Good day, and welcome to the INVO Bioscience First Quarter 2022 Financial Results Conference Call. Today all participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please, note that today’s event is being recorded. I would now like to turn the conference over to Robert Blum with Lytham Partners. Please, go ahead sir.

All right. Thank you very much, Chris. Good afternoon, everyone. And thank you all for joining us for today’s INVO Bioscience's first quarter 2022 financial results conference call. Joining us on today's call is INVO Bioscience's CEO, Steven Shum, the Company's Chief Operating Officer and VP of Business Development, Mike Campbell, and Andrea Goren, the Company's Chief Financial Officer. 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 statement. 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 and 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. 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, @www.sec.gov. Company is under no obligation to and expressly disclaims any such obligation to update or alter forward-looking statements, whether results of the receipt of information, future events or otherwise. With that said, let me turn the event over to Steven Shum, Chief Executive Officer for INVO Bioscience. Steve, please proceed.

Thank you, Robert. And welcome everyone. We will plan to keep our prepared remarks shorter today since we covered a fair amount of detail on our recent year end results call which just took place six weeks ago. And as a reminder included a new slide presentation covering key details of our INVO Center strategy. So for today, we will focus on important progress and data since that year end conference call. Overall, the business is moving well on all of our key fronts, we continue to see growth trends building at the existing INVO Centers. Our multi-channel marketing programs, which we started in Atlanta are really starting to make a difference and impact Atlanta. We are now applying similar efforts in both Birmingham and Mexico. Those key metrics, inbound patient inquiries, consultations, and patients working through initial testing to confirm if they are suitable for fertility treatment, which are all important precursors to larger revenue resulting from actual IVC cycles are all trending very well. And that flow is running at a stepped up level just in the past few weeks. Mike will touch on a few specific metrics in a moment. We are also learning and gaining valuable insight with these marketing programs regarding what is having the best patient conversion rates. As we stated previously, we will look to deploy these tactics in a more conservative manner to accelerate the cycle ramp in future clinics. We announced our intent to open new centers which is consistent with our previously stated goals to expand our INVO Center footprint. We are in the early phases of all the necessary steps to open these centers in a timely manner per our plan expectations. Our Tampa lease is in final review. I'm pleased to report that we will reduce part of…

Great, thanks. Thanks, Steve. I'm just going briefly add some additional color to some of the comments that Steve just mentioned. Though with respect to expanding our U.S. INVO Center footprint, we are actively focused on our initiatives for our plants San Francisco Bay, Tampa, Florida and Kansas City locations that we have previously announced. As highlighted earlier, we are targeting metropolitan areas that meet a number of key criteria that we believe make them highly attractive market suitable for the INVO Center. As Steve mentioned, discussions with potential partners as well as potential referring physicians are progressing well. We're very encouraged with the interest level in these markets toward bringing additional and affordable care to these designated communities. We're also seeing potential opportunities to collaborate and partner with existing IVF clinic operations. This would cut down both our overall startup time and costs to deploy in the Celanese markets. Based on our conversations with principals in these practices, this could be a key additional catalyst towards achieving our goal of providing affordable care to the masses in an accelerated manner. With respect to the existing INVO Centers, as Steve mentioned, patient flow continues to increase across the board. The marketing programs in Atlanta targeted toward both referring physicians and direct to patients are starting to mature and yield great results. For example, in the past two or three weeks, we have been averaging over 15 to 20 INVOcell patient inquiries a week from our combined marketing initiatives. You may recall that Atlanta was the initial market where they launched these awareness campaigns, and should also be noted that a minimum of 40 to 50 new patient consultations per month has been targeted as a key level of practice activity Atlanta, and we are now consistently achieving this goal. But…

Thanks, Mike. I'll just pass right to Andre here to quickly cover the financial highlights. Andre?

Thank you Steve. Revenue for the quarter totaled $163,000 compared to $685,000 in the prior year period, we recorded a net loss of $2.8 million compared to a net loss of $2.5 million in the prior year. Excluding non-cash charges mainly related to equity based compensation. Our adjusted EBITDA loss was $2 million compared to an adjusted EBITDA loss of $1 million last year. The $2 million adjusted EBITDA loss for the quarter included approximately $250,000 attributable to our joint ventures. As such an apples-to-apples comparison of our adjusted EBITDA loss would be $1.8 million in the current year, compared to $1 million last year. This was slightly better than our internal operational goals. Revenue consisted of product revenue from INVOcell sales to IVF clinics in the U.S. and the distribution partners abroad, as well as consolidated revenue from Atlanta INVO Center. Most of last year's Q1 revenue included a one-time purchase by Ferring to meet its 2020 minimum purchase target, as well as Ferring license revenue. Since the Ferring product purchase was done to meet agreed contract minimums it is not a reflection of sell through to the end market. We do not have visibility to Ferring quarterly sales in 2021, but we expect them to be closer to our Q1 2022 actual product sales than what they purchased from us last year. Going forward, we also expect product revenue to continue to grow to be more consistent from quarter to quarter than it was in the past and to reflect true end market demand. On the gross margin change between periods the decrease resulted from the inclusion of the Atlanta INVO Centers cost of goods sold and the completion of the Ferring license amortization last year, rather than a sudden change in our product gross margins, which remained…

Thank you, Andrea. Before we open for questions, let me just reiterate, we see a lot of very positive developments unfolding for INVO. Our existing clinics are building our distribution activities are building, we expect those two areas will contribute to increased revenue throughout the balance of this year. Our overall presence in the market is expanding. We have more work to do on this front, but it's already much better in the past six months. And of course, the success of our operating clinics make have made a big impact on driving that. Further. The value of this improved market presence is that our conversations as you've heard a few comments made with potential partners and existing IVF Clinics are evolving very rapidly and in some interesting and very positive ways. And we look forward to reporting more on that progress soon. With that operator, we'll go ahead and open it up for questions.

[Operator Instructions] Today's first question comes from Jason McCarthy with Maxim Group please proceed.

Hi, this is [indiscernible] on the call for Jason McCarthy. Thank you for taking the question. Firstly, congrats on the progress, continued progress and expansion of additional clinics as well as you know gaining traction with patients for the IVC procedure overall. Could you briefly remind us of what criteria the company utilizes when evaluating targets for our clinical expansion, such as when choosing a particular area or state to be potential targets for opening additional clinics? Thanks.

Sure. As we mentioned last period, we are taking both quantitative as well as a qualitative review and looking at markets. So we're looking for areas where demographics and population criteria are attractive, especially when compared against the current level of care being delivered in the marketplace and looking for -- and really that those large gaps that exist between patients that are in need, versus, again, the amount of treatment cycles occurring within the area. And then there's other criteria that we look at regarding the dynamic in the market regarding the current referral network and how it works. And looking for areas where we see less captive referral type markets, where the existing large OB-GYN groups are tied closely to existing IVF centers. So those are at a high level some of the key criteria. Mike, I don't know if you want to add anything to that. But, basically, we are looking for these types of areas across the country. And as we said, as we said, we've identified a number of markers that we think look attractive and meet those criteria.

Steve the only other thing that that is just the healthcare networks themselves that have IVF centers within the group, that's going to be very difficult in terms of the referral patterns as well. But that's about it.

I see great, thanks. Sounds helpful. And then I just wanted to ask quickly about the progress in the company's label expansion to include the 5-day incubation, I understand various factors, including COVID will have impacted the timeline for initiating the trials. But could you just briefly touch on what sort of improvements and success rates you have seen or expect to see for the 5-day versus the 3-day incubation period based on some of the real world data you've collected today?

Sure, well, as a reminder that, our initial efforts to on this have been focused on utilizing the existing retrospective data. And it did take quite a bit of time, as many of the clinics have been impacted by COVID. To go in and collect all the additional data that we need it not all the data was really available in the SART database. So we had to reach out directly to some of the key clinics, with some of the higher volume numbers out there on INVOcell. And admittedly that process took much, much longer than we originally anticipated. We have collected at all, we're satisfied with the volume of data that we have, we have been finalizing the submission. And as I mentioned, my prepared remarks were on the verge here of having everything ready to go to submit to the FDA. The good news from our vantage point is the first go around on this when we when we did submit, with really just what we had available in the SART database, we did get pretty good color from the FDA on specifically what they were looking for, in terms of special controls and risk factors. And like said, the good news is the individual clinics did have all that information available in the patient records. So we worked with them to go through a process to collect all that data. And so, we think we have pretty good visibility on what the FDA was looking is looking for. And we think we've captured that. And we're excited to finally be ready to submit everything to them here in the next couple of weeks.

All right, thanks for those details. And congratulations again on the progress.

Thank you appreciate it.

[Operator Instructions] The next question comes from John Heerdink with Vista Partners. Please proceed.

Good afternoon, gentlemen. Again, congratulations on the progress you've made again this quarter. It's exciting to see on top of that, what you just announced today out of China in regards to that. I have a couple of quick questions. Just more of understanding China and the situation there. But if you could, could you give us a picture is there how many clinics exist in China now? What does that picture look like?

Yes, according to the most recent data available, there's approximately 498 or called 500 IVF clinics with about 450 of those state owned and 50 private clinics. Most of the centers are actually within major hospitals. So they're essentially in within larger facilities. So while the number of clinics is similar to the U.S., they tend to be much bigger facilities and hence they're in total doing a lot more treatment cycles per year than we do here in the U.S.

What does that look like? What are they annual cycles do they perform?

Well, again, the last reported data was 700,000 plus cycles. But I would tell you that our local sources indicate it's probably closer to a million at this point. So you're talking almost 3x, the volume we do here in the U.S.

Let's see. And is it similar to the U.S. where you have what we what seems to be, that seems to be putting out somewhere around the 90% level of patients being underserved? Is China similar to that? Is that a can is that can we can we believe that or understand that?

Mike you want to add some color on that one?

Yes, sure. From what we know, China is definitely underserved. We've been -- the information we got from a lot of potential partners over the past couple of years is that the fatality rate is actually higher in China than it is in most of the rest of the world. So when you ask in most of the developed nations, it's about one in six, refer to China, it's about one in eight. So there's literally probably 15 in Chinese women that need fertility services. They also used to have a pretty large medical tourism business, because of some of their constraints there, the wait times I heard are astronomical, and as Steve said, these clinics basically are government owned. So it's very difficult to establish a clinic in China, there's tons of hoops, you got to jump through in order to get them established. The INVO Center concept really isn't a concept for China at this point in time, because of the barriers to entry into the marketplace. So we definitely have to do the distribution to the existing centers. And once we can demonstrate, I believe once we can demonstrate the streamline process and the availability to treat more patients with the same resources, I think we have a really, really huge opportunity there. So it's going to take about 18-months to get through the registration process anywhere from 18 to 24 months. And that's pretty typical. Back when I was a Cooper, it took us four years to get CFDA approval in China, but the process is a little better these days. So, we have some work to do over the next 18 months. And we're really going to delve into the specifics, the logistics and come up with a plan to incorporate some of the KOLs over there to take a look at this technology. I going to tell you, I'm really excited about Onesky and Biomedic. I know some folks that have worked there. And really, it was a great group that got the far reaching, and they have tons of resources. So pretty exciting.

And again, this is per your press release the development there is solely on the dime of your partners. Is that correct?

Yes, correct. They are going to do all of the product registration for this. Correct.

Okay, and then is the idea of your I guess the number is the same, you need to go to existing facility, so you'd be pushing it through there through the process of registration, etcetera, with these partners. And depending on how quickly that is, that's when you start to get to the significant revenue flow that you declared in the press release as well as soon as over 14 million over 5-year periods just minimally. So that seems to be a good contract that you've agreement that you put together here, especially since you're not having to fund that development and registration process. With that said, is the idea right now is to -- is the idea of Onesky to put it into these facilities, their existing facilities, they would just I guess, you sit in rooms and being one of the advantages of INVOcells that you don't need significant space to be able to administer to a number of patients. Can you speak to the other advantages that that allow you to maximize the same space and investment that China has put together in these clinics already?

Yes.

I think this is…

Go ahead, Steve.

Go ahead Mike.

I was just going to just addressing the embryology side. And again, that's the chokehold here in the U.S. and all the rest of world markets. The reason that there is a bottleneck in IVF services worldwide, is because of the significant resources both in capital and people to do the embryology side of the business, and as you know, our process, everybody on the phone call knows our process, there really is, it's a much reduced process to perform the embryology side of the business. So we're able to obviously process more patients through the same facility, because we're not monitoring and nurturing embryos in the lab. So it all comes down to that. That's the major concept here, John. And, again, we have not initiated anything in China yet. But when we do get there, and we do, consult with the KOL, something really up to par, we're going to focus on in terms of its streamline approach and its efficiencies and see if this resonates.

Got you. Well, it seems like the options are not, there's not too many options for the Chinese market, if they're significantly going to make a dent in their fertility issue that has become pretty well known with their aging population, that they're going to need to speed things up to alter the course and to read, populate a younger generation here. And as it seems to be here in America, where we haven't made a dent in the situation with IVF, over the last 20 years, that they need to be exploring options like this, and there doesn't seem to be too many options, and correct me if I'm wrong. If IUI, which has a 10% hit rate, approximately, and inside the U.S., which we already know, the constraints on that. And so the third is IBC, or MSL? Is there are there any other options?

No, we that's how we see it till. We think our technology can play a big role in in helping to open up access and treat more patients, as Mike just said, we see that same dynamic in China. I would say that we, IVF has made a dent, we just think there's a lot more patients that that also still need help. And, and again, due to our efficiencies in the way we deliver care, we think we can help. And I think we're excited to see that a key partner, like Onesky in China, after spending much time with them, and educating them, saw the same opportunity. So long time in the making, and we couldn't be more excited to be teaming up with them as a key partner for that market. It's a big market, it's a big opportunity. And we think we finally found the right partner. And it's been, we've been working at that for as many of you know for a very long time. So it's nice to finally get it done and beyond the way towards working to get products clear for approval in the market with a partner. They agreed to handle the expense to do that. Well, obviously, we'll support them as they need support from us. And then, they, as you pointed out, they agreed to minimum contract minimums that are that were certainly attractive to us states actually are bigger minimums, and what Ferring signed up to and in the original Ferring agreement for here in the U.S. So we're excited all the way around for that market.

Absolutely, no, I congratulate you guys, for putting this together. It seems to be heading us towards some significant cash flow in the future. Switching back to you to the U.S. and your rollout of the MSO clinics where you've identified a number of markets 20 plus, and now you have three in place to or North America, if you will, two in the U.S. and one in Mexico. One in particular interest of me is that is Atlanta. And you mentioned some marketing initiatives that have you been increasing or kicking off or pushing forward and having some raw results in patient flow? Can you speak to that? Is that a direct? Can you see the direct investment in this marketing? Being producing patient flow? How would you represent that?

Yes, again, we really targeted Atlanta as the market to basically try some of these programs and where we initiated them first, and, again, what's terribly exciting for us is that we can see these programs starting to really take hold and make a real difference. I would say that many of the patients that are coming into the clinic are a direct result of these activities. Even patients that are being classified as walk ins which they're not necessarily being completely tied to maybe one of the marketing programs we 100% believe that it's an indirect result of the awareness programs that have been in place in Atlanta for really going back almost six months ago with the initial referral program. More recently with some of the advertisement and Google Adword programs were running in the market. You heard my quote, the volume of patients that we're starting to see consistently on a weekly basis, coming into the clinic, I would tell you hot off the presses, we literally had nine inquiries off of our Google Adwords program today alone come into the clinic. So you're just continuing to see activity level build across the board. And so for us, again, this was a key test area, if you will, that we are now taking the best of what we think has having the best impact, and deploying that into both Birmingham and Mexico, and more importantly, planned to do that earlier on with the new plant clinics.

Thank you. I guess looking at this rollout with the three in place, and you got the announced you're planning to put others in Tampa, Kansas City and San Francisco. Correct me if I've missed any others, but you're rolling out? And it looks like you're on track to getting six attendees in place very quickly, relatively. And you've identified 20 plus other clinics? And I mean, how would you look at if you're -- overall, is the opportunity much greater than that to really place much more into the marketplace with again, 80% 90% of whatever the number actually is out there that's currently being underserved, putting it into more communities in the U.S.?

Yes, absolutely. I mean, we certainly think there are a lot more markets beyond our initial shortlist of 20 or 27 cities that we've kind of put on what I would call the more immediate target list, we think it's certainly much broader than that. Again, it's important to evaluate the markets on a market by market basis in terms of the various criteria, as well as our comfort and confidence in finding good partners. So those are the things that the key element to these activities. Again, this is a bit of a qualitative comment. But, our conversations with potential partners continues to really improve. So, I guess I would say our confidence is growing, we can, we will continue to find really good partners, like we've done in Atlanta, and Birmingham and Mexico. So it's all progressing well, from our perspective. Of course, we'd like everything to move along faster, we do have to deal with various elements from a timeline standpoint, and it takes time basically to identify good locations and start the process and so forth. But it really is going very well, from our perspective.

Okay. And can you add a little more color in regards to the ramp at these existing clinics that are in place? Is there anything else you'd add that you haven't added?

I would say that, again, what we're seeing in the volume of patient flow, we absolutely believe is going to contribute to improved revenue activity, as we progress from here. So we would expect to see nice incremental growth. And that's going to happen both within the existing clinics as well as even within our distribution related activities.

Okay, well, again, congratulations on the progress. I'll step back and allow others to ask questions. Thank you

Thanks, John.

At this time, we are showing no further questions in the queue. And this concludes our question and answer session. I would now like to turn the conference back over to company management for any closing remarks.

Once again, we appreciate everybody's time today for joining the call. I would say that on behalf of the entire INVO team we are extremely excited about where things how things are progressing and where we're headed. Please don't hesitate to reach out either directly to us or to our IR group, should you have any additional questions. And again, we thank you for your time.

The conference is now concluded. Thank you for attending today's presentation. And you may now disconnect.