We have a team up in Canada, for example, that manages all of the advertising for all of FitLife, right? And so they can build FitLife in the U.S. and they can build Dr. Tobias in Germany for their services, which moves cash flow right to Canada and would allow us to start to chip away at those NOLs. Now, again, how much and how quickly that I just don’t know yet. But, yeah, I’m going to do whatever we can to be as tax efficient as possible.
Daniel Smoak: Great. Thanks. And then last question for me. Congratulations on sounds like you’ve got the Combat Crunch Bar close to launch here coming in Q2. So that’s a great accomplishment. Do you think that helps your case with new potential wholesale relationships given that you have that Combat Crunch Bar and it was pretty successful historically? I’d like to hear your thoughts on that?
Dayton Judd: Yeah. I mean, I do. It’s something we heard from customers. So it wasn’t like we had to push it on them.
Daniel Smoak: Right.
Dayton Judd: So I think a lot of people are excited to see it come back. We have presented it to some new clients as well. For example, some drugstore chains. Again, I don’t know if they’re going to take it, and just as a reminder for the way brick-and-mortar retail generally works, they don’t have multiple planogram resets every year, right? Sometimes it’s once a year. Sometimes it’s a couple of times a year, right? So you can kind of present it, but they may not decide until August, right? So it’s it is an entree into some stores that have never sold it, but there are there are customers that used to carry it that were not carrying MusclePharm products or hadn’t carried MusclePharm products for a couple of years that are taking steps right now to bring it in.
So, we know we’ll sell some. Again, I can’t put a number on it, but there definitely is interest, and like I said, it was it was popular online as well and so we’ll take advantage of that and put it out there in our online channels.
Daniel Smoak: Okay. Thanks. That’s all for me.
Operator: Thank you. [Operator Instructions] The first one is coming from George Marema. George, your line is now.
George Marema: Yeah. Hi again. I want to clarify something. So, in your remarks, you’d mentioned that the vendors selling the MusclePharm stuff for the last, I don’t know, year or two online or the business when you bought it was roughly $5 million annually online. Is it online — was it online only or was that $5 million in total online and wholesale? And how much did they also sell, was that only powders and they sell bars at all?
Dayton Judd: Yeah. Good question…
George Marema: That number…
Dayton Judd: So, yeah, the $5 million was just online. So there was additional wholesale…
George Marema: Just online.
Dayton Judd: … business that they were doing at least during bankruptcy. I think, I’m pretty sure we have continued with all of those customers or if not all of them, almost all of them. Again, it took some time, though, to kind of negotiate new agreements with them. But I’m pretty sure that all of them are still customers. We just had to go through that process and no, there were no bars, right? So the bars have been out of market for about two years. So the bars is a new opportunity or new after a couple of years.
George Marema: And do I understand correct the bars are primarily going to be sold through wholesale distributors rather than directly online from you?
Dayton Judd: No. No. We will — the first place you’ll be able to buy is online. Like I watch in the next two weeks and please go buy them. And I may be biased, but I eat a lot of protein bars, and look, I think, ours are really, really good. So, but no, they’ll absolutely be online. That’s the first place they’ll be available. But we’re making them available to our wholesale customers as well.
George Marema: The wholesale customers. Okay. Okay. Great. Thank you.
Dayton Judd: Yeah.
Operator: Thank you. And we did have another question come from Igor Novgorodtsev. Igor, your line is live.
Igor Novgorodtsev: Hi, Dayton. So, a MusclePharm, I know that you’re working hard to restore the old wholesale channels and that is probably residual bitterness from the previous relationship when Muscle Formed went bankrupt. So what would it take to get this channels restored? Would you have to sacrifice a gross margin for a while and basically give them very good pricing to get in or it just takes time? I understand that you don’t have the precise numbers, but I just kind of want to get your thinking of how you want to proceed with basically getting the business back?
Dayton Judd: Yeah. Good question. So, we are not discounting at all right now, right? Our view is the way this business was run for many, many years was it was all about discounting, it was all about revenue and profit didn’t matter, and you can see where that led, right, for the company previously. So, we — our strategy right now is we’re seeking to get in with decent margins, and then once we’re in, right, we’re happy to on occasion, right, or as necessary to promote. And so, we — I mentioned some of the retailers where we have gotten the product or where we’ve started selling the product, as that scales, right, we probably will make some decisions to invest, right, and to drive additional growth, right? But again, I view that as completely separate.
Our — we’re not discounting to get in. We’re trying to get in and then offering promotional spend to help drive growth for both partners, if that makes sense. In terms of the timing, again, it’s — this is where — it’s just a total uncertainty. There’s no one that I think could predict what would happen when. But many retailers, right, they have one reset a year, right, or maybe two and so we’re kind of somewhat at their mercy. It has been — for as widely as these products were distributed, there’s a lot of buyers. When I say buyers, I mean, retail buyers, not the end consumer, but the people that work for the companies that got burned by my MusclePharm and it’s been an education process for us to try and tell them that that wasn’t us, right?
We’re somebody different. We’re the new owner. And look, there are some of them who have said, unless you make us whole for the damage that was caused previously then we don’t want to talk about it, right? So that’s just some of the issues that we’re working through and we’ll deal with it as it comes. But it’s just — again, it’s really hard for me to say I can tell you exactly where and when we’re going to be and at what point. I will say, I think many of you know, it wasn’t Costco. And Costco is a very, very big customer for MusclePharm. If we are Costco generally carries just a couple of different powdered proteins, right? And one of them is going to be optimum and the other is going to be somebody else. Once they replace you, they’re not exactly looking to welcome you back with open arms, right.
You got to kind of work your way back in. And so if we are going to be successful with a place like Costco and I’ve put some other retailers on that list as well, it may be that we start with online, right, with their online offering or maybe in a regional assortment, right, of stores as opposed to going chain wide. So, I — look I — like I said, my prepared remarks, I wish I could give you all a number, but we’re going to do our best and we’re going to try and grow, and the way the way I view it, right, the day I signed the deal, right, it was, like, I think, we’re getting a pretty good deal and we’ve got this massive call option. Maybe it takes a year, maybe it takes five years. I don’t know, right? But I do know that, in the end, I think, there’s going to be a good investment for us.
Igor Novgorodtsev: Okay. No. That’s great. So, basically discounting is what I wanted to hear. So glad to hear that. My other question is about international opportunities. So traditionally, before Mimi’s Rock, it was based in the U.S. and Canada and maybe a little bit abroad. Now you have Mimi’s Rock and now you have MusclePharm. How much do you think can grow international business? I mean, something like Mexico or maybe South America, maybe the Middle East or anything. So just kind of how you think about international growth?
Dayton Judd: Yeah. So we — I mean, we always field calls from international buyers and international distributors. One thing in the numbers is, if we sell to — we may sell to a company or to a distributor that’s U.S. based that distributes the products internationally, right? For us, that shows up as U.S. revenue. But the end consumer is outside the U.S. I’ll give you a very specific example. Dr. Tobias products have been on iHerb for a while. They’re predominantly sold on Amazon, obviously. But we also sell to iHerb and then iHerb resells them. Well, 90% of iHerb’s revenue roughly is coming from international markets. So they’re selling in Saudi Arabia and India and Japan and Asia and Latin America, right? So we’re selling to iHerb in the U.S. that shows up to us as U.S. dollar revenue, but ultimately, the end consumer is outside the U.S. So we know there’s demand for the products outside the U.S., because we’re selling to people who are selling it.
I mentioned Coupang as well, which is similar. It’s like kind of the Amazon of South Korea. I mean, MusclePharm does quite a bit of business with Coupang. And Coupang is, we’ve talked to Coupang about a number of our brands. So, again, that’s a domestic sale for us, but it’s to an international customer that you cannot buy domestically on Coupang, right? So, the demand is there and we’re looking at ways to capitalize on it. But the good news for us is like we like selling domestically. We don’t have the currency issues. We don’t have to deal with foreign currencies. We most times — most of the time when we sell product, we have to pay for the shipment. So, I’d much rather pay to ship it to California and have them move it around the world than we have to ship it over an ocean.
Does that answer your question?
Igor Novgorodtsev: Yeah. Thank you. I don’t have any more questions. Thank you, Dayton.
Dayton Judd: Yeah. Thanks, Igor.
Operator: Thank you. And there were no other questions at this time. I would now like to hand the call back to Dayton Judd for closing remarks.
Dayton Judd: All right. Thank you, Paul. And thank you everybody for participating in our conference call this afternoon. We certainly appreciate your interest in FitLife. Happy to speak to you all individually if you would like or if you have additional questions between now and the next time we talk. But again, appreciate your interest and look forward to speaking with you in the future.
Operator: Thank you. This does conclude today’s conference. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.
