Friday, July 26, 2019 12:07:35 AM
Some interesting excerpts from the Q1 2019 shareholder cc:
Moving to next slide, #8, we're very pleased with the recent financing we closed this week. It provides working capital and helps us more aggressively develop new products. It also brings us closer to an important strategic partner, Minim, as we move to significantly increase the capabilities of some of our new products. With the financing, we've got new board members, Jeremy Hitchcock and Jonathan Seelig, who are both co-founders of very successful network communications companies. We think that they will be very helpful as we set our course moving forward. You can also see that it's a priority for us to trade on NASDAQ. Figure 9 shows the impact of the financing on our balance sheet items, including pro forma figures that simply assume that the March 31, 2019, balance sheet was improved by $5 million in cash from the private financing announced this week. That cash will be used primarily for working capital and for product-related expenses to grow the company. Now let's look at some of the near- and long-term opportunities for Zoom. On Slide 10, we summarize our Motorola exclusive license. This has evolved over time and our license now extends through 2020 on a wide range of networking products. We believe that we're far down the road to extending our license well past 2020, but we can't guarantee that yet. Slide 11 updates our position in Amazon. Recently, our share of cable modem sales has been around 25%. We've got an unusually high number of Amazon issues recently, typically due to some hiccup in the giant Amazon machine. The good news is that we keep improving our systems for dealing with Amazon issues and that our Amazon sales and cash flow remain strong. Slide 12 reminds you of some of our important customers. These are the top U.S. retailers of electronics, and we're excited about the prospects of growing our shelf space and shelf position this quarter. With that, I'd like to turn it over to Joe for some discussion on our sales channels. -------------------------------------------------------------------------------- Joseph Lee Wytanis, Zoom Telephonics, Inc. - President & COO [3] -------------------------------------------------------------------------------- Thanks, Frank. Slide 13 summarizes some of our near-term sales channel goals, starting with increased storefront sales in Q2 2019. We've made excellent progress with a major retailer that will result in increased product placements this quarter. In the service provider channel, we are focusing our initial attention on Tier 2 and 3 cable operators in the U.S., Canada and Latin America. To reach these operators, we are forming relationships with key distribution partners and industry organizations. We're excited about the Motorola cellular multi-sensor we began shipping at the end of March and the downstream recurring revenue that, that will provide. It is our full intention to build added features and functionality into our future cable modem, router, WiFi mesh router controllers, extenders and other router products. This includes unique security, network and cloud capabilities that will offer us differentiation in the marketplace. I will discuss this more on the next slide, but certainly a key point is the downstream recurring revenue this will create. As just mentioned, we fully intend to expand our sales presence into international markets, starting with adjacent markets of Canada and Mexico. As I alluded on the previous slide, Slide 14 speaks to the exciting prospect of Zoom teaming up with Minim, whose CEO, Jeremy Hitchcock, just invested $4.1 million in our company through his family fund. Having Jeremy on the board and his company, Minim, working closely with us in partnership will create tremendous possibilities for Zoom. At a very high level, it would allow users of Motorola products to easily manage their wireless home network from a Motorola application they will download. The application will give end-users access to parental controls, manage WiFi settings, create usage limits and much more. But that's not all. It will allow our Motorola customer tech support team to provide outstanding customer service support by providing remote network diagnostics and management of home network endpoint devices. Slide 15 summarizes some exciting technology trends that will help drive growth for Zoom. The rollout and adoption of DOCSIS 3.1 for higher downstream and upstream speeds continues. We are developing new DOCSIS 3.1 products with enhanced capabilities. Achieving better in-home WiFi coverage while making it simple to install continues to grow in importance. We embrace open standards, including the support of EasyMesh, and we are developing new mesh products. With the blazing speeds DOCSIS 3.1 can provide, we don't want users constrained by the WiFi throughput. So we are developing products that include WiFi 802.11ax technology. As I mentioned before, we see the need for end-users to have greater control of their home network -- WiFi network -- with easy-to-use network management and security. We intend to include this capability in some of our new products moving forward. Of course, this will provide downstream recurring revenue for us through subscription in cloud services. Faster internet speeds, coverage outside the home and new applications are right around the corner. We continue to put attention on developing new cellular product solutions, with a keen eye on 5G. Finally, we view home security and energy management as a very interesting IoT market segment for our company to move to, and we are developing products that include technologies that support this segment. In summary, we are going through some difficult tariff headwinds. However, we're excited about our prospects, and we appreciate your support. We'd now like to open it up for questions.
"Our houses are such unwieldy property that we are often imprisoned rather than housed in them." - Henry David Thoreau, Walden: Economy, 1854
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