Vislink Technologies Inc

Good morning and welcome to VizLink's second quarter 2024 earnings conference call. My name is Megan 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, Mike Bond, who will report results for the second quarter ended June 30, 2024. 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 includes 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 upon the company's current estimations and various assumptions. These statements involve risks and uncertainties that could cause actual results or events to material 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 a 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, few events, or otherwise. This conference call contains time-sensitive information that is accurate only as of the live broadcasting this morning, August 14, 2024. Please note, this event is being recorded. Now, I would like to turn the call over to VizLink CEO, Mr. Mickey Miller. Please go ahead.

Thank you, operators, and thank you, everyone, for joining us today. This morning, we filed our Form 10-Q with the SEC and issued a press release that provided our financial results for the second quarter ended June 30th, 2024, along with key business accomplishments. As a brief overview for today's call, I'll start by discussing our second quarter performance and highlighting our progress toward our three-year financial goals. I'll then pass the call to Mike to discuss our financial results. Afterward, I'll return to discuss recent updates within our key target markets, product developments and our go-to market strategies. As we advance through 2024, we are on track to meet our three-year financial and operational objectives. Our targets include doubling revenue by 2026, increasing recurring revenue streams, and achieving cash flow positivity in 2025. While we aim for cash flow neutrality by the end of 2024, the timeline may adjust due to the need to invest in promising growth opportunities we are actively pursuing. I'm excited to share that the second quarter of 24 has been another confident step forward for Zislink in pursuit of our three-year goals. Our efforts have resulted in robust financial performance and significant progress in executing our strategic initiatives. In Q2, we achieved a 73% year-over-year increase in revenue, reaching $8.7 million. This growth was driven by both our live production and MilGov markets. Our strategic focus on new products, particularly in the MilGov sector, is paying off. In recent months, we have landed key MilGov orders and successfully converted opportunities with BMS customers. In 2024, our systems were successfully deployed with U.S. Customs and Border Protection, Baltimore City Police, Baltimore County Sheriff, and the New Jersey State Police. And initial orders were received with the Danish Ministry of Defense and D.C. Metropolitan Police. Additionally, we have positioned BizLink for expanded market reach in the coming years by obtaining NATO stock numbers and successful shipments to several OEM customers. NATO stock numbers, included in the NATO codification system, are critical for standardizing and streamlining procurement processes within the 63 partner nations. Obtaining NSMs for our AVDS product portfolio, significantly raises VizLink's credibility and market access in the defense sector. This milestone could enable more efficient and widespread adoption of our technology within NATO forces, opening the door to significant contracts. Additionally, achieving approved supplier status with three new OEM partners solidifies our relationships and paves the way for more reliable revenue streams. We've also made significant strides in expanding our weighted sales pipeline, now valued at $51 million, up from record levels reported in Q1. This reflects the demand for our current offerings and new products and our potential to expand into emerging markets such as drone command and control, or Drone C2. Our increased R&D investment in Drone C2 highlights our proactive approach to pursuing emerging opportunities in both manned and unmanned applications. As we navigate the remainder of 24, our goal remains to achieve cash flow neutrality by year end and transition to cash flow positivity in 2025. Our Q2 expenses were higher than expected due to talent acquisitions, non-standard governance costs, and R&D investments. We are actively pursuing operational enhancements and cost optimizing measures alongside our strong revenue growth trajectory to ensure effective cash management. In line with these efforts, we have appointed Donnie Gilliam as VP of Operations to further improve our operational efficiency and effectiveness. His extensive experience in operations Supply chain management and lean manufacturing will be instrumental in driving customer satisfaction, cost reduction, and working capital improvements. Donnie will also lead the implementation of our new ERP system this fall, which will enhance our cost structure, inventory management, and customer deliveries. Additionally, Bill Sweeney, with his extensive MilGov background, is leading our global sales efforts as a new Senior VP of Sales. Our focus on the MilGov market is paving the path for our growth, bolstered by opportunities opened by the BMS network. These factors, combined with our increased governmental investment, given the current geopolitical landscape, will drive our revenue growth. We expect to continue growing by ramping up and refining our sales efforts, supporting our enhanced channel capabilities, and ever-improving product portfolio. Before I proceed with further updates, I'll pass the call over to our CFO, Mike Bond, to provide a detailed overview of our financial results for the second quarter. Mike?

Thank you, Mickey, and good morning, everyone. Looking at our financial results for the second quarter, our total revenue increased 73% to $8.7 million, up from $5 million in the prior year period. The increase in total revenue resulted from continuing growth in sales to both live production and MilGov customers. Gross profit increased to $4.9 million, up from $2.6 million in the prior year period. The gross profit margin for the quarter was 56%, up from 53% in the prior year. The year-over-year improvement in gross margin reflects greater operational efficiency. The gross margin improvement was partially offset by a higher mix of revenue from live production markets, as well as from installation timing for a large MilGov opportunity. Total expenses. were $11.3 million compared to $8.4 million in the prior year period. Beyond the costs associated with the increased revenue, our Q2 expenses reflect one-time corporate costs, including new hire recruiting fees, legal fees associated with evaluating inorganic growth opportunities, and an increase in personnel in preparation for the upcoming ERP implementation. We also saw an increase in R&D investments, which we anticipate will continue over the next several quarters as we strategically invest in our drone C2 platform. Turning now to our profitability measures. Operating loss improved to a negative 2.6 million, down from a negative 3.4 million in the prior year period. Net loss attributable to common shareholders improved to a negative $2.3 million or a negative $0.93 per share. That's from a negative $3 million or a negative $1.27 per share in the prior year period. This improvement demonstrates that our strategic cost management is working and will continue to enhance operational efficiencies. Moving now to the balance sheet. As of June 30, 2024, our cash and short-term investments stood at $11.5 million, compared to $14.2 million at December 31, 2023. We experienced higher-than-expected cash usage during Q2, primarily due to one-time corporate items, including talent acquisition and non-standard governance costs. These items are not expected to recur, and we anticipate improved cash performance moving forward. Despite these challenges, we maintain a robust working capital of $29 million at the end of the second quarter, compared to $31.8 million at December 31, 2023. As we launch our ERP system this fall, we expect to see continued improvements in cash performance, inventory management, supply chain, and our working capital turns in the coming quarters. That concludes my prepared remarks. I'll now turn it back to Mickey.