Vivos Therapeutics, Inc.

Oh, I'm sorry. I would also like to remind everyone that today's call will contain certain forward-looking statements from our management made within the meaning of Section 27A on the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as aim, may, could, should, projects, expects, intends, plans, beliefs, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements involve significant known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant risks, uncertainties, and contingencies, many of which are beyond the company's control. Actual results, including without limitation, the results of Vivos growth strategies, operational plans, including sales, marketing, product acquisition, and integration, research and development, regulatory initiatives, cost savings plans, and plans to generate revenue, as well as potential results of operations and operating metrics and other matters to be addressed by Vivos management in this conference call may differ materially and adversely from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors described and other disclosures contained in vivo filings with the Securities and Exchange Commission, including the risk factors and other disclosures in our Form 10-K for the year ended December 31st, 2022, which was filed with the SEC today, and our other filings with the SEC all of which will be accessible on the investor relations section of the VIVOS website as well as the SEC's website. Except to the extent required by law, VIVOS assumes no obligation to update statements as circumstances change. Finally, please be aware that the U.S. Food and Drug Administration has given certain VIVOS appliances 510K clearance to treat mild to moderate OSA in adults. Any reference herein regarding vivos treatment or the vivos treatment method should be viewed in this context. Treatment of patients with severe OSA are performed off-label at the sole discretion of the treating doctor and are not part of the vivos treatment protocol. Now, at this time, it is my pleasure to introduce Kirk Huntsman, Chairman and CEO of vivos. Kirk, please go ahead.

Thank you, Julie. I want to thank you all for joining us on today's conference call. In just a moment, I'll turn the call over to our Chief Financial Officer, Brad Ammon, who will walk you through the highlights of our fourth quarter and full year 2022 financial and operating results. Once Brad is finished, I'll come back on and speak with you about the latest developments at Vivos. First, I'll quickly talk about 2022. the challenges we faced, including the revenue recognition review process that aided so much of our time last year, and then also briefly mention some of what we accomplished in spite of these headwinds, including actions we took to broaden our product offerings and distribution channels, and importantly, to increase operational efficiencies and improve our cost structure in order to work more efficiently with dentists and medical professionals in a post-COVID-19 world. Then I'll take a few minutes to talk about 2023, what we've already been able to achieve in just a few months, and what we expect to accomplish during the rest of the year. This includes our recent acquisition of product rights and patents from Advanced Facial Dontics, which has expanded our product line, our product portfolio, as well as our revenue potential by opening the US up to a much broader patient base. After that, we'll be happy to take your questions. Now let me turn it over to Brad To review our financials, Brad, please go ahead.

Thank you, Kirk. And good afternoon, everyone. Today, I'll review the financial highlights of our fourth quarter and full year 2022 financial results. For information on our results for the 12-month period ended December 31, 2022, I'll refer you to our earnings release, which was distributed earlier today, and our annual report on Form 10-K, which will be available on the SEC filings portion of the investor relations section of the Vivos website at www.vivos.com forward slash investor dash relations. Today, we reported fourth quarter 2022 total revenue of $4 million compared to $4.4 million for the fourth quarter of 2021. The overall year-over-year decrease was due in part to total revenue lower revenue from vivos integrated provider or VIP enrollments. On a positive note, we saw increased product revenue during the quarter as well as increased revenue generated year over year from billing intelligence services, oral facial myofunctional therapy, known as OMT, and increased sleep testing service revenue. It is critical to note that a material portion of the decrease in VIP enrollment revenue reflects a deferral of approximately $2.5 million of VIP enrollment revenue into future periods under our new revenue recognition policy. We expect to recognize all of this revenue over the next 17 months as we fulfill our obligations under our VIP contracts. In fact, our actual VIP enrollments were up 43% in the fourth quarter with 50 VIPs enrolled versus 35 enrolled in the same period last year. But our new policy has the net effect of recognizing a significant amount of VIP enrollment revenue over time, which for this year only creates a bit of an apples and oranges effect for comparison purposes. Our revenue recognition policy also has the effect of allocating enrollment revenue to other service and product revenue categories based upon various performance obligations included in the enrollment contracts. As we consistently apply our revenue recognition in 2023 and beyond, the year-over-year comparisons will shift back to an apples-to-apples comparison. Year-over-year revenue growth was also impacted by the effects of COVID-19 Delta and Omicron variant resurgences toward the end of 2021 and persisting throughout 2022. These resurgences presented challenges for the dentist offices, which were operating at lower capacity and with limited staff. For further details on our revenue recognition policy as it relates to ASC Topic 606, I refer you to today's Form 10-K filing. As we noted on our last investor call in December, while the revenue recognition exercise we went through last year was draining on a number of levels, the good news is that the actual impact on our company and on our historical results of operations was relatively limited, including that no prior audited financial statements required restatement. Also on the good news front, during the fourth quarter of 2022, product revenue increased 21% due to price and volume increases as we sold 2,938 oral appliance arches for approximately $2 million, compared to 2,707 during the fourth quarter of 2021 for approximately $1.7 million. And for the fourth quarter of 2022, we recognized approximately $200,000 in our billing intelligence service revenue, consistent with what we reported in the same period the prior year, and $100,000 in OMT revenue, again, consistent with the comparable prior year period. For full year 2022, revenue was $16 million compared to $16.9 million for the full year of 2021. This decrease of approximately $900,000 was primarily attributable to the same factors I just mentioned, including $400,000 due to a prior year revenue recognition adjustment and $300,000 due to the increase in the average price of VIP enrollments. During the 12 months ended December 31st, 2022, we enrolled 196 VIPs, net of cancellations, for revenue of approximately $4.8 million compared to 197 VIPs in revenue of $8.5 million for 2021. Of the $3.7 million difference, $700,000 was related to the items I just mentioned, $800,000 and $1.8 million related to 2022 and 2021 allocations of performance obligations to other revenue categories, respectively. During the year ended December 31st, 2022, we sold 12,281 oral appliance arches for revenue of approximately $7.8 million, a 29% increase in appliance revenue, and an 8% increase in the number of appliances shipped compared to the year earlier when we sold 11,355 oral appliance arches for revenue of approximately $6 million. Again, the increase in product revenue is due to both price and volume increases as well as ASC 606 allocations from enrollments. And for the full year of 2022, we had approximately $600,000 in center revenue compared to approximately a half a million dollars for the prior year, and approximately $900,000 in OMT revenue compared to $300,000 in 2021 due to the introduction of this service in 2021, an increased demand for these services, resulting in a 3X increase year over year. We are optimistic that the demand for our OMT offering will increase further this year, creating more revenue potential for Vivos. Gross profit was $2.4 million for the fourth quarter of 2022 compared to gross profit of $3.1 million for the comparable period in 2021. Gross margin for the fourth quarter of 2022 was 60% compared to 71% during last year's fourth quarter, primarily driven by higher costs associated with increased sales volume of our appliances and increased in the cost of raw materials and VIP enrollments, as well as costs related to our new programs, including the sale and leasing of sleep image rings and OMT. For the year ended December 31st, 2022, gross profit was $10 million, compared to gross profit of $12.6 million for the comparable period in 2021. Gross margin for the full year of 2022 was 63%, compared to 75% for the full year of 2021, The year-over-year difference was due to the same factors I just described. We continue to refine our sales, marketing, and promotional efforts with potential VIPs, not only to increase enrollments and revenue, but to improve our gross profit and margins. This includes utilizing targeted social media and digital marketing efforts specifically designed to drive sales. Sales and marketing expense was $1.3 million for both fourth quarter 2022 and 2021. Sales and marketing expense decreased by over $200,000 to $5.3 million for 2022 compared to approximately $5.6 million for 2021, primarily due to reduced expenses related to the annual Breathing Wellness Conference and expenses related to the BeVos website. General and administrative expenses were approximately $6.9 million for the fourth quarter of 2022, and approximately $29 million for the year ended December 31, 2022, compared with approximately $9 million for the fourth quarter of 2021 and $25.8 million for 2021. The lower quarter over quarter expenditures reflects our cost-cutting efforts in the fourth quarter of 2022, as well as lower bad debt expense, T&E, insurance, and baking fees. The year-over-year increase was mainly due to higher headcount throughout the year, as well as increased travel and event expenses related to improving conditions with respect to COVID-19. Net loss was $6.1 million for the fourth quarter of 2022, compared to $7.4 million for the fourth quarter of 2021. The year-over-year decrease in net loss was primarily from lower G&A due to expense cuts and the factors I just discussed. Net loss for the year ended December 31, 2022, was $23.8 million compared to $20.3 million for 2021. Turning to our statement of cash flows, cash burned from operations for 2022 increased approximately $3.9 million compared to 2021. This increase is due primarily to the $3.6 million increase in our net loss during the year. For the full year 2022, net cash used in investing activities consisted of capital expenditures of $900,000 related to the development of software for internal use, which is expected to be placed into service in mid-2023. As of 12-31-2022, we had three point $3.5 million of cash in cash equivalents. It's important to note that the total cash burn in 2022 decreased throughout the year from $6.2 million in the first quarter to $3.2 million in the fourth quarter. From the third quarter of 2022 to fourth quarter of 2022, total cash burn decreased $2.7 million quarter over quarter due to the effect of our expense cutting measures. In January 2023, we augmented our liquidity by closing a private placement with a single institutional investor for net proceeds of approximately $7.4 million. The private placement consisted of shares of common stock and pre-funded warrants together with five and a half year common stock purchase warrants with an exercise price of $1.20 a share. The effective purchase price per share of common stock or pre-funded warrant in lieu thereof, and associated warrant was $1.20. With this financing as well as additional cost savings measures we have been implementing since the latter part of 2022, we continue to anticipate having sufficient financial resources to meet our capital requirements, fund our operations, and continuing executing on our growth strategy in the near term. Once our cost savings initiatives are fully implemented, we expect to achieve permanent SG&A expense reductions on a go-forward basis. Longer term, we will be required to obtain additional financing and expect to satisfy our cash needs primarily from the issuance of equity securities or indebtedness in order to sustain operations until we can achieve profitability and positive cash flow. We continue to explore different types of financing strategies to support our growth, and extend our cash runway, including potential debt financings given our recent stock price levels. In conclusion, following what we view as a challenging but still only slightly down 2022, our 2023 plan is to continue with our cost savings measures while at the same time working to realize increased contribution from current revenue streams and also implementing new products and revenue streams to accelerate our revenue growth prospects. Kirk will discuss these in more detail with you shortly, as well as share some recent updates and talk about our long-term growth prospects. Now, I'll turn it over to Kirk.

Thank you, Brad. As I mentioned earlier, in many ways, 2022 was a challenging year for Vivos. As Brad just discussed, our reported gap revenue was down slightly year over year as we confronted a number of challenges. As we previously noted and expected, A material portion of that revenue decline was due to our new ASC 606 revenue recognition policy. Otherwise, the biggest issue we faced was the lingering effects of pandemic-driven dental workforce disruptions, which corresponded to fewer patients walking through dentist stores. Combined with an economy reeling from inflationary pressures and higher interest rates, these issues were pervasive in their impact on our business in 2022. I talked at length about these issues on our last conference call, so I won't rehash them here again in any detail. Aside from these short-term challenges, and in some ways as a result of having faced them, in 2022 and early 2023, we've achieved several significant accomplishments. We believe these accomplishments have laid the foundation for vivos to move forward in a more focused and productive way. Suffice to say that largely because of that adversity, We seize the opportunity to refine our strategy and transform our business model in very important ways. We believe those challenges will allow us to diversify beyond our previous reliance on the dental industry while enabling us to more rapidly scale our business going forward. Here are the primary changes we've made and accomplishments we've achieved in laying the foundation for our future growth. I'll run down this list quickly and then elaborate on each of them further thereafter. Number one. Over the course of 2022, we cut our cash burn by more than half with further reductions anticipated ahead. From Q3 to Q4, our cash burn was reduced by more than 2.7 million. We reorganized. Number two, we reorganized and redeployed our operations and support teams. Number three, we reorganized our direct sales team and put them under new leadership. Number four, we overhauled and extended our service and product lines. This means easier access to Vivos for far more dentists who will be able to offer more options to patients. Five, we introduced a new streamlined training program that to date has resulted in a threefold increase in Vivos dentist productivity. Six, we tripled revenue from our OMT treatment services this past year. Seven, we published multiple exciting new papers. one of which showed that 80% of patients had their OSA symptoms completely resolved. Eight, we obtained new regulatory clearances in Australia and the United States, including FDA 510 clearance for the DNA appliance as a Class II device for mild to moderate sleep apnea. We continued to see success in our DSO market penetration and value propositions. Ten, we initiated discussions with several large durable medical equipment companies known as DMEs, who collectively have hundreds of thousands of CPAP failure patients looking for alternative solutions. Eleven, our medical integration division now has seven open locations, and we are now just beginning to derive patient case volume and management fees from the Newsomnia Clinic operations therein. First, over the past several months, we have substantially improved our cost structure and operating efficiencies throughout our entire organization. This effort entailed staff reductions, renegotiated or terminated vendor agreements, and policy changes. We also created additional revenue opportunities across our service and product lines. On the services front, in addition to our VIP program, we now offer additional lower cost options for dentists to become vivos providers. Dentists can now become limited Vivos providers for as little as $7,995. For example, if a dentist only wants to use our new mandibular advancement oral appliances and not our care devices, they can now enroll for a low one-time fee. And if at some point down the road they want to learn to do more, then they can upgrade to our full VIP program. We have also turned our Vivos Institute facility into more of a revenue-generating asset, by hosting a number of paid medical dental related trainings and courses. Our annual breathing wellness conference will also be a profit oriented industry sponsored professional education event rather than the heavily subsidized sales events we've had in the past. These changes to our operating model and practices will begin to reflect in our revenue beginning this year. During 2022, we entered into a strategic alliance with Nexus Dental Systems to create what is expected to be one of the most comprehensive medical billing services in the dental industry. The net result is that vivos providers and their patients will now receive much higher insurance eligibility and reimbursement on vivos appliances, which we expect will lead to greater case volume and higher revenue for vivos. We are hoping that our alliance with Nexus will have a positive impact on appliance case starts as 2023 progresses. In the latter part of 2022, we launched what we refer to as our treatment navigator program. Treatment navigators will engage with patients very early on in their OSA journey under the instruction of the treating doctor to educate them about their condition and discuss with them the available treatment options the VIP practice has determined best suited for that patient. The treatment navigator's role is to effectively act as an extension of the VIP practice. to guide the patient through the many different steps involved in the patient journey, including coordinating medical and dental diagnostic appointments, insurance pre-authorizations, further education, and generally coaching the patients through treatment under the direction of the treating doctor. This service removes a significant workload from the practice and helps mitigate the risk associated with employee turnover. Dentists appreciate the consistency and continuity that comes from working with treatment navigators and they pay vivos for their services as the practice starts new cases. In this infancy stage of the program, we already have just under 50 VIP offices enrolled in the program and expect it will continue to grow rapidly as more doctors see the benefits. On the oral appliance product front, and after a great amount of research and product evaluation, we expanded our product suite so that our VIPs have more tools in their toolbox to treat their patients' breathing-related sleep disorders. In addition to our proprietary care devices that form the core of what we call the VBOS method, we now offer VIPs other palliative oral appliances, such as traditional mandibular advancement devices. In today's economy, treatment with our care devices can be cost prohibitive for some patients. Having appliances available at lower price points allows VIPs to treat more patients. As many of you are likely aware, earlier this year, we acquired the intellectual property and assets of Advanced Spatial Donics, LLC. This acquisition involves several U.S. and foreign patents, three of which were newly issued in the past few months, as well as product rights, trademarks, regulatory approvals, and trade secrets. The primary patented technology we acquired is called unilateral bite block technology, and the primary product is called the preventive oral device, also known as the POD. although the nature of the patents allows for the application of the core technology across any oral appliance type, including aligners, mandibular advancement devices, orthotic splints, et cetera. The pod currently has FDA regulatory clearance to treat TMD and bruxism, both of which are highly correlated with the presence of obstructive sleep apnea, headaches, pain, cranial distortions, oral facial distortions, fatigue, breathing disorders, and more. A second device we acquired called the NightBlock incorporates the same unilateral bite block technology and is a mandibular advancement device. It is likewise highly effective and easy to use for both mild to moderate OSA and TMD bruxism. The primary benefits of the pod are that it is extremely easy to fabricate and deliver by dentists. It's safe and comfortable to wear. And it has a relatively low cost to patients. while also being profitable for both vivos and providers. New dentists can be trained via an online course on the clinical use of the pod in well under two hours. And pods will be manufactured by our existing manufacturing partners. We are also initiating a more robust two-day live course at the vivos Institute where we teach and explore the biological mechanisms of action behind the pod technology. We will continue to seek further regulatory approvals for additional indications of use for the pod, including upper airway resistance, migraine headaches, anxiety, depression, and obstructive sleep apnea. According to published reports, over 80 million Americans suffer from TMD-related disorders. Now, with the pod, Vivos is in an excellent position to help these patients. We expect the pod, along with other devices based on the same technology, to become featured components of the Vivos method right alongside our proprietary care devices. They fill a critical gap in the overarching products that we've traditionally offered here, and they are more manageable for dentists who may not want to learn the use of our care devices. We believe pods will have a particular appeal to dental service organizations known as DSOs. who are looking for revenue enhancement opportunities that are easy to train and deploy, simple and easy to use, and very cost-effective for patients. The pod checks all of those boxes well. To our knowledge, there is nothing like the pod on the market today. As a direct result of these revenue and expense initiatives that I've described, our monthly cash burn has decreased from a monthly high of $2.5 million in the first quarter of 2022 to now just a little over a million. We expect this amount will continue to decrease as we move throughout 2023 and as the full impact of our cost cuts and new revenue lines start to kick in. As we have previously stated, our goal is to become free cash flow positive by the middle of 2024. We very much remain on that track and we are enthused and encouraged by the opportunities we see in support of that goal. Speaking of DSOs, Vivos also continues to make excellent progress in that space. We now have active pilot programs with six different DSO organizations representing just under 1,000 dental offices. Broadening our product suite also allows us to offer DSOs different entry points to integrate Vivos into their practices. We are currently in advanced discussions with an additional 28 DSOs representing several thousand additional practices. In our last call, I walked through the economics of both the DSO, for both the DSO and Vivos. I'll jump to the takeaway in this call, which is that by working with Vivos, we believe a single DSO practice can add about $1 million in annual revenue and $300,000 in EBITDA per year. That same practice will generate approximately $200,000 in additional annual revenue for Vivos. A rather average-sized DSO with 100 offices participating in Vivos could add $20 million annually to Vivos' top-line revenues. There are roughly 2,600 DSOs operating in the U.S. today across 40,000 locations. Turning to durable medical equipment companies, also known as DMEs, these companies fulfill medical prescriptions for CPAP machines and supplies and monitor their usage. Every month in the United States, there are over 200,000 new CPAP units delivered to patients. and every month there are a significant portion of CPAP users who are intolerant or noncompliant. Each DME company of even modest size has thousands, tens of thousands, or even hundreds of thousands of failed CPAP users in their databases. Up to this point, the DME companies have not had any viable alternatives to recommend, and redirecting their CPAP failure patients to independent dentists has not been successful. Recently, however, DME companies have engaged in discussions with Vivos to leverage our nationwide network of approximately 1,700 trained dentists in order to help their CPAP failure patients obtain oral appliance therapy for their OSA patients. If ignored, OSA certainly can get worse, so noncompliant CPAP users need an alternative that is more tolerable. As a Vivos distributor, A DME company can readily assist such patients while making a nice profit margin with minimal overhead and expense. Vivos is currently in active discussions with a number of the leading DME companies operating in the United States, and we expect that in time, this will be another strong revenue source for us. In 2022, we also continue to make important progress with our research and published studies. In July of 2022, Vivos published a landmark study in the peer-reviewed medical journal Sleep Medicine. This study demonstrated convincingly, perhaps for the first time with this kind of credibility, the ability of our care appliances to significantly reduce OSA in 63% of patients and resolve OSA symptoms completely, meaning an AHI of less than 5, in 26%. Final results were obtained without any active intervention, which is radically unlike any results reported with other devices, simply because such devices must be activated and in place to produce a clinical result. To date, no relapses or reports of AHI increasing after treatment from patients in any of our studies have been reported. We know of no other technology or product that can make any such claim. Other studies conducted over the past several years affirm and support that major study in sleep medicine. The latest data, which we submitted to the FDA, showed 80% of patients who used only the DNA appliance along with our proprietary myocorrect therapy, which is all part of the vivos method, had an AHI of less than five post-treatment, which means no further obstructive sleep apnea. Now, in that case, the sample size was relatively small, so we should not infer too much from that single group. Excuse me. Nevertheless, this is a promising development and one that generally comports with prior studies showing significant rates of full resolution of OSA in study cohorts. We have submitted this latest data as a peer-reviewed public paper. To our knowledge, no other treatment method has ever shown anything close to that level of efficacy without lifetime intervention or surgery. Our research and clinical data also continues to open more regulatory doors for us. In 2022, Vivos was cleared through the Canadian Ministry of Health, Health Canada, to sell devices in Canada with even broader specifications. Also, the Therapeutic Goods Administration, or TGA, in Australia issued clearances for our devices to treat adults and children with for all indications inclusive of OSA regardless of severity. For those of you not familiar with the TGA, it is Australia's equivalent to the U.S. Food and Drug Administration. And just before the end of last year, vivos received a brand new FDA clearance for our proprietary DNA appliance. The FDA 510 clearance for the DNA appliance is as a class two device gives rise to a completely new treatment regimen for mild to moderate OSA in adults and jaw repositioning. This is an important milestone for vivos as the DNA device for palatal expansion is our longest standing appliance with the widest use among vivos trained dentists. The DNA is the only oral appliance ever to receive FDA clearance to treat OSA without mandibular advancement as its primary mechanism of action. We are extremely excited about receiving this FDA clearance, and we expect this will lead to continued market adoption of the DNA for treating OSA. One noteworthy and very practical application that has come from our ongoing research and development has been the introduction of a key diagnostic technology called rhinomanometry. In June of last year, we announced a deal with GM Instruments where Vivos became the exclusive dental market distributor in the U.S. and Canada for the only FDA-clared rhinomanometer available. Finally, during 2022, our Medical Integration Division continued to expand and establish our partnership with new medical dental sleep clinics known as Newsomnia and Newsomnia Plus Centers. In late 2020, we launched our Medical Integration Division to assist VIP practices to establish clinical collaboration ties to local primary care physicians sleep specialists, ENT doctors, cardiologists, pediatricians, pulmonologists, and other healthcare providers who routinely see or treat patients with sleep and breathing disorders. The primary objective of our MID is to promote the VIVOS method to medical providers through education on a local and national basis, thus facilitating the potential for additional OSA adult patients gaining access to the VIVOS method while offering continuum of care. These independent clinics that are owned jointly with medical doctors and dentists, or just medical doctors, depending on local state regulations, will be managed by our company under a management and development agreement, which pays us 6% to 8% of all net revenue from sleep-related services. We also collect a development fee for each clinic prior to opening, which establishes all operational protocols and flow. In addition to the five operating Newsomnia clinics operating at the end of 2022, here in the first quarter of 2023, we are gearing up to open two additional clinics in Las Vegas, Nevada. In the past six months, the Medical Integration Division has consolidated operations, thus improving operational flow, which in turn has produced significant increases in case starts and management fees. Looking ahead, we expect to add two additional Newsomnia clinics in 2023, And with the additions of new service lines, we expect these clinics will deliver revenue opportunities for Vivos, both in terms of management and development fees, as well as appliance sales. Now, here in 2023, in addition to the developments I talked about earlier, we have also been focused on improving our sales and marketing efforts. We made some organizational changes, streamlined processes, and implemented new training and leadership in the sales organizations. Part of these changes was to create and implement a new pre-qualification process for dentists attending our educational event that has been the primary lead generator for new VIPs. At the same time, we launched several new marketing campaigns, which are having some of the highest conversion rates we've ever seen. I am pleased to announce that Vivos has joined the Seattle Study Club, which is one of the most prestigious organizations for continuing education in the country, with an audience of nearly 6,000 of the nation's top dentists. We are already seeing strong results from these efforts. In March, we generated three times the number of leads for new VIPs that we had in just the prior month. We are very excited about these results and look forward to continuing this momentum throughout the year. For all of the above reasons, we feel extremely optimistic about the future of our company. We see many opportunities to scale and extend. We now have the people, the contacts, the model, and the momentum to see this company start to realize its full economic potential. We deeply appreciate your confidence and continued support as we've laid the foundation for a bright and exciting future.

Now we'll take your questions.

Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on the telephone keypad. Confirmation tone will indicate your line is in the question queue. you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from the line of Scott Henry with Roth Capital Partners. Please proceed.

Thank you and good afternoon. Kirk, you covered a lot of ground there. Just a couple questions. First, with regards to VIPs, I recognize that the revenue will be spread over a larger time period, which will eventually annualize and it'll be similar, but that VIP ad number of 50 in fourth quarter, do you think that's a representative number of what you would expect to add quarterly going forward or What types of ads should we be thinking about on a quarterly basis, knowing there will be some volatility?

Yeah, I would say we do have some seasonality in our enrollments, and the fourth quarter tends to be a little better. The first quarter tends to always be a little softer, and that's been true here in the first quarter of the year. But, you know, this is – they don't – they don't drop off dramatically. There's just some fluctuation that goes on throughout the year. I think what you're going to find Scott is because of the way we've restructured. So doctors, we used to be a very binary organization. We had, you either paid the full upfront initiation fee or enrollment fee, which was, you know, somewhat of a barrier for some, some of these doctors. And it was $45,000 for these guys to get all the training that they needed. Now we've got multiple levels and multiple ways that these doctors can participate and that they can begin to generate revenue for themselves, their practices right away. So we have multiple layers or levels of entry points at various prices so that there's really no reason for people to walk away from an event with us or walk away from any type of an exposure to vivosphere and not participate at some level. We have very inexpensive ways now for doctors to do that. If they want the full measure of what we have to offer, that VIP program is still available. But I think what we're going to find is that the numbers of VIP doctors is going to continue to rise. We're having some great success with our DSOs. That tends to add a lot of doctors in more of a cost-effective way. And so I think what we're going to see is that number is going to accelerate as we go through 2023 because we'll have a lot of doctors that hesitated or delayed getting involved with EVOS because they really didn't want to pay for all the training that's required. Now they can get limited access with limited training. They can put a toe in the water. And we're seeing a lot of interest and a lot of growth in that area. So I think the numbers are going to get better as we go throughout 2023 because we just here mid-quarter rolled out that new program, and it's been very well received. So we're starting to see some good positive signs there. It's too early to tell exactly what the impact will be, but we think with multiple ways and multiple price point levels to participate, I think that we're going to see that number go up.

Okay. And then appliances was kind of flat quarter to quarter, sequentially third quarter to fourth quarter. How do you find utilization per dentist? How should we think about that trend? Should we think about it flat or just with more dentists driving the number, or do you think you'll get some more gains as far as appliance per dentist?

So that's a great question. And buried in our or monologue that we just gave you guys. There was a statistic or an event that we reported on. We overhauled our training and we rolled this training out and then measured the productivity of the attendees. This was initially rolled out last September. We measured the three months prior. We measured the three months after training. And this new training yielded a three-fold increase in doctor productivity. We're very excited about that. Now, we're going to continue with those type trainings. We take those trainings on the road typically so that we can reach dentists on the East Coast, you know, North, South, East, and West. So we don't require dentists to come to Colorado for that. We take that out on the road. But the relaxed and more – specific focus training that we've rolled out is yielding some very important and very significant increases in productivity. So I would say, Dr. Productivity, as we get more of our doctors through that process, Dr. Productivity should be up higher than what it was last year.

Okay. And then the acquisitions that recently took place, how should we think about the magnitude of

revenue gains there in the timeline of realizing those revenue gains well we are I'll just tell you this we are extremely excited about this new technology that the the impact that it will have I think on our business will be profound and we think we see the introduction of a low-cost easy to use easy to deliver products such as the pod to be a central part of our appeal to DSOs, to the DME companies, to other groups that allow us to scale our business more rapidly. When we go after onesie, twosie dentists and we get one dental office at a time, it's hard to scale that in a meaningful way in a short period of time. When we have larger groups or we have companies such as DME companies with vast numbers of patients, the simplicity of training a dentist to do a pod device delivery, for example, with a patient, we can do that training in about two hours. It takes us at least three days of live training and probably another 12 hours of online training to get our doctors ready to deliver and produce with our care devices. So the simplicity and the immediate profitability of the pods are very appealing to the dental market. They've got vast numbers of patients that can use them and use them well. And so we're very excited about what that's going to mean. And I think it's really, honestly, I think it's a bit of a game changer because of the way that it allows us to go more broadly and deeper into the market that we all know is just that they're just screaming for something. If they fail CPAP, they have nowhere to turn except a surgical operation, and that's really for most patients not really on the table.

Okay, great. Thank you for taking the questions.

Thank you for asking. Thank you. So, operator, are there any further questions?

Yes, we do have one. Our next question is from the line of Lucas Ward with Ascendian Capital Markets. Please go ahead.

Hi, guys. Good afternoon, and congratulations on your progress. Thank you.

So I wanted to ask about these institutional partnerships. You've got the DSOs and the DMEs. And it sounds like there's just massive business there. So I'm wondering, what are the bottlenecks? How long does it take to close these deals? And once you do get a major DSO or a DME on board, does it just open the floodgates? Is it something that we can model?

Okay. Lucas, that's a great question. So I'll remind everyone that back in 1995, I was one of the very first individual entrepreneurs that started the DSO industry. I watched that industry grow. I'm familiar with the players in it. And I cautioned everyone when we launched our DSO initiative because I know these guys. They're very, very cautious from an operational standpoint, introducing anything like what dental sleep medicine entails into a dental practice. It requires a great deal of patience, a great deal of commitment, and a great deal of energy and time. So we never really expected the DSOs to be any sort of an immediate sort of revenue panacea. Having said that, we're making huge strides there. We have had some amazing success stories that are just really stunning in the way that they're delivering services to patients within the DSOs. And we're gaining a lot of traction. In fact, I have people right now at the largest annual DSO conference going on right now in Orlando. But we really think that that's a little bit of a slow burn. The opportunity there is huge, but it's a little bit of a slow burn. The DSOs are just very cautious and very careful. Several of them have been burned by trying to implement fleet programs into their organizations in the past, and they've never had a company like Vivos that has solved all the barriers to entry. So it's proceed with caution with those guys, and it's going to take a little bit of time. But once they flip the switch, once they realize, and they are starting to realize how big this opportunity exists, they will come on strong. I would say I would say that we really won't see any significant revenues from the DSOs until the latter part of this year and going into next. For the DMEs, it's almost the opposite. The DME companies are thirsty. From our experience so far, they are craving and looking for somebody to come along and help them navigate the world of dental sleep medicine. They've tried. It's been difficult and working with dentists is not always easy. The fact that we have a nationwide network is a very, very appealing thing. The fact that we have different price point opportunities from the pod to a mandibular advancement to our care devices, which can take their patients and take them from a low cost, low entry, quick fix type thing to all the way to potentially resolving their OSA. The DME companies are all over this. I fully expect the DME companies to be a primary driver for our revenues as we go throughout 2023 and into 2024. And, yes, the opportunity there is unlike anything we've ever seen. We think the DME companies are a total game changer for Vivos. We're deep into contract negotiations and pilots with Vivos. beginning pilots with several of these guys, and we're excited about what we're seeing there. We're excited about their enthusiasm for what we have, and we see the DMEs as being much more immediate in terms of revenue drivers.

Okay. I just had a couple of financial questions, possibly for Brad or whoever wants to take it. Okay. Can you –

say what your revenues in the fourth quarter would have been without the revenue recognition change. So instead of four million, would it have been five million or higher?

Yeah, it's very difficult to look at it like on a quarter over quarter basis. You know, we we talked about two and a half million dollars moving from recognition of revenue into deferred revenue. But that'll be recognized at some point in time. So it's not like that revenue goes away. That revenue just gets deferred. We used to recognize revenue over 12 months, and now it's up to 18 months on the longest piece. So it's more of a deferral program than it is anything else. Okay.

Clear. And then with respect to operating expenses, I was wondering if you could give a little color there it looks like the sales and marketing was up sequentially quite a bit although you were down a little on gna um i'm wondering sort of what the trend is likely to be for 2023 on uh well just operating expenses overall see we did 35 million this year like do you expect that to grow in 2023 and if so like roughly how much

Well, we've been focusing on our cash burn and operating expenses and GNA are obviously a big part of that. We had 180 employees in 2021. And now, you know, we ended the 2022, it's about 160. And we are looking at other ways to save costs in terms of outsourcing some personnel to save some costs there. But we're really focused on the cash burn. And if you look at the cash burn in first quarter, the whole quarter of first quarter of 2022, we burned $6.2 million of cash. And in the fourth quarter, we burned $3.3 million of cash. And in third quarter, we burned $6 million. So we were down just about half of our burn between third quarter and first fourth quarter. So we saved $2.7 million. So we're looking at things on a basis of what do we need to scale. We're driving top line revenue and looking at the expense line items so we can start to improve the bottom line as well.

Clear. Thank you very much for all my questions. Thank you.

Thank you. There are no further questions at this time. I would like to turn the floor back over to Kirk Huntsman, Chairman and CEO for closing comments.

Thank you, operator. I would like to thank everyone again for joining us on today's call and for your continued interest in vivos therapeutics. We look forward to sharing our continued progress with you in the future. Thank you and have a great evening.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.