Good morning, ladies and gentlemen, and welcome to the First Quarter of Fiscal Year 2019 Earnings Conference Call for Apyx Medical Corporation. At this time, all participants have been placed in a listen-only mode. And at the end of the company's prepared remarks, we will conduct a question-and-answer session.

Please note that this conference call is being recorded, and that the recording will be available on the company's website for replay shortly.

Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management, and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise.

This call will also include references to certain financial measures that are not calculated in accordance with Generally Accepted Accounting Principles or GAAP. We generally refer to these as non-GAAP financial measures.

Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website. I would now like to turn the call over to Mr. Charlie Goodwin, Apyx Medical's President and Chief Executive Officer.

Please go ahead, sir..

Thanks, operator. Welcome everyone to our first quarter of fiscal year 2019 earnings call. I am joined on this afternoon's call by our Chief Financial Officer, Tara Semb. Let me provide you with a quick agenda for today's call. I will start with an overview of our first quarter revenue performance and the drivers of our growth during the period.

Then I'll discuss some of the important operational developments in our business during the first quarter as well as our recent progress with respect to our four strategic initiatives that we have identified as key components of our longer-term growth strategy.

Tara will then provide you with a more detailed summary of our first quarter financial results and review our fiscal 2019 guidance, which we updated in our earnings press release this afternoon. I’ll then share some additional closing thoughts on our outlook for 2019 before opening the call for questions.

In the first quarter of 2019, we achieved total revenue of $5.8 million, which represented 71% growth year-over-year. Our total revenue growth in the first quarter continues to be driven by strong sales performance in our Advanced Energy business, which increased by $1.7 million or 66% year-over-year.

These impressive sales results reflected strong global demand for our Renuvion cosmetic technology, which continues to resignate in cosmetic surgery markets around the world.

Our first quarter revenue results also demonstrate the successful execution of our strategy to drive growth in our Advanced Energy business by increasing the adoption and utilization of our Renuvion cosmetic technology generators in handpieces in the U.S., fulfilling the increasing demand we are seeing from distributors in our existing international markets and expanding our coverage and penetration of key OUS markets by entering into new distributor partnerships.

In addition to our Advanced Energy sales performance, we also saw important contributions to total growth from our OEM business, which increased by $684,000 or 89% year-over-year. The growth in our OEM business was largely driven by the expected contributions from our electrosurgical generator and supply agreement with Symmetry surgical.

Recall that we entered into this agreement in connection with the divestiture and sale of the Bovie Medical Corp business in brand – and brand in August of last year. From a geographic standpoint, first quarter total U.S.

sales increased by $1.3 million, or 49% year-over-year while total international sales increased by $1.1 million, or 169% year-over-year. First quarter sales in the U.S. were driven by a 30% increase in Advanced Energy sales and 104% increase in OEM sales. We were especially pleased with our U.S.

Advanced Energy performance in the first quarter as sales only declined mid single-digits compared to the fourth quarter of 2018. This is impressive in light of the fact that the first quarter tends to represent a seasonably weaker quarter due to the capital equipment purchasing trends in the cosmetic surgery market.

Our Advanced Energy growth in the U.S. benefited from strong utilization based demand for our Renuvion handpieces.

First quarter international sales were driven by stronger than expected utilization based demand for our Advanced Energy products from distributors in our existing international markets, many of which we entered into partnerships with during the last nine months of 2018.

We also added new distributor relationships in new countries in the first quarter, which represented additional upside versus our expectations.

Turning into an update of our recent operational progress and operating highlights, in addition to the strong performance of our Advanced Energy business during the quarter, we also continued to receive strong positive feedback from our new and existing clinician customers in the U.S. cosmetic surgery market.

Our new Renuvion customers report that they are motivated to purchase our technology after observing the results that can be achieved and discussing the potential benefits of adoption with members of our sales team as well as their clinician peers.

Additionally, many of our existing customers reported seeing a notable uptick in their patient procedure volumes after integrating Renuvion into their practice.

As I will discuss later in my remarks, we continue to improve our support for new and existing clinical customers to ensure they are able to effectively integrate the technology into their practices and that they have tools and best practices to market Renuvion cosmetic technology to their patient customers.

Before updating you on the recent progress we've made with our strategic initiatives, I would first like to take a moment to discuss an important development during the first quarter with respect to our regulatory strategy.

As discussed on recent earnings calls, our team has been focused on pursuing 510(k) regulatory clearance for Renuvion specifically a new clinical indication for the use in dermal resurfacing procedures. On December 18th of last year, we filed our application for a premarket notification 510(k) regulatory clearance with the FDA.

Our application was supported by data from a multicenter single arm, evaluator-blind prospective IDE study, which evaluated the safety and efficacy of Renuvion for the reduction of facial wrinkles and rhytides. During their review of our application, the FDA raised several questions and concerns regarding three aspects of our IDE clinical study.

First, the FDA questions the study's results regarding Renuvion’s performance and dermal resurfacing procedures versus its stated primary end point.

While the IDE study yielded no serious adverse events, it did not meet the primary efficacy endpoint as only 63.64% of the patients were deemed to have experience and improvement of one point or greater on the Fitzpatrick Wrinkle sale at the three month follow-up visit.

The study protocol and statistical analysis plan included a success criteria of 75% of patients. Second, the FDA questioned the variability in treatment outcomes across the three investigational centers in the study as one of the three investigational centers in the study achieved superior outcomes compared to the other two.

And third, the FDA questioned the impact of protocol deviations at this investigational center. Specifically, the FDA questioned how the protocol deviations may have contributed to the superior results obtained at this investigational center.

Following the procedures, all but five subjects treated at this clinical center were prescribed with MEDROL, a corticosteroid that can be used to treat inflammation of the skin and increase patient comfort post-procedure.

Following discussions with the FDA in late March, we voluntarily withdrew our application on March 29th as we were unlikely to be able to favorably resolve the issue raised within the FDA's congressionally mandated MDUFA 90-day review period that would have otherwise ended on April 1.

While Apyx does not share the FDA's view with respect to the three areas in question regarding our clinical study, we understand their focus on these areas. We also appreciate the FDA's engagement with our clinical and regulatory team, which has included many productive and positive interactions through the process.

Although we are greatly disappointed by this setback, we remain convinced of both safety and efficacy of our Renuvion technology when used in dermal resurfacing procedures and we are committed to pursuing 510(k) clearance for dermal resurfacing. In terms of Renuvion safety profile, our IDE study included no serious adverse events.

Additionally, the FDA expressed no comment or concerns regarding the safety of the procedure itself. And from an efficacy standpoint, over 90% of subjects in this study experienced an improvement in appearance as assessed by the study investigators.

In addition, the studies independent photographic reviewers were able to correctly identify post-treatment photographs in over 97% of patients. In terms of next steps, we intend to develop and submit a new investigational device exemption or IDE application.

Our clinical and regulatory teams are highly focused on developing a new clinical protocol and securing the necessary support for our IDE application. We are taking a methodical approach and have engaged additional external resources to inform our process.

Upon receiving an IDE, we will then gather additional clinical data under this new clinical protocol to support our submission of a new application for 510(k) clearance to market and sell Renuvion for the dermal resurfacing procedures. With that, I'll now turn to an update of our recent operational progress with respect to our strategic initiatives.

As a reminder, Apyx Medical has been focused on the following four strategic initiatives in order to position us for long-term success in the cosmetic surgery market. Number one, we'll formalize our regulatory strategy to pursue specific clinical indications that will enable us to market and sell Renuvion for our target procedures.

Two, secure new clinical evidence demonstrating the safety and efficacy of our Renuvion technology. Three, enhance physician and practice support for our cosmetic surgery customers. And four improve our manufacturing capabilities and efficiencies.

With respect to our first strategic initiative in addition to our efforts to secure a new clinical indication for Renuvion in dermal resurfacing procedures, our regulatory team is focused this year on expanding our geographic footprint by obtaining regulatory clearance for our technology and new countries outside the U.S., particularly those with large and growing cosmetic surgery markets.

Importantly, while our commercial strategy is to identify a strong distributor partner in each market, we are focused on owning the registrations and licenses in each respective country.

Longer-term, our team has also identified other potential clinical indications where we believe our Renuvion technology would address important unmet clinical needs within the U.S. cosmetic surgery market. We intend to focus on obtaining these clearances in the years to come in an effort to expand the potential adjustable market for Renuvion.

Turning to our second strategic initiative, we are continuing to develop a comprehensive portfolio of clinical support demonstrating the safety and efficacy of our Renuvion cosmetic technology.

Building on the work we completed in late 2018 to demonstrate how our Renuvion’s technologies method of action is so unique in the marketplace, we expect to publish a retrospective clinical study examining the subdermal use of Renuvion in liposuction procedures during the second half of 2019.

Our third strategic initiative, we continue to make steady progress during the first quarter on enhancing physician and practice support we provide for our cosmetic surgery customers.

These efforts begin in earnest in late March of last year with the launch of our Renuvion brand, which was designed to enhance our marketing efforts to our customers, more importantly to help our clinicians in the cosmetic surgery market effectively market Renuvion to their patient customers.

The Renuvion brand has received strong praise from our clinical customers and overall market response has exceeded our initial expectations. We remain committed to supporting this dedicated branding effort in enhancing its visibility in the marketplace.

During the first quarter, we released our first patient marketing materials, which are being shared across our clinical customer base to raise awareness of Renuvion and its potential benefits.

In tandem, we also launched a new multipart video series via our clinician web portal to educate our clinician customers and provide them with actionable tips to optimize their digital marketing of Renuvion via social media.

In addition to building support for our Renuvion brand, we continue to improve our marketing programs to train clinician customers on the use of Renuvion and its benefits. We had recently begun hosting formal events, which we call physician mentor programs, or PMPs.

During PMP events, our consulting surgeons educate a small group of prospective clinical customers on the use and benefits of Renuvion and then perform one or more live cases. This program seeks to provide our potential new customers with the ability to learn directly from their peers in a formal education setting.

We have also invested in a small team of clinical specialist, which are dedicated to educating and training our clinician customers. They provide support for our new clinician customers during their initial procedures with our technology and additional training for our existing customers as needed.

In addition to enhancing our relationships with our customers, our clinical specialists also help our sales reps to be more efficient by allowing them to focus more of their time on their selling efforts.

And lastly, in connection with our fourth strategic initiative under the direction of Laura Iversen, our Director of Global Operations, we are improving our manufacturing capabilities and efficiencies to accommodate the increasing global demand for our generators and handpieces.

Over the last year, we have made a number of important operational improvements at both our Clearwater and Bulgaria facilities, including efforts to improve our workflow and vertically integrate our supply chain. During the first quarter specifically, we expanded our manufacturing capacity in our Bulgaria facility.

In addition to improving our ability to produce more products, expanding our manufacturing capacity in Bulgaria provides us with a long-term benefit of lowering our manufacturing costs. We are also leveraging our Bulgaria facility to streamline our operations of the U.S. by shipping directly from Bulgaria to our OUS distributor partners.

With that, let me turn the call over to Tara to discuss our first quarter financial results in greater detail and review our fiscal 2019 financial guidance, which we updated in this afternoon's release.

Tara?.

Thanks, Charlie. As a reminder, our results are reported on a continuing operations basis for the period ended March 31, 2019. Any financial impacts related to the divestment and sale of our core segment appear in our financial statements as discontinued operations and are excluded from the commentary that follows.

Total revenue for first quarter 2019 increased $2.4 million, or 71% year-over-year to $5.8 million compared to $3.4 million last year. By business segment, total revenue growth in the first quarter was driven primarily by Advanced Energy segment sales, which increased $1.7 million or 66% year-over-year to $4.4 million.

Total revenue growth in Q1 also benefited from growth in sales from our OEM segment. OEM segment sales increased $684,000 or 89% year-over-year to $1.4 million in Q1 driven primarily by sales of generators related to our 10 year manufacturing and supply agreement with Symmetry entered into as part of the divestiture of the core business.

Advanced Energy and OEM sales represented approximately 75% and 25% of total revenue in the first quarter of 2019 respectively compared to 77% and 23% in the prior year period.

Revenue in the United States increased approximately $1.3 million, or 49% year-over-year, to $4.1 million and international revenue increased approximately $1.1 million, or 169%, year over year to $1.7 million.

International revenue represented approximately 30% of sales in the first quarter of 2019, compared to 19% of total sales in the first quarter of 2018. Moving down to P&L gross profit increased $1.5 million or 68% year-over-year to $3.7 million compared to $2.2 million for the first quarter of 2018.

The increase in first quarter 2019 gross profit was driven primarily by strong sales in the company's Advanced Energy segment. Gross margin for the first quarter of 2019 was 63.9% compared to 65.1% last year.

The change in gross margin was primarily due to revenue mix by product in our Advanced Energy segment, Advanced Energy sales outside the U.S., which represented a higher mix of total sales in the first quarter of 2019 compared to last year and higher OEM sales as a percentage of total revenue this year.

OEM segment gross margins were lower in the first quarter of 2019 when compared to the prior year period driven primarily by revenue related to our new product manufacturing and supply agreements with Symmetry in the first quarter of 2019, which did not contribute to revenue results in the prior year period.

Operating expenses for first quarter 2019 increased $4 million or 81% year-over-year to $8.9 million compared to $4.9 million for the first quarter of 2018.

The year-over-year change in operating expenses was primarily driven by $1.4 million increase in salaries and related costs, $1.3 million increase in professional services, a $1 million increase in selling, general and administrative expenses and $300,000 increase in research and development expenses compared to the first quarter of 2018.

Loss from operations for the first quarter of 2019 was $5.2 million compared to operating loss of $2.7 million last year. Net loss from continuing operations for first quarter 2010 was $4.7 million or $0.14 per diluted share compared to a net loss from continuing operations of $2.8 million, or $0.8 per diluted share, for the first quarter of 2018.

First quarter 2019 adjusted EBITDA was $4.2 million compared to an adjusted EBITDA loss of $2.1 million last year. We have provided a detailed reconciliation from GAAP net loss to adjusted EBITDA in our press release this afternoon. As of March 31, 2019, the company had cash and cash equivalents of $32.4 million and short-term investments in U.S.

treasury bills of $40.9 million as compared to cash and cash equivalents of $16.5 and short-term investments of $61.7 million as of December 31, 2018. The company had working capital of $77.8 million as of March 31, 2019 as compared to $81.8 million as of December 31, 2018.

Turning to a review of our 2019 financial guidance, which we updated in our earnings press release this afternoon, for the 12 months ending December 31, 2019, we now expect total revenue in the range of $25.5 million to $26.5 million, representing growth of 53% to 59% year-over-year compared to total revenue from continuing operations of $16.7 million in fiscal year 2018.

This compares to the company’s prior total revenue guidance range of $25 million to $26 million. Our updated 2019 total revenue guidance assumes Advanced Energy revenue in the range of approximately $20.5 million to $21.5 million representing growth of 57% to 65% year-over-year compared to Advanced Energy revenue of $13.1 million in fiscal year 2018.

This compares to the company's prior Advanced Energy revenue guidance range of $20 million to $21 million. OEM revenue of approximately $5 million representing growth of 38% year-over-year compared to $3.6 million for fiscal year 2018. This is unchanged from our prior guidance expectations.

As a reminder, we expect approximately 50% of our total OEM segment revenue to come from our legacy OEM activities with the balance coming from our manufacturing agreements with Symmetry.

In terms of profitability guidance for fiscal year 2019, we expect GAAP net loss in the range of $23.5 million to $22.5 million compared to GAAP net loss from continuing operations of $9.5 million in fiscal year 2018. This compares to the company's prior guidance range of net loss in the range of $24 million to $23 million.

And we expect adjusted EBITDA loss in the range of $19.9 million to $18.9 million compared to adjusted EBITDA loss from continuing operations of $11.7 million in fiscal year 2018. This compares to the company's prior guidance of adjusted EBITDA in the range of $20.4 million to $19.4 million.

As a reminder, we have included a full reconciliation from GAAP net loss to non-GAAP adjusted EBITDA in our earnings press release this afternoon. Lastly for modeling purposes for the full year 2019, we expect gross margin of approximately 59% to 61% this year compared to $64.7 last year.

The largest driver of the expected decline in gross margins this year is the impact of 12 months contribution from our manufacturing agreement with Symmetry in 2019, compared to approximately three months contribution in 2018 as reported within our OEM segment.

Excluding the full year contributions to total company revenue from this agreement, our total 2019 gross margin would be approximately 63%, stock-based compensation expense of approximately $4 million, depreciation and amortization of approximately $700,000 and weighted average diluted shares outstanding of approximately 34 million shares.

With that, I'll turn the call back to Charlie for closing remarks.

Charlie?.

Thanks, Tara. Based on the impressive international performance of our Advanced Energy business during the first quarter coupled with stronger than expected U.S. growth handpiece utilization for our Renuvion products, we are raising our revenue guidance expectations for 2019. We are also lowering our expected 2019 net and adjusted EBITDA loss as well.

In 2019, we expect our Advanced Energy growth will continue to be driven by both generator adoption and handpiece utilization in the U.S. Outside the U.S., our guidance continues to assume the contributions from utilization related demand from our existing international markets.

We will continue to update our international growth expectations to the extent that we receive additional material OUS clearances. Stepping back with the best-in-class technology and a recently enhanced direct sales force, we continue to believe we are well positioned to continue our rapid pace of growth this year.

Importantly, we are focused on a very compelling addressable market that represents an approximately $1.5 billion opportunity in the United States alone. Included in that is an annual recurring revenue component of more than $170 million.

As a reminder, this addressable market opportunity is based on our current clinical indication, which allows us to market our Renuvion generators and handpieces to be used for sub-dermal coagulation following the estimated 400,000 liposuction procedures that are performed annually.

Looking ahead to the remainder of 2019, we will continue to expand our share of this market by remaining focused on the execution of our commercial strategy.

And lastly, we will advance our four strategic initiatives and allocate capital thoughtfully to facilitate the broad-based adoption of our technology to position Apyx Medical for sustainable long-term growth in the years to come.

I'd like to end my prepared remarks this afternoon by thanking our employees for their dedication, integrity, and commitment to excellence in overcoming any obstacles to our goal of becoming a leader in the cosmetic surgery market.

While the Apyx Medical names symbolizes our commitment to providing innovative products and excellent service in the cosmetic surgery market, our employees are the ones that turn this commitment into a reality and we truly appreciate your efforts. With that operator, let’s now open the call for questions..

Thank you. [Operator Instructions] And our first question will come from Matt Hewitt with Craig-Hallum Capital. Your line is open..

Good afternoon and thank you for taking our questions..

Hi, Matt..

First up regarding the international opportunity and your intention is to submit new applications to expand your opportunity there.

What kind of cadence or how should we be thinking about when those, I guess, applications will be submitted? How long they typically take to come back? And when we'd be hearing about maybe the first one or two new country opportunities?.

Yeah, well, thanks, Matt, for the question. The first is that the – all the countries are different. It depends on each country for the length of time and the process to go into each one of those. And so, we will give updates as we enter material markets and give you that.

And so for the first quarter of 2019, you can actually – since you asked the question, you can know about the first two markets that our material that we entered into and that is Mexico and Canada, where we have our cosmetic technology now registered for both of those countries. And so, we will update you as we get them..

That's great.

And I guess regarding Mexico and Canada, do you have distributors already in place? Are there any stocking orders attached to those agreements? And if not, when would we expect to see those?.

Yeah, so when we enter a country, we will always have a distributor already with them and b) orders remember are a little bit different, even though our distributors are typically buying to take care of demand that they have already in the market. One of the things you need to remember is that Renuvion is a – is looked at globally.

And so, we receive leads from all over the world on a weekly basis. And as we enter a market and get registration in that market, we obviously give the distributor all the leads that we have for that market, so they can go out and take our technology to them. So we did receive orders from both of those countries within this first quarter..

That's great. And maybe one last one and then I'll hop back in the queue. Regarding gross margins, obviously a fantastic quarter, based on the guidance that's going to come down. Will that be a sequential decline over the course of the year? Or does that drop back to the 59% to 61% starting here in Q2? Thank you..

We don't – yeah, we don't usually give quarterly guidance on gross margins..

Remember everything we do is on an annual basis, so think of about that for an annual basis..

Okay. All right, thank you..

Your next question comes from Kyle Bauser with Dougherty and Company. Your line is open..

Hi, good evening. Thanks for taking the questions.

Can you hear me okay?.

Hearing, great, Kyle. Thank you..

All right, great. So you've mentioned the addressable number of physicians out there for Renuvion at about 15,000 and roughly up 400,000 procedures.

First, is it fair to apply the 80/20 rule and say that’s roughly 3,000 of those physicians drive over 300,000 of the procedures? And whether or not that's true realistically, how many sales reps do you think you will need to go after the key practices in the U.S.?.

Yeah, well, as you know, we've got – we increased our sales force to 20, 28 at the end of this quarter and we had 17 at the end of Q2. And so, we have a hybrid model as you know where we also have seven agencies that work for us. And so, we've got around 40 people as far as selling it in the United States.

And we think that that is a very good number here in the U.S. for 2019 and we're happy with that number. As far as your first part about the 80/20 rule, I don't know if we exactly see it that way. It totally depends on each practice.

And a lot of the cosmetics surgeons that we talk about that are of that 15,000 do a little bit of everything and all would be potential customers for us..

Okay, got it. And from your comments and frankly our checks with users, it's clear to us that tightening with Renuvion and during lipo procedures is becoming sort of the standard within practices. So the device sort of speaks for itself and likely drives a lot of its own increased utilization within those accounts.

But as you continue to drive adoption into new accounts from current initiatives and the KOL training workshops, you kind of talked about, do you envision generating more outcomes data? Or are even running a trial eventually for the sub-dermal coagulation indication?.

Yeah. Look, we're not going to get into today to further trials that we could potentially do as we sit and talk today. But I did mention that as you know from a regulatory and clinical strategy, we do – we are looking at other indications to go after and we will update you that when we have those, number one.

And number two is that we are working on all kinds of clinical data that we want to be bringing to this market. And remember when we started here, we didn't have any and it has been a focus of ours in our strategic initiatives to keep adding as much as we can. And so it's not just something that we will do this year.

This will be an ongoing thing for us for the years to come and to totally increase our body of work..

That makes sense. Great, I'll jump back in queue. That's it for me. Thanks so much..

Your next question comes from Matt O'Brien with Piper Jaffray. Your line is open..

Hey, Charlie and Tara. This is Kevin Farshchi on for Matt today. Thanks for taking the questions. I guess to start off, I look at the guidance coming up and when we contemplated the upside drivers available to the model, we didn't think too many would exist this early in the year without dermal.

It sounds like the handpiece utilization was a little bit better in the quarter. So the question is broadly on your confidence for that type of acceleration for 2019. So as I think about Renuvion, you've lapsed the new branding and cosmetic surgery.

If you could provide anything on kind of what reorder rates look like in both mature and growth accounts? And you also mentioned many existing customers are seeing an uptick in our patient and procedure volumes. So any types of metrics to frame up your confidence in that growth profile for 2019 would be helpful. And I have one further question.

Thanks..

Yeah, look, as I said before, we are just getting started in this 400,000 addressable procedure market with 15,000 clinicians. And I've stated before that, our market share is still – you can still count it on one hand. And so, our confidence in the business has always been based on the sub-dermal coagulation and we have a long ways to go with this.

And the $0.5 million guidance increase that we gave was because of our increase in OUS, but also a better expected handpiece demand in the U.S. And so we remain confident on that.

And the two new countries that we did enter in Q1 with Mexico and Canada, we had said when those do happen and we have upside there for the year that we will update our guidance with that..

Okay, that's super helpful. I just have one more. I'm glad to hear you're still committed to pursuing the dermal indication.

The question is how do you think the new IDE would be different if you think about making outcomes more consistent on protocol and bringing up those efficacies? And then secondly, if you're looking at resubmitting, is there any kind of refining to the market size from your perspective when you develop the new protocol? Thanks so much..

Well, we will be developing a new protocol. And one of the things that we will be doing within that protocol is using two passes instead of one passes.

And one of the main reasons for the two passes versus the one is that as the way that are – that the clinicians that are using it off-label today are having the best outcomes and the best success for that. But remember regarding the market opportunity, it is still the fully ablative technology with the 200,000 procedures in the U.S.

And so that is still the area that we are focused on with this new protocol and this new submission..

Thanks so much..

You bet..

[Operator Instructions] Your next question comes from Russell Cleveland with RENN Capital. Your line is open..

First, congratulations on the number of [indiscernible] first quarter. I have a financial question then one other question. The next loss – the net loss that we forecasted $23.5 million to $22.5 million. What will be cash actual loss? I know these are GAAP numbers, adjusted EBITDA and so forth.

What will be the real cash loss on that forecast?.

Well, there's minimal CapEx on working capital impacts. So, it will be close to the adjusted EBITDA..

So $19 million to – $19 million, so that would be the cash loss..

More or less, yes..

Okay. So, well, thank you for that, a lot less than the other. So the other question on this FDA submission, there's obviously been a tremendous amount of interest in this, a lot of misunderstanding.

Anymore on the timing here because as – are we talking hopefully three months or six months or something that we could kind of hang our hat on? What is our expected timing to resubmit here to the FDA?.

Yeah. Obviously, this is the high priority for us, but one of the things that we want to make sure that we do is, is that we're taking a methodical approach to make sure that we dotted all our Is and crossed all our Ts and that’s the protocol that we know is going to give us the results that we want.

And we will have an actual update on the timing of our submission, no later than our Q2 call in early August. But it is the high priority for us. We're working hard on it and we will definitely let you know when we've got a good timeline for sure..

Okay, thank you so much..

Thank you, Russell..

Thank you..

There are no further questions in the queue at this time. So that concludes today's conference for today. Thank you for your participation..