Good morning and welcome to the Zoom Telephonics Shareholder Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Frank Manning. Please go ahead.

Thank you Stephanie. Welcome to the Zoom Telephonics call for Q2 2019. I'm Frank Manning, Zoom's CEO. Our President, Joe Wytanis will also be speaking and answering questions during this call. During this call we'll be referring to slides at www.zoomtel.com/sq219. When you have time please read Slide 2. We cannot predict the future and our comments and forward-looking statements are subject to risks. Slide 3 provides a brief overview of Zoom Telephonics. I think most of you are familiar with the facts on this slide. Zoom has been in business since 1977. We have the exclusive Motorola brand worldwide license for a large number of Internet access and local area network products. Our strongest product category is cable modems and cable modem routers and we are also seeing growth in a number of additional product categories. The Motorola brand, great products, and excellent execution tripled our revenues from 2015 through 2018. China tariffs have dramatically impacted our business recently and we'll discuss why we're still optimistic in spite of these tariffs. On Slide 4, you can see that we had 10 straight quarters of increased year-over-year sales through Q3 2018. That trend was interrupted in Q4 2018 and Q1 2019 due primarily to China tariffs. We're pleased that Q2 2019 showed a resumption of year-over-year growth with net sales up 8.5% to $8.2 million. There has been a fair amount of price chaos due to the tariffs, but over time prices have become more stable. Q2 2019 benefited from a significant improvement in shelf space and shelf position at Best Buy, a very important electronics retailer. We also achieved good online growth, especially at Amazon. Almost 100% of our sales were in the U.S. We saw year-over-year growth in every significant product category including cable modems, routers, and other…

Thank you Frank. Hello everyone. Slide 14 provides an update on our activity with service providers. As Frank mentioned we recently hired a VP of Sales that has excellent experience selling to MSOs. This person will also put a concentrated focus on our existing retail business. I just returned yesterday from the NCTC-ACA Connects Independent Show in Chicago where we unveiled that Motorola is back and better than ever in the service operator channel. Our participation was well received and I'm optimistic about our prospects. We are developing distributor partnerships to reach out to U.S. Canada and Mexico markets, plus we're working on necessary product certifications with service operators to sell direct to them. Finally we're developing product solutions and packaging tailored specifically to service operators. Slide 15 shows some of the technology trends that will help drive future growth. DOCSIS 3.1 is a fairly new and very important cable modem category. We have a successful DOCSIS 3.1 cable modem now and we have an exciting line of DOCSIS 3.1 modem/routers coming. Mesh is a high-growth technology for routers and we are working aggressively on adding mesh to new cable modem routers and routers. WiFi 6 is an advanced WiFi standard and we expect to have WiFi 6 products in 2020. Network management and IoT security are increasingly important, as homes have more and more devices, some of which can threaten your network's performance and your personal privacy. Our alliance with Minim helps leapfrog us into this important area. We've already talked about how subscriptions and recurring revenues will be increasingly important for us. We have cellular products now. Revenues are low, but we're seeing a good growth and we expect significant sales starting in 2020. We like this product area. We're increasingly good at it and we see it…

[Operator Instructions] Your first question comes from Spencer Lehman [ph], Private Investor.

Good morning, Frank and Joe.

Good morning.

Yeah, on these tariffs, what a shame, but if you're not successful with the exemption and then if the Mexico deal doesn't work either, do I understand that eventually by next year you may have to move manufacturing back to the U.S.?

No. Our primary supplier for the vast majority of our products is based in Shenzhen. They purchased land and built a facility in Vietnam and they will be -- begin production of some products but not cable modems in Q4 this year. And cable modems are targeted for Q1 if necessary. Certainly there's always risk when you're moving a sophisticated production line to a new country but they're certainly on the case as far as doing that. Moving to the United States is really not a practical solution because the cost would just be too high, so we…

That's just too high, it would -- yeah, that wouldn't make any sense. The tariff -- paying the tariffs would be cheaper than moving back to the U.S.

Yes. Well it's -- if we’re in Vietnam unless the policy changes there is no tariff. So China is the one that's a real problem right now.

So eventually you could move everything you needed to Vietnam.

Yes.

That's correct.

Okay, okay. That’s good to know. Okay. Well, we’ll keep our fingers cross. So, thank you and good luck.

Yes. Thank you.

Okay.

And there are no further questions in the queue.

Okay. Well, thanks to everyone who joined. We always like to link up with you and we look forward to future calls. Thank you.

Thank you.

Thank you. That does conclude today's conference call. You may now disconnect.