LogicMark Q3 2023 Earnings Call Transcript

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November 9, 2023

There are 5 speakers on the call.

Operator

Good day, and welcome to the LogicMark Third Quarter 2023 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. 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.

Operator

Please go ahead.

Speaker 1

Thank you, Abigail, and good afternoon, everyone. We appreciate you participating in today's conference call. Joining me from LogicMark are Shylen Simmons, Chief Executive Officer and Mark Archer, Chief Financial Officer. During this call, management will be making and anticipated product launches. Forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements.

Speaker 1

For more information about these risks, please refer to the risk factors described in LogicMark's Most recently filed annual report on Form 10 ks and subsequent reports filed with the SEC as well as LogicMark's 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 9, 2023. Except as required by law, LogicMark disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. With that said, I'll hand over the call to Shailene.

Speaker 2

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 in many years. When our team began this journey, the opportunity to build A company that continues to meet the needs of our valued veterans and aging 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 still is. Our vision is to expand beyond just hardware to a broader ecosystem that better prepares us to capture opportunities in the growing care economy. We're doing just that with our new Care Village ecosystem, a proprietary software stack that includes an iOS and Android app, On device proprietary middleware, a proprietary AI enabled cloud infrastructure as well as subscription services, all of which will allow us to add additional revenue streams and obtain margin uplift.

Speaker 2

Our research and development teams and GPS location. It also provides two way communications with a caregiver and 20 fourseven monitor emergency services with our partner, U. S. Monitoring, a prestigious 5 diamond monitor center. Our new Care Village app can be downloaded for free at the Apple App Store or Google Play Store, which connects to the Freedom Alert Plus, allowing caregivers to always connect to their loved ones per device, providing around the care access to monitor fall status, device battery and more.

Speaker 2

And of course, we have accessories to accompany the device, including both a lanyard to wear around the neck and a clip that can be attached to a belt, purse or backpack. FreedomWorth Plus is one of several in an expanded line of solutions that we are developing to meet the specific needs of our customers. LogicMark has 3 other products to choose from currently, whether or not that be WiFi, 4 gs or NANDLA connected devices at various price points. The Freedom Alert and LogicMark Guardian Alert 911 are at home solutions. And for those on the go, we have our Guardian Alert 911 plus Our devices have recently been recognized by Forbes as among top rated medical alert systems with no monthly fee.

Speaker 2

We believe that those with limited means should have access to a PRRS 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 Afterpay, which offers a no interest payment plan. So what's next? Our ability to use artificial intelligence, Sensors and machine learning is revolutionizing the direction of our product roadmap.

Speaker 2

Along the way, our team is finding new 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, Our second Purse device launched this year. We are delighted to report that the initial feedback during testing has been very positive, particularly regarding its weight, compact design, GPS location service and fall detection feature. This new product is 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 find Sustainable Solutions.

Speaker 2

For example, we are 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-nineteen is also helping us reduce shipping costs and sustain our margins. LogicMark's planned expansion includes entry into other areas, such as health monitoring and offering expanded features to complement what we're doing with our FERS devices. Not only solutions that are reactive, with those that are predictive or preventative, such as Medicine Reminders. Given our plan to enter several new verticals and the progress we are making, we are excited to have recently welcomed 2 new Board members, Corinne Schneider and Tom Wilkinson, Expanding the total number of directors to 6.

Speaker 2

We look forward to the Board's collective 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 developments. At this time, I'll hand over the call to Mark to provide a brief review of the financials.

Speaker 3

Thank you, Shai Lynn. Our 3rd quarter results included a gross margin of 67% on revenues of $2,400,000 This compares to a gross margin of 62% on revenues of $2,800,000 for the same quarter last year. The year over year decline in sales during this Q3 was due to the one time sale of replacement units last year, which boosted prior year quarter results. The National Cellular Network Carriers as they upgraded to 5 gs Discontinued their support for 3 gs, so our customers with older 3 gs Guardian Alert 911 plus units needed to replace those units with our current model that supports 4 gs services. This replacement process was completed in September of last year.

Speaker 3

So we anticipate an end to the reduction in year over year sales starting with this current December quarter. Back to our continued improvement in gross margin, we focused on 3 areas to drive that improvement. First, we've been able to shift from airfreight back to transpacific shipping from our Asia based contract manufacturers. During the peak of COVID, shipping costs and port delays increased, which necessitated us to move to expensive airfreight in order to ensure that we could meet more opportunistically versus our traditional previous just in time approach. Now, we purchase some of our components when prices are most favorable rather than when we need the part.

Speaker 3

And third, our domestic shipping costs to customers have improved. Previously, We were using 1 shipping vendor exclusively. Now we've implemented software that selects whether the United States Postal Service, UPS or FedEx is the lowest cost option on each particular order. Turning to total operating expenses, the 3rd quarter came in at 3,400,000 decreasing 12% or $500,000 compared with the same quarter 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.

Speaker 3

Net loss attributable to common shareholders for the Q3 was $1,500,000 versus a net loss of $2,200,000 in the same quarter last year. On a fully diluted basis, the net loss per share was $1.10 compared with a net loss of $4.53 a share in the prior year quarter. All the values, by the way, have been adjusted for our 1 for 20 reverse stock split completed this last April. In terms of liquidity, as of the end of September, The cash balance was $6,700,000 compared to $7,000,000 at the end of December 2022. We had no debt on our books.

Speaker 3

So as we move into the last quarter of the year, We remain focused 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 will We'll open the call up for questions.

Operator

Thank you. At this time, we'll conduct the question and answer session. One moment for our first question. Our first question comes from Marla Marin with Zacks. Your line

Speaker 4

is open. Hi, thank you. Can Talk a little bit about the launch of the Freedom Alert Plus product. First of all, Were there any surprises that you saw like following your product introduction? And also, or other potential product launches going forward.

Speaker 4

Thank you.

Speaker 2

Hello, Marla. I'm happy to answer that question. So we did not see a huge anticipated Surprise when it came to the launch of this particular product. We have gone through a fairly rigorous QA testing of the product, the back end services and a 20 fourseven monitor As you and as I might have spoken about during this particular call, when we talked about the launch of the FA Plus, It's really not just the launch of that particular hardware itself, but it was a launch basically of our CareVillage technology platform. So we launched the app.

Speaker 2

We launched the proprietary sort of middleware technology, the AI enabled cloud based services And then sort of the recurring subscription services in the form of the 20 fourseven monitor service, the fall 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 because it's a first I'm sort of rolling out a 20 fourseven monitor service and a subscription fraud detection service. We have launched This on a consumer platform side. And so, as we are going out and reaching out to our B2B and B2G partners, We are introducing some of this technology to them and demonstrating these to them as we are going along.

Speaker 2

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 launching all of those different facets concurrently at the same time, we did launch consumer first And then rolling out to B2B and B2G. And so even this week, we actually have we're attending a Veterans Administration show in Orlando where the government sector is being introduced to our new technology this week. Thank

Operator

you. Thank you. I'm showing no further Questions at this time, I would like to turn the call back to Shailene Simmons for closing remarks.

Speaker 2

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 4th 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. This includes our valued veterans, our elderly aging in place and those who seek enhanced safety and health.

Speaker 2

As we head into the Veterans Day holiday, we reflect on their service and sacrifice as well as the sacrifice of our veterans' families in honor to our country. Today, we announced a donation to the Bob Woodruff Foundation in support of their mission, which aligns with ours To ensure that our nation's veterans, service members and their families who stood for us has stable and successful futures, We have worked with the Veterans Administration for over a decade to facilitate our veterans' independence, and we look forward to continuing our great relationship As we enter the holiday season, our entire team at LogicMark wishes all of you the very best. Thank you so

Speaker 3

much. Thank

Operator

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

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Key Takeaways

  • LogicMark launched its first new device in years, the Freedom Alert Plus, alongside its proprietary CareVillage ecosystem—comprising iOS/Android apps, middleware, AI-enabled cloud services and 24/7 emergency monitoring—for additional subscription revenue.
  • Third quarter revenues were $2.4 million with a 67% gross margin (up from 62% a year ago), and net loss narrowed to $1.5 million from $2.2 million in the prior-year quarter.
  • Operational efficiencies, including shifting from airfreight to transpacific shipping, opportunistic component purchasing, and optimizing domestic carrier selection, drove improved margins and a 12% reduction in operating expenses year-over-year.
  • Liquidity remains strong with $6.7 million in cash and no debt, positioning the company to focus on launching new products, growing revenues and achieving breakeven profitability.
  • LogicMark is expanding its product roadmap and IP portfolio with AI and sensor-driven health monitoring solutions, planning a second purse-sized device launch and entering preventive health verticals, while adding two new board members to strengthen corporate governance.
A.I. generated. May contain errors.
Earnings Conference Call
LogicMark Q3 2023
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