Exhibit 99.1
QT5, INCORPORATED
Moderator: Steven Reder
June 2, 2003
10:00 a.m. CT
Operator: Good day and welcome, everyone, to the QT5, Inc. conference call.
This call is being recorded. With us today from the company is
the President, Mr. Steven Reder, and Interim Chief Financial
Officer, Mr. Norman Kunin. At this time, I'd like to turn the
call over to Mr. Steven Reder. Please go ahead, sir.
Steven Reder: Good morning, ladies and gentlemen. I'm Steve Reder, President of
QT5, Inc. I would like to welcome you to the QT5 conference call.
Joining me on this call is Norman Kunin, our Acting Chief
Financial Officer. We have some exciting things to discuss today,
but before we get started, I'd like to read a cautionary
statement.
This conference may contain forward-looking statements made by
senior management of QT5 that involve risks and uncertainties
such as statements about our plans, objectives, expectations,
assumptions, or future events. These statements involve
estimates, assumptions, known and unknown risks, uncertainties,
and performances or achievements expressed or implied by the
forward-looking statements. Actual future results and trends may
differ materially from those made in or suggested by this call
due to a variety of factors including, for example, our ability
to compete with other products in our space, the risk of
unfavorable federal regulations, and the fact that our status as
a development-stage company makes our future unclear.
Consequently, you should not place undue reliance on any
forward-looking statements made on this call.
We discuss many of these and other risks that are uncertainties
in greater detail under the section entitled "Risk Factors That
May Affect Future Results" in item one of the company's current
report on Form 8-K filed with the SEC on January 24, 2003 (the
"Merger Form 8-K").
We have a number of positive developments which I would like to
discuss with you today in our first official conference call and
the first of many to come. I should note that Management and
Board of Directors of QT5 are very committed to the maximum
transparency, and you as shareholders or potential shareholders
will find an extraordinarily high level of disclosure with the
company as we move forward.
For those of you that are new to QT5, an overview - we are a
Delaware corporation formed in April of 1999 as a manufacturer,
distributor, and marketer of Bio-Med testing and homeopathic
products. While we are highly focused on the successful rollout
of NICOWater, we are continuing our clinical research and
development of future products for lifestyle enhancements. We are
headquartered in Westlake Village, California, and for more
information, please visit our Web site at www.qt5inc.com.
And now for our newest developments, as many are aware, we have
worked for over a year and invested over several million dollars
in hard and soft costs to bring a great new homeopathic product
to market. This is a product which is designed to appeal to 40
million Americans when they can't or shouldn't smoke. As large as
the market of smokers is, the market of non-smokers, of course,
is another 200 million Americans and includes, needless to say,
children that our product helps to protect for the known hazards
of secondhand smoke. So we have a great homeopathic product which
assists smokers and non-smokers alike.
One of the questions we get regularly is, "What makes a product
homeopathic, anyway?" Well, as you undoubtedly know, homeopathic
products are those of which are part of everyday American life.
One of the hallmarks of anything homeopathic, of course, is that
homeopathic products are considerably more diluted and the key
ingredients are natural or organic. The active ingredient in
NICOWater is nicotinum, which has been in the homeopathic
pharmacopeia since 1933.
It is also extremely important to note that homeopathic products
operate under certain FDA regulations. Homeopathy, of course, has
been scientifically
validated and used worldwide because of the - its effectiveness.
Homeopathy is an effective and gentle way to assist the body.
Homeopathic products are recommended for adults, the aged,
babies, children, and even pregnant woman. But more specifically,
you should also be aware that NICOWater is defined as
"homeopathic product that is sold under the FDA's compliance
policy guide conditions under which homeopathic drugs may be
marketed."
NICOWater is designed to relieve the symptoms of tobacco cravings
as is indicated in all product packaging and usage instructions.
We are quite specific about who our market is - adult smokers who
suffer from the symptoms of tobacco cravings and find themselves
in situations or environments where smoking is prohibited or
discouraged. The United States has led the world in identifying
the dangers of secondhand smoke. As a result, smoking
restrictions are widespread and increasingly rapidly. While these
steps have eliminated many of the secondhand smoke exposure
problems and greatly improved numerous building environments,
there remain over 40 million active smokers who must obey these
growing restrictions and (succumb to) these inconveniences simply
to relieve the symptoms of their tobacco cravings.
So that's what NICOWater is. What is it not? NICOWater is not a
cessation product. NICOWater is not a magical (bullet) for
smokers. And NICOWater is not to be used by anyone under the age
of 18.
So what do we, as management of QT5, believe about NICOWater? We
believe that NICOWater is a breakthrough product whose time has
come. We believe that NICOWater is effective to relieve the
symptoms of tobacco cravings. We believe NICOWater taps directly
into a $200 billion tobacco and tobacco products market. We
believe, most importantly, this great homeopathic product can
have broad commercial acceptance through all consumer channels.
And what is broad consumer - commercial acceptance? Our strategic
plan calls for sales to everything from national pharmacies,
convenience chain, grocery stores, airlines, and sport events.
One thing about the original consumer resistance to our new
products that subsequently became household words whether they
were beverages like Snapple or Red Bull or ((inaudible))
nationally accepted weight-loss products such as Atkins or Weight
Watchers.
So where does that leave us financially? As with any public
company, the proof is in the pudding, or more importantly, in the
numbers. I'd like Norman Kunin, our Acting Chief Financial
Officer, to provide guidance for this coming year. Norman?
Norman Kunin: Thank you, Steve. As you are presumably aware, QT5 commences its
new fiscal year on July 1, approximately four weeks from now. To
date, we have been a development-stage company, but as we start
to roll out our product, we're now able to generate a forecast.
For fiscal 2004, we believe that the company
could generate revenues in excess of $27 million. Assuming we're
able to achieve that level of revenue, we believe that it could
result in net income for that same period of approximately
three-and-a-half million dollars. Based on our assumptions
regarding shares outstanding, state and federal tax treatment,
and (dilution), it's our estimate that we could generate
approximate seven - eight cents earnings per share - that's eight
cents earnings per share for the forthcoming fiscal year.
Steven Reder: Thank you, Norman. So we believe we have a great company, a great
product, and a terrific management team. But there are always
questions we would like - and we would like to take your
questions now.
But before we get started, I did have one question online. And
I'll read that now, and it was, "We received an inquiry prior to
this conference call asking if the company is willing to release
a quarterly breakdown." Yes, and we will release that in the next
several days.
We're available for questions now.
Operator: Thank you. The question-and-answer session will be conducted
electronically. If you'd like to ask a question, you may do so by
pressing the star key, followed by the digit one on your
touch-tone telephone.
Once again, ladies and gentlemen, to ask a question, that's star,
one on your touch-tone telephone.
And we'll take our first question from Mary Warnick with West
Coast Marketing.
Mary Warnick: I have a question for Mr. Reder. Wouldn't a public company like
yours trade at, at least 15 times this year's earnings?
Norman Kunin: Steve - this is Norm Kunin - Steve has kind of transferred that
answer to me. I think the multiple of price to earnings is a bit
imprecise right now particularly since we're a company that's
just becoming an operating company. So we'd like to defer our
estimates of what that multiple could be for - until a later
date.
Thank you for the question, though. It's a good one.
Operator: We'll go next to Gale Leetzow with - as a private investor.
Gale Leetzow: Good morning, gentlemen. I'm relatively new to your company, but
I have two questions because I have invested quite a few dollars
in small companies similar to yours. And the questions are,
number one, "Do you have any foreseeable increase in authorizing
your outstanding shares of stock or doing reverse splits in the
next six months to a year?" And the next question I have is,
"Do you have enough cash to meet your delivery costs such as
increased inventory, increased accounts receivable, and increased
accounts payable?"
Norman Kunin: I'll handle that question ((inaudible)), and they're good
questions. This is Norm Kunin.
With respect to having available cash, the company will be in a
position to meet its financial responsibilities in terms of
making the payments that you mentioned. As far as what our stock
structure will be in the future, again, I think that's going to
be dependent upon perhaps future financing, so it's a bit
premature to comment on that, but thank you very much for the
question.
Operator: We'll go next to Brian McCarty, Stansbury Holdings.
Brian McCarty: Hi. How many shares are outstanding currently in the company?
Norman Kunin: There are approximately 36 million shares - approximately 36
million shares outstanding...
Brian McCarty: How many - how many in the float?
Norman Kunin: ...common shares. Excuse me?
Brian McCarty: How many in the float?
Norman Kunin: I don't think I can tell you that - not because I don't want to.
It's because I'm not quite sure what's in the float, sir.
Operator: We'll go next to Jerry Kirby, Spencer Edwards.
Jerry Kirby: My question was just answered about the shares in the float.
Thank you.
Male: Thank you.
Operator: Once again, ladies and gentlemen, to ask a question, that's star,
one on your touch-tone telephone. And we'll go next to Jeff
Farrar, private investor.
Jeff Farrar: Yes, sir, have you generated any income from any of the other
products you've developed?
Steven Reder: No - this is Steve Reder - no, we haven't. Again, our first
product to come to market is NICOWater. Thank you.
Jeff Farrar: OK, thank you.
Operator: Once again, that's star, one to ask a question. We'll go next
to Jason Swain, private investor.
Jason Swain: Hi, I just have a quick question. How much is the unit cost
or per bottle?
Steven Reder: Are you talking retail or wholesale?
Jason Swain: Retail.
Steven Reder: We have a suggested retail price of $7.99.
Norman Kunin: That's not per bottle.
Steven Reder: That's not per bottle. That's a four-pack - how we're selling the
product.
Jason Swain: Thank you.
Operator: Once again, that's star, one to ask a question. And we do
have a follow-up question from Gale Leetzow, private investor.
Gale Leetzow: Yes, on the other products that you're developing, when are you
seeing any kind of a marketability on those products?
Steven Reder: We have - this is Steve Reder, and we have specifically put those
down the road at this - at this point in time and are truly
concentrating on NICOWater.
Operator: Mr. Reder, there appears to be no further questions at this time.
I'd like to turn the call back over to you for any additional or
closing comments.
Steven Reder: Thank you very much.
Ladies and gentlemen, we are greatly appreciative you joined us
today. It should be self-evident we are very enthusiastic about
our company and our product. And while there are no guarantees as
to our long-term success, we believe that we have the right
product at the right time, and we encourage you to watch our
progress. Thank you very much.
Operator: This does conclude today's conference. We thank you for your
participation. You may now disconnect.
END