YesDTC Holdings (YESD) – Why I Purchased 7.1 MM Shares of YESD Stock – YESD Uplisted to OTCBB – Update on Product Initiatives
YesDTC Holdings (YESD) Why I Purchased and Additional 7.1 MM Shares of YESD Stock – YESD Uplisted to OTCBB – Update on Product Initiatives
On Friday, I increased my stake in YesDTC (where I am the CEO) via the purchase of approximately 7.1 million shares of common stock and I am likely to buy more soon. The reason for this is simple – I feel the shares are a significant bargain. As we have announced publicly, we believe we are poised to show strong revenue growth throughout 2011. Things at YESD are looking good. Our flagship program, WordSmart, has already begun to operate on a profitable basis and both the MediPendant and Simply Music programs are scheduled for additional air times this month. We have also now scheduled February 15th for launch of our PureSleep infomercial in Hong Kong and Southern China. Please see the SEC disclosure filing, which will be on the SEC site over the next 48 hours,for further information on my share purchase and investment in the Company.
Here is my basic rationale for significantly increasing the size of my investment in YesDTC:
As of the last quarter there were just under 140mm YESD shares outstanding. At $0.02 that is only a market cap of $2.8 mm. I would think that a company such as YESD that is growing its revenues substantially should trade at least 2X or 3X revenues – maybe higher depending on the growth rate and the margin structure. The WordSmart program, and its soon to be released SAT study cousin, we are hoping can produce $10mm to $15mm in revenue this year as we have seen similar proven results from the program in the past. We also have a new 2-year agreement with Alex Trebek where he has agreed to do additional endorsements, including TV and radio ads. We plan to utilize him more in 2011. Of course, we are launching additional initiatives over the coming months that will join MediPendant, PureSleep and Simply Music. If we just produce $10mm this year, it would imply a market cap of $20mm to $30mm, placing the share price at $0.14 to $0.28. We are working very hard to deliver these results.
Important to our efforts to growth our revenue is increasing working capital. We must, of course, have the money to purchase television advertising to generate sales. My further investment in the Company increases our working capital and provides us some of the funds we will need toward this end. Additionally, one of the largest media financing companies has approved us for a media funding credit line. This will allow us to buy hundreds of thousand of dollars of TV time on credit and pay them back as we make sales – of course, they charge a fee for this, but considering our average sales ticket is greater than $300 and our hard product costs are under $10, we have some very strong gross margin to play with. The new media funding will allow us to really ramp our media spending and revenue generation in a major way. We remain very hopeful for 2011. For the past 20 years I have watch several hundred companies be successful or fail. I have learned a lot from this experience and will apply this to help make YESD a success.
On Thursday, we were informed by market regulator FINRA that YesDTC (YESD) had been accepted to trade on the over-the-counter bulletin board market (OTCBB). YesDTC had been dropped from the OTCBB because market makers had failed to maintain adequate quotes. This is happening more and more to small companies as it becomes more expensive for small broker-dealers to trade stocks. Nevertheless, we are clearly very excited to move back to the OTCBB.
Things at YesDTC continue to move forward at a rapid rate. As we announced earlier in the week, we completed the transition of the WordSmart program over to YesDTC and experienced no major glitches in the process. The result has been continuity of the revenue stream, which is now being recognized by YesDTC.
The ratios of media spending advertising costs to revenues are right in line with our projections. This allows us an approximately 50% gross margin from the media spend, before other expenses are subtracted. We are very happy with this ratio and plan to capitalize on our success by aggressively ramping our media spending costs over the coming weeks. In order to fund these significantly increased advertising expenses we have been approved to by one of the leading media funding groups in the country. This will allow us to increase our advertising spending levels over the coming weeks to our desired goal of approximately $100,000 per week.
Considering fact the ratio of revenue we are generating to media being spent is over 2.0, we should be able to generate approximately $200,000 of revenue per week from the WordSmart program alone. On an annualized basis this equates to over $10 million.
We are also planning to launch additional versions of the WordSmart program in order to drive revenue growth further. For example, we will soon be launching a separate SAT/GRE/GMA preparation program that will also be endorsed and marketed via Alex Trebek. For the SAT preparation version we will be offering a guarantee of a 200-point boost on SAT scores. We think this will be an incredibly popular program as the difference of 200 points will allow thousands of students to be eligible for entry into universities to which they would previously be ineligible.
We are very excited about the acquisition of the WordSmart product line and want to emphasize that this substantial high-margin revenue stream was acquired at zero dilution to shareholders. It is clearly something I have never seen relative to small-cap companies.
The PureSleep (anti-snoring product see www.puresleep.com) product initiative is very exciting for us right now. We have converted the English version of the PureSleep infomercial into Cantonese and we have now scheduled its airing in Hong Kong and Southern China for February 15th. Our Chinese partner feel strongly that a launch right after Chinese New Year will be optimal. We have also started working on a Mandarin translation to target the more northern parts of China. We are also in discussions with the two largest drugstore chains in Hong Kong and southern China to carry the PureSleep product. No decision on this yet, but we are very hopeful.
Later this month we will be launching a new version of the Simply Music program, (www.trysimplymusic.com) which will include not only the DVD set that teaches people how to play the piano or keyboard, but also a high quality keyboard private labeled as the “Simply Music Keyboard.” Our price point will be approximately $200.00, which will allow us strong margins – and it is a terrific value for the customer as the keyboard along could easily sell for over $200.00.
Later this month we are also planning to launch a new version of MediPendant product based on our new in-house call center. We are excited about this because we think it will significantly improve our order closure rate. Approximate launch date is February 15th.
With YesDTC back on the OTCBB, we are prepared to continue our already substantial revenue growth into 2011. While we believe WordSmart, sponsored by Alex Trebeck, will remain our flagship revenue generator for 2011, we believe several other products will also be strong contributors.
Thank you for all your support thus far. We look forward to keeping you informed of developments as these initiatives continue to roll out and as our revenue base continues to grow at a rapid pace.
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