Highlights of Wallach's conference call
I've chosen and edited the most relevant and interesting parts of the call, for those who don't have time to read the whole thing. It's a bit random, because of the question and answer format that followed the presentation.
While the tariffs themselves minimally impacted our cost of goods to-date, the reduced promotional scheduling due to costing uncertainty is what [partly] drove revenues down. [The other part was reduced demand for the lights]
We developed a new lighting product that presents a higher perceived value and improved gross margin. It should serve as a catalyst to revitalize our revenues in 2019 within the LED category.
The product resonated well with the buying community and initial orders totaled was an estimated $3.5 million [VS $12.8 MILLION IN ALL OF 2018] within the warehouse club channel.
The early point-of-sales data indicates strong sell-through, and we anticipate this product will meet its targeted objective throughout 2019.
I am pleased to report that the response to our smart mirror at t he CES show exceeded expectations.
The cash balance of 2018 year-end remains strong, increasing $154,000 from 2017.
Notes and loans payable in 2018 remained at zero. The most impressive thing is our working capital: $3.8 million
The company has been working to develop a short-term presale website, which we’ll use to facilitate direct sales to early adopters. We plan to introduce this site no later than May of 2019.
The web team has also been working on our primary website, which will be a modernistic site featuring products from the new connected surfaces line and is expected to launch in Q2.
We engaged Producify, a full key, full service marketing company to help us create and produce our initial product video, which will be used as social media channels and to support the initial campaign.
Our goal was to buy [back] the authorized shares, but only when the funds are available and not required to support operational moves. [which is why there were no buy backs this year.]
We had strong interest expressed to us at the CES Show from a number of international markets. And while we may see some of this business by year end 2019, I expect that 2020 to be the year for significant international expansion.
If the initial product [the mirror] is accepted as we believe it will be, then we will slowly introduce the rest of the product line.
The average home has 8 to 10 mirrors, in hallways, entryways, family rooms, exercise rooms, and guest rooms. We believe the Mirror will find placement in any of those areas as a replacement product
There isn't anything that you won't be able to do on your smartphone or tablet that you can’t on your mirror. And this is the key issue here, because there are other smart mirrors available. But they’re more narrow and predefined: for example, playing music, or getting a stock or weather report. We take an entirely different approach.
As this becomes mainstream, we have plans for different configurations--with brains, without brains, dressing mirrors, full length mirrors--the options are numerous.
We've also been contacted subsequent to the CES show by some hotel businesses. So that large market exists.
And for Android Headline, which is a chief publisher that covers that show to recognize us as one of the best in CES, it was pretty remarkable.
We've been experimenting with smart displays which are now prevalent from Lenovo, Google, and others. It's a joy to have embedded in the kitchen countertop. You no longer have a paper recipe book sitting there. these items, will be configured for various rooms. So, yes, we will be targeting different environments as soon as we have our initial read on the first mirror.
A new business called The Mirror Company is charging $1500 for a mirror and a monthly fee to watch certain exercise videos. But with our mirror you can watch thousands of exercise videos for free on Youtube.
A great deal of creativity was devoted to integrating this tablet with the mirror itself.
Unlike in the past, with less sophisticated products, we have focused now on dealing with extremely high quality manufacturers, such as mobile application distributors approved by Google. There's only a handful of them.
The development phase is done, and now we’re close to finishing the extensive practical testing. I will probably sign off on the final product in the third week in April.
The next time window for delivery of retail orders is Christmas season. Meanwhile our presale website, aimed at consumers, will debut in May.
We've also hired a marketing company that's doing video production for us. We've developed a very strong social media strategy, which will incorporate advertising as well. Our website will be up soon, too. We will pull the trigger on all this as soon as the product is ready for sale.
We are not taking a frugal approach here. We are going top drawer across the board. We're using top companies for outsourcing, so that we can speed the market, and all this will be happening by the end of Q2
My presentations to the retailers are already taking place--and the response is sensational, because we’ve made the mirror not just a trendy smart home item, but really a functional product.
So instead of walking around your house with your smartphone, in any room that has this mirror you've got accessibility to the content, through touch or voice.
when I approach the mirror in the morning, I say, good morning, and my personalized routine kicks in:
weather report, traffic report, a news summary, and then some music.
Later, when I say good night, it shuts off certain lights in a house, and plays some soft music, and then it shuts down. So unlike any other mirror that we're aware of, this is all programmable by the user.
I'm the largest shareholder in the company and I’m disappointed that revenues dropped 60%. But management was smart and prudent about the tariff situation.
We removed risk entirely. We had a $1 million loss, but it could have been a multi-million dollar loss had we made the wrong decision. We refused to pay the tariff costs for our customers. While that cost us some revenue, we otherwise would have lost money on every single unit that we ship.
So that topline reduction was planned for.
We are now in a very solid position to move forward.
I think you'll hear more about that in our Q1 webcast which is due mid-May. But everything is where it should be right now and I feel very good about how we're moving and looking in 2019.
