INVO Fertility Inc (IVF) 2021 Q1 法說會逐字稿

Good afternoon and welcome to the INVO Bioscience reports first-quarter of fiscal year 2021 financial results conference call. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Joe Diaz from Lytham Partners. Please go ahead.

Thank you, and thanks, everyone, for joining us today for a review of INVO Bioscience's first-quarter 2021 financial results. Joining us on the call today is INVO Bioscience's Chief Executive Officer, Steve Shum. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session.

Before we begin with the event, we submit for the record the following statements. Certain matters discussed on this conference call by management of INVO Bioscience may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

All statements regarding the company's expected future financial position, results of operations, cash flows, financing plans, business strategies, products and services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as: anticipate, if, believe, plan, estimate, expect, intend, may, could, should, will, and other similar expressions are forward-looking statements.

All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond the company's control, which may cause actual results, performance, or achievements to differ materially from the anticipated results, performance, or achievements. Factors that may cause actual results to differ materially from those in the forward-looking statements include those set forth in the company's filings at the Securities and Exchange Commission at www.sec.gov. The company is under no obligation and expressly disclaims any such obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

With that said, I'd like to turn the call over to Steve Shum, Chief Executive Officer of INVO Bioscience. Steve, please proceed.

Thank you, Joe, and welcome everyone listening on the call today. Mike Campbell, our Chief Operating Officer, who would normally participate on the call, had an important meeting come up last minute and won't be joining this time. He will be sure to make sure to make the next call.

As we noted in the release that went out today, it's been an exciting start to the year and a very busy one for our team. We worked hard to put the necessary resources and people in place to take advantage of the market opportunity and feel we are starting to see early progress and benefits. Most important, we advanced our INVO clinic strategy here in the US with the signing of our first two agreements.

I would note that we expect to be executing on a third agreement soon. Both Mike and Chris Myer have been instrumental in moving these efforts forward, both in the US and Mexico. With the leadership of Inger Britt Carlsson, our VP of Medical Affairs, along with support from the team, including our Scientific Advisory Board members, we have substantially enhanced our training materials and process. It's important to note that proper training is critical to the success of our distributors and partners. And training is not a one event session. It's generally multiple sessions with multiple Q&A follow-up activities.

We have really experienced a notable increase in these training and support activities this year, which are occurring weekly now. Of course, this is exciting for us to see this activity level as it's a reflection of our team's efforts, the growing awareness around INVOcell, and the expanding number of international distributors. The most important benefit is we also see this as a precursor or a leading indicator for the business and driving future revenue growth. I want to also praise our international business development team who have been on the frontlines and critical to pushing these activities along and supporting those efforts.

Another very important milestone for international activities, we have recently seen INVOcell procedures recycled to being performed in Spain and Malaysia. These locations are reporting very good fertilization and embryo quality rates, consistent with what we have seen throughout with INVOcell and positive patient satisfaction levels as well. We look forward to much more of this activity in the near future. And again, this is a result of proper training and support.

Another important building block we recently expanded on this year, and something that is absolutely necessary to supporting our commercialization efforts, is marketing. We added both a new Board member with strategic marketing expertise, as well as an internal team member, with the addition of Meryle Lynn Chamberlain as our Director of Marketing.

As we highlighted on our last call, additional published outcomes data with the recent Ferring peer-reviewed publication and the SART data, which further demonstrates quality outcomes with INVOcell, also continues to be impactful for our commercialization activities. This expanded retrospective data helps further validate technology and provides confidence in the INVOcell solution. We intend to further advance these activities this year with additional planned publications. In fact, a few abstracts on INVOcell were submitted recently for the upcoming ASRM Conference later this year.

I will take a few minutes to expand further on the commercial activities which Mike wanted to make sure we highlighted for everyone. The commercialization activities have made solid progress just since the end of March when we held our last investor call.

In the US, as announced earlier, we executed on the partnership agreement with Lyfe Medical for our second INVO clinic to be located in the San Francisco Bay Area. We have started planning meetings with our partner and they are eager to finalize location and begin the buildout phase. Structure wise, it's a little different than our other US joint venture agreement, but we expect that we will have similar economics in terms of profit split.

On the Birmingham clinic, we are making progress towards opening. We received the construction permits to initiate the space buildout, which begins this week, and is expected to be completed in eight to 10 weeks. All of the clinic equipment is on order and there are no foreseeable delays in obtaining any of the required products.

We do not have a specific opening date ready to share just yet, but we can say that we are feeling more confident that we can be ready to start seeing patients in the July-August timeframe. We will provide additional updates as they become available.

I know we have highlighted our Birmingham Partners a number of times, but it's worth noting again as this is a critical point, the clinicians we are working with have already demonstrated success from a business model and patient standpoint with implementing INVOcell in a clinical practice. This is a huge benefit and provides us with tremendous confidence regarding the potential success of this clinic.

Ferring, our distribution partner here in the US, continues to focus on promoting and selling into the existing IVF clinics, and they are continuing to expand patient awareness through their marketing activities. We believe our strategy around creating the INVO clinics will really help add to that awareness, create market acceleration with INVOcell and complement Ferring's efforts.

In Mexico, once we cleared the product registration process in February of this year, Dr. Arredondo and Dr. Ramirez started working at an accelerated pace to bring this joint venture operational as well. The site location in the City of Monterey is finalized, and the INVO Center will be located within a local hospital. They are targeting a July timeframe for the construction buildout to be completed. Lab equipment has been ordered here as well, which has an approximate six to eight weeks lead time.

They do need to complete some local licensing, which is in process. As such, our partners are targeting a September-October timeframe to begin operational and begin treating patients. But again, we will provide more specific dates as we work through these remaining steps. Also, as a reminder, similar to Birmingham, Dr. Arredondo was an early adopter of INVO at his fertility clinics in San Antonio and Austin and is well versed in the technology and how to successfully implement within a clinical practice.

We remain active in Canada and expect to report on some developments there soon. As another reminder, the product already has clearance and can be sold into the Canadian marketplace.

In other parts of the world, earlier this year, we reported that we began initial sales to a few clinics in Spain. We have hosted a number of training sessions with clinics and more recently, they began performing initial procedures. While it's just a start, treating patients with INVOcell is a very important milestone for this market.

In Malaysia, we have conducted a number of training sessions with our new distributor. One of the local hospitals in the country also started treating patients recently as part of an evaluation, and preliminary outcomes are good and what we would expect to see.

Similar to Spain, these initial patient procedures are important, as they begin the process of building real-world experience and confidence with the clinicians in these markets and something that can be built on within these regions. We do anticipate more of this in other markets soon.

By the way, as a side note, our distributor in Malaysia has also recently inquired about expanding their territory outside of Malaysia. They are a great distribution partner, and we believe that request reflects their confidence, as they have devoted time and resources to training and the initial activities within Malaysia.

We recently entered into a distribution agreement for Thailand. The distributor is helping our teamwork through the local product registration process, and we have also begun training and recruiting local key opinion leaders to initiate procedures. They are a strong local player and have set some aggressive goals for INVOcell within that market, which is very encouraging. We'll look forward to additional updates as we complete initial steps in that market.

As we noted previously, Pakistan remains a very interesting market opportunity. While the fertility industry there is small currently in terms of annual procedure volume, it's a large potential patient market with significant potential for growth. And our partner, Galaxy Pharma is really the dominant player and market share leader. They too have been very active in training and been one of the more aggressive partners of bringing a large audience of clinicians in their network to our training sessions. They are eager to start and we hope to have product registrations completed around the July timeframe of this year.

Our India partner remains challenged by the very difficult COVID situation over there. They are still working to try and bring the first center up and running this year, but we know it's a challenge currently and we will provide further updates as they occur.

Just a quick update on a few other earlier distribution agreements we executed in Africa, Turkey, and Jordan. All these markets have been severely impacted by COVID. We have completed our training programs, and these partners are prepared to begin promoting, marketing and selling in the local markets. We are seeing some forward progress and believe these areas will begin contributing later this year.

Overall, we feel the commercial team has come together and performing well. Our data and validation profile has vastly improved, which is critical for the commercial effort. We have really honed our training proficiency, and now our marketing is quickly coming together to support these activities. We have an increasing pipeline, and our distributor and partner activities continue to develop at a more accelerated pace.

Turning back to the INVO clinics just for a minute, I realize we keep stressing the INVO clinic activities, but this is really an important point for everyone to understand. We believe this new business activity, which serves as an additional method for bringing INVOcell to the marketplace, will prove to be transformative to the business.

We expect these clinics will highlight and drive greater awareness and adoption of the technology, which we believe will in turn help accelerate volumes within the existing IVF clinics that offer INVOcell as part of their overall practice. And the INVO clinics will also allow us to participate in greater economics on a per-procedure basis. We are keeping our original stated goal to have the initial three to five clinics up and running in the second half of this year.

Turning to a few financial highlights, revenues for the quarter totaled $684,000, which compared to $258,000 in the prior year period. We recorded a net loss of $2.5 million, compared to a loss of $1.4 million in the prior year. However, excluding non-cash charges related to equity-based expenses and additional amortization of the convertible debt discount, we had an adjusted EBITDA loss of approximately $981,000, compared to an EBITDA loss of $625,000 last year.

We had approximately $224,000 in this year's first quarter related to costs associated with the INVO clinic activities. So much of the actual cash increase over last year was related to the added business efforts, which again, we view as necessary before we start to see the added revenue impact of those efforts.

We closed the quarter with approximately $8.4 million in cash. Subsequent to the quarter end, we also collected just over $500,000 in cash from receivables.

During the quarter, we had $1.2 million of our convertible debt outstanding convert into common shares. So at period end, we have just a remaining $500,000 in convertible debt. As a reminder, that remaining debt is convertible at a fixed price of $3.20 per share.

We also had over -- just over half of our outstanding warrants convert during the quarter, part on a cash basis and part cashless. We have approximately 216,000 warrants that remain outstanding. Our current outstanding shares stand at approximately 10.4 million.

On the clinical side, with respect to our five-day label enhancement for the US market, we do not have any updates report just yet. That remains a very active effort. And we have set a goal of completing the process this year and we will provide updates as we have them. Also, as a reminder, the five-day labeling is just for the US market. Our CE Mark is already based on five-day.

I will conclude our prepared remarks by simply restating what we often highlight in many of our press releases and updates. There is a very significant underserved patient base around the world suffering from infertility. And there are some real challenges with respect to providing enough care to treat all those in need, in terms of affordable, efficient, and effective solutions and ones that can add capacity to the overall infrastructure, all of which are issues that we believe INVOcell can address.

We are excited for the balance of 2021 and beyond, and look forward to leveraging the progress we are making and the impact we believe that will have on our forward operating results.

I will now open this up for questions.

(Operator Instructions) Scott Henry, ROTH Capital.

Thank you and good afternoon. Just a couple of questions. I guess, first, the orders from Ferring, obviously they can be kind of chunky depending where they come in. Could you give us a sense of what kind of cadence we may see throughout the year of -- should we expect orders again in second quarter, third, and fourth, or will it be in boluses? Just trying to get a sense of that and model it.

Sure. Thanks, Scott. Yeah, as you know, the purchase requirements are annual requirements. So we continue to assume there will be volatility quarter to quarter until we and Ferring further establish INVOcell in the market. As I mentioned, Ferring is adding additional marketing efforts this year for the US market. So we will see how quickly that helps accelerate volumes to work through existing stocks, such that they will be ready to place their next order. So again, we would still anticipate some quarter-to-quarter volatility in that.

Okay. So I mean, I probably wouldn't expect a ton in the second quarter given the big order that went in first quarter, I guess would be my interpretation until you get to that steady state, I guess. And then shifting gears -- well, actually first, were there any o-US product revenues in Q1? I know those are near term, but I don't know if anything happened in Q1.

Yeah. Again, it was small -- what we are starting to see on the international side are small, but for us, it's very important that it's a start and getting the ball rolling, so to speak. But yes, there was a little bit in Q1.

Okay, great.

And as we mentioned before, we would expect that to build as we move through the year.

Okay, great. And then on the five-day label, I know there was either the hope that perhaps you could do it on retrospective analysis. Do you have any clarity on whether you will be able to do retrospective analysis within that product?

Yeah, we actually do have -- still have quite a bit of confidence we can achieve what the FDA is looking for utilizing the retrospective data. It has required us to have to dig a little deeper. Some of that data is not readily available within the SART database, but we have been fortunate to have some really friendly, supportive clinics that are willing to give us access to that deeper dataset that we need to support the submission. So like I said, at a high level, we actually do have a fair amount of confidence we can achieve the objective utilizing the retrospective data.

Okay, great. And final question, SG&A was higher in the quarter. You mentioned a lot of that was through the build-out of the clinics, but you should continue to build out clinics, I guess, through 2021. Should I expect SG&A to stay around that $2 million level or do you think that will pull back?

Well, I would want to note that we incurred some costs in terms of JV activities that were expensed in the period, and which we are not part of a specific facility buildout or equipment purchase, which would appear as assets on our balance sheet. And those costs were primarily some of the legal costs and working through the agreements. So we would like to think those will dissipate a bit, Scott.

And of course, to your point, we will be making these investments in those activities, but they will be reflected a little differently rather than coming through the P&L. But we would anticipate, there still might be some of that occurring, but I think maybe not at the level we saw in the first quarter.

Okay, perfect. Well, thank you for the clarity and thank you for taking the questions.

Thanks, Scott. Appreciate it.

(Operator Instructions) Kyle Bauser, Colliers Securities.

Great, thanks. Hey, Steve. Thanks for all the updates.

Hi, Kyle.

Maybe I will just start on the peer-reviewed publication. It looked like favorable outcome, and the conclusion was that this INVOcell is a pretty nice alternative given the economics and the outcomes of that clinical data. I am just wondering how the pregnancy rate per transfer or per cycle start compares to traditional IVF? And maybe you could just kind of highlight some of the key takeaways anyways from that peer review?

Yeah. We think that that peer review reflected what we have seen in most of our other data, in that it's fairly equivalent to what you see in IVF, I mean, within a few percentage points, and again, when you are doing proper apples-to-apples comparison. But -- so from our vantage point, we constantly say we get high-quality outcomes and we view those as comparable.

And when you look at it from a cost of procedure, this is where we often say we think we are even leading the way on having more economical solutions to achieving a high-quality outcome at an affordable price, really -- especially in some of the higher cost markets like we see here in the US.

Got it. And I think about 95% of the cases in that study use the five-day incubation period, and appreciate the comments on your confidence that we could potentially use retrospective data.

Just curious, what's your sense out in the field for, I guess, the percentage of sites that are doing a five-day incubation off-label on their own? I know you can't market it for five-day in the US, but just kind of curious how the rate of using five-day has trended maybe over the past 12 months or so. Has it gone up?

Yeah, I would say that we continue to see -- I'd probably be conservative by saying at least 80%, if not even higher, of INVOcell cycles being done using five-day transfers for the US market. So that continues to be at a very high rate. We only see a couple of sites that still sometimes tend to do three-day.

Got it. Yeah, makes sense. And appreciate the color on timing in terms of having INVOcell clinics up and running, I think three to five by later this year. In Alabama, I think you said a July-August timeframe, we will start seeing patients, and in Mexico in September-October timeframe. Did you mention it for the San Francisco clinic what it's like? I am curious on timing there.

We did. We are not as deep in some of the planning process with them. So we are a little deeper into planning and getting -- make the space, and leases, and equipment on the other two facilities. And that's still a little -- we just started some of those conversations in San Francisco.

So of course, as a result, we would anticipate that a little later in the year, the hope to get it maybe even right towards the end. So we didn't really give as much clarity on that one as what we did with Birmingham and Mexico for exactly that reason that we are just farther along with those other two.

Okay, great. Thanks for all the update.

Yeah. And I would say, Kyle, I am not sure if you caught the comment, we feel we are close on another agreement. And that one, there has been some pre-work done too that that might move that timetable up as well. So that could end up being even earlier than potentially a San Francisco operation. So just stay tuned. We will have more to report on that as we are ready.

Interesting. Okay. Well, thanks for taking my questions and congrats on all the progress here.

Thanks, Kyle. Appreciate it.

(Operator Instructions) John Heerdink, Vista Partners.

Good afternoon, Steve. Thanks for taking my questions today. Congratulations on advancing the business in the manner that you have, especially layering in the model of these clinics to lead the way.

Could you speak a little bit about -- first of all, that model in reference to Birmingham again, you had -- Dr. Hammond out of there is one of the three partners in the LLC that you partnered with there with that 50/50 partnership, I believe, and she has had the great deal of success with INVOcell. Could you look at the numbers there?

And I believe, and as opposed to what you were seeing at Birmingham at our prior practice, there was only really one doctor that was dedicated to it and they did I think 700-plus cycles in a very short period of time. And now I believe you are looking to the ideas to get two doctors out of this one clinic moving forward once the doors open. Can you speak to that and what that might mean, and then scaling the revenue difference between being the distributor versus a joint venture partner here?

Sure. So as a reminder, in the previous practice, Karen and Lisa were a part of -- they had figured, from a capacity standpoint, they could handle upwards of 700-ish cycles a year and that was a very small practice and part-time embryologist, et cetera. And that was actually quite a bit higher from a volume capability than what could have been done simply doing conventional IVF within that practice. So just as -- that as a backdrop, you are right. They had pretty good success, they were capable on a run-rate basis of doing pretty good volume and have very small footprint and practice.

What we are building in Birmingham is going to be a little bit bigger, a little bit added resources. So what we have estimated, or I would say what Mike and team have estimated is, it's capable of doing up to a couple of thousand cycles before any further expansion would have to happen.

We are not suggesting it's going to immediately get to those numbers out. That will take some time to ramp up. And this also ties back to the importance of some of the marketing resources we brought into and anticipating bringing these clinic operations up and running is to help build that kind of volume within those practices.

We expect that the practice will, on a per-procedure basis, be similar to what they were doing in the previous practice there in Birmingham, which is around roughly $5,000 to $6,000 per cycle. So that would be the per-procedure revenue approximately, and we are at 50/50 joint venture in that practice.

Okay.

Did I cover the main points you are looking forward, John?

Yeah, I think that hits it. So if I was pulling that out and if he weren't half as successful at max, it would be at 1,000 procedures a year, and call it, on the low end of 5,000, that's a $5 million clinic. And if you are a bit more successful, it could be something greater or double that.

So it seems like in the footprint, again, it's relatively small, right? These footprints of these clinics, can you just speak to that and what that looks like that you are building up?

Yes. I don't remember the exact square footage. There is obviously the lab. It doesn't require a huge footprint, a couple of 100 square feet. And then there is two procedure rooms and a receptionist area. So again, I don't recall the exact square footage of the overall facility, but it's -- yeah, I would certainly at a high level say it's not huge.

No, and it's conservative. And the amount of outlay that we have in comparison to an IVF lab, that could be tens of millions of dollars in some situations. So it seems to me that's pretty efficient model.

And again, it's a reoccurring theme here, right? Once you have this other leg of revenue coming in here in this back half of the year from not only Birmingham, but again, Lyfe Medical, Mexico and these other distributor relationships, and possibly, as you mentioned today, one of the -- a new one that's on the horizon here in the US, you start to see that this reoccurring nature starts to really take hold and build year after year.

You mentioned in the release or on the call today of a new relationship in Thailand. Can you speak a little bit more about that? I am sorry, I was not aware of that. And so that's something that just came on. I apologize if I missed it along the way here.

Yeah. We didn't do a separate -- by the way, first on the US side, you are exactly right. That's how we see it. It's why we have a lot of enthusiasm over bringing these initial INVO clinics up and running. We think it's going to be very additive to the overall effort to build INVOcell's presence within the market.

And equally important or even more importantly, help this large underserved patient market out there that needs greater access to care. So like I said, we are very excited for these efforts to get underway.

As far as Thailand, we didn't do a separate news release on that distributor that was executed here recently. Again, our business development folks are active in a number of different markets and talking to potential distributors. We have brought on a couple of new ones. But this particular partner is a great distribution partner for that market. They have been active at wanting to get training underway.

They have provided our team with some fairly, what I would say, fairly aggressive objectives and goals for that market, which is, like I said before, very encouraging to see that. I think that it's partly same with Malaysian distributor looking to add territories. All of this to us is indications of a growing presence and awareness for INVOcell on the market.

When you look at the totality of it, of the greater number of training sessions going on, Inger Britt Carlsson leads that effort. And she is definitely a lot busier these days over the last several months with active sessions requested from the distributors and clinicians. You look at distributors looking for additional territory, new distributors. All of these things are, in our minds, indication of the momentum that's starting to build around awareness of INVOcell.

And we think that again is a leading indicator, ultimately be a precursor to driving the actual operating results of the business, and it will manifest itself in growth in revenues and profitability for the business. So for us, it's very exciting to see all of this activity going on. It's head and shoulders above what we saw last year.

Obviously, last year was certainly impacted by COVID, but a part of it, it takes time for a business development team to cultivate their pipeline and generate their leads, get people paying attention, get through agreements with partners, go through training sessions. All of this has been a very concerted effort over the last year, and I think we are making great progress.

Yeah. I would say you are, from my perspective. I guess, with all of this activity, and it's just naturally organically creating an awareness of the product itself in this massively underserved market, I think it's some there -- as you put in your press releases, more than 90% of couples in need of fertility treatment each year go without care. It's shocking. That opportunity to fill that gap in some manners is pretty exciting.

Around this though, I think the challenge is going to be -- and I think you guys are up to -- it is with the new marketing team and emphasis, and just global brand trust that you brought in the form of your new Board member, Rebecca, and also your new Director of Marketing, Meryle Lynn Chamberlain. It seems like you are really ramping that up too to help support these efforts, both through distributors, joint ventures, and partners to bring up this awareness.

Is there currently plans to -- as you are leading into opening up these clinics, et cetera, ramping up what you are doing in addition to these partners to help lift the excitement and awareness, and potentially push at least inquiries into those practices? Is that something you guys are working on?

Absolutely. I mean, I would say Meryle Lynn and working closely with Mike and the team are absolutely, that's front and center of focus is to have a cohesive marketing message and strategy. It's all about driving awareness and bringing patients into the clinics. So yeah. I mean, that's absolutely the focus.

And marketing is something that we more recently added. So we are working fast and feverishly to catch up, so to speak, with the business development activities to make sure that that marketing activity and support is ready to go, as the distributors are coming online and as the INVO clinics come online.

Got you. And so this plays in, everything is pretty much the same. You are looking to not add as far as headcount at INVO Bioscience. You are not going to add significantly, I would suppose, based on what you have told us again today to that number, therefore, keeping your costs and being able to leverage the organization and these partners through this plan. Has anything changed in that or is that still consistent with the way you see things?

Yeah. We feel we are pretty set on our fixed infrastructure for sure. We have got the key pieces in place to your point. We have built up over the last 1.5 years. But we are -- at the same time, we are not a big team, but we have -- like I said, we filled in the key areas we felt were important.

As we move forward from here and as the business grows, there will be some -- I think I mentioned this on our year-end call, there will certainly be some variable cost increases as revenues grow. But yeah, we are shooting to try to keep our fixed structure fairly stable from here. And then like I said, as the business grows, we will add some incremental costs, but we certainly would look to see the revenues grow much faster than any added costs.

Got it. Thank you. And then the last thing is, as you are reaching out, increasing this awareness, are you seeing any additional potential partners, joint ventures, distributors, et cetera, calling into you now that this is -- each one of these you add on, each one of these new relationships, each new doctor, are you seeing anything coming out of the OB/GYN world? Are those doctors coming at you are now in a sense, saying, hey, let us learn more, let us get trained? What are you seeing?

Yeah. We certainly are seeing more inbound. I wouldn't say attracting new partners is easy, but it's certainly getting easier, I think, as we are making progress and becoming more known and understood. And it's one of the reasons we keep saying that the clinical validation, the retrospective real market use data that keeps coming out has been incredibly helpful to the commercial efforts because it adds confidence into the marketplace with potential clinicians and distribution partners.

And so, yes. We are seeing increasing levels of inbound inquiries coming into us. I think I mentioned to you the other day, we are starting to see more regular e-mails coming in on our website with prospective distributors or potential partners asking about INVOcell. And while it's not a huge volume, if I do a relative comparison to last year, it's significantly higher.

That makes sense. And it doesn't take a whole lot to move the needle for INVO at this stage with your high margins as you roll these clinics out and create this ongoing, multi-legged revenue model that has this high-margin business underlying the product, which I think you again confirmed this in the 90% range here on the product side. So all good.

I will step back in line and again, congratulations on the quarter and thanks again for answering the questions I had today.

Thanks, John.

[Larry Udell, Udell Associates].

Mr. Udell, your line is open.

I think maybe Larry dropped off.

Since there appears to be no --

Never mind -- go ahead, go ahead.

No, I think he dropped off.

That's okay. No worries.

We would like to turn the call back over to Steve Shum for any closing remarks. Thank you.

Okay, great. Thank you. Again, we appreciate everyone that joined the call today. Please do not hesitate to reach out should you have any additional questions and again, thank you for listening.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.