Vislink Technologies Inc

to VizLink's second quarter 2023 earnings conference call. My name is Drew, and I will be your operator for today's call. Joining us for today's presentation are the company's CEO, Mickey Miller, and CFO, Paul Norridge. Following their remarks, we will open the call to questions. Earlier today, VizLink released results for the second quarter ended June 30, 2023. A copy of the press release is available on the company's website. Before we begin the call, I would like to provide VizLink's Safe Harbor Statement, which includes cautions regarding forward-looking statements made during this call. Management will make statements during the call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including without limitation our examination of operating trends and financial expectations, are based on the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to differ materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not rely on these statements for a list of the risks and uncertainties associated with the company's business. Please see the company's filings with the Securities and Exchange Commission. VizLink disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information that is accurate only as of the live broadcast this morning, August 11th All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. Please note this event is being recorded. Now, I would like to turn the call over to VizLink's CEO, Mr. Mickey Miller. Sir, please proceed.

Thank you, Operator, and thank you, everyone, for joining us today. This morning, we filed our 10-Q with the SEC and issued a press release that provided our financial results for the second quarter and six months ended June 30th, 2023, along with highlighted business accomplishments. As a brief overview for today's call, I'll begin by providing highlights for the second quarter of 2023 and summarizing some of our most recent updates before passing the call to Paul to discuss our financial results in more detail. I'll then come back to discuss progress on our go-to-market strategy, product developments, and updates within our key markets before moving to Q&A. And with that, let's begin. In Q2, we've made substantial operational progress as we continue transforming the business. With a keen focus on the public safety growth market, Our efforts in this area led to a 91% year-over-year revenue growth in our MilGov segment, reaching $1.2 million for Q2 and $2.1 million in the first half of 2023. Our progress in public safety is highlighted by three key deliverables in Q2, two in the eastern U.S. with a large city and a large county, and the other one with a major country in the APAC region. These successful deliveries are clear indicators of our progress in this growth segment and reflect our team's resilience throughout this organizational transformation. We are swiftly adapting to the dynamics of the public safety industry. This includes navigating elongated sales cycles and dealing with budget cycles that heavily lean towards the second half of the fiscal year. along with decision-making patterns that follow a similar trend. While these factors present near-term challenges to our top line, we remain confident in the alignment of our solutions and the services within the public safety market. As we move into the second half of 2023, we are encouraged by having the most $1 million-plus opportunities in our sales funnel that we have had in several years, and behind our revamped sales and marketing efforts, already in motion. We are confident that we will capitalize on many of these potential deals in the second half of the year in 2024. During this transformative phase, as revenue decreased 10% year-over-year in the first half of 2023, effective cost management has been paramount. In Q2, we reduced total expenses by 10% from the prior year. Continuing with our transformation, we plan to implement additional cost-saving measures in the second half, which will further rationalize our product set and position us to more cost-effectively serve our target markets. Taken together, these actions will contribute to saving over a million dollars annually. We have also augmented these measures through our pricing strategy as we have applied a 5% increase to all new quotes starting at the end of Q2. Additionally, we continue to drive increased efficiencies throughout the organization, including heightened workflow optimization and financial accountability, efforts we will extend into the second half of the year. A significant component of our transformation has been our ongoing progress in integrating our three ERP systems into a single more modern system. This consolidation not only streamlines our operations, but also enhances reporting and control. Our early efforts to boost operational efficiency across the organization have already begun to yield positive results. Later in the call, I'll elaborate on our product development and strategic initiatives in sales and marketing that are designed to complement and bolster the results of our operational improvements. But first, I'd like to turn the call over to Paul to discuss our financial results for the quarter in greater detail. Paul?

Thank you, Mickey, and good morning, everyone. Looking at our financial results for the second quarter, our total revenue for the first half of 2023 was $12.2 million compared to $13.6 million in the prior year period. For the second quarter of 2023, revenue decreased to 5 million from 6.8 million in quarter two of 2022. The decline in revenue during the recent period is primarily due to our decision to discontinue several product lines in the third and fourth quarters of 2022. These products are phased out because they weren't in line with our evolving strategic direction. Gross profit for the first half of 2023 was 6.6 million compared to 7 million in the first half of 2022. Our gross profit margin for the first half of 2023 was 54%, an improvement from 52% in the first half of 2022. The improvement in gross margin resulted from cost savings and components and personnel. In the second quarter of 2023, gross profit decreased to 2.7 million from 3.6 million in the prior year period. the gross profit margin for the second quarter of 2023 was 53%, consistent with the 53% margin in the prior year period. Total expenses in the first half of 2023 were 18 million, a 7% decrease from 19.3 million for the same period in 2022. For the second quarter of 2023, total expenses decreased 10% to 8.4 million from 9.3 million in the prior year period. The improvement in total expenses was primarily driven by reductions in workforce-related expenditures, including personnel expenses. Additionally, we transitioned away from our outsourced partner, opting to integrate additional engineering capabilities in-house and further enhance our operational capabilities. Turning to our profitability measures, for the first half of 2023, we recorded an operating loss of 5.7 million, consistent with the operating loss of 5.7 million in the prior year period. For the second quarter of 2023, we recorded an operating loss of 3.4 million, compared to an operating loss of 2.6 million in the prior year period. The increase in operating loss was primarily due to the changes in revenue previously noted. Net loss attributed to common shareholders for the first half of 2023 totaled 4.8 million, or $2.02 per share. This was 0.5 million improvement from the net loss of 5.3 million, or $2.30 per share in the first half of 2022. Net loss for the second quarter of 2023 totaled $3 million. or $1.27 per share compared to net loss of 2.5 million or $1.10 per share in the second quarter of 2022. EBITDA for the first half of 2023 was a loss of 4.9 million compared to a loss of 4.5 million in the first half of 2022. Adjusted EBITDA, a non-GAAP metric for the first half was a loss of 3.2 million compared to a loss of 2.8 million in the same period a year ago. EBITDA for the second quarter of 2023 was a loss of 3.1 million compared to a loss of 2.1 million in the prior year period. Adjusted EBITDA and non-GAAP metrics for the second quarter of 2023 was a loss of 2.8 million compared to a loss of 1.5 million in the second quarter of 2022. The EBITDA results were primarily a result of the changes in revenue partially offset by cost management. A reconciliation of EBITDA at the gap measures is contained in our earnings release. Finally, to our balance sheet. As of June 30th, 2023, we had cash and cash equivalents of 11 million compared to 14 million at the end of the first quarter. In the second quarter, we increased inventory by 10% as we continue to enhance our capacity for immediate booking and shipping. We also have invested 10.8 million in federal bonds intended to be held to maturity. We've maintained a strong balance sheet, and from a working capital standpoint, we have 35.6 million in working capital at the end of the second quarter, compared to 38.6 million at the end of Q1. We believe our strong debt-free balance sheet that only shields us from macroeconomic pressures, but also gives us the flexibility to invest in high return on investment opportunities that align with our long-term growth potential. We intend to remain proactive in exploring enhancements to our video communications areas, especially within defence and public safety. That concludes my prepared remarks. I'll now turn it back to Mickey.