Good day, ladies and gentlemen and welcome to the Oculus Innovative Sciences Fiscal First Quarter 2017 Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference Mr. Dan McFadden. Sir you may begin.

Thanks Sabrina and good afternoon and thanks to everybody for joining us. With me on the call today are CEO, Jim Schutz; and our CFO, Bob Miller. We will open the call with Bob’s review of our financial results for the quarter followed by Jim’s update on our business strategy moving forward. This afternoon, Oculus issued a press release detailing fiscal first quarter 2017 financial results and recent corporate developments. A copy of the release can be downloaded from our website, which is oculusis.com, that’s oculusis.com, or you can call Investor Relations at 425-753-2105 and we will be happy to assist you. Before we begin, I remind listeners that this conference call contains forward-looking statements within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by use of words as expect, to expand, would and anticipate among others. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, including risk inherent in the development and commercialization of potential products, the risk that potential clinical studies or trials will not proceed as anticipated or may not be successful, or sufficient to meet regulatory standards, or receive the regulatory clearance or approvals. The company’s future capital needs and its ability to obtain additional funding and other risks detailed from time to time in the company’s filings with the Securities and Exchange Commission, including the quarterly report on Form 10-Q and annual report on Form 10-K. Identified product applications and/or uses are intended to highlight potential applications for the investment community and does not infer that the company is marketing for these indications. The company does not provide any assurances that such applications will receive regulatory approvals. Oculus disclaims any obligation to update these forward-looking statements. So with that, I will now turn the call over to Bob Miller, our CFO.

Thank you, Dan. I will first discuss our key strategies to achieve strong revenue growth for fiscal year 2017; second, a review of the financial results of our derm strategy and our overall financial results for the first quarter ended June 30, 2016 and lastly, will provide some revenue guidance for the second fiscal quarter ending September 30, 2016. First, what are our key strategies to continuous strong product revenue growth for fiscal year 2017? Our strategies for growth for the rest of this fiscal year, which have been the same and consistent since the beginning of 2015 are the following. The number one strategy is to focus on growing revenue in the U.S. dermatology market with our direct sales force and a robust product portfolio with both Microcyn and non-Microcyn products. The U.S. derm segment provides us with the largest potential growth and will lead us to overall breakeven. Our number two strategy is to continue strong unit growth in our international business with new product launches and stronger partners. The international segment was 61% of our product revenue for this June quarter and generates cash to help fund the US derm growth. This strategy is really simple. Bottom line we’re selling into the derm market only with an expanding direct sales force and with an expanding product portfolio. What have been the financial results of our dermatology focus starting in October 2014 through our first quarter ending June 30, 2016? As a preface to discussing these dermatology results, starting from zero direct sales revenue in late 2014, we have built a strong dermatology foundation over the past year and half, upon which to continue to grow in the future. Jim will cover this in very detail in his discussion. There are several ways to measure our success in…

Thank you, Bob. For my portion of today's call we'll spend just a few minutes on two areas before opening the call for Q&A. First, our progress in our growing U.S. dermatology business, and second, our pipeline of dermatology products which we believe will continue our U.S. derm growth sales ramp. So first, our progress in our growing U.S. dermatology business. As Bob said our U.S. derm sales were up 115% versus the same period last year largely driven by our growing sales team. As Bob said we now have 20 plus experienced field salespeople, plus three highly trained senior managers. Each of the senior managers have 20 plus years of sales and marketing specific dermatology experience. We targeted growing our sales team to approximately 35 to 40 reps in the U.S. over the next two years. We're currently selling seven unique and effective prescription dermatology products in several of those key products. Our Alevicyn line and new Ceramax brand that Bob mentioned are all focused on the mitigation and treatment of atopic dermatitis or commonly known as eczema. The combination of Alevicyn and Ceramax have terrific supporting clinical evidence. You may remember Alevicyn has terrific anti-inflammatory and anti-itch properties. And Ceramax has robust clinicals showing skin repair. We believe it's a great combination. For those of you who do not subscribe to IMS or Symphony data, our Ceramax ramp is particularly attractive in the last 90 days both in units and pricing and is on its way to becoming our fastest growing and we predict best selling product. Our best seller by unit is our Celacyn for scar management. Over the last four quarters, Celacyn has grown in demand dollars 50% quarter over quarter. Our sales teams is especially enthusiastic about introducing Celacyn for scar management once we start…

[Operator Instructions] And our first question comes from the line of Jason Kolbert with Maxim Group.

Hi good afternoon guys. This is Gabrielle Zhou on behalf of Jason Kolbert. Thanks for taking my question. So while the increase in the first quarter revenue grew 20% which is offset by the Latin America decrease due to the foreign exchange rate. How do you see the growth versus exchange rate in foreign markets affecting the revenue over the next six to twelve months?

We think that -- obviously we can't forecast what the peso is going to do. But if it stays where it is that will have a negative impact on our revenue. However since we are fairly squared we actually manufacture in Mexico and lot of our expenses in Mexico. Mexico, even though the revenue is down, it still generates cash because those were fairly squared. Going forward we would expect this especially in the next quarter to have that same kind of impact where – there’s going to be a negative impact on the revenue, but they will not be a negative impact on the cash. Does that answer your question?

Yes. Okay, thanks. I have a follow up question. So can you walk us through the projected timeline for new product launches this year into the following year? Thanks and sorry -- and also what that means for top line revenue?

Yes, apologies for the repetition. I can't handle the new product timelines. So we've got two products that we’re preparing to launch right now: SebDerm for seborrheic dermatitis, Lasercyn for the static market. After that we're soon to be in the FDA queue for LOYON, a descaling product that we anticipate in early 2017 we would launch and that of course is subject to FDA timeline. A little bit later in 2017, perhaps late spring, we'd be launching a new product for post-Mohs procedures. And then we've got two additional really interesting European products that we've got planned for later in 2017. So apologies for the repetition but we think we have a pretty low risk healthy pipeline coming. In the second half of that question, what do we believe those launches will do to top line revenue on that, I think, you want that one?

Yes, first of all you’ve got to distinguish between the gross revenue and just get a little bit of that earlier and down to net revenue, there are a number of deducts relating going from gross to net in the dermatology business that are fairly significant rebate so that we would -- in terms of the growth, as Jim mentioned, and we mentioned before that we've had -- in the last four quarters been growing at a demand dollar growth rate of about 65% quarter over quarter. Obviously as our numbers get larger, we're not going to be able to maintain that kind of a pace but we would expect to see really good strong revenue growth in dermatology on the top line, maybe not at the 60% because of the product launches, help that -- enable that us to achieve that kind of growth rate but a very strong continued growth rate over the next year because of the product launches.

[Operator Instructions] And our next question comes from Laura Engel with Stonegate Capital.

Good afternoon and I appreciate the information. Good quarter, good information. Always love the specifics. I wanted to get back to one thing I had in my notes. From last call we talked about the -- and you mentioned this time the non-core markets churned off cash and I wanted to see if you’d just give us an update on with your current cash balance, the cash machine turned off and then your goal for the breakeven, where you see that falling over the next remaining quarters of this fiscal year?

Well, I think we said this in the past, our quarterly burn rate tends to be in the 1.5 to 2 million range per quarter and we would expect that to decline, that cash need to decline over time as we get closer to breakeven. Our breakeven quarterly revenue number is about $6.5 million and we see us growing to that. We don't give a specific deadline but you guys can figure out what kind of growth rate that it takes to get there and you can see us how we’re growing in our derm business. Of course our international business tends to be growing at a much slower rate than the derm business.

And then can you give us a feel for part of the -- I guess approach that's been mentioned in the past is gentle price increases and you had mentioned – seen some of those in this fiscal year. What are your thoughts on that having just finished this quarter?

Yeah, our gentle price increases mentioned, we took our Microcyn products up – last we took them up to $120 per unit and that was about $99 before that, and that's been -- that was several months ago that we took them up. We would say that the gentle price increases would probably be in the 10% to 20% range. Now what’s also really happening is interesting is that we got out with the Microcyn products priced at the $122 level and we have Ceramax priced at the 2014 level. We have Mondoxyne that's priced at anywhere from $480 to $600. So what's happening is that our average price per script is going up. So it's not just the price increases but because of the mix and especially the growth of the Ceramax business which has been very strong is that every price has gone up, goes up – has been going up almost every quarter. End of Q&A

[Operator Instructions] At this time I'm showing no further questions. I would like to turn the call back over to Mr Jim Schutz for closing remarks.

Thanks very much. Thanks everybody for joining us. We look forward to talking to you if not before – we look forward to talking to you in November for the earnings call for the quarter ending September 30. Thanks very much.

Ladies and gentlemen thank you for your participation in today's conference. This concludes the program. You may all disconnect. Have a great day.