Innovus Pharmaceuticals' (INNV) CEO Bassam Damaj on Q4 2017 Results - Earnings Call Transcript

About: Innovus Pharmaceuticals, Inc. (INNV)
by: SA Transcripts

Innovus Pharmaceuticals, Inc. (OTCQB:INNV) Q4 2017 Results Earnings Conference Call April 2, 2018 4:15 PM ET


Bassam Damaj - Chief Executive Officer

Rauly Gutierrez - Vice President of Finance


Jay Albany - SeeThruEquity


Good afternoon and thank you, everyone, for joining us today. My name is Gary and I am assisting the company with this investor relations call.

With me today from Innovus Pharmaceuticals are President and Chief Executive Officer Dr. Bassam Damaj; Randy Berholtz, Executive Vice President, Corporate Development and General Counsel; and Vice President of Finance, Mr. Rauly Gutierrez.

During today's call, management will provide a brief overview of the company's progress in the fourth quarter and for the full year ended December 31, 2017 as well as provide preliminary first quarter 2018 estimated net revenue results, a corporate update and a brief roadmap for the remainder of 2018. Management will also provide an overview of the financial statements and discuss the product pipeline. We'll then open the line up for questions from analysts and answer shareholders' questions received during the quarter.

Please note this event is being recorded.

I'd like to remind everyone that certain information discussed on today's conference call is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act.

During today's conference call, management will be making certain forward-looking statements regarding future events or future financial performance of the company, including statements related to the expectations around the timing for the commercial launch of products, the timing of outcomes of clinical trial results and the regulatory approval process of Innovus Pharma from product candidates, of business development, plans and objectives such as out-licensing and acquiring products and product candidates, product launches, the amount and source of future revenues, expected use of cash reserves and the development of the company's products pipeline.

Such statements are predictions based upon current expectations and actual results could differ materially.

The company's first quarter 2018 anticipated revenue results are preliminary and based on the most current information available and are subject to completion of the consolidated financial statements for the first quarter of 2018.

Please refer to the company's most recent filings with the Securities and Exchange Commission, including Innovus Pharmaceuticals' Form S-1 and annual and quarterly reports on Forms 10-K and 10-Q for additional discussions regarding these and other risks that may affect the company's business. These documents can also be found on the company's website at

Innovus Pharma's financial results press release for the fourth quarter and fiscal year ended December 31, 2017 as well as preliminary first quarter 2018 net revenue results was released earlier today and can be accessed on the company's website. The 10-K for the fiscal year 2017 was filed by the company with the SEC today.

With that, I will now turn the call over to Dr. Bassam Damaj. Dr. Damaj, please go ahead.

Bassam Damaj

Thank you, Gary, and good afternoon, everyone. We announced today that Innovus Pharma has almost all doubled its year-over-year revenues in the history of the company in the first quarter 2018.

We believe that these revenue numbers are an indication of the success of our Beyond Human business model despite a slight setback caused by the natural disasters in Texas and Florida in late 2017 that accounted for approximately 15% of our customer base.

We are entering the second quarter of 2018 on a pace to more than double our annual revenues for 2017.

In addition to the announcement we did today about our year-end financial results and estimated first-quarter net revenue numbers, we will discuss on this call the further development and expansion of our sales channels, our expanding pipeline of OTC drug supplements and medical devices, and further increase in our margins towards our goal of profitability exiting 2018.

With that, I will now turn the call over to Rauly to discuss our detailed financial results, followed by a detailed discussion on our corporate and business performance. Rauly?

Rauly Gutierrez

Thank you, Bassam. For the 3 and 12 months ended December 31, 2017, we reported net revenue of $2.4 million and $8.8 million respectively.

Similar to the previous quarter, our best-selling product was UriVarx which we launched in the late fourth quarter of 2016 and generated net revenue of $1 million and $2.9 million for the 3 and 12 months ended December 31, 2017.

We expect this product to generate at least $6 million in net revenue in 2018.

We now have seven core products – UriVarx, Vesele, Apeaz, Sensum, ProstaGorx, FlutiCare and Diavasense [ph] which we expect will generate at least $1 million each in revenue annually with five of these products – UriVarx, Vesele, Apeaz, FlutiCare and Diavasense – expected to generate at least $2 million annually.

The launch of the two of these seven core products in 2017 and one in 2018 has shown our ability to generate significant sales shortly after launch.

ProstaGorx, which we launched in late May 2017, generated close to $700,000 in 2017 and the Apeaz ArthtiVarx combo which we launched in late July 2017 has generated close to $700,000 in 2017 and is projected to be our third best-selling product behind UriVarx and Vesele in 2018 at a projected annual revenue run rate of at least $2 million.

Diavasense [ph] which we launched in mid-February 2018 through our newly established direct mailing sales channel has already generated close to $400,000 in net revenue in the first quarter of 2018 and we expect to generate at least $2 million in all of 2018.

The fourth quarter was our best quarter in 2017 which historically has been our lowest quarter as we generated net revenue of $2.4 million which was an increase to net revenue of $159,000 or 7% on a sequential quarter-over-quarter basis. But, more impressively, a $688,000 or 41% increase when compared to the fourth quarter of 2016.

Net revenue for the year ended December 31, 2017 of $8.8 million was an increase of $4 million or 83% from 2016. We believe the 2017 revenue was negatively impacted by factors outside of our control, such as the natural disasters in Florida and Texas during the third quarter of 2017.

We were unable to advertise our products to our targeted customer base these states for multiple weeks as well as our ROI on the advertisements in the weeks following the disasters were lower as a result, and thus negatively impacted our product revenue.

These two states generate approximately 15% of our net revenue and have a population within our target demographic of approximately 17 million people.

While our 2017 revenue was negatively impacted by such unforeseen circumstances, our preliminary first quarter 2018 net revenue is estimated to be between $4.3 million and $4.4 million or close to half of the total net revenue generated in all of 2017. This puts us on an annual limit of at least $18 million for 2018.

We've seen increased results due to our increased presence in new and existing sales channel in 2018 and a pick up in revenue from products like Diavasense and FlutiCare.

Our newly established direct mailing and sales channel increased to approximately 13% of net revenue in the first quarter of 2018 compared to 5% in 2017. In addition, our online sales channel increased to 7% of net revenue in the first quarter 2018 compared to 3% in 2017. And lastly, revenue from our international customers to 9% of net revenue in the first quarter of 2018 compared to 3% in 2017.

The diversification of our revenue streams through a different sales channel in 2018 has enabled us to achieve a significant increase in our revenue from 2017 and we expect our revenue to continue to increase throughout 2018 as we expand our product lines in these three sales channels in addition to our existing print media advertising.

In regards to international shipments to our partners in 2017 compared to 2016, we increased our net revenue to approximately $235,000 compared to $81,000 in 2016. In addition, in the first quarter of 2018, we were able to generate approximately $382,000 in net revenue from our international partners.

The increase in ex-US sales in the first quarter of 2018 was due to a shipping the initial order of UriVarx for our partner Acerus Pharmaceuticals in March 2018, totaling approximately $300,000 and shipping our second order from our partner in South Korea in March 2018 totaling $82,000.

During 2018, we expect to – we did receive $140,000 order from our partner Sofima [ph] for Zestra and Zestra Glide, which is expected to ship in the second quarter of 2018 and we expect to receive an additional order for the new approvals received in Algeria, Tanzania, Egypt and other countries in the coming months.

We also expect to receive an initial order from our partner Lavasta for sales of ProstaGorx in the Middle East and North African countries in the coming months.

We expect to receive initial order from our partner Luminarie for sale of Zestra in Australia and New Zealand, which was recently approved for commercialization as a medical device, and we did ship our first bulk order of our products to our partner K LABS in India in the second half of 2017, which was to start local stability as required by the Indian FDA, which is expected to take a few months after which we expect to receive the initial order from our partner.

We're also anticipating an additional order from our partner in France, Densmore, who had placed $100,000 order in 2017.

And lastly, we are anticipating another order from our partner, Danoweiss [ph].

Our gross margin for the 3 and 12 months ended December 31, 2017 was 78.2% and 79% respectively compared to the same periods in 2016 of 78.2% and 77.5% respectively.

We've been able to consistently maintain a gross margin of close to 80% quarter-over-quarter in 2017 which is a testament to the efficiencies we have gained through our materials requirement planning processes and by successfully launching our products to the Beyond Human sales and marketing platform.

With the increase in shipping and handling costs expected from a third-party product fulfillment center due to increase in our revenue, we have moved to a new facility in November and have now integrated all of our fulfillment and shipping processes into our warehouse here in San Diego.

We believe the benefit of the implementation of this change in our operating process to reduce the cost per unit for shipping and handling our products will be fully realized beginning of second quarter of 2018.

Sales and marketing expense increased to $2 million and $6.9 million for the 3 and 12 months ended December 31, 2017 compared to $1.4 million and $3.6 million for the same periods in 2016.

Sales and marketing expense increased in the fourth quarter of 2017 as we launched FlutiCare in mid-November and incurred marketing costs for shipment of samples to physicians and independent pharmacies as well the creation and distribution of marketing materials and digital media for the FlutiCare brand.

As we move forward from the launch of our products including FlutiCare which is experiencing double-digit growth in certain sales channels, we believe the sales and marketing expense as a percentage of revenue will decrease as our newly launched products in 2017 and 2018 have more sales history and we have sufficient data to better target our advertisements through our sales and marketing platform.

Also, as more customers subscribe for our monthly shipment program, which currently represents approximately 20% of our net revenue generated, we believe this type of revenue stream will contribute to a better ROI as it does not require any additional sales and marketing costs.

General and administrative expense decreased to $1.2 million and $5.2 million in three and 12 months ended December 31, 2017 compared to $1.9 million and $5.9 million in 2016.

The fourth-quarter and full-year 2017 did however include non-cash stock-based compensation totaling $139,000 and $1.1 million as well as non-cash depreciation and amortization expense of $163,000 and $642,000 respectively.

Therefore, after non-cash expenses, general and administrative expense was only $665,000 in the fourth quarter of 2017 and $3.4 million for all of 2017. This demonstrates our continued efforts to control our operating costs as we work towards achieving our goal of profitability.

Loss from operations for the 3 and 12 months ended December 31, 2017 was $1.1 million and $5.1 million, which I stated before includes $302,000 and $1.7 million in non-cash stock-based compensation and amortization. This represents a decrease of $827,000 or 43% and $735,000 or 13% from the 3 and 12 months ended December 31, 2016.

Our loss from operations for the fourth quarter of 2017 as a percentage of revenues has decreased by 68% from 2016 and by 8% when compared to the third quarter of 2017. As we continue to look at different ways to control operating costs, increase our ROI on our advertising spend and bring more processes in-house to reduce our operating costs, we believe this trend of decrease in our loss from operations shows our progress to reach our goal of profitability.

Lastly, at December 31, 2017, our cash balances were $1.6 million as our cash used in operations for the 3 and 12 months ended December 31, 2017 was $815,000 and $2.4 million. And as of March 31, 2018, our current cash balance was approximately $4.7 million.

With that, I turn the call back over to Bassam.

Bassam Damaj

Thank you, Rauly. As you have indicated, the company has been able to double – almost double our revenues for 2017. This is always a pleasure to see our revenues continuing to double year after year and year after year. And we're also on track to double our revenues again for 2018.

We are continuing to increase our gross margin, increase our cash position. As we have seen as of March 31, we have $4.7 million in cash, a very healthy cash position for a company of our size. We continue to reduce our expenses and cut our losses significantly and increase our drive to profitability to maximize shareholder value.

Overall, the company has tried to increase and further develop our Beyond Human sales and marketing platform and to diversify our marketing and sales channels to continue to increase product revenue and profits. We have a very strong and proprietary Beyond Human sales and marketing platform. It's been shown to be a very efficient platform for us.

Second, we will continue to expand the number of our core product that produce or expect to produce over $1 million per year of revenue, to include revenue growth of our most profitable seven products – UriVarx, Vesele, Sensum, FlutiCare, ProstaGorx, Apeaz ArthtiVarx and Diavasense through our Beyond Human marketing platform, our website, our Amazon Direct, our Amazon online stores, our direct mailing, our print and other channels.

Third, we've developed our own proprietary product and license in new products in strategic areas, including addition of new and proprietary supplements or drugs or diagnostic sets or meter combinations.

Four, to continue to grow our FlutiCare OTC product through our various channels.

Fifth, expand our international distributor relationships and sales and increase shareholder value by examining an uplist into the company's shares into the NASDAQ to improve the value of our company and while limiting any needed reverse splits.

So, let me expand on each point. First, the company continues to expand and develop [indiscernible] marketing channels which we can consistently deliver excellent results for our products using our proprietary Beyond Human sales and marketing platform through five main channels. So, now we have expanded our sales and marketing platform to five main channels.

So, first, we have through our 3,000 newspapers and magazines that we have in the United States and I'm happy now to announce that now we have successfully expanded our Beyond Human sales and marketing platform to Canada.

Second, through our newly established direct mailing channel, and we've seen the results of the success of this channel with the launch of Diavasense and being able to record over $400,000 in the first quarter of 2018.

Third, through increasing sales through wholesalers and retailers in the United States. And then, through our online platform which is made of Amazon, Wish,,,, eBay. We have over 160 websites and over 2.5 million subscribers.

Fifth is to continue to increase our number of international distributors. We currently have 18 and we are diligently working to increase the number of distributors especially in the countries that we have approval for our products.

So, as of December 31, 2017, the net revenue breakdown by channel is as follows. We had 88% of our revenues coming from the print media, 4.5% from direct mailing. And please note that we initiated the direct mailing not long time ago and we expect the direct mailing to be a much, much larger percentage.

We had 2.8% of retail and wholesale. Our online Amazon and online platform has 2.8% now of revenues and we have 2.7% of international sales.

The more we grow our Beyond Human platform, the more we expand on our online platform, on online sales, on our direct mailing, the percentage now changes and platform is becoming a more and more diversified channel.

So, in the first quarter of 2018, our percentages for the print media was 71% as compared to 88% in 2017. Our direct mailing in 2018 first quarter were 12.4% as compared to 4.5% in 2017. Our retail and wholesale went down to 0.8% as compared to 2.8% and this is something that is important for us. And I think it's worth to have a stand in here and understand why the company has taken that move. And I'm sure you're aware that our gross margins are actually close to 80% now. And our gross margins have not increased where we are right now until we started exiting from some selected retailers where we have a much, much lower margins.

And we are extremely excited to see our online platform, and specifically our Amazon store and sales for that store have increased to 6.7% from 2.8% in 2017 and our international orders are following suit. Now we are at 8.9% in 2018 versus a mere 2.7% in 2017.

Thus, we are moving to have a more balanced, diversified and less risky sales channels approach, by decreasing our reliance on print media and instead increasing our efforts on direct mailing, online and international sales.

In addition, we are considering other marketing and sales channels. That's continued to expand our selected retail and wholesale presence for certain products that will fit into such channels.

The second point is that we continue to develop and grow successful products that can each sell over $1 million per year through our Beyond Human sales and marketing platform. So, just remember that – at Innovus, we call our core product any product that actually exceeds the $1 million in sales.

And our goal here is really to start to move those $1 million product sales into $2 million product sales, 3 and 4 and so forth to really create blockbuster actually products that we have.

And as Rauly mentioned, to date, seven of our core products, including UriVarx, including Vesele, Sensum, ProstaGorx, FlutiCare, Apeaz, ArthtiVarx and Diavasense each bring or expected to bring in over $1 million per year, with UriVarx estimated to bring at least 6 million for 2018, Apeaz, Vesele, Diavasense, Sensum, FlutiCare over 2 million and ProstaGorx over 1 million.

One of really our goals here is to bring or develop ourselves or license an additional product that we can move into our sales and marketing platform that can transform into a core product and blockbuster product.

Another goal for us is to increase the sales of each of the core products through additional various sales channels to further increase their sales by [indiscernible] with FDA-cleared diagnostics products such as the UTI urine strip that was cleared by the FDA not long time ago for home detection of early UTI infection to go with our product UriVarx.

And to go – for example, once we get the clearance from the FDA for our GlucoGorx meter to go with our GlucoGorx sugar maintenance supplement.

And we continue to innovate more and more for our 20 products to become part of our core products. We see this model growing to FlutiCare, UriVarx and the UTI-cleared strips, Vesele and our nitric oxide oral strips that we expect to launch soon. RecalMax and our nitric oxide strips that we expect to launch soon and GlucoGorx with an FDA-cleared glucometer and strips for insulin detection.

Third, we are continuing to develop our own proprietary product that are patent and trademark protected. The company currently has for US patent issues, 11 patent applications, 11 international patents and 4 patent applications and 23 trademarks and 29 applications and 25 international trademark and 25 applications.

As you can see, we are really beefing up our intellectual property to protect our product in all the territories that we are standing at as now our product are progressing to become not just 1 million, 2 million, but going towards the $6 million and potentially $10 million products.

In addition, we are looking to acquire or in-license new product in strategic areas, including supplements or OTC drugs or FDA-cleared devices that targets large important healthcare needs such as pain, sexual health and urinary, respiratory, muscle growth, acacia and diabetes. Also, to partner with companies such as ACON Laboratories for the supply of diagnostic strips, meters that accompany such supplements or OTC drugs that we have.

And third, to partner with our OTC drug and supplement companies to either distribute their products through our platform or private label their product.

Our early success with Can-C, Can-C Plus and the MZS Melatonin are a very good example of indication of the success of such business strategy.

So, what is coming up for Innovus Pharma in terms of product launches in 2018. We currently expect to launch in 2018 the following new product, among others.

One, the FDA-cleared UTI strips, urine strips, to be coupled with UriVarx for the urinary health. We expect to launch that in the second quarter 2018.

Our Xyralid [indiscernible] for hemorrhoids as we expect to go with the hemorrhoid cream, lidocaine based, in the second quarter of this year.

Also, we [indiscernible] the second quarter of this year our new proprietary GlucoGorx supplement and FDA glucometer for blood glucose measurement in the second half of 2018 minute.

The nitric oxide oral strips coupled for Vesele for men's sexual health in the second half of 2018. The RecalMax nitric oxide in the second half of 2018. And, of course, we're diligently working on the Regenerum for muscle wasting or Cachexia which we expect a launch in the US in the second half of 2019.

Fourth, let's talk about FlutiCare. FlutiCare launch is on track with the company and we are close to completion of our first phase of marketing as being one of the top – earlier [ph] phase of marketing where we are actually sampling to the top prescribers of fluticasone propionate spray in the United States and to over 20,000 independent pharmacies in the US.

And I can tell you physicians are responding at a very high rate to our sampling program, with repeat requests for additional samples and coupons on a daily basis.

And I'm happy to report that we have multiple sales channels that are showing excellent double-digit growth for FlutiCare sales as we continue to optimize the rest of our channels that we have ongoing.

A good example of FlutiCare uptick is the success and growth we're observing online and specifically through Amazon stores, where FlutiCare 2-pack [indiscernible] has become a bestseller on Amazon and has become the Amazon's choice now for fluticasone propionate sprays.

Our sales channel and other sales channels like the print and the direct mailing are still in the optimization phase as we keep working to improve the ROI of the products.

We are also experiencing now orders from two of the largest wholesalers in the United States from demand from the pharmacies, which is generated from the sampling programs that our team is doing on a daily basis.

In addition, the company is now working to establish the relationship with multiple physician groups in the United States, so we can establish what's called in-clinic sales of FlutiCare.

So, we're currently expecting this product to become one of our core products this year and to realize the full potential of the product in the fiscal quarters ahead. And I will keep actually updating you on the progress of quarter-over-quarter basis.

Fifth, the company has been expanding our international distribution network for our products. Currently, we have 18 international distributors who are selling several our product in over 12 countries worldwide and registering the product for marketing and sales in others.

We announced in the fourth quarter of 2018 that two new partnerships, one would Lavasta Pharma for ProstaGorx in the Middle East and North Africa and one with Acerus Pharma for UriVarx in Canada. And as you've seen from Rauly's point, we've already actually realized large number of sales failed from the Acerus partnerships for Canada as we prepare to work with Lavasta on their first order – expected first order for ProstaGorx.

We believe that our ex-US sales will continue to increase as we get more orders from our current partners and launch the product in additional countries as they receive regulatory approval.

Lastly, and I want to discuss an important point in here, we are focused on increasing shareholder value. And I can tell you, with the maturity, with the growth where we are right now, we are actually evaluating a potential uplist into NASDAQ or through another potential alternative transaction that will allow us to limit the needed reverse split to meet the NASDAQ price requirement.

As I have discussed with you previously on multiple calls, we will consider an uplisting when the time is right for the company and if it does not require a large reverse split.

And I want to reiterate that we are very interested in such an uplisting to increase the shareholder value but only if it makes sense to the company and its shareholders.

In closing, I want to actually stress a very important takeaway point here. One, this is a company that is doubling its revenues year-over-year. This is not a one-year where we double – we're doubling it every year.

And our pre-announced – what we announced our expected revenues for the first quarter in 2018 shows that we are on track to double for another year our revenues.

Our gross margins have reached 80% and we will continue to work on ways to increase them.

And I am happy to really tell you that we are on track to exit 2018 profitable.

We have a very strong position as of March 31. We have recorded $4.7 million in the bank, which is a very strong healthy position that will allow us to continue the launch of our product, that will allow us to bring in more product, that will allow us to expand the sales channels under the Beyond Human sales channel that we have, allows us to expand the platform into other companies. We started in Canada and we're evaluating other companies to expand our sales.

Our FlutiCare sales continued to grow and we will continue on additional channels in order really to realize more sales of this product and really becoming a major product for the company.

And here, I really want to have a recommendation out there. And I think all of you who have listened to my calls, I am very actually straightforward person who would not take or allow people to bring harm to the company or shareholders.

And my recommendation to all who are shorting Innovus stock at this point is to go and cover their positions before it's too late and suffer extensive losses. And I will make sure that the company not just continues to grow, but thrives, reaches profitability and continues its year-over-year doubling of revenues.

With that, I thank you for your continued support for the company and for the management and I will now open the floor to questions from our analysts and then I will follow by answering your questions that you have been very appreciatively [ph] sending us through the quarter.

Question-and-Answer Session


[Operator Instructions]. Our first question comes from Jay Albany with SeeThruEquity. Please go ahead.

Jay Albany

Hello. Thank you for taking the question. I was wondering if you could give me a little bit more color on the outlook for FlutiCare for this year.

Bassam Damaj

Sure. As I mentioned in my call, we expect FlutiCare to be a major product for us. We have given a guidance in 2017 that from a full year of launch, we would expect somewhere between 10 to 15 from this product coming in. We launched the product towards the end of 2017 with all the holidays and everything. So, I think now we are starting to realize the growth of FlutiCare. The product is starting to be recognized now. I gave a quick example on Amazon being a top seller and the Amazon's Choice. We are actually pushing quite hard in the print media and the direct mailing media, wholesalers and direct to consumers.

So, these are really the top channels that we are pushing where we believe that it can bring us pretty fast results in order to bring really the sales from FlutiCare.

Jay Albany

Thank you. At what point during the year will you have visibility into the sell-through during allergy season for the first batch?

Bassam Damaj

So, as you know, the allergy season is just starting. And, hopefully, we will be able to report in the second quarter of this year actually what are the results of those campaigns that we are putting forward. We have high hopes for FlutiCare as I always mentioned and we continue to push forward on its sales.

Jay Albany

Great. thank you. Very impressive growth in your forecast on the year. Can you remind us what the share count after your last raise?

Bassam Damaj

It was 192 million shares.

Jay Albany

Great. Thanks again. I'm really impressed by your growth.

Bassam Damaj

Thank you, Jay. Thank you.


At this time, management will turn to questions previously received by phone or email.

Bassam Damaj

Thank you, Gary. And this is my fun part of answering all of the shareholders' questions. I think this is becoming a very appreciated form of being able to handle way more questions from all our shareholders.

So, for the first question comes from JR [ph]. Can you shed some light on the recent increase in your share price going from $0.08 close to $0.18?

First, JR, thank you for this question. I mean, this is a really important question. And you have seen before, I know you all know, I really struggle when I saw that our share price was trading $0.08, $0.06 and we were a really undervalued company.

And I can tell you that we have digged deep hard into what's going on with the company with the share. And we've received multiple communications from shareholders about brokers, funds, individuals shorting the stock or market makers carrying naked short position overnight and groups spreading deceptive and untrue rumors and articles, which I'm sure you all have seen and they are all illegal.

So, in order to protect the company, the management have engaged our own investigative work and some shareholders did the same on their own. I would like to send them a personal thank you for doing that. And I'm happy to report that we were able to identify multiple people carrying out those practices.

And I'm happy to say that our efforts paid off and I'm sure that you have seen of those individuals publicly apologizing on the message boards and other venues.

And I think people now – our shareholder base now that we have has been cleaned up and you can see that our shareholders appreciate the company, appreciate the sound business of the company. We have really sound growth, sound products, we have sound business platform, unique business model, a very actually qualified management and we're executing on our business plan. We are doubling our result every year and I think the market is realizing what's going on that this company has true fundamentals, even though we're trading on the bulletin board, but this is a company that has true revenues, true products, true fundamentals. And now, we should actually maybe have – own our stock for the long term. So, I think this is what we're seeing right now and [indiscernible] for appreciation that we have seen.

Another good example, a few days before our call today to see our share price going down, and then suddenly everybody is trying to cover and end up in the positive today.

The second question is coming actually from multiple shareholders. I have like four or five. So, the question coming on FlutiCare sales. Is FlutiCare performing as you hoped? Will you [indiscernible] in the first 12 months?

And I think this is a question that I partially answered through my call and to Jay, the analyst from SeeThruEquity. But, again, I'm telling that we are actually confident with FlutiCare. We are happy with the double-digit growth we're observing in several of our channels.

I said Amazon is a big, big example and I look forward actually to seeing this product actually becoming a major, major product for us in the near future.

A question from C Stella [ph]. NASDAQ uplisting, can you please update on your proposed uplisting to NASDAQ?

I'll go through this again. I think it's important. I think we all need to realize that the company really is maturing very fast. We have serious revenues. We are doubling our revenues every year. We are approaching our profitability. We have a very strong proprietary sales and marketing platform, a very strong pipeline of commercial product and a strong portfolio – pipeline of products coming up to the market.

Innovus, in my opinion, should not be trading on the bulletin board. Innovus should be trading on a higher exchange like NASDAQ. And I will do my best to bring us to NASDAQ as long as I have the options to limit any needed reverse split. And not just to maintain, but increase shareholder value with such a transaction. And I think this is important.

Coming from Chris Savio [ph] on the Amazon revenues. And here, I want to actually thank Chris for his [indiscernible] and continuous positive feedback to the company. He's saying what is the percentage of revenues that the company earned from Amazon and what will that percentage be in the future?

So, our revenues – I can tell you the numbers. Our revenues for the year ended December 31, 2017 on Amazon from our online business were $251,000 or 2.8% of our net revenues.

And which is interesting. In the first quarter 2018, we did $288,000 for the quarter or 6.7% increase in net revenues. We are averaging now close $150,000 a month in net revenues from our e-commerce business month per month and growing at an average rate of 25% a month, which could put our Amazon sales and online sales close to $3 million on an annual rate.

And I can tell you, this is for us a very impressive growth from where we started these channels a few months ago and now we are on track for those numbers.

Coming from Jim [ph] – no last name. Earnings guidance 2017, you predicted between $10 million to $15 million in revenues in 2017. Why didn't you achieve that? And why should we believe that you will double or any guidance you give for 2018?

A very good question. I thank you for your honesty. I'm happy to answer this question. Just for the record, we did achieve $9.6 million in gross sales in 2017. But our net revenues were $8.8 million excluding returns and product damages. So, we were not too far from our low-end guidance.

I mean, it should be noted that the company took a large hit from the disasters in Texas, Florida. Then, we had fires in Los Angeles. Otherwise, we would have achieved bigger numbers for 2017. And I think that you should believe the management when it tells you that we will continue to grow, we will continue to double because we wanted to pre-release our first quarter 2018 numbers, so the market would know that we're really growing very fast and achieving the numbers and doing around $4.3 million, $4.4 million in the first quarter. This is like equivalent to half of what we have done in 2017.

And again, we're putting guidance of $18 million in revenues and I believe this is a conservative basis, but again the numbers are here now, $4.43 to $4.44 million in first quarter 2018. Do the math. Multiply it by four. We will get there.

And, again, the question from Jim is very important for me because we would like to answer all shareholder [ph] question even if they are blunt, even if they are straightforward questions. We did not achieve. We need to tell you why we did not achieve it, what we have done and are doing to correct this and achieve our next guidance.

Moving forward to the next question, the first manufacturer – I actually have – we have multiple shareholders actually asking this question including from overseas, Germany and so forth, so we do thank them for being a shareholder and following the company.

The first manufacturer, have they approved product? When will that get approved, if ever? And how does it affect how you sell FlutiCare abroad or even in the US?

I can tell you that our partner is still working with the FDA on the approval. This has been really a very long process. I am so much frustrated from the length this has taken and I really hope that this will come to an end soon and we can see an approval in the near future.

But I think it's also important to understand, the drug is in the US. We are making revenue from the US. We do have an agreement with our partner, Westwood [ph], which we have the option to expand outside the [indiscernible].

We are focusing really our efforts now on the US. We want to establish the brand, establish really the higher revenues before we move outside. But even though we do have current partners who are sending us request and projections for their corresponding parties, we are taking a slower approach outside sales of FlutiCare until we establish ourselves in the US.

And I think here it is important to understand the advantage of this first agreement for that first ANDA. Although we do appreciate our relationship with our current partner, Westwood, because they allowed us to be able to be on the market much faster.

The [indiscernible] agreement we have actually does allow better commercial terms for us, better payment terms, and also no minimum batch requirements would have a big impact on our cash in order to buy such large inventory for those batches.

So, [indiscernible] advantages. So, we're actually patiently looking for that approval to come in. But at the same time, we do appreciate our current partnership we have with FlutiCare with Westwood. We look forward to growing it and so we can grow the sales in the US.

And with this, I will stop here and I would like to thank you for your continuous support, your continuous questions and your continuous phone calls. And your continued support in that – independent shareholders that they came to us. And I look forward to keep updating you with very good results hopefully for the second quarter – for the first quarter – end of first quarter 2018.

And with that, thank you very much and have a great day.


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