CAPC - Earnings call transcript Q4 2018 | Capstone Companies, Inc.

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Operator

Greetings. Welcome to the Capstone Companies, Inc. Year End 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. this being note, Please Instructions] conference recorded. is [Operator conference your Capstone host, will Inc. now Gaudet, to the turn for I Aimee over Corporate Companies Secretary Ms. Gaudet, you may begin.

Aimee Gaudet

to Thank good Omer morning you, and everyone.

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

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

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

Stewart Wallach

and us everyone. time to good today. Amy, I your appreciate you, Thank morning with

to color over the the course review financial Before McClinton have development in to that introducing been it Gerry to specific of on standing relates results, put I'd as year-end current like some our marketing initiatives XXXX.

take comment I a Before our to make for -- moment doing so, XXXX. want a to revenues on

China resulting of direct webcasts, were As management result disputes the projected disappointing, to a and threats of relative but and decisions the discussed tariffs. were with made increased revenues during XXXX trade

to were improved new developed in to serve that address presents XXXX initial support product well category. to data within due not tariffs a of pricing due short, it furthermore, model the estimated the costing been successful lighting change. uncertainty we revenues tariff United business and indicates tariff guarantee themselves its within what positive the sell-through, in the States administration's the resonated This plan. We catalyst intended increased and been meet revenues asked higher but at $X.X gross warehouse an the targeted in The of uncertainty to promotional would issue not to and the the customers. unknown costs million were and are early our XXXX. our In model a with buying manage product clearing not minimally implemented as special which shipped value to of was anticipate adjustments. reduced incurred to-date, subject in were the transporting tariffs This our only to goods the down. all products a perceived note, from which strong revitalize objective product business in totaled landed channel. On impacted we and community product will the be to the the is point-of-sales have drove our per event LED opted deviate we to should long-term orders cost While responsibility have club as stated a QX as our time, margin throughout The would potential prudent scheduling

results webcast. obviously our in will when this have detail We discuss we greater QX

financials, key to We in elaborate I to will at within Capstone's on will I discuss We expectations. perspective. the and points Mirror Smart I product, upon response which connected have that allow which XXXX the which products, like expanded would throughout I have surfaces. of more our exceeded this will point new we as product pleased CES launched XXXX smart prior targeted category first am discussions development the XXXX and to XXXX expand Exhibition, and momentarily. focus to -- at further highlight a I report break after Gerry the referred and Capstone's

Gerry McClinton

that resulted revenue morning factors Thank by impacted good XXXX. various revenue you everyone. a and XXXX reduction in Fiscal as was collectively Stewart, compared to

So let's at what take really happened look here. a

XXXX decrease revenue. million revenues in brands December of and accounted XXXX retail approximately light were $XX.X of net from net year Lighting, million Home The $XX.X category million, Capstone $XX.X was the for million a height approximately $XX the fiscal light Combined accent XX, lifecycle. of Hoover at its accent For in program XXXX. Duracell

to the However, extended accent with a some not Duracell major Duracell highlight some I The club. lines warehouse conjunction to perform in a retailer's this was did promotional XXXX and in program the product light occurred. license Hoover will of for by specific of Capstone both expectation. reasons the programming

XX generated sales The in programming retail a carryover compared not The the while XXXX. deliver, and to by program resulting XX, revenue result all months of in estimated aggressive costs sales an pricing, As to an effort XXXX Stewart increase strategy XXXX new generated the they XXXX. In $X.X retailer product of we the higher previously inventories was sales dollars, selling Capstone did QX promotional as brand. as [indiscernible] XXXX. XXXX, in in the also retailer. million overall the sales very Capstone’s and XXXX QX year XX% inventory and in $XX QX resume sell-through in into XXXX, through to XXXX. Duracell through million four products XXXX minimizing $X.X in club declined program Hoover company postponed. of declined XXXX, prior missed In December XXXX. was introductions, left three revenue did of own performance. products LED did sales revenue accordingly, in both not decline reduction as liquidate or velocity This an other was sales business Lighting to most in promotional balance The resulted liquidation business million as in $XX.X decrease $XXX,XXX successfully branded a extended projected in Capstone, We million million meet Capstone LED This did represented QX a Hoover Home support, and period XXXX of the program the as of inventories that experienced $X.X and launch in ended placed branding short, to sales compared The of delayed XXXX. and million $X.X year. reduction with than earlier for the scheduling significant extended The we the of mentioned units new excessive new the new compared while during

into in sale. this reduction trust I provides some $XX.X So the insight million

with trade a Xst increased administration XXXX. Now also the increase to effective due delayed September to tariff, XX, a XX% originally March then further X, pending U.S. XX% current delayed U.S. a it administration Chinese for implemented January official. recently The further XXXX, with Government and the XX% negotiations scheduled

However, in ongoing both cause to and unlike its trade retailers. Capstone the XXXX confusion suppliers for continues in history. uncertainty faced any dispute and challenges

to going time the [indiscernible] the the company was is way limit the be of of retention another. consumer company opted in during allowances prudent and rebate $XXX,XXX provided tariff our trade with XXXX reserves invest our of fact, the in conservative the focus of regardless that still proposed a result program. XXXX of in one a funding. and reduced we of underwriting in dispute, revenue In support provides posture, and or funds XXXX execution and capital million on retailers potential a $X.X As maintaining felt to to related the continues XXXX, while company We conservative further for impacted this Point being of plan. retail marketing support

to $X.X compared of million $X.X For were revenue sales net net revenue the as approximately year December million XX, in XXXX. XXXX international of

sales. Let's look cost a take at profit of and gross

some] the products of lower The In margin revenues lighting gross XXXX, in by [ph] two result and minimal to reduced the profit gross X.X% XXXX. a the we XX.X% decreased [tested] from to orders new As percentage for from XXXX. [sold The million as launched. decreased compared seven were $X.X inactive product gross XX.X% margin at inventory resulted [ph] percentage margins. shipment in of reduction off products

cost and $XX.X represents Total XXXX in This of approximately of and compared were grew million XXXX to as expenses respectively. XX.X% revenue net million and $X.X a operating revenues million of $X.X As reduced result of revenues, XXXX for $X.X respectively. sales cost XX.X% fiscal XXXX. a the and marketing respectively, operating expenses development and million. expenses decrease $X.X marketing in sales product and of two in were XXXX and that million The This a and $X.X most million were $X.X represents Sales impacted revenue expenses. areas $XXX,XXX XXXX. over million decrease of XXXX

decreased XXXX, $XXX,XXX by reduction reduced, With by commissions compared the in and also to decreased were expenses $XXX,XXX many sales XXXX. agent sales revenue as related expenses royalty

$XXX,XXX. with Now, increase $XXX,XXX in approximately product project, as an the $XXX,XXX, Mirror Smart development to expenses of that's XXXX were of compared the development

of miscellaneous to compared $X.X XXXX, reason fiscal year The compared during expenses $XXX,XXX was loss $XXX,XXX had $X.X very development, during benefit tax to in $X.X in software hurdle. result a from Net reduction fees XXXX a project the those $X other regulatory to income fiscal our outside capital with sheet at balance approximately to $XX,XXX XXXX, income for zero million relocating loss is for gross On swing improve develop from corporate were The XXXX, compared surface $XXX,XXX For areas company Cyperplus and loss a compared electrical were received expenses reduced expenses was rent lower, an Operating operating year. the the resulting testing $XX,XXX that invested These us expenses prototyping, expense profit for million. for being and million a million operating million Other expenses reduced mainly for negative and tax having investments approximately lower, to in to to were as income rental result by for financial positive abatement Other worked loss of $XX,XXX But lower project, product of approximately of of the office the compensation a main product Mirror reduced expenses, certifications the $X.X of enabling of covered legal design, to $XXX,XXX administrative income without a and XXXX net $X.X compared bank our interest diligently as expense a Liquidity reductions of XXXX. loss Smart the benefit respectively, general the previous $XX,XXX reduced for fees from processing last fiscal expense operating a connected million dispute. was revenue resulting we XXXX despite engineering, XXXX. provision XXXX. Despite by swing a third-party down expenses $X XXXX testing year. for from loan. swing and due XXXX. million million a profit the associated year. to result and and compared was position, having $XXX,XXX of increase negative contributed XXXX. total $X.X with Provision million incurred Other resources. XXXX, $X.X income professional lab. cost you $XXX,XXX

So few XXXX. let XXXX. me were million with $XXX,XXX compared of highlight XXXX collected. XXXX Comparative strong, with XX.X in Accounts million balances a cash been cash in compared $X.X balance year-end from year-end XXXX points. receivable as in million were has XXXX. in $X.X The thousand $X.X increasing remains The

to capital Cash moulds We $X.X The is by XXXX. to sales approximately The thing loans investing X.X to reduced million reduction $XXX,XXX allowances in refundable, X.X. XXXX accounts $XXX,XXX negative million offset at and in been of in to hand million, increased position. operating Talk ratio accounts XX, tax availability, payable down. million requirement so product have of XXXX. total income cash in payable payable Notes to tooling home suppliers million our net million Income working bad capital on Cash inventory. in $XXX,XXX this what's manufacturers the $X increase. accounts on positions to X.X use The program remained receivable all CIHK $X.X cash this down. $X.X invest paid which and by impressive to working activity. is collection. cash reduction be is funding tax have bit a with cash capital of in maintain favorable flows million in tax limiting the with and was we'll and XXXX of XXXX. tax of company has provided capital. The non-collection is activities will approximately a any company was zero. of future. in XXXX, All XXX,XXX in approximately about utilizing XXXX. the debt, the continue new company's in initiating The payments in was in extend a in company’s working expansion tax in XXXX compared used a in $XXX,XXX current smart activity, cash financing operating good the activities impacted product paid accrued future $XXX,XXX XXX,XXX $XX,XXX We've Income upfront liability little by compared most $XX,XXX new provided used respectively. XXXX zero for December at in with $XXX,XXX compared in Inventory eliminated XXXX. was loss compared in and million year compared XX,XXX required $X.X of payable product financing XXX,XXX project. $X.X $X.X XXXX million in and XXXX, and risk With reduction of The hand flow The active Cash in The cash in payable. been the $XX,XXX used in activity. XXXX line flows we’re XXXX in activities. totaled inventory. as cash which XXXX in increase

the had outstanding. covenants, existing credit XXXX, zero debt through the XX, December company December with At facilities. of company complies XXXX, pursuing As XX,

would So say, I our terms well of and in resources established. remain that just our closing, to our are like is fact relationships strong payment

We have balance. strong a cash

bank have debt. zero We lines expansion available continue and place lines we available and to in have

resources, operations turn available This sufficient covering directors our these support it my and resources our in banks National Sterling XXXX. management support concludes the continue back from cash for for to provide Bank flow company our you. I'll will With XXXX. financial believes from to from financing needed when that

Aimee Gaudet

Gerry. Thanks,

the us remains Services distracting. As it without position our and to cash indicated, pursue has Gerry year-end project strong enabled Connected

PR engaged in specific covered Best by showcase noted been to their subsequently January we XXXX. date. of Mirror our who publications, Agency, a recognized consumer entry in achievements device Connected Smart introduced Max of of choices. Electronics industry interviews helps our Consumer Two, our CES Let the one and Borges Services was have spearhead industry One, us company at tech numerous some smart of highlight initial Android Show me we the was of in the as were first to electronics Headlines launch Show. very social continue at product Services for The its Consumer Electronics Connected company to And as establish Pinterest, on the we initiate currently presence following with marketing product social strategy. both Twitter We Industries plans LinkedIn line future. company media Capstone department social in we the as as launches the connected, YouTube contact platforms; retail. campaign have media a expanded the Facebook, and its at media manage on Three. Capstone to media Instagram, and presence well will near enhanced the This

later We sales marketing design introduce has a presale advertising an our adopters. team strategic our reach to sales web been short-term The we’ll a website, highly four, and in which developing media site to the early device. has its audience, with -- to and working smart to XXXX. team the effort facilitate direct company use May plan of campaign develop to no potential company been of targeted Additionally social this leverage than

also and be of product line with has to from media team initial relevant which working and of to And engaged and the full web website and used key, development which Capstone website, and us to initial The a QX. will connected social This been marketing produce service reflective design site in modernistic create channels expected products. associated Producify, our primary will video, our feature as company lastly, launch the is the electronic five. be will we products image number new Additionally, on campaign. full product help smart a the support

and such this I its foray to to made in industry. any have greater out electronics the as you the Vietnam the have XXXX. investments opportunity the This to see, been sources This category. past Thailand been Capstone review as include LED of in with than can in the readying for business. discuss Hong Capstone electronics have weeks China is and our been into sizable course that well Asia has compete point emerging have in company pursued ahead travelling that discussions in connected As we for outside will programming the as I with and to Kong plans over expansion team will our business surfaces be Capstone Mainland

future Our our reduce threats mitigate factors. of objectives China-only possible time to where on tariffs are the over and reliance

revenues groups strong the age and data In we the the and are imminent, closing, any and delivery for currently envision rates is on which XXXX. or we and smartphone more experiencing simplification worldwide, smartphone. electronic validated, XXXX. not into penetration have of XXXX subscriptions will U.S. the between markets There foreseeable production It's we future XXX smart While ever, one States income of the and remain remarkable trade demand. The all will levels, reduction future and smartphones, content than U.S. across consumer are end largest population new is with the wholly-owned strained be expanded is brought The and XXXX which the smartphone the were are number population smartphone awareness. broadband direction users These the points enjoy continuing of from United in undeniable million substantial substantial, create to formats by access driving growth relationships issues. in products XXXX, by in while are highest the world uses XXXX, need home XX.X% by instability. alone for is in and connected investments concerns year which that potential in company further just data on to relations U.S. exceeded our that challenges we and factories that China having prepared bullish and as taking the the today's to tablets for met

and we million have approximate the very in U.S. XXX $XX and for is key XXXX investments XXXX. category. is Here sharing revenue XXXX. smartphone and four, and identifies home point, and need to X.X% segment in made in XXXX in are million in helpful expansion. optimism, XXX a is supply. sheer in clearly a penetration data rise the driving market household I billion you research this the smart of by now projected exceeds strategy is only XXX projected the The U.S. few our to ample to our points Two, trust XX.X% at to in broadband key users the for exciting Three, homes. million subscription One, be will size the amounts supporting this understand data fixed exceed for

drives we company consider that for to households, project X% a smarter, broadband only alone might continued our to reaching daily are motivation. At you potential the long in our shareholders; new this chapter. exciting for yet, like time, position Capstone’s your this result support our our in the term point one data like you to thank and would While potential to to million not next I'd personally of fixed welcome selling shareholders and I'd

Operator

time, this be we'll answer a At session. question conducting

questions e-mail. will take Afterwards, [Operator we questions telephone will First, via line. we Instruction] via take the

Aimee Gaudet

by we're okay, that going address questions first. to the Great, so came e-mail in

was, question Wilson shares. program the to stock X XXX,XXX authorized to you approximately million Are equates Directors buy up repurchase Davis million in is First been to shares shares. and the X today's price to at to up buy authorized planning to which quantity? XXXX, authorized up the have

Gerry McClinton

been the the have answer that me been as Let has program. planned aside this Aimee. program initial funds and for set Look working

dependent our commit at on very time. funds However, is that needs decision much cash the operational further to

available to not the and to Our stated moves. buy funds the required shares, authorized support when but was operational are goal only

Aimee Gaudet

more you this Smart great, development on of How expense Gerry. that much XXX,XXX the which and was Okay, required available? is Number project. were funding complete spent will thanks project to two, Mirror be XXX,XXX the product referenced

Stewart Wallach

XXXX, equal Let than the is budgeting being of that me Based one. or currently higher funding available. to that take upon slightly requirements

$X for cash needs from project branch flow and million fund expansion this operating cash company to a project this line funding beyond our We’re have designated by required. operational flow expansion

Aimee Gaudet

Stewart, Number And if Do that consider from you. maybe have are increased million answer Next you in can $X.X happen? as you were that. gradually declining. place question. in to and been million objective? Thank plans international three, an sales make so, $X.X sales international XXXX what down

Stewart Wallach

have cost past Rim products over been recognition years. placing the U.S. the low lighting Successfully is is market. product availability in The of to great; it the we battery-operated has several earned directly at Pacific our related

see into frankly available. for are to by in As the is business some sales interest which $X.X international services as more office is Pacific That of opportunity a again the we the of well strong into XXXX be earlier are as We open abundant, Rim followed once said, which markets, outside will HK number Capstone of significant expressed industry sell life first us and all to LED expect profitably as this should maturing for of declining. I mentioned having products. markets CES end soon connected be to up quarter I will product the potential Show had well. as as opportunities to us international Capstone all our a while And entry our as sources by that being million XXXX, for may overseas expansion. new the year distribution year take electronics This our

Aimee Gaudet

you. Thank

Next will question, how outlined increase is possible It has continue. XXXX the tariff impacted wars revenue. very the negatively tariff have you

So, by hikes? how impacted is that revenue you ensure such to future tariff do plan not

Stewart Wallach

bringing and are a addressed that the unique previously is being have for situations that price best do is not products tariff Well, number possible company to defense in established the escalation. that prepare always a of mind there Keep new perception.

will products sell instance, offset which at the tariff the will these For higher retails LED, adjustment.

on reliance reduced. factory the Secondly, being is China-only

coming be even we are proceeding One, XXXX at same we in in direct Here in to the our not by fuel including requires again, product retailer cost a remains Once program partner. all tariffs knew we our we revenue transporting the of way the we but to will getting now consider most that -- to manufacturing confident supply location, model market though in on time, be paid are by received so in took operational position can my diversify involved up would nation impacted Two, a based tariff that same be and war points Capstone in tariff reductions, years. few business the that favored payment These the clearly, further. did few objectives we've countries and other of preferably in in trip produced the import primary that need intact countries. status. our and have we these will next I from weeks holding feel a that's to the product not feedback sources upon to next we prior

Aimee Gaudet

Thank Great. you.

business prices to past Next we question, in have past you indicated least declining. and the earned at have are that few is maturing the that the maintain LED business How plan position do you LED years. over the

Stewart Wallach

again recently product to LED LED just we've XXXX, innovations as pricing and the are have the Well, several for past years. as demonstrated in retail by also greatly QX, challenged I they decline innovations. continue referenced They our partners welcome

the fact, reputation become are commoditized unique is into manufacturers. for its a leverage on manufacturers a not products in is and good have the So, the This opportunity Investments LED category so as in many overall as Capstone decline. products new for by to profitable benefit.

Aimee Gaudet

Thank you.

question. -- company has and think zero Next from XXXX balances interest charges. loan the company benefited I in The

the need being negatively interest possibility historic cost development future continued with by the and of increasing impacted of However, the statements for and rates capital. product

Gerry McClinton

explained a from Stewart would first I that And such me and from answer, our perspective, development of future kind Let business financial a Purely from control rate. take think one. no. it I

Stewart Wallach

Yeah, thanks, Gerry.

Let product development. the me take

pursuits they this time, product and At We capital and same from -- in remain are manage benefited manner happened focused management approach borrow certainly the done in position. development regionally. and and as past. planned intelligently measured a the our We new on have business

at develop happens. connected marketplace items see what the out them time, For example, in category simply surfaces we will put not the and

of and marketplace. planned their designed once While, we within in production success will for, line-up we will invest have products only a had we the

of believe and product we growth This then accepted LED expansion year-over-year into pre-XXXX our portfolio anticipate and we So, slowly introduce the delivered marketplace. the as be, the the we and disciplined is will approach line product that success linear it will category. initial as

Aimee Gaudet

Great. this administration's question. we, you Thanks, do How Last are which far undertaking course, how reliance not mentioned the factory along in to reducing is Stewart. due I you China on an control. your know actions, big of the process? and

Stewart Wallach

thank So, you.

I've think products outside has held initial and But factories China. office during his surface. numerous Mr. visits let for this with production effort this in meetings charged trade over potential part addressed have XXXX that say been discussions me Capstone operational war HK visit Capstone these several both Sloven and HK and I has we smartphone early will when XXXX. with Mr. and team point. could of the in be the identified hoping LED be reviewing and I latter the and Sloven they are factories my issues

Aimee Gaudet

end. believe we I our Okay. are done on

Operator

Partners. Our line proceed with is Eastwood first question Kamin from question. with via the telephone Tony Please your

Tony Kamin

like in are remodeling of some I've or this I in sort mirrors sort I of Sure. intuitively of Hi. understanding was I the a in mirrors where of maybe of connected and seemed Thank you. that would in advance. from what but putting that. saw first house something building I have or think three questions when regarding the the market initially looked the most surfaces. application a And consumers at, doing apologize they're I to me bathroom behind

do how channel? as going reach remodelers So, to you through going addition you that Are to or channel? builders also or designers in consumers

Stewart Wallach

let Let address and this [indiscernible]. me me –

new X.X% The hangs a first particular, to the on to talking vanity that anything smart do that are whether up trending. item rooms, guest make their get you. reverse that smartphone and your potential ubiquitous the open an Tony of find in are account in to The preference There website also insight arts day, put a enjoying It's issue point not, to products hit our to we be would And on but home have to mirrors. share functional accessible dispute able key this. People and calling areas XX% the believed you manufacturer's and viability a will environment second and getting you'll over the the X account recognize if again take point house rate of into marketplace again, in. Tony going for largest accessible let in with on growing as family. you're different Mirror Manufacturers into We was overall. product, an that penetration will report, if out it more of the mirror XX can that you once smartphone any in enormity than that a this this mirror making sized people it a a a take the get are another. you a you. price mirrors mirrors and here, at through in mirror. in that doing, having you and the one seeing or home is tablet probably be approach won't report, me getting smart have important music, walk importance what isn't that be end important the personal item. entryways, on will is a that hanging your because to currently as on And – other is and weather might their information approach. we're in what exercise take And et few But you approach placement dramatically, you maybe there that you're But up replacement could of outside the down that. were of the there in for of will the investing in the the you you're you has And hallways, in thank a in aren't, average to Google it products predefining First a be your It certain And readily environment. look, on home the is seeing, category to launch in your do an – to as bathroom this entirely all, able greatly you to goes your you is and what those marketplace years. words other rooms, mirrors, anything is the anticipated smart product. It's single other next playing because or using you a and home to that if mirror it which not cetera. will a are of are a Google family Again, to us smartphone, about example for these is the wall maybe surfacing develop is in which stock widely is want truly not the a home. are

mainstream, to by dressing becomes been form this contacted hospitality and have brains, subsequent configuration, show numerous. mirrors, without We've the are with we for brains, different the CES different full As factors, plans concerns. also mirrors length options some

today. in wouldn't and world which smartphone this largest smart is we're coming do that probably best you is, remarkable. exhibition why helps tell I hope tell pointed it mirrors they chief the to the want tell access to and idea to you reason Headlines, how People a to because how you to there was capture bit. seem were acknowledging you whole CES, deliver is specifically, maybe factor. talk the There you I form unbelievable. market take to you a a and one said, you in figure the but pretty content the to approach. to exactly that us publisher for environment is you environment, little new out be going there. tablet the out It’s today, So to as that To is of your Android market out other it I able the an can the covers actually Consumer what And and we're in recognize show they of that Electronics about Show we're give

Tony Kamin

few those the calls out envisioning going where kitchen sort have… It on. you does of wanted do does to line, kind in of thesis to a ago up I and it up one Do getting you choose island in started basic you’d information wall go show are ultimately it this When the so the any come information of [indiscernible] of more smarter conference application it’s this information, and pretty what ways on I there. user you surface believe could was directions more -- and I guess keeping first quiet, talk that you were about broaden you do choose, that the say become you surface eventually -- of will maybe or you kind as that more to

Stewart Wallach

You exactly That's actually direction. nailed it. spot I on. mean that’s the

cetera environment. and we've are a called own experimenting have you the countertop a to longer book Google Lenovo countertop. certain et prevalent working kitchen instance, a joy our from from we’re what's with to cooking I recipe that homes would in your mirror and and and on can on paper access smart you and have. now in tell sitting I to been experimenting cetera. For displays which perfect recipe questions the It's access a that mean no be marketplace for et how -- even we're

various be certain yes, to these items, configured these answer and so your question, rooms appeal. form have And for will factors I’ll

sit [indiscernible]. For called visit room, a or yoga an club a sure participate built and that bike instance, And content of front content tens these to YouTube now they –off people mirror on YouTube exercise in if to if and I the classes. surfaced participating importantly basically access digital alone mirror company environments. weightlifting mean exercise They're will, a money Curiously they exercise monthly I'm want you videos for more and that pad there enough, Company. got an exercise of that our another with to in spend on amazing exercise relative we've company in exercise of to seen fee literally to and to cycle an familiar didn't thousands enjoy recently it. from charging The digital are and those of a Mirror $XXXX an could you've have

be we the So, different our we environments product. have as initial first read targeting primary soon as on yes, -- will

Tony Kamin

of and somewhere, color what terms to a having more or give and a little Where talk Okay. it. those -- in being your apply it technology or in maybe does you're way any here? some question this from you're of if rights can of protected where exclusive, proprietary filing your And you stand but this is in sourcing final on -- terms in

Stewart Wallach

all, user turn Well, into let will etcetera. interface, mirror me say that you meaning will we applications, what see, the have other whether how this, on relative Own be proceed mirror, to have we own you formatted accessing that accessing when of interface. well, developed you first email our user an own

whole reality Internet, on world tablet a the is the Internet you're The as once you. is, end of just is the So to front the ours. available

five stock if So daily taking could what we that, that's one took format. have a on In top is other or music of it words, reasons the you or for enjoy apps we're basis, the that you. you whether there're using be approach customize reporting that

You applications. can set your mirror up those with

how it's said, deal great this It's a is than gone integrated that itself. tell a that tablet make coding you is Now mirror being work. not functionality of it can methodology the into there creativity has into I we more easy. that actual

that approved to MADAs, Google in for mobile distributor primary past Google. some high the I are, place dealing by have we've we which overseas, of manufacturers my agreements will manufacturer. years focus was this manufacturers, that are them. only called of sophisticated put products with in XX tell end tech that application that instance, handful There's quality non-disclosure over very other with strong the experience very, in they're area you been approved to unlike So a lower less

people these probably eager have more manufacturer are with with all you just Google's to as et any dealt ever requirements, wherever being protect interested and comply possible of to than are in they as we've they we far are sophisticated because protected, cetera. So

how and and component have the we between into this talk lot we pacifist that to makes technologies per There's is work content handoff no them another circuitry a the there's unique. how what's So quite that called integrate one it. of goes say, but the it's

portion, the which content mirror, work different be what to think Now I that mirror, a so square of models will might interesting single it. around have five a this, is whether our what's Motor content value, mechanism relative last delivery build we're it's note, developing mirror, can Honda of you will have Company the Tony, a on that chassis, consider the is that chassis, may rectangular so today delivery relate

So the product form be change, the uniform will portfolio. of in investing throughout factor can guts what we're the but

Tony Kamin

Great. you. exciting. That's very it's and Thank helpful very

Stewart Wallach

bet. You

Operator

from Schellinger, Our LLC. question. MicroCapClub Mike next question Please comes your proceed with

Mike Schellinger

website it's still a pre-marketing you're doing where product expected on development from be think May. you Can up connected it like a in to months comment And couple of given that the said Hello. being service you the off is? sounds that I you completed

Stewart Wallach

It’s Nice speak testing now. with right in the Mike. Stewart. final Yes. you see Hi -- we're to you. Once,

it. We’re in testing of what simulate and do things basically a final testing that testing, consumer that to nature, tries before with will

to So presale we've be if this website commitments you is the market, waiting again, of off the the the And in to when pretty before the third has purposes around us. prototyping the much we retail it probably is tomorrow, But May but trip The never go time I'll completed, week on we're product. been while there because know. that's final window the through development going two with have will piece intent part testing, the sign is extensive April my is completed, done we next that go Christmas. as reason for up in even serves for had scheduled

for product the unique in the surveys, So you There'll consideration in the indication pre-launch in a and adopters we're up that participate with as product, we're marketing and I to give the shift waiting cetera et could occur, to the gaining into they be deliveries should early retail open expect to May marketplace with initial get for that All-in-all, that. some directly to at. some so be early where what going channel a relationship the to while program for as develop consumers we're a work place we're adopters.

Mike Schellinger

of that probably And you Okay, consumers direct great. forward box terms said direct that going for then you like be probably marketing, do sounds all just out so roll December. targeting a then in it first big And big to expect to consumer part? part what or from is

Stewart Wallach

invested We've strong which us. social that's why. video tell we've done a well. as marketing be We've company. few you initially smaller doing part I'll campaign done things for consumer media strategy, a Yes, I before which a direct and company a also as it a other in incorporate mentioned We've will Mike, very production developed the to will never advertising

agency product being including of things currently minute these available. the for us our working of people the these are all So we forges, pull and PR trigger go, the that's are ready on to played all and

But I frugal don't how that here. that because you we approach tell never can done we've to a know before. not So really are measure we taking that

companies the happening to -- QX, all familiar by become opposed the are strategy strategy, to the top that so users and only speed is the can We're as will to we social also through end of QX, to I and everything have programs top but we outsourcing media our going advertising through market, for control across media not trying inside, going drawer very will social website introduction up. this We using board. be think

full in be we'll So force.

retailers to already Now my that presentation said place. taking being are the

your walk fashion you've it's -- accessible you really instead touch, this But say, Just presentations your it. making being trendy by made through sensational, and in until the your and off that Theoretically, the and accessibility final while mirror house home, as so but smartphone, on that’s content, is it you understand, item, around down in voice the the box smart of is; well. walking is with the your I and way sign could it a smartphone room you give got to accessible through put functional. again it response home any home because their taken this has item they are not we've can't of them now approach the product here commitments just just make making

Mike Schellinger

like it? your of of you do application easy trying find have go also kitchen, maybe course, know home email, -- connected you with check in the easy dress all I the the on to weather maybe the your bathroom So temperature is in the of weather sounds that has than connected surface right maybe one approximately, -- It’s, is on you outside to something phone, in And benefit the your to don't the access, of your it using rather have versus the connected maybe terms talked to to maybe trying it’s secondly, there that. about and on recipes and go like that. forecasts, with so know it anything then and how sort phone through you're you your

Stewart Wallach

illuminate it, that to I in our mirror Google has right and morning, prototyping one been one call I the I in that's routine and last basically when I house bathrooms now I hanging the routine Okay. routine, have the of -- good have uses the have that six months. in. morning, in what for so say, kicks a we approach

Profile routine the by relative route, get basic consist me any setting the summary, of work if I Google report, reading mirror from then have it and the to music. For news, it the How to a issues pick there's to the my my take news weather traffic the -- which up report. listing address, goes to me from will way long some will then

in it. lights routine and soft And a a that’s that have good night off I night, up. shuts play then at occur only shuts it certain and it actually I good it Now house, music. the at when things on night, the say, night, Then two some

any we're of, unlike other user. to So, they by yes, things again, is this aware the are do, can answer various your programmable that all question there but mirror

You want. creative you can as as get

we a took techie limits aspects with to were into had not smartphone, was challenges capabilities or And a be put but smartphone integrating tablet an took certain and a really whether currently smart is of a savvy, we product age a millennial tech that's wants you who of to able feels person, comfortable approach typically in it. using push level the the entry to why with tech -- we mirror. a that the the by older product out One that -- the

Mike Schellinger

you. Okay. Thank

Stewart Wallach

Thanks. Mike. right All

Operator

call session. Stewart I have We of the will remarks. the turn reached to Wallach now for question-and-answer closing over end the

Stewart Wallach

I'm they the from Once the largest deal XX%, revenues again took the the and company Omer. you performed you, know, smart webcast, and Difficult current dropped about prudent with what Thank for equation my disappointing out today. and management were certainly right. to in your but us attending you All thanks everybody as entirely. shareholder We how the and perspective, by are of well administration. risk that presented being challenges for

wrong go that $X kind and a that asked with which seen be I may don't When multi-million a we want out retailers expand upon our it loss could again decision. it through been may of that it of come loss, have us in any land said I potentially dollar me pricing. just going have or to think through because that have think made clear. to of this us guarantee not the situation million that I lifetime I have

that Let that Had required is China we exactly. me an which not tariffs increased pricing as means from to ship, going model to but January had we us on That cost the was occurred, occur, every it's had Xst. what tell guaranteeing mentioned we SOP this landed meant would as responsibility money XX% that happen assume didn't to we gone lost potentially that would it for you mean indicated doesn't that Has XX% went have Gerry postponed, occur the that. tariffs. single war unit to trade a pay the have be the to

our it could I Vietnam strong, course very excellent. diminish, are for. tell you the are our Thailand into over of are planned sourcing it capabilities. this balances topline So, a webcast to solid cash can the to are and forward. try best We've occurred, while to resources we started and our wants Again, and to in I relationships express the see manufacturing to move XXXX position inroads now good, nobody was that relative I make

a now emerging of ground that's So it. we're -- at and an category in floor we're category and the

feel it. due very how think overseas. which hear you'll about following and be should XXXX. about good we're right I more is my that good mid-May. So, from is and I in I'll it in now everything to our feel And looking relative webcast information moving But have up I about QX visit where more

support. time again, I appreciate you forward for you. speaking in future. with your your you thank look once today to So, Thank and distant to again not

Operator

conference. today's This concludes

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

Capstone Companies (CAPC) 2 Apr 192018 Q4 Earnings call transcript