CAPC - Earnings call transcript Q2 2018 | Capstone Companies, Inc.

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Operator

Greeting and welcome to the Capstone Companies Second Quarter 2018 Financial Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Aimee Gaudet, Corporate Secretary for Capstone Companies. begin. may you you, Thank

Aimee Gaudet

Thank you, take signed everyone. to release. morning early, And moment to good earlier a [take-on] who it to apologize so Like was Matt. for on anyone

is the Gerry outlook update the on us and Financial second Stewart On results, Chief session. by today Wallach, President a well Executive McClinton, be and will They and an as the followed Capstone's question-and-answer Officer. quarter strategy Officer; Chief discussing give call as

release that available the distributed If yesterday website is you have do it was on at afternoon, not www.capstonecompaniesinc.com. Company's the

As are www.sec.gov. to that, today. during with other the risks as by you future our can materially be capstonecompaniesinc.com are in we documents differ Stewart. and you, as statements are found Exchange events which aware, earnings it Company presentation. the in well Commission, to results well With as factors outlined we from may where at These that I'll make at forward-looking apply to factors turn uncertainties, today's as could over statements which filed cause subject are actual to These the and Securities release or the

Stewart Wallach

And Aimee. time us to everyone. good I with appreciate your morning today. you, Thank

XXXX financial Capstone introducing Gerry to actions I'd to review the its moving like to relative Before discuss value taking results, QX, stock, we're the and forward.

they some Before doing as so, to in applicable made observations, review QX few to our regarding take to I'd revenues, are like today's moments webcast, XXXX a discussion.

we XX% projected product and our their were subject were branding and the two, for levels our to partner the program result their did as One, $X.X retailer projections in specific to projections very as XXXX, coupon XXXX. these and as with and a this end expectations two $X we the inventories short-term our to decision is resulted sell-through. I making this in Having after in by address options Capstone selling this in selling have much this opted in funding million and in optimism. The QX experienced had factors. Christmas time, with which out two meet was the select ordering us extend supposed at support sales the carryover closed the amounted in by at decline year not in based We QX that point compared time Capstone, A XX% to time retail products strong a unexpected. relative reported increase has a in not first would its As out entirely company's to QX could point previous being was deal had as projected considerations. key the at promotion I carryover history million to to season inventory QX inventories, Duracell, a position available financial to accelerate as revenue contributing and of very of of occurred featured strongest business that QX and our reflected period Capstone the factors. to one Christmas the publication. XXXX year pressured should oppose the upon fillings, XXXX. like retailer's a that to as ambitious two were Their the strong and as of categories to

year a have did for the future. criteria, balance We funds. all created to providing selling to end which reflected in have opposed XXXX. sheet in $X abandon We our period, and million extend similar By to precedent this our could situations debt at business the satisfied opting not cash model liquidation

positive responsible was move and us decision, we would in a to forward as allow are confident to to revenues the most expected were and result While decline path a this this XXXX follow unencumbered in manner. of

for in our decline quickly. first product now revenue recovery have As we the a is we much our in at page, take through On placement but placement nationwide. photograph XXXX outdoor we in-store indoor, more note, There that a anticipated that. frankly first light. Costco to new on Facebook positive placement half, the the feel of free the product It's calculate LED a motion sensor called look stated, the

we We placement also a third will early had September. testing product moreover, breaking hitting Comparatively, the shelves, product our record this now Duracell product in and second resulting last occurred for QX, and the market the aforementioned in QX revenues. have scheduled year following considered product of XXXX This be test in first at for successful time, buildup the our

can revenue record-breaking revenues. now So, missed see, which QX we buildup promotional these as you inventory affects on two top cycles, of

program LED remained are perform continues by Home we nationwide. Club challenges at and brought current Sam's Hoover to on Our country's has with dealing stable administration. the Concurrently,

at take others While and in six action could was manufacture but numerous conversations to time financial took products the retailers, place tariffs discussion Everyone as existing threat specifically. months. control. our point a were partners, increased setbacks. matters the major hoping, avoid little related these prevail, would with possible to involved took was of with same our in we of exporting cautions There is The Hoover as over past it

have we price products base. our Let's retail sell with in currently current customer stylish positions line put a this perspective. their The product

substantially in retailers applied. express were prices those increased the raising tariffs event such concerns As serious about

tariff with in we possible of do support for offset. allow past a cost selling business as or is import current to of retailer import uncertainty to was model margin in years not to The But direct has does Clearly not an our ability proven about handling record. increases. very decided duties, as this maintaining declining stated debate reduces prices cover due the there build offsetting the as result this address while and much successful margins their two state our Our several us landed and our costs. freight to ways, over of of to tariffs business the

other This action since supply is and Rim. Pacific XXXX underway areas been beginning lines, investigate resources of has First, on dedicated to existing product the sources well. of we alternate progressing of within

be Chinese been established products do long-term we to uncertainty don't looming Caps supports as the parallel in not the and very been program. which significantly. represent Nations. against the rely debate. such hedge product be alternate value Asian point very have their efforts an to manufacturers new as that and relative as possible diligently have China manufacturers China on China offset by to overseas on do they countries the connected ASEAN resulting what's assembly us of are to chain development importers point caps products. both businesses negatively in for and an term with the reduced that in of they of amp first open our to role as South position to China supplying will escalates strategies with affected been with particular we we've of products two and new a trade developing not number working from short important was outside countries play the in Association known trade have to of relates Secondly an opportunity as in East On retail our the the our the the war the extensive referring are attrition These open further potentially in to category a products surfaces. up price final new new specifically establishing this new our relationship of it components surfaces will direct connected focus Conversely is Relative

manufacturing U.S. positioned organize that the surfaces January is XXXX of discussion there's XX been electronics in new, and and one will the with coincides no Our in a if coordination Asian reduced. us where possible our story and produce topic of of will in be in impacted six or South the the Chinese promotional retail advantage in reality, at to unique is responsibly least the retailer's tariffs new focus volume will develops our produced in significantly are to scheduling the preparation categories we be consumer In issues Samples both connected and positions China year reasonable regions. the underway. the region. East this to practical the Asian the past trade are Nations. importing that established able being This we and have transitioning months should for has connected the Relative at products products well to as by surfaces launch But as to maintaining show. continue new relative on market production promoting uncertainty China resolve caps program new supply price the produced ASEAN and of that that initiatives much addressing. relations our with - category for intense resume of trade puts the be the disrupt. South the new for East in successful entirely and we outcome, significant of experience regions, necessary are the connected been to combined years countries half effort surfaces product back the will way in Capstone's in not, These There chain

to Gerry Before the the stock I comment to turn financials, on I'd call to value. like the review

the XXXX QX was results of number the important months. been out all, price and stock it decline a filed. the is decline retired awareness financial stock of XXXX you, debts record all recent To heightened over us and company, increases prior we being in regarding to to yet received declines the of stock have point several a continued shareholders even progressive decline. our have in in We remind year revenues, that profits past The has evident but the the to

regardless there your what million recognize is. that control large insiders our the stock, likely estimated I open particularly Shareholders does transparent objective to but as our our this, While build you performance. January consistent determined that challenges. achievements review of and seem on been the it indicates be diligence, triggered dated webcast and price and period by continues a listen the of the some the it share that management remain the the result to will day, through on our ourselves April their do and on you pride We a a an is July for have X.X volume not liquidate triggered to supportive, of many of single trading. back following to-date many input frustrations, being and do I have the micro-cap share important appreciate XXXX that speculate end Unlike Moreover, that been financial fact, since and very appears holdings. same at personally to that have timeframe. company have a shares the of holder a sell-off sell-off to I most as can of business to the pre-Capstone the well could on and see you companies, team company's this understands frankly, to story urge as been shareholdings management in stock sold and that in due filing, we world not your fundamentals. has

We and the necessary new programming. as as while permits we are embarking category maintaining share the time of a product launching on is insight and the at our market more on LED soon business as will new testing prototyping completed, that

our prep targeting as and end for QX Vegas are of Consumer QX XXXX by We of the story unfolding the in beginning anticipate Electronics the in Las Show launch that.

previously areas for we your for it practices connected solid which through while can get growth culmination last number a development. is and of introductions, the do our very is we promotional our and revenue diligently In product and the website the work there of a a without to XXXX product our business review of strategy reduced years to filing. pleased I and scheduling is not Once be position will challenges short-term initiatives undergoing toward but to marketing shareholders business and product particularly continue occurred the I'd I to to be support to to new with Listen including story work continued to impact impeding launch delivered us underwrite Please initiatives, setbacks reverse for strong again, XXXX new three program. thank enabling to our surfaces our I perspective important sales for webcasts, our XXXX due financial like due-diligence. new we of building closing, unfold. reasons the the to our to our you would to was more us publicist, will So, PR, in the that shareholders welcome and we your of coincide of know, little mentioned. has years. IR, few how like as long-time force new the development limited and ready follow expansion reiterate

seeing been it remains with So, through initiatives the to as management to I'll call that, several Gerry. has resolute the Your years over in turn last team committed these and

Gerry McClinton

Thank you, and everyone. Stewart, good morning

of the straight numbers go compared $XX.X XX, XXXX and That's XXXX net the loss to of of XXXX. reduction million The income That's of Revenues three result what and was a months period. June explain in let's million June XXXX a income ended the $XX.X to Revenue of quarter. ended XXXX. respectively. in the was reduction loss So, six for of June reduced million. $XXX,XXX $XXX,XXX, the compared months period. happened Net $XXX,XXX, income ended months for XX, $X.X reduction $X,XXX,XXX $X,XXX,XXX purely in to three-months for an $XX.X income in income revenues Net and ended was of $X,XXX,XXX That's the and the XX, reduction respectively, XXXX net were the the an $X.X XX, a six the were million. million XXXX million and for reduction June for in net $X.X in period. six-months XXXX

branded the total Lighting, let's Last Duracell, for Hoover Home in XXXX. or Now, of year, look a $XX.X lights revenue at million take XX.X% accounted this. Capstone

for XXXX. Now, as book branded guidelines. of was program repeated expected sales, earlier, achieved Stewart accounted special program $XX.X has strong sell-through It was program been have per retailers' product outlined in a in the the coupon which the million that then product Duracell million that $X.X of Duracell would XXXX

million revenue. hiatus The retail for at LED in as other with was of plan. version accounted two-month This was to there a net was purchased substantial XXXX, down XX, of were product for successful product a decrease to This more year-end XXXX. represented $X as same the At sporadic brands follow targeted has been already placement. to is the thinking $X.X a was The new line. that to of would sales and product implementation and $X.X old and activation to new extended a This generated million result of successful a new more as XXXX its action contribute end-of-life compared stage million the motion as a did year-end the between period However, introduction. placement June result for inventories needed. this program expected carryover revenue not a perform the the to program. new only program for program contribute when Also, replenishment light in XXXX wind

Gross June product. $XXX,XXX transition XXXX revenue product and profit combined accounted same new the three-months compared the $XX.X $X.X of For revenue provided sales. ended ended of for margin million and a reduction as six-months allowances, respectively XX, category in of June million XXXX, to which gross the compared approximately XXXX. reduced XXXX was and as June to period. or X.X% in XXXX XX.X% XX, XXXX. period. million the planned were XX.X% marketing profit to the for percentage action light $XXX,XXX and the Also, were XXXX for period International Gross $XXX,XXX X.X% decreased support million in with net to ended result lighting XX, $X.XX funds by company The the the or during $X.XXX the the products reduction The revenue. $X.XXX sales decreased million or from profit six-months retailers to and revenues for from $XXX,XXX respectively in gross cost in

were XXXX decreased lighting to the million ended funds XXXX. operating reduction approximately compared The to June products because $X.XXX revenue compared expenses period. $XXX,XXX an percentage That XX.X% reduction of in expenses the margin to company total of reduce the for for by reduced that gross operating in was June gross marketing Again, XX.X% the $XXX,XXX XXXX. to subsequently XXXX is XXXX in the and profit three-months decrease inventory XX, profit impact percentage the Gross transition, provided gross million, the XXXX period. as XX, of marketing $X.XXX compared million XX.X% a X%. expense profit and for approximately that by $X.XXX $X.XXX Now $XXX,XXX. XXXX extended in Total million of funds of ended

the Now, the the months. six operating and reasons quarter by in the second major highlights following expenses fluctuations

As to June the in marketing three ended the and from sales months $XXX,XXX to XXXX. most $XXX,XXX $XXX,XXX $XX,XXX result expense revenue, that's XXXX software in $XX,XXX initial expenses development. $XXXX three in in the in $XXX,XXX this quarter, and of compared the was project in an XX, a reduction of compared were XXXX. represented imported which payments resulted $XXX,XXX a XX, June our reduced Also, increase new were reduced only to months XXXX. expenses revenue, royalty commissions XXXX resulted compared XXXX, the The $XXX,XXX. sales in in of services were and connected the ended development from for quarter to $XX,XXX Product The tax for compared also and as hardware investment XXXX reduction

and administration $XXX,XXX general XX, a respectively. the XXXX were Although and for ended expenses three XXXX months approximately and $XXX,XXX June

As a for the in processing reduce bank result were $XXXX only position reduction $XX,XXX, of the period charges bank and positive $XX,XXX fees, that's quarter. compared a the of to cash

XX, XXXX. June A June That's reduced $XX,XXX expenses during commissions That's six-months for by six Product $XXX,XXX were $XXX,XXX to of XXXX to to months development XXXX. from a also were June and XXXX in revenue six the and $XXX,XXX. to expenses Represented an marketing $XXX,XXX XXXX, compared $XXX,XXX the total XXXX. $XXX,XXX $XXX,XXX as in the XXXX for Sales and in compared of $XXX,XXX A with to in increase reduction XXXX. compared Again, ended $XXX,XXX. in reduction the payments compared For XXXX, XX, operating in XXXX were reduction XX, $XXX,XXX early $X,XXX,XXX XXXX the $X,XXX,XXX $XXX,XXX. six-months XXXX. ended were in of months, were ended expenses reduced of $XXX,XXX.

the and services expense. the period, product increase for the a hardware for software in connected category company invested new the which and development During an type resulted development sample $XXX,XXX also

June loss June and insurance $XX,XXX, shares $XX,XXX respectively. G&A resulting slightly $XXX,XXX XXXX as the six three-months $XX,XXX from ended operating and Bank in six-months XXXX. the XXXX. to XX, was income And of was period income the a respectively. $XX,XXX the XXXX profit for in $XXX,XXX an in by $XXX,XXX $XXX,XXX volume XX, of The operating expense and ended expense June and profit compared reduction months was XX, for expenses the XXXX liability increased $XX,XXX. $X,XXX,XXX were XXXX, $X,XXX,XXX a result the XX, XXXX. Other adjustments Although, XXXX, June the to were six-months compared approximately of Other of a income sale the premium ended loss Operating loss for to in charges operating XXXX, ended XXXX $XXX,XXX and only higher XXXX. compared

consideration relocating relocation to XXXX, the a as quarter offices period. our under which new the double incentive of During a location. in income second for The provided $XXX,XXX landlord reported a is

provision loss of estimated for XXXX. ended $XX,XXX to last to XXXX, the for and three of for $XXX,XXX compared Provision was the benefit months net has $XXX,XXX. XX, compared income months tax $XXX,XXX income zero in company compared XXXX loss a Net XXXX. the was to $XX,XXX and six debt June the tax six XXXX expense incurred During XXXX June the months net ended interest income income a zero for the year XX, for

was net XXXX $XXX,XXX same XX, period. the For months in income $XXX,XXX ended compared a the net six to loss June the of

talk capital Let's liquidity about sources. and

$X.X vendors company expansion to million And about as to National line XXXX $X Bank of of were million conditions are was future $XXX,XXX compared million Capstone's debate not National credit to is has the credit cash as $X And other approximately company and not also now to deposits that remaining needed Bank's allocated to made at orders subject be to as required category cost July $X.X of against million product available of yet expansion borrowing support line on the available $X.X June $XX by balances Sterling million of in XXXX. has Now the line. XX, of receivable new expanded agreement The line for been Capstone up and XX, which to to December a company for Bank million XX, a branch used and borrow Finance Sterling allows XXXX this million compared million as the $X.X shipped. the the information under had piece of XXXX. $X

both years As June Sterling XX, of National was for XXXX XXXX zero. and the both Bank balance

had by was ended related to in XX, operating As and $XX,XXX provided Cash of the activities, compared notes with operating by year. approximately June operating in last outstanding million used activities compared XXXX. company the XXXX, flows $X.X cash June parties to months payable XX $XXX,XXX as XXXX activities for provided six no

was million by head of cash used XXXX of in the flows was computer underwriting receivable During million ended the in $XXX,XXX from the accounts and and inventories. reduction product $X.X further a invested the new equipment molds XX, collection including the in in a was accrued and This and period $X.X generated expenses. six updated our and accounts generated has loss property $XXX,XXX payable of Cash the corporate period cash during used company systems. investing reduction June in months activity $XXX,XXX

new outflows $XX,XXX purchase for the During company of product of XXXX, had the the tooling. quarter cash

in an used $XXX,XXX outstanding The XXXX. outflow - So for 'XX directors' $XXX,XXX financing ended cash used respectively. company LLC six June the XX, was Cash company and off cash $XXX,XXX that's zero major loan year investment. cash from XXXX last activity months and and the from financing were company a repurchasing paid of activities result shares during in the and of the of XXXX

provide credit in In Sterling flow resource the from the capital will the is Bank company existing As the that from with with for excellent extension terms company in pursuing in operations line facilities. summary an cash position. Management XX, XXXX. of was June believes XXXX, new full compliance financial all National company to sufficient our resources

to will you. with So, I the that pass call over Aimee,

Aimee Gaudet

some time, receive inquiries Okay did telephone email first. will address a we questions great. number Gerry. we'll field however via this those and of Thanks At

open will questions up lines want if Now those to the well. and then it's time answer as you -

Operator

Instructions] [Operator

Aimee Gaudet

in first out so the positive we drop of first the revenue with the year-to-date as point can losses coupled the half reduction and what in first question Okay, half dramatic with the the price these stock results? of take

Gerry McClinton

let you me Aimee, perspective. numbers let from give so the to I'm my me close pretty answer this.

Aimee Gaudet

thanks. Great,

Gerry McClinton

At the and insiders of largest ownership statement. end that me major moreover XXXX stock second makes not added the director shareholder to DSO any of his a positive to

strong a million have positive. in bank the major and million so with $X.X deposits cash as $XXX,XXX over of cash. We position we're That's paid above out vendors $X.X to sitting really a

we going. and they for they've company for $X million along credit As July our million debt they on we're would in believe has a incur of million given give major they $X to numbers, major have of line million from long-term line had institutions a positive. additional the see direction any which tells plan, $XX of going today, an continued we're capital know not positive. is we million today A our of National positive XX, of major after we've where that's Sterling our extended which expansion $X financial strategic debt Bank me as available made years been $X may Why XXXX a to the that zero been us

in major inventory developments we have to a write we in investments in off any Which product expensed major XXX% We product inventory. the clear $XX,XXX we're six as year, to we end new has always inventory go to is proactive means The don't me interest months the $XXX,XXX $XXX,XXX indication intent previously it we've and was that interest a innovation which been which also manufacturers company but means major zero positive. usually don't $XXX,XXX innovative of been outlined very a tied a from strategic a up now tariff have only last for transition to discussed have made we We've for our many our to that positive. last to major has zero half, introduce year relative problem the in that's current is accomplished that's and at our last half positive. year from and goal potential the reduced through don't up have compared as clean product problem Stewart $XXXX at our inventory half we as cash Our increase, a a that's fluctuation.

in this approaches We research our opening major statements executing and positive. outlined his into are deep that's earlier a two-tier Stuart

just in We Another do major have go. don't many what results a some they disappointed structure we do office in We're completed work that positive. taken about website our planned as overall as location impact our the our really are well. terms as know should But to these alluded and to we results expansion. investors is with to we've but We that. from our part everything update very very operations it Stewart of there which new are plans into was major didn't know ready positive of systems all at move positive seamless it a upgraded

Aimee Gaudet

for Thanks, Gerry. feedback. that positive Thanks

to last the me over has few to can has increase question please maybe Stewart stock us? lost the give can that, do you you share is the with plan value. Second XX% the the with value what fact in months,

Stewart Wallach

feel I Aimee. that Yeah,

XXXX that mentioned thing that confidence. confidence their teams As was business a build directors most the single early and we executive with our a of in or manager the do or important level price owner shareholders. Until management share is webcast, or an can to reflecting

turn that been with the my I connected results the building our changing in the promoting of success that said, At business the on being in it prices cautious end the considerable will past. mentality, story team as day While the as stories. to and advent share we the of programming. surfaces the and it committed has have regaining conservative financial are of management confidence. relates to the is That am that and corporate focus our distraction tell

QX and a in program. flow, year, budget with of stock this to presented generating repurchase the for profits did we be when a as will we return Additionally, cash board

Aimee Gaudet

Stewart. Great, thank you,

update, having there far price production going last seeing down will the few not product be [ph] new the in at question, and if CES is about XXXX actually process. making or so Third problems wonder me presented the the in share new product the weeks are

Gerry McClinton

There category, not me delay two to here, to of this no, funding funds Let or all product things problem. introduction as that from allocated is the consider launches. have glitches a the far are not perspective, to a operational the From is about to an answer fund would are of any launch product projects we as concern. perspective, really that. make The we some just our answer anticipate happen experiencing

So, I we're think fine.

Aimee Gaudet

to Actually, question your new category. new with the concern regarding regards there product the What is is another major products.

Stewart Wallach

My me major Let point, Aimee. that at this situation concern would of overseas, be the capacity. because handle

capacity my course, will and makes of a which Of concern good news, be gross, bad response, scenario. direct news a

The consumer have, and occur. the rate, with that at that accept will confident I product. at respond I they any what product with we'll what speed, is the any base, concern time, the is If same which speed which other at quite but the consumers well resonate the that am

Aimee Gaudet

terms new product great Now, the question, Is five. and in market number LED of consumer categories? demand products is a this peaking of introduction

Stewart Wallach

timely. very This great Aimee. is right, and You're question it's a

homes. to conversion has primarily Let's people say, the picture, when the business that talk where where LED a business, business. converting burns light about driven consumer out, being LED LED Research bulb one, mainstream. light which business from a indicates one their business, would lighting now are is light That per is called buy by residential the changed replacement

product primary consumers. to in characteristics As of saturation appealing the lifespan. one that is the Keep mind with consumers, of rate, most to LED and XX% XX% the of

to only the categories traffic. of expanding And growth course, So, to our and secondary that are space, next home will opportunities market Home observations LED, reduction results space that from this for in, a growth acknowledge and We foot of being we will in bi-product LED categories strategy bi-product early that evolution. smart transition. curve proactive benefit from it our Smart less of foot these of instigated This bulbs, products be the into is within lighting by the on of allocated the channels are currently affected pricing, are distribution. reduced are traffic. we The which of reduction

Aimee Gaudet

thank very Great, much. you

Gerry McClinton

XX-K LED and yesterday that, than time just where be LED where there it's million lot XXX I then the XX% an a they States, a also one after indicator major products in, year. add, of would are the that want million down areas XX-K are, this I is. of as manufacturing a lighting going and on of are researching are home an on United the markets create example just reduction, market what's which division, of the to there and so the That's as markets because, see went old LED the LED from the we XXX spend

So, think that timing I is perfect.

Aimee Gaudet

Great. Thanks, Gerry.

Does Next question. a have the Capstone campaign, to in invest substantial please? marketing capital

Gerry McClinton

as see our I is are validated But Aimee, Yeah, buying answer campaign that let products new once marketing a at don't the me an key the obstacle. levels.

As team our of I we for an expansion marketing lines, human here. support we campaigns, as expansion expand line, bank earlier, approached will mentioned product our resources the to and expansion which

Aimee Gaudet

Great.

Gerry McClinton

recover. Would

Aimee Gaudet

number in actual the the us give product Stewart, you can can answer new category? question, next of And offered product sites you this. Gerry. new Maybe Thanks,

Stewart Wallach

product strategy until I the competition number years relative unlike was distribution, you introductions, new provide radar, Capstone, chains our state channel the tell large I What limited supply where is to our by of finalized. of Well, are companies. earlier the under through specific and can actual the avoid can't

welcomed, the mentioned I like received, public moreover, be exposure which connected substantially will area. be competitive And is category the general The surfaces degrees to is consumers our amount expand to company Our demand. for the to for of no that. of intended XXX the because the And global related will involvement with category to reach. in channel one the speed able respond strategy directly satisfy the earlier,

Aimee Gaudet

next S-X your you on date? And shareholder for a that. am filed filings. company published question. I was since the that at that company see Why and last looking was Form SEC hasn't S-X Okay. XX-XX-XXXX. Form of the Thank I the any

Gerry McClinton

That's has of options a good company issuances exemptions on in question, past. relied the for private the offering

company's option of Form being issuances options we because statutes. company's issuance limited of are our It's such stock Florida officers, only and generally [indiscernible] options extensive many to mandatory and and and that's S-X of also a terms But is one the offering The of filed State registration the stock plan. the in of of indeed very been benefits. expired. issuance have issuance S-X the been recipients the typically and have filing of case under exercised options of offerings We exempted stock have in and have and inceptions in private option file whereas director sole provides or companies been limited. Florida options incorporated issuance without many very, this are directors cover not and under have have to extensive not of the Form number Virginia employees then available and company's that where is Public from of hell shares, could options has transactions The located. Virginia offer Florida number

Aimee Gaudet

question detailed. we happens Thanks Great. our last the email. that for that This be to receive

manner. straight to As a forward a long-term things doing and and always in I commitments shareholder. your plans appreciate disciplined

doc this to sites. upon was want based the which us and back of LED However, my the the aside, in your to tell That company. undervalued at connected XXXX The move direction? is that greatly that I this in your profits I Even based certainly wish opinion. an few stock drove earlier decision a optimism, price Can share you expansion to services. facts upon was

Stewart Wallach

of users to I usage same exceed to few have lines, and be homes formats, technology public. head may have in fixed into a in your XXXX a, for a the all XX%, is XX% inquiry. these subscriptions, continues Along adoption respective capability used subscriptions following. should of and by more today's fact say of population the connected ever. through social in around my U.S. covers XX%. of data. and ownership Each smartphone exceeding top percentages do XXXX. is of points media you It's Broadband color provide these increase. the off Thank from Internet expanded although I is that my Smartphones, exact appliance consistently access broadband the content the tablets, approximately approximately today the don't as thought XXX facts some that not XXXX. to that I And considered but than approximating interest formats XX%, million subscriptions of have went home that share the your is question. smart front data

points support why we are surface by But these connected All category. of the staggering. encouraged so data the potential is

in I'll XXX that We audiences. Of in units XXX as Wi-Fi broadband a subscription. If that with to people requires plus million those, $XXX are tapping prove indicates which grow. I participate usage census consumer and our largest category, thought America. one the to continue reach estimated be adoption minus only million an were could fixed have leave which The to U.S. summarizes million or rates this housing would into think connectivity million the business approximately consumers approximately X% of nicely. category The X you this explosive.

story category our and growth we to We I less again and are will received. company unlike, current expansion, on in concerned to possibly respond the and welcome business will an of related we early reiterate channel openly. react channel that the tell is we to in focusing that will reach, expect is supply competition, say we in consumers restricted. our where exposure one field, margins so our while amount our trends. will speed did and advertise I in competition and buying will open I relevant about demand that vigorously to competition global messages can going which habits products, the I the This area, pursue because days, the am directly And the be areas fact telegraphing are no Because we and at

Connected enthusiasm is comes introduction that and from we the encouraged that of Surfaces. so my why So with is where are

Aimee Gaudet

Great, thank you Stewart.

line we the of and have I think question Matt time. a we don't one can open for lot up

Operator

Okay. And now further questions. to there for any [Operator back no to turn closing comments. are over if floor like I'd management the Instructions].

Aimee Gaudet

Stewart, want do with to you something. close

Stewart Wallach

No, somebody notification. place is trying I received a to just a but I believe call.

Aimee Gaudet

Okay.

Stewart Wallach

it's queue. think that in I the

Aimee Gaudet

Matt, you. you take. Thank can

Operator

great. Please came a Okay do here Mike have [ph]. question ahead. go We from through

Unidentified Analyst

everyone. Hi good morning

Stewart Wallach

Good morning.

Gerry McClinton

Mike, how you? are

Unidentified Analyst

just general from I'm see Where the to going months question. now? ask do nine Capstone Fine. you

Stewart Wallach

it? didn't that come through. sorry, Would repeat I'm you

Unidentified Analyst

Yeah. Where Capstone see Sure. you months do from nine now?

Stewart Wallach

appreciate the and our as very to say relative doing are both fully success customer business it's it expansions would not and base broaden Everything we anticipate to to a over strategy reach and difficult more new the I the base. we're and Mike. our programs it see Well. as supports consumer

visible et with the a expect more launch we're Capstone product making thinking successful to and I the going about into company up we to as dramatically. ramp who and PR investments that change to to with publicity, IR protective and cetera, going it can assure volumes So, be in start publicity far this is to what are our more were relates shift you we I being as we become

evolution a operation. I player highly So, will I think, and and in field very the will Capstone believe that a visible be of become home recognized smart

Unidentified Analyst

Thank Okay. you.

Operator

Great. you to closing Thank final we you. questions queue. comments Management, have And those'll here? make do want the any in be all the

Gerry McClinton

good. I'm

Stewart Wallach

some of a talking about through We sincerity - bullish plan at certainly we with, all just in that the this that a just overcoming but obstacles. did because hope, this, this, maybe like company further small It's not We these we us many it the very came I are But speaking. an extent. has for of we as the respect but business. to to and will I'll mission accomplish the faced you to very it's hope actually our enable I'll easy develop particularly for that And proceeding share believe it challenges be uncomfortable relative want will QX very management correct Stewart our certainly call. company on and working believe failure, and going QX. We while not sound a itself a of is of of that's thing in an frustration I it's very the did investments I and do position. the corrected understand transition company anticipate the this time, result stock say and that this to good through a and going be want always hard is open. we deal again the as you same be to to is storytelling

do urge we I the And a filings, few again participation and resume support. and call Please you at. you the your do see very that you price company, your be previous your So day. all will we'll looking not has of performed please exceptionally I activity that over the only management look for in stock Thank indicator for itself due again the let that you're Thanks at years. diligence, the last your and shortly. thank

Operator

This teleconference. concludes today's

You disconnect you lines at time. participation. your may again Thank this your for

Capstone Companies (CAPC) 15 Aug 182018 Q2 Earnings call transcript