INVO Fertility, Inc. (IVF) Q4 2020 Earnings Report, Transcript and Summary

Good day and welcome to the INVO Bioscience reports Fourth Quarter and Fiscal Year 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.

Thank you very much, Grant, and thank you all for joining us today to discuss INVO Bioscience's year-end 2020 financial results. Joining us on today's call is INVO Bioscience's Chief Executive Officer, Steve Shum; as well as the company's Chief Operating Officer and Vice President of Business Development, Mike Campbell. 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 the 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 anticipated results, performance or achievements. Factor that may cause actual results to differ materially from those in the forward-looking statements include those set forth in the company's filings with the SEC. The company’s under no obligation and expressly disclaims any such obligation to update or alter company’s forward-looking statements, whether as a result of new information, future events or otherwise. With that said, let me turn the event over to Steve Shum, Chief Executive Officer of INVO Bioscience. Steve, please proceed.

Thank you, Robert. We appreciate everyone joining today. As Robert mentioned, Mike Campbell, our Chief Operating Officer and Head of Business Development, is on the call with us. Mike is a critical team member and heads up our commercialization. Before we cover a few financial highlights for last year, I think it's important to review some key developments that occurred last year, which are important building blocks for the future. When we did our planning at the end of 2019 and heading into 2020, we certainly didn't anticipate or plan for a global pandemic. And while COVID impacted our existing and potential commercial partner efforts in general, primarily from a timing standpoint, we feel we made important progress in a number of key areas. First, our team, we realized early on in 2019 that we needed to strategically add members to our team in order to properly capitalize on the significant market opportunity for INVOcell. I give Mike a tremendous credit with this effort. His long career in the fertility industry enabled us to locate some great industry people that are now part of the INVO team. Throughout 2020 and even into the early part of this year, we believe we've substantially completed this process. We certainly recognize this has added cost to our infrastructure, but we view it as a necessary investment to capture what we see as the big opportunity in front of us. During 2020, additional real-world evidence also became available, which continued to reflect the quality outcomes being achieved with usage of INVOcell in the field. Earlier this year, our U.S. partner Ferring also published a peer-reviewed report, further reflecting real-world usage data. And we would expect to see additional data published this year with SART likely to be out in the very near future. We cannot stress enough how valuable having this expanded retrospective real market usage data is for our commercial efforts. Validated data provides confidence, and we have a much expanded portfolio over the past year to point to now in this area, and it really should continue to grow. We believe this will be very important to expanding and accelerated market adoption as we move forward. In 2020, we also had an opportunity to highlight a particular clinical practice and their success with implementing INVOcell as their primary treatment option. I won't take time to cover all the details of their story, but the key takeaways are they had very good patient outcomes, provided a very attractive price point to the patients, which allowed them to see strong demand from all around the country. And they were able to handle more than a four to five fold increase in terms of patient volume thanks to the efficiencies of INVOcell without any increase in their resources. It really is a success story around the business metrics for INVOcell. Having the benefit of their story along with the additional real-world outcome data provides a powerful combination in our commercial efforts. And the best conclusion of this story is that the key people involved in that practice decided to venture out and start their own practice. And we were fortunate enough to team up with them and help create that new practice, which was the basis of our most recent announcement to form a joint venture in Birmingham, Alabama to establish the first U.S. INVO clinic. With respect to the INVO only clinic efforts, as many of you know, this has been an active part of our strategy dating back to early 2019, when we finalized the Ferring agreement which provided the ability for us to create this concept here in the U.S. market, we've long viewed this effort as an important additional channel strategy that would complement the current distribution efforts to sell INVOcell to the existing fertility practices. I would even say that as we've learned over the past two years, we have even more conviction and confidence that this strategic effort is critical to our bigger success in the industry. The idea with an INVO clinic is to create a new practice that primarily offers INVO as the advanced treatment option. Our goal is to create a structure such as a joint venture in collaboration with a physician, whereby we provide funding and technology or training support to establish the clinic and the practitioner runs the operations with us sharing in the overall profits. We believe these operations will drive broader awareness around INVOcell and actually help improve adoption within the existing clinics. So again, we see this as a very important channel strategy and the one that allows us to benefit in a more significant economical way with the expansion of our technology. In the beginning of 2020, we actually entered into our first INVO clinic venture with a partner for the India market. Shortly after that agreement, COVID really broke out, and our partner over there had to delay the opening of that first clinic in the market. As the severe lockdowns in India loosen up, our partner will look to move that forward. Toward the end of 2020, we entered into a similar joint venture agreement for Mexico. Just last month we completed the product registration process and our partner’s now moving quickly. And then most recently, as I mentioned, our first U.S. partnership, the key point here is that after much planning, partner negotiations, initial hurdles to overcome, we are finally now moving the INVO clinics forward expeditiously with our partners. I cannot stress how excited the whole INVO team is to be finally at this point and how valuable we believe this will be for the company's future. And we have active discussions well in process with additional potential partners. Our key objective for the balance of this year is to bring these initial INVO clinics into an operational mode. I’ll let Mike cover some additional details around that. During 2020, our team also worked through enhanced materials and processes to train our distributors and clinics online rather than in person in order to deal with travel restrictions. As we previously noted, product registrations for some of the countries where we established a distributor relationship have taken longer, and a number of them are still pending due to COVID. However, others have completed and we are beginning to see initial international orders, which we believe will continue to build this year. In 2020, we also announced the formation of our scientific advisory board and the initial members whom are all industry experts. We believe this will add important, valuable feedback and guidance from key opinion leaders as we move forward. And lastly, another key development for 2020 was the completion of our larger funding and simultaneous uplifting to the NASDAQ exchange completed in November. This was critical to supporting our strategic plan. As part of that effort, we also improved our listing status and visibility as well as built out a fully independent board. Let me take a minute to turn this over to Mike for some additional details before I review financials, update our five-day labeling effort and then open up for questions. Mike?

Great. Thanks, Steve, and good afternoon, everybody. Yes, as Steve mentioned, we are really excited to be moving closer to seeing our first clinics become operational. As you mentioned, this is a critical part of our strategy and what we believe will help create the market acceleration for the technology. So planning and progress for the Birmingham clinic is well underway, we have identified the site location, signed the lease, we have initiated the build-out and we've also audited our long-term lead equipment. As we move through the project plan, we’ll have a better sense of the clinic opening date, and when we will begin to start treating patients. But generally speaking, we expect this first U.S. clinic to be operational in the early part of the second half of this year. The other really important point Steve noted to highlight on this joint venture is that we are working with the team that has already demonstrated success from a business model and patient perspective with implementing INVOcell in a clinical practice. This is a huge benefit and in our opinion, substantially improves the success profile for this clinic. We're very fortunate that Dr. Hammond and her team made this decision to pop in with us and move this plan forward. As Steve also mentioned, we have several additional discussions in process with other potential joint venture partners here in U.S., and we hope to provide more information on these activities in the very near future. Regarding Mexico, as Steve mentioned, we are now moving quickly that we have finally cleared the product registration process last month. As a reminder, we entered into a joint venture agreement with Dr. Francisco Arredondo, who was a well-respected and experienced Board certified reproductive endocrinologist and his business partner, Dr. Ramirez, Dr. Ramirez is also a physician and an owner of several successful enterprises in Mexico. Dr. Arredondo was an early adopter of INVO and began offering INVOcell to his patients at his Fertility Clinics in San Antonio and Austin, Texas back in 2016. He sold his U.S.-based fertility practices and he is now focused on bringing the INVOcell solution to Mexico. So similar to our U.S. partner, there again, we have teamed up with someone who has previously and successfully implemented INVOcell in a clinical setting. Dr. Arredondo has been a great champion for INVO for many years and is well versed in the benefits that INVOcell can provide to his patients. And from a clinical operation standpoint, he knows how to build a successful practice. We are truly excited about this partnership and as with the U.S. We expect this first Mexico clinic to be operational in the early part of the second half of this year. Coming back to the U.S., Ferring, our distribution partner will continue to focus on bring in the INVOcell procedure to the existing IVF practices. The plan this year is to help create increased patient awareness within the market and help drive patient demand to these facilities. We think this combined with our initial INVO clinics coming online should really help accelerate increased utilization of the INVO procedure. Up in Canada, we have initiated our efforts there to identify potential partners in both joint venture and product distribution opportunities. We have several ongoing active discussions and hope to be able to make some announcements on these activities to you folks in the near future. The good news for this market is that we have already received clearance from Health Canada, which is the Canadian Regulatory Authority, and we can commence commercialization once agreements with potential partners are completed. Just a quick update on our other markets as well. In Europe, we announced recently that we began initial direct sales for few clinics in Spain. We've also initiated a small study to begin to build our evidence-based outcomes platform for these markets. This is an important criteria, not only to help expand utilization, but to gain payer support within these countries. Same in Asia, we’ve initiated sales to some of our distribution partners in Asia, and we have supported a study in Malaysia to start to build in-country outcomes-based clinical evidence. These activities will help establish the basis for government supportive fertility programs. Shifting gears, we are really excited about a new distribution partner in Pakistan, Galaxy Pharma. This is a very successful full service fertility industry provider and they have just placed their first order. And we have training scheduled next week for approximately 50 in-country fertility doctors and 20 clinical embryologist. So although Pakistan is a small market, we expect Galaxy Pharma to have a very, very large impact there. So all in all, the business development team has had an extremely active pipeline of ongoing activities. Our main objective currently is to help our existing portfolio partners bring INVOcell successfully to their respective markets. And again, we're also continuing to pursue other discussions with additional potential partners worldwide. In addition to the commercial activities, we have also engaged resources to help support our efforts in two other key areas. The first is marketing; this is extremely important to help build our overall market awareness on the technology to support our current distribution partners outside of the U.S. and to help develop an effective launch plan for a U.S.-based and Mexico joint venture clinics. The second key area is reimbursement. Although most advanced fertility procedures in the U.S. have paid out of pocket by the patient, there is a growing network of private insurance carriers offering fertility benefits. And there also have been some additional U.S. individual state mandates put in place to provide fertility benefits for their constituents as well. And in many parts of the world, advanced fertility care is provided by government sponsored programs. So we feel that INVOcell is an ideal platform that will provide wide scale economic value and we plan to have INVOcell recognized and included in these various reimbursement initiatives. Lastly, to emphasize Steve's earlier comments, we believe that our growing body of clinical outcomes data along with the joint venture partnerships with experienced clinical practitioners will enhance the validation or the INVOcell technology in the marketplace. This is something that we plan to continue to build on as we move forward and I look forward to continuing to provide more updates. With that, I will turn it back to you, Steve.

Great. Thanks, Mike. Let's cover a few financial highlights. Total revenues for the year totaled $1,037,000, which compared to $1,480,000 in the prior year. As we noted in our earnings release, our U.S. partner Ferring placed a final 2020 order for $501,000 in order to satisfy the amended annual minimum requirement for last year. But that actual revenue recognition on that order will occur on the first quarter of this new year. Excluding non-cash charges related to equity-based expenses and the amortization of the convertible debt discount, we had an adjusted EBITDA loss of approximately $3.74 million, compared to a loss of $1.5 million in 2019. Our cash-based operating expenditures for last year were largely consistent with our internal plan to execute our strategic initiatives. As a result of our end of year public offering and uplifting to NASDAQ, we closed the year with approximately $10.1 million in cash, subsequent to the yearend; we had $1.2 million of our $1.7 million in convertible debt outstanding convert into common shares, so as of now, we have just a remaining $500,000 in convertible debt and our current outstanding shares stands at approximately 10.4 million. Shifting to our clinical activities, as many of you know, our original FDA clearance was based on three day incubation and that is what our product is labeled and currently marketed under here in the U.S., but many, if not most of our current practitioners are performing five day transfers. So expanding our product labeling to encompass five day incubation remains an important initiative and something we are pursuing actively. Our Ferring agreement also provides for a $3 million milestone payment upon completion of that activity. We had designed a small prospective study in the beginning of 2020 by recruitment and generally moving that forward was severely impacted by COVID. However, during 2020, the additional real world usage data became available for us an opportunity to pursue the label expansion with the retrospective data. We are optimistic in that approach and look forward to reporting further updates this year. Let me just conclude our prepared remarks here by highlighting a key point. We are now moving quickly with our JV partners to establish the first INVO clinics this year, which will add a completely new dimension to INVO. Whereby, we will have two key market channels underway, our distributors selling into existing clinical practices and now the dedicated INVO clinics. As Mike mentioned, we are engaging marketing resources now, and we think those initiatives along with the added channel activity will be a powerful combination in building the marketplace. Remember, there is a significant underserved patient base around the world, that's something we believe INVOcell can address and we are excited for the balance of 2021 and beyond. Let's open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question today will come from Kyle Bauser with Colliers Securities. Please go ahead.

Great. Thanks for taking the questions. Can you hear me okay?

Yes. Hi Kyle, how are you doing?

Hi. Good. Thanks. And thanks for all the updates here. Maybe first off on the five day label expansion efforts, I know you've filed the 510-K using the retrospective data. And then you mentioned, you're working to collect additional real-world information to support that submission. Was that a request from the FDA, maybe you can just talk a little bit about that? Thank you.

Yes. They requested some additional information, it – some of the details actually are – as information that's not available in the SART data. But upon further investigation directly with some of the clinics, we determined that we could actually obtain that additional info that they requested directly from the clinics and that's something what we're working through right now.

Okay. I mean, that's a positive update that they're obviously willing to kind of consider that application and we could see a potentially a clearance a little bit sooner than we were anticipating later this year, so nice update there. How about on the burn rate, how should we think about operating expenses over the subsequent couple quarters? I know you ended the year with about $10 million in cash, but just kind of wondering how far that gets you.

Yes. You’ve looked at our cash based operating expenses for last year, Kyle, of course before gross profit offset, but just the absolute expenses. We ran around approximately $4.7 million, we wouldn't expect much increase above that level until the clinic, the invoke clinic activities began and then of course, that will be a function of consolidation rules around those clinic activities, if we're fully consolidating them or not. So we – I mentioned that we feel we put most of the pieces in place already, there'll be some incremental increases this year. And again, that's – those are gross dollars before we offset with sales and gross profit.

Okay. Got it. That's helpful. And then just lastly, you’ve had some really nice updates on you being able to now open up the seven clinics in the U.S. without any geographic restrictions and we're seeing some nice activity internationally. I guess just kind of wondering ballpark, what do you envision the number of INVO only clinics being maybe by year-end, maybe a range or just kind of any internal goals or objectives that you had, that would be interesting. Thank you.

Yes, well, we were – as we – as you heard on our prepared remarks, we feel pretty confident about the U.S. clinic and the Mexico clinic this year. We're still optimistic, our India partner will be able to start moving forward here. But we have a number of other activities that are close at hand. So I would say that we feel achieving the first three to five clinics this year is reasonable, obviously there could be some slippage, but that's really our internal objective, as to see the first, like I said, somewhere between three to five clinics this year up and running.

Got it. Perfect. I appreciate that. I'll jump back in queue and congrats on all the updates.

Thanks, Kyle.

[Operator Instructions] Our next question today will come from John Heerdink with Vista Partners. Please go ahead.

Good afternoon, gentlemen. Can you hear me clearly?

Yes. Hi, John.

And how are you doing. Nice to hear your voice, Steve. I want to follow-up with Kyle's question around the FDA clearance. Can you speak to that a little bit more, the three day versus the five day issue, so to be clear around that? And if you get that, I believe there is a $3 million non-dilutive payment that is committed to by your partner Ferring, if upon that reception. Can you speak to that and clear that up for me?

Yes. Well, the last part of your – exactly correct. Upon successful completion or clearance of the label enhancement from the FDA, then we are eligible for the $3 million milestone payment that is just a licensing payment, it's certainly non-dilutive. With respect to the question of the some additional details around the three versus five, I mean, obviously most probably realized, but just to make sure everyone understands. The importance here is that, our original clinical approval was predicated on three day, and at the time we did that, that was more of the norm in the industry was doing three day transfers. And as we often point out is our outcomes, success rate was generally equivalent to when you properly compare that to three day, conventional IVF. Shortly after we launched the product, a lot of our – since there was more and more five day transfers being done and that continues to grow, a lot of our early practitioners simply started using the device off label and incubating for five days. And what we see now in this, what we often refer to as the real world usage data is that we reflect a similar improvement in outcomes by incubating for that additional two days that you often see with conventional IVF. So it's critically important to be able to achieve the label enhancement. Well, it's important, well beyond the milestone payment, this is important for our commercial team to be able to point to the outcomes data for five day, and again, because one of the most important things from a patient perspective is having a successful outcome. So since we already know that INVOcell is predominantly being used in the marketplace with five day and the practitioners that are doing so are achieving those higher outcomes, it's important that we can label and market the product under five days well. Mike, do you feel free to add to that if you'd like?

Yes, Steve. I just want to know for John, the difference is substantial. So typically a three day outcome for both INVOcell and IVF is around 30%. The typical five day outcome – five day incubation outcome for both INVOcell and IVF is a little north of 50%. So that's a substantial difference. And as Steve mentioned, we are unable to market this 50% data point, because we do not have approval or clearance from the FDA on our five day label, so that's the difference. We can only market 30% in U.S. and while we’re achieving 50% outcomes.

Thanks. Thank you both. That makes sense. And I guess the follow-one question regards to the clinic and specifically in the U.S., where you are a 50% joint venture partner. I think that's potentially very exciting. One is just planting these footholds, these flags around the country, starting in Birmingham. But I think it evolves the model of the company substantially, where to-date you've been a supplier of the INVOcell system, but you'll be a partner in this. So you'll be jumping up your revenue, and again, with a high 90%-plus gross margins that you enjoy in a product that's pretty attractive already, but if you have control in a clinic in a sense to get this out, and you're starting with what seems to be the most logical partner and one that has arguably the most experience with INVOcell system. I would think that this – that would speed up the whole process. Could you speak to that – the development there? You've said a little bit, but maybe talk about the modeling aspect that, what does that mean from revenue? What does that cost per cycle? What were they doing in Birmingham? And what do you expect them to do going forward from that one clinic?

Mike, do you want me to take an initial stab at that and you can add to it or vice versa?

Sure. Go ahead.

So, yes, John, I mean, we would generally expect the clinics here, these INVO clinics to have an average per procedure price consistent with what we've seen in the market with the existing active clinics providing INVOcell, and that's generally been in the range of $6,000 to $9,000. The Birmingham clinic sometimes was as low as $5,000. So we feel good about – what we feel good about is that the clinic should be self-sustaining or breakeven at 250 patients per year run rate, which is really not a very high hurdle, especially when you compare that to what Karen and her team were doing – often doing in a single month in terms of the number of patients. I mean, they were often having months where they were processing 60 or 70 patients in the month. So we would expect that these clinics to be capable of at least 800 or more cycles per year. So when you compare that against, again, the relatively low hurdle to reach breakeven, as you start moving above that these operations should be nicely profitable. I'll let Mike to sort of add to that.

Yes, I’ll just jump on that a little bit, John. Yes, on the modeling, of course, there's a lot of variable costs, but on the modeling that we've done for most of these clinics, based on the price points that Steve mentioned, the margins are anywhere from 43% to 61%, just depending upon again, the variables and the overhead costs. So they're very profitable in terms of per procedure. And again, as Steve mentioned, these clinics are capable of processing up to 2,000 patients in what we're going to be building. And a single INVOcell embryology lab with one to two people can do an annual run rate up to 2,000 cycles. Not that we're going to do that, but we have the capability to do that in that footprint. So, as Steve mentioned, breakevens around 200, 250 cycles and anything north of that is profit.

Got it. And so if I did my math right, I'm just doing what ARM did, you're talking around, I believe 700 cycles. And if we use, say, 6,500, that's about a $4.5 million business just there. And if you're doing 2,000, obviously, you can double it and then some from there. So out of this one clinic it sounds like you're going to be generating pretty significant revenue once up and operational fully. I guess speaking of that, is there – what you spoke to marketing earlier in the game, I would suspect that there's going to be some way that you're going to be able to jump up the marketing as you open up these clinics or leading into it that would might bring potential – gets patients into the clinics and doc and referrals, et cetera. How do you see that playing out? What's your plan there? And I think if you've kind of hit the ground, running post the press release as you get to identify the site and looking to get the doors opened in the beginning of the first – the second half, I believe, you had mentioned on the call. What are you doing from here to there to get this open? And what does that look like?

Well, first of all, I’d say, the high-level number you've pointed out, John, is exactly the reason we're very excited to be at this stage for the company in moving forward and getting these initial clinics up and running. Again, it's a game changer for the company. As far as marketing, we definitely see the importance of that. You've got to help create patient awareness and bring patients into these clinics. As we mentioned earlier on the call, Ferring is also doing additional activities this year to help drive patient awareness and bring the patients into the existing fertility clinics that are already offering INVO. So our activities, we're expecting we'll help compliment that, but of course, our activities will focus on helping our partners and bring patients into the clinics. But the good news for Karen and her team, they're already pretty good at that. Like I said, they were doing a great job of attracting and bringing – recruiting and bringing patients into the clinic in the original Birmingham facility. So really once that clinic is up and running, they ought to be able to hit the ground running pretty good right out of the gate.

And john, I’d add to that…

Go ahead, Mike. Sorry.

Yes, I just want to add a little color there. Yes, Karen Hammond has a very, very broad following on Facebook and on some of the fertility platforms on the social media networks. She's very well recognized, very well respected. And as Steve mentioned, they were bringing those patients into Birmingham from 28 different states, and again, not really utilizing a geo-targeted social network platform. So that's the expertise we just brought in. It's a new resource. They've only been onboard, head out for two weeks, but we have already initiated the planning. And this is one of our critical marketing activities to support these first to INVO clinics to make sure they're successful. So we're in the planning stages for that now. We plan to have the big sendoff and again, that's our number one objective from the marketing perspective.

Okay. So if – and I think I heard you right, you're looking at sort of three to five of these in the relatively near-term. And if you take, what, say, the 2,000 number, to round it off times the low end of 6,000 per cycle, that's $12 million per site. You're talking about just the three, that's $36 million annually. That's a pretty big jump and solid. But you've got your line of sight, you've already obviously got the Birmingham announced, and I believe you've been out there doing some business development and previewed the call today. You've got your line of sight on 3,000 to 5,000 here. That's pretty exciting. Anything you would add to that to help me understand better that development?

Well, again, I think, as I'll say again, John, that's one of the reasons we're excited about this activity. It obviously – each clinic will need some time to ramp up into volume. And some of the clinics may take a little longer than others to do that. Like I said, we think Karen will hit – the good news about Karen and that first facility here in the U.S., they'll hit the ground running pretty good right out of the gate. But it also – what you're saying also speaks to the really, again, the big opportunity in that. This market has such a large underserved patient population out there, including right here in the U.S. So, and what the industry really needs is additional capacity. And that's one of the advantages of in INVOcell, both within bringing it into existing clinics, we help add capacity, but creating additional clinics clearly adds capacity to the industry. And so we need to provide more access to the volume of patients out there that need help. And that's another very exciting element to this for us is that not only are we driving the business, but we're helping to improve capacity and bring care to patients that need help and there's a lot of them out there.

Thank you. Well, I'll jump back in line.

And Steve, I wanted to – I just want to add onto that. Capacity is the choke hold on the industry. And, again, I mentioned these INVO clinics are going to have the ability to do up to 2,000 patients. The average IVF practice in the U.S. does about 600 patients on average 500 to 600, but we could do up to that number without increasing capacity, whereas an IVF clinic, if they need to do additional patients, they need to expand their operations, very expensive proposition in both equipment and human capital. So again, as Steve mentioned, that's the advantage of INVOcell as we have the ability to expand our capacity without any additional resources, both in human capital and equipment.

Thank you. I guess one follow-up question. Regards to sort of this Birmingham clinic and/or clinics like it, what do you think the all-around investment is for your 50% of the partnership? What does that end up the costs around that to get that up and running? Because it doesn't sound like it would be that much.

Yes. Well, first of all – first off, just from a general standpoint, keep in mind that there are some differences between the different partnerships in terms of our exact interest and the general terms we've agreed to with the partner. So Mexico, we're a 33% partner, Birmingham, we're a 50% partner. So and there might be additional variations of that in some of the future ones. So as well as each facility, there might be some differences in the scope or size of the plan facility. So as such, the requirements will vary perhaps as low as $300,000 to perhaps up to $1 million. The most important point that we would want to stress is that we believe each one of these will have – if we do all the analysis upfront, each one will have a very attractive ROI to us and our shareholders relative our commitment. And as we noted in our Birmingham release, John, the initial startup investment we're making into Birmingham is actually being structured, as a note that is to be paid back out of profits to the clinic and then we still have our 50% carried interest from an equity standpoint. So we think we’ve created a great deal there.

Yes, it does seem like you've aligned interests in that. You'd probably look to do that with these other prospective partners that you'd move forward to really step up the revenues and the push forward of that product to the world. Thanks for taking the time. I'll step back in line here and congratulations on moving the business forward.

Thanks, John. Appreciate it.

This will conclude our question-and-answer session. I would like to turn the conference back over to Steve Shum for any closing remarks.

Great. Again, we appreciate everyone that joined us today for the call. As always, please do not hesitate to reach out to either us directly or IR firm Lytham Partners should you have any additional questions, and we look forward to keeping everyone updated on our progress as we move forward. Thank you.

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