GRNE CEO, Richard Surber, Issues Annual Letter to Shareholders; Discusses Form 10K Financials
Apr 18, 2012, 09:28 ET
SALT LAKE CITY, April 18, 2012 /PRNewswire/ -- Green Endeavors, Inc. (OTCQB: GRNE) (PINKSHEETS: GRNE), a majority owned subsidiary of Nexia Holdings, Inc. (PINKSHEETS: NXHD), release the following letter from its CEO, Richard Surber, to its shareholders.
2011 was an exciting year for GRNE. We further strengthened our business by improving our operating systems, streamlining our marketing efforts, stepping up our hiring efforts, and further improving our new talent education program. 2011 was the first full year of operation for our newest Landis Lifestyle Salon location in Salt Lake City, which generated over $745,000 in gross revenues in 2011. Our flagship location of 6 years continued to dominate the Salt Lake market pulling in over $2M in revenues and showing a net profit of nearly $300,000.
Over the last year I have stressed revenue growth because we are in the initial stages of growing our businesses. Revenues are a partial reflection of how well we are servicing our guests. Revenues are a broad measure of many metrics, such as: guest retention rates, retail product sales per client ticket, productivity, increases in new guests, and other metrics. While we are working hard to post profits as soon as possible, posting net income at this stage of our development is not the primary focus. Our focus is on growth in 2012. Although our focus is on growth, this does not take away from the fact that I am carefully watching expenses, especially variable costs. Growth requires expending additional capital. GRNE estimates each new salon will have a cost of $250,000 to $500,000 provided we do not purchase the underlying real estate. It is my belief that the cost of capital should decrease as our operations continue to strengthen.
Coming into 2012, we are on track to further strengthen our operations with the addition of an Aveda™ Experience Center (EC) at the new City Creek Center. (An EC is a retail shop that sells a full array of Aveda™ products. No salon services are performed at the EC.) The EC will further brand Aveda™ in the Salt Lake market, while acting as a referral center to our other salons for guests looking for hair, skin, and nail services. The EC is expected to increase exposure to our existing salons by introducing a portion of the estimated 7 million visitors annually at City Creek to Aveda™ products and the services provided at our existing Landis Lifestyle Salons. We will be able to book services for guests at the EC via our networked booking software to any current or future salon.
We are already on track to outpace 2011 in revenue growth. Furthermore, we are taking measures to improve our balance sheet by eliminating the derivative liability posted there, reducing interest expenses, and potentially eliminating the related party debenture liability. The derivative liability on our balance sheet is conceptually a reserve based upon insufficient authorized common shares to cover convertible instruments as of December 31, 2011 – that creates a substantial working capital deficit. Management expects the derivative liability to be removed or materially adjusted in the 1st and 2nd quarter 2012 financials based upon the increase in authorized shares and reorganization of certain convertible debt instruments.
Looking forward, shareholders may consider the effect of converting the related party debenture into equity in conjunction with removing the derivative liability. Upon reducing the related party liability and eliminating the derivative liability, GRNE's working capital position would improve by nearly $3M and its net equity would improve by about $6M.
Furthermore, shareholders may want to consider the market value of the initial acquisition of Landis Salons, Inc. and subsequent salons. GAAP requires us to book related party acquisitions at their adjusted book value. If these assets were valued at market, GRNE would have a substantial positive net worth. This analysis is outside the scope of GAAP accounting, but, nonetheless, is relevant to analyzing GRNE's financial position.
Our focus in 2012 will remain steadfast on excellence in guest services, while expanding our foot print in the Utah market. We will further hone our systems and work to create great efficiencies at our existing locations. I am excited for our future prospects.
CEO and Director
About Green Endeavors, Inc.
Green Endeavors, Inc. (OTCQB: GRNE) (PINKSHEETS: GRNE), headquartered in Salt Lake City, Utah, is a holding company with operations in health & beauty. GRNE's wholly owned subsidiaries, Landis Salons, Inc., Landis Salons II, Inc. and Landis Experience Center LLC http://www.landissalons.com, operate hair salons built around the world-class AVEDA™ product line. For more information, visit http://www.green-endeavors.com. The numbers are audited and have been reviewed by an independent accountant. GRNE strongly encourages the public to read the above information in conjunction with its filings and disclosures filed in 2010 and 2011. GRNE's disclosures can be viewed at www.sec.gov and www.otcmarkets.com. Investors should not invest more than they can afford to lose in penny stocks.
FOR MORE INFORMATION, CONTACT:
Richard Surber, President
Green Endeavors, Inc.
801-575-8073 x 106
SOURCE Green Endeavors, Inc.
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