Q1 2022 LogicMark Inc Earnings Call

May 12, 2022

Okay.

Hello, Good day, Thank you for standing by and welcome to the logic, Mark first quarter financial results and corporate update conference call.

At this time, all participants are in listen only mode.

After the speaker's presentation, there will be a question and answer session.

Now to ask a question. During this time you will need to press star one on your telephone keypad.

And also please be advised that today's conference is being recorded.

If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Mr. Louie Toma. Thank you. Please go ahead Sir.

Good afternoon, and thank you for participating in today's conference call. Joining me from logic, Mark's leadership team, our chairman and Chief Executive Officer, and Mark Archer Chief Financial Officer.

During this call management will be making forward looking statements, including statements that address expectations.

Performance or operational results.

Looking statements involve risks and other factors that may cause actual results to differ materially from those statements.

For more information about these risks please refer to the risk factors described in logic marks most recently filed in North Park.

<unk> 10-K, and subsequent periodic reports filed with SEC and logic March press release that accompanies this call, particularly the cautionary statements in it.

The content of this call contains time sensitive information that is accurate only as of today may 12 2022.

Except as required by law logic, Mark disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur.

After this call.

It is my pleasure to turn the call over to the company's CEO Charlyne Simmons.

Thank you Tony.

Welcome everyone and thanks for joining us.

At their previous call with intended to close the books on 2021.

With that let's discuss opening a new chapter for our company.

We started the year on a strong note with revenues growing 50% and margins expanding as we saw strong growth in our U S Veterans Health administration business.

Highlighting our solid relationship with this partner.

As we discussed on our last call. We received approval at the GSA banker and agency of the U S government.

We have taken the opportunity to leverage our existing government business to increase sales.

This includes federal state and local agencies.

These increased sales to mislead already stellar reputation with the FDA.

And we anticipate continuing to grow our government business as we introduce new products and further expand that team.

We've also seen ourselves positively impacted from the sunsetting of <unk> cellular service recognitions like cellular network providers.

Our customers upgrading to a fortune.

101 plus device.

We will continue to communicate to our current <unk> device customers to help them transition over to the speed of various programs I mentioned a month ago.

Including direct mailings.

Customer support continued media outreach and of course to get to that one education programs, which include a complete <unk> sunsetting leased our center.

And then instructional video on how to check correct logic devices.

Building on building on our momentum from this past quarter with.

We plan to launch an updated website with an e-commerce platform in Q2 to open up direct to consumer sales.

We are also looking forward to launching new at home and on the go products and solutions.

While expanding upon our intellectual property portfolio.

Specifically, we expect an additional professional patents.

At the end of the second quarter.

In addition, we expect to add monitor services to our offerings, which will enable us to implement a recurring revenue element to our business model.

Despite these advances.

Continued to face the supply chain challenges that are endemic to the entirety of the tech sector.

Continued spikes in Covid cases.

Ukraine bring with them expected disruptions as well.

We continue to believe the logic market nimble enough to deal with most of the stress on our supply chain.

Costs connected with little interruption.

However, we do expect these factors to have an impact on the price of products in our market as well as the cost of doing business.

We have always endeavored to offer solutions at varying price points to hover.

The needs of our customers.

Before we move to our financial results.

When I accepted the role of CEO and also set out to recognize our ESG responsibilities.

Meet the highest standards for both social and shareholder endeavors.

We have structured our ESG efforts around three main themes.

Financial policy reviews, and audits and what.

We will continue to dedicate our resources to ensure we remediate the issues that have contributed to a potential delisting from the NASDAQ stock market last year.

And then towards ongoing adherence to nasdaq's governance guidelines.

Jefferson equity, we're making products that trust in UBS and most vulnerable as an example of how our social and shareholder responsibility goals align.

This concludes offer different price points for our products. So that it meets the needs of persons and bearing social economic situations.

We have also begun looking at company diversity and inclusion practices and examined labor standards across our supplier base.

And finally.

Operational efficiencies, we are building a sustainable enterprise is a priority for the company.

As a result, we have begun.

<unk> closed offices to streamline operations.

We have begun reducing people waste throughout the company and are working towards a goal of decreasing the amount of marketing material and printed materials included with each device by 50%.

We also have begun to conduct and energy and resources evaluation to determine if increased efficiencies are possible.

Prudent expansion and improvement of domestic and international supply chain channels.

And then to offset program.

All under review to ensure we meet customer demand and that suppliers adhere to nasdaq's recommended code of conduct.

For today I'll take home message is one of optimism and looking towards the future to continue the momentum. We believe we have initiated in the first quarter.

We look forward to communicating with you as we continue to progress.

I'll now pause and ask Mike Archer to discuss our first quarter financial results and then I'll return to provide some closing remarks.

Thank you <unk>.

Here are the financial results for the first quarter ended March 31.

2022.

Revenue was $3 7 million.

Up 50%.

From the year ago quarter.

Gross profit.

It was $2 2 million.

And 2% from the same quarter last year.

Gross margin was 60%.

Compared to 59% in the same quarter last year.

The improvement in gross margin was due to better management of our inbound freight costs.

Operating expenses were $3 5 million.

Compared to $2 3 million in the same quarter last year.

About half of the increase was due to higher noncash stock compensation expense.

The balance, resulting from the company increasing investment in new product development.

And the ramp up in our sales team.

Operating loss was $1 3 million versus an operating loss of 800000 in the year ago quarter.

Again due to the increase in noncash stock compensation expense.

And net loss for the quarter.

It was $1 3 million.

Compared to a net loss of $4 2 million in the same quarter last year.

$4 $2 million loss.

In last year's first quarter was negatively impacted by a warrant modification expense of $2 9 million.

At quarter end.

The company held $12 2 million in unrestricted cash.

That's up $200000.

From the $12 million that was held at the end of the December 31 two.

2021 quarter.

Thanks, Mike.

As you wrap up the call I Wonder if maybe with a couple of key thoughts.

Our plans continue to be ambitious and we continue to build our team and have new products in the development pipeline to establish <unk> as a leading brand in the health communications market and care economy.

Logic market is poised to capture a larger share of the <unk> market as we continue to write this new chapter in our history.

We look forward to introducing new product offerings to demonstrate this leadership position.

Optimal value for our stockholders.

At this time I will open the call to questions operator.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad again Thats star one on your telephone keypad will.

For just a moment to compile the Q&A roster.

Your first question comes from the line of Allen Klee from Maxim Group. Your line is open.

This is Dr. Greenberg onto the Al and my first question is just in regards to Covid I know that had an impact.

Impact on sales because you can get into some of the smaller clinics as part of the PHA program. I was just wondering what youre seeing there if things are normalizing applications to provide some color.

It's working right now.

Yes.

Thank you for the question, Yes, we are seeing some easing and the opening and a slow rollout of the opening up clinics.

In terms of outreach for the.

The fragrance out there.

I think that we're seeing a much better sort of.

Situation overall when it comes to cover with the Veterans administration business, we're seeing lots.

About the hospital side.

My sort of pre Covid conditions is our understanding from our veterans administration partners.

And the critics slowly sort of opening up.

Okay, Great and then also had a question about the GSA contract agreement you had from last year. I was wondering if you were starting to see some material impacts from that or if there's any like key.

Government agencies are trying to target.

Yes. So we are absolutely targeting a number of different government agencies as we might have played before.

GSA contract is.

I don't know if it's necessarily a unique but certainly one that falls under a certain communications category area, which allows us to look at not only federal sort of level agencies, but also state and municipalities for most of the states in the United States and so we are slowly building out.

Partnerships with a number of different federal agencies.

<unk> is beginning to analyze and look at what states to targets for as part of our sales team strategy that said it.

It takes a little time to build those relationships with federal agencies, and so I don't believe necessarily that will start.

Seeing some of the impacts until later towards the end of the year.

Okay, great. Thank you.

There are no more questions at this time presenters. Please continue.

Okay.

There are no more questions at this time for centers.

<unk>.

Okay.

Yes.

Let me speak for Shai Lynn.

I want to thank all of you who dialed in to listen to our call today.

And we look forward to continuing to provide updates.

On our progress at the appropriate times.

This concludes today's conference call. Thank you for your participation you may now disconnect.

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Hello, Good day, Thank you for standing by and welcome to the logic, Mark first quarter financial results and corporate update conference call.

At this time, all participants are in listen only mode.

After the Speakers' presentation, there will be a question and answer session.

Now to ask a question. During this time you will need to press star one on your telephone keypad.

And also please be advised that today's conference is being recorded.

You require any further assistance please press star zero.

I would now like to hand, the conference over to your Speaker today, Mr. Louie Toma. Thank you. Please go ahead Sir.

During this call management will be making forward looking statements, including statements that address <unk> expectations for future.

Performance or operational results forward looking statements involve risks and other factors that may cause actual results to differ materially.

More information about these risks please refer to the risk factors described in logic <unk> most recently filed.

On Form 10-K, and subsequent periodic reports filed with SEC and logic March press release that accompanies this call.

The cautionary statements in it.

The content of this call contains time sensitive information that is accurate only as of today may 12 2022.

As required by law logic, Mark disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.

It is my pleasure to turn the call over to the company's CEO Charlyne Simmons.

Thank you Larry welcome everyone and thanks for joining us.

At the previous call was intended to close the books on 2021 today, we gathered to discuss opening a new chapter for our company.

We started the year on a strong note with revenues growing 50% and margins expanding as we saw strong growth.

U S Veterans Health administration business highly.

Highlighting our solid relationship with this partner.

As we discussed on our last call last year, we received approval at the GSA Thunder and agency of the U S government.

We have taken the opportunity to leverage our existing government business to increase sales.

This includes federal state and local agencies.

Do you think he sales demonstrate our already stellar reputation with the VA.

And we anticipate continuing to grow our government business as we introduce new products and further expand our team.

We've also seen our sales positively impacted from the sunsetting of <unk> cellular service.

<unk> cellular network providers.

With our customers' upgrading trustworthy guarding alert 911 plus device.

We will continue to communicate to our current <unk> device customers to help them transition over to the spill of various programs I mentioned a month ago.

Including direct mailings additional customer support continued media outreach and of course go back to veteran education programs, which include <unk> Sunsetting Resource Center.

And then instructional video on how to check correct magic with devices.

Building on building on our momentum from this past quarter.

We plan to launch an updated website with an e-commerce platform in Q2 to open up direct to consumer sales.

We are also looking forward to launching new at home and on the go products and solutions.

Expanding upon our intellectual property portfolio.

Specifically, we expect an additional provisional patents.

At the end of the second quarter.

In addition, we expect to add monitor services to our offerings, which will enable us to implement a recurring revenue element to our business model.

Despite these advances we continue to face the supply chain challenges and debit to the entirety of the tech sector.

Continued spikes in Covid cases.

One Ukraine bring with them expected disruption as well.

We continue to believe the logic market nimble enough to deal with most of the stress on our supply chain.

Costs connected with little interruption.

However, we do expect these factors to have an impact on the price of products in our markets as well as our cost of doing business.

We will always endeavor to offer solutions at varying price points to hover.

The needs of our customers.

Before we move to our financial results.

When I accepted the role of CEO .

So sit out to recognize our ESG responsibilities.

Create the highest standards for both social and shareholder endeavors.

We have structured our ESG efforts around three main themes.

Financial policy reviews, and audits and which we will continue to dedicate our resources to ensure we remediate the issues that have contributed to a potential delisting from the NASDAQ stock market last year.

And then towards ongoing adherence to nasdaq's governance guidelines.

Jefferson equity, we're making products that trust in UBS and most vulnerable is an example of how our social and shareholder responsibility goes online.

This concludes offer different price points for our products. So that it meets the needs of persons and bearing social economic situations.

We have also begun looking at company diversity and inclusion practices and examined labor standards across our supplier base.

And finally.

Operational efficiencies, we are building a sustainable enterprise is a priority for the company.

As a result, we have begun.

Have closed offices to streamline operations.

We have begun reducing paper waste throughout the company.

Looking towards our goal of decreasing the amount of marketing material and printed materials concluded with each device by 50%.

We also have begun to conduct and energy and resources evaluation to determine if increased efficiencies are possible.

Including the expansion and improvement of domestic and international supply chain channels.

To offset program.

All under review to ensure we meet customer demand and that suppliers adhere to nasdaq's recommended code of conduct.

For today I'll.

The take home message is one of optimism and looking towards the future to continue the momentum. We believe we have initiated in the first quarter.

We look forward to communicating with you as we continue to progress.

I'll now pause and ask Mike Archer to discuss our first quarter financial results.

And then I'll return to provide some closing remarks.

Thank you Shai Lynn.

Here are the financial results for the first quarter ended March 31.

2022.

Revenue was $3 7 million.

Up 50% from.

From the year ago quarter.

Gross profit.

It was $2 2 million.

52% from the same quarter last year.

Gross margin was 60%.

Compared to 59% in the same quarter last year.

The improvement in gross margin was due to better management of our inbound freight costs.

Operating expenses were $3 5 million.

Compared to $2 3 million in the same quarter last year.

About half of the increase was due to higher noncash stock compensation expense.

The balance, resulting from the company increasing investment.

New product development.

And the ramp up in our sales team.

Operating loss was $1 3 million versus an operating loss of 800000 in the year ago quarter.

Again due to the increase in noncash stock compensation expense.

And net loss for the quarter.

It was $1 3 million.

<unk> to a net loss of $4 2 million in the same quarter last year.

$4 $2 million loss in.

In last year's first quarter was negatively impacted by a warrant modification expense of $2 9 million.

At quarter end.

The company held $12 2 million in unrestricted cash.

That's up $200000.

From the $12 million that was held at the end of the December 31 two.

2021 quarter.

Thanks Mark.

As you wrap up the call I wanted to leave you with a couple of key thoughts.

Our plans continue to be ambitious and we continue to build our team.

New products in the development pipeline to establish <unk> as a leading brand in the communications market and care economy.

Logic market is poised to capture a larger share of the camera comedy market. As you continue to write this new chapter in our history.

We look forward to introducing new product offerings to demonstrate this leadership position and to prove.

<unk> optimal value for our stockholders.

At this time I will open the call to questions operator.

At this time I would like to remind everyone in order to ask a question Brett Star then the number one on your telephone keypad again Thats star one on your telephone keypad.

Pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Allen Klee.

From Maxim Group your line is open.

This is Dr. Greenberg I'm sure Alan.

First question is just in regards to Covid I know that had an impact.

The impact on sales because you can get I'm sure some of the smaller clinics as part of the PHA program. I was just wondering what youre seeing there Sanjay normalizing if you could just provide some color on how that would be.

Looking right now.

Okay.

Thank you for the question, Yes, we are seeing some easing and the opening and a slow rollout of the opening up clinics.

In terms of outreach for the.

The fragrance chapter.

I think that we're seeing a much better sort of.

Situation overall when it comes to cover with the Veterans Administration business, we're seeing Amit listen I'll go back to the hospital side.

Sort of pre COVID-19 conditions.

Standing from Veterans Administration partners.

And the clinic slowly sort of opening up.

Okay, Great and then also had a question about the GSA contract agreement you had from last year. I was wondering if you are starting to see some material impacts from that or if there is any like key government.

Government agencies are trying to target.

Yes. So we are absolutely targeting a number of different government agencies as we might have stated before.

TSA contract is.

I don't know if it's necessarily a unique that's certainly one that falls under a certain communications category area, which allows us to look at not only federal sort of level agencies, but also state and municipalities for most of the states in the United States and so we are.

Slowly building Alex.

No ships with a number of different federal agencies as well as beginning to analyze and look at what states to targets for as part of our sales team strategy that said.

It takes a little time to Delta has relationships with federal agencies, and so I don't believe necessarily that we'll start seeing some of the impacts until late.

Later towards the end of the year.

Okay, great. Thank you.

There are no more questions at this time presenters. Please continue.

Okay.

Yes.

Okay.

Yeah.

There are no more questions at this time presenters.

Okay.

Yes.

Let me speak for Shai Lynn.

We want to thank all of you who dialed in to listen to our call today.

And we look forward to continuing to provide updates.

On our progress at the appropriate times.

Okay.

This concludes today's conference call. Thank you for your participation you may now disconnect.

Q1 2022 LogicMark Inc Earnings Call

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