Good morning, ladies and gentlemen. Welcome to the CTI Industries Corporation announces its Second Quarter and Year-to-Date 2016 Financial Results Conference Call. This call is being recorded. This conference may contain forward-looking statements, as defined in Section 27A-1 of the Securities Act of 1933 as amended, including statements regarding, among other things, the Company’s business strategy and growth strategy. Expressions, which identify forward-looking statements, speak only as of the date this statement is made. These forward-looking statements are based largely on this Company’s expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond their control. Future developments and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. I'll now turn the call over to Mr. Stephen Merrick, President. Please go ahead, sir.

Good morning, everyone, and thank you for participating in our call. My name is Stephen Merrick. I am the President of CTI, and I will be presenting our report with Tim Patterson, our Chief Financial Officer; and Stan Brown, Director of our Company and Director of Investor Relations. At the conclusion of our report, there will be an opportunity for you to ask any questions you may have. In general, our second quarter results were reasonably good and in line with our second quarter results over the past several years. As we progress this year toward what we expect will be the strongest year in our history. As recently reported, we have received purchase orders for 168,000 units of our branded vacuum sealing machine products and for associated film products for delivery in November. The orders have a total purchase order value or about $7.9 million. These orders are in addition to our other anticipated orders for all of our product lines during the third and fourth quarters this year, so we are anticipating a substantial increase in total company revenues this year compared to 2015. Typically, our second quarter is our weakest quarter of our year. However, we did have an overall increase in sales of about 4% for the quarter compared to the second quarter of last year. We had strong increases in sales in several of our principal product lines, including our branded vacuum sealing product line, our home organization product line, foil balloons, and our commercial film products. However, we did experience weakness in our latex balloon product line, which affected both our net sales and our profitability for the quarter. I'll get into some details on each of these areas, but let me first summarize the results for the quarter and for the first six…

Absolutely. [Operator Instructions] We'll now take our first question from Steve Snipner with Star Bridge Investments.

Hey Steve. How are you doing?

A couple of questions. On some of the prior calls we had discussed that the company was sticking their toe into contemplating some hedges on the latex when that was more of an issue. Have you guys thought about doing any currency hedging with the peso issues that have been coming up?

We are exploring that possibility and we've not done any currency hedging to date, but that is something that we are exploring for potential application in the future.

Okay. Also you had indicated obviously with this large order that you announced a couple of weeks ago delivery in the fourth quarter, you're referencing increased cash coming in fourth quarter, first couple of months. Is that just -- it's a slow delivery and then you are just getting paid 30-60 behind that, or are there additional sales that you are referencing with that cash flow?

Well, we expected our sales in the fourth quarter will be in general strong as they are. In addition to that, we have a major order that we've reported, but we'll receive payment on sales over the period of time. However, with respect to the major order payment, with respect to that order and some of our larger sales in the fourth quarter will come at the very end of the year or in January.

Do you have any -- I assume this is some sort of a stocking order. Do you have any sense assuming sales are -- or to projections what kind of follow through orders may be there, what type of an order of magnitude may be a reasonable expectation; 25% of those level. I assume they're not going to continue ordering at the pace that an initial order is placed. Do you have any sense of how that may play out?

Well, this is a single -- in that particular case, it's a single order for a promotional activity. However, that is a customer which we have an ongoing substantial relationship and with whom we expect to continue to have significant orders.

Oh, so this is from an existing customer, not opening up something new?

Right.

Got you. Just refresh my memory, I don't have the Ks or the Qs in front of me, when is the actual mezzanine loan due assuming you haven't paid it off early as you anticipate?

December 2017.

Okay. So one way or another it's a 2017 event is your expectation, hopefully sooner rather than later, but it's a 2017 event. Okay. Great quarter. Thanks guys.

Thank you.

[Operator Instructions] We will now take the next question from [Vincent Gargano].

Hello.

Good morning.

Good morning.

Good morning. Good quarter. So future looks exciting. Do you anticipate recognizing all the revenue from this big order in the fourth quarter?

Well, we'll recognize revenue in the sense that all of that -- or that order will be billed in the fourth quarter, not all of the payment will be received in the fourth quarter.

Okay. And you have any issue completing this order?

Well, we’re working day and night to make sure that we get it right.

Okay. Could you talk about the new latex machine coming online?

Sure. It’s a significant new machine, one of the things that's a little bit hard to picture is that these latex production machines are actually quite large, probably 60, 70 yards long. So they're big machines.

Okay.

This machine has been in construction most of this year so far, and it did go online in production in July, so we are expecting it to generate product and sales at a good rate during the second half of the year. It did not -- we had hoped that it would have been online sooner than July, but it is a new machine, and it’s one that’s been constructed and it’s a very good one, but it took until then to get it functioning well. It should increase our capacity in the range of 30% overall.

Okay, I understand that. So sales were down for latex balloons. Do you anticipate the machine helping fulfill sales or was it just the orders were soft? I'm trying to understand how the machine is going to increase your latex sales basically.

Okay. To some degree, the machine will increase our overall unit sales, because it will increase our capacity. There is a dynamic there of the peso and volume. One of the reasons that our dollar volume was down of course was the fact that the value of the peso against the dollar was down. And in general, our production was at or close in terms of unit volume, was at or close to what it had been before. However, that had got pretty close to capacity and so the effect here will be that the new machine will increase our capacity and will increase our total sales. What exactly the impact of the peso going forward will be, we don’t know, but we do think that the effect of the peso declining against the dollar will moderate in the future, which will help in terms of our results as well.

Okay. Any anticipated margin improvement with the new machine or stable?

I think our margin -- I don’t know that we anticipate a significant increase in margin, but I think we're going to be able to maintain what were pretty good margins in that product line in the past.

Okay, I am excited too. One last question, the mezzanine loan, the outstanding balance is $5 million currently?

It is, yes, that’s correct.

Okay. I'm excited to see these fourth quarter numbers and hopefully a good 2017.

We're working to get there.

Good, good. I like the stock too, looks good.

Thank you. Appreciate your help. Thank you.

And that concludes the question-and-answer session for today. I would like to turn the conference back over to Mr. Stephen Merrick for any additional and closing remarks.

Thank you, everybody for participating in our call this quarter. I look forward to reporting over the next couple of quarters as we progress towards what's going to be a very exciting year for us. Thank you much and talk to you soon.

Thank you. And that does conclude today's conference. Thank you for your participation. And you may now disconnect.