Executives: Aimee Gaudet - Corporate Secretary Stewart Wallach - President and CEO Gerry McClinton - CFO

Analysts:

Operator: Greetings, and welcome to the Capstone Companies Inc. Third Quarter 2018 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Aimee Gaudet, Corporate Secretary for Capstone Companies Inc. Thank you, Ms. Gaudet. You may begin.

Aimee Gaudet: Thank you, Doug, and good morning to everyone. On the call today is Stewart Wallach, Capstone's President and Chief Executive Officer; and Gerry McClinton, Chief Financial Officer. They will be discussing the third quarter results, as well as give us an update on the strategy and outlook followed by a question-and-answer session. If you do not have the release that was distributed yesterday afternoon, it is available on the Company's website at www.capstonecompaniesinc.com. As you are aware, we may make forward-looking statements during today's presentation. These statements apply to future events which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in our earnings release as well as in documents filed by the Company with the Securities and Exchange Commission, which can be found at www.capstonecompaniesinc.com or at www.sec.gov. With that, I'll turn it over to you, Stewart.

Stewart Wallach: Thank you, Aimee, and good morning to everyone. I appreciate your time with us today. Before introducing Gerry McClinton to review the Q3, 2018 results, I'd like to take a few moments to discuss some important factors that have attributed to the results through the quarter and year-to-date. As evidenced in our filings, we experienced across $8 million decrease to our revenues in the quarter and approximately $19 million year-to-date. It is important to highlight that this decline in revenue was anticipated and discussed in detail during Q1 and Q2 webcasts. I will provide a brief recap of that. At year end 2017, it was Management's decision to extend the sell period into 2018, as a way to reduce excess inventory resulting from a single-retailer sponsored promotion that did not meet their revenue expectations. The promotion at their recommendation was licensed under the Duracell brand, and was expected to outpace previous promotional sales of the Capstone brand by as much as 40%. The retailer purchased inventories to support that sales level. However, the sales projections were not achieved. The retailer looked to us for assistance in dealing with this underperforming promotion and the resulting carryover inventories. Capstone Management determined it was more fiscally responsible to extend the sales period than to underwrite what could have been approximately $1 million in markdown adjustments, even though knowing new product introductions would be postponed for 2018. I'd like to point out that although there is a considerable decrease to our top line, the Company achieved net income of approximately $172,000 in the quarter. Year-to-date losses were approximately $370,000, of which $176,000 factored into the R&D investment for our connected surfaces program, which is scheduled to be unveiled at the CES 2019. In keeping with our debt initiatives, the Company has a debt free balance sheet and maintains a very strong cash position following this underperforming period. As discussed in our May 15th webcast, I made several observations regarding first quarter revenues, the anticipated reduction to our second quarter, and the limited amount of promotional activity that occurred during the period. In short, while our revenue momentum has been slowed, activity is resuming and our order backlog of core LED products is growing. These orders will begin to ship in Q1, 2019. Of utmost importance, we have been diligently focusing on meeting our [CPS] launch deadline for the connected surfaces programming. This achievement represents the most substantial opportunity the Company has ever undertaken, and is expected to resume our revenue growth for several years. Before providing insight into our products and branding strategies for 2019, I'd like to comment also on the state of the LED market. This market assessment played a vital role in our portfolio shift to the connected surfaces programs. The LED market now in its fifth to sixth year of mainstream availability has stabilized from a wholesale perspective. Important fact, and LED light bulbs that sold only three years ago at 999 are currently selling at a $1.49 to a $1.99, in some cases promoted at $0.99. This price erosion has driven unit sales substantially as homeowners convert to LED, but at the same time has commoditized LED products in general. This market condition has been exacerbated retail space dedicated to LED lighting has been reduced as well. In short, LED is no longer the shiny new thing. Capstone's business building success has been a visibility to identify emerging product categories where Capstone's Management experience and creativity can be fully leveraged. We demonstrated this as we entered the LED lighting category. Our branding and product strategies delivered the Company to a well respected market position delivering year-over-year growth through 2017. The Company's expertise and low cost manufacturing and operations have provided an advantage in delivering great products competitively. As we recognized the growth in the LED category was slowing in mid-2017, we saw a business opportunity that would prove equal to or greater than the LEDs business. While we currently are resuming our LED product positioning, the revenue potential has been lessened and our looking forward strategy was very timely. Our new portfolio appeals to a much larger audience with more relevant products that will benefit from Management's proven abilities in the aforementioned areas of low cost production and operations. The connected surfaces portfolio taps into consumers ever expanding connected lifestyles so prevalent today. Much like a smartphone, the products will perform the function similar to that of a tablet with both touch screen and voice interfacing, Internet access, and an operating system capable of running downloadable applications. The average selling prices will be comparable to that of good quality tablets and smartphones. Expected retails will fall between $300 and $800 per unit, delivering consumer value for middle income homes across America. During the day your smartphone is the connection to your world whether it's work or personal. Following the introduction of our new products, when entering your home, Capstone's new connected surfaces home furnishings concepts will enable users the same level of connectivity in a more relaxed and innovative manner that does not require being tethered to a smartphone. While we have done our best to stay under the radar to-date, media announcements will commence just prior to and following CES, at which time a new product focused website is planned as well. In short, I want to emphasize that your Management are genuinely excited and looking-forward to 2019. So with that, I'll turn the call over to Gerry McClinton, to review the financials.

Gerry McClinton: Thank you, Stewart, and good morning everyone. Now to get a more detailed understanding of the financial results, we highly recommend that you review the Form 10-Q for the third quarter ending September 30, 2018. Let's go straight to the numbers. Revenue for the three months ended September 30, 2018 and 2017 were $5.7 million and $13.8 respectively, a reduction of $8.1 million. Revenues for the nine months were $11.9 million and $30.8 million respectively, a reduction or $18.9 million. Now to better explain the revenue reduction, let me point out that in 2017, the action LED light category is at the height of its retail lifecycle. Combined Capstone Lighting, Duracell, and Hoover branded action lights accounted for $22.3 million or 72.3% of net revenue for that period. The Duracell brand accounted for $12.6 million of sales. However the Duracell program did not sell as expected and resulted in excess poor level inventory at year end 2017. As of September 30, 2018 the Duracell program generated $1.1 million of sales which represented $11.5 million decreased revenue compared to 2017 for the Duracell program. During the same period 2017, Capstone Lighting and Hoover brands accounted for approximately $9.7 million of net revenue in the action light category. But no further promotions were planned while excess inventories were being reduced revenues for this category through September 30, 2018 was approximately $2.3 million, a reduction of $7.4 million from the same period of 2017. In 2018 the combined revenue reduction in the action light category was $18.9 million and the cause for the revenue decrease as compared to 2017. Despite the reduction of plan promotions in 2018, we have launched five new exciting products which includes a new and improved updated action light. International sales for the nine months ended September 30, 2018 were $551,200 or 4.6% of revenues as compared to $1,288,000 or 4.2% of revenue in the same period 2017. Gross profit for the three months ended September 30, 2018 and 2017 was approximately $1.3 million and $3.1 million respectively. The gross margin percentage for lighting products was 23.2% in 2018 compared to 22.5% in the same period 2017. Gross profit for the nine months was approximately $2.7 million and $7.3 million that's a reduction of $4.6 million. The gross margin percentage for lighting products was 22.8% compared to 23.8% in 2017. Total operating expenses for the three months ended September 30, 2018 and 2017 were $1,150,000 compared to $1,660,000 respectively that’s an expense reduction of $510,000 or 30.7% in the quarter. For the nine months total operating expenses were $3.3 million and $4.2 million respectively, and expense reduction of $860,000 or 20.7%. Operating income for the three months ended September 30, 2018 and 2017 was $180,000 and $1,450,000 respectively. For the nine months after being loss with $586,500 and $3,176,000 profit respectively. Net income loss for the three months ended September 30, 2018 and 2017 net income was $172,100 and $990,500 respectively. For the nine months ended September 30, 2018 the net loss was $370,000 compared to a net income of $2,143,000 in the same period 2017. Now of course noting that included in the year-to-date 2018 net loss are strategic expenses required to support future revenue growth and normal current legal cost totaling $150,000 for the settlement of legal issue dating back to 1998 under previous management. The company expense $176,000 and the development of the new connected services product category that's being launched at the 2019 CES Show. We also increased our end store marketing expense by $80,000 to stimulating consumer product awareness for the new item just recently released. As Stewart mentioned, earlier management stayed approximately $1 million in expense to address the Duracell carryover inventory. Even though the extended sales through period postponed the loss of the new products in 2018 and the level of reduction in revenues, as we supported the retailers inventory markdown request, the adverse financial impact to net income and cash position of the company would have been significant. I now want to turn to liquidity and resources. Cash balances at the end of September 30, 2018 were $3.6 million compared to $3.7 million at December 31, 2017. The company also had available borrowing capacity which was not used under the Sterling Bank financing agreement of approximately $2 million and $3.7 million respectively. Worth noting on July 20, 2018 Sterling Bank credit line was expanded by $3 million which allows the company to borrow up to $10 million of which $2 million has been allocated as a Capstone expansion credit line. These funds are available as needed to support the expansion of Capstone new product category, and is not subject to the bank’s loan advance transition as required will remain $8 million credit receivable line. As of September 30, 2018 and December 31, 2017 the Sterling loan balance for both periods was zero, and we have not incurred any loans interest during the period 2018 to-date. As of September 30, 2018 the company has no outstanding notes payable to related parties compared to $1.2 million as of December 31, 2017. We'll talk a bit of our cash flows provided by operating activities in the nine months ended September 30, 2018 and 2017 was approximately $55,800 and $2,143,000 respectively. In 2018, $1.8 million of cash was generated by the collection of accounts receivable and $132,000 by the reduction of inventory level. This cash is used in underwriting to $370,000 loss and $933,000 reduction in accounts payable and $613,000 decrease in income tax payable. Cash flows used in investing activities during the nine months September 30, 2018 and 2017 was approximately $130,700 and $47,600 respectively. During 2018, the company invested in new product molds, sterling and updated the entire corporate computer systems. Cash flows and financing activities; during the nine months ended September 30, 2018 and 2017 was zero and $499,600 respectively. The entire cash flow for last year was a result of the company repurchasing $250,000 of company shares from involved LLC and the company paid off $257,000 of directors' loan. As of September 30, 2018, the company was in full compliance with all the terms pursuing to existing credit facilities. In summary, the company is in an excellent capital resource position. Management believes that our cash flow from operations with the new line expansion from Sterling Bank will provide sufficient financial resources for the company in 2018. This concludes my financial report. With that I’ll turn the call back to you Stewart.

Stewart Wallach: Thank you, Gerry. Thanks very much. In closing before we enter into Q&A, it’s important that management remains committed to delivering and looking forward marketing and strategic initiatives. I’d like to briefly highlight some of the activities of the third and fourth quarters that will help fuel our entry into 2019. First, we relocated our offices. This is done to accommodate the future growth and needs of our Capstone team which has been planned to support our connected surfaces product initiatives. Secondly, we negotiate an expansion credit line with Sterling National Bank to support the aforementioned product portfolio. Thirdly, we received an extension to our Hoover licensing agreement enabling us to offer branding options for the new category should our entry into multiple new channels require brand differentiation. Fourth, we've been working assiduously oversees to transition manufacturing and procurement to Thailand and Vietnam to mitigate the impact of the tariffs planned and imposed by the current administration. And as stated in our Q1 webcast, we have now aligned ourselves with the Max Borges Agency, a premier consumer tech PR company, who will help spearhead the launch of our connected surfaces product line at the Consumer Electronics Show and manage media contact for the Company. We are also hiring and finalizing this shortly of a social media strategist who will manage Capstone social media department. This position was created to support the new category which targets an expanded consumer base and broader channel reach. Social media participation will initially include Facebook, Instagram, Pinterest, Twitter, and YouTube. These activities will start to surface late December early January. With that Aimee, let's go ahead and open this up for Q&A.

Aimee Gaudet: Okay. That sounds great. I'll turn it over to Doug, to open up the phone lines. However before fielding questions via phones, we received several questions that came through by e-mail which we'll review first.

Operator: [Operator Instructions]

Aimee Gaudet: Okay. First question that came through: Help me understand how the tariff situation affected the Company's business year-to-date?

Stewart Wallach: All right. Because estimated landed pricing for Q3 and Q4 were questionable, the retailers were reaching out and asking the supply base, which would Capstone in this case, to guarantee the landed pricing by underwriting any tariffs that may have been imposed during the period. Our business model is a very simple and straightforward direct import program, which has worked very welcome for both our retailers in Capstone the past several years. We do not currently invest in stocking inventories and all costs including shipping and duties are the responsibility of our retail customers, which means we do not accrue for these nor do we build them into our pricing model. Because of the business model, our margins cannot possibly account for 20%, 25% tariff absorption. As such, we do not believe this to be in the Company's best interests to tie up its financial resources at sensibly zero margin. Additionally, the retailers promotional scheduling overall was substantially cut in the hardware area due to the uncertainty of the trade negotiations.

Aimee Gaudet: Next question, it appears that the Company not has to make decisions regarding how to deal with excess inventories remaining at 2017 year-end, but also the reduction of promotional activity. In retrospect do you believe Management made the right decisions in 2018, and how do you see business taking shape in 2019?

Stewart Wallach: I am confident that Management made the right fiscal decisions for 2018. Reporting revenues that are less than half of the prior year is disappointing at the very least, but because at 2017 year -end we were profitable, had a strong cash position, and had retried all debt, we recognized the opportunity, turned our attention toward the expansion of our product portfolio in a manner that would mitigate a similar occurrence in the future while offering significant growth potential beyond that of LED. Our new product portfolio connected surfaces not only had to have growth potential for several years as LED presented to us in 2009, but also had to sustain Capstone's reputation for innovative and affordable products. Our product roadmap was governed by two additional objectives; one, being to address our channel concentration; and two, to address our product concentration. We believe we have accomplished these objectives and are excited about our entry into the consumer electronics industry, and believe the product portfolio has the potential to do dwarf our 2017 requirements.

Aimee Gaudet: Okay, great. Next question, The Sterling National Bank credit line was extended from $7 million up to $10 million, and of that $2 million is allocated for Capstone's working capital expansion. Could you outline how these funds will be used? Maybe Gerry you can…

Gerry McClinton: First of all let me say that our bank has been a tremendous supporter of our strategic plan. Now obviously to provide such a line expansion and allocate funds for the capital expansion, the bank has done the financial due diligence and are very supportive of the strategic direction we're taking the Company. I will not provide too much detail, these funds have been allocated for the full development of the connected surfaces project. The type of expenditures that we have planned and budgeted for, include the recruitment of an experienced management team to support the connected surfaces program as it is validated in the marketplace, for the website development of all of these new products, access to social media, for e-commerce and social media development, also we have to continue to expand our product line and continue the software development, public relations, product marketing, and advertising. You probably heard that we've tied up an agency that helps us there, that will continue, continuing prototype development and investment in community participation. So this is where we see these funds going over the next nine months.

Aimee Gaudet: Next question, you've stated that you had no intention of deviating from your plan to start publicizing the new product the end of the third quarter or beginning of the fourth. Could you please explain why this has not happened and if possible why Capstone has not followed through on its 2017 promise to increase its PR activity in 2018? A straightforward response will go a long way toward strengthening its longtime investor's confidence and Capstone's confidence and integrity.

Stewart Wallach: It is always our intent to answer questions in a straightforward and transparent manner. As a long time shareholder you should know that I do not like telegraphing planning or distributing PR as they can be affected by dynamics in the marketplace which we don't control. Relative to the year-end promise to increase our PR spending, we adjusted our position in enhancing our investment into PR when we realized the revenue decline was taking longer to resolve than planned as a result of the year-end carryover inventories. Relative to the third, fourth quarter announcements regarding the new products, the long and short of it is that the connected surfaces portfolio took approximately 60 days longer than projected to submit product for testing. This is not unusual when dealing with a highly technical product where software plays a vital role in its operation. We are still planning on initial releases to occur in December. Moreover, we are registered to participate in what is known as the digital experience, sponsored by a company named Pepcom, and this occurs the evening before CES commences. The digital experience is to believe to be the largest media event at CES and will provide us direct access to an estimated 1,400 press attendees. Capstone has never participated in a venue of this nature. It is only because our product line is still relevant and innovative that we can benefit from such participation.

Aimee Gaudet: Great, thank you. Next question, it seem very enthusiastic and bullish on the connected surfaces product line, which is believed to offer great potential for the Company. Has the LED ordering picked up at all in Q3 and Q4, which would kick off 2019 nicely regardless of the connected surfaces potential?

Stewart Wallach: That's an intuitive question and I am pleased to respond affirmatively, yes. It has picked up and promotions for Q1 and Q2 are currently being scheduled. We anticipate momentum to continue to turn keeping in mind however that the potential for LED overall has been lessened because of the market dynamics.

Aimee Gaudet: Next question, while the fears of the direction Capstone is taking is more towards smart home product, are we still making these products in China and won’t they be subject to increase tariffs. Stewart may be you can touch on that?

Stewart Wallach: All right, there are two points to consider relative to the impact of tariffs; current products and non-current products. In case of current products, retails are established with the consumers and our customers. Increasing prices on these products are a problem as the proceed value has already been established. Conversely for new products that do not have a yet established retail, the impact maybe less if the product communicates it’s a benefit effectively with the consumer at the prevailing retail. That being said, however, we have been working diligently oversees with many alternative manufacturers outside China. As I mentioned earlier in Thailand and Vietnam particularly. It’s important to point out we will not burn our long-standing relationships that we’ve developed over the past decade in China in the event that the trade ban will subside or because it was extreme. However lesson learned, we will also not put ourselves in this position again and have found some great resources that would benefit Capstone regardless.

Aimee Gaudet: Last question, Gerry maybe you can answer this one. In August, the Board approved an extension for the company to repurchase up to $1 million of stock. So far to the best of my knowledge the company has not repurchased any shares even though share price would be considered low why is that?

Gerry McClinton: Well the decision to repurchase company stock depends in whether the company has the cash resources available for the stock repurchase but that was impacting company operation. Considering the company strategic repositioning and the reduced revenues in 2018, we considerably reserved all of our liquid funds to ensure that capital resources were available for the connected surfaces expansion. But the bank line of extension now in place, the company is now in position to repurchase stock and we will be reviewing this our position with the Board shortly.

Aimee Gaudet: Thanks. I think that concludes our questions that came in via email. So I would like to turn it over to the calls on line.

Operator: Our first question comes from the line [Joe Marquis with Network1 Financial Group]. Please proceed with your question.

Unidentified Analyst: Congratulations on excellent management and shepherding the company through this and in the face of diminished revenues. We are now having slight profitability for the quarter, I think that really shows the excellence in management. Now the question I am going to ask you, please understand that this is coming through my wonderful flip phone that I get for free, I don't understand smartphone. And I really have very little understanding of what you're doing expect I believe in you and it sounds like it is a success. I have recently seen commercial, advertisements on TV, walking through some device, the Google provide and selling by Google device turn on the stove, freeze the ovens to 350 degrees et cetera, et cetera okay. In light of that, and my knowledge with some other products out there could you please investigate your product from what is currently available and basically just position your product vis-à-vis was already out there and sort of explain to me why people will like this product and need this product in the face of other that seems to be to somebody like me who is totally unknowledgeable of the area but seems to be some product out there were ready that would seem to compete with your new product?

Stewart Wallach: Thank you for the acknowledgment regarding our efforts. It's frustrating but it's at times like this when a company is put to the challenge that management really does have an opportunity to demonstrate its capabilities, and in spite of the revenue decline I'm proud of what we've been able to accomplish. That being said, now, let me - I'm going to cautiously respond to this because I really don't want to dilute the announcement that's forthcoming through our PR agency Max Borges, but let me try to paint a picture for you and hopefully be able to shed some light on it. You're talking about the new products; there is a Google Home screen that's now available; there is an Amazon Echo, which is their screened version; we have, Lenovo is come out with what's called an LED smart display; and most recently Facebook is come out with something called Portal. I'm going to assume those are the areas that you're responding to relative to new products being in the marketplace. Interestingly enough Joe, what's the common denominator of all those? And these are large companies that obviously are investing in this. The common denominator is that you can remain connected, you can keep that digital lifestyle but you can break the tether with a smartphone. Bigger companies than us spend great deal of money to assess consumer behaviors like these companies did, and clearly I think we all guilty of it but walking around our house with a smartphone in our hands it's amazing to me how connected we become and reliant upon this. So approximately a year-and-half ago we started exploring the opportunities of taking that connected experience, that being, being able to do everything you can do with a tablet and provided it into furnishings. And I am going to have use furnishings as a catch up, okay. So give it some consideration, furnishing is that you can hang on a wall, furnishing is that you can sit at, furnishing is that you can work at, but at the end of the day deliver the same level of connectivity to those platforms, allowing you to put down your smartphone. Now, the items that we're talking about which by the way we could not possibly have known those were going to serve this, it's actually a very good thing because what it's doing is establishing at a very expensive investment from these companies and TV advertising et cetera, that the lifestyle is changing and the opportunity to connect with people and connect with the Internet are now taking on different shapes and forms. It's actually endorsement of everything that we're doing. We will just be a different form than what that is. Keep in mind however that those items, those that you're seeing and we've got all of them sitting in the front of me in fact, we're running tests on these things. They range from $199 to $249, and their capabilities are far, far less than that of a standard tablet. So we will have a broader reach in a different platform, something that would be more conducive to home furnishings than a simple counter top hub that just happens to have a slate, does that help?

Unidentified Analyst: Yes, and I guess the final question would be, would a 73-year-old, basically totally technologically illiterate person like me, be able to buy your product and use your product without I guess having to basically go through a 150 page manual et cetera, et cetera, in other words will a dummy like me be able to use your product?

Stewart Wallach: Okay. Joe, one of the most critical components of any successful technical product to-date is ease-of-use. And we've gone through this extensively. And, yes, it's very intuitive. It's something that maybe hung on a wall in one application that still has to be dealt with. But if you can hang a picture and if you can hang a mirror you can hang our product -

Unidentified Analyst: I can hang some picture.

Stewart Wallach: Okay. But and so far is the technical setup of it, here's what I can tell you. We specifically took a different route than anybody we're aware of and that we've created a handheld control console that allows you to do all the setup just by touch screen and some verbal announcements, and once that product is setup through the console, you are now - you can now operate it hands-free. If you can operate a smartphone, if you can operate a tablet, and again there's all degrees of that experience that you have to consider. If you understand Google, if you understand how to ask Google Assist to do something for you then you're not going to have any problem at all with this product line.

Unidentified Analyst: Thank you for your answers. Good luck with this. I mean, this is a huge part of our future and I'm sort of comforted, I've urged you in the past to engage some stock IR and everything, but in this instance I think the product IR and everything hopefully will translate into stock IR. I would hope that you're planning and your basically announcements about the product and everything to include where possible in these product announcements that these products are owned by Capstone, maybe includes the symbol for Capstone, publicly owned company et cetera. I hope you're considering ways that the product announcements and product promotion will inherently include elements that would increase awareness of the stock.

Stewart Wallach: Joe, in closing let me just say that's why we hired a PR agency because we wanted to get a fresh perspective and wanted to follow the lead of somebody who is an expert in that area. And you're going to see a whole different look and feel to this Company in the period over the next 60 days.

Unidentified Analyst: Yes, right I mean, it is a stupid example but I mean I'm enough old that I've used this example continuously. I mean there was - there is a company called Swisher et cetera, and every time one would use these facilities at a restaurant or wherever their products were stored, you would look down and you would actually see that it was a public company and grew their stock symbol. I mean it's an example I've always used and I would hope that the product announcement would somehow buy in to the fact that we are a public company, there is a symbol, people can participate in this company and in this company's growth and hopefully that the product PR program would become to some extent a de facto program of increasing investor awareness or potential investor awareness of the stock and the fact that we're a public company.

Stewart Wallach: It's exactly what the strategic outline is for that company and that's what we've outlined what we want them to achieve.

Operator: Our next question comes from the line of [indiscernible]. Please proceed with your question.

Unidentified Analyst: I was wondering when do you anticipate that the connected surface product will be available to actually purchase. I understand the introduction at some electronic sale, I'm assuming you're probably going to solve this like via Amazon and essentially Big Box stores and just kind of wondering when you would expect that consumers could begin to buy?

Stewart Wallach: Targeted availability will be the end of Q1, the beginning of Q2.

Unidentified Analyst: And then one other quick question, for the LED markets, I understand as you said it's reached a more mature stage, do you anticipate introducing new products in the LED space or are you going to continue to sort of write out what you have in the portfolio?

Stewart Wallach: No actually, I believe Gerry referenced this, we actually introduced subsequent to July, five new products that has not been on the market before. Again the reason being we held back is to find out wait to see what was happening with the tariffs because had we launched them too early and then we’ve been subject to tariffs all we would have done is added five more products to the mess. So we held back a bit. The first product by the way was launched and it was on [Cosco] shelves this past month. It’s a three pack of a security light outdoor security light actually more of a wall light that has security function in it. The second product is just been committed to that will be scheduled for Q1 and we have two other products being reviewed by another retailer that are being reviewed very favorably. So we’re not throwing the baby out of the bathwater Mike. We see the LED business as an important overhead business and we’ll do our best to continue to build on that and sustain that but our hopes are also that our new opportunity in electronics industry will thwart that business and that means as that business continues to mature, we won't be too reliant on the category.

Operator: There are no further questions in the queue. This does conclude today's teleconference. Thank you for your participation. You may disconnect from your lines at this time and have a wonderful day.