Greetings, and welcome to the Blonder Tongue Third Quarter 2018 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Bob Pallé, CEO of Blonder Tongue. Thank you. You may begin.

Thank you. Good morning, everyone. Welcome to Blonder Tongue's 2018 Third Quarter Financial Reporting Teleconference. We thank you for your participation. Before we begin this morning with any details of performance, I'd like to preface my remarks and those made by other Blonder Tongue representatives who may be speaking today by reminding you that we will be discussing certain subjects which will contain forward-looking statements, including management's view of our prospects and evolving trends in the marketplace. As you know, the future is impossible to predict so I caution you that actual results may differ from those that may be projected in our comments this morning. For additional information concerning factors that could cause actual results to differ from the information that will be discussed this morning, I would ask you that you refer to our prior SEC filings, our Form 10-Qs for the first, second and third quarters 2018 and prior quarters, 10-Ks for years 2017 and 2016, the 10-K/A filed on April 30, 2018, and the 8-Ks filed periodically, but especially the 8-K/A filed on October 9, 2018, which explains in detail the current status and conditions regarding the sale of the Old Bridge property referred in today's press release and the 8-K filed on October 30, 2018, which affirmed the appointment of Ted Grauch as the Executive Vice President and Chief Operating Officer of the company. With me today are Steve Shea, Chairman of the Board; Ted Grauch, Chief Operating Officer; and Eric Skolnik, Chief Financial Officer. All of us will be available to answer any questions you may have during the question-and-answer period that will follow our presentations. First, I'm extremely pleased to introduce to you, and welcome to the Blonder Tongue family, Ted Grauch, BT's Executive Vice President and Chief Operating Officer, and allow him to provide his comments. Following Ted, I will provide my remarks. And following my remarks, Eric will provide his financial report. Following Eric, we will open the call up to a question-and-answer session. Ted, welcome to Blonder Tongue.

Thanks a lot, Bob. I'm really excited to be joining the team and I've known of and worked with Blonder Tongue products since me practicing electrical engineer back in the 1980s. The company has a great reputation for creating extremely reliable products for high quality and deep industry involvement and a long history in this industry. We've got a great technology team, engineering team and world-class U.S.-based manufacturing. We've also got really loyal customer base for a wide range of our products around the country. I'm looking forward to helping the team grow the business in 2019 and beyond. Back to you, Bob.

Thank you, Ted. Before I continue with any new information, the essence of my third quarter press release comments bear repeating. We're reasonably pleased with the slight increase in third quarter revenues. However, we are concerned regarding revenues for the remainder of 2018. As an update to the sale of the Old Bridge property, although the completion of the sale has been delayed, we received deposits totaling $500,000 in anticipation that the transaction will close as planned in January 2019. Also as was planned, we experienced higher operating expenses in prior periods due to the new product introduction phase of our NeXgen Gateway and upgraded DOCSIS 3.1 Fiber Optic product lines. Both of these introductions were well received at the SCTE Cable-Tec Expo in October and are anticipated to provide revenue growth as 2019 unfolds. During the second quarter financial reporting teleconference, we indicated that an 8-K had been filed on August 6, 2018, disclosing that we entered into a contract to sell and leaseback the Old Bridge property from the new owner and that we anticipated that the transaction would close in early November. Although the closing has been delayed, the referred deposits have been received into the company's operating account. The deposits are subject to certain obligations and conditions, the particularity of which are described in the aforementioned 8-K/A. However, the fact that we have received them, coupled with the acknowledgment that the due diligence period has expired, greatly raises our confidence that the transaction will close as anticipated. Basically, reexpressing what was stated -- what was stated earlier in the last teleconference, if the sale of the property closes in early 2019, as we anticipate that it will, our company will be debt-free with significant cash reserves positioned to invest more aggressively in the development and promotion of new products. Now I'd like to turn the call over to Eric Skolnik. Eric?

Thank you, Bob. Net sales increased $50,000 or 0.9% to $5,626,000 for the third quarter of 2018, from $5,576,000 for the comparable period in 2017. Net loss for the 3 months ended September 30, 2018, was a loss of $199,000 or a loss of $0.02 per share compared to a loss of $153,000 or $0.02 loss per share for the comparable period in 2017. The increases in sales is primarily attributed to an increase in sales of digital video headend products offset in part by a decrease in sales of data products. Sales of digital video headend products were $2, 814,000 and $2,100,000 and data products were $1,112,000 and $1,782,000 in the third 3 months of 2018 and 2017, respectively. For the 9-month period ended September 30, net sales decreased $1,447,000 or 8.2% to $16,266,000 in 2018 from $17,713,000 in 2017. Net loss for the 9 months ended September 30, 2018, was a net loss of $597,000 or $0.07 loss per share compared to a loss of $640,000 or an $0.08 loss per share for the comparable period in 2017. The decrease in sales is primarily attributed to a decrease in sales of data products, analog video headend products and HFC distribution products offset in part by an increase in digital video headend products. Sales of data products were $3,566,000 and $5,168,000. Analog video headend products were $1,234,000 and $1,360,000. HFC distribution products were $2,345,000 and $2,545,000, and digital video headend products were $7,899,000 and $7,330,000 in the first 9 months of 2018 and 2017, respectively. Now I'd like to turn the call over to our Q&A session.

[Operator Instructions] Our first question comes from the line of [ Greg Irvin ], who's private investor.

Could you elaborate at all on what the future holds as far as for the rollout of both the NeXgen and DOCSIS 3.1?

Well, we're really excited the buzz we created at the SCTE Cable-Tec Expo just last month. And our initial discussions, testing process with all of the MSO prospects and others have been extremely positive. But do you need more...

Well, what's the order flow looking like in the near term?

Well, we're -- right now we're in a period where the MSOs are preparing their budgets for next year. And so we're into that budget process with a number of them with our products for the first time. And so these will be primarily 2019 purchases. So we see the uplift coming during 2019, and that's why I expressed concern about revenues in the fourth quarter. That's why we said what we said. So I'm not sure if that's helpful or...

Well, do you anticipate some of the orders coming in sort of at the same size over time? Or might there be some lumpiness with large orders placed when they do begin to flow?

That's a good question. And for -- you've been in our court here for a while.

For years, right.

I know. And so then you know that for me to say, "Well, it's not going to be a lumpy order flow anymore," is -- that's kind of unrealistic expectation, right? So the order flow is going to be lumpy, but we think that the order flow is going to increase over time because of the reception that we've gotten from interacting with the prospects and the customers. But just really, really pleased -- I couldn't be more pleased with the rollout.

I assume then that it's a demand, not a supply, in that you haven't designed and developed and manufactured the models for the NeXgen, but it's more on the demand side, correct?

You're -- I apologize because your question completely confuses me. Yes, there's definitely a demand for our product and especially because our product is so much more modern than the currently being shipped products, and the pricing is so much more favorable for our product line. And the future proof of our product compared to the others is so much more favorable. And so this is the -- and it's just easier to drive, it's easier to use. And so we're the last guys to go so we should be better, and the initial feedback is that we're better. So...

Right. Well, looking at the -- comparing quarters sequentially, despite your concern about what the third quarter was going to look like and the fourth, you've managed to at least tread water and the headend products are up. Only the analog looks like it's going down, which leads me to that question about, that was raised in prior calls, are the -- I assume most of the analog equipment comes from China. Are the -- had the tariff factor is still there in front of us?

The tariff issue is still in front of us but being worked. So we're in a period right now where the tariffs are 10% on certain products that we import. And the most noteworthy of those would be the analog headend products that you refer. But we're working the other products to mitigate those tariffs. And as you said, the analog is going down. Right now 10% is a fairly modest tariff. But after January 1, now we go to 25%, so this could become a little bit more serious. But we do not foresee it, if the advice we have is correct, that being a huge impact, be a modest impact.

And then, [ is it primarily on ] the analog?

Oh, that's currently -- our research tells us that, that's where it is. But the customs, CBT can change your mind at any moment and force you into categories you don't agree with, and then there's legal expenses to defend that. And there's -- you could -- it can get ugly quickly and totally not under our control. We've gotten -- we've invested in legal advice, and we've recently received legal advice that's reasonably favorable to all of the big-ticket items that we're involved with. And we have mitigating strategy should CBT take it upon themselves to change the categories that we're importing under, but we have a very strong defense for why we're importing under the numbers that we're importing. But there's a lot of gray area. As you know, there is a convergence and a confluence of telephony and data transmission and entertainment, a full-motion video. And so this tends -- or can blur the interpretations where back 15 years ago, the categories were extremely bright lined. The differentiation was extremely bright lined, but we just have to -- we're doing our homework, and we'll have just have to be mindful of what they do. And one thing that we have is we have a factory that -- where we can move stuff back reasonably quickly and mitigate any adverse tariff action taken by the CBT that we don't foresee at the present time. Just to emphasize again, we don't foresee that but it can happen because it's not in our control.

Thanks for that explanation, and I hope that any components that might be required for the rollout of the new products wouldn't be adversely affected or ability to produce those products wouldn't be handicapped too much by traffic -- international traffic. I know 3 or 4 other companies that I follow, and they are all invested in manufacturing across borders. They're all affected by what's happening in the tariff world.

Well, I'm not sure whether they have the ability like we do to start building things that we're now importing.

No. That's one of the things that attracted to me about Blonder is relative self-sufficiency, the what I take to be relative self-sufficiency.

Well, that's -- we think that's one of our strong points, so -- but you did mention something that I want to address because you talked about components. Now where the components -- the country of origin for the components are what they are. And so silicon devices and whatnot. The fab is in where they're doing the fab now. The guys like Broadcom can move things from country to country. To mitigate that, but that's not necessarily mean that we are in control of telling them what to do. So but we're talking about the component cost level, not at the finished goods cost level, right? So -- but we are -- we think that -- we've analyzed that, and we think that the impact is modest with respect to the components that we have identified as China country of origin.

Okay. And finally, with respect to -- could you -- is the roofing and the title search and all that is -- is all that going according to plan for the -- I'm talking about the sale of the facility.

So you're talking about the sale of the facility. What's our take on...

Yes. Everything is going according to plan, yes.

I asked specifically about the roofing because as the weather turns colder, not knowing what kind of roofing you're doing could become more problematic. I hope that's solved?

We have a 20-year lifetime roof that we're like 8 years into, and it doesn't leak anywhere. And it has a 20-year warranty where they're responsible for fixing anything that should go wrong with it. So we think we're -- we made a major investment in that like 8 years ago, and so we think we're covered right now. Is that helpful?

Yes, yes, yes.

There are no further questions at this time. I would like to turn the call back over to Mr. Pallé for any closing remarks.

Thank you very much for your participation. And I will speak with you again at the year-end teleconference in April, Eric, or thereabouts? Thanks again.

Thanks, everybody.

Thank you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Thank you.