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.