CEO: Gino Pereira
WSA: Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer, joining us today is Gino Pereira, the CEO for NXT-ID Incorporated. The company trades on NASDAQ, ticker symbol is NXTD. Thanks for joining us today, Gino.
Gino Pereira: My pleasure. Thanks very much, Juan.
WSA: Certainly. For some of our listeners that are new to your story and may not have caught our interview from last year, can you provide us with an overview of the company?
Gino Pereira: Yeah, certainly. NXT-ID started about five years ago as a security technology company for mobile devices. We saw a need — with the increasing amount of mobile devices out there — to provide a level of security and we’ve seen over the years quite a number of breaches that have happened in very substantial amounts. And so we’re focused on doing that and we’ve evolved as technology has evolved over those last five years. And we now provide a comprehensive platform of technology products and services to enable the Internet of Things. With our extensive experience and access control, biometric identification, verification, security, privacy, encryption, payments, miniaturization, and sensor technologies, we have the ability to develop and market groundbreaking solutions for payment and IoT applications.
Previously some of the leading products that we’ve introduced, we started with WOCKET, which was a next generation smart wallet. We followed that up with a collaboration with WorldVentures, an international travel organization and we’ve developed and manufactured for them a card called the flye card, which is a smart credit card as well as a loyalty card as well. And along the way we’ve also expanded the way we look at IoT and security and we acquired in July of 2016 a company called LogicMark, which is a manufacturer of Personal Emergency Response Systems. And we’re in the process of designing new and updated technology for that stream of products. It caters to an aging population and that’s something that we have growing around the world. At the same time these devices are becoming more mobile than they were before. They’re not just tied to something at your home.
And we look forward to continue growth with that company. And then recently we made a very significant merger with FitPay, which has a proprietary technology platform to deliver end-to-end solutions to device manufacturers for contact payments as well as credential management and tokenization. These services are essential to any wearable company that is coming to market. They need to be able to have a secure, approved and efficient way of making these payments. And FitPay helps them do that by having done all the groundwork and having all the approvals and the confidence of the major banks as well as card corporations. We’re working with a good number of partners to bring product to market there.
WSA: Great. And what were some of the highlights and drivers there behind your current Q2 results?
Gino Pereira: Second quarter results were really strong. They are built on our first quarter results and the results from the last quarter of 2016. As our technologies start to mature and come to market and we still only are at the beginning stages of this, you know, the results are following. We had continued growth revenues for the first six months of 2017 with about $14 million and we had less than $100,000 for the same period last year. So, the company is really starting to turn into products the technology that’s been promising in development. On that front, LogicMark, the Personal Emergency Response company, continues to perform very well.
Even on its legacy business it has posted a second straight quarter of record revenue. And we think there is a long way to go developing the legacy business as well as generating the next generation of those types of products. Our deliveries of flye cards to WorldVentures, continues at a strong pace as WorldVentures has started to increase distribution of that product. And although FitPay didn’t figure in the numbers for the quarter that was the quarter in which we merged with FitPay. And we announced that FitPay is providing payment capabilities to Token, which is an exciting new connected ring developed by a company called Tokenize.
And we also announced milestones with both Visa and Mastercard in terms of our ability to issue tokens to vendors that we work with, which is essential to make this whole secure system work. And so we’re very happy with the second quarter and the year-to-date and we’re looking forward to the rest of the year.
WSA: Great. And what are some of the key trends that you’re focusing on right now in this sector and how does the recent FitPay acquisition position you to capitalize?
Gino Pereira: Our key strength is the breadth of our capabilities. We have some really unique technologies now and particularly by bringing in FitPay, we have a lot of pieces. We already understood access control and biometrics, security and privacy, but FitPay really brings with us the payment technologies and the ability and the relationships with established payment companies to be able to bundle this all together and turn out an incredibly strong product.
I think that the combination of these capabilities will play a role in the growth and expansion of the IoT market. BI Intelligence estimates that by 2020 there will be more than 20 billion IoT devices in the market. This is obviously a huge market and the ability to authenticate these devices and use this for secure transactions is obviously critical. The whole IoT model will fail if we’re unable to secure these devices. And I believe that NXT-ID’s core competencies position us very well in that market.
WSA: And what are some of the other factors that you feel make your solutions unique from some of the other players in the sector?
Gino Pereira: Well, I think that I’ve outlined our uniqueness in terms of the breadth of product and technology that we have to bring. We can partner with some very significant companies and provide them with solutions. But some of the other trends that are interesting to us and exciting to us is actually the whole growth of this space. There is a lot of data out this month showing that consumers are now ready for a much more convenient way to buy things. The way we buy things is pretty inefficient. It’s time-consuming and it can definitely be improved upon. And we are right to the point where we have those technologies to offer our customers who are bringing their products to their customers in order to do this. We can eliminate friction from how they buy and pay for things. So, I think as that trend becomes more established that will be an accelerator for our business.
WSA: Sure. And what key goals and milestones are you hoping to accomplish over the course of the next six to twelve months?
Gino Pereira: There are a couple of areas that we hope to accomplish. One is the area of our capital structure and the other is the area of our business. In terms of our capital structure, we recently announced, with the last financing that we did, that we no longer have any floating rate convertible securities outstanding. So, we’ve managed to eliminate that from our balance sheet structure. We’re now in view of the strong financial results that we’ve been posting. We’re looking to refinance about $15 million in debt that we have, as with debt replacement at a considerably cheaper interest rate, which will free up a considerable amount of cash flow. We’re hoping to accomplish that before the end of the year.
In terms of our business operations, I think the flye card will contribute to the company’s success towards the end of the year. We expect that the deliveries will increase substantially. As far as LogicMark is concerned they continue to perform very solidly and we are expanding into new channels, which we will be announcing fairly soon. And FitPay will soon begin to see their contribution. As I said we announced the Token platform, the launch of the Token platform and there are a number of customers that FitPay has been working with over a while that are now coming to fruition and coming to market with their products. We will be announcing those partnerships coming to market and with that will be the revenue contributions of the group as well, certainly over the next 12 months.
WSA: And will you look for more types of acquisitions and if so what are some of the synergies that you’ll be targeting?
Gino Pereira: Synergy is actually the operative word, right. So it’s not easy to find things that are synergistic. We certainly are not about making acquisitions for the sake of making acquisitions. We have the strategy and a goal that is anchored around IoT and if something comes across our radar that fills or helps to expand that role we’ll do that. We’re just very focused on executing on our business plan right now in our model, we have a lot to do. There is a lot of opportunity in front of us so we’ve kind of got our nose down and trying to get things done.
WSA: So, as far as investors in the financial community Gino, what are some of the drivers there that you want them to better understand about your company and sector?
Gino Pereira: Well, we’re still an emerging company that is positioning ourselves at the cutting edge of a really substantial emerging market. It’s a really interesting and dynamic place to be and so I think we’re placed right. We’re one of the few small companies that really have something to contribute in this area. And I think that in terms of how the company has changed over the past twelve months, it’s not just the numbers that we’ve put on the board. It’s also the quality of the acquisitions that we’ve made and how the complexity of the group looks entirely different as to how it did twelve months ago.
Our balance sheet is much stronger. Our book of business is a lot stronger. The management team is stronger. On all fronts we’re really building the company for growth. So, we’re optimistic about the remainder of the year and what’s ahead for us in the coming quarters.
WSA: Great and once again joining us today is Gino Pereira, the CEO for NXT-ID Incorporated. The company trades on NASDAQ, ticker symbol NXTD. Currently trading at $1.63 a share, market cap is about $20 million. And before we conclude here, to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Gino Pereira: Well, I think we’ve made real progress just recapping what I stated just now. We’ve expanded our capabilities, our technology offerings, our revenue. We’ve improved our financial structure and strengthened our balance sheet. The company has made tremendous progress over the last twelve months. And so I’m confident that we will create value for our shareholders. Going forward, we’re very focused on executing our strategic business plan, which is to become a real player in the IoT space, providing payment and security technologies. As we work to continue and produce results as they come up I think that they should be positively reflected by the market and hopeful they’ll be reflected in our share price.
WSA: Well, we certainly look forward to continue to track the company’s growth and report on your upcoming progress. And we’d like to thank you for taking the time to join us today Gino and update our investor audience on NXT-ID. It’s always good to have you on.
Gino Pereira: Yeah, pleasure. Thanks very much, Juan. I enjoyed it.