Notes from the Conference Call
--------------------------------------------------
(again sorry they are rough, but I was trying to keep up, don't have the time to clean them up)
--------------------------------------------------
Someone (Jim?) had a Question about financials, here's Steve's response.
- Salon City is a corporation as of jan 5, 2005, prior to that they were a sole propriatorship. 5 years before that, there was a small oversize publication that was mailed out to the top 15 salons across america.
- June of last year, they became a public company, in that period of time from Aug-Dec they engaged in a PR campaign that they thought was going to generate advertising revenue that would exceed $3.5 million. They thought this would be adequate for the 2007 initiatives: 1) take publication and put it into newsstands (done) 2) ramp up online site with new look and revenue generator (done -- live in next month) 3) live events 4) Entered into agreement with LAs top production companies (matrix productions) to produce webcasing and broadcasting in 2007.
- All 4 of these initiatives are underway exactly as they said they would
- in order to to this, they had to encur 2 additional expenses 1) expense of becoming a publicly trade company. This incurred additional expenses that were not initialy planned for. 2) Ramp up to have a magazine that would appear next to vogue, glamaur, elle, opra across america. This goal was achieved through an "overheating of expensing". The challenge was that the 3.5 millino that would come in from the campaign did not come in as expected. This did not happen.
The stock went down from .10 - .15 down to .01 - .02 because their efforts have been focused on developing media outlets.
They are preparing to go into the next buying season. They have been able to acheive remarkable milestones.
- Salon city has a very low burn rate. Most companies invest 1-3 million to produce a magazine. SAlon city has done it for 5-10 % of that number.
- They can increase their revenue 100 fold without a major ramp up of expenses.
- They are in a good position to recover from those "overheated expenses"
- the new magazine which has been reformatted is now distributed in 30 countries. It is 132 pages long.
- In 2008 they are preparing a media buying plan
** NEW NEWS: engaged in discussions with people that represent Ad sales that are very will respected to have them represent the salon city book for the larger national accounts. If they do go forward, this will be a very big factor for Salon City to generate MILLIONS of dollars in ad revenue in the next 1-3 years.
- The new magazine that is targeted to the salon owners will be an additional revenue. This is the new magazine that Steve has been talking about over the past few weeks.
- Since the last con call, Steve and Annie were in Las Vegas at shows letting people in the consumer market and the professional market (two trade shows) know about the magazines.
- Once of the attractive sides of Salon City is that the revenue does not come from just one center, (print, online, intergrated placements, webcasting (mobile phones)
- They are organizing an independant network of salons -- they envision going after 1-2% of the 250,000 salons in america, and inviting them to join their network, and giving them a marketing opportunity to use all of their outlets to advertise the independant salons. To Date, nobody is doing this!
- REgis corporation is doing something similar, but they are doing it with franchises, not independants.
- This will happen over time, the first step is to establish the media first, once this is established, and there is a global brand recognition, they they can use that media for promotion.
- Question; would you define your stage as developmental?
- Answer: Absolutely, in fact you could almost describe us as startup. To the consumer / reader / buyer, this is the first time they have seen Salon City. The brand is just now being seen. They can only go up from here The good news is that like the Walt Disney brand, they have always stood for the "good things". They have always been a high integrity type of organization. They intend on building on the foundation.
- Question: 5-1 forward split justification
- Answer: when they went public, they thought they could increase the amount of trading with a 5-1 split. In retrospect, it has impacted capital structure. SLON is just a few weeks away from the filing of the 10SB for uplisting to the OTCBB. There are 90 Million common shares outstanding because of the 5-1 split. They have address this as they go forward. They intend to take their company to the NASDAQ. In order to do that, there are qualifications that they company may have to meet to be traded on NASDAQ.
- In Aug-Sep they terminated the Investor Relations group relationship. They have 3 fold plan to increase stock price
1) strengthen fundamentals - increase revenue, media outlets, etc.
2) going after getting uplisted to attract the other 95% of the capital investment community.
3) (didn't catch #3)
- Ad pages in magazine (opra, elle, etc.) run for $100,000 per page. 100 pages of ads at that price is $10 million per magazine!!
- There goal is to appeal to institutional investors -- they need to be on the OTCBB before these types of investors will invest in them as they cannot invest in pink sheet stocks.
- he was speaking to the auditors this week, they are just waiting for some additional info -- Steve things they are just a couple of weeks away from 10SB filing.
- takes about 60 days after filing the 10sb before getting uplisted. The thinks they should be on the OTCBB by Aug-Sep.
- Steve is not happy with the price being at a penny or two.
other updates:
- in Orlando, FL, there is a large haircare event taking place today/tomorrow. They will see for the first time Salon City magazine featured throughout the newstand stores throughout the airport.
- LAX will have cover on lightboxes in multiple terminals
- in toronto, beginning July 1, they took on a campaign (one of the key fashion locations in Canada and the world) to have Metro News and Union Station featuring the magazine. These campaigns will run from July - November.
- The new Salon City.com site is making very fast progress. A new team has been hired to complete and polish the new site before going online. There will be revenue generating opportunities using this site. The first phase will be online in just a few weeks. It will replace the current saloncity.com site. It will have a good Investor Relations section.
