Q1 2020 Earnings Call

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I'll now turn the conference over to our hosts Joe had good first Investor Relations contact. Thank you you may begin.

Thank you operator, thank you for joining us today and welcome to the miles runs technology first quarter 2020 results conference call and webcast.

Yes on the call today is Joseph Mondillo, Chief Executive Officer, and Joseph TPH Your financial controller.

We'd like to remind our listeners that any statements on this call their knowledge historical facts are forward looking statements.

Results may differ materially from those projected <unk> any forward looking statements.

These statements and that's really sit or not historical facts or are forward looking statements.

Actual results may differ materially from those projected are applied in any forward looking statements such statements involve risks and uncertainties, including but not limited to those relating to product and customer demand market acceptance of our products the ability to create new products to research and development.

Successful results of strategic initiatives success of our products, including Yelp position muscle milk Formula Miocene I must have a formula fewer miles internal nutrition.

The success of our research and development the results of the clinical evaluation of Fork truck and its effects.

The only to enter into new partnerships object partnership opportunities and the success of our existing partnerships the ability to generate revenue and cash flow from sales of our products.

The ability to increase our revenue.

Gross profit margin the ability to achieve a sustainable profitable business effective economic conditions, the ability to protect our intellectual property rights.

That's it from other providers and products continued listing of our securities on the NASDAQ stock market.

So in product development, our ability to raise capital to fund continuing operations adverse impact of the Terrata virus pandemic on the economy in our business and other factors discussed from time to talk about filings with the Securities and Exchange Commission, we undertake no obligation to update or revise any forward looking statements and events or circumstances. After the date on which such.

Statement, it's made except as required by law.

These statements have not been evaluated by the food and drug administration, our products are not intend to diagnose treat cure or prevent any disease.

I would like to turn over the course work from a speaker Joseph D. P. Trump go where the financial results good morning, Joe.

Good morning joined good morning, everybody. Thank you for joining us happy Friday.

Miles rents financial highlights our net revenues for the three months ended March 31st 2020 increased by 141000 or 95% to 290000.

Compared to net revenues of 149 K for the three months ended March 31st 2019.

This increase is primarily due to an increase of 155004 miles kenai muscle forming a product an increase of 17000 for white label business offset by decreased 31000 from our older product lines.

Our cost of revenues for the three months ended March 31st 2020 increased by 97460%.

258000 compared to cost of revenues of 61000 for the three months ended.

It's 31st 2019, the increase is primarily due to cost related to manufacturing products related to an increase in our product sales.

Our operating expenses for the three months ended March 31st 2020 decreased by 66000 or 6%.

Two to two 985000 compared to operating expenses of a million 0.5 for the three months ended March 31st 2019.

This decrease is primarily due to 27% decrease in selling marketing research expenses of 73.

And and 11% decrease in general and administrative costs.

41000, offset by 11% increase in personnel and benefits of 48000 to do the hiring of additional members to our sales and marketing teams last year.

[noise] liquidity in capital resources in connection with the closing of a private placement on March 15, 2020, the company issued shares for aggregate cash proceeds of $10 million as well as an exchange of 825000 of our principal promissory note.

The company intends to use proceeds from the private placement primarily for working capital.

Research and development strategic initiatives and other general corporate purposes.

As of March 31st 2020, we had cash was 670000.

On April 22nd 2020, the company received loan proceeds and the amount the 310000 under the Paycheck protection program.

BPP establish as part of the cares act provides for loans to qualifying businesses.

For payroll and other qualifying expenses.

The company intends to use the loan proceeds for eligible purposes, including payroll benefits rent and utilities.

With that I'd like to turn the call over to our Chief Executive Officer, Joe minimal.

Thank you Joe.

I hope, everyone is safe and well and.

Dealing with all the craziness that we have each day.

Actually doing this for my office at home as I'm sure. Many of you are.

Let me begin by just saying or <unk>.

We entered 2020, we were focused on our three verticals animal health age management and sports nutrition.

As you know these three verticals are each linked to our positive clinical studies.

Kansas State for pet.

Anti aging in lung jeopardy for Berkeley, and sports nutrition for Tampa.

It is rare for a product, especially a nutrition product.

That is not a drug.

I would have such efficacy and statistically positive results from studies.

These verticals or large and have great growth prospects over the next five to 10 years.

However, we don't look at each vertical and the same way or FERC, its focus and resources or use the first on our pet products, then anti aging or longevity and finally on sports nutrition.

That decision was made on where we believe we can get a better return of your money and so far it is playing out according to plan.

However, we will adapt and change.

If we feel.

There's a better use of your capital.

Let me give you some of the highlights of the first quarter.

We were able to achieve fairly good results, while cutting expenses.

Are you Cal Berkeley study was presented remotely.

In France at the Frailty and Sarcopenia conference in March.

Ortega's few hundred Dog study was published in peer reviewed journal Plos one in early April.

The impact of having a peer reviewed studies and going public with it.

It was much greater than I realize these results were year old, but yet going out with that study was just impactful, especially to veterinarians who wants to see a peer review study.

And we just got a great response, once we went public with it.

We also announced that many top tier insurance companies cover miles canine.

There's approximately seven cut insurance companies.

If a veterinarian recommends our product.

They can get covered up to 90% each insurance company is different.

But supplements are covered a with pet insurance and pet insurance is small in the United States gets five times as big in Europe, but it is growing millennials are bringing their dogs and cats to to the vet that's much more than older.

Baby Boomers and Gen Xers arc and pet insurance looks like it's just going to continue to grow. So we're very excited about that.

We also announced an agreement with kv.

The International JV P. was introduced to to me by one of our board members anti Ponty, they sell products such a surgical supplies braces.

To approximately 10000 veterinarians.

Are there just a great company to work with.

So I'm really excited about this partnership.

As Joe alluded to we closed the private placement on March six.

We had tremendous incredible momentum going into March and then as we all know cobot hit.

First we made sure all of our employees were set up to work remotely.

To make sure that they were safe then we quickly made sure.

Our fulfillment centers had greater than normal supply anticipating issues there.

However, we see positive news that we redeemed in a central business. So we're able to make.

To better manage all aspects of our supply.

We also discussed the 310000, we received under the Paycheck Protection program. The company will use these proceeds for payroll benefit ret and utilities.

I do not get a salary so none of this money will go towards my salary.

So now.

We've had to create a plan to do our best to get revenue.

When many of our clients and prospects, a where centrally and are essentially shut down veterinarians anti aging doctors chiropractors Jim's fitness centers.

So.

Let me try to tell you what we're doing.

We're trying one to drive as much traffic.

Through our direct to consumer customers through E commerce.

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Two we created educational Webinars to tell our story.

The pet in human medics to the pet in human medical community we've done numerous.

Webinars now we did it before cove it we've done.

A tremendous amount since not only with Dr. priddy from my OWS, but we've had some outside veterinarians are also do webinars for us.

We did one with Dr. Leilani Alpirez for minimum medical center, who talked about.

Supplements for aging dogs, and and for the Tropin or so and it went over phenomenally and we'll continue to do that.

Even once we get through Cove, it, but we will continue to try to reach our could or customers. This way and get a lot knew a lot of new customers.

We did offering the product getting deals as marketing to get a greater awareness afforded tropin then its benefits.

We've stayed in constant contact with our customers offering whatever we can do to help them. During these times.

And we're looking for opportunities.

As everyone on this call know that during difficult times, they come if you're open to it.

We want to make sure also that we understand what the landscape of our business is going to look like over the next 612 18 months.

And if cove it is going to change any of the habits of our customers.

So what are we doing now essentially we're trying to take a bigger piece of a smaller part.

And.

Now and then once we get the other side to this to have a much bigger piece of a bigger party.

I'll now take your questions.

Thank you.

Ladies and gentlemen at this time, we will conduct our question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad.

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One moment, please while we pull for questions.

Our first question comes from.

Jim Mcilree with Bradley Woods. Please state your question.

Okay.

Yeah. Thank you and good morning, you mentioned a near the end of your your called that you're trying to drive traffic to the direct to consumer.

I was curious if you could elaborate on that a little bit too that's mostly facebooks driven.

Issue and maybe talk a little bit about how much you're spending or would like to spend and.

And how you're measuring success for that initiative. Thanks.

Sure I'm, you know I won't go into particulars.

No.

What we spend but what we did is you know we we took some spending that was going to other areas and through social media Facebook Google Amazon you know we are.

Taking are spending and focusing more on the end specifically probably mostly.

The miles canine muscle formula and miles canine muscle formulas that strength.

And yeah, I'm trying to drive the traffic to Amazon or our own E. Commerce sites are truly dot com.

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As the vets or.

You know shut down or many are a we do see some green shoots just to let you know as.

States are opening up where we're starting to see people you know.

Veterinarians come back.

But how do we judge that do you know we.

Use the normal things, we'd look at what our expenses and where it's driving traffic in.

You know, we we look at all the data there to to see how well it's performing.

Is it too early to.

Say that.

You're going to change the spending permanently towards more of a direct to consumer.

Instead of veterinary driven sale or.

Or getting you know do you have enough data yet on on that to determine the.

Efficiency of the.

The spend there versus the.

Let's call it pre cobot marketing.

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Yeah.

That's your you know you're less statement is the tough one to figure out.

I I do believe that we'll judge it you know.

Each time, but for example, when we put out the press release.

On the plus one study we drove some of that to that.

Because we want them aware of it and the beauty of will continue to do that so.

Did a where we're going to continue to look at.

Oh, you know, what's what's happening out in the market events are opening up we'll use some of that spend to market and the advertise to that.

No.

Direct to consumer is a big big market for us. So I would think a that will be still a big part of our marketing an AD spend but well we will move it around as we see fit.

I can't tell you what the results are you know obviously for April and going into Meg.

They'll be for later date, but.

Right now you know, we're still using a good amount of our spend direct to consumer.

Okay, great. Thanks, a lot and good luck with everything and that.

Thank you.

Thanks, once again to ask a question at this time press Star one on your telephone keypad anyway Press Star followed by the number two to remove your question.

Our next question comes from Stephen made with key clients. Please state your question [noise].

[noise]. Thank you. Thanks for taking my call into question, Joe a congratulation I think it was really good order given the circumstances would be really good data and then you know pivoting now with the reimbursement from the insurance carriers I think that's really positive. So I had a question about sort of moving forward I had.

Utilize those two positives to gain traction with that's I mean, what's the strategy to try to get as many you've got to I know you've got did about the vet confidence and stuff like that I assumed a partnership with K L. Your K L. B has something to do with that as well, but what's the best way to get traction with these events just sort of start identify.

The best you know the best way to utilize their their patients and their dogs that are having surgeries are opening we try to get them start pushing the product.

Onto the retail market, especially now that don't really want people have parents that I know that they're going to be getting reimbursed for that.

So so thank you Stephen Thank you for the question there there's quite a few ways to to go about that as you know we have a consultant dr. Albert on who's a veterinarian and he.

You know with a public relations, we we do some things a with him that we target to vet community, where he'll be it you know from different outlets will last to speak on the topic in for example.

Products for aging dogs, or you know why for to Tropin can benefit your dog and so we utilize that in in that community. We and then this is public we we put out at <unk> and stories in publications that C.

If we feel that there is a very very good open rate for one is that practice news that we advertise in and that reach bets.

And the M., we've had a very very good ROI from you know we've talked to that since said, what what publications, if any or what digital media. If any do you focus on to look for new products or new information.

So there's the Webinars there's publications.

Specific publications and then there's trade shows.

You know, we just did VM exit and ER, that's the big one down in Orlando.

I don't know there's surgery.

Or a group of that surgeons that they have a trade show, there's rehab surgeons, but theres rehab, that's we do a very big job.

To sum up please meet their phone.

And ER.

We have.

There's hope holistic vet conferences, so between conferences publications.

Webinars and Dr. on that's really how we are targeting vets.

The good news is we had the results of this study.

Be.

Published the bad news is it probably would have gotten bigger traction. If we published it you know later you know where we put it out later, we can't do that where a public company, but it lives. There is you know 100 dog study is a very very large study.

So we're going to continue.

Through social media and all those other tools I just told you about to get the word out.

[noise] well that make sense all right. Thanks for the question I appreciate it good luck with the quarter moving forward.

Thank you.

Ladies and gentlemen, there are no further questions at this time I'll turn it back to management for closing remarks. Thank you.

Great Great first of all I want to thank everyone.

Whose invested in my house I I really do believe.

He said it but out there.

The end of last year that the company has been transformed.

And you know, we still are getting great results out here and whether it's anecdotal or in our studies.

I was very very optimistic about where we were in March.

As with sometimes in life, you get hit right between the eyes.

We picked ourself up very quickly.

And I think were again moving into right direction.

And.

I look forward to that direction, and where we're going so please feel free.

To give me a call or email me on if there were questions that you had were questions that come up tomorrow.

I want to thank you all of you know again for being on the call in please stay safe stay well you and your family.

And we'll talk soon thank you.

Thank you. This concludes todays call all parties may disconnect have a great day.