Q3 2022 Vislink Technologies Inc Earnings Call
Through our go to market and our engineering and our capabilities on the operation side, we have a technology strategy to drive software and services growth. The way we view historically, we've been largely a hardware company, providing hardware to our customers now the opportunity is to take that hardware and make it more intelligent and we're doing that.
As our operating system, the linked matrix, which we acquired in the mobile viewpoint acquisition, which gives us the ability to remotely manage control and more importantly, automate a lot of the different workflows for our customers and when you look at what our customers do whether it's military government. The workflows are very.
Very similar you have content capture so that means four K cameras 10, ADP HDR cameras 60.
60 frames per second digital stitching.
And then you take that two contribution how do you how do you get that to where you need to edit or where you need to view it it's either through our <unk> solutions.
Proprietary or through bonded cellular which is the public networks or through private <unk>, which we just introduced.
Those were all compressed at <unk> Dot 265, which is the most recent compression technology thats used throughout the industry.
And then theres applications on top of that like camera control, our entercom or video return all of those things are part of that and then specifically for sports news and entertainment the ability to produce it in the cloud to do post production to add graphics and things like that and then ultimately to play out on whatever type of formats needed.
Have the transcoding capability to do that and then ultimately how to transport that around their networks, we have gear and ability to do that but now it is all managed by our linked matrix solution, which heretofore we didn't have that capability. So now we have the opportunity to remotely manage and support our customers and also to <unk>.
To provide a revenue source are there for us and support them in the field in ways that we couldnt before and then on top of that bringing our AI capabilities to allow them to make their workflows more efficient to be able to find the exact content, they're looking for based on the need. So there's many ways that we can help our customers become more efficient.
<unk> through using machines to <unk>.
Evaluate things as opposed to humans.
And then giving humans are much better more concentrated view of what needs to get done and what the opportunities and the content that's available to do that.
We think.
We are positioning ourselves for profitable growth in the future over the last couple of years, we've executed on a turnaround strategy has positioned the company for consistent earnings growth.
We've reduced our breakeven point from over $50 million, a couple years ago down to around the mid $30 million Mark now and we're continuing to push that further.
We've reinvigorated our go to market capability to support our global.
Blue Chip customer base in sports News and entertainment we have also.
Pursuit heavily that federal state and local markets for for Mil Gov.
And we've invested heavily in R&D, we've launched five new products in less than three years, some of those products or the quantum receiver the IP linked three D.
The DB E 6100 encoder.
The IP linked affordable RF transmission system, and lastly, and most importantly, we've just introduced the arrow link.
So we've streamlined our head count and operating footprint and increase productivity over the last couple of years we've.
We rationalized our product portfolio to focus on higher margin higher revenue products, making on we first came here we made a decision to exit about 70% of the products that we had at the time most of them are redundant.
Significant amount of overlap in our product portfolio.
We have secured access to necessary capital over the last couple of years as you know we did a transaction last October where we added significant amount of cash to our balance sheet. We now have approximately $25 million to $30 million on the balance sheet. We're in very good shape financially.
We've closed on the acquisition of mobile viewpoint and successfully integrated with this link all aspects of the business.
We brought the bonded cellular and artificial intelligence technology that they brought to bear and we've put that inside our product portfolio and integrated into our product sets.
We launched several jointly develop busily and VT products, we've launched the <unk> four live to visually connect.
Basically <unk> in the click transmitter we've also introduced AI clipping tool.
We've established link matrix is the operating system for all our <unk> devices and that's now the operating system that our customers can use to manage our total solutions.
I will turn it back to Mickey.
Thanks, Mike you want to walk him through the preferred dividend.
Alright.
Yes.
So as everyone knows.
Effective on November 9th our board of directors declared a dividend of one one thousands of a share of preferred stock for each share of the company's common stock.
That dividend will be issuable to all shareholders of record on November 21 of this year.
That series, a preferred stock will vote together with the outstanding shares of the company's common stock as a single class concerning one issue and that is the reverse stock split.
A special meeting will be called the shareholders to vote on that reverse split we expect that meeting to be held on January 11 of 2022.
Sorry January 11 2023.
Each outstanding share of preferred stock will have 1 million votes. Therefore, each common share will receive 1000 boats.
All shares of the preferred series a stock.
Not present in person or by proxy at the opening of the polls of that special meeting will automatically automatically be redeemed by the company.
Alright.
Yes.
It looks like we just lost Mike's audio unfortunately.
But we can pick it up and that's slide it making sure alright, so as Mike went through.
We have approximately two proxy is actually coming up one will be for firstly.
Lord and the auditors that will be the one December 27th and then following that will be.
As everyone knows this link received notice of a delisting.
On May 22022 from the NASDAQ and that notice was due to the fact that we had a share price below $1 for 30 consecutive days. The company was given a 180 days to cure that deficiency.
We believe the prospects of raising the share price at above a dollar is very challenging in the near term. We think the best Avenue would be to effect a reverse share split.
Okay.
Delisting normally causes a couple of reasons why we think that a reverse split is appropriate we think delisting would cause a further decrease in our share price.
We think a reverse stock split does not.
Entailed dilution to our current shareholders.
And clearing the possibility of delisting, we think would reduce some of the downward pressure on our stock price.
Many of the institutions that we know would not invest in a company that has the share price below $2. So in retrospect, we think that.
The reverse stock split is the right.
Appropriate thing to do at this point.
So it looks like we did get Mike back. Thank you.
You guys are truly the spirit of tag teaming here.
And as each other's sentences.
So.
Why were optimistic about the future of our business first we've got a blue chip customer base and growing markets as I said.
Right.
Independent if there is there is a macroeconomic.
Headwind around a recession the markets. We're in tend to be recession resistant, but I think what's more important that in these markets. There is a digital transformation happening where they are using technology to help them make their business more efficient. So we think there is a tailwind of digital transformation that allows us to continue to grow.
What's happening at the macro level, we've optimized our operating platform for profitable growth as we talked about.
We're very focused on profitable growth, we've made a lot of changes in this business over the years to be able to make ourselves more efficient to reduce our costs and reduce our breakeven and we continue to do that with our most recent announcement in third quarter that Mike talked about.
We're introducing new products at a record rate.
Mike showed the five large products that we introduced but with those or.
Lot of enhancements that go with those and also other products that we've we've done and customers love the new products.
Evident by our sales were up 42% on the live production side and our <unk> sales funnel. That's our area of video downlink systems for military and government is the highest its ever been on record. So I'm very excited about the work that our teams are doing of bringing new products to market to serve our customers and our customers are rewarding.
Net.
As I mentioned digital transformation across both markets that we serve as hot.
And our product portfolio.
Folio Leverages all the newest technologies, whether it's artificial intelligence, whether it's <unk>, whether it's cloud we take all of those integrated into our solutions to bring that efficiency to our customers as Mike talked about on the M&A side, we see inorganic growth opportunities at attractive valuations.
We're very focused and to make sure that if we deploy capital from our cash base. It's very focus on something that's going to be accretive and it's going to be complementary to our customers and serve our customers in a better way.
This business has over 50 years of heritage, creating deploying complex communication services and solutions.
Our customers are here because of our team the team at visit link.
His passion about what they do they are passionate about the markets, we serve whether it being live production content or those in uniform.
And we are very pleased.
Please.
Barry.
Considerate of the fact that we have is very normal mission and we believe in our team. The team has done a phenomenal job through very difficult situations, whether it was during the pandemic in 2020 coming out of this pandemic, where everything needed to be.
Delivered at once through the challenges that we've had in the supply chain and continue to work through every day.
And focus on meeting the needs of our customers and helping them do their jobs more efficiently. So as I said, we are optimistic on our future. We believe in this business. We believe in our people and the team we have in place I talked to customers on a regular basis and our customers want us to continue to succeed they've seen a huge.
<unk> opportunity for the services that we're offering there given us feedback to that and we want the opportunity to continue to do that.
So.
Just closer to that and then Gabrielle will open up to questions fantastic well. Thank you Mickey and Mike brings us as Nicky said to our live Q&A portion of this broadcast so just a reminder, if you've got any questions that you might have come up with as you are watching the presentation.
Go ahead and drop it in the chat and it is being monitored by this link. So we'll go ahead and review those questions and get them up here for answering. So this is your chance to get any and all of you for any questions answered.
And we've already got a few questions here ready to go so we've got one here from Marianne <unk> comment.
What are your plans for regaining compliance with marketplace requirements can you take us through that.
Yes, so ideally.
We have.
Until this extension and then potentially another extension, but we want to we believe that a reverse split is the best approach now theres over I'm told over 400 companies Microcap companies that are under a dollar a lot of companies are in our position as you saw in mikes slide.
We have over.
We're trading well under our cash level, we think we're undervalued, but every CEO thinks theyre undervalued. So.
That's not investment advice, but certainly being under a dollar.
It is a challenge for us to get above a dollar to the NASDAQ compliance.
We think the <unk>.
Best thing at this point at this juncture, what we see as a reverse split now I know at our last reverse split I said. This is the last reverse split that I wanted to do and believe me. We didn't think we'd be in this position when we did that but this is an impact that's happening across the market with micro caps and then for us as a company we have to view.
What is the best situation for us because many of these companies will be delisted and I know theres a lot of frustrated investors on this call right now that hurt US say, we're hopeful that was our last reverse split, but I think things are different in the sense that the market is well down in the previous reverse splits before the one that we did.
Markets Werent necessarily down.
We've been investing prudently, we've been cost cutting where possible as you can see from our breakeven that we brought the company through and we've been doing things from introducing new products, increasing our ability to extend our reach to customers. So.
So we'd like to continue with this mission as a public company because of public company and gives US access we think there's we think there's upside there.
And we ask our investor base to consider this.
We can't give your opinion on which way to go but certainly we will go in the direction of our shareholders. This is your company.
We're here at the pleasure of the board, which is here at the pleasure of our shareholders. So we will execute as deemed appropriate by our shareholders.
Omnicare, Mike I'll, let you take.
Either or have these but as so from Byron Weaver, how do your government orders look.
Mike or making.
I can answer that.
We're seeing a very robust sales funnel for government orders at this point.
We typically term debt as mill government military government, we're seeing a great.
<unk> Tic and business potential business with government first responders, particularly because we've just introduced our new airlink product. So that airlink product is being embraced very well by the customer base and we expect a very strong sales bump with aetna or other products.
In 2023.
Yes, I might add to that.
This is not just a U S solution, it's a global solution military of defenses throughout the world are interested we've had several coming to our offices to do evaluations of the product with our engineering teams as well as many.
I have been looking at it independently as I said, our funnel is the highest its ever been in the last six seven years. We are very excited about that obviously as challenges.
Social injustice happens throughout the world the need to have technology and systems in place to proactively deal with that we see that happening throughout the world. So we think this solution is coming at the right time in the market and our customers based on the interest that they have in it.
Are supporting that.
Well you know we've got another question in the chat from Susan and she wants to know who are the decision makers in the buying process ultimately product offer is compelling, but I can imagine that some of the industry may be hesitant to change. So we focus on the aviation departments within these organizations because our bulk product is.
<unk> Air to ground Communications, and then taking that information and doing things proactively and that can range from.
Large groups at the agencies that are making decisions across the entire agency.
All the way down to a sheriff's department, where the sheriff will.
The business. So it's a variety wide variety and we do it through both our partners and our direct channels that we have in the market.
This next question is from Nelson Morgan and he wants to know what will you do to increase transparency with the shareholders, especially in terms of contract announcements and while we see the post them releases about use at sporting events and conference displays. He says it's really hard to quantify how these are reflected on the balance sheet.
Until these earning reports and calls.
How would you respond to that.
Thats a great question, we get asked that question a lot we'd like to share as much we'd like to share everything Unfortunately.
There is a big event, that's happening in the world right now, which we're participating in but we can't say anything about.
As you can imagine.
Many people in the live tier one events I want to be able to sell their branding rights to sell their content rights. So they don't like people writing on the tails of that so we're limited in what we can say there secondly.
For a lot of military has a lot of governments, particularly governments.
They don't like to make large announcements if there are announcements around.
Where theres been a vote among the city Council for example, Miami Dade.
We received 1 million order for Miami Dade for upgrade of all of their aircraft as a part of their large program that they announced at the end of last quarter.
That's a great example, but many times it is limited on what the customers willing to announce and what the.
Wow us to announce.
And at the same time, we push our sales teams to get that information, but at the same time, we want our sales team is going out to find new orders not necessarily badgering, our existing customers to have them to allow us to do a press release. So it's a balance and we're trying to work that but obviously in a lot of cases, it's not.
To the level that a lot of some of our investors would like.
Well I know in the earlier in the presentation you mentioned the Afghanistan. So I just wanted to ask to further elaborate on what was your involvement there.
Hey, Mike.
It's Mike Doyle.
I think you can hear me.
So we had a very good contract with the.
The army and area of the army called so com, which typically.
<unk> equipment for special forces.
We had a contract where they were feeding in a particular type of receiver into special forces in Afghanistan with the fall of Afghanistan, We concluded that contract with the army with so calm and so.
We stand ready to do more of that type of business, but at this point absent that type of theatre of war.
We're not going to see a lot of orders with that particular product at the moment, but again, we still try to find other ways to work with.
Our military partners and customers to continue to increase sales, but with it with the end of hostilities in Afghanistan that ended a very big piece of business that we did last year.
Well, Mike as a follow up to this maybe you could answer. This question. We just got about how are you planning to make up for the military business shortfall that caused the quarter's decline yes.
Yes.
Mickey had mentioned, we've just introduced the Arrow Lincoln.
You know kind of fashion and our new go to market team in that sector and so were seeing there was a lag there was a defund the police effort last year and that caused a lag to it to a certain extent in the orders that we were experiencing in the government first responder side.
And so now we're seeing that lag.
Diminish and we're seeing some real robust interest in our new products and our offerings. So we think we're watching the sales funnel fill up we think that we'll see a real uptick in that government military business, mostly government into next year.
Well you know we have our next question here, maybe making you can take this one it seems like we've been hearing about the benefits of <unk> for consumers just forever right. So when will it start impacting the backend production side of business and where do your <unk> product steadiness.
So I think it's going to be country dependent.
In the U K for instance, they've allocated 400 megahertz of <unk> private <unk> spectrum and what that allows is for.
Broadcast or to set up a private <unk> network, which they can uplink the videos and then bring those to the cloud or distribution distributed them any way they want.
In other parts of the world, particularly here in the U S. Private <unk> is largely around what's called <unk>, which is only 150 megahertz, which isn't.
Public it's privately owned there are some unlicensed bands, but anybody can propagate on those bands and such that there is a potential for interference. So in that case broadcasters are very concerned about you.
Using private <unk>.
What we do see happening for tier two events is.
As the public networks being used if you can imagine if you're a verizon or AT&T youre focused on the downlink, what you care about the downlink because essence consumers we want to get a feed write down we don't have a lot going up and our use case, it's more about the uplink because we're taking video compressing it and sending it up so you need bandwidth.
Going up.
What we do for that in the public networks is our bonded <unk> cellular capability, which allows you to bond two to three to four to seven different bands together to be able to get that uplink. So we see that as an opportunity for growth and when combined with our Remy products for a lot of people to previous events and.
We have maybe one person that's event.
Or that can be handled by an AI as well.
Well you know we got a question here about the new small click transmitter you just launched so Mike and making are free to respond, but just what are the use cases for it and the sales that we're seeing.
So we are in the process, we haven't we've announced that we're working with customers on final definition and final prototypes that will be introduced in volume at the end of first quarter in the second quarter next year. The use cases are vast everything from drones, because it's a very small compact too.
<unk>.
Shoulder cameras, the stability that's happening with Pov camera, that's point of view cameras. If you can imagine in the past pov cameras were very shaky.
It was a very pleasant to watch them that stabilization through the development of a lot of the <unk>.
Sensors has improved dramatically so with that and our transmission capabilities, it's allowing both body worn cameras as well and again these arent yet to where our goal is to get them in a helmet, but.
It allows them to have multiple feeds whether from a helmet say a motorcycle helmet and shoulder camera.
As well as.
Small.
Applications, where they want to get a camera very that's very concealed camera for surveillance. This allows them to do that so with that size and format and power. It allows them to have a low power unit in a small package.
Using whatever variety they want I mean today, we have solutions that are used.
In basis on a major league baseball game.
This continues to evolve that capability.
You mentioned that you are actively looking at M&A opportunities on the last few calls.
When do you think you'll be able to announce one.
[laughter].
We're not going to make an acquisition just for acquisition sake, we've had.
We're very active we are in a lot of discussions we see multiples coming down that's the price to earnings multiple.
Whereas before they are well and the teams, we're seeing that come down a bit given the recession concerns.
So we're being prudent on how we want to allocate our capital.
And we're seeing how things evolve so I don't want to put a timeline our goal was to be able to announce something before the end of the year, but we're not going to sign up to terms and conditions or a price that we don't think is in the best interest of our shareholders.
So we're patient, but we're also very active capture well are there any recent customer wins that you can publicly announced.
Miami Dade was big certainly we shipped that in the third quarter.
We have and again that was a $1 million plus order in <unk>.
Included some of the services things that we talked about today.
We have.
It's funny the ones I love to talk about we're under NDA with.
Theyre not yet.
It's probably some of the biggest sporting event on the lateral to announce them I mean, theres one is going on right now, which we have.
Deployed.
Tremendous amount of gear and that's going to do amazing things for the content that we're not able to share.
Okay, So not publicly announced but there are some interesting things in the works okay. Well we have one last question here, maybe Mike can take this one.
Where do you expect to finish up and sales by year's end compared to last year.
So we don't give guidance ordinarily, but we do see.
A pickup in sales.
Again, we're seeing a robust sales funnel filling and most of that is for 2023, but we do think that we're going to continue to increase in sales over the next quarter or so.
We have very very strong hopes for the coming year for the first quarter second quarter and again, we are seeing very robust customer activity.
But we do think will kind of stay on the same path that we've been on through the remainder of this year and then we will see increasing.
The uptick in sales and an increase in customer activity entering into 2023.
Yes.
Fantastic Alright, well, we do have another question that just popped in the chat and it's just about where are we with cameras with NFL helmets.
We still have an iteration or two to get there. That's our goal to ultimately get there. The challenges are this you have to have an encoder and our modem that's low enough power.
Low enough in size and density.
To be able to provide at least a 10 ADP HDR signal and.
And so that's this this click that we've introduced is closer to that.
Type of product, but we need probably one to two more iterations to its to our ultimate goal I set a while ago. Our goal is to do that before Tom Brady retires, we'll have to see if that happens a pain upon this year.
We still have some work to do and that's working with our semiconductor partners to be able to get the products that allow us to have a lower power.
Very dense type of product that provides the solutions that our customers are driving for but that's our goal and.
With everything that's happening around.
The software on top of it as well as having bonded <unk>, having private <unk> and <unk>.
Have many different ways that that can.
Be pushed to the cloud and content created.
Fantastic that concludes our Q&A. So thank you to everyone who submitted questions. So far and then just as we conclude this call I wanted to ask him, making Mike any last thoughts you want to leave with our audience who's watching right now.
I'd like to say look.
We're as unhappy as anyone about where our stock prices today.
We've been doing a lot of work behind the scenes, but it hasnt translated into results for you and us as shareholders.
We're very focused on that we're here to build a big business that makes a difference.
As we've said when we started.
Still very focused.
Very committed to make that happen.
The reverse stock split request, we understand it's not something we wanted to do.
But at this point in time, we think it's the best thing for the company, given where the market is and where that timing on the market coming around maybe so.
No a lot of people are not happy with it I'm not happy with it Mike's not happy with it and we're going to continue to work with our team who are working hard every day to support our customers and.
And deliver them solutions that allows them to grow and generate.
New revenues and new content so.
We get it we're continuing to work hard to make it happen for you. Our investors. This is your company and we want to make you proud of your company and what Youre doing and will continue in earnest to work hard at that and we appreciate your support.
Thank you Mickey and Mike any last thoughts.
No. Thanks, I do want to Echo Mickey's thoughts, but we are not satisfied.
With where we are today.
Our mission, we came to the business couple of years ago was to change it fundamentally to create a better value proposition for you the shareholder such that we could all benefit from that.
Missions, not done Nikki and I will not stop we won't rest until we've created a business model that works that increases the value of the company and hopefully increases the value of the shares as Micky said at this point, we're not happy coming back to the shareholders and ask for another reverse split.
At this point, we don't see a better alternative and we do want to keep public shares in the hands of our shareholders and we think Thats the best way to do that at this point.
We're not happy, but we're going to continue to work very very hard for you the shareholder.
Thank you, Mike well I believe it or not that wraps up today's conversation. So a big Thank you, Tim Micky and Mike for joining us today to talk about the quarter's update and answer all of your vis linked questions. Hopefully you got some of your questions answered we learned a lot and we have.
Appreciate your time, thanks, Gabrielle thank you.
Of course, and as always if you want to learn more checkup on current updates events. Please visit www dot vis link Dot Com and then your host Gabrielle Thanks for tuning in and we'll have a new website coming up in the next two weeks fantastic in a website updates of it.
Thanks, a lot Andrew.