Good day and welcome to the LifeVantage Second Quarter Fiscal Year 2015 Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. John Mills of ICR. Please go ahead, sir.

Thank you. Good afternoon ladies and gentlemen and welcome to LifeVantage Corporation’s fiscal second quarter 2015 conference call. On the call today from LifeVantage with prepared remarks are Garry Mauro, company’s Chairman of the Board; Dave Manovich, Executive Vice Chairman; and Dave Colbert, Chief Financial Officer. In addition, we will have members of the office of the President on the call as well, which includes Dave Phelps, Chief Sales Officer; Bob Urban, Chief Operating Officer; and Shawn Talbott, Chief Science Officer. By now everyone should have access to the earnings release which went out this afternoon at approximately 4 p.m. Eastern Time. If you have not received the release, it is available on the Investor Relations portion of LifeVantage’s website at lifevantage.com. This call is being webcast and a replay will be available on the company’s website as well. Before we begin, we would like to remind everyone that the prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. These statements are based on current expectations of the management and involve inherent risks and uncertainties including those identified in the Risk Factors section of LifeVantage’s most recently filed 10-K. These risk factors contain a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statements. This call also contains time-sensitive information that is accurate only as of the date of this live broadcast, February 04, 2015. LifeVantage assumes no obligation to update any forward-looking projection that may be made in today’s release or call. And based on the number of participants on today’s call, during the Q&A session, we ask that you please limit the number of your questions to three. Now, I will turn the call over to the company’s Chairman, Mr. Garry Mauro. Please go ahead Gary.

Thank you, John, and good afternoon. As many of you are aware earlier this week, we announced changes within our executive management team. Doug Robinson, who had been serving as our President and Chief Executive Officer for nearly four years, and the LifeVantage Board of Directors mutually agreed that Doug would step down from his role at our company, effective February 2, 2015. On behalf of our entire board, I want to thank Doug for his leadership and contributions to LifeVantage. During Doug’s tenure, he was instrumental in managing our growth, dramatically improving our infrastructure, positioning our business for the future as we transitioned from retail sales to direct sales. We wish Doug all the best in his future endeavors. Our Board of Directors are working with an international executive search firm that is experienced in identifying senior management talent within the direct selling space to identify the ideal candidate to serve as our next CEO. While the search is underway, Mr. David Manovich, Executive Vice Chairmen will manage the strategic and tactical direction of LifeVantage until a new CEO is appointed. Dave has been an Investor in LifeVantage for over a decade, has served as a Board Member for LifeVantage for the past three years, has extensive experience in executive sales, marketing, operations, distribution management and market development. He currently serves as managing partner of DNS investments, a private investment entity, has held several executive positions throughout his career with leading technology companies, including Chief Operating Officer of Ad Road Inc, Executive Vice President for worldwide sales at Apple Computer, and Vice President of Sales for Fujitsu PC. Dave holds an MBA in Finance and started his career with Deloitte, Haskins and Sells. The Board believes this change in our management is necessary as our growth has reached the plateau. The company is not progressing in line with our business model of a growth-oriented, science-based network marketing company. The intent of this move is to: one, deliver consistent predictable growth; two, to better insure the success of our outstanding distributor sales force; three, successfully manage the complexities of international product distribution and finance; four, further the validation of our science-based products; and finally, address the needs of our customers. Now before I turn this call over to our Executive Vice Chairman, Dave Manovich, I want to thank our loyal shareholders, our distributors, our customers, and our employees for their dedication to LifeVantage. Dave?

Thank you, Garry, and good afternoon to everyone. The board has taken these necessary steps in an effort to re-ignite LifeVantage’s revenue growth. While, we have accomplished a tremendous amount over the last few years, there are many untapped opportunities ahead that we believe will drive long-term profitable growth. In addition, the board asked me to manage the strategic and tactical direction of the company until we hire a new CEO. The board has also created the Office of the President that will report directly to me. The Office of the President is comprised of the senior executives responsible for the operations of the company and we’ll work collaboratedly to ensure seamless leadership, continuity, and continued execution of LifeVantage’s day-to-day operations and our strategic initiatives. In addition to the Office of the President, the other members of the senior executive team, who will report to me are Rob Cutler, our General Counsel and Corporate Secretary; Michelle Oborn, Vice President-Human Resources; John Genna, Vice President of Corporate Communication. Now, I would like to discuss how we get back to re-igniting growth. Our company has portfolio scientifically-validated products along with the strong distributor network. Recently, our financial results including our second quarter performance have not reflected the strength of our business model. Growth has reached the plateau. Simply put we are not progressing in line with our expectations. We need to improve upon our results and return to a consistent top-line growth while increasing the enthusiasm felt by our employees, our distributors, and our customers. We’re confident that we have the talent and leadership in place to lead LifeVantage through this transitional phase. In the second quarter, revenue outside of Japan increased by 1.6%. However, when including Japan, we generated revenue of $48 million, a decrease of approximately 6% compared to the…

Thank you, Dave, and good afternoon everyone. For the second quarter ended December 31, we’ve reported revenue of approximately $48 million, compared to $52 million in the same period in the prior year. Revenue in the Americas increased 1.8%, while revenue in the Asia Pacific region declined 22.9%. Also revenue for the quarter was negatively impacted $1.6 million or 3% by foreign currency fluctuation. Gross profit margin for both the current and prior year was 85% or $41 million for the current quarter versus $44 million for the prior year quarter. Commission and incentives for the second quarter was 48% of revenue, compared to 49% of revenue in the same period last year. We expect our commission and incentive expenses do increase slightly to approximately 49% for the full year as we continue to focus on distributors, preferred customers and promotions. SG&A expenses for the second quarter was 30% of revenue compared to 25% of revenue in the same period last year. The increase in SG&A expenses as a percent of revenue during the quarter were due to lower revenue and our continuing investment in sales, marketing and product development initiatives, as well as our investment in the October 2014 Axio product launch. Of this increase, approximately $750,000 are one time expenses in the current quarter. Net income for the second quarter was $1.5 million or $0.01 per diluted share calculated on 101 million fully diluted shares. This compares to $3.3 million or $0.03 per diluted share calculated on 112 million fully diluted shares in the same period last year. Turning briefly to our year-to-date results, for the first six months of fiscal 2015, revenue was approximately $100 million, compared to $103 million in the prior year period. Revenue in the Americas increased 3.7%, while revenue in Asia Pacific decreased…

Thank you. [Operator Instruction] And our first question comes from Mitch Pinheiro with Imperial Capital.

Good afternoon. I guess one thing, first thing I want to ask is looking at the Americas business, your independent distributors were up slightly year-over-year, but the preferred customers are down. So what is that telling you? What is that telling us?

We are - This is Dave Phelps.

This is Dave Manovich we have the entire group officer, the president here, and I think that question is probably most appropriately answered by Dave Phelps, our Chief Sales and Marketing Officer. So with that I’ll let Dave to continue on that.

We are in a position today that our product strategy is a deeper, broader, more diversified business existing than we’ve had before. One other challenges that comes as we have extended beyond our flagship product offering of Protandim and now we are in the TrueScience category and the AXIO category, our skin care and energy product category. The transition that we are seeing has been challenging for us as we focus our energy away from a single product category into a multiple product offering. That has had an impact with respect to our distributor increase, as well as our preferred customers. We’re doing all that we can now to increase the education with our distributors with respect to the value of those additional product offerings, the reality is we’re in a much stronger, more diversified business positioning because of these additional products and we expect to see improvements with respect to both distributor and customer numbers.

But you’d think of that with the increased portfolio as much as it might, how much or exactly why would it be confusing, but you’d think that there’d be an energized distributor base which gives a lot more to sell lot more on their plates, some new stuff to talk about to hit the existing base. So I’m just not sure why you’d really - the initiation of all these nice new products would actually take business the wrong way?

That’s an excellent question and I’ll answer it by suggesting this. For a period of five years, virtually 100% of the time and the energy has been focused on the single product of Protandim. Now that we have transitioned into a multiple product strategy getting our mindset changed with our volunteer and our independent distributor network is important that we give some additional time to that transition to take place. So that they will be fully prepared and as passionate about our other products as they have been about Protandim.

Okay, so I mean net-net was - in the Americas, I’ll just focus there, was Protandim, core Protandim that had to be down year-over-year? What was that?

Hey, Mitch, Dave Colbert here. Product mix wise, yes. It’s down. We ended the second quarter Protandim was about 69% of revenue, a year ago it was just about 70%, 71% of our revenue. So it is down slightly from a mix perspective.

Okay. And just one other question and I will yield the floor here, but is it pertains to margins. I guess we will see stable gross margins, but we will get a little less G&A leverage, is that how sort of the back half is going to look?

Yes, the gross margins we’re forecasting is remaining consistent.

Okay.

What we see on SG&A and how we model it out, we’re expecting the sales and marketing spend on a year-over-year basis to be up almost 16%, offsetting that almost to the dollar with a decrease in our G&A spend. So what we have is an increase until the marketing of about $4 million - $3.5 million, $4 million and a subsequent decrease in G&A.

Okay. All right, thank you.

And ladies and gentlemen, this does conclude today’s question-and-answer session. I would like to turn the conference back over to Mr. Manovich for closing remarks.

Thank you. Thank you to everyone for joining us today. We should want to appreciate you’re loyal to us during this transition and I look forward to meeting and speaking with our shareholders over the coming months. Again, thank you very much.

Ladies and gentlemen that does conclude today’s conference. We do thank you for your participation. You may now disconnect. Have a great rest of your day.