William Bennett : Thanks, Rich. Hopefully, you can get a sense and how excited we are about this quarter and that, as we work through Phase 1 of our plan despite the lower revenue, we’re in a great position to stabilize the company this year, cement a much stronger business model and prepare to begin investing for the future. As we’ve alluded to in the past, we’ve been working hard on a full review of the business, which I’d like to start to give you a peek into. As we’ve analyzed, debated and discussed what this business could be someday, we’ve aligned on the fact that we don’t want to be a small company forever. We want to be a $1 billion revenue company someday. I tell you that now because I want you to know that every decision we make is focused on that goal.
Now we aren’t going to jump to $1 billion overnight, so our first milestone in that journey is what we call our 100/10 plan. This entails getting to our first $100 million in revenue and driving $10 million in adjusted EBITDA. We want to achieve this first milestone with 0 incremental debt and no other capital raises over the next 2 to 3 years. This entails our Phase 1 and Phase 2 plans. We’ve talked a lot about our Phase 1 plans and you’re seeing that play out in our financials. So let me now pull back the curtain a bit on our Phase 2 plans. We’re calling this phase laying the foundation for growth because our goal is to better allocate capital in our profitable businesses, evolve our business model and demonstrate a differentiated value proposition that can later be further scaled.
We’re going to make deliberate decisions focused on logical investments that will generate cash to help fund our future phases. I’ll separate these comments into 2 sections: first, capital allocation; and second, core business growth. First, capital allocation. As CEO, I consider one of my most important jobs to be the allocation of resources and capital. As I dove into the business over the last 7 months, I’ve seen large opportunities to drive growth and profitability purely through capital allocation. Let me share a few metrics to highlight what I’ve seen. As I dug into our historical financials, I found that our e-commerce business has been the primary driver of losses for the company. Over the past 5 years since we purchased our e-commerce businesses, we have lost in excess of $12 million on those businesses, more than our entire debt outstanding.
During this time, the professional chef side of our business remained nicely profitable, but the overall company lost money for most of those 5 years. E-commerce is a $10 million revenue business. So about 12% of our company revenue has been losing enough money to more than offset the profit of the remaining 88% of the company. Now while e-commerce was driving that $12 million loss over the last 5 years, IVFH is also investing differentially in that e-commerce business. For example, we own approximately $21 million of appraised real estate value today. About 85% of that is tied up in our e-commerce fulfillment center in Mountain Top, Pennsylvania. So the 12% of revenue that’s losing money is tying up 85% of our real estate capital. Another example, we have about 125 people employed by IVFH, about 1/3 of whom are primarily dedicated to e-commerce.
So again, the 12% of our revenue that’s losing money requires 1/3 of company head count. I could say similar things about the skew of resources around cash management, marketing spend, inventory, expenses, legal fees, maintenance capital, management’s time, et cetera. We’ve spent significant effort deep diving into a profitability plan for the e-commerce business and have come to the conclusion that without a larger e-commerce business to bolt this on to, we would need to triple its size to get to an accretive model. This would take 5-plus years and require large additional investment, entailing significant risks, and we don’t believe this is a good use of the company’s resources and time. So we’re going to dramatically shift our capital allocation to better align to our business and profit objectives.
