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Q1 2023 Earnings Conference Call
spk03: Good day and welcome to the Aurora Spine Reports First Quarter Fiscal Year 2023 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Adam Lowensteiner. Please go ahead, sir.
spk02: Thank you, Chuck. Welcome everyone and thank you all for joining us today to review the financial results for Aurora Spine for the first quarter fiscal 2023 ended March 31, 2023. With us on the call representing the company today are Trent Northcutt, President and CEO of Aurora Spine, and Chad Clouse, CFO of Aurora Spine. Before we begin, I would like to remind everyone that statements made during this course of this call may be considered for looking statements. Within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934, these statements reflect current expectations concerning future events and results. Words such as expect, intend, believe, may, will, should, could, anticipate, and similar expressions are words that are used to identify for looking statements, but their absence does not mean a statement is not for looking. These statements are not guarantees of future performance and are subject to risk and uncertainties and other important factors that could cause actual performance or achievements to be materially different from those projected. For full discussion of these risks, uncertainties, and factors, you are encouraged to read Aurora Spine's documents on file with CDAR, including those set forth in periodic reports filed under the for looking statements and risk factors section. Aurora Spine does not intend to update or revise any for looking statements, whether as a result of new information, future events, or otherwise. On this call, management may refer to EBITDAQ, adjusted EBITDAQ, adjusted net income, adjusted EPS, which are not measures of financial performance under generally accepted accounting principles or GAAP. Management believes that these non-GAAP figures, in addition to other GAAP measures, provide meaningful supplemental information regarding the company's operational performance. Investors should recognize that these non-GAAP figures might not be comparable to similarly title measures of other companies. These measures should be considered in addition to and not as a substitute for or superior to any measure of performance prepared in accordance with GAAP. A reconciliation of non-GAAP measures to the most directly comparable GAAP measures in accordance with SEC Regulation G can be found in the company's earnings release. With that, I'd like to now turn the call over to Mr. Trent Northcote, President and Chief Executive Officer of Aurora Spine. Trent, please proceed.
spk01: Thank you, Adam. I'd like to welcome everyone to the Aurora Spine First Quarter Fiscal 2023 Financial Results Conference Call. Earlier today, we issued a press release detailing our financial results. Hopefully, you've had a chance to review this news release. But if not, a copy can be found on our website at auroraspine.com, under the Investors section, or in other financial websites. To lay out the agenda for today's call, let me first summarize a few key events for the quarter. And then I'll take a bit about the status of each one of our key initiatives in products like Zip and Silo, as well as our initiatives on the Spine Division, including DEXA product line. Chad will then give a recap of the financial results, and we will then conduct a Q&A session at the end. So, let me talk to you about key events in Q1, the market overview, the dynamics of the new products, and our clinical studies. The first quarter of the fiscal 2023 was a transitional quarter for Aurora, where the certain reimbursement changes that affected our SI Joint Division, which in the interim has been resolved. We've also added new sales personnel during this time, and we will start to establish new relationships to renew our sales strategy. We believe that these changes and investments will be beneficial to the company later fiscal in the long term. Despite these short-term issues, the company has several key initiatives that were positive including the initial surgeries of our new Silo TFX product, which has been successfully implanted into patients. We are currently building inventory to ramp up for the new release of this product slated for the third quarter of 2023. We also embarked on clinical studies, which many of our products during the 2022 into 2023. That is important to have this data to share with the industry when selling our products. As we received early positive results from our ZIP device, it continues to build momentum, ZIP to act as a key contributor to the company's sales, and as the product has recently received approval reimbursements, but is versatile and is starting to gain momentum in the marketplace as more professionals including neuro, ortho, and pain interventionalists are recognizing the value of the ZIP line of the product and to others. We believe that the true vision and intent of this product is now coming to fruition. Looking into 2023, we believe that the proper track for continued revenue growth, while the first quarter was slower than anticipated, we took time to make some changes to prepare the company for the long term, including adding some new personnel. On a macro level, we continue to see momentum gaining in the minimally invasive surgery market, especially regards to the reimbursement coding, as insurances are embracing more procedures that can be done in a minimally invasive manner and have the patient recoup at home in a quicker time frame. Aurora's products like the ZIP and the Silo are very complementary to doctors and their patients and especially designed for minimally invasive procedures. I believe that these catalysts, while our products are able to gain traction, will be well received. Moving on to DECSA, we continue to work diligently in placing the kits. We are identifying appropriate homes for these kits. We feel confident that they will be able to place these kits by the end of the year. That said, in order to attract appropriate healthcare professionals, we will be starting certain training capabilities for the DECSA C to immerse them into the product and to the technology. While training isn't required, we believe offering some training will be necessary to get the doctors to fully embrace the technology. Our goal is not only to have them use DECSA C, but to continue to use the entire platform as well, especially as we will have DECSA L available in the near future. To summarize, I'm extremely proud of our team's performance in staying focused on building this company. We are well positioned to take advantage of growth markets in several new proprietary products. We will remain focused on penetrating these markets further this year through continuing training sessions and clinical trials. Looking to the longer term, as well as positioned for success, we especially have the new products that are more clinical and more clinical studies providing out of our technology and education for more doctors on the benefits of using Aurora's products. We remain highly focused at the opportunities that are in front of us and continue to invest our growth with each of our major platforms, Zip, Silo, and DECSA. I will now turn the call over to Chad Claus, Aurora Spine CFO, who will review the financial results. Chad, please proceed.
spk05: Thank you, Trent. With numbers highlighted in detail in the press release, let me focus my comments on a few areas and provide some color where I can. Total revenues for the first quarter of 2023 were $2.93 million, a decrease of .5% compared to the $3.55 million in the same quarter a year ago. The lower revenues are due to less sales of the company's silo algraph system due to reimbursement and the slow sales of the company's silo algraph system due to the change in coating change and slower sales in the spine division. Gross margin on total revenues was .2% for the first quarter of 2023 compared to .5% in Q1 of 2022. The gross margin is slightly lower due to product mix but remains strong historically. Total operating expenses were $2.19 million for the first quarter of 2023 compared to $2.29 million for the first quarter of 2022. Operating expenses slightly decreased primarily due to lower G&A and marketing expenses. EVDAQ was a negative .38 million for the first quarter of 2023 compared to a negative .15 million for the first quarter of 2022. EVDAQ was lowered due to lighter revenue levels through the current quarter. Net loss was .662 million, a negative .6. For the first quarter of 2023 compared to the first quarter of 2022 which was a loss of .387 million. Basic and diluted net loss per share was a negative one cent for each for 2023 and 2021. During the balance sheet, the company ended the fourth quarter with approximately $362,000 cash equivalents. During the quarter, we received approximately $700,000 in proceeds from the conversion of warrants. The accounts receivable decreased sequentially but we continue to remain highly focused on our cash collection and believe that we'll be able to lower these receivables over time. Our inventories were flat during the quarter as we've made a fair amount of product to
spk01: Thank you, Chad. Before we open the call for questions, I'd like to conclude that we continue to make improvements internally to make sure that we remain on track to continue revenue growth. We obviously have more work to do but the company is in a very good position to capitalize on the IP improvements we've established in the past 18 months. We are highly successful in creating new proprietary products and now it's time to demonstrate that we can scale the company on the commercial side of the business. I appreciate everyone's patience and I believe we are in the early stage of reaping the rewards of our efforts. With that said, operator, we are ready for any questions.
spk03: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys and to withdraw your question, please press star then 2 and at this time we'll pause momentarily to assemble our roster. Any first question will come from Tom Fedeiken with MicroCat Connection. Please go ahead.
spk04: Hey, good morning there guys. Thank you for taking my call. I want to dig into some questions regarding the really the capital on hand, cash on hand. We've had two quarters of pretty sizable losses and you know $360,000 on the balance sheet. You know, at what point in time are we looking at doing a capital raise?
spk01: Good morning, Tom. Yeah, I am obviously we are we are taking a close look at our cash position. We have improved just recently on collections. We've seen some people that were slower in the payment schedule actually come through for us. So our cash position is actually has improved even from this press release. So it doesn't mean that I'm not looking at obviously making sure that we're stable financially and making sure that we have appropriate cash for operational expenses. So it's in our discussions now. I've had conversations with our board and I haven't accepted any financial raises or anything, but I am discussing it as either a possible bridge or potential investment into the company.
spk04: Okay, and in regards to that, I know David Rosencrantz has got a debenture, I believe it is, that is outstanding. Has he ever thought of converting that? Because my understanding is that to do a financing or to have a bank loan, I should say, that might be an issue in that, you know, he's got first right of, you know, on the on the debt of the company, right, or the assets of the company. Has that ever been discussed about converting the shares and into this? All right, his his owing's into shares. And second to that, I guess, if a raise was to take place, given the rollout of of all these new products that are coming out of Dexaca, of course, continually rolling rolling Silo TFX, you know, how much capital would we be looking at? Two million, four million dollars? How much money?
spk01: So the answer to the first question, yeah, I mean, David Rosencrantz, our chairman, has been, you know, obviously a great ally to the company and a strong leader on our board. You know, he is definitely here to help the company in any way that is possible with the company. So I'm not I'm not going to put words in his mouth. Obviously, he he's here firmly on our side to make sure that things continue to run smoothly with the company and and we'll obviously make adjustments where we need to and if he needs to, if he if he wants to participate in that type of selling off of his of his warrants, that'll be the decision he makes. So obviously, he's active. David and I speak every week and it's very hands on, which is a good thing for us to be in. The second part of the question is, I did say that we have we are seeing some some bright lights on the collection, which has been promising. I'm not saying people won't continue to hold tight on their purses, but we did get a little bright spot over the last couple of weeks here, seeing some improvement in areas where money was finally being released. Not trying to pat myself on the back too hard, but I was aggressively and diligently being I was on the AR collections team for a few weeks, just, you know, just dialing the phones and getting people to pay their bills. So as far as how much money we have to pick up, a lot of the bring in if we did do a raise, the the good news is most of the products that we that we've been talking about for a while, such as Dexacy and Silo TFX, a lot of those those products have already been built up and built out. So we're not going to have to grab extra money for that for those products. The the TFX product is as of today is on time with its scheduled release. We feel confident that the TFX will fill in the gap that is obviously the hole that got created in our revenues with the T code reimbursements on the Silo Alegraaf systems. This was a problem. You know, we're the publicly traded company, so we're the one who we're the one to get get the most attention on this space. But many of the Alegraaf SI companies are also dealing with the same T coding reimbursement challenges. So we we are very confident and I'll boldly say that I know the TFX will fill that gap and actually come up and out of it on top because the product is performing well in its trials and the TFX product has already added some additional revenue to the company that we needed and is getting a favorable reimbursement on the Dexacy side. The challenge there is just simply been getting it approved at the facility. It's not a matter does the doctor like the product? Does the doctor see the advantages of the product? The answers those questions are yes. I sweep the phones regularly asking the doctors how are the patients doing, how the patients you know responding to it and they're all very, very impressed. Many of the accounts that we had slotted for Dexacy implants were simply the hospital just hasn't given us the approval yet to have the product available. So we continue to sell the product and we continue to get the product introduced to doctors and there's many people who want to use the product but it's still just not available at their facility for committee approvals within that facility.
spk04: As for the accounts, get back to the accounts receivable for a second with with increased growth if you double your business I would expect that you would double the accounts receivable and that's kind of where I was coming up with maybe two to four million dollars required to raise for future growth. Would that be a correct assessment?
spk01: Yeah that's a fair comment and you know it's certainly yeah we're not internally discussing you know 10 million dollar raises or anything like that. That's not the conversation we're having we're just basically talking about more of a bridge extension of making sure that we can execute. I reset the sales organization we have new sales people who have come in we've doubled down on education we added a clinical specialist in the field to help support Chrissy. We hired a new regional manager that's already put up new numbers for the company brand new revenue for the company and we're adding more regional sales management which we are confident will new revenue for the company in areas that we don't currently have strong revenues. So this will be new business for us and it will be focused on the zip, the silo tfx and the dexa products as I've been discussing now for you know 18 months.
spk04: No perfect. Now at the start of 2023 you had eight dexa kits in the field. How many currently do you have outstanding?
spk01: Yeah we have we have we have nine kits in the field and there's I believe there's another nine here active ready to go in the office so that puts us at 18 and I know that they'll have all of the dexa kits beyond 20 I'll say you know 20 and higher available here by mid-year but still I like I said I have nine extra kits that I know can be placed right now and we are holding our breath on a couple of accounts because they're we're in the VAT committee we're in the committee approval process and we're just waiting for them to rubber stamp that that approval so we can move on in and start to have the dexa c utilized and using surgery. Now with that said I know you the dexa c multi-center study and I think that with that multi-center study similarly what we saw with with the zip technology where it was maybe a slow start with us was zip became widely accepted the study that we put out there for the for the dexa was widely accepted it was a nice crossover hit amongst you know the different groups of doctors you're working with. Dexa c of course is very focused on ortho and neuro spine market but as much as we talk about it and I know Tom you know about the product and I know a lot about the product we need to get more people behind more doctors more surgeons to who know the product have the ability for the product to be used in their center and we think that this multi-center study that we are embarking on and do have IRB approval on we'll start to help the doctor with the VAT committees with the approval committees to get the product more readily available to them because we've taken the extra step to make sure that there's a some clinical data coming out from behind it so we can support it as we enter into new facilities.
spk04: Perfect no that's I appreciate that that's great. Silo TFX kits you had three you're doing your your your alpha testing I guess or beta testing I guess would be on them right now as of the last call that is I should say I'm presuming it's still three kits how many kits do you feel you'll have by year's end and will we see will we actually see mid-year 10 kits in the field like what what should investors expect when it comes to the Silo TFX?
spk01: Yeah we'll have we'll have closer to 20 kits by the by the second half of the year and I mean like Q3 in Q3 so we've we've got some really positive results from that from the the doctors who've done a blend of ortho, neuro and interventional doctors have used the product with some really good clinical results. We're coming up to our first almost six months of use of the product you know because we had our first alpha sites done right away so by by the July we'll be into our first six month outcome with the product. We're on schedule with the product as far as like the instrumentation and the implants. Our in-house manufacturing team has done a magnificent job of making the the quick changes that we saw clinically in the product and we were able to do that quick pivot on updating them the instruments and the x-rays that I've seen the comments that I've received are very encouraging and I know it's going to fill the hole that we seen from the second half of last year Tom when you when you started to hear my concerns on the coding reimbursement on the t-code how concerned I was with that and how it directly affected our sales revenue and this is why we we made changes in sales but we were also very optimistic about what the tfx is going to do but we were we didn't get our fd approval until October of last year did our first cadaver lab course once we had the first kit available for the course to be able to teach on the product which was in February and that's where we got the alpha sites we've quickly worked through all the the the modifications that were needed and we've already performed two tfx along with zip trainings we combined the trainings we've already done two of those one the west coast and one on the east coast to about 20 positions on that in those trainings and all of that we've got 100 approval from those doctors that they are going to use the product
spk04: wonderful wonderful now now of the solo tfx kits that are currently out and and and even moving forward from an expectation standpoint how many procedures should we expect per doctor per month based off of what you know from the silo in the past and of course now this is the new upgraded version of silo the tfx can we expect to see similar numbers as as to what we saw with the silo
spk01: yeah i'm seeing and procedures
spk04: a month well or is there a number we can expect
spk01: yeah i'm looking to obviously you know be consistent at 10 10 cases per month you know starting next month but quickly moving up past 25 procedures a month going into july and then with as high as 35 procedures per month we've seen an increased reimbursement on the device by over $3,000 from our $9,000 average sell price of silo to now we're getting over $12,000 for tfx so we're we're encouraged by that because we've seen some additional pricing come in that's even higher so we'll we'll be able to maximize on that and again the kits are performing real well the outcomes you know inside the operating room are looking promising and we've already different procedures that have been booked out on personal injury cases work comp cases medicare and in private payers of all paid so far on the silo tfx so that's also a nice promising spotlight in in a darker q1
spk04: okay and and and i'm sorry i'm going to skip back to dexa for a sec because it's something that dawn on me that i didn't ask and that is um how did dexa perform in q1 we we didn't see any any language in the press release as to um you know the success of dexa did we see was it a successful quarter what percentage revenues was it for the quarter are doctors still performing 10 surgeries per month per per doctor with the dexacy
spk01: dexacy was down mainly because the one of our key users of the dexacy product was out and and he was a high performer of the product for us so that really that really hurt us he he blew his shoulder out in december so that in all of the essentially q1 he was out in recovering he is back and we've got some more surgeries with him scheduled and he had changed to another facility the pricing was lower than where we were at the other facility but we have different users a more a more a bigger blend of doctors using the product we just don't have all the approvals one of the big facilities that i was counting on last year one of the major universities that's part of the multicenter study there were not they were they had pushed the vat about 20 levels a month with that with that university in december and then the committees pushed us all the way to mid-year at that particular university we hope that we don't run into those type of issues we don't think we will but that one was obviously earmarked to be a revenue generator for us but turned into a longer committee approval process
spk01: dex is out there i think the the the challenge for us is just simply getting doctor familiar with the product and getting our sales team focused on the the dexa technology versus the tfx or the zip product it's a matter of just picking the products appropriately on that sales call and we've added a new field trainer to help support christy's division to help train the doctors on the product so that way they don't and then also just to be in front of the distributor this new field trainer which we added here in the first you know at the end of the q1 he joined us he is out actively training doctors and distributors which is the key part here the distributor and the distributor reps on why tfx why dexa and how the distributor can make money off of these products by introducing these technologies that in our opinion our door opening products in that area and to to our more of a surprise many of our distributors that were carrying zip and silo didn't know we had dexa so that was clearly something that we saw and we and we fixed and we added that new component to the company so we could get better awareness and better training in the field on that technology and our new tech support gentleman who joined us is very very excited about the technology and is actively out right now as we're speaking you know talking to distributors and doctors and covering some surgeries that are needed so we don't lose the sale cycle because one of our salespeople stuck in a surgery the clinical specialist is out in the field covering those procedures for us
spk04: perfect and and do you feel you have the the full roster of staff that's required moving forward or are there still holes that are needed to be filled
spk01: well internally we we feel we feel good internally externally as far as like sales goes matt goldstone is is in is running in a series of interviews right now with different areas and we have two two new offers that went out that are going out this week to salespeople that we believe will be impactful to the company sales wise and the the roster that i see here on my board you know he's got eight more salespeople so six more out of the two that he's making offers to that are in strategic areas around the country and parts of the pocket of the country that we're just not either strong in or we just don't do anything at all there or areas that we think we need to improve on we'll be adding those people here in the second quarter or early q3 at the latest but that'll be all all those salespeople will be joining us as fast as we can get them signed on
spk03: again if you have a question please press star then one this concludes our question and answer session i would like to turn the conference back over to adam loehensteiner for any closing remarks actually we just received a couple questions that came in i'm so sorry about that our next question will come from sergio hiber with iber research please go ahead
spk00: hi good day to you guys clinton chad thank you for for taking the call um i my job is to ask what tom may have missed so um do you want to give any revenue guidance do want to change the revenue guidance that you gave previously or you're sticking with it
spk01: good morning sergio um the the um the so we were you know we were chasing to get ourselves at about 1.5 million that's what we were shooting towards we'd actually felt on the sales for on in our sales forecasting from the field that we were going to be somewhere between 1415 but um the team the team had some shortcomings within those estimates so we've regrouped the team to be more accurate on our forecasting so until i can get the the team to accurately forecast consistently i'll hold on where that number is it doesn't change what we're shooting towards we're get on a regular sales revenue above the 1.4 1.5 million dollar number that's where we want to be that's our first milestone that we're trying to consistently be at you know we've shown improvement here in the second quarter from the first quarter so that's the step in the right direction but we must continue to to take steps forward and we have to get the tfx system out into the market because the sales shortcoming is primarily off of the t code on the silo allograft si joint system the reimbursement was was being was a concern of doctors and so the procedures had dropped significantly in fact in the beginning of the year went down 70 so that's why we are we are looking to re-forecast the sales in especially in the si market based upon the release of the tfx which we believe will be able to fill in the the shortcomings of that device and then also add new revenues to the company above and beyond you know the shortfall of the of the silo allograft system with more firepower out the street which would be more salespeople
spk00: so the come without without getting more dexa c kits out the revenue for the next quarter is not going to be as good as last year's so can you give more color as to why it's taking so long with the dexa c my understanding is that you're not selling to just one hospital it's a hospital group so is that correct so when you sell it won't be just one
spk01: yeah the the the quick answer to the the kits are being presented to different accounts the problem we had with some of the accounts was that we would we could get the yes from the doctor but we weren't approved at the facility so we have to still go out get a part of the hospital approval system where the where these particular procedures are being performed we redirected our sales force to make sure that they were focused on accounts that could give us access to their facilities it is a newer product so the the oftentimes some of the hospitals and even some of the surgery centers are are year to year or quarter to quarter on approvals and we got a slow start because we weren't we weren't set up right at the end of the year with the inventory of headwinds that we ran into at the end of the year going into the first quarter this year which roughly affected on top of the silo reimbursement challenges that we went into the year so those two things dragged ourselves down in in the first quarter last year's q1 was a record-breaking q1 for us with no headwinds of coding reimbursement and no inventory issues this quarter both those challenges were real but are being corrected and have been corrected
spk00: and then you talked about training for that's even though it doesn't need the training so will you be reinstating the formal training schedule that you had before as far as having training once a month
spk01: we're not so yeah with deficit we don't need to do a big cadaver course it's not a cadaver type of training but what what we did recognize is that many of the distributors that we were working with were keen on the zip and on the silo but when the reimbursements went down of course we were asking them hey you need to jump in and start to promote the dexa technology and many of them just were not in tune with that and that was that was that was short-sighted on our part we thought that they would be able to transition these products further into their surgery centers and the hospital systems that they were working at so what we're doing on the training standpoint is a man named adam and then all the all the sales people are are re-educating the distributor network that we have this technology and here's our our early clinical results so we've put more of a presence out on on social media for the for the purposes of showing people what dexa technology is and that we do have good clinical results so if that help us get through any type of committee process approval at the hospital quicker that that hears the information for them and hands-on educating these distributors and of course doctors on why this technology is it already had a successful year we did last year we did 1.2 million dollars in dexa and last year i told everyone that we were only going to do about half million and we actually beat our estimates on that product this year we're off to a slow start because we we lost one of our key users because of injury but also due to just not sales focus they were everyone was reeling off of the the t-code issue of the allograft and and we didn't get enough good information out there in front of the surgeons to use dexa c and i'm and i'm fixing that right now
spk00: so trying to have just one last question is there any one big hospital group that you're working with to get the dexa c kits with that would be a significant achievement well
spk01: we we have submitted our dexa c with hca which is the largest health care system in the u.s. you know hospital system in the u.s. tenant and i believe we are approved on the tenant contract now i had to double check that but i think we are approved on that now hca is is on an account by count basis from from different doctors that want to try it but it's not i don't think it's nationally approved yet and and we did a we did an introduction of the product at the american academy of neurosurgeons and in the beginning of at the end of march beginning of april we did a presentation at the american academy of neurosurgeons and so we just have to wait for that to bear some fruit off of that that submission we had a podium speaker at the at the double ans dr sabastian coga who's one of our biggest supporters of the product and he has good clinical and biomechanical data that he is has been accepted in a published paper and a published poster and in a published release within the the congress of neurosurgeons so this is all new and we're getting that out dexa is everything i say it is it just needs to be in front of more people so more people understand it and more people get it and they have it available to use the product because their hospital system allows them to use it and i'll continue to to to fight that and get it get it approved
spk00: and this is dexa l you're looking to roll out in the fourth quarter
spk01: yeah we have so we're you know the good news is we have the fda approval on that product we have the testing results that are positive on the biomechanics of the product we need it strong enough and it's not it's not a it's not a product that's going to give any issues to the for the position obviously we're getting those samples in and then it'll start to be integrated into our existing standalone which is if you look at our website there's a product on there called solo solo is a 3d printed standalone system that system will will will will fade out and dexa l will be incorporated into that and we'll roll out nine kits on that on the dexa l and we have users that that will convert from the dexa l over to the dex sorry for the solo l to the dexa l implant and we think it will pick up more traction with some new users because the product will be available and it's already it's already it's part of our same submission that we're doing with dexa so we don't have to go back out to run into the same headwinds we're submitting the approval because it's already fda approved you can't submit products at a hospital if it's not an fda approved product so the fact that we already have the fda approval now we are submitting that pricing with the hospital as a new product line we're doing that now why the product is still being
spk00: manufactured and does that require more training than xsc no
spk01: it's it's certainly it's a it's called a standalone technology where it's an alis anterior lumbar inner body fusion so we're going only we're taking that product out to the people that we are closest to so no there's not a big giant learning curve on it it's already a widely accepted procedure technique wise in the marketplace thank
spk00: you that's that's all my questions thank you very much
spk01: thank you sergio
spk03: the next question is a follow-up from palm fedaikan with micro cap connection please go ahead
spk04: hey friend two three more questions quick questions i'll let you go um full year sales for 2023 i know you don't want to give a target but will you be cash flow positive for the full year or are you really trying to just exit with a one quarter or two quarters of profitability um
spk01: i so i i'm i'm not the uh you know the forever optimist but i do i am optimistic um for all the right reasons that we can be profitable uh this year in the second half of the year you know i thought we'd get there early on this year and even last year but with the t coding changes cut our business by 70 percent um that that's real i'm back filling that now with the silo tfx and if it does what i say it's going to do and i know that uh talk is cheap the product has to perform we have to sell the product um i you know we are so close every single month uh in in you know profitability is right there in front of us it's not like it's a big giant forward to be profitable it's right there in fact we're even saying now that our break even is is closer to about you know 1.2 to 1.25 for profitability so it's not 1.5 we're profitable just past 1.2 million with the with the tightening of the belt that we've done internally and silo tfx as it continues to roll out and get favorable results then i i i slide back that that 70 hit on the aligraft sales and with that we think we'll see more opportunity with other with the other devices such as zip and and dex to see so that'll help us promote more of our sales growth so i i still think we're going to get to we're going to get to 1.5 million a month it's going to come sooner than it is later but i i just reset the sales team at the end of february we made some additional changes in q4 but it didn't really hit everything that we were working on internally until mid q1 and at that point in time we were already so far behind on the q1 quarter but now like i said we're already making improvements in q2 than where we were in q1 and we have the ability to you know make potentially even beat last year's q3 if we do it right
spk04: perfect no that's great to hear now investors they like to see management invested alongside of them now if arrays were to happen or even if arrays doesn't happen you find a way where there's no need will we see insiders step up and buy in the open market
spk01: it's a good question i don't i don't know the answer that i'm certainly you know we needed to get through you know the the end of the year results which you know we budgeted 14 million we said you know we came in at 14 almost 15 million so we were ahead of that but we put some extra money towards last year hoping that we could pick up where we were starting to see the headwinds of the t-code so this year on the stock you know i think that i think that you know there it's still the still arguably it's still a a good stock from the standpoint that we've we're still here and we still continue to release these technologies last year was the build-up to make all these products this year we had to we just got the silo tfx out which will help stabilize the sales numbers and if that's the case then you know the stock price hopefully would go up i was told many times by different people last year that i would see an increase in the stock price after i got the tfx and you know dex results so i don't hold my breath for much of that anymore because i i just have to get the sales numbers and i am no sales
spk04: yeah and the question was more about insider buying sorry than it was really the star price yeah knowing knowing that the price is down um seeing insider buying gives investors confidence they know you're beside them and especially if there's a raise you know do you feel that insiders would participate in a potential raise or if a raise is not required would we see insiders step up and you know even you know buy what you can afford of course but see you see your presence yeah
spk01: i'm open to it so uh perhaps you know if if we uh if we do a raise um you know i'll be reaching out to people in groups that would be interested in adding internally i can't speak for all the board members but certainly i'm on board with buying more shares i do buy shares in the company so i um i i will continue to support i'm you know i'm all in on this this is uh this is the you know this is what i'm working towards to get it right and you know i have no problems putting my own money back into the company and and i hope that the board will also do the same but i can't speak for them obviously okay
spk04: perfect and one last question now is is uh do you feel that 2023 will end on a record note do you feel that this potentially will exit with potentially a five million dollar quarter um that's the elusive number we've yet to hit but uh do you think that's that's reach attainable
spk01: yeah we have to we have to really you know pull this thing up because i want to obviously beat last year and that's my first goal is to get to get past uh you know the one point five million dollar a month consistently there's no reason after tfx release why we can't be there we should absolutely be there and then obviously as fast as the time we'll tick by how fast can i get with that sales number to get past uh you know 14.9 million so i can you know say that we you know we beat last year's results and that's those are the be profitable hit the 1.5 beat last year's number get our products approved in the hospital system more efficiently than we did last year follow up with all the doctors that we trained last year to you know to get them introduced to say tfx because we have a book of business we have customers that like us we have customers that use our products get them to use more of our products and all that's achievable if we just do those those things
spk04: perfect so i i believe we
spk01: can get past the 15 i guess to answer your question
spk04: okay no that's great and i lied there's one last question is there any metric or any anything that we haven't asked as investors that we should have asked that you can think of that would uh you know kind of uh shed some light on your business that we haven't brought up
spk01: i would think that the only thing that that we that we need to focus on more on the calls going forward is how are the individuals the new salespeople the added sales people performing because i think there was a lot of of um you know hopeful thoughts on people that would you know sell and hit those numbers we have to do a better job of forecasting the the quarterly numbers and and we've changed our internal erp system we have now a new crm we really are focused on this because we want to be more accurate on our forecast and so that's uh i expect you guys to keep me honest on that so when we are talking about forecasting we're we're getting closer to the center of the target and being too far on the outside and that's that's going to be on sales execution and that's why i made these changes in sales leadership
spk04: perfect perfect well thank you very much trent for your honesty and your time you know i really look forward to q2 and beyond so again thank you very much and i appreciate it
spk01: thank you tom yeah q2 q2 is already shaping up nicer it's not what we want it to be but q3 and q4 because of the new releases of the products um and we don't we don't see the headwinds at all we don't you know the t code was unknown i want to be clear on that you know for everyone anyone who's listening or people who believe in us the t code was such an unknown last year i could barely comment on it because nobody knows nobody knew exactly what it was going to do they're still speculating on it and there's going to be a change to that alagraft code in january of this coming year and nobody knows what it means still so last year when it got brought up it it put people into a paralysis of the of the of the procedure in the reimbursements and especially in an interventional space they got real nervous about what the what their if there would be any clawback in the reimbursement they haven't seen any of that no one has seen any of it's not out there but that definitely put a freeze on us if you look at the first two quarters last year without the discussions of this t code it was very promising 1.5 million dollar march of last year so we were bullish on the year for all the right reasons and then when the t code got thrown into the mix here it really changed the the cell cycle and the user groups were were less likely to use it now with tfx i'm putting that behind us
spk03: this concludes our question and answer session i would like to turn the conference back over to mr adam loensteiner for any closing remarks please go ahead
spk02: thanks chuck and thank you everyone for joining us we appreciate your time and interest in our spine and very excited about what's ahead for the company in the remainder of the year and beyond we look forward to speaking with many of you in the weeks ahead if any of you have any questions or please feel free to reach out to myself and we'd be happy to schedule a follow-up call with the management team thanks again everyone and have a great rest of your day
spk03: the conference is now concluded thank you for attending today's presentation you may now disconnect