NewtekOne Inc (NEWT) 2010 Q4 法說會逐字稿

Good day ladies and gentlemen, and thank you for your patience. Welcome to the Newtek Business Services Incorporated Q4 2010 earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder this conference may be recorded. I would now like to turn the call over to your host, President and CEO, Mr. Barry Sloane. Sir, you may begin.

Welcome, everyone, to our March 16, 2011, fiscal year 2010 shareholder conference call. We really appreciate you attending. My name is Barry Sloane. I'm President and CEO of Newtek Business Services, the small business authority. And today present with me is Seth Cohen our Chief Financial Officer. Seth, would you please read the Safe Harbor statement?

Sure, Barry. The Safe Harbor statement. Statements in this slide presentation, including statements regarding anticipated future financial performance, Newtek's beliefs, expectations, intentions or strategies for the future, may be forward-looking statements under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters.

Risk factors, cautionary statements and other conditions which could cause Newtek's actual results to differ from management's current expectations are contained in Newtek's filings with the Securities and Exchange Commission and available through www.SEC.gov. Our Capcos operate under a different set of rules in each of the seven jurisdictions and these place varying requirements on the structures of our investments. In some cases, particularly in Louisiana or in certain situations in New York, we do not control the equity or management of a qualified business, but that cannot always be presented orally or in written presentations.

Thank you, Seth. We're pleased to announce our fiscal year 2010 financial highlights. Today we put out a press release that we have consolidated net income of $1.4 million for the year. That's versus a $429,000 net loss from the year prior and net income -- pre-tax net income of $877,000 versus a $4 million loss from the year prior of $4.8 million swing. We have revised our revenue guidance to a range of $119 million on the low end to $125 million at the high end for 2011, and our pre-tax net income range of $1.2 million on the low end to positive $4.3 million on the high end. In further looking at the 2010 financial highlights, looking at the segments a little bit closer, we had some primary revenue trends in EPP and web hosting that we were proud of, exceeding 2009 comparisons. Combined EPP and web hosting revenue for fiscal year 2010 is a $100 million versus $85 million a 13% growth from the year prior, and the biggest influential swing was our lending arm, Newtek small business finance, which posted a pre-tax net income of $2 million for 2010 versus a pre-tax loss of $2.3 million for fiscal year 2009.

On the conference call today, we're going to focus on our financial performance, cash position, balance sheet, business trends and 2011 guidance. We'll talk a little bit about our strategic mission as the small business authority and also focus on the launching of our new website, www.THESBA.com on January, 2011 of this year. Looking at the electronic payment processing segment, we posted $80.9 million of revenue, up 16% from the prior year. The web hosting segment was up 2%, $19.2 million from the year prior, and small business finance had a 28% increase coming in with revenue of $9.4 million. Looking at our core operating segment pre-tax net income, electronic payment processing, a 31% increase to $5.7 million, web hosting up $4.7 million, a 21% increase, and small business finance was a swing to positive $2 million from negative $2.3 million, a $4.3 million improvement. We finished off 12/31/2010 with a fairly -- fairly healthy cash balances. When you add up cash, cash equivalents, restricted cash on the broker receivable, which is the receivable that we'll get when the government guaranteed piece is liquidated on the SBA loans and we typically have a decent buildup at the end of the year, that's $33.2 million in cash, and that equates to about $0.93 a share. If you were just looking at pure cash, it would be $0.29 a share.

Our electronic payment processing segment historically has been the largest segment by revenue for Newtek Business Services, as we've mentioned earlier. Some fairly healthy increases in revenue pre-tax net income. This is a cash flow positive business with significant operating leverage. We came in with EBITDA of $7.4 million. This business has zero debt associated with it. And we came in at the upper end of our 2010 guidance range. We're focusing on the e-commerce space and EPP. We think this is a real important initiative, obviously tying our payment processing capability along with our other sister businesses obviously in hosting and design. We've been very successful with our NEWT Pay product, which has been an extremely competitive alternative to Paypal, and we have recently launched, and you can take a look on our website, our, Meet or Beat campaign where we're in the marketplace, challenging businesses to come to us where we will meet or beat their payment processing costs for qualified businesses or pay them $250.

Looking at our web hosting segment, which has historically been a very good segment for us, our revenues for the year 2010 versus 2009, up 2%, our pre-tax income up 21%. There clearly are a lot of challenges in this particular segment, as particularly the low end of the market has become a difficult market to compete in, given that a lot of our competitors are giving hosting away. Obviously they're giving it away without a lot of service or product associated with it. It is -- it is quite challenging. We're continuing to invest in this segment to support future growth. We're very positive about what we currently call web hosting, but realistically, positioning the Company as an entity that offers -- offers managed services or outsourced solutions, technological and web based solutions to small and medium sized business, is really what our expertise is. Historically we've done a great job at marketing to IT partners and web developers, and we think this will be our core strength going forward as we make some product shifts and offer more service and services frankly that are -- are quite in demand today. We'll get into that a little bit further in the presentation as we talk about our cloud computing position. As a matter of fact, we'll talk about that on slide number 10.

When we talk about cloud computing, frankly, a lot of the market and our customer base is somewhat unfamiliar with what cloud computing is. And essentially in a cloud computer offering, business customers, and I say the SMB market, and you've got large customers in that segment and real small customers, typically don't want to own the hardware. They don't necessarily want to own the software. They don't want the personnel. They don't have the ability to store their data. They're concerned about their security and their responsibility and accountability really, for their whole technological infrastructure. And essentially, the -- the common verbiage is, well, I'm going do it in the cloud, or outsource it and push it away to third parties. Why is cloud computing relevant? The major end of the SMB market or even major corporations have used cloud computing because it has contained costs, it has created tremendous efficiencies. Many corporations find, when they outsource it, they get better service and management of resources, they get more security and they get more functionality. Our competition in the area of cloud computing for really the big-boy space is the Amazon.coms, the Googles and the Microsofts. There are other hosting companies and IT providers like Rackspace that are also getting into -- into the cloud.

We have a beta launch on our own cloud product, and we'll be announcing a significant rollout of our cloud computing initiative along with an advertising and marketing campaign. The small business authority we believe has a real US based cloud authority with cloud authority personnel, that are able to talk to the small business customers that really need some hand holding in this particular area. I'd say the primary difference between our offering and our competitors, is the fact that we've got a significant service initiative there to support customers that do want to outsource the product and to be able to explain it. The other thing that we will push and present to the marketplace is with our cloud, the small business authority, has a pay for what you use concept. So if you're using X amount of bandwidth you'll pay that price. If you pay X amount of storage, you'll pay the price for what you use and the same with CPU. This is a tremendous advantage over our competitors who typically have a plan and don't have personnel that can talk to the customers and in many cases the cloud isn't even on US soil.

We think the cloud computing market is an extremely important trend. We think that the market and market participants, particularly the SMB community is going to shift to this market. There are a lot of competitors have got signification market valuations based upon their capability to offer this product in the market, companies like Rackspace. So why is it that the small business authority can come up with an offering and actually be good at cloud computing? The fact of the matter is, we've been servicing customers with a high level of service and competency for years, since we've been in what we currently call the web hosting space. We offer tremendous service to designers, developers, we've got a huge portfolio of them, we've got great 24/7 personnel that does a great job with our customer base. So, we believe that given our product knowledge and the ability to pick up the phone, talk to customers with a high level of service and competency and a real sharp offering, is going to make us a leader in cloud computing. We are the small business authority. And we will present our cloud authority with a late March, early April rollout.

We're very proud of our success in small business finance, and I think for the last year or two we talked about our lending infrastructure, our ability to originate, underwrite, fund, service and collect nationwide. We're finding a tremendous interest in our infrastructure, which today is very, very, very, valuable. We've used our infrastructure historically to focus on the SBA 7a business. As we had mentioned previously in shareholder conference calls, and in 8-Ks, we do have a very unique contract with the FDIC to perform services for our government in this particular area. In the fourth quarter of 2010we were named as a Standard & Poor's rated commercial servicer first under the category of acceptable, and then we were upgraded to select. We also closed a AA rated securitization on small balance commercial loans, these happen to be SBA 7a loans where we issued $16 million of notes and received a AA rating. This was the first rating of small balance commercial loans that was done in several years. We were proud to be able to execute a securitization of that particular asset class.

With that securitization proceeds, we retired our Capital One Bank term note for Newtek Small Business finance, and paid it off in its entirety in December 2010. At the same time during that month we opened up a new line of credit with Capital One Bank. It was a $12 million -- up to a $12 million line of credit to fund portions of the guaranteed portions of loans by the SBA, and we're also working on an additional $15 million warehouse for Capital One Bank to fund the unguaranteed portions of SBA loans as a bridge into the next securitization or sale. We also announced that we consummated a $10 million line with Sterling National Bank to fund accounts receivable, financing. That paid off our previous Wells Fargo line. We're proud to announce an environment that is still difficult to get business loans for most businesses to fund their business, the marketplace is finding Newtek Small Business as a credible and credit worthy counterparty, and our ability to access the capital markets as well as borrow money from banks, is a good demonstration of that.

Looking further at our small business finance segment, we had a real good year in growing our servicing portfolio. From 2009 to 2010, we had an increase of $109 million of SBA loan servicing. We expect significant future growth in this particular business area. As many of you are aware that follow the Company, our certified capital Company business, which has had a diminishing effect on our Company, given that we haven't created any new Capcos since 2005, really has a lot of consequences to the Company. Number one, it does makes our Company appear that we are more levered. It does use up a significant amount of management time, and there are accounting and legal costs and other miscellaneous costs that really reduce the Company's ability for our balance sheet and income statement to -- to look better. So Capco does have certain effects that weigh the Company down. In analyzing the balance sheet effects, which we've done in the past, there are certain items both on the asset and liability side of our balance sheet that does make the Company seem to be a little bit more levered than it is.

The first item, which I'll touch upon lightly and leave it to Seth to talk about more extensively and eloquently in his MD&A is the SBA loans transferred subject to premium recourse area. And as you can see those -- that's pretty close to an offsetting asset and liability match. Looking at credits in lieu of cash, which are Capco generated, those are exactly $35.5 million each. Those match. So you're looking at about $60 million worth of liabilities which do match and offset each other against approximately $54 million of shareholder net worth. So you can actually take a look at the Company and see that we're really not highly levered. A lot of the other debt on the Company's books are basically -- is basically debt against receivables or debt against small business loans. And, once again, I don't want to impress upon this further, but the Company really does not have very much debt, but if you look at the GAAP financials, it looks like you have $165 million of total assets against $54 million of net worth. One of the things that we look forward to is the -- the balance of tax credits, particularly on the asset side of our balance sheet, which matches the liability side, burn down over time. We finished the year in 2010 somewhere around double the amount that you're seeing in 2011, somewhere around $35 million.

In 2011, tax credits will shrink to about $17 million. At the end of 2012, it goes down to $8 million. So the effective Capco will continue to diminish over time with respect to balance sheet effects. In terms of regulatory compliance on slide 18, you can see that we have got a variety of different thresholds both in DC, in Texas and into Louisiana Capcos to get to a 100%, we have reached the 100% mark in Alabama in 2010, which is the key decertification threshold, and Florida our Capco has sunset as per state law in December 2010 so that Capco will -- will go away as well. Our growth strategy going forward obviously as the small business authority and our small business authority brand, which is marketed through television, radio as well as our website, THESBA.com, that was launched in 2011.

We're going to continue to emphasize internally, the cross selling and cross marketing into the existing customer base making sure that our clients know that if they have one product that they can reduce their costs, grow their sales and reduce the risk by taking a look at other products in our large arsenal of business opportunities. We are also going to continue to grow our alliance channels. Our alliance business historically has been the primary source of customer base for our Company and it's a great channel. We have very satisfied alliance relationships. We'll be announcing some big ones in the future. And we'll also talk about the outbound campaign that we have with a direct focus on small business through television and radio. When we look at our strategic mission of the small business authority, we clearly position ourselves as a thought leader and a destination for small business owners and operators to come to us and get information as well as products and services to help their business. As we announced recently, we have launched a significant campaign with 77WABC radio throughout the day on 77WABC radio, the station reports live from the small business authority studios atop Madison Square Garden.

We have in excess of 400 mentions a month. I think it's actually 460. We have over 250, 60 second radio commercials per month, which you could hear our spots actually if you go to our website at THESBA.com, click on community, click on the radio spots and hear the personality like Imus, Hannity, Levin, Cudlow, Batchelor and McIntyre talk about the small business authority and the things that we do for small business. We also have launched our own radio show, the small business authority hour. It's on the first Saturday of every month. Our show is for independent business owners and operators. The first show that we had in February focused on three great owner operators, talking about their experiences in the marketplace.

Our second show was focused on healthcare, and we had great special guests, including, Humana, the fourth largest insurance company in the United States, DH-Kohn, the top 20 and accounting and tax firm, focusing on the tax aspects of -- of the health -- new health care legislation as well as Ramparts Benefits Consulting, a very large benefits broker. These shows are great. They help us continue to further position ourselves as authority in the market. Our next show coming up will be focused on small business lending, and we will have the economists from the Credit Union National Association and a senior commercial banking executive from Capital One Bank. In addition to WABC radio, which has a relationship with Fox Business News at the Imus show in the morning, is on WABC radio and also on Fox Business News, you can see the small business authority brand when you see Warner Wolf broadcast from the small business authority studios several times each morning, and Bernard McGuirk who is also one of Imus's helpers doing his morning briefing. So we welcome you to take a look at Ed, Warner and Bernie every morning Monday through Friday, where you can take a look at their mike flags as well as their backdrops in really promoting their presentation from the small business authority studios.

The Company also this year has launched the SB authority index, which is our own created small business index and is a financial barometer for the small business economy. This index will be reported each and every month. It is available on our newsletter, which is distributed to over 50,000 business owners throughout the United States, and it's made up of eight primary business and economic components in the small business economy. The SB authority index is also available on our website now at THESBA.com. Another economic barometer that we report, as the authority on small business is the SB authority market sentiment survey. We are polling our clients on a regular basis. Our polls usually go in excess of 1,000 respondents. Our -- our most recent poll was focused on health care, and really came up with some real interesting -- interesting items. I welcome you to go to our website, take a look at all the polls and the surveys that you can participate in as well as get real interesting information. Our SB authority market sentiment survey and the indexes released typically at the beginning of the month is also available on our newsletter, and we'll really have some interesting statistics. For example, in our recent poll, we asked four questions about health care.

I thought two of the interesting questions were, in speaking to small business owners, which is your most trusted advisor when it came to health care? And the choices were your health insurance company, your tax provider, your benefits broker or the Internet. And the answer that came up I think was 70%, was your health insurance company. And as health insurance companies, frankly, in many instances are not thought of highly by the media and constantly demonized by different market participants. It is very interesting that most small businesses actually trust them as the place to go to get their market information on health care, and to be frank with you, makes a lot of sense to me. The other question I thought was quite interesting is we asked over 1,700 small or medium sized businesses whether they had read the in excess of 2,500 page Patient Protection Affordability Health Care Act, and approximately 23% claim that they had read this Act, and I found that quite interesting and quite incredible. I think those are basically businesses that are sympathetic to the potential effects of Obama care and felt by saying if they read it, it would be viewed positively.

We talked a little bit about the small business authority hour. I welcome you to go on our website and get more information on that. We plan on having this show for many, many months, and so far it's been doing very, very well. We typically speak to about 60,000 listeners, both on 77WABC as well as WABCradio.com, so you can reach that on the Internet. When we look at our marketing strategy, we obviously talked a lot about the small business authority channel, our historic strategic alliance partner channel still going strong. It's still the workhorse for distribution and client relationships and will continue to be so. Referral volume continues to grow on a consolidated basis, with our long-standing relationship with the Credit Union National Association. We have approximately 460 credit unions signed up to contracts.

Given that there's only 7,700 credit unions of which 1,000 of them take demand deposit checking accounts, which is evidence that they focus on small business, we have 460 contracts, which I think is a terrific penetration rate into credit unions that are actually focusing on small business. We have a very large alliance that we'll be announcing within the next two weeks, which I think is going to be terrific and very exciting and will really help our distribution channel. As we're looking at the small business authority brand, we want to continue to grow that brand through -- through the Internet. Obviously, a lot of the advertising we're doing is raising the awareness and the number of hits we're getting to our site, and the time people are spending on the site. We're clearly increasing our recognition as the authority on business issues for small business as well as the destination spot for independent owner operators.

In conclusion, if we can go to slide 30, it's one of my favorite slides. You can see that we're at the beginning of a great trend towards profitability. Looking at our 2011 forecast midpoint, we're estimating $2.8 million in pre-tax income for 2011 year. Looking a little bit further at our guidance at revenue forecast for 2011, on the low end of the range, $119 million, on the high end of the range $125 million with a $1.2 million pre-tax on the low end, $4.3 million on the high end. And with that, I appreciate everyone's attention, and I will pass the presentation over to Seth Cohen.

Thank you, Gary. For the year ended December 31, 2010, we recorded pre-tax income of $877,000 as compared with a pre-tax loss of $4 million one year ago, an improvement of $4.9 million. We had net income of $1.4 million or $0.04 per share in 2010 compared to a net loss of $429,000 or a loss of $0.01 per share in 2009. The 2009 net income was favorably impacted by the partial release of a tax valuation allowance attributable to 2010 taxable income at our SBA lender. Revenue increased by $7 million or 7% to $112.7 million compared to prior year. It's primarily attributable to the growth in our small business finance, electronic payment processing and web hosting segments.

Please turn to slide 35. We began the year with $12.6 million of unrestricted cash and cash equivalents and ended the year with $10.4 million, a decrease of $2.2 million. Cash, restricted cash, and the broker receivable totaled $33.2 million at year end, up $7.4 million from the beginning of the year. Notes payable increased by $11.8 million. The increase in the debts payable reflects an increase in the credit line that supports our receivable purchases, full use of the revolving line to finance guaranteed portions of SBA loans and the proceeds from the securitization of the unguaranteed portions of SBA loans. The decrease in cash and increase in borrowing primarily reflects the effect of the lending operations of the small business finance segment on the Company's operations. We originated $65.9 million of SBA loans in 2010 versus $16.6 million in 2009 and in 2010, we purchased $55.3 million of receivables over the course of the year versus $21.2 million in the same period in 2009.

I would now like to review the performance by segment. If you could turn your attention to slide 36 in the PowerPoint presentation you will see the comparison of our full year 2010 results versus the full year of 2009. Electronic payment processing segment revenue increased by $11.2 million or 16% in 2010 to $80.9 million, predominantly due to organic revenue growth from a combination of growth in our merchant count and an increase in process volume per merchant. Pre-tax income increased 31% to $5.7 million for 2010 compared to $4.4 million for 2009. Although the amount of revenues less electronic payment processing costs or margin as a percent of sales, declined slightly year-over-year for a margin increase of $1.4 million in dollar terms. This improvement in dollar margin, combined with costs other than electronic payment processing costs remaining flat between years, resulted in improved pre-tax income.

Web hosting segment revenue increased by $310,000 or 2% in 2010 to $19.2 million to $18.9 million in 2009. The increase is due to the combination of improved revenue per plan, organic growth of virtual instances, and an increase in sales for customer website development services, which overcame a decrease in plan counts year-over-year. Management's intent is to grow revenues through higher service offerings to customers to drive greater revenue and margin per plan, although this may result in a lower number of plans sold overall. Pre-tax income increased 21% or $805,000 to $4.7 million for 2010 from $3.9 million in 2009, reflecting both the increase in sales and a $495,000 decrease in expenses. Small business finance segment revenue for 2010 increased by $2.1 million from 2009 or 28% to $9.4 million, due primarily to an increase of $776,000 in premium income for those guaranteed portions transferred that achieved sales status, and a $939,000 increase in servicing fee income primarily associated with the contract for an outside portfolio. The segment also benefited from a $3.8 million change in fair value with SBA loans transferred during 2010. It did not achieve sales status during the year.

The removal of the premium warranty from the SBA sales form effective February 2011, segment will recognize the premium from these transfers along with the sales of new guaranteed portions as revenue in 2011 offset by the reversal of the fair value gain recorded in 2010. Segment recorded pre-tax income of $2 million for 2010, an improvement of $4.3 million as compared to the pre-tax loss of $2.3 million in 2009 reflecting the resumption of lending for the full year, the increase in receivables, purchases and the outside servicing contract. For 2010, the all others segments had a pre-tax loss of $1.6 million, a $1.2 million increase from 2009's loss. The change primarily reflects the $1 million investment recovery in 2009 that did not recur in 2010, and the $500,000 markdown of a qualified investment in 2010.

In 2010, the corporate activity segment recorded revenue of $2.3 million, a $953,000 decrease from $3.2 million one year ago. This decrease is primarily due to the expected reduction in Capco management fees. Total expenses decreased slightly by $77,000 year-over-year primarily due to a decrease in professional fees and depreciation amortization offset by an increase in head count for general corporate purposes. As a result of the decrease in management fees, the corporate segment increased its pre-tax loss to $6.8 million compared to a loss of $5.9 million in 2009. In 2010, the pre-tax loss in the Capco segment decreased to $3.2 million or 13% compared to a pre-tax loss of $3.7 million in 2009. $479,000 decrease in loss primarily reflects reduced management fee expense year-over-year. Finally, slide 37 reflects our current guidance for 2011. 2011 we are projecting consolidated revenues of $119.6 million to $125.3 million, and a consolidated pre-tax income range of $1.2 million to $4.3 million. I would now like to turn it back to Barry.

Thank you, Seth. Operator, we'll take questions now.

Yes sir. (Operator Instructions)

Operator?

Sir there appear to be no questions in queue at this time.

Operator, I see a question from Charles Shirk and TJ Sallin.

Mr. Sallin, your line is open.

Hi there. So congratulations for the year. The balance sheet looks great. The businesses look good. I guess the one question I had is regarding the cloud opportunity. Is this an offering that you have already had in this business line, and this is sort of the formalizing it and making a marketing push, or is this a brand-new opportunity?

It's brand new TJ. We have a soft launch for the product on our website for the last couple of days, but we plan on putting out an announcement, probably the last week of March, first week of April as well as putting some marketing -- marketing effort behind it as well.

Okay. Great. I'm going to -- I'm going to dig through the numbers and I'll come back to you for some other questions later. Thank you.

Okay. Thank you.

(Operator Instructions) Our next question comes from Harold Elish of UBS Financial Services.

Thanks very much. Barry?

Hello Harry.

In previous calls you had been very high on the Newpay opportunity, and that there's a little bit of -- less color on that in this particular call. Is that ramping up in the fashion that you had anticipated? Is this now a lesser opportunity in your view?

You know, Harry, it's interesting. No, it's not a lesser opportunity. At the end of the day, it's a -- as you can tell we have a lot to talk about. So, Newpay is a product for us that's been out in the market for about the last year. It's frankly doing great. It's -- it's a pretty significant -- we don't give detailed statistics on it, but it's a pretty significant percentage of -- of new account business that comes on. It is extremely competitive to Paypal. We actually got participants that are in the merchant processing space that come to us and they want -- they wan to put Newpay in their e-commerce solution. So it's working real well, it's extremely meaningful to us, and it's very, very competitive with Paypal, so we're -- we're happy that it's part of our arsenal, and you know what we try to do on these calls is just you know make introductions to our shareholder base in terms of what's real important. And obviously I think today, or a year ago we talked about the importance of e-commerce. You know, if you listen to a lot of media that's focusing on small business, everyone is offering website, web design and e-commerce solutions, obviously with a -- with a payment aspect to it as well. So, we're happy to say that we hit the market at the right time with a great product. Newpay is doing great, and we're also very excited about you know some of our new innovation with respect to our cloud offering.

Excellent. Thank you very much.

Thank you.

Thank you. (Operator Instructions) Our next question comes from Charles Shirk, stockholder.

Yes. Hi, Barry. Just one quick question. I was wondering if you have ever considered a reverse stock split. I have seen companies our size use that card successfully. You know, it helps attract attention. It gives your current stock holders quite a bit more leverage. Any interest or thoughts in that area? Thanks.

I appreciate the question. I -- I think I'll talk about that question broadly without discussing, you know, any intentions, because it wouldn't be appropriate. But you know from a broad perspective, getting the stock price above $5 is -- is a goal. We have I like 35 million, 36 million current outstanding shares, and I think that a lot of market participants Charles, they hate with a big H reverse stock splits, because they feel that doing them is typically a sign of a company that's not doing well. I do feel, however, that having a stock above $5 would generate more institutional and major wirehouse participation. And although I don't think we would consider it at this price, it is something that is a tool, but it's -- you know you poll the universe of stock investors and you're going to get strong arguments on both sides, but it is -- I think the important aspect of it, is the discussion of about you know better participation. And I think that our Company is well positioned, has a lot to talk about, the branding of the small business authority I think it has elevated a lot of market participants to get -- okay, I see what they're doing now. Maybe I didn't see it a year or two or three ago, but now I see it. So you know getting near $5 which I think is a more important -- that's the goal. How to get there, it would certainly be better to do that with just pure stock appreciation, over reverse split. I will tell you a lot of people will have a very negative thought about reverse stock split. So, I won't comment on that either way, but hopefully that my comments were informative and colorful generally.

Yes, that's colorful. Thanks very much, Barry.

Thank you.

Thank you. (Operator Instructions) And as there appears to be no further questions in queue, I would like to turn the call back over to Mr. Sloane for any closing remarks.

Super, well we appreciate everyone tuning in and the questions and the participation. We're real happy with our profitable results, and we look forward to future growth and exciting conference calls coming up. Thank you very much.

Thank you, Mr. Sloane, and thank you, ladies and gentlemen for your participation. That does conclude your call. You may disconnect your lines at this time. Have a great day.