Good morning. My name is Christel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Zoom Telephonics Third Quarter Earnings Call. We advise you that today's conference call contains forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses and future business outlook. Actual results or trends could differ materially from those contemplated by these forward-looking statements. For more information, please refer to the Investor Relations page for additional risk factors discussed in Zoom Telephonics' periodic filings with the SEC, including the most recent Form 10-Q. Please note, too, that today's call may include the use of non-GAAP numbers. The slides that accompany today's call can be found on Zoom Telephonics website at zoom.net/investors. I will now turn the call over to Jeremy Hitchcock, Executive Chair.

Good morning, and welcome to Zoom Telephonics' Third quarter Conference Call. On our last call, I said that Zoom is at an exciting inflection point, and I'm delighted to talk more about the results of the quarter and also the recently announced merger agreement. We have signed a definitive agreement to merge with software company, Minim, an AI-driven WiFi management and security platform. Zoom and Minim have already partnered on next-generation product offerings. The combined company will integrate Zoom's market recognized Motorola hardware with Minim's connected software to offer integrated intelligent connectivity solutions for the home and ISP markets. On today's call, first, I'll provide the high-level rationale for and opportunities provided by the merger as well as an operational update on Zoom's third quarter. Second, Jacquelyn Barry Hamilton, our CFO, will share more details on the third quarter financial results; and third, Gray Chynoweth, CEO of Minim, will provide more detail into the combined company's objectives and product direction before we open for questions. Now is a great time to turn to the slide information that's provided on investors.zoom.net in the slide packet that was released this morning. If you look at Slide 5 in detail, we share the rationale for this exciting merger. As you know, at Zoom, we design, develop and sell innovative modems and other home networking products under the Motorola brand name and our benchmark show that our modem products are top 3 ranked products in certain retail consumer markets. Zoom was founded in 1977 and remains committed to addressing consumer connectivity needs as they evolve. You were already familiar with Minim, the AI-driven WiFi management security platform that is integrated into our latest wireless product, the Motorola MH7022. With this merger, we can work together on an ongoing basis, from development through sales, to…

Thank you, Jeremy, and good morning, everyone. I will be reviewing our financials for both the third quarter and year-to-date 2020. For those who are following with our earnings presentation from our website, I will be starting with Slide 12. We have a great revenue story to tell this quarter. We have significantly reduced tariff exposure and are employing the use of ocean freight where possible for cost reductions, [indiscernible] factors that have previously weighed down our performance this year. On the top line, our revenues were strong, with Q3 revenue of $12 million. As Jeremy mentioned, this is our highest quarterly revenue result in recent history, up 11% or $1.2 million over revenue recognized in Q3 2019 and up 17% or $1.8 million sequentially over Q2 of this year. Year-to-date, our revenues have increased $7.2 million or 26.7%, from $27 million for the 9 months ended September 30, 2019, to $34.3 million for the 9 months ending September 30, 2020. The growth in our top line continues to be driven by strength in retail demand associated with more working and studying from home due to the pandemic, with particular strength in sales to Target and to Best Buy during the third quarter. We continue to reduce the impact of tariffs as we moved our manufacturing to Vietnam, which as of the end of the third quarter represented approximately 98% of total production. As a result, our gross profit margins improved on a sequential quarter basis, increasing from 20.7% in Q2 2020 to 32.2% in Q3 2020. During the third quarter, we decreased our reliance on airfreight to ship our products from Vietnam to the U.S., which reduced our total freight expense as a percentage of sales by 36%. We will continue to utilize airfreight only if necessary to meet…

Thank you, Jackie. I'm really delighted to be here with you and Jeremy this morning. By way of introduction, I'm currently the CEO of Minim, and was previously Chief Operating Officer of Dyn. While I worked closely with Jeremy to grow the company from 10 employees to more than 500 and set the course for annual revenues to increase from $3 million to $100 million per year. By the time Oracle bought Dyn in 2016, we were providing internet optimization decisions daily for more than 3,500 enterprise customers, including some preeminent digital brands, such as Netflix, Twitter, Pfizer and CNBC. Today, I want to share with you some reasons that we are just so enthusiastic about the combining strengths of Zoom and Minim. Together, we're an extraordinarily well positioned company. We'll be able to drive innovation and growth for the benefit of customers, employees and shareholders. Looking at the management team of the combined company on Slide 15. You can see that we have an experienced top notch group that blends people and capabilities. I'm just simply thrilled to be here back in the side of Jeremy. We experienced great success together at Dyn, and I look forward to working with him and the rest of the management team to generate similar success with the combined company. I'm particularly excited that Alec Rooney and Nicole Hayward, who'll be key members of the combined management team. Alec was a Co-founder of Minim, and his background includes networking and security at HP, Agilent, Meetinghouse and Cisco. Nicole Hayward, also a Co-founder of Minim, previously served as Chief Marketing Officer, as software companies Antidote Technologies and OnSIP, which was recently acquired by Intrado. In terms of the structure of the combined company, the merger -- this is a merger of equals that transforms…

Thank you, Gray. There's no question that this merger provides a clear path forward with a sustainable business plan that allows us to participate in an exciting and growing market, global wireless technology, with proprietary products on a SaaS basis. I look forward to building a vertically integrated franchise with an innovative hardware-software road map with higher market multiples and a healthy growing business. Operator, we are now ready for questions.

[Operator Instructions] Your first question comes from the line of [ Albert Hanser ].

Congratulations on a great pathway. 2 separate but quick questions. One, can you break down the $30 million headline number? Are there benchmarks or earn-outs associated with that number in time if certain metrics are hit and kind of give us more color on the structure of that number? And then separately, with the new product 720, just some of the metrics around the device and its Wi-Fi capacity and kind of drill down into the differentiator of that product cycle?

Thanks, Albert. Good to hear you. I'll take the first question on new products and metrics. I believe you'll be seeing more to come on that. We think that SaaS revenue will be an important part on an ongoing basis. Certainly, the way that the numbers lay out, it takes a while for the SaaS numbers to show up in a meaningful number, but on a counted as a customer acquisition number and more traditional SaaS metrics, I think, are ways to blend that. So stay tuned to that question. And then for the first part of the question around the acquisition valuation and the structure, I'll turn it over to Jackie.

With respect to the acquisition valuation, the company conducted its own analysis, and we also employed the assistance of third parties to help the company develop a fair and unbiased valuation for Minim. All aspects of the company's financials were looked at. We also looked at the company's prior credit company valuations. And looked at comparables in the market.

Is all $30 million being issued today upfront? Or is it staggered according to certain earn-outs and metrics hit by the company as you integrate the 2?

There are no earnouts or staggering based on performance metrics. It is a stock transaction. And it will all take place at the same time.

[Operator Instructions] Presenters, we have no further questions.

Thanks to everyone for joining us this morning, and we look forward to updating you on our progress. Thanks, and be well.

This concludes today's conference call. You may now disconnect.