Q3 2023 LogicMark Inc Earnings Call

And welcome to the logic, Mark that third quarter 2023 financial results and corporate update conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question you will need to press star one one on your telephone you will then inherent automated message advising your hand is raised to withdraw your question. Please press star one again, please be advised that today's conference is being recorded.

I would now like to hand, the conference over to your Speaker today, Pierre Dubois Investor Relations. Please go ahead.

Thank you Abigail and good afternoon, everyone. We appreciate you participating in today's conference call joining me from logic, Mark Our Schilens Simmons, Chief Executive Officer, and Mark Archer Chief Financial Officer.

During this call management will be making forward looking statements, including statements that address logic marks expectations for future performance or operational results and anticipated product launches.

Forward 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 annual report on Form 10-K.

And subsequent reports filed with the SEC as.

As well as logic marks 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 November 9th 2023.

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

Flex events or circumstances that occur after this call.

With that said I'll hand over the call to Charlotte.

Thank you Pierre and good afternoon, everyone.

I'm excited to speak with you today on the heels of our first new product launch since our team came together and the first for the company for many years.

When I began this journey the opportunity to build a company that continues to meet the needs of our valued veterans and agent population was front and center.

But also the potential to develop an expanded suite of products to improve safety for an even broader population was very compelling and it's still there.

Our vision is to expand beyond shocked hardware to a broader ecosystem that better prepares us to capture opportunities in the growing care economy.

Do you mean, just start with a new care village ecosystem.

Bio-terrorist software stack that includes an iOS and Android apps.

On device proprietary middleware.

A proprietary AI enabled cloud infrastructure.

As well as subscription services all.

All of which will allow us to add additional revenue streams and obtain watching uplift.

Our research and development teams worked extremely hard to release, the new freedom, all that plus the first product to be offered under our new care platform as a service or C pass platform.

Yeah.

Freedom alert plus is an advanced device offering features such as our new patented fall detection algorithms and GPS location.

It also provides two way communications with a caregiver and 24 seven monitor emergency services with a partner U S monitoring a prestigious five Diamond monitor center.

Our new care village can be downloaded for free at the Apple App store or Google.

Go play store, which connects to the freedom alert class, allowing caregivers to always conducted their loved ones PERS device provide.

Providing a round of care access to monitor false status device battery anymore.

Of course, we have our salaries to accompany the device, including both go down here to play around the neck and eclipsed that can be attached to a belt purse backpack.

Freedom, what price is one of several.

And an expanded line of solution, we are developing to meet the specific needs of our customers.

<unk> Park has three other products to choose from currently whether or not that people Wifi for Chi Wen bama connected devices at various price points.

The freedom alert and logic My Guardian alert 911.

At home solutions and for those on the go we have a guardian alert 911 plus.

Our devices have recently been recognized by Forbes as among top rated medical alert systems with Nomad policy.

We believe that those with limited means should have access to our first device that fits within their budget. So we continue to offer these products with no monthly subscription fees.

Further for those who need help with the purchase of their device, we have a new partnership with after pay which offers a no interest payment plan.

Yeah.

So what's next.

Our ability to use artificial intelligence sensors and machine learning is revolutionizing the direction of our product roadmap alarmed.

Along the way our team is finding new innovation innovative solutions using this technology and at the same time, expanding our IP portfolio.

At the moment, we are preparing to launch a new device a second PERS device launch. This year. We are delighted to report that the initial feedback during testing has been very positive.

Particularly regarding its weight compact design G. P S location service and fault detection feature.

This new product has a smaller form factor, which some customers prefer not dissimilar to phones, which come in various sizes to meet consumer preferences.

Our efforts not only focus on new devices, but we continue to look for ways to improve operating efficiencies and fine sustainable solutions.

For example, we were working towards environmentally friendly packing solutions, including biodegradable boxes, and bags and reducing packaging waste.

And as we've mentioned transitioning from shipping versus airfreight. After COVID-19 is also helping us reduce shipping costs and sustain our margins.

Logic marks planned expansion includes entry into other areas such as health monitoring and offering expanded features to complement what we're doing with our current devices.

Not only solutions that are reactive, but those that are predictive or preventative such as medicine reminders.

Given our plans to enter several new verticals and the progress we are making we are excited to have recently welcomed two new board members, Karen Schneider and Tom Wilkinson.

Expanding the total number of directors to fix.

We look forward to the board conducted expertise in many areas, including corporate governance finance operations hardware and software solutions.

I'm very excited about our talented team and growing product lineup as we advance to the next stage of the company's development.

At this time I will hand over the call to Mark to provide a brief review of the financials.

Thank you Charlotte.

Our third quarter results included a gross margin of 67% on revenues of $2 4 million.

This compares to a gross margin of 62% on revenues of $2 8 million for the same quarter of last year.

The year over year decline in sales during the third quarter was due to the one time sale of replacement units last year.

Which boosted prior year quarter results.

The national cellular network carriers.

<unk> upgraded to five G.

Discontinued their sport for three G.

So our customers with older three cheese Guardian to work 911 plus units.

Added to replace those units with our current model that supports <unk> services.

This replacement process was completed in September of last year.

So we anticipate an end to the reduction.

And year over year sales starting with this current December quarter.

Back to our continued improvement in gross margin.

We focused on three areas to drive that improvement.

First we've been able to shift from air freight back to transplant Trans Pacific shipping from our Asia based contract manufacturers.

During the peak of Covid.

Keeping costs and port delays.

Increased which necessitated us to move to expensive airfreight in order to ensure that we could meet customer demand on a timely basis.

Second we switched to procuring inventory more opportunistically versus our traditional.

Previous just in time approach.

Now we purchase some of our components when prices are most favorable.

Rather than what we need for park.

And third.

Our domestic shipping cost to customers have improved.

Previously we were using one shipping vendor exclusively.

Now we'd be implemented software that selects whether the United States Postal service.

P S.

Fedex is the lowest cost option on each particular order.

Turning to total operating expenses.

Third quarter came in at $3 4 million.

Decreasing 12%.

Or a half million dollars compared with the same quarter of last year.

And down 13%.

From this year's June quarter.

The lower operating expense year over year.

Was due mainly to a reduction in general and administrative expenses.

Slightly offset by higher selling and marketing expenses to support our new product launches.

Net loss attributable to common shareholders for the third quarter was $1 5 million.

Versus a net loss of $2 2 million.

In the same quarter last year.

On a fully diluted basis.

The net loss per share was.

As the door and 10 cents.

Compared with a net loss of <unk>.

$4.53 a share.

In the prior year quarter.

First of all what you had been.

Or are one for 20 reverse stock split completed.

This last April.

In terms of liquidity.

As of the end of September the cash balance was $6 7 million.

Compared to 7 million at the end of December 2022.

We have no debt on our books.

So as we moved into the last quarter of the year.

We remain focused on.

On launching new products.

Increasing year over year revenues.

Continuing to improve margins.

And reaching breakeven profitability.

And with that I'd like to hand, it back to Abigail who.

Open the call up for questions.

Thank you at this time, we will conduct a question and answer session. One moment for our first question.

Our first question comes from Marla Marin with Zacks Your line.

Sure.

Oh, hi, thank you.

Can you talk a little bit about the <unk>.

Launch.

The freedom alert.

Product.

First of all.

Were there any surprises that you.

You saw.

Following.

<unk> introduction and also.

Do you think that you can use this experience with introducing this new product as a template for other potential product launches going forward. Thank you.

Hello, My life I'm happy to answer that question.

No we did not see a huge anticipated surprise when it came to the launch of this particular product we had gone through a fairly rigorous QA testing of the product the backend services and a 24 seven monitor service as you and cause I might've spoken about drawing this particular call when we.

Talked about the launch of the FAA plus it.

It's really not just a bunch of that particular hardware itself, but with the launch basically of our caregivers technology platform. So we launched the App, we launched the proprietary sort of middleware technology the AI.

I enable cloud based services and dessert and then sort of a recurring subscription services in the form of the 21st type of monitor service.

Default detection sort of technology, and so forth and so we did not see any surprises. There. However, I will say that this in home solution. We have you know because it's the first time sort of rolling out a 21st southern monitor serve as a subscription fast bot detection. So that we have launched this on a consumer platform side.

And so as we are going out and reaching out to our <unk> partners.

We are introducing some of this technology to them.

And demonstrating these ciabatta as we're going along and so in the future we may be simultaneously launching our technology platforms across all of the channels.

At the same time, but at least with this particular first launch because we're watching all of this different fastest concurrently at the same time, we did launch consumer first and then I'm rolling out to be to be in BTG and so even this week. We actually have were attending our veterans administration show in Orlando where D.

The government sector is being introduced to our new technology. This week.

Thank you.

Thank you I'm showing no further questions at this time I would like to turn the call back to Schilens Shannon for closing remarks.

Thank you.

In conclusion, I would like to thank all our employees customers and investors for their continued support.

We look forward to reporting on the fourth quarter and full year results early next year.

In the meantime, our dedicated teams will continue to work passionately to progress our vision, which is to provide solutions for every segment of the population to help improve the quality of their lives.

It includes a value veterans.

Our elderly aging in place and dose who seek enhanced safety and health.

As we head into the Veteran's day holiday with respect on the service and sacrifice.

Whilst the sacrifices of our veterans families in honor of our country.

Today, we announced a donation to the BOP withdraw foundation in support of their mission, which aligns with ours.

Sure that our nation's veterans service members and their families.

For us how stable and successful future.

We have worked with the government administration for over a decade.

To facilitate our veterans independence, and we look forward to continuing our relationship with them.

As we enter the holiday season.

Our entire team I logic, Mark, which as all of you the very best Thank you so much.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Okay.

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