Spine Pain's (SPIN) CEO William Donovan on Q2 2014 Results - Earnings Call Transcript

| About: Spine Injury (SPIN)

Spine Pain Management, Inc. (OTCQB:SPIN) Q2 2014 Earnings Call August 14, 2014 4:20 PM ET


John Bergeron – Chief Financial Officer and Director

William Donovan – Chairman, President and CEO

Michael Smith – VP and Director of Sales and Marketing

David Spencer – Technology Team Leader

Timothy Donovan – SVP of Operations and Administration


Welcome ladies and gentlemen to the Spine Pain Management Inc. Second quarter 2014 Investor’s Webinar Conference Call. Before we get started with our panelists, let me take a moment to familiarize new attendees to the webinar console, which you should be seeing if you are attending online right now.

Any time you can click on the arrow to the left of the console to hide the console. But before you do any hiding, please be sure to click on either telephone or mic and speakers depending on whether you are using your telephone to listen-in or whether you are using your computer mic and speakers.

If you desire to use your computer exclusively, use the mic and speakers. Okay, the conference call is an interactive giving you the opportunity to pose questions. However to do this, you must type in your question in the box and the questions which you will see down here towards the bottom.

You can use this box at any time during the presentation but all questions will be held until the formal presentation and the Q&A portion starts. Questions will be put into queue and answered in the order received. If there was some repetitive questions may be eliminated.

With this said, let me now turn over the call to John Bergeron, Spine Pain Management’s Chief Financial Officer to read the required disclosure statement.

John Bergeron

Thank you, Mark. This presentation includes forward-looking statements as determined by the U.S Securities and Exchange Commission, the SEC. All statements other than statements of historical facts included in this presentation that address activities, events or developments that the company believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different than any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include general economic and business conditions, the ability to acquire and develop specific projects, the ability to fund operations, healthcare service demands, changes in healthcare practices, government regulations, and other factors which the company has little or no control.

The company does not intend and is not obligated to update publicly any forward-looking statements. The contents of this presentation should be considered in conjunction with the warnings and the cautionary statements contained in the Company’s recent filings with the SEC.

Now, I’d like to introduce you to Dr. Bill Donovan, our Founder.

Bill Donovan

Good afternoon. This is Dr. Bill Donovan. I want to welcome you to our Q2 2014 conference call. Thanks for taking time to be part of this call. The purpose of our presentation today is to; number one, present the Q2 numbers, we want to compare with the Q2 2013 and in particular Q2 2014 to Q1 2014 and we’ll explain that more, and we will give you an update on the company development and I want you to remember you are going to learn about video integration systems.

We have two new members of the company that are be introduced, Mike Smith and David Spencer and you’ll see where they fit into our mission and development. For the new investors who are around this call, Spine Pain is a technology driven financial services medical device and healthcare solutions.

We deal with doctors who treat liabilities spend increase. We have developed some proprietary technology that be in the Quad Video Halo which we will refer to as QVH and it’s really the center point of the new video management systems that are being developed by Mike Smith and David Spencer and you will understand why these two people are now part of the company.

Next slide. Everyone is familiar with. This is a fairly newer slide of what we are talking about the Quad Video Halo that essentially in healthcare now, we are dealing with visually based technology and diagnosis. Everything is going through a visual base type presentation.

We felt this for a while. That’s why we have spent a lot of time, effort and money developing the Quad Video. But we are now going to take this to a video management system where this integration is going to be critical and it includes just not the arena that we are working as now.

Next slide. A quick summary of the company. We presently have three affiliated doctor groups that we deal with. Our shareholder equity is little over $5 million or $0.28 a share. The number of outstanding shares is 18.7, inside ownership is 33% and the market capitalization is $5.5 million. We have about 670 beneficial shareholders.

Next slide. I feel that we are in an inflection point right now. If you remember, when we had the Q1 call, we talked about as of January 2014; we shut down our relationship with the centers in Florida and the center in McAllen Texas.

In effect, these changes in January of this year reduced our potential income 70% of revenues. So it obviously was a significant hit to the company, but I felt that it was necessary to do, so that we could move forward.

Also in that last conference call, I saw that we were additional due diligence to expand into new markets with expanded services. We are working with some other doctors on some very unique and exciting type of services. In June of this year, we worked with a new affiliate in Odessa Texas and it appears to be very positive at this stage.

In addition, the centers in San Antonio and Houston showed a significant increase in cases and of about a 153% in Q2 over Q1 in 2014. The year – when we do a year-to-year comparison for Q2, 2013 and 2014, even though we lost four centers, we effectively have made up the lost ground and we are basically flat. We anticipate an upward trend in the core business plus these new types of services that we are looking at.

Next slide. When we talk about changes, we are talking about software updates and technological advances. This has been explained by David and Mike have joined the company. We are developing a robust VMS platform that’s going to go into many different areas of the medical and legal communities.

We’ve been very pleased to interview and hire Michael K. Smith and Mike has a particular interesting background. In 2006, at Stryker Corporation which is a terrific orthopedic company, they started developing a thing called video integration that is – guys like me in the operating room, we were using various types of cameras that it was really haphazard.

In 2006, Stryker started really getting involved with video integration. It happened to be the same year when Mike got involved with Stryker. So, Mike brings with him a history of video integration that was actually started in 2006 and I think and Mike will talk about this and we can ask some questions. I think, back in 2006, most people say, well, this is kind of crazy. We don’t need this.

This is no different than the 1975 when I started doing arthroscopic surgery, people thought this was stupid. Why would anyone do an operation through a scope, well, obviously, things have changed.

So, I think there is a nice comparison of how things happened in medicine and Mike was right at the beginning, most recently, it was with FSN Medical Corp. which is a terrific company and they are not only a pioneer but a world leader in video signal management distribution and displays.

This is right where we are and we met Mike at a meeting and we had follow-up meetings. We had follow-up interviews and he now has brought a whole list of areas that we can apply this new VMS platform. In addition to Mike, I needed the technological expertise.

And this is where David Spencer is coming in and we are going to talk more about these two people.

I am now going to turn over, everybody wants the numbers, so, here is John Bergeron, the CFO and he will give the numbers that have been reported today.

John Bergeron

Thank you, Dr. Donovan. As on Slide 9, basically states, I won’t go through everything, but I wanted to show you based on our decision to close down or stop our affiliations with the Florida and McAllen thing. You’ll notice that the revenue is pretty much on par, flat.

The cost of sales is a little bit higher in 2014, so we had a little bit different service mix. You will also notice that we lost $153,000 for the quarter, that it should be noted that $114,000 of that is non-cash charges,

If you’ll go to slide 10, please. One thing I want to highlight on this is the difference in the revenue between Q2 and Q1. We had a 156% increase from Q1 2014 to Q2 2014. We went from $334,000 to $859,000 of revenue.

The next slide please. This is the condensed balance sheet. The thing I want to stress you is look at our current ratio. We have 4.3 to 1 current assets to current ratio. We think this is – or current liabilities, excuse me. We think this is a very strong financial balance and our shareholders’ equity is a little over $5 million and we expect to continue to build on this balance sheet.

For a complete listing of all the financial statements, please see our 10-Q which was listed today. It will have the statement of changes in financial position. Also in addition to the balance sheet and P&L statement. The last will have quarter end year-to-date numbers.

Next slide please. With that, I’d like to give the conference call back to Dr. Donovan.

Bill Donovan

What we are showing on in this slide are the total cases and total procedures from the beginning in 2010 to the end of Q2 2014. The procedures and the cases continue to increase and we feel that we are going to with some new procedures that we are working on, hopefully can increase the angle of the growth.

Next slide. When we compare cases to collections, we now have collected over $9 million on 1425 cases. We still have 2427 cases open. Since inception, in late 2009, 2010, we had failure on 75 cases where there was no collection.

Next slide. During Q2 2014, our average case settled for a little over $6500. Since inception, the average settlement has been $6545. So essentially from the beginning through Q2, the case settlements are about the same.

At the end of Q2 2014, we still have over 2400 cases awaiting final settlement. I think if you go back and think about from the beginning, we’ve raised a total of about $3 million through various debt structures. But that $3 million has already resulted in $9.33 million in cash collections from 1425 cases. There is strong evidence for the cash flow potential in this business model.

Next slide. I wanted to talk about our future value, the shareholder value. We have to take this technology and make it into a better platform servicing a much larger market both in the medical field and the legal field and we are going to talk about this.

We are getting to the point where can finalize this technology for third-party sales and I think, Mike will be explaining this, why we brought on them. How we do a pre-sale marketing campaign for sales.

And we want to continue growing the portfolio of what’s already been pre-funding that’s waiting to settle. So, I think these areas and we are going to attack more how technology is going to help us attract more affiliated doctors in different specialties, just not in pain.

Next slide. Before I have Mike get on to talk on this call, when we first met him, he was telling me about Stryker Corporation in 2006 and denounced to me I was using Stryker equipment doing arthroscopic surgery. And Stryker is a really smart company.

And they knew, they wanted to get into the video integration systems because if you are ever in an operating room, there is wires everywhere, people everywhere doing various things and Stryker really brought some sense to how we doctors do certain types of procedures in the operating room and in our clinics.

But when you look at Mike’s resume, out of 78 reps at Stryker, he was the sole recipient of their marketing award. This guy is really keen into video management. He spent his whole life here since 2006 in this type of environment for doctors and hospitals.

And if you look at the bottom, it work with surgeons to design over 65 new operating rooms in his territory, that’s just his territory, Kansas and Missouri. Then Mike has come up with some ideas of who do we approach that understands the kind of technology that we are doing both for pain, orthopedics, the different things in bariatry, in urology and so forth.

So, I’m now going to turn this over to Mike. He is going to tell you about himself and how he looks upon this platform to help develop this country. So, it’s my pleasure to introduce everyone to Michael Smith.

Michael Smith

Good afternoon everyone. My name is Michael Smith. Just wanted to touch base little bit about my background. My primary focus has been over the past eight years in video management system. The medical application with regard to video as it pertains the surgical.

So, with that being said, you are taking video from a knee scope or general surgery, and like Dr. Donovan was explaining earlier, you’ve got cables and cords everywhere. Video integration really cleans that out and allows for better use of those video signals and make DOR flow better.

QVH was of immediate interest to me upon meeting Dr. Donovan. And as it applies it has unique hardware and software to allow for greater documentation of many types of procedures. Yes, it was developed with a specific idea and problem that it was tackling. However the application for QVH are really endless.

So, over the years, we’ve seen OR design change and with Halo and how it manages video signal, we are going to see a simplification in the process, as well as better documentation for both patients, doctors, as well as from a legal standpoint, the liability stand from the hospital.

One thing that makes QVH unique is that it’s easy to deploy, but it has excellent capabilities. Normally a system will have to be dramatically larger and much wider in scope in order to handle or have the capabilities of – to really kind of get everything done that needs to be accomplished in the OR. So, in the short of things, QVH really manages excellent – a broad spectrum of problems with a small package.

In a teaching environment, Halo can provide superior access to medical students. One of the areas that medical that is not commonly discussed is in teaching institutions. A lot of the video utilized by medical students as in residence and fellowship programs can be made more precise better manage with more accurate information with great video management, and documentation.


Bill Donovan

Next slide

Michael Smith

Halo used in the medical surgical field should not just be limited to spine. As a documentation tool for medical schools Halo will bring perspective to surgical residence. Halo is unique among medical devices due to additional benefits to hospitals, doctors and patients providing transparency improvement overall over several years used by thin and its core PI business.

And with that, I’d like close out. I just wanted to sum up that QVH is an excellent product. It is the cutting-edge of video integration as I’ve seen in the market and sales of the product should take off to one. We are exploring other markets.

John Bergeron

I would like to take this opportunity now to introduce you to David Spencer. We met David several months ago when we were actually doing a video marketing of part of the Halo.

And we got talking and he understood the opportunity from a management information system and so we’ve been talking now for several months and David’s background is really perfect for what we need. He is a technology consultant to get his hands on and fix those things. He has a degree in computer science. He is in automation systems, he is in database administration and he has a company called Spencer Media that’s in the litigation support firm.

So David understands video and he understands information systems and how we have to be able to get information quickly, correctly to the people that need it. So it’s my pleasure to welcome David Spencer to this port.

David Spencer

Good afternoon David Spencer here. We thought on board initially to take a look at the Quad Video Halo system out, immediately – I immediately picked up on the multiple applications that to be applied not just in the medical field but also the litigation and as we all know that that was obviously run hand-in-hand in a lot of circumstances.

So we are looking at the system and evaluating. There are a lot of things came to mind that will stay close to the core value of the business was to not let the technology drive what we are doing, but allow us to facilitate the things that Apple has tried itself on end-user experience understanding what the end-user is doing in reference to doctors, what this video is, how this video is presented in trial..

Connecting all those dots, leads us down the road for what is the nucleus. The nucleus is the cord itself, the VMS system, the Video Management System, what does it do for us? What does it do for our doctors? What does it do for our end-user and so you design a system around that and that facilitates – you talk about the reliability aspect of it.

You certainly don’t want a system out there in the middle of the procedure that’s going to obviously cut out on itself and also there is so many different platforms out there. So having cross platform integration to be able to plug this thing into multiple environments, i.e. Apple, Microsoft, all of those things, where you are not reinventing the wheel for every client that buys our system.

But you are already adapting to the platforms that are exist out in the market today. The next thing with IT is, as we all know and we call upon our techs all the time is administering thing. How do I do this, how do we do that. So simplifying the administration aspect of it. It was a very critical component not just from the thin aspect that overhead capital all those things come into play.

As I’ve touched on briefly the video features for our doctors want, things of that nature. That was all about keeping the end-user in mind. Also it’s expandable. Expands with our practices. We didn’t want to bring in a technology that we were basically reinventing the wheel every time we wanted to send out a new system.

This was putting everything in perspective in regards to, again, the en-user, where we saw this, we are we placing that. Litigation has different needs. So does the hospital and doctor environment. So it was finding a platform that would actually meet in the middle and all we are doing is turning off and on features based off at your industry in use. We are not monitoring. I’ve touched on that.

The big one is Share Point integration. As everybody knows, we are moving to digital files. We are in the digital world. So, by using Microsoft which is – I mean, Share Point which is a Microsoft product, we can integrate these files altogether from MRIs to videos archiving. So you are making a digital file for the patient per se, that carries things into litigation and into the metaphor of all those well.

The next thing was to look at the Halo card from a production standpoint was to get a cheaper, lighter and less of a footprint. So we analyze bringing the cost down. Not as many connections not as many wires as Mike has touched on and Dr. Donovan as well.

The next thing was to have access to this system. How do we get this out there and when it is in place, what are we going to throw out there that is different in the competition. And one of the things that distinguishes different is the Halo app. And as an Apple developer, we are developing right now an app that houses you can download on your android and your iPhone for example or your iPad. You can log in, and look at patient records, archive and also live video feed. The system is intelligent enough… next slide please.

The system is intelligent enough that it will pick up your connection based off of where you are, if you are on Wi-Fi, if you are on cell signal and it will stream accordingly, kind of the YouTube model. So that’s kind of where we are at with that. I’ll pass it.

Bill Donovan

David, thank you very much and I think what David has been with us to several of the shows, and trade shows and we’ve been approached by various people in different medical specialties that there is a whole new business or multiple businesses that we hadn’t even thought about.

We then approach about – toward negligence or toward product liability for video documentation. So I think there is – we have our existing business which we are moving ahead with and there is new businesses and procedures that we are in discussions with various people. With this improved technology, we are looking and having some very good discussions with new doctor affiliates.

Our staff knows that we have to improve the cash flow and then add appropriate staff to help us grow. As the President and CEO, my job is to hire good people and I want these good people to be growing in the rows and in positions.

Next slide. In conclusion, we are providing our affiliate doctors with opportunities to be able to help their patients. And I want to now turn this over to a question and answers. But I really want to thank you for your time and consideration today. I am excited about what’s going on and having Tim and David and Mike and John here.

I think we are putting together a very credible team that we can expand and grow and just move forward. Do we have any questions?

Question-and-Answer Session

Bill Donovan

Yes we do. From Harris Goldman, we have, you said for the last two years that you are impressively searching for new COO for SPIN. Is two years enough time for finding a capable individual?

What’s encouraging here about the Halo system and the excitement reported in a couple of PRs based on the investment already expended and that’s where it ended. So, I guess, what we are saying here is, are you still going to be searching for a CEO and I am not quite sure where that last part went, because, it just quit on the question.

Well, let me answer it, I’m Bill. We’ve had discussions and interviews with various people. We haven’t found the right person yet. So we are looking absolutely. If there is somebody in-house that could do it, maybe, but yes, absolutely, we are looking.

We’ve had some lengthy discussions with some people and we just never got to an agreement on certain issues. But let me tell you with this new team that we brought on, I am more excited now than ever.

Next question, again by Harris Goldman. What happened to the last individual – what was the new position of sales and marketing that SPIN announced? I guess a couple of conference calls with that.

That was in fact we’ve got a year or year and a half ago, he never produced. So he was – he is gone. I think you’ll know, we’ve been looking and we’ve been interviewing people and I think Mike Smith, you go back to 2006 man, he was right there to beginning of video integration.

So, I feel that, Mike is someone that can be very, very productive and good for the company. Previous guy didn’t work out. So, he is no longer involved with the company.

And here is a question for Mike Smith, this says, what makes the Halo Unique over competitive products? It seems that was addressed in yesterday’s PR having to do with PI cases. Mike?

Michael Smith

If you look at from a product standpoint, there is really no specific product that directly addresses what we are running into with PI cases. Yes, we are seeing video integration systems out there. However, with regard to recording four types of video sources in an application that documents those the way that Halo does. There is no direct competition.

Yes, you compete together and you add on for other systems. However, with regard to this market, there is nothing is clear and it’s crisp as Halo. So, if I can answer that question right now, that we are the only one in the market. I believe I can actually say that. Is there something that you can piece together that would be our competitor? Yes.

Would it be a great – in a sense of, it’s right out of the box ready to go? No. So, from a standpoint of our direct competition, we don’t have any. And I am going to hand this back to you.

David Spencer

Since you referred to yesterday’s press release, I think he was really refereeing to the uniqueness of this having a history of legal an evidentiary use. I believe. Because I think that was mentioned in the press release.

John Bergeron

And you are probably talking about, with regard to systems that have been utilized, Halo really has a track record. So, if we were to kind of go over and review and look at the history of video systems utilized in PI cases, with a two year track history, there is again nothing that’s really in direct competition with us out there in the market.

We are not seeing anything with the robust two year history like Halo.

Bill Donovan

And let me just add to that. We’ve been at these trade shows, four medical trade shows and one legal trade shows. So wanted to get inputs from the people that we met and the AAJ which is a big legal show, was really eye-opening. The people who came by spent on average about 25 minutes with the system and it was people in the business and they are telling us they haven’t seen anything like this.

And I’ll tell you what they also want. They want 3D models of the spine from this particular patient. They want to see 3D imaging of the MRI scan. They want everything visually based in one platform and we are already making some 3D spine models from the MRI. It’s the actual spine model of the patient.

So, I think that, people that are in the business are telling us they haven’t seen anything like this that are there some competitors out there, we don’t know, but, yes, I am sure there is some.

John Bergeron

Another question for Mike. What do you envision a logical marketing plan be it internal reps?

Michael Smith

So, from looking at a plan of A, running lean that is pretty much how I envision running the sales begin with, I am not a huge advocate of spending money to make money. I look at this as going from a route of who is already in this market? Who is already tackling, surgeons, direct contacts in this area.

And so, I have a group of sales reps that are operating from a distributor base. There is presently north of 200 in North America and they are already calling on people in this realm.

And so, what sales reps really appreciate is staying in their same wheel house for making calls talking to the same people that they typically talk to, but what they really like is something new, something exciting in the market, and something that’s we haven’t seen out there at all.

There is nothing out there that compares the Halo. So, if you are asking me how am I going to go about marketing this, selling in, and getting the market excited about it, number one I am going to talk to the sales reps who are already selling products in this area.

Number two, this is a product that is directly a complement to what they are already selling and number three, I am getting sales reps that are already selling something of this magnitude financially. So, if someone is out there and they are selling spinal injections or they are selling some type of syringe but they are in our area. That’s great, but they are not really going to help us.

We have to look at something that is selling in and in the specific dollar range that Halo would be. So with all those things being said, we are going to sell it through people that are selling in this market already, people that are already selling something of this magnitude and people who have long-term connections in this area. And that’s answer to the question.

Bill Donovan

Okay, next question is again from Harris Goldman. We’ve been hearing about core expansion for quite a while. Why haven’t there been any expansions outside of Texas? What appears to be the problem?

Yes, this is Dr. Bill, we’ve been talking people in other states and we’ve been very careful about how we manage our money and how we expand. And I am glad we didn’t rush to other states quickly because we made changes in Florida and in McAllen. We’ve had ongoing talks with people in other states and I wouldn’t be surprised that we will in other states hopefully soon.

Okay for Mark Robins. I missed the introduction. So would you please help understand the timeline for Halo when it will be fully developed, for the markets sold and et cetera?

Mark Robins

The Halo is still in development in different aspects. The FDA has recently come out with some new guidelines and they understand that in medicine, a lot of the rapid growth is with software and affiliated hardware and they are pulling back downwards some of the requirements.

We thought that we were going to be listed at such and such level that it appears that we will be considered a surgical camera and accessory. This gives us a much better focus and we are in contact with our FDA attorney in Washington about this. The second thing is, with what David has done, we now are moving on to the appropriate testing that’s necessary which shouldn’t take very long.

Mike tells us that we need to have a pre-selling program because he has targeted reps that sell equipment from pieces of equipment from $50,000 to $400,000. People that work in a ring and they stay on that wheel hubs. So I think we are going to have more to give timeframes. But we are moving ahead to make it better, simpler, lighter and build in the appropriate marketing people.

Unidentified Company Representative

Can you describe how the Halo might provide a recurring revenue stream, that’s for Bergeron.

John Bergeron

Well, it is now, I mean it is with the leases that people that are using, that are paying us at least it’s going to attract new types of services. Biologics is going to be a big part of development here. There are other areas. So, I think this is going to be some recurrent and I want Mike to add to this.

Michael Smith

If we are going to look at Halo with both the hardware and software applications, as I spoke to earlier, we can apply the teaching institutions that would basically purchase an educational software program for their students to utilize. This would in turn create a re-occurring revenue stream for a pierce of capital equipment.

Typically, when you are selling a piece of capital equipment and the sales rep is out there selling it, let’s say they are selling a C-arm, yes, they sell the C-arm and then they have to wait for the C-arm to obsolete.

With regard to Halo, we are looking at software development that can bump up against the Halo product, but then that software would be part of a re-occurring revenue stream for both educational institutions as well as other facilities that would be – that basically would almost help us develop it.

What is based upon what their needs are, but each device would then have to be updated. Each device would have be updated.

David Spencer

And to back-up what Mike is saying is that, when we move into the software arena, we can now module base components. That way we can breakout services and revenue streams and then also what that also does is branches into other areas to back-up a little bit.

Think of the VMS system as a layered application. When you think of a video, it’s more of what you see is what you get. The new VMS system is layered in a sense that it can apply in different applications, but it also blends with the overall goal in mind and that is to, are we trying to win a case here?

Are we trying to prove that the doctor did a good procedure and the patient has actually been injured. That applies in the litigation work. Then we can take the MRI 3D print and we can show the video documentation for the trial lawyers. There was a bundle package that we can also break amount into modules for additional revenue streams for support and upgrade these well. So, I’ll pass it on that.

Bill Donovan

Let me add to this. The trade shows, we’ve learned a lot, when we went there we wanted to introduce Halo, but let me try to give you some examples. We had a bariatric surgeon come up and he says this is terrific and say that you are in bariatric, let me tell you where our problem areas are.

We do a lap band or a bypass, whatever on Joe Smith. Joe Smith goes home and two months later, he shows up in the emergency room, Well, Joe Smith is gone to Kentucky Fried Chicken and eaten 20 pieces of chicken and it’s in his stomach and he is the emergency room now sicker than a dog.

They have to document this and – they never thought this and they guy says, we want to be able to document exactly what’s going on from a liability standpoint from the doctor. We had the same thing with E&C. WE have doctors, urologists in prostate, they are doing stuff now, they are using C-arms in certain types of treatment and they want to document all this.

So I think there is going to be a lot of recurring revenues and new revenues. Once we can present this to the right sales people dealing in the right different parts of medicine.

Michael Smith

This is Mike again. I just wanted to touch base on this. If Halo is tracking four video feeds and I believe that it can actually track more. If we are tracking four video feeds as Halo stands now, in a bariatric procedure, you might utilize a C-arm. You might look at the patient’s hemodynamics meaning their blood pressure, heart rate, body temp.

All of those things being documented in a case where the patient overate after the procedure, all of those things become relevant with regard to the hospital’s liabilities, the physician’s liabilities, because when these things occur, I try not to be fooled, the patients typically blame the surgeons that the procedure wasn’t done right.

So what happens is you default back to the documentation that they are removing x number of pieces of chicken from the patient’s stomach. And again, all we are doing is documenting the procedure via the video signals to tell a story later on.

John Bergeron

Thank you. And another question for Mike. What do you estimate the size of the market, the MSRP and are there different cost for different versions of the Halo? That was for Mike.

Michael Smith

So, I am – the size of the market when we are talking about this, really since coming on the team – what I am looking at is all of the markets that we could tap into. So, if a company can sell – an existing company can sell $60 million worth of video equipment, I would say with a brand new product, just hitting the market. My expectations would be pretty high.

With regard to units, I think north of 200 – with regard – the number of units I am estimating it’s high. And so, that’s really all I am going to say about that. I think that we are reaching a point where we are finding about. All the markets we can tap into, how we are going to go about that and how we are going to develop the software as well to refine the hardware to tackle that.

John Bergeron

Thank you. There is a couple of other parts the estimated MSRP and are there going to be different versions? For Mike - for the same question.

Michael Smith

So, yes, there are going to be different versions. We are going to be see different versions of software. We are going to see different versions of hardware. There is going to be what is a base model.

As far as MSRP, I’d love to relate numbers. I am still kind of going through some product refinements to kind of find the sweet spot. So at this point I’d rather not elaborate on the MSRP.

John Bergeron

Okay, I guess, a question back to Dr. Donovan. What is the cash outlook looks like for forward growth in the core business?

Bill Donovan

I think, it’s pretty good because, we are talking with some additional affiliates right now. And we are planning to move ahead. And it’s – I think we’ll be able to elaborate on that more over the next month or so,

John Bergeron

And this is like the last question for David. Any idea when a version will be ready to be marketed?

David Spencer

We have finished up all of our initial testing. We are going live with it with five of our units with all the new systems rolled out at the end of August. Based on the FDA and UL findings of the new system that has a smaller footprint, that is really going to be our trigger point right there, is once we get the UL and FDA updates on our certification of the new equipment, that will give us a target as to when we are going to be able to get out on the market.

Bill Donovan

Any last questions, 10 seconds to ask and five, four, three, two, one. I guess, that’s all we have. Well, thank you very much for joining us and….

John Bergeron

Let me bring this Bill. I just want to wrap up with a couple of things. Number one I appreciate everybody’s time. Number two, our newest market, we then – we started in June and there has already been three cases settled. So, I think that in certain markets, the QVH can have a significant impact.

So I think that the future looks very bright and I am really excited about this because, Tim and John and now Mike and David may and this is an infusion of energy that just it’s so exciting. And we went to five trade shows this year. And we’ve learned so much about the market. What do they want? How do they want to deliver and so on and so forth.

So we are coming up with a variety of packages to present and there is a lot of new markets, well, I’ll tell you, these are markets I never thought about. The product liability in orthopedics alone with the hips and the knees that have to replaced, we are being approached, can we develop programs for them.

There is just a lot of new things and this is why we needed improved technology, improved sales, improved infrastructure. And with this, I think, things are going to look bright for this young company. But I want to thank everyone for taking time. Thank you see you all in three months,

Thank you.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.


If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

About this article:

Tagged: , Investment Brokerage - National,
Error in this transcript? Let us know.
Contact us to add your company to our coverage or use transcripts in your business.
Learn more about Seeking Alpha transcripts here.