NXTD - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to the webcast to discuss the results for six and three months ended June 30 and to provide a general corporate update. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Gino Pereira, you may begin.

Gino Pereira

much. very you Thank afternoon. Good general everyone, Nxt-ID's for six today you, and our and business. joining financial and discuss a XXXX unaudited XX, the ended to on operating the quarter Thank June call update results months for

statements. be call, future assumptions by of goals, confirmed forward-looking statements, to expectations, our performance beliefs, existing underlying information, forecasts, During statements we'll which such cannot and that and this the of making afternoon's regarding projections be reference consist including statements

note, number materially any cause our reliance should you factors Please a that, actual required law, results our any forward-looking on place the except such not statements. will are factors that recognize by in we there of including filings. statements, discussed to from identified undue update undertake forward-looking and Please as to SEC no differ and statements, duty

Vin O'Connor, the Michael and President on Kevin today Orlando, call a call LogicMark. general update Chief with me of take Operating our care Officer; then a With respectively. our and turn then on President of begin to health I'll over Officer is Chief the Financial Pay; of Fit Miceli, payments Vin review the from questions update on Mike analysts the for an call. and and our to financial then Kevin call We'll the for the results, business,

the the product LogicMark. despite R&D over period. period even the the Overhead on year same expenses So six with ended catching our significant in with about quarter par a were quarter. But with new margin year, on development our last the the improved from the were XX first for corresponding spending on sales, for second revenues June deficit significantly up gross mostly LogicMark months from previous

by XX% a $XXX,XXX operations Our last provided $X.X for months deficit about year. operations million June for months ended was from period operating continuing period approximately for versus the XX XX the June And six same in increased cash previous continuing same the by the over the ended income six of year.

to increased new innovative product perform forward XXXX. core and at Our well continues early and we look of contribution, LogicMark with the XXXX introductions end at business to

that our opportunities. credit had time further given we extension announced raise X, to unable ultimately, obliged sufficient division agreement they've opportunities, acceptable lender withdrawn to by for spin-off required now credit strategic division. with we're spin on agreement also we've XXXX. continue certain PartX prescribed pursue of the And The primary off fintech that our us to as period, we We this planned under July a funding terms within we're and other seek the although

note prospective of entered but excluding $X We million confidentiality, in we're the also time, with of further letter certain of information unable the save any a company Fit Pay, at intent cash announced that this assets. we would Pay Due purchaser nonbinding disclose a to year. into to disposition the Fit that approximately

to update a that's So me, over financial general the I operations. turn Miceli call Vin to the and review for

Vin Miceli

you, Thank afternoon, Good Gino. everybody.

XX, June the to and ended summarize operating briefly second results the X versus XXXX So quarter I'm for months XXXX. going

'XX revenues million X June compared were from increased those revenues for about ended and of $XXX,XXX the X basis, XXXX XX, quarter So to sequential million approximately the for over the were for And revenues second million, continuing On by and periods XXXX. $X.X operations first respectively. $X.X $X.X the months $X.X million. a 'XX, and quarter

of 'XX. X both and X of flat Revenues the and versus were essentially 'XX in months X months X the

typically to mix basis. a higher products, per-unit from some land-based mobile decreased in did on LogicMark's product which we have partially were which commercial experience favorable sales shift in volume sales, offset sales a products a However, by price sales

the shift X months favorable in the very favorable be The 'XX, And the operations XX% product ended in periods. XX continuing as XXXX in primarily compared gross from June strong increase approximately to for was margin and same to sales company's to the XX% X mix. continues margin profit approximately both gross due was of and periods

expenses roughly at $XXX,XXX up the the for product higher over quarter, for to second result primarily R&D direct that increase level quarter development 'XX is the the operating a expenses Our were attributable were the XXXX new and efforts of LogicMark.

June compared for were the XXXX $X.X $X.X as X X to months months million in to Operating down ended $XXX,XXX approximately XX, the million expenses XXXX.

G&A of versus approximately down $XXX,XXX expenses first the XXXX. were 'XX in and selling half Our

of at again, However, as new and I pointed efforts direct product up result the $XXX,XXX, about a LogicMark. earlier, out development are R&D expenses

The versus in incurred facility X resulted periods. interest XX June interest for both decrease the expense the lower XXXX expense term loan the $XXX,XXX as in from primarily in months incurred refinanced 'XX. interest was periods expense on on the second 'XX, credit the lower in X approximately the and revolving ended expense the Interest quarter to both of and by in X compared same $XXX,XXX months

million, and net operations The for $XXX,XXX the comparable for million June to and of approximately a months XX, X loss and from X compared $X.X a ended respectively, $X.X was loss net the XXXX, continuing loss 'XX of periods. $XXX,XXX

slightly X had debt Excluding quarter the of XX, -- loss XXXX, $X.X periods. have June a have reflecting ended and XXXX significant on the comparable -- loss months have minimal profitable would for of the million, in the progress the over XXXX company 'XX process extinguishment of been would second

items the sheet. some the at closed of I'll $X.X cash balance over the of go sheet quarter through June company's XX with key Moving balance here. We million. to about

generated that company's we I about cash generated speaking, should rest roughly of and oh, was -- $XXX,XXX, had the from the was the program. And of from the operations. cash cash was -- generated inventory cash, sales under out point Our stock the ATM

towards offset which We you which is accounts the about end Inventory inventory see up was $XXX,XXX. up. a was company's the the payable of had received can large in quarter, balance, also

under up the million with balance about in And then created debt, $XX refinancing, closed with million. newly just we have current quarter $X.X the $X.X million. about that's have the amortization the sheet current to equity. equity We Also loan we company's new of of

it back So over with I'll that, Gino. to turn

Gino Pereira

And Thanks about very call Pay. talk Fit Mike now much, to over the like I'd hand to Orlando Vin. to

Mike Orlando

Good afternoon, Gino. everyone. Thanks,

our of three flye revenues period year compared $XXX,XXX those the $X.X months shipping of the we $XXX,XXX team's to million. in of QX in to inventory. difference card So is off X-month and division first The finished all to XXXX, shipments related first and of the were two is during the final numbers all for $XXX,XXX WorldVentures half the compared for XXXX for that the to

the the platform generation at from fees revenue, purely today. Pay, core Fit And so and if it's results, you the implementation look our platform customers XXXX our

into bank the During XX grew XXX we our countries. quarter, to banks and just expanded over implementations

We our to they Garmin with Swatch products platform. see more devices continue those as to continue activity for and and on increased have support

XXXX. product company continuing additional In e-commerce would have networks this in effort bring of of we've development the platform completed development that into service that launch addition, services for implementation with as development a product initiative and X QX extension an from and and that continued the to these on year perspective, to benefit later the to are the our tokenization market

with that, I'll back you, And to leave Gino. it

Gino Pereira

O'Connor Kevin And now, then LogicMark. with Mike. Thanks,

Kevin O'Connor

the everybody. and the to overview kind business, as in Good that the LogicMark Vin I of talk in the but about Gino. core as details, channel. an through them LogicMark very VA our well to won't go we had afternoon, has primarily just perform government Thanks, business financial specific covered continued specifically

up that a ramped As to the in year QX. in have Vin mentioned, QX start slow we did

second So we've got half flat to momentum. as a gaining at strong first about a the half anticipate We we're year-over-year.

Our the maintaining that of team Louisville margin great has There's so focus on tariffs job a our did that one to that is costs, from into within Vin in addressed. uncertainty with thrown Part kind the also kind was so that the strong and core of help our focus been a gross shifting we an gets and of doing really of drive product at the improvement in China. the operations variables of managing mix channels, that.

China, an there's in been some So on as tariffs increase and we in hold. been there's bring products put from

we're throughout our and eye as So through trying much that, an possible, as margins keeping on stay managing process. ahead that of that gross to again,

continues business, retail also we've and into slower The been and than it's as to grow, the commercial we looked at expanding channels, it core hoped. had

launched QX in anticipated. we As had a Stan a do to try exposure we test compete. and some earlier the Best their e-commerce We partnerships this both the been the with space on and with increase and slower and had It's monitored both so dot-com. And products. on year, competitive lot QX really both of really did had Walmart Buy mentioned platforms, that's than marketing

a with presenting So our one in proposition no fee. the light of challenges value monthly was best the

try as really and investments. marketing I we of and mentioned, some on did to return get exposure, test any had we was And the a limited expensive

in right now, also additional So strong lower-cost in elevate channel we position retail the Part the some opportunities. includes of of trying There space so both looking dot-com partnerships is kind but PERS, at monitored at to brands at commercial looking overall in primarily that looking ways to additional that and market really with exploring and potential are we're opportunities. our at in branding some for category. the advertise, channel,

happen and look on promote cost-effective more ways in for proposition, half. to value we'll continuing impactful for to We're strong second and to the that the look

to control drove so on, focused really manufacturing Vin development done and midyear, mentioned costs move as Again, product releasing in trade potential of and previously the issues quarter products been forced have concern can new it product us we've and that be going in-house development development of the and about drive through delayed. Chinese product with manufacturing what increasing. that again thing needed. more to some other IP those talked the was tariffs We our of initially we The really all with some second partners, some was that and

also both that half to release the look have at end we'll -- of year, think position in that our some core anticipate channels released So in the markets we channels, as enhance new VA and we but commercial as the year, of government got we're new well. products to opportunities we've by some products we this and the expanding second for to the look

Gino, to And over back it I'll turn with you. that,

Gino Pereira

can Kevin. Thanks very now, much, take please. questions And from we analysts

Operator

Alliance. And from Instructions] Brian question first from is Kinstlinger [Operator our

Brian Kinstlinger

lot of in list There's obviously you going your three start. priorities company could at on this a company? you your Gino, your Can top of right Maybe, now. things stage

Gino Pereira

Certainly.

care So new is the focus and our always and focusing are remains, and main health growth, which introductions. to opportunities expanded product been, and essential That's on LogicMark future. has we on priority why

that our us priority we is can move to to Second for reduce spend continue into profitability. so

where go rationale us that, good as opportunities. fintech strategic spin-off, as the obviously, flow that can well of it then of to The home continuing a and do operation. for was significant for has to amount part continue objective help the a relieve will and so us is other potentially the now, and cash And have to

Brian Kinstlinger

And to the goodwill is looks say and at much the the the Pay then, like expected third or prospective of can't revaluing purchaser evaluating to the transaction it quarter. Fit is Q, from the but about the happen LOI, or that end attached that,

is So that take to should assume about comes quarter away when and Is Q how transaction than out? likely more two closes that? should investors third the the that next months we that think a

Gino Pereira

a it potential all. The does happen, goodwill goodwill event. triggering evaluation on would event. something or potentially a a goodwill -- at company should is yes, And is the be necessarily this actually Not triggering -- valuation

to So a more we process. But more say, than -- And of than through currently that. we're I as is that. to normal there say due going infer the is I agreements, and can't nonbinding try any confidentiality letter anything wouldn't intent, it

Brian Kinstlinger

that. to going ask to question information getting without one much more about I'm try too

Some company can. a they as as companies, this, generate when looking cash like to much obviously sell they loss-producing are they

minimal very investors get amount of burn? -- to cash the cash of strictly rid to of cash get getting trying rid expecting reduce are be Should cash? burn. just some just that material trying And the Or

Gino Pereira

Well, on time. point this that at comment I can't in

Brian Kinstlinger

a discuss of to few the can the question you ton One I'm get compliance with Maybe NASDAQ? plan getting back before more businesses. in I a of Okay. get e-mails. into

Gino Pereira

our really, -- business. we can plan all do focus So is on the

our they in, our reflect viewed be drive And opportunities. to will report we that results as of they'll And trying our to the valuation the the in hopefully, we're as and those market, company. see ultimately, favorably So progress. revenue

Brian Kinstlinger

Okay.

were the these like And stated slower you flat. or six of terms products versus thought? which you Is fairly clearly In little the the what revenues business, continuing that you are a if so, Walmart the you of on and that bit result slower months, thought? have said Buy Best than operations sales climbed

Gino Pereira

And and so on The retail there's -- really in competition. share place an not potential well despite we impact VA, we're us, as year, penetrated alluded been business profitable to the cycles well. continue with last think have products earlier, -- thing no life that's very profitability. Well, the more improve And market changed doesn't I our as pushing into products maintain the Kevin we've part increased into for so was it of to the that and through is there. the -- go mix plan to

moving And new into that VA. more year, opportunities in is give the we're that the of will wouldn't end would right product step-up. well mix What so products. products think the next that more the in we've And the year. fact we're than that are I R&D doing excited around us now we they have the in our to following been about that profitable the be we penetrated with the But read released early

Brian Kinstlinger

think I question I my to annually the question, No, potential that underlying XX%. grow really -- guess about I you've in past, Yes. the talked think, is,

tracked that. below far this year, so And you've

has, until the get retail Is next to trying thought curious products? first Is to path has you I'm getting on you performed from view, not there prohibited X like the it might your performance. that but growth? Just in what in in You XX% year, delays initially? months, to understand, led that hasn't it what

Gino Pereira

Yes.

things. combination of think I it's those a both

we retail go think than slower to I anticipated. been has

great believe. small relatively And at we be value effective that company, obviously, how public, a As the proposition, budget. it's to we can have alluded, we as Kevin communicating a limited

certainly had our too, because And was an definitely products the had in had that So we an projected yes, impact. that introduction delayed that of impact, the new part of forecast. revenues

Brian Kinstlinger

that products released are to weren't new released? those that what expected And be are

Gino Pereira

a have updated development. PERS an in development device. Just device in there's And WiFi general wearable new in XG device and terms, cellular cellular we a -- device

those have are the been focus. our -- So those areas primary of

Brian Kinstlinger

business. got Great. Pay I've question Last is Fit the on

if with names this obstacle material I generating you revenue been heard some business? you're a biggest revenue, watches think with? couple you below What's been dollars obstacle that that correctly, thousand it's quarter. I the in big of hundred working I in What's more did you the think of guys said biggest $XXX,XXX to the

Gino Pereira

you Mike, want to... do

Mike Orlando

It's in really yes. branding to there, banking these Mike It's Yes, required. the experience, are affiliates Orlando. getting certifications the certification of have types manufacturers process, Mike terms through user it's a that Orlando. the I networks devices, devices' pretty needs that takes high Gino. heard, there's by of experience And Brian, payment been so device bar and extension place. types of other the

there. expected. and and certainly, approvals and longer of those has then have customers our And So execution products we caused than expected, that's delays the taken development

and increased If adoption of you look then the and here specifically, at in globally. U.S., penetration consumer seeing in the market increased acceptance the marketplace overall, you're

think devices I in to that's seeing in to big process. big akin But out, -- biggest things terms our the together. come a of and -- the start we're pretty of getting business so approval drag And been a lot this

Brian Kinstlinger

product that needs you that And separately? work through be each how approved is? definition... And on regulatory so to by it that Is

Mike Orlando

Yes.

Brian Kinstlinger

how that take? process year A And generally more? long or does

Mike Orlando

payment of at looks go the payment looks but board And their devices sure need it's to then certification, process. the different within is own approved, globally. of have approval these which at an make terminal -- platform's that independent Our networks that lab through interoperable an each devices [Eco] to independent every attributes

place. to the and development addition that -- So takes hardware that's in

we've -- take X we've what from a got anywhere lasted have So and average months, some that but X on year-plus. those can seen to approvals

outside are And a well. control so those to as our things certain of and, our outside extent, of control customers'

Operator

SoundView. our [Operator Instructions] from next is question And Tuttle from Kris

Kris Tuttle

I months? just for and just clarify the QX the side on the business. you Pay six $XXX,XXX -- first, Did wanted $XXX,XXX I say Fit of were revs to

Vin Miceli

That's correct.

Kris Tuttle

numbers? Okay. or That's -- flye x kind that? And there's year -- remnants no any revenue last Fit that's of so then Pay completely and that's of pure the any of --

Vin Miceli

Yes.

Kris Tuttle

with that the that Flip? of Or a focus business? anything of not Okay. the And happen of is part current did kind

Mike Orlando

Yes.

We pilot shipments the initial So late delay a we Flip first our serve May. we had that in first customers inventory in had that out began time, those. had. We that second of arrived of slight April, we seen early the and inventory shipments in then adoption getting additional of -- of part we first, of we've June, restarted that and June week at

It's X device. customers lot there. for revenue a of devices more We're going there's will to usage the is components loading from we the the see So funds fees long-term that The which activity market. the the and nominal. getting the of that more as build of of we're And see revenue sale not there. and device, in pretty more to device,

Kris Tuttle

Okay. numbers of performing? help devices might how and activated actually have understand shipped percentage devices, that these of would used? And been can about us things you any metrics Any that give us kind that were number of are

Mike Orlando

not Yes. We're breaking out time. at this that

Kris Tuttle

Okay. then I X that the for accurate? right, cash of the had you ops $XXX,XXX, the almost read if $XXX,XXX about months year. flow on And Is -- from first continuing the Q of

Vin Miceli

Yes.

Kris Tuttle

that up And of helping are are revenues, cash on from some you balance of -- -- number get the flow is the you financials in we number ops guys to maintaining that in before into the focused or a shore increasing terms sheet?

Vin Miceli

Absolutely.

Kris Tuttle

fully share diluted count? the What's current Okay.

Vin Miceli

million XX shares. under Just

Kris Tuttle

XX.X million?

Vin Miceli

the at million the Well, filed, the of outstanding end -- it XX.X -- of actually filing. time at we actually when shares was it was

Kris Tuttle

Okay.

Fit in expectations your of for being of $X.X get looking which of with, about million I the handle half Pay, year, business, the get acquired. the And half might first then Okay. second at or million that $X.X on the guess, a kind to so just

feel you million year is that full $XX do your does reasonable as -- management compare a team? a to million like Pay, Fit for $XX to how Excluding the expectations

Vin Miceli

can't any -- we do projections, we're -- can't Kris. So discuss really it's that. We just

Kris Tuttle

get do is mean will in a mean you us I That have sort there plan, LogicMark radically guess. you -- half something anything wondering consistent, was or expectation I not core second in handle trying of a with first different on would the just I half. if whether I that to to would respect of make business. but just would can, that none we mean an -- I have the unusual Okay. some can't the be projections, low. know be that you or internal was higher

Vin Miceli

So you I guess first what of aware we're X is would that tell the not permanently. that months I would results drastically anything alter

Kris Tuttle

think and on frustrations, people what's kind is monitor has of going tech. on of I [washen] what's think, with of health in the of health And if just Okay. one you We growth at I a is going the a follow payments line. opportunity, Nxt top had seeing are with lot online and and on kind tech lot a IPOs, companies explosive of look

some of in that opportunity for for or a like tremendous there channels like division question delays that somehow, I amount clearly, growth. looks like upside there's there. staff some work is, of the increases didn't obviously, and lot some guess the out my opportunity products? sounds something respect be product that a could tremendous base or opportunity And partnerships incremental were what unlock organizational should so -- but there to a LogicMark, And feels It has out it with

on cetera. value apologize this I And segment don't the all to and of I their et implement be -- business. is parks kinds I which and rambling the would kind kind today programs that are the just of locations products own it for someone feels of business, actually like remote it's across happening -- discovered it's be products, unlocking kind great don't And things. of -- of in all I just they that versus the driving mean great trails but margins, number a safety their of of that of LogicMark LogicMark's these should that nature something lot of the a more know, just I question, one using discovered national

Gino Pereira

Yes.

So Kris, is this Gino.

the yes, of of So tremendous aware number we're opportunities.

definitive range they we period. range of We But I broad moment. a pursuing may they tell larger as be the to opportunities yet. they a out. And a we may don't successful. opportunities opportunities. are might we a And very to out of or the as are the them longer now, have at of but working about or take usual, believe market we're could we actively are And -- have work say, But opportunities not anything gestation work range working adequately longer not

Operator

[Operator Instructions] Brian from next And is Kinstlinger from our question Alliance.

Brian Kinstlinger

I point just one question want as a make though. clarification to of

million continuing that I you first of I in $X.X was for have the think million the revenue Fit adjusted mentioned Kris operations. Pay. half thought $X.X

all larger So right? that Is of be market. that revenue should

Vin Miceli

LogicMark. had of we in X of was first revenue million the all which So $X.X by months, generated

Brian Kinstlinger

Right.

The is ops the not right other discontinued now. -- in your financials

Vin Miceli

correct. statement. absolutely in carved and reflected income It's line in the item That's one out

Brian Kinstlinger

I'm Right. you go us, it, sure and interest Q the can I your I ask So although we about guess think in is rates debt? interest expected current remind the interest expense. kind rate question through to of on the can -- it's other want I'd can

Vin Miceli

is XX%. Approximate

Brian Kinstlinger

cash a that Is number?

Vin Miceli

thought rate. you I'm asked interest I sorry, the

Brian Kinstlinger

how of I much and then No. No, cash? that actual is did. XX% Yes,

Vin Miceli

cash. all It's

actual P&L On of equivalent itself? Or the -- the XX%? is it that's

Brian Kinstlinger

a your the rate, kind know different it? [indiscernible]... rates of of XX% much interest. is see to So through what I had income number income XX% exact statement, interest is statement? show you've of but Or the runs on there higher on Or we'll no

Vin Miceli

number also amortization amortization. a because income issue the included there There's of the on as deferred the different OID the cost is face well debt as statement,

Brian Kinstlinger

just for So that can you quantify us?

Vin Miceli

noncash. is number that of $XXX,XXX around probably -- you're Approximately,

Brian Kinstlinger

per or per $XXX,XXX year? quarter Sorry.

Vin Miceli

months. six the For

Operator

we're Pereira remarks. for would Gino no I over the questions. further [Operator like time, turn to back this closing call Instructions] At showing to

Gino Pereira

the with joining you So today. for call everyone call. we've a Hopefully, very to will provide current conclude update. that Thank thank our managed everyone, much, And you.

Operator

in the program. today's gentlemen, thank you participation for and This conference. concludes Ladies your

disconnect. now may You

LogicMark (LGMK) 26 Aug 192019 Q2 Earnings call transcript