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Selling high-quality
meals, drinks, snacks and nutritional supplements that are safe, through celebrity
endorsements and word of mouth has put XELR8 in position to grow their business
Healthcare
Drug Related Products
(PRH-AMEX)
XELR8 Holdings Inc.
VitaCube Systems Holdings Inc.
(public company domain)
480 South Holly Street
Denver, CO 80246
Phone: 303-316-8577
Earnest Mathis Jr.
Chairman and CEO
Interview conducted by:
Walter Banks, Publisher
CEOCFOinterviews.com
January 26, 2006
BIO:
Earnest Mathis Jr.
Chairman and CEO
Mr. Mathis was appointed as XELR8's Chairman and Chief Executive Officer in March 2005 and
is involved with corporate strategy and the day-to-day operations of the Company's
business and development. In addition, Mr. Mathis is also President and a director of
Inverness Investments, Inc., a privately held financial consulting company, since January
1987. Since its inception in 1987, Inverness has completed numerous acquisitions of
publicly held companies; Mr. Mathis served as the principal manager in most of those
transactions. He has also been involved in several initial public offerings as an
officer and director of the registrants. Since 1998, Mr. Mathis has also served as
the Managing Director of AmeriGolf Holdings, LLC, a golf course development company.
One of AmeriGolf's properties, The Golf Course at Redlands Mesa in Grand Junction, Colorado,
was named “Best Affordable New Public Course in the United States” by Golf
Digest in 2001. In January 2002, Mr. Mathis became one of the founding members of
Waveland Ventures, LLC, a capital management company emphasizing economic redevelopment
and stimulation programs for Government entities. He also has held a managerial
position at Waveland Colorado Ventures, LLC, a certified capital company, since its
formation in January 2002. Mr. Mathis has been a member of the Society of Security
Analysts since 1990. In 1997, he participated in the then State Treasurer (now
Colorado Governor) Bill Owens' Good Will Ambassador Program to China. His extensive
high finance background is a valuable asset in driving sales, profits and shareholder
value.
CEOCFOinterviews.: Mr. Mathis, will you tell us about the
company name change and a new branding strategy?
Mr. Mathis: “We have some exciting things happening with
our company now and love sharing them with the financial community. Our name today is
still VitaCube Systems Holdings Inc., in the public company domain. We are in the process
of changing that to XELR8 Holdings Inc., but that has not been done at this time. We
anticipate that will take place probably sometime in the month of January, hopefully no
later. In the mean time, we did change our operating subsidiary to XELR8 Inc. Our
corporate name is a DBA (doing business as) XELR8. We pretty much have everything cleaned
up and the reason we have chosen to re-brand our company is there was some confusion about
who we are in the marketplace. We felt it was a necessity to come in with a complete
different brand, and one name instead of multiple names. For instance, we were being
called V3S, VitaCube and we were also under the name of PROformance Network; it was a
confusing message. On September 24th, we re-launched our company changing the
DBA to XELR8 and our operating subsidiary to XELR8 and at the same time, a completely
different logo. We also launched two new products at that event that we held on September
24th to tell all of our distributors about our new name and brand as well as
some of the new products that we have added. Primarily, the old name VitaCube is a product
and it was one of the first products that this company created, which is a
compartmentalized box, if you will, that tells you how many vitamins to take, when to take
them and how often to take them. With that, we felt that rather than branding every
product that this company has, we wanted to brand one company and have multiple products
fall under that brand.”
CEOCFO:
Why did you choose the name XELR8?
Mr. Mathis: “There is a meaning behind it; we also felt
that we could get the name as far as dot.com or dot.net. The X is truly the acceleration
of our business, and the X factor with our athletes and that endorse our products. The E
is for the Eat Drink Snack System that we’ve created. The L is the leverage that we
create for our distributors and shareholders by being in on the ground floor in a network
marketing company and the leverage of a well funded public company. The R is for the right
tools at the right time-Simple Sample System-The “Tin” marketing system.
It’s the successful AOL “Tin” that’s beautifully embossed with our
logo that includes: DVD that sells the business opportunity for our distributors, sample
of our Energy Drink, Brochure, and Coupons to help you get started in our business. Eight
- is the times you share the XELR8 message per weeks that you could do this eight times a
week.”
CEOCFO: Your company is successful with its marketing
approach, how have you been so successful with your approach?
Mr. Mathis: “First, our marketing approach is our brand
and secondly, it is reaching out to our distributors and allowing them to be proud of the
company for which they work. We came up with a completely new system to bundle some of our
products into the system that we named our Eat, Drink and Snack system. Why did we do
that? We did that simply because there are many companies out there that are asking people
to go into their pocket, and spend more money than they are spending on a weekly basis and
buy their products. We wanted to say hey look, we have an Eat, Drink and Snack system
– We all eat various meals everyday, sometimes we don’t have time to sit down
for a quality meal so we came up with a Super Meal Shake that meets the Harvard Food
Pyramid Guidelines and more! It only takes a minute or two to make. We want to replace
some of those Grocery dollars with some healthy food choices that we create. On the drink
side, you are going to Starbuck’s, you are drinking pop on a weekly basis; take some
of that money, and put it into a healthy alternative that will give you the same energy
level but be a lot more healthful for you than a can of pop or a cup of Starbuck’s.
On the snack side, you are buying Snickers bars, eating Zone bars and whatever you may eat
between meals, we would like for you to take some of those dollars that you spend and
spend them on our Chocolate Raspberry Chews that will satisfy your cravings in between
meals. The idea was not to take anymore money out of the budget that they were spending,
but to give them some healthful alternatives to what they are eating.”
CEOCFO: Does your bar
taste as good as the candy bar that you buy at your local grocer?
Mr. Mathis: “In my opinion it does, but it is a lot
better for you, it has less calories and it satisfies your cravings between meals, where
as a candy bar that you buy at the local grocery store will be loaded up with
carbohydrates. It is the old adage --Sugar feed Sugar, so the more Sugar you eat, the more
Sugar you crave. Ours is a good and healthful alternative to a regular candy bar or
something between meals, that helps satisfy your cravings.”
CEOCFO: Are you
targeting the general public or are you focusing on athletes?
Mr. Mathis: “We are targeting the general public. We
have over 350 professional athletes that use and endorse our product and that helps our
network marketers open the door to be able to successfully talk about our product and
Business opportunity. Many people are concerned about what they put into their bodies and
want to know if it is healthy and if there is any risk in having steroids in these
products or anything that would be harmful to them. Simply put, our distributors are able
to say that we represent a company that has all of these athletes that use and endorse
these products, and if they are good enough for them and the world they live in today that
is scrutinized so much by so many different people, then they should be good enough for
you. Generally, that works as a good door opener for distributors. So, we have athletes
that use our products but we are targeting the general public.”
CEOCFO:
How do you go about getting your sales reps?
Mr. Mathis: “We are a direct sales company, which uses
network marketing as the sales process. Back in June, we started a Fly-In Program and we
went out headhunting. We targeted some of the biggest network marketers that we knew of
out in the network-marketing world and we invited them to come in and take a look at our
product and our marketing strategy, kick the tires on our company and meet the management.
Over a three-month period, we flew in 150 of these type of individuals that had
demonstrated to us that they had been in the network marketing business for a number of
years, had been successful in more than one company. They had earned a paycheck of over
$5000 a month in the network-marketing field, and they were still employed with other
companies. We brought them into the company and we had over 40% closure rate on getting
them to join our company. These leaders became leaders for our business and they have
networks or down lines. They are paid for recruiting people that they have worked with in
the past. It is more email, word-of-mouth and telephone driven at that point.”
CEOCFO: How many members
do you have to your team so far?
Mr. Mathis: “We have a bit over 1800 at this
point.”
CEOCFO: What do you look
for in concerning a successful rep?
Mr. Mathis: “First, every networker that works with us
is also a customer so if all they were to do is to become a distributor for our company,
which they can do for as little as $29.00 on an annualized basis, then they are allowed to
get 20% off their product purchases. They can get their thirty bucks back rather quickly
if they are buying $100.00 to $150.00 a month in products. If a distributor signs up two
or three people that enjoy our products, use them, and share the products with other
people, then that’s certainly viewed as a success. If they sign up 100 people
underneath them obviously that would be even more successful.”
CEOCFO: You mentioned
that you do not put any steroids in your products; will you tell us more?
Mr. Mathis: “We do not step out on the limb and make any
claims that our products will cure this or that. We certainly do not use Ephedrine in any
of our products or any steroidal-based ingredient that would cause any harm to our
athletes. We take more of the safe route to make sure that we formulate proven ingredients
that have been on the market for many years and that have been approved by the various
athletic organizations and the FDA and so forth. These are products such as vitamin C,
Vitamin B-12, B-6, Ginseng, and Green Tea Extract to name a few. All we have done is take
these ingredients and formulated them in such a way to give the boost that people are
looking for such as in our energy drink. We are competing in the energy market with the
likes of products like Red Bull, which by the way does over $2 billion as a stand-alone
product on a yearly basis. We have come up with proven ingredients that have been around
for many years where there has been no problem with regulatory agencies. On our vitamins
and supplements category, we sell glucosamine, vitamin C, a multi-vitamin as well as EFA
(Essential Fatty Acids) and Calcium to name a few. We purchase the highest grades of these
products and or ingredients available for our unique compartmentalized delivery system
–VitaCubes. Our products are safe and efficacious. That’s one reason we have
been able to attract all the athletes to use and endorse our products.”
CEOCFO:
What sets you apart from your competitors?
Mr. Mathis: “What sets us apart are our athletes.
Competitors might say I can get a multi-vitamin anywhere, or an energy drink; sure you
can, but can you get all these athletes that say hey these are some of the best products I
have every used? That sets us apart one way and the second way is how we sell our
products, such as comparing our vitamins to Centrum. When a multi-vitamin is on the shelf,
there is generally no testimonial that comes with that product. The way we sell our
products is through network marketing so someone is speaking up and sharing the experience
that they have had from taking our various products. Word-of-mouth seems to be one of the
better marketing and sales channels that exist today.”
CEOCFO: Will you tell us
about the financial position of the company and if you have the money to continue to build
out your company?
Mr. Mathis: “We believe we do have the money in-hand to
continue to build out our company. We have a burn rate around $350-400 thousand a month.
Our last reported cash position was $4.3 million and we believe we can hit or break even
during the first half of 2006. If you do the math, you can see that we would have
sufficient cash on-hand to be able to accomplish that goal.”
CEOCFO: Which do you
feel you would like to get more of, institutional or retail investors?
Mr. Mathis: “I would like to have a nice mix. If we grow
our business to the Mult-million dollar like we’re capable of then we will have
thousands of distributors and many of those will become shareholders. They will most
likely go through retail channels to do that. We will have a good mix of shareholders that
probably at the end of the day; will be 30 to 40%. I would like to see the rest on the
institutional side. There is a strong institutional following in our industry because
there have been successful companies both on the network marketing and in the nutrition
area.”
CEOCFO: Why should
someone consider investing in XELR8, which is a multi-level marketing company and why is
that more valuable than a company in your industry with a retail approach?
Mr. Mathis: “First, we have a little under 10 million
shares outstanding. Our stock is around a buck and a quarter. You are looking at a $12.5
million market valuation. That is inexpensive when you look at the athletes that we have
assembled who endorse and use our products. This would cost millions to duplicate if you
could. In addition, we have created a world-class management team here at this company
with the likes of Doug Ridley our President that has built Network Marketing companies
from the field producing as much as $2,000,000 per month for the company he was with and
as a founder of another company that grew from nothing to over $20,000,000 per month in
revenue generating sizeable profits. We’ve gone through the pain of developing the
products-- we’re in the sales cycle now with a foundation that can support many
millions of sales revenue. Our cost of goods is around 20% so we have great margins and a
marketing and sales program that I believe allows our company to grow exponentially. Most
companies that start out as retail or wholesale companies are going to need around $25
million in inventory and marketing to be able to go into as an example, GNC stores that
would take your product on. You have to have that type of capital behind you; therefore,
you would have to have a lot bigger financial base than we have. Conversely, with the type
of company we’ve put together you don’t need that amount of Capital. This allows
for more leverage for investors in our company because of our financial base (Market
Capitalization) than you might have in a retail play.”
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