LogicMark, Inc. (NASDAQ:LGMK) Q2 2024 Earnings Convention Name August 13, 2024 4:30 PM ET
Firm Individuals
Chia-Lin Simmons – Chief Govt Officer
Mark Archer – Chief Monetary Officer
Convention Name Individuals
Marla Marin – Zacks
Operator
Good afternoon, and thanks for taking part in at the moment’s Second Quarter 2024 Convention Name. Becoming a member of me from LogicMark at the moment are Chia-Lin Simmons, Chief Govt Officer; and Mark Archer, Chief Monetary Officer.
Throughout this name, administration will probably be making forward-looking statements, together with statements that tackle LogicMark’s expectations for future efficiency or operational outcomes and anticipated product launches. Ahead-looking statements contain dangers and different elements that will trigger precise outcomes to vary materially from these statements. For extra data of those dangers, please seek advice from the chance elements described in LogicMark’s most up-to-date filed annual report on Type 10-Ok and subsequent periodic stories filed with the SEC and LogicMark’s press launch that accompanies this name, notably the cautionary statements in it.
The content material of this name incorporates time-sensitive data that’s correct solely as of at the moment August 13, 2024. Besides as required by legislation, LogicMark disclaims any choice to publicly replace or revise any data to mirror occasions or circumstances that might happen after this name.
It’s now my pleasure to show the decision over to Chia-Lin Simmons.
Chia-Lin Simmons
Thanks, Olivier.
I might like to start out by congratulating the workforce for the progress that we have made up to now in remodeling ourselves to a private security firm, a options supplier that meets the wants of a much wider viewers of individuals at varied levels and with varied wants of their lives.
After I first joined as CEO, we had been {hardware} firm producing one-time income from sale of our private emergency response programs to the federal government’s Veterans Administration. What we had and nonetheless do have a long-standing relationship, assembly the wants of our valued veterans, I knew there was a better potential. In order the workforce got here collectively, we laid out our imaginative and prescient for Care Village, a linked care ecosystem that’s each reactive and predictive.
For these of you acquainted with the expertise area, you understand that it takes time to improve a expertise stack. After I arrived, the corporate’s focus was very slender, and innovation has stagnated with nothing new launched since 2015. Immediately, we’re very totally different. We had our heads down since mid-2021, specializing in paving the best path to increase our footprint in a a lot bigger private security and elder care market. Because of this, now we have modernized present merchandise and developed new options. We now supply 5 PERS options that embody options comparable to superior fall detection, geofencing for reminiscence care, join the cloud and caretaker app assist. This additionally consists of the usage of large knowledge, sensors, synthetic intelligence and machine studying.
We have additionally launched — apologies, we have additionally launched a private security resolution with the Aster security app, which comes with a Bluetooth button. With our new expertise stack, there at the moment are alternatives to increase and add on options that might be tied to a associate’s expertise or companies, and it additionally permits us to accommodate white labeling and different alternatives for partnerships.
We have additionally been constructing a strategic mental property fence round our Care Village. Since I arrived on the firm in mid-2021, we filed 14 patents. Our latest patent filed this week pertains to threat and security metrics calculation and evaluation utilizing sensors and algorithms, which combine with our PERS and private security services and products. Different patents cowl areas comparable to synthetic intelligence, sport idea, digital twins, environmental sensing, customized habits monitoring and extra. So, we constructed a sturdy IP portfolio, which is outstanding for a workforce of our measurement and in such a brief time period, and this asset will function one other catalyst to develop gross sales by way of potential licensing agreements.
Within the months forward, we’ll be specializing in increasing gross sales and advertising and marketing efforts throughout all our buyer channels, together with authorities, B2C and B2B. I am pleased with the truth that now we have been each — now we have each at dwelling and on-the-go options at various worth factors. And with each reactive and predictive options, we now have alternatives for each one-time and recurring income options with larger margins. I encourage everybody to go to our logicmark.com web site and take the product quiz to see which options matches your wants.
One among our newest merchandise is the Freedom Alert Mini. It is modern, handy and fewer than 2 ounces and filled with modern options, so it is the proper on-the-go security machine. It makes use of patented fall detection, GPS location companies, water resistance and free caregiver companion app. The machine additionally helps geofencing, permitting caretakers to determine a predefined space for his or her family members’ security. That is particularly essential for these with Alzheimer’s or early — or different types of dementia who might are likely to wander. The Freedom Alert Mini is a monitored machine that’s iOS or Android suitable and runs on any 4G LTE mobile community and is supported by a 24/7 US-based care workforce.
One other one in every of our merchandise is that this Aster security app, which is an actual sport changer for private security. This turns your smartphone into a private security machine with 24/7 monitoring the place you possibly can choose which family and friends members can observe your jogging route or monitor your attendance at an occasion for added security assist. Whether or not you are a university scholar on-campus, a mortgage employee, an actual property agent internet hosting an open home by your self, an adventurous senior exploring nature or a caregiver in a sandwich era, Aster’s modern options supply unparalleled peace of thoughts. These are nice examples of the work that now we have performed to increase our product choices in private security and elder care.
At this level, I am going to hand over the decision to Mark to summarize our monetary outcomes, together with the current capital increase that we accomplished.
Mark Archer
Yeah. Thanks, Chia-Lin.
Income for the second quarter ended June 30, 2024 was $2.3 million, up barely in contrast with the identical interval final yr. The next common promoting worth greater than offset softness in unit gross sales.
The gross margin was a extra normalized 67% for the three months ended June 30, 2024, down from the 69% for the three months led to June of 2023. Gross revenue within the second quarter of this yr was comparatively unchanged at $1.6 million in contrast with $1.6 million in the identical interval final yr.
Whole working bills for the second quarter had been $3.6 million versus $3.9 million final yr, a lower of 6%. Decreased working bills had been pushed by decrease spending in product growth and technical engineering, partially offset by larger spending in gross sales, advertising and marketing and promoting as the corporate pivots from growing new merchandise to placing these merchandise within the fingers of our clients. Basic and administrative prices additionally fell because of decrease recruiting, skilled and authorized charges.
The online loss attributable to frequent shareholders for the second quarter was $2.1 million in contrast with a web lack of $2.3 million in the identical interval final yr. On a completely diluted foundation, the web loss per share was $0.96 in contrast with a web lack of $1.83 per share within the prior interval.
As of June 30, 2024, our money stability was $3.0 million. As Chia-Lin referenced, on August 5, we closed on a registered secondary providing priced on the market. Gross proceeds earlier than deducting placement agent charges and estimated providing bills had been roughly $4.5 million. We intend to make use of the web proceeds from the providing for working capital and basic company functions.
We additionally plan on holding a particular assembly of stockholders on October 1, which, amongst different issues, will search approval for: first, a reverse break up of the corporate’s shares of frequent and Collection C most well-liked inventory, permitting us to regain compliance with NASDAQ’s minimal bid worth requirement; in addition to, two, approval for the issuance of 20% or extra of our shares of frequent inventory in reference to the simply accomplished secondary providing. Shareholders of report as of August 5, 2024, will probably be entitled to vote.
With that, I might prefer to open the decision as much as any questions.
Query-and-Reply Session
Operator
Thanks. [Operator Instructions] We’ve got a query coming from the road of M. Marin with Zacks. Your line is open. Marla Marin, your line is open.
Marla Marin
Sure. Thanks very a lot. Sorry. So, I feel that you’ve got mentioned previously that the DTC channel is considered as an necessary new channel going ahead. Are you able to give us any colour on the way you see that channel gaining traction? And what your plans are to attempt to promote gross sales by way of DTC?
Chia-Lin Simmons
Sure. Thanks for the query, Marla. Hope you are nicely. So, sure, DTC, I feel, is an important channel for us. And after we discuss D2C, we’re actually speaking about not simply gross sales from our web site and even app retailer downloads and gross sales for our Aster product, however we’re additionally speaking concerning the work that we’re doing on Amazon. And for anyone who has ever labored with Amazon, they’re a behemoth, and they don’t seem to be a straightforward group to work with typically as a company entity. And so, we proceed to make strides there, decreasing our price, taking part within the Amazon packages for delivery to make sure that we truly get merchandise into the fingers of the shoppers as rapidly as potential. And now we have now launched our Mini product in addition to relating to the 911 product, which is one in every of our key heritage form of merchandise on that specific platform as nicely. So, we’ll proceed to principally promote and search for methods to extend these alternatives.
We are also very targeted on working with various totally different form of D2C advert alternatives, at all times consistently taking a look at, in fact, growing the lifetime worth, LTV, of the client and principally doing acquisition in addition to potential. We’re a workforce of start-up folks with company background, however in our hearts, we’re form of startup folks, and so our curiosity has at all times been to principally take care of acquisition to be nimble, as a result of that is the scale of our firm, and to principally purchase buyer with as a lot low price as we are able to in a really aggressive market.
I feel now we have to notice right here that our rivals, Medical Guardian, which is a privately held firm, and a few of these of us have been available in the market D2C for greater than 10 years, proper? And so, D2C is extraordinarily very, very new for us. And so, we proceed to make excellent strides alongside these strains.
Marla Marin
Okay. Thanks. After which, one final query, which is about Aster, now you’ve got had not a really lengthy timeline, however a while in your belt. Aster represents a brand new goal market, I imagine, a brand new demographic. So, by way of addressing that demographic going ahead, are you pondering that there will probably be different alternatives to offer companies and/or new merchandise for that specific demographic or for the demographics, I ought to say, that fall exterior of your conventional core demographic?
Chia-Lin Simmons
Sure. It is — to be candid, the Aster launch is an thrilling one for us. I imply, now we have been and proceed to like the silver tsunami that comes together with our PERS market, proper? There’s nothing — it is nothing to see that when one-fourth is — when your clients make up one-fourth of the US demographic and that is nothing in comparison with a worldwide form of like look by way of how many individuals are turning 65 and over, and of that 65, one in 4 falling. So, we proceed to be very bullish on the getting old silver tsunami market.
However the Aster market actually opens us as much as a totally new TAM for the corporate. It actually additionally permits us to do quite a lot of issues that I feel are very totally different by way of the kind of partnerships that we are able to take part in. The truth is that 66% of People are afraid to do outside actions. I imply, I am saddened. I’ve mates who truly had tickets to go see Taylor Swift in Austria of all locations and it was canceled. And so, I feel that for lots of people, private security is admittedly prime of thoughts for lots of them from large occasions like that to going to a pageant.
Individuals do not feel secure anymore. And so, the Aster product truly opens up — us as much as a market of individuals — I imply, 66% of People not feeling good about doing outside actions like concert events, occasions, going jogging, that is actually somewhat surprising. And so, we predict that, that market represents a really strong alternative for us to develop our pie. But additionally that — this can be a market and the Aster product permits us to additionally associate in a B2B2C facet. And so, you will notice us truly speaking about partnerships on this class a heck of much more by way of who we might work with to make these merchandise obtainable to form of enterprise partnerships and distribution partnerships. So, it is a very thrilling spot to be in.
Marla Marin
Okay. Thanks very a lot.
Operator
Thanks. And I am exhibiting no additional questions within the queue at the moment. I’ll now flip the decision again over to Chia-Lin for any closing remarks.
Chia-Lin Simmons
Thanks, Olivia.
In abstract, I might prefer to say that I am extra inspired than ever about our future prospects. Research present that the aged inhabitants resides longer and like to age in place, and private security considerations are all-time excessive. We have made nice strides in remodeling LogicMark right into a provider of modern, reactive in addition to predictive options to enhance private security and high quality of life. That is the best time for us to proceed investing within the private security and elder care markets.
We respect the assist that every one of our inventory — stakeholders have offered up to now, and we stay up for holding you up to date on our developments. Thanks.
Operator
Women and gents, that does conclude our convention for at the moment. Thanks on your participation. Chances are you’ll now disconnect.
