Q2 2022 LogicMark Inc Earnings Call

Good day my name is shantou and I'll be your conference operator today at this time I would like to welcome everyone to the logic, Mark second quarter financial results and corporate update conference call.

As a reminder, today's conference call is being recorded all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question. Please press star one again, thank you all.

I'd now like to turn the call over to Louie Toma from core IR the company's <unk>.

Investor Relations firm.

Good afternoon, and thank you for participating in today's conference call.

What do you need some logic partial leadership team are doing.

Executive Officer, and Mark Archer Chief Financial Officer.

During this call management will be making forward looking statements, including statements that address large market expectations for future performance or operational results.

The statements involve risks and other factors that may cause actual results.

Not materially misstatements.

More information about these risks please.

Refer to the risk factors described in logic March most recently filed annual report.

On Form 10-K.

Subsequent periodic reports filed with the FCC.

And largely March press release that accompanies this call, particularly the cautionary statements.

Content on this call contain sensitive.

Sensitive information that is accurate only as ups.

Today August 11 2022.

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

After this call.

It is now my pleasure to turn the call over to the company's CEO and Simon.

Thank you Louis and welcome everyone and thanks for joining the.

The second quarter was another success as we grew our revenues by 21% over the prior year quarter, while continuing to execute on our strategy of building solutions that address the growing economy.

Our relationship with the Veterans Health administration remains solid contributing to our healthy sales growth.

As an approved GSA vendor, we have had the opportunity to generate additional governmental related businesses at the federal state and local agency level, increasing ourselves the opportunity to drive future revenue growth.

In July we launched a new direct to consumer sales channel through our newly designed website, where consumers can buy products directly from logic.

This launch opens up the new DTC sales channel that I have talked about.

And extend our market opportunity.

Currently the website include several products for sale.

Including our Guardian alerts Guardian alert 911, plus freedom.

Freedom alert models as well as various related accessories will.

We will be adding new products as they become available.

This new channel what enabled us to establish deeper connections with our customers by being directly involved Alex yes.

Mr. Greg relationship will provide the opportunity to sell additional products and accessories and should positively impact future revenue growth and profits.

Recently, we added two senior sales professionals and upgrade it ourselves leadership beefing up our investment in this important area.

We established a product without.

Having a solid sales infrastructure will be critical in successfully getting these products to market.

This investment will establish a foundation to support strong revenue growth over time.

Given the current market dynamics, we are in a position to capitalize on some very strong market trends.

Here are a few.

We're currently in the midst of a silver tsunami.

10000 Baby Boomers, turning 65 daily the demand for technology that supports a growing share of economy is increasingly increasing rapidly.

Do you expect the CAGR of just total aging in place market is 13% of total care economy that is about 24 billion.

Research has.

[noise] shown that 90% of people that are over 50 want to age in place.

The stage for strong demand for years to come.

Our mission is to protect the personal experience.

She just told us.

But logic like we don't believe the agent is grouchy, we believe agent as it gets to be enjoyed embellished.

Job is to remove the worry of agent independently for everyone involved and providing a direct connection to a loved one.

They need.

We're excited about this opportunity to continue to work hard to provide you innovation innovative solutions to address the care economy we'd.

We look forward to updating you with new announcements as we progress with these initiatives.

Since joining the company in June of last year, My ambition has been to position logic monster success.

We have set and shared our objectives and have established a track record of successfully achieving those goals.

One.

My first goal was to improve the financial condition of the company execute chicks lives substantial revenue growth.

Two we have established a new direct to consumer channel to drive additional sales opportunities that have begun to build it yourself.

B, we have improved corporate governance and cost management.

We have expanded our intellectual property portfolio and also out of experienced personnel to our management team.

<unk>.

These accomplishments highlight that we are successfully executing on our strategy building credibility with our stakeholders.

Solid foundation to launch new products.

We are excited about the progress that we have made to date.

Just started to scratch the surface.

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

Well, thank you Charlotte.

Here are the financial results for the second quarter.

Ended June 30th.

2022.

Revenue was $3 4 million up 21% over the year ago period.

Driven by improved sales to VA hospitals and clinics.

And from replacement sales above four key Guardian alert 911 plus device.

Two sunsetting of our previous <unk> model.

We believe these replacement sales opportunities were mostly finish at the end of this quarter.

Gross profit was $2 million.

17% from the same quarter last year.

Gross margin was 59%.

Compared to 61% in the same quarter last year.

The lower gross margin this quarter.

As a result of a product mix shift to the lower margin Guardian alert 911, plus unit as.

As well as higher shipping costs, which we are addressing this quarter.

Operating expenses were $3 1 million.

Compared to $1 9 million in the same quarter last year.

The increase in operating expenses was driven by the investment in sales personnel.

Higher bonus and sales commissions increased marketing costs.

And the addition of resources to the organization to drive new product development as well as investing in our finance and administrative infrastructure.

Operating loss was $1 1 million.

This quarter versus an operating loss of 200000 in the year ago quarter.

That variance a result of the higher operating expenses.

Net loss attributable to common shareholders was $1 2 million.

Flat with last year's quarter net loss of $1 2 million.

Net loss per share for the quarter was 13 cents.

Versus 22 cents in the same quarter last year.

At quarter end.

The company held $1 $1 million in cash.

Versus $12 million at the end of December of last year.

And the company has no debt.

Yeah.

Yeah.

Thanks Mark.

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

As the trend to the elder of segment continued to represent an increasing proportion of the total population.

<unk> 24 billion pure economy will continue to expand creating an opportunity for innovative companies to provide creative solutions to people who desire to Egypt.

Logic market is increasingly becoming positioned to be a leader in this exciting market with our new IP and sales strategy.

Chocolate highlights our ability to follow through on our objectives, and our ability to execute and succeed in penetrating this market, adding value trusted holders.

At this time I will open the call to questions.

Later.

Okay.

At this time I would like to remind everyone to ask a question. Please press star one we'll pause for just a moment to compile the Q&A roster.

Our first question comes from Arizona Bernstein with Alliance Global Your line is open.

Hi, This is Anna on for Brian .

Could you share the expected timeline for new product releases and describe some of those new products specifically.

Specifically when will some of your innovative new products, including the monitor services be commercially available for sale.

Sure Great question. Thank.

Thank you Irina.

Youre going to see the first of connected products launching into our portfolio.

By the end of Q3 this year.

And so and some of the first hardware designs newly designed hardware products, probably by the end of <unk>.

Q1 of next year.

So as we've mentioned in the past.

We'll continue to sort of stay within them and continue to sell what has been best selling products in our portfolio, which is on connected products. We believe firmly that there are fixed income as well as other low income.

Segment senior segments that really baas and <unk>.

Desire of products to meet these products last six months.

And a charge.

They connect you directly to 911 that said we are looking at a monitor products and again the first of these products, you'll see us potentially launch as early as Q3 of this year.

So.

When we talk about building newer innovative products from a hardware perspective.

It really is focused on first building restaurants technology.

Products each year. The first base. So in Q1, you will see us looking at what does it mean to actually build a amazing tourist product wearable product.

Did they don't have to be well it looks like garage openers were around your neck.

We believe that there should be something that.

Those were aging the boomers would want to wear on their bodies and they actually ship also utilized in defense. The first of our events sort of work around machine learning on fall detection as well and so you'll see some of those products rolled out.

For our connected product that is launching in Q3, it will be a Wi Fi product that is that will be.

We will be using to replace our in home <unk>.

And it will be the first to basically connect and bring data into the cloud. So that we can actually continue to build on our <unk> technology.

Okay, great. Thank you and then can you talk about how the supply chain challenges.

At all are impacting manufacturing and pricing of existing and new products.

Yeah, absolutely I think that's a really great question as we continue I'm sure you know the second well actually the third year of Covid.

We are continuing to see supply chain being impacted overall for every company that basically are in the consumer electronics or utilize any chips, which is.

In the essence, just about every company from consumer products like ours to automakers and so forth and so we are seeing component parts quite candidly skyrocket.

We are definitively seeing slowdowns.

And in sort of the supply chain to getting the products that we are looking for.

To show our warehouses into our manufacturing.

That said, we are very fortunate to be a small and nimble company.

As we've mentioned in the past.

We are not Apple good or bad and so we don't have to purchase a million I see chips at a time right.

We're not buying at that volume so our small size has given us the flexibility to go into the spot market and purchase those items.

And be on a sort of look out at the prices sort of flux from within the sort of smart.

Spot market place.

We can actually capture them when theyre out of BOE and warehousing for our needs.

So we are it is impacting us to a certain degree that you know we had been prior to the supply chain problem I'm, taking on a little bit less inventory, because we were able to capture some of those suppliers in our supply chain a little bit easier. So you'll see us basically take on a little bit more inventory.

Purchasing ahead before we need to basically utilize some of these assets.

We can actually have them in hand.

So again the market face pricing is fluctuating as do we want to buy at a low and we will hold those products. So that we can help them for manufacturing and so we're also seeing as you said.

And in this particular call shipping cost challenges and so we are sticking those issues as well and looking at ways to dynamically look at you know the best shipping partner, who can work with so that we can actually get products out she has hands of our customers as quickly as possible for as low a cost to us as possible. So we are seeing in <unk>.

No question about it like every company in every industry.

St.

But again.

We're fortunate to be nimble and fast moving as you know startup with a ticker symbol and so we've been able to sort of ride some of those issues.

We are however, very conscientious of some of the costs and the demands of the supply chain. So you will see us potentially looking at rolling out increases in the cost of our products.

Okay. Thank you again and my last question is given the economic downturn have you begun to see or expect to see any changes in demand for your products.

Yeah, I think that's a really great question I think when we look at you know.

Demand for needs you know, we probably would end up.

Okay.

Yes.

Now the one in four.

<unk> 65.

It doesn't change and hasn't changed.

We don't see a slowdown in demand of our product in fact, we will see.

As we've mentioned in the sort of discussion of the market forces that we will see sort of continued increase in demand for our products because you know.

Aging waits for no man and.

So everybody continues to age and the need for security and safety remains.

Economic conditions look like.

I hope it answers your question.

Yes. Thank you so much.

Okay.

Again, if you would like to ask a question. Please press star one.

Okay.

We have reached the end of the question and answer session I will now turn the call back over to Charlotte for closing remarks.

Okay.

Okay.

Yes.

I will now turn the call back over to show then for closing remarks.

Okay.

I think we may have lost Scheindlin. She was on a cell phone today and concerned about losing the signals. So on her behalf I'd like 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. Thank you all very much.

Yeah.

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

Yeah.

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