Turtle Beach Corp (TBCH) 2013 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Parametric Sound Reports Third Quarter 2013 Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to [Steven Hooser], Investor Relations Representative. You may begin.

Thank you, Latoya. Good afternoon and welcome to Parametric Sound's conference call to discuss financial results for the third quarter of fiscal 2013. Before we get started, we will be referring to today's press release announcing third-quarter results, which can be downloaded from the Investor Relations page of our website, parametricsound.com.

In addition to our discussion of third-quarter results, Juergen Stark, CEO of Turtle Beach, will join the call to provide additional business and financial information with respect to Turtle Beach and discuss the recently announced merger. There will be further communications in the days and weeks ahead about the proposed merger. We also intend to file with the SEC a proxy statement and other relevant materials regarding the proposed transaction. Shareholders of Parametric Sound are urged to read all relevant documents filed with the SEC, including the proxy statements, as it will contain important information about the proposed transaction.

I must point out that during today's call, we will be making projections and other forward-looking statements, which are based on our current beliefs and expectations. Please be aware that these statements are subject to certain risks and uncertainties. We advise you to consult Parametric Sound's filings with the SEC for additional information.

In addition, this communication may be deemed to be a solicitation in respect of the proposed merger of Parametric Sound and Turtle Beach. The directors and executive officers of Parametric Sound and Turtle Beach may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction.

I will now turn the call over to Mr. Ken Potashner for some additional remarks.

Thanks, Steve. I'd like to welcome everybody to our third quarter earnings conference call. The Company continues to execute positively on our previously stated operational plans. As everybody knows, we announced our merger intentions with Turtle Beach and I'm very pleased that Juergen Stark, the CEO of Turtle Beach, was able to join us on this call today as well.

As a start, we'll have Jim Barnes review our financial performance for the quarter.

Thanks, Ken and good afternoon. My remarks will focus on our operating results for the third fiscal quarter of 2013 which ended on June 30, 2013. I will also comment on certain cash flow and balance sheet items and then I'll turn the call back to Ken.

We are very pleased with the progress we have made this year. We continue to make important progress on building our commercial HSS business in the third quarter. Ken will be providing more details about pilots and rollouts. We see momentum building in the commercial sector. We are preparing and managing our supply chain to support that growth.

Our licensing initiative led to the recent announcement regarding our merger agreement with Turtle Beach. We continue to add to our patent portfolio, and with the Turtle Beach announcement, we are taking steps to even more aggressively broaden our protection. We are making important innovations in emitter technology that we believe will prove to be very valuable addition to our patent portfolio.

Third quarter revenue totaled $212,000, up from $34,000 recorded during the same quarter last year and up from $155,000 sequentially from the March second quarter. Both sequentially and overall, we are seeing commercial sales growth and we expect that to accelerate in future quarters. Gross profit was $101,000 for the third quarter of fiscal 2013, positive in comparison to $16,000 for the same quarter last year. We target commercial gross margins of 40% to 50%, but that may vary in future quarters as a result of volume discounts, production efficiencies and other factors as we grow.

Total operating costs were $2 million for Q3, including $519,000 of non-cash option expense. We also incurred approximately $300,000 of strategic transaction costs, consisting of legal, accounting and investment bank fees during Q3. We also spent a lot of internal effort, time and costs supporting very intensive merger-related patent, legal, financial and business due diligence.

For Q3 of the prior year, total operating costs were $1.7 million, including $849,000 of non-cash option expense. We expended approximately $50,000 of direct costs on HyperSonic health development in Q3 plus some additional support costs. If you exclude the strategic transaction costs, our monthly operating costs have remained steady at just over $300,000 per month this fiscal year to date and we expect our normal operating cost to continue at comparable levels.

In future quarters, we expect cash expenditure levels to be offset in greater part by increasing cash contribution from commercial revenues. We do expect, however, to incur substantial legal, accounting, proxy, filing and other fees and costs associated with the Turtle Beach merger during our Q4 of 2013 and in Q1 of fiscal 2014. We expect the merger to close during our Q1 of 2014 that ends in December 2013. Future merger costs will vary depending on the division of work between ourselves and Turtle Beach and other factors, some of those factors outside our control. We are jointly developing plans and budgets for this work and the related costs, but we don't have details at this time.

Our net loss for the third quarter of 2013 was $1.9 million or $0.28 per share and included $519,000 of non-cash stock option expenses. During the first three quarters of fiscal 2013, we received cash proceeds of just over $1 million from the exercise of warrants and options.

Our cash position at June 30 was $3.3 million and has been supplemented by $182,000 of cash from warrant exercises so far in Q4. We believe our cash resources, along with growing margins from increased sales, are sufficient to fund normal operating costs during the next 12 months. We intend to obtain additional resources as a result of the increased costs related to the merger. As we have stated, we may seek a minimum of $5 million of debt or equity proceeds prior to completion of the merger.

From a financial perspective, while there is a lot of work involved in preparing for the proxy filing and the shareholder meeting, we don't foresee any significant issues in integrating the two companies for future financial reporting purposes.

This concludes the financial discussion and I will now turn the call back to Ken.

Thank you, Jim. Although I am sure everybody wants to discuss the merger first, we're going to do that last and have Juergen add his perspectives at that time with significant positive progress to report on our core businesses and I want to make that we take the time to get appropriate focus to that.

So Jim reviewed our revenue performance and at this stage revenue continues to be a direct consequence of the positive progress that we're making on our pilot initiatives. We continue to receive consistently good news on these pilots and one of the substantial opportunities for ourself has been our performance on our McDonald's pilot. McDonald's channel has now designated us as a premium audio solution for their restaurant installations.

As you know, we were in pilot installations in two of their California restaurants, including the highest revenue restaurant, west of the Mississippi, their Disneyland property. And those pilots went extremely well. We've got an extremely pleased franchisee. So we've now been notified that we are being designed into five additional restaurants owned by other franchisees in Southern California, and more importantly, the McDonald's channel is actively now presenting us as a solution to an additional 300 restaurants.

In addition to McDonald's, we continue to proceed with planned previously-announced installations and [grow with the builder there]. And we've also now launched additional new pilots in multiple multi-billion dollar global consumer electronic company applications.

The range of the applications continues to be very broad, and as a simple example, we are now building product to be installed in national museums in Japan and Hong Kong and a long, long list of where the technology applies.

On the HHI front, this is our health applications, we continue to also make great progress. At this point, we've completed all testing, data analysis and demonstrated the effectivity and the safety of our solution and the results are extremely good. We now have consultants working on our FDA submission.

We also have completed our first live customer installation and are very -- and we have a very happy individual who is hearing his TV for the first time in many, many years, maybe even decades and we have a happy wife who can sleep in the next room without having a blaring TV keeping her up at night.

On the IP licensing side, we've collaborated with Turtle Beach relative to their sensitivity on whom they will feel comfortable with us having appropriate licensing discussions and we're in the process based on their input of beginning to reinvigorate some of the licensing dialogs that we put on hold as we went into negotiations with Turtle Beach.

I'm currently talking to large companies on everything from geographic access to our IP to silicon integration opportunities straight through to integration with glass opportunities and other materials for tablet and smartphone applications. Stay tuned on that.

Also as a footnote for those who have been following the evolution with Turtle Beach, our discussions with them actually started out as a licensing discussion, and after the diligence and extensive evolution from there, Turtle Beach concluded that they want to go in much broader than a license, and that's what led us to this merger proposal. So obviously their diligence on our IP from a licensing perspective must have turned out positive if they -- like a company, that's the company [dealt] with us, which they are, and that we think also will carry a lot of weight from a diligence view as we look at other licensing opportunities. And again, we're going to collaborate very closely with Turtle Beach to make sure that there are synergistic approaches to any and all licensing discussions.

Additionally, we continue to drive further improvements in our technology and our new emitter design that I've discussed previously is resulting high-performance results that we are very pleased with and also low-cost objectives that we set in place for this program. As we further progress with the characterization work here, we will look to integrate this solution into our consumer products.

Now on to the merger. As we stated, we intend to combine our great inventions, our great innovations with a great brand, Turtle Beach, that has global distribution networks, broad technology skills, very substantial financial resources and the opportunities for us mutually to enter into multiple multi-billion dollar markets and this is the excitement for us and we plan on fully leveraging that. We're going to be able to mutually broaden our product lines, accelerate our activities, all the things that I talked about on the Parametric side of things, the health business, the commercial business, consumer pursuits, all those get accelerated as a result of the merger proposal. The resources they have are skills that we desperately need, the distribution path that's in place, we will fully take advantage of, and as I mentioned the financial resources we can't underestimate what that will do to our acceleration. So we're highly, highly excited by the prospects of this.

I'm going to assume that everyone has taken the time to read the press releases that Juergen and I have put out relative to the deal and that you've all listened to our initial remarks on the previous conference call that we did. We've been fairly limited by regulations on what we can say until we release our proxy. So we're very anxious, Juergen and myself to get that proxy out, so we can tell the full story and get everybody as excited as we are. So you all -- most definitely we'll have the opportunity to do that, we'll be on the road, and we have what we think is a compelling story to tell and we will tell that story.

What we will do today though is Juergen is going to give some additional remarks for your benefit and then we'll proceed to that -- into a Q&A that will have -- it will be a fairly limited one and I'll come back when Juergen is done with his comments and talk about what's in bounds and what's out of bounds for the QA.

So at this point, let me hand it off to Juergen Stark, CEO of Turtle Beach, and future CEO of Parametric Sound.

Thanks, Ken. Hi, everybody. It's nice to be on the call with you. We've been asked repeatedly about Turtle Beach margins and there has been speculation about what companies might be a good comparables for us. So we wanted to provide some additional clarity.

As I mentioned on the call earlier this week, Turtle Beach provides gaming headsets which are headphones with a voice transmitter attached for two-way communications. Many of our headsets contain sophisticated audio processing technology to deliver a variety of benefits to the user.

Our customers are gamers who understand tech specs and value the capabilities we put into our products. Because of the innovation and quality of our products among other things, our products, our markets and our business are very different from companies who provide basic stereo headphones, and we have a very strong market position in the specialized gaming focused sector of the headphone market.

The proxy statement that Ken was talking about will be filed by Parametric. It will include a full overview of our business, but to give you a general idea of some of the historical numbers, based on the way we calculate EBITDA, we produced approximately $46 million of EBITDA in 2012 with an EBITDA margin of roughly 22%. These figures are not yet finalized. They may vary by a few million dollars, but hopefully that gives you some good historical context for our performance.

Looking ahead, it's very important that you understand the gaming industry context for 2013. Both Xbox and PlayStation have announced launches of new consoles during the holidays this year. As a result, the entire gaming sector is going through what we believe to be a normal cycle of contraction prior to these new console releases. Our business results in particular will be very much dependent on, one, how consumer purchasing behavior for more expensive accessories like headsets plays out heading into the transition; two, when the new console launches will happen; and three, what quantity of new consoles will be available and sold during the weeks between the launch and the year-end.

That being said, in the past there has been a renewed growth of the gaming category after the transition period after new console launches. Industry analysts have stated that they expect that to occur this time as well and we obviously are hopeful that it will and that we will benefit from the renewed growth, but naturally we can't guarantee that that will occur.

With that as a background and keeping in mind some of the additional variables I'll go into in a minute, we expect our 2013 revenues to be in the range of $190 million to $215 million and our EBITDA to be in the range of $32 million to $40 million. In addition to the industry context I just talked through, we are making some specific strategic investments to create a new media headset category for users of Apple devices. These are our iSeries products that we announced at E3. We're also investing to ensure that our staff and infrastructure is scaled and ready for 2014.

In addition, note that the EBITDA numbers I just talked through do not include one-time costs related to the merger with Parametric or any extraordinary costs that could come from the transaction processes and other adjustments. And importantly, they rely, among other things, on successful widespread launch of the new consoles with sufficient selling weeks, the impact this year as well as availability of some specific components from Microsoft required for sale of our licensed Xbox One headsets this holiday. These specific items by the way are outside of our control.

Our outlook is also based on assumptions about sell-through rates for our existing and new products and launch timing of our new products as well as assumptions about pricing, promotions and inventory management. These uncertainties are driving the wide range around the expectations for revenues and EBITDA, I just talked through, but it's important to note that our actual results could fall materially outside of these ranges if the aforementioned assumptions turn out to be inaccurate.

I am hopeful that this additional color on our performance clearly demonstrates the good business we've built. Again, I will refer you to industry analyst views of the console transition and their projections for the future.

As I mentioned in our call earlier this week, we are an audio technology company that has leveraged innovation and quality to build a strong franchise in gaming headsets. Parametric adds a unique new innovation in audio that has a strong fit with our technology development and commercialization capabilities, enables leverage of our supply chain and back-office and can benefit from our strong global retail sales capabilities. That's why we've worked with Ken and the Parametric team over the past months to structure a deal that we hope will be beneficial in the long run to shareholders of both companies.

Thanks. And with that, I will turn it back over to Ken.

Thanks, Juergen. And I'd like to add one commentary point, which is around the anticipated performance for the gaming sector for the years 2014 through 2016 and we've also posted a slide in the corporate presentation on our website that shows the industry forecasted growth. So I'd like everyone, at the earliest opportunity, to go to our website, pull up the growth slide.

And it's a dramatic growth slide that's shown there. The slide shows very robust growth starting 2014 with the adoption of the new consoles, and for this period, we anticipate we're going to benefit greatly from Turtle Beach's market share leadership. We have the lion's share of that opportunity and I am confident that Juergen and the team are going to absolutely go achieve that. And this, of course, was a very key consideration for us in the transaction.

I'm also glad that Juergen has said that he is going to do what it takes so that his staff and his infrastructure are going to be ready for 2014 because if he can execute that, we are going to ride the growth in that industry and we're going to outperform and the ability that Juergen has demonstrated previously to achieve market share leadership, he should be able to sustain that. So with that -- yes, we are anticipating everyone is going to benefit dramatically as a result of the success.

So we're going to now move to the Q&A part of the call, and again, I want to make the statement that we're going to be very limited on comments that we can say relative to Turtle Beach and to the merger until we issue the proxy. So we're going to not be shy in telling you that it's out of out of bounds, you're going to need to wait until the merger comes out. The intent is for us if there is further clarification on anything that Juergen said today or that we've released -- previously publicly released, we'll provide clarification, but we're not going to expand the boundaries of what we have disclosed until we do get to our proxy statement.

So with that, let's open up the Q&A phase.

Thank you. (Operator Instructions) Mark Stafford, MOGN.

Hi, Ken. Why is Parametric picking up so much of the cost of this merger when it seems -- when we're only getting 20% of the new company?

Well, we have to pay our own legal costs and costs till we file the proxy at least. So we have a sharing arrangement that will be bearing a big portion of the cost, but there is some cost sharing and part of it is just legally -- it's partly our costs at least until the shareholder vote process.

Okay. Thanks.

And that was Jim Barnes, our CFO, of course commenting.

Okay.

Okay.

Thank you.

Michael Fox, Park City Capital.

Good afternoon, guys. Juergen, could you talk a little bit about just some context around the cycle and how it impacts your margins? And if you don't want to talk specifically about Turtle Beach, if you can give us some context of industry margins, of categories that you participate in? And if you can give us some same context with regard to sales trends in the category through the last cycle, and it looks likes you put some of that on the slide, but just if you can give us some historical context around margin and sales, that'd be great.

Yes, Michael, I would refer you to the analyst reports that cover the console transition, as I mentioned, instead of me getting into more specifics at this point. It's somewhat logical what happens. Consumers obviously in anticipation of the new consoles, they buy less consoles, less games, less accessories right until the new consoles hit and then typically what we've seen is that the buying cycle kind of restarts. But in general, there is a lot of very good coverage. We'll go into a lot more detail obviously after the proxy is filed, but you ought to be able to get good coverage from some of the industry analyst reports around this.

And when you think about the cycle, it sounds like that the new consoles are coming out for the holidays this year, so in anticipation would you guys kind of ramp up production ahead of that so that your products are available same day, or how do we think about that?

Yes, we've announced that we have two licensed Xbox One headsets. You can read about that on our website and so we're working closely with Microsoft and targeting and hopeful obviously that we'll have those available for launch at the same time as the console.

Okay. And then with regard to that, can you talk about price points on those versus previous products and margins on those products versus previous products?

Price points are -- you can find all that on the website. We have headsets that span multiple price points from $50 up to $300 and the two Microsoft Xbox One licensed headsets fall roughly in the middle of the range. I believe one is $99 and one is $159.

Okay.

I'd like to let other people get questions and so let's move onto the next questions -- next caller.

(Operator Instructions) Louis Basenese, Wall Street Daily.

Hey, Ken, Juergen. Congratulations on the deal. I appreciate the extra color on the margins. Juergen, could you just give us some clarification for that 2013 number, how much is going to be spent on CapEx for that iSeries rollout?

Let's wait for the proxy.

Okay. Fair enough.

Yes, I think that's right, Juergen.

Okay. Guys, I am jumping at the bit to say more and I apologize that I just can't say more than we've disclosed other than just providing clarifying comments. I'm hopeful that at least the comments today help everybody understand our business a little bit better.

Ken, a quick question for you before moving on to just some of the pilots and stuff, the last call you said you are excited by the term sheet and that's understanding that there were negotiations that came after that. But in light of where the shares closed today at about $16, would you still make that characterization?

Yes, I mean, we don't [toe into] a transaction like this saying what's the stock going to look like the next day, right. So we've -- both companies have done exhaustive modeling and diligence in terms of what is the company that we can build for tomorrow. What is the combination of this technology with Juergen's, with Turtle Beach's strengths, where does that leave us, right. So I think the big mistake would be for anyone to take a look at Turtle Beach or that category and view it as static, right. That's the only reason Turtle Beach does this is because of the opportunity to broaden their product line, potentially enter new markets, right. So where our bet is that happens and that occurs and we'll deal with unique advantages.

And then I add to that acceleration on HHI, I add to it the ability -- I mean, if I get all these great commercial demos and pilots going great, but I don't have the financial wherewithal to service the demands I'm making, I really haven't achieved much.

So one of the key questions someone -- I'll ask Juergen and I'll answer on behalf of Juergen, although I'll be interested in his comment is, gee, do you shut everything down and turn this into an expanded headset company or do we position ourselves to go very broad with the initiatives that we've laid out. And the answer is, I mean, the only way I would have done this deal is to get commitment from the Turtle Beach side that we have -- that we go with a broad agenda. And to create -- so the models you can't do, say, okay, who do we think is in this category, what's their EBIT, what's the appropriate multiple, let's multiply that by 20% to get -- to see what that means to the Parametric shareholders. That math doesn't work.

What you need to do is, say, what markets does this allow the collective company to enter, what's the speed we're going to get into those segments, can they line up the financial resources to execute on that and what company is that going to look like and what's the multiple we're going to prescribe to that company. And that's the basis for how we made this decision. And I can't wait again for Juergen and I to get out on the road and build that case. It's an exciting case.

A question on -- in the press release you talked about some of the customer demonstrations for the emitter technology rolling out into production. Can you provide some more information on that? Are any of these the three co-development projects that we talked about on the last call? Is there something new there?

Yes. So on those, we have very high profile partners who, in every case, see their work with us as a competitive aspect and absolutely, under NDA, do not allow us to link names with efforts until there is formal announcements. So we won't be able to add color until there is color to be added.

Okay. Last question, I'll jump back in the queue if I have anymore. Just about the NDAs and reinvigorating some of those licensing discussions, how many of the 20 or so that we had before, any potential strategic deal, do you think -- how many of them are active? Can you comment on that or do you still believe they'll be active?

Yes. So I'll comment it from the perspective of you all need to visualize what business that Turtle Beach/Parametric are wanting to go attack themselves from a product perspective, right. And you need to effectively carve that out. So if we have this licensing universe of here's all the kinds of companies we're talking to for these broad array of different verticals that we're going to go and support. So you need now to take that universe and begin carving out what markets you believe we may want to penetrate ourselves and what's left are the discussions that we're still going to actively have.

And Turtle Beach, think of it all in the context of veto capability that Turtle Beach will be absolutely influential and are being influential in who we're talking to, but we're talking to some major guys and Juergen and I are excited by who we're talking to. We won't announce anything until it's announceable.

Okay. But is the number 10, 15 that might still be active? I've got to imagine that was part of the discussion?

That's not a meaningful -- there are major categories. Let me leave it that way. There are still major categories left that are going to be relevant to us from a licensing view.

Okay. Thanks, gentlemen.

[Joshua Westport, Westport Holdings] Joshua, please check if the line is mute. Brian Gerber, Prudent Money.

Yes, just a question for Juergen. I've read some of the -- sorry about that. I've read some of the industry research about the different hardware cycles with the PlayStation and the Xbox. What I am not clear on is the attach rate of headsets, your new product sales with the hardware. What's the historical experience there? And more importantly, is there anything in this cycle that makes it different such as input device, the changes of some catalogue that would cause me to buy a new headset that doesn't use the old Turtle Beach headset?

So the attach rates for headsets, I can't cite, I believe, an NPD number.

Juergen, [hold on one] second. Juergen.

Yes.

Whoever asked the question, can you mute your phone because we're getting a lot of feedback.

Would you just like me to close his line off?

Close his line off and then Juergen will answer the question.

Okay. One second. Okay.

Okay. So I am not positive if it's NPD, but their industry research shows typical headset attach rate for consoles, I believe, is around the 8% to 10% range. And then in terms of whether the new console launch will generate a different trend, I think that's to be seen.

Steve Wagner, Wagner Financial.

Yes, thank you, gentlemen. This may sound like a really dumb question, but Turtle Beach, you guys manufacture headsets and I've been through your website. I'm trying to understand where Parametric's technology fits into headset. And I will have a couple of follow-up questions, but could you just answer that like I'm a five-year old?

Yes. Yes, no, that's actually -- that's quite a good question and glad to answer it. So we don't see an immediate application for the HyperSound technology in headsets themselves.

Okay.

It doesn't mean that there won't be some future use, but because of the way the technology works, it takes a few inches for the sound to actually start to manifest itself. Again, who knows what happens years down the road, but for the gaming category, there are non-handset applications like a gaming sound bar.

Okay.

And because of the way the Parametric system works, the HyperSound, you actually get a headset-like experience without needing to wear a headset.

Got it.

So that's of interest to us for gaming. But again, I'll repeat something that I went through on Monday night. At the heart -- gaming headsets are different than stereo headphones in that they are -- many of our more sophisticated headsets have complex audio processing, digital signal processing, multiple wireless radios, et cetera. And the fit with Parametric from a technology standpoint is -- I would guess, probably half of the secret sauce behind Parametric is sophisticated complex audio processing right up our alley.

Okay.

And so as Ken has mentioned a couple of times, our ability to work together with a lot of commonality in the kind of the technology that goes into Parametric and the technology that goes into the headsets is something that we think we're going to get a very good leverage from.

Okay. So another quick question then, when will you guys be going on the road? You said you're going to do a road show. (multiple speakers)

So post proxy, as soon as -- I mean, for us the key event is to get the proxy out, the full disclosure on everything and we're going to be out immediately thereafter.

Okay. And when do you expect the proxy will be done?

Jim, do you want to comment on the proxy schedule?

Our plans are to file the proxy as soon as possible after the 30-day go-shop period. So we don't have a precise date yet, but our plans are to accelerate that and get it filed as soon as possible after that.

So approximately a month from now then, perhaps?

Correct.

Okay. And then another --

I think a month might be a little bit. I think the target is probably four to eight weeks from now.

Okay. Four to eight, okay. Great.

In that range.

Great.

Okay.

I want to go back to something someone mentioned earlier, the first caller talking about why are we, Parametric shareholders, seemingly kind of stuck with the majority of the cost of this merger, this reverse -- I will call it a reverse merger. Clearly you folks at Turtle Beach wanted to go public. This is a great way for you to do it. It really does seem that it's unfair, however, just from a layman's perspective, or not reading all of the details.

I am really hoping that the proxy material will clear this up, but Mr. Barnes, I think you mentioned earlier that we would be sharing some of it, but the question was asked though was why are we participating in the majority of the cost? Are you saying that we're not participating in the majority of the cost? Tell me exactly what you are saying.

Well, we haven't looked at the budget completely, but we would expect that Turtle Beach will be sharing a big portion of the cost.

Yes, the big could be -- big is nebulous. I mean, does that mean the majority, or who's going to handle the majority of the cost?

But the bottom line is we all are assuming the merger goes through and all of our resources are joined together. So it really wouldn't matter after the closing.

Okay. Fair enough, fair enough. And I would say one last thing, and again, I've been a shareholder with Parametric from day one and been, of course, very, very happy and I am one of these guys that -- I looked at the share price the other today and I think it's all air until we have significant revenue. So the fact that we went from [17 to 12] intraday doesn't bother me one bit.

But what does bother me is when you guys -- when you folks put out a press release about the reverse merger that was so confusing and so -- I don't know, what else to say. I know you weren't able -- I mean, you're telling us and we have to take your word on it that you weren't able to put certain things in there. But it just seems to me -- I've been doing this a long, long, long, long time and reading these documents every single day of my life for 30 years, I've never read something that was so, let's just call it interesting, as that press release and I would only ask, number one, why was it done that way?

And then my other question would be, Ken, is this. And I totally respect you, I remember when you came on board as the CEO of Parametric, I was very excited to hear your foresight, your passion, everything else. And again, this is no disrespect to the folks at Turtle Beach, but was this honestly the best thing that you could have done for us?

I am not sure I understand the second question. I mean, the first question, it is what it is. Obviously everyone intended to do the best job we could do, and part of today's call, getting Juergen on this is to begin adding color as we got feedback from several sources that the picture was incomplete to many people, so we're looking to rectify. And as I have said repeatedly, full clarity comes out as Juergen and I go on the show -- on the road post proxy. Proxy is going to be extraordinarily comprehensive.

And obviously if we didn't think we can build a case that was going to get shareholder support, we wouldn't have gone down this path. So I think -- I feel we've got every card we need to get everybody on board and get rewarded by the shareholders for successfully implementing that. And so that's the answer to one. And I'm not clear on exactly what you're asking on number two. Is Turtle -- let me ask you, give me a really succinct re-ask of the second part of the question, then we'll move on to next call. All right.

(Operator Instructions) [John Grimley], private investor.

Hey, guys. Just two quick questions. First, I just want to touch on market share and whether that market share should be sustainable as we hit this product refresh or the console refresh. And if you can touch on things you're doing to kind of maintain that market share, that'd be helpful as well.

I won't comment specifically on market share, forward-looking market share because obviously there are a lot of things that are not in our control there. I will comment though that we have a license deal with Microsoft. This is in news that you can find on our site, so it's public, where we are a -- we have two licensed Xbox One headsets. Xbox One is the next Xbox console that's coming out. And we are one, as far as we know right now from Microsoft, one of two licensed headset providers for the Xbox One that we feel will be -- put us in a reasonably good position for the transition on the Xbox side.

And then just the second question, the healthcare business, any update on that would be helpful or timing on that or how we should be thinking about that as investors as a value creator over time?

So I think -- John, I think I gave an update which is we are now complete relative to the characterization, testing, to the analysis that we intended to do, the data gathering, the protocol definition, the execution of that protocol. So we've literally checked all the boxes that we set out to check and we convinced ourselves we have something here. And the next key phase for us is to pursue an FDA submission and we now have tech consultants on board helping us towards that submission. And Juergen and I will put a lot of work together collectively in terms of where we go from there, what is the market plan, what's the product definition, what's the bounds of that business. We think it's an extraordinary opportunity obviously and we're going to leverage that.

And then last, just what's the target for timing of getting sound bars out or other Parametric product into the consumer end market?

(inaudible) you are on your third of your two questions, John. So we're going to go on. We're going to make room for one last question from one last caller, please.

Michael Fox, Park City Capital.

Hi, guys. Can you talk a little bit about the synergies that you think you'll have from a product perspective? And then from a branding perspective I notice that -- I understand that Turtle Beach has a strong brand in its space and you chose to keep the Parametric brand, so the products that you don't have today but in the consumer space, how are they going to be branded and just what products or synergies because you talked about lots of different possibilities but there is not necessarily going to be Parametric technology in the headphones. So anything you can talk about with synergies and new products, that would be great. Thanks.

Juergen, do you want to take that?

Yes, I would say synergies on products, I think it's along the lines that we've discussed, strong commonality of technology in the background, but we intend together to build the business that has a consumer segment, a commercial segment and a healthcare segment and have products in all of those with commonality in the engineering and research and development, digital signal processing, supply chain, back-office, all of that. Obviously, we'll be able to apply our global retail distribution into the consumer segment and then build on what Parametric has in commercial and on the future healthcare front.

In terms of branding, I would not -- right now we haven't talked about brands. We've just talked about the name of the company going forward. And I would say that decisions on branding in terms of these different segments, products is something that we have not decided at this point yet. Obviously, we intend though to keep and leverage and protect the very good Turtle Beach brand in the gaming segment.

Okay. Thanks.

Thank you. At this time I'd like to turn the call back over to Ken for closing remarks.

All right. So again I want to thank everyone for joining the call today. And again, I challenge everyone to apply a little vision and realize what's possible in putting these two companies together as opposed to where we've been and that should be the basis for your valuations. And I look forward to giving you another update really soon. Thanks again.

Ladies and gentlemen, this concludes today's program. Thank you for participating. You may now disconnect. Good day.