LogicMark(US:LGMK)2019-08-26 18:24Financial Data and Key Metrics Changes - Revenues for the six months ended June 30, 2019, were approximately $8.7 million, consistent with the same period in 2018, while revenues for the second quarter increased by about $300,000 compared to the first quarter of 2019 [13][14] - Gross profit margin improved to approximately 76% for both the three and six months ended June 30, 2019, compared to approximately 72% for the same periods in 2018 [15] - Operating income from continuing operations increased by about 67% over the same period last year, with cash provided by continuing operations at approximately $670,000 compared to a deficit of $1.1 million for the same period last year [8][19] Business Line Data and Key Metrics Changes - LogicMark's core business performed well, contributing significantly to revenues, although there was a decrease in commercial sales volume, partially offset by a favorable shift in product sales mix [14][28] - Fit Pay revenues for Q2 were $232,000, down from $805,000 in 2018, and for the six-month period, revenues were $454,000 compared to $1.4 million in 2018, primarily due to the completion of shipments for the flye card [23] Market Data and Key Metrics Changes - The company expanded its bank implementations to over 425 banks and entered 26 countries, indicating growth in market presence [24] - LogicMark's focus on government channels, particularly the VA, has maintained market share despite increased competition [28][45] Company Strategy and Development Direction - The company has withdrawn the planned spin-off of its fintech division and is now seeking other strategic opportunities to relieve cash flow pressures [9] - There is a strong focus on new product introductions in the healthcare sector, with expectations for innovative products to be launched by the end of 2019 and early 2020 [8][35] - The company is exploring additional marketing and advertising strategies to enhance its value proposition in competitive retail and commercial channels [31][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in retail performance and delays in product introductions as factors affecting growth, with a commitment to improving profitability through a focus on more profitable products [46][47] - The company is actively pursuing a range of opportunities, although larger opportunities may take longer to materialize [70] Other Important Information - The company closed the quarter with cash of about $1.3 million, with inventory levels increasing due to new stock received [20][21] - Interest expense for the six months ended June 30, 2019, was lower by approximately $521,000 compared to the same period in 2018, primarily due to lower interest on refinanced loans [18] Q&A Session Summary Question: What are the top three priorities for the company? - The main priority is focusing on healthcare and LogicMark growth, followed by reducing spending to move towards profitability, and exploring strategic opportunities for the fintech division [39][40] Question: Should investors expect a transaction regarding Fit Pay to take longer than two months? - Management indicated that the goodwill evaluation is a normal process and does not necessarily imply a timeline for the transaction [41] Question: What has led to the performance tracking below the expected 10% annual growth? - Management cited slower retail performance and delays in product introductions as contributing factors [46][47] Question: What new products are expected to be released? - New products include an updated 4G PERS device and new cellular and WiFi wearable devices [48][49] Question: What are the biggest obstacles in generating revenue for Fit Pay? - The main obstacle has been the lengthy certification process for devices, which has delayed product launches [50][52] Question: What is the current interest rate on the company's debt? - The approximate interest rate is 13%, with about $300,000 of that being non-cash for the six months [76][81]