Aug 11, 2013
Executives
Steven Hooser – IR Ken Potashner – Executive Chairman Jim Barnes – CFO, Treasurer and Secretary Juergen Stark – CEO of Turtle Beach
Analysts
Mark Stafford – MOGN Michael Fox – Park City Capital Louis Basenese – Wall Street Daily Brian Gerber – Prudent Money Steve Wagner – Wagner Financial John Grinly – Private Investor
Operator
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 call over to Steven Hooser [ph] Investor Relations Representative. You may begin.
Steven Hooser
Thank you, Latoya. Good afternoon everyone and welcome to Parametric Sounds 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 at 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 intent 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.
Ken Potashner
Thanks, Steve. I’d like 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.
At the start, we’ll have Jim Barnes review our financial performance for the quarter.
Jim Barnes
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 on balance sheet items and then I will turn the call back to Ken. We are very pleased with the progress we’ve 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 chains 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 projection. 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 large second quarter. Well 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 cost were $2 million for Q3 including $519,000 of non-cash option expense. We also incurred approximately $300,000 of strategic transaction cost consisting of legal, accounting and investment bank fees during Q3.
We also spent a lot of internal effort time and cost supporting very intensity merger related patent, legal, financial and business due diligence. For Q3 of the prior year, total operating cost were $1.7 million including $849,000 of non-cash option expense.
We extended approximately $50,000 of direct cost on HyperSonic Health Development in Q3 plus some additional support cost. If you exclude the strategic transaction cost monthly operating cost 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 expenditures 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 cost associated with the Turtle Beach merger during our Q4, 2013 and in Q1 of fiscal 2014. We expect the merger to close during our Q1, 2014 that ends in December, 2013.
Future merger cost 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 cost, well 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 exercise of warrants and options. Our cash position at June 30 was $3.3 million and has been supplemented $182,000 of cash for warrant [ph], exercises so far in Q4.
We believe our cash resources along with growing margins from increased sales are sufficient to fund normal operating cost during the next 12 months. We intend to obtain additional resources as a result of the increase cost related to the merger.
As we’ve 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.
I will now turn the call back to Ken.
Ken Potashner
Thank you, Jim. Although I’m sure everybody wants to discuss the merger first, we are going to do that last and have Juergen and his perspectives at that time.
With significant positive progress to report on our core businesses and I want to make sure 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 are making in our pilot initiatives.
We continue to receive consistently good news on these pilots and one of the substantial opportunities for ourselves is 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 perceive with plans previously announced installations and growth we built it there.
And we’ve also now launched additional new pilots in multi-billion dollar global consumer electronic company applications. 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 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 affectivity 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 we have a very happy individual, who is hearing his T.V. for the first time in many, many years, maybe even decades and we’ve a happy wife, who can sleep in the next room, without having a blaring T.V.
keeping her up at night. On the IP licensing side, we’ve collaborated with Turtle Beach relative to their sensitivities on whom they’ll feel comfortable with us having appropriate licensing discussions.
And we are in the process based on their input of beginning to reinvigorate some of the licensing dialogs that we put on hold, as we run 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 their 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 their Turtle Beach concluded that they want to go in much broader than the 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’re going to make a company that’s the company bet with us, which they’re 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 are going to collaborate very closely with Turtle Beach to make sure that their synergistic approach is to any and all licensing discussion.
Additionally, we continue to drive further improvements in our technology and our new emitter design that I’ve discussed previously is result in high performance results that we’re very pleased with and also low-cost objective 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 onto the merger, as we stated.
We intend to combine our great invention. Our great innovation 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 are going to be able to mutually broaden our product lines, accelerate our activities all the things that I’ve 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 sets in place.
We will fully take advantage 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 prospects of this. I’m going to assume that everyone has taken the time to read the press releases that Juergen and I’ve put out relatively 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 are very anxious.
Juergen and I myself to get that proxy out. So we can tell the full story and get everybody as excited as we’re, so you all most definitely will have the opportunity to do that will be on the road and we have, what we think is a compelling story to tell them.
We will tell that story. What we will do today, though Juergen is going to give some additional remarks that for your benefit and then we will proceed to that and to 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 bounce and what’s out of bounce 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.
Juergen Stark
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’s 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 contains 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 to provide basic stereo headphones.
And we have a very strong market position in the specialized gaming focus 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 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, so they may vary by few millions 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 holiday’s 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 release.
Our business results in particular will be very much dependent on one; how consumer purchasing behavior for more expensive accessories like headset plays out, heading into the transition. Two; when the new console launches will happen and three; what quantity of new consoles will be available in sold during the weeks between the launch and the year end.
That being said in the past, there is been a renewed growth of a gaming category after the transition period, after new console launches. Industry analyst 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 will occur. With that as background and keeping in mind, some of the additional variables, I’ll go into a minute; we expect our 2013 revenues to be in the $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 iSeries products that we announced at E3.
We are 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 cost related to the merger with Parametric or any extraordinary cost it 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 to impact this year as well as availability of some specific components from Microsoft required for sale of our licensed Xbox 1 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 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 turned out to be inaccurate.
I’m hopeful that this additional color on our performance clearly demonstrates the good business we’ve built; again I’ll refer you to industry analyst views of the council transition and their projections for their future. As I mentioned in our call earlier this week, we are an audio technology company that is 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’ll turn it back over to Ken.
Ken Potashner
Thanks, Juergen so 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 their 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 are going to benefit greatly from Turtle Beach’s market share leadership.
We have alliance shared that opportunity and I’m confident that Juergen and the team are going absolutely go achieve that. And this of course was a very key consideration for us in the transaction.
I’m also glad that Juergen said that he’s 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 are going to outperform and in the ability that Juergen demonstrated previously to achieve market share leadership we should be able to sustain that. So with that, we are anticipating everyone’s is going to balance – dramatically as a result of success.
So we are going now move to the Q&A part of the call and again, I want to make the statement that we are 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 are going to not be shy in telling you that a balance.
You’re going to need to wait until the merger comes out. The intent to – if there’s further clarification on anything that Juergen said today or that we’ve released previously publicly released or provide clarification but we’re not going expand the boundaries of what we’ve disclosed, until we do get to our proxy statement.
So with that, let’s open up the Q&A phase.
Operator
Thank you. (Operator Instructions) and our first question is from Mark Stafford of MOGN.
Your line is open.
Mark Stafford – MOGN
Hi Ken, why is Parametric picking up so much of the cost of this merger, when it seems when we are only getting 20% of the new company?
Jim Barnes
Well we’ve to pay our own legal cost and cost till we file the proxy at least. So we’re, we have a sharing arrangement that will be bearing big portion of the cost, but there is some cost sharing and part of it is just legally, it’s partly our cost up at least until the shareholder vote process.
Ken Potashner
And that was Jim Barnes, our CFO of course commenting.
Mark Stafford – MOGN
Okay, thank you.
Operator
Thank you and the next question is from Michael Fox of Park City Capital. Your line is open.
Michael Fox – Park City Capital
Good afternoon guys. Juergen, can 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 you can give us some same context with regard to sales trends in the category to the last cycle.
It looks like you put some of that on the slide, but can you give us some historical contexts around margin and sales, that would be great?
Juergen Stark
Yes, I’d Michael I’d refer you to the analyst report that cover the consoles 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 they typically what we’ve seen that the buying cycle kind of restarts, but in general there’s a lot of very good coverage.
It will go into a lot more detail obviously after the proxies filed, but you got to be able to get good coverage from some of the industry analyst reports around this.
Michael Fox – Park City Capital
And when you think about the cycle, when times like the new consoles are coming out for the holidays this year, so in anticipation would you guys kind of ramp up production, headed that so that your products are available same day or how do we think about that?
Juergen Stark
Yes we have, we’ve announced that we have two licensed Xbox One headsets, you can read about that on our website and so we are working closely with Microsoft and targeting and hopeful obviously that will have those available for launch at the same time as the console.
Michael Fox – Park City Capital
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?
Juergen Stark
Price points are, you can find all that on the website. And there we have headsets that are that span multiple price points from $50 up to $300 and the two Microsoft Xbox One license headsets are fall roughly in the middle of the range.
I believe one’s $99 and one is $159.
Michael Fox – Park City Capital
Okay.
Ken Potashner
I’d like to let other people get questions and so let’s move on to next caller.
Operator
(Operator Instructions) The next question is from Louis Basenese of Wall Street Daily. Your line is open.
Louis Basenese – Wall Street Daily
Hi Ken, congratulations on the deal. Appreciate the extra color on the margins.
Juergen, can you just give us some clarification for that 2013 number. How much is going to be spent on CapEx for that iSeries rollout?
Juergen Stark
Let’s wait for the proxy.
Louis Basenese – Wall Street Daily
Fair enough.
Ken Potashner
I think that’s right Juergen.
Juergen Stark
Guys, I’m chopping 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 I’d have least of the comments today helps everybody understand their business a little bit better.
Louis Basenese – Wall Street Daily
Ken, quick question for you before moving on to just some of the pilots and stuff. The last call you said, you were excited about the term sheet and that’s understanding that those negotiations that came in after that, but in light of where the shares closed today about $16, would you still make that characterization?
Ken Potashner
Yes, we don’t go into a transaction like this saying what’s the stock and they look like the next day, right? So both companies have done exhaustive modeling and diligence in terms of what is the company that we can build for tomorrow.
What does the combination of this technology with Juergen, with Turtle Beach’s strength, 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 you’d stack 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, we’re better that happens when that occurs and we do with unique advantages. And then I answer that, acceleration on HHI, I add to it the ability.
I mean, if I get all this great commercial demos and pilots going great, but I don’t have the financial wherewithal to service the demand I’m making, I really haven’t achieved much. So one of the key questions, some I’ll ask Juergen and I’ll answer on behalf of Juergen.
Although, I’ll be interested in his comments is, gee do you shut everything down and turn us into an expanded headset company or do we position ourselves to go very broad with the initial that we’ve laid out. And the answer is, I mean the only I would have done this deal is to get commitment from the Turtle Beach side that we go with a broad agenda and to create the models you can’t do, say okay, who do you think is in this category, what’s the reader [ph], what’s the appropriate multiple, that’s most of light up by 20% to get, to see what that means to 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 multiple, we’re going to just provide 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 that’s an exciting case.
Louis Basenese – Wall Street Daily
A question in the press release you talked, some of the customer demonstrations for the emitter technology rolling out into production. Can you provide some more information on that or any of these, the three core developments projects that we talked about on the last call.
Is there something new there?
Ken Potashner
So on those, we’ve 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’s formal announcements. So we won’t be able to add color until there is color to be added.
Louis Basenese – Wall Street Daily
Okay, last question. I’ll jump back in the queue, if I have any more.
Just about the NDA’s 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 or how of many of them are active, can you comment on that or do you believe they’ll be active?
Ken Potashner
So I’ll comment it from the perspective of your need to visualize what business that Turtle Beach/Parametric are wanting to go attack themselves from a product perspective, right? And you’ll need to effectively carve that out, so if we have this licensing universe of here’s all the kinds of companies we are talking to, therefore this 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 [ph] capability that will be absolutely influential and RV [ph] influential in who we are talking to, but we’re talking to some major guys and Juergen and I are excited about who we’re talking to. We won’t announce anything until it’s announceable.
Louis Basenese – Wall Street Daily
Okay, but is the number 10, 15 that might still be active. I’ve got imagine that with part of the discussions.
Ken Potashner
That’s not a meaningful, they’re major categories. Let me leave it that way.
They’re still major categories left that are going to be relevant to us from a licensing view.
Louis Basenese – Wall Street Daily
Okay, thanks. Gentlemen.
Operator
Thank you. The next question is from Joshua Westport of Westport Holdings.
Your line is open. Joshua, (inaudible).
The next question is from Brian Gerber of Prudent Money. Your line is open.
Brian Gerber – Prudent Money
Yes, this is a question for Juergen. I’ve read some of the industry research on the different hardware cycles and with the price of the Xbox.
What I’m not clear on is tax [ph] rate, (inaudible) with new product sales to the hardware? What’s the historical experience there and more importantly is there anything in mid-cycle that could make a difference such as input device that changes or some catalogue that caused me to buy a new headset that wasn’t new (inaudible) Turtle Beach.
Juergen Stark
So tax [ph] rates for headsets, I can site I believe an NPD number.
Ken Potashner
One second, Juergen. Whoever asked the question, can you mute your phone because we’re getting a lot of feedback?
Operator
Would you just like me to close his line of?
Ken Potashner
Close his line of and then Juergen will answer the question.
Operator
One second. Okay.
Juergen Stark
Okay, I’m not positive if it’s NPD, but their industry research shows typical headset tax [ph] rate for console, I believe is around 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.
Operator
All right and the next question is from Steve Wagner of Wagner Financial. Your line is open.
Steve Wagner – Wagner Financial
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 have a couple of follow-up question, could you just answer that like I’m five-year-old.
Juergen Stark
Yes, no that’s actually that’s quite a good question. I’m glad to answer it, so.
We don’t see immediate application for the HyperSound technology in headsets themselves. 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 non-headset applications like a gaming sound bar and because of the way the Parametric system work, the HyperSound. You actually get a headset like experience without needing to wear a headset, 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 then stereo headphones. In that, many of our more sophisticated headsets have complex audio processing, digital signal processing, multiple wireless radios etc.
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. As Ken has mentioned a couple of times, our ability to work together with a lot of commonality kind of the technology that goes into Parametric and the technology that goes into the headset it’s something that, we think we’re going to get very good leverage from.
Steve Wagner – Wagner Financial
Okay, so another quick question. When will you guys be going be going on the road?
You said, you were going to do a road show?
Ken Potashner
So post proxy, I mean for us the key event is get the proxy out, full disclosure on everything and we’re going to be out immediately thereafter.
Steve Wagner – Wagner Financial
Okay and when do you expect the proxy will be done?
Ken Potashner
Jim, do you want to comment on the proxy?
Jim Barnes
Our plan I’m sorry to file the proxy is 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 out as soon as possible after that.
Steve Wagner – Wagner Financial
So approximately a month from now then perhaps.
Jim Barnes
Correct.
Steve Wagner – Wagner Financial
Okay and then another.
Juergen Stark
I think a month might be a little bit, I think the target is probably four to eight weeks from now.
Steve Wagner – Wagner Financial
Okay, four to eight. Okay, great.
I want to go back to something someone mentioned earlier. The first caller talking about, why are we Parametric shareholder seemingly kind of stuck with the majority of the cost of this merger, I’ll call it a reverse merger.
Clearly, you folks at Turtle Beach wanted to go public, this is 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’m really hoping that the proxy material will clear this up, but Mr. Barnes like you mentioned earlier that you know we would be sharing some of it, when the question was asked though was, why are we participating in the majority of the cost?
Are you saying that we are not participating in the majority of the cost, tell me exactly what you’re saying?
Jim Barnes
Well, we haven’t worked at the budget completely, but we would expect that Turtle Beach would be sharing a big portion of the cost.
Steve Wagner – Wagner Financial
Yes, but big is nebulous. I mean, that’s means majority or who’s going to handle the majority of the cost?
Jim Barnes
That the bottom line is, we all are assuming the merger goes through and all the resources are joined together. So it really wouldn’t matter after the…
Steve Wagner – Wagner Financial
Okay fair enough and I would say one last thing and I again I’ve been a shareholder with Parametric from day one and then of course very, very happy and I’m one of these guys I looked at the share price the other day and I think it’s all air until we have significant revenues. So the fact that we went from $17 to $12 intraday doesn’t both me one bit, but what does bother me, is when you guys, when you folks put out of 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, but you weren’t able to put certain things in there, but it just seems to me. I’ve been doing this a long, long time in reading these documents every single day of my life for 30 years.
I never read something that was so let’s just call it interesting, is that press release and I would only ask, number one why was it done that way and then my other question would be is this and I totally respect you and I remember when you came onboard 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?
Ken Potashner
I’m 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 colors.
We’ve got feedback from several sources that the picture was incomplete to many people. So we’re looking to rectify and I said and as I’ve said repeatedly full clarity comes out as Juergen and I go on the road post proxy.
Proxy is going to be extraordinarily comprehensive and obviously, if we didn’t think, we can build the case that’s 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, 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 clearly think re-ask of the second part of the question, then we’ll move on to next call.
Operator
(Operator Instructions). John Grinly, Private Investor.
Your line is open.
John Grinly – Private Investor
Hi guys, just two quick questions. first 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 would be helpful as well.
Juergen Stark
I won’t comment specifically on market share forward-looking market share because obviously there are lot of things that are not in our control there. I will comment though, that we have a license deal with Microsoft this is news that you would can find on our sites, 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, per Microsoft one of two licensed headset providers for the Xbox One that we feel will be put us in a reasonably good positions for the transitions on the Xbox side.
Ken Potashner
Okay, all right.
John Grinly – Private Investor
And then just a second question. The healthcare business, any update on that would be helpful or timing on that or how we should be thinking about that is investors as a value creator overtime?
Ken Potashner
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 literally check all the boxes that we set out to check and we’re convinced ourselves we have something here and the next key phase for us is to pursue and FDA submission and we now have top consultancy on the word 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 balance of that business? We think it’s an extraordinary opportunity obviously and we’re going to leverage that.
John Grinly – Private Investor
And then last, just what’s the target for timing of getting sound bars out of other Parametric products into the consumer end market?
Ken Potashner
You’re 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.
Operator
Yes, so the next person is Michael Fox with Park City Capital. Your line is open.
Michael Fox – Park City Capital
Hi guys, can you talk a little bit about the synergy, do you think you’ll have a 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 where the products that you don’t have today, but in the consumer space how are they going to be branded and just what products are synergies, could you talk about lots of different possibilities but there is not necessarily going to be Parametric technology in the headphone? So anything you can talk about with Synergies and new products that will be great.
Thanks.
Ken Potashner
Juergen, do you want to take that?
Juergen Stark
Yes, I would say synergy is on product. I think it’s along the lines that we 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 product in all of those with commonality in the engineering and research and development in 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 on the future healthcare front. In terms of branding, I would not right now all we ever talked about brands.
We’ve just talked about the name of the company going forward and I would say, the decision is on branding in terms of these different segments and products is something that we have not decided at this point yet. Obviously, we intend though to keep in the leverage and protect the very good Turtle Beach brand in the gaming segment.
Michael Fox – Park City Capital
Okay, thanks.
Operator
Thank you at this time. I would like to turn the call back over to Ken for closing remarks.
Ken Potashner
All right so, again wanted 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 oppose to where we’ve been and that should be the basis for your evaluation and I look forward to giving you another update really soon. Thanks again.
Operator
Ladies and gentlemen. This concludes today’s program.
Thank you for participating, you may disconnect. Good day.