LogicMark, Inc. Q3 FY2023 earnings call

• Launched the new Freedom Alert Plus under the Care Village ecosystem, which includes an iOS and Android app, on-device middleware, AI-enabled cloud infrastructure, and subscription services. • New product testing has been positive for a new device in terms of weight, compact design, GPS location, and fall detection. • Efforts to improve operating efficiencies, such as environmentally friendly packaging and transitioning from air freight to shipping. • Plan to expand into health monitoring and offer predictive/preventative features like medicine reminders. • Welcomed 2 new Board members: Carine Schneider and Tom Wilkinson.

Third quarter revenues were $2.4 million with a gross margin of 67%. In the same quarter last year, revenues were $2.8 million with a gross margin of 62%. The year-over-year sales decline in the third quarter was due to one-time replacement unit sales last year. With national cellular network carriers discontinuing 3G support, customers with older units needed replacements, but this replacement process was completed in September last year, and sales year-over-year are expected to stop declining starting from the current December quarter. Gross margin improvement was driven by three areas: shifting from air freight to transpacific shipping from Asia-based contract manufacturers, more opportunistic inventory procurement, and improved domestic shipping costs to customers.

• Entering the last quarter of the year, focus on launching new products. • Aim to increase year-over-year revenues. • Continue to improve margins and reach breakeven profitability.

• National cellular network carriers upgraded to 5G and discontinued 3G support, requiring older unit replacements, but this replacement process was completed in September last year.

Q: Can you 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, do you think that you can use this experience with introducing this new product as a template for other potential product launches going forward?

A: Marla, I'm happy to answer that question. So we do 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 24/7 monitor service. As you -- 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 with the launch basically of our Care Village technology platform. So we have launched the app. 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 24/7 monitor service, the fall detection sort of technology and so forth. And so we do not see any surprises there. However, I will say that this in-home solution, we have -- because it's our first time sort of rolling out a 24/7 monitor service and a subscription fall 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 the technology to them and demonstrating these to them as we are going along. And so in the future, we may be simultaneously matching 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 these 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 our Veterans Administration Show in Orlando, where the government sector is being introduced to our new technology this week.