the six months compared to 44% and 31% when you look at fiscal 2006.

Again, the related question was -- historically, my recollection was the accountants forced you to take a higher reserve or not count it until you got paid for three or six months as revenue. Are they still taking that conservative stance on the LEC billings?

No, the biggest portion of that reserve was for dilution, which again relates to the unbillables and the charge-backs that we would get. And again, we've taken a quality assurance step, if you will, through [core] discussions with our operational people, consultants.

And we are now really reducing that reserve. I think we reduced it this quarter by about 5% because the unbillable amount is down significantly and continues to drop.

All right, that's all I have. Thank you.

Thank you.

Your next question is from the line of Bill Wolfenden of RS Investments.

Hi, good afternoon.

Good afternoon.

A couple quick questions. You probably said this, but I missed it. Where did you trough? You troughed at 70,000?

Yes, that's correct.

And roughly when was that?

That was right at the end of last quarter.

You mean on March 31st?

About mid-March.

Yes, about mid-March. We paid back through, it dropped to -- the settlement was to February 28th, and we continued to get refunds after that. And that was the bottom, and then we started a lot more of the programs on the telemarketing. You saw them, and they were catching up. We improved them, and then it grew from there.

Okay, so we've gone from 70,000 to call it 73,000 in the last month?

We're north of 73,000.

We're north of 73,000.

Right, we're well north of 73,000.

Great. And then, basically, if I heard you right that the variable costs, going forward, are pretty much just going to be sales reps. I mean, you'll hire new sales people as the business call for it?

Exactly.

Okay. But currently, with the current infrastructure, you can add about 5,000 a quarter?

Yes, with current infrastructure, we can add 5,000. In fact, the current infrastructure within YP.com, we could add another 200,000 paid listings and really not add more than one or two headcounts.

Okay. And can you talk a little bit about the churn you're seeing just from the Philippines business as separate from the new Vegas business because it's probably too new to tell?

The churn has been absolutely almost nothing from the Vegas because those are very high-end sales. So that's not been a problem at all. From the Philippines, that's been getting -- that has been lowering all the time. We've seen that sliding on a month-by-month basis. As we've been able to improve our responses, the letters that go out to them, the follow-up calls, it's been getting better all the time. So we feel that will continue to improve.

Now, in the industry there's a certain amount of companies that just go out of business, and small businesses change their numbers, change their addresses, and you'll always have some. But we have seen it improve substantially. And so we're very happy about that. They're doing a quality job.

And roughly, where is it now?

Well, we still have average life expectancy of customers that come on in the 18- to 24-month range or more.

For the Philippines business?

That's correct. That's overall, across our entire base. Because the direct sales out of Vegas are still a small portion of it.

And I just want to add one more point to Dan's comments related to Vegas. The churn out of there is virtually non-existent because we are engaging with them on term-like contracts, anywhere from three months to six months to one year.

And what is different about what is going on out of the Vegas office than the Philippines? Is it more like elephant hunting versus -- ?

More targeted, the marketing is highly targeted. We're going after companies that, for example, there was a question fielded earlier related to the top-performing categories, that's an example of a form of targeting. Going in with a specific type of pitch specific to that industry, if it's automotive, travel. The bundling of the packages.

There's more complexity around the sale. We're adding -- it's not just the Yellow Page listing. We're adding other features that we've fixed a cost on and then are reselling it out at a higher margin and then doing some bundling with it.

Okay. And excluding Vegas, so just sort of the new business that's being sold in the Philippines, what's that being sold at right now, roughly?

That is on an average monthly -- we target it around between $30 and $39 monthly. So you could expect probably an ARPU on that, an annualized one, of $300 to $400 per customer per year.

And that's a very boilerplate, a highly commoditized product. It's your basic Yellow Page listing. There are no other features than what we advertise on our website. We got some searching optimization features that are in our higher end product that are not in that product.

Again, that was designed to be a mass market bid of entry level type of product into our product base. And then we were going to take that as an opportunity to also generate leads for the Las Vegas operations, identifying businesses that might be an ideal prospect or candidate for a cross-sell into other product lines.

Okay. So, again, excluding Vegas, just on what's being sold now, it's being sold at a higher price than $29.40, so we should continue to see the ARPU going up. And then when you throw Vegas in, it should even continue to go up even at a faster rate. Is that a fair assumption?

That's a fair assumption.

Okay, great. And what are the expectations from the Philippines operation? I thought they were talking about 10,000 plus a quarter, or was that more of a gross number?

That was a gross number in the past. Today we've refined the numbers, again, based on the size of our footprint and what we can comfortably acquire and keep.

Because the focus is on retention. Sales are increasing, and retention, or churn, is decreasing. So we're trying to keep the net gain from that for as long as possible. So that's the goal. So we're trying to strike a balance. At the moment, the preponderance of sales and revenue is coming in from our Philippine call centers.

Okay. And most of the Philippine stuff is the LEC business, is that right?

That's correct.

Okay. And when I met with Dan a few months ago, there was some discussion about potentially doing some cross-selling down the road to not only sell additional services, but also potentially have someone from Vegas contact those people and hopefully get them on the ACH. Has any of that even started yet, or is that still an opportunity?

That has not started yet, but it is an opportunity. In getting the Vegas going, we've had some great success with the people that we have there now, but we've got plenty of leads for the small group we have there. We've just been refining it.

And like we mentioned, we had an average of $2,300 from them, but we've got some sales in there that are looking very good. As we run out of the leads with that group there, than we'll be targeting some of our customers from the Philippines.

Okay. And over time, can you get that LEC business down back into the 50% range from, where is it now, 65%, I think?

I think we could. The way we're managing the LEC business now and the fact that we're getting paid sooner, it's not uncomfortable at 60%, but we will see more of it.

In fact, it may be 50/50 if you look at gross dollars in the future. But as far as customers, it might be 60%. But we'd like to see the gross dollars are going to much higher from the Las Vegas one. So it depends on how you'd look at the number.

Okay. And lastly, any plans to try and get off the bulletin board and get a NASDAQ listing?

Absolutely. In fact, we have an application in now, and we do plan on doing that. That's in our future.

Okay. Thanks a lot.

Your next question is from the line of Kenneth Smith of Lenox Equity.

Thanks. Dan, you mentioned you have an application in now. Do you meet all the requirements to get off the bulletin board, or do you still have to do some things in order to qualify?

Hello, Ken. How are you?

Hi.

We meet all the qualifications except for price, and that's something that we've been -- we're working on. And with the new growth that we have and going forward, we're hoping to see a better response in that area.

And we're talking to them now. In fact, we're talking very close with them, and we've got them coming down on being able to go forward. And we'll see what we can do in the near future. But other than that, we're in very, very good shape for being able to go on.

Okay. And then I just want to follow up on the Las Vegas operation. I understand it's quite small right now, but is that -- and the revenue per customer is quite high. But is that the way it's going to stay, or can that operation ramp up significantly? Can you give us your thoughts on that?

The gentleman we have that's in charge of that has worked for a competitor and was running an excess of 150 telemarketers. We have plans -- I'm the one holding it down. I want everything tested. I want to know what the pushback is. I want to make sure that these are the absolute quality sales and that we go forward. And then we will begin to ramp up. And we have already located a spot to add the additional employees. We're using the offices we have now.

But our gentleman that we have there plans on ramping up to an excess of 90 in the next, say, three, four quarters. I'm holding it down, verifying everything, getting everything absolutely right before I allow him to start hiring in those kinds of numbers.

What do you have, like a half a dozen there now or so?

No, we have more than that. It's probably -- the headcount's closer to 15, probably 18 at the moment. The plan is to -- obviously when we eliminated the infrastructure associated with the prior marketing method, we got some office space and call center space to accommodate a ramp of our biggest facility.

So in this first phase, it's sort of an incubation mode and pilot ramp-up in Vegas, but we have also additional facilities in Mesa that we could leverage. So you're not going to see any infrastructure costs other than adding headcount, which, again, as Dan pointed out, is tied to sales volume.

Okay. Thanks.

Then, one last comment on there. The team we had hired did come from probably the number one, number two in that space, was former director of sales. Of the 10 or 12 mid-tier management that reported to that individual, we had recruited half of them.

So we've got a -- it really is a crack team that has years of experience in that space, at least five to ten years, and probably 20 to 25 combined across the management team out there. They are used to selling in this manner. They've proven before. It was a highly visible competitor. So they know what they're doing.

Okay, thanks a lot.

Thank you.

And as that was the final question in queue, I would like to turn the call back over to management for closing remarks.

First of all, I'd like to thank all of you for coming out and spending time to listen to us today, and we hope to be able to communicate more by press releases in the near future, and we plan on staying as visible as we possibly can as we grow into the future. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's call. That concludes the presentation. Have a great day.