No. 3 AnswerRichard Valencia (Executives) Right. The next...

No. 3

AnswerRichard Valencia (Executives)
Right. The next question is, were there any changes made specifically to the management's STI targets during the year? If yes, what effect did it have on the amounts that were paid to management?

AnswerTimothy Cruickshank (Executives)
So for this one, I assume we're talking about FY '23, the year that just finished up as we're in Q1, right, or just finished Q1 of FY '24. I think we stated in the audited annual report, the company achieved 70.6% of its short-term incentives for FY '23. This is a combination of results of the first half plan and the second half plan under our new Managing Director and CEO.
So no changes to the structure, and it did not impact the amounts achieved under the plan in either scenario for either half-year plan.

AnswerRichard Valencia (Executives)
All right. The next question is, are you looking at licensing out your IP for other conditions. Actually, you know what I'm going to hold that one off to the back end. Let's jump to the next one. Tim, can you describe the difference between SaaS, core business and clinical business revenues, which is more profitable?

AnswerTimothy Cruickshank (Executives)
Sure. So the core business, that's our -- predominantly our lymphedema business at present. Contracts in this business in the U.S., bring with them north of 90% gross margins on the monthly license fees. And the contracts also have no specific end date. So they go on for an unspecified amount of time. The clinical business, on the other hand, those are contracts with companies that request to use our technology to accompany their own clinical trials. The gross margins on these contracts can also be quite lucrative and north of that 90% gross margin as well, but the timing and quantum of the contract values for these are harder to predict on the lymphedema business. And importantly, they have end dates. So there's no churn in the clinical business as clinical trials come to an end.
So they're both very -- they both carry with them very profitable, strong gross margins. But clearly, the core business is the fundamental focus of where we need to be as those contracts continue for extended amount of time.

AnswerRichard Valencia (Executives)
All right. Next question. Who are the major players who may be developing competitive tech in stealth? How can you track this?

AnswerTimothy Cruickshank (Executives)
Sure. So we've had some slides in the past on the competition that's out there. There's no direct competition in bioimpedance spectroscopy and BIS, at present. But we know competitors, of course, will come in time. For now, we're monitoring ClinicalTrials.gov, FDA filings, lots of other avenues. And as we've stated in the past, we believe we've got a 2- to 3-year head start on the competition.
Our primary goal is to dominate the market in oncology and all of the top cancer centers and institutions. We believe our biggest competitive advantage will always be our first-mover advantage. So we're focused on locking down those major hospital systems and cancer centers in cancer-related lymphedema and then further penetrating those customers with our broader oncology platform. So technology like ours, I think that first-mover advantage, once you're implemented and embedded into U.S. health care, it's very unlikely to be replaced, and that's -- that will always maintained. That will always be our #1 competitive advantage of this.

AnswerRichard Valencia (Executives)
Great. Last one for you, Tim, and then a few more from me. How are your manufacturing strategy -- how is your manufacturing strategy working? Are you ready for this step change in growth?

QuestionElyse Shapiro (Analysts)
Yes, continue to prepare. We knew we'd have line of sight as we learned what states get to critical mass to grow. We'll be able to grow into ourselves. So still very confident in manufacturing. We know this is an area that can go wrong often for companies. So we don't take this lightly. But we've got over 400 or around 400 SOZO 1s available to us that can be ready for sale in a very short period of time. So sufficient SOZO 1 inventory on hand for our near-term needs.
And then when the timing is appropriate in calendar year '24, also we'd be launching SOZO Pro, and we've got preorders in for SOZO Pro as well. So for the foreseeable future, we're covered from an inventory manufacturing standpoint, but we'll continue to obviously invest the right amount of time into this to ensure we stay ahead of any supply chain issues.

AnswerRichard Valencia (Executives)
All right. So a few more here, and then we'll open it up if there are any other questions from you live. Are you looking at licensing out your IP for other conditions such as heart and renal in order to make some revenue of this asset while your focus is on lymphedema?
So I spent close to a decade at Qualcomm. Qualcomm is a world-renowned mobile technology company, but a big part of their revenue and margin is in licensing or patent IP. Any company would pair in comparison to a company like Qualcomm in terms of a patent portfolio and a patent business. But you can see telltale signs of an IP -- patent IP-oriented company or not. And my observation when I came to ImpediMed is that the company was not built around patent IP. The company leverages a readily available technology in bioimpedance spectroscopy, that no one is quite mastered the way we have. And there's know-how there that theoretically could be licensed at some point. But I have to tell you that the clinical, the technical, the commercial investment that would need to be made in those specific indications and others would be quite significant from where we are today to have something that someone would be willing to pay us a significant license fee for it.
Otherwise, I'll tell you, we do get approached quite regularly by folks in the industry that know about what we've done in bioimpedance. And generally, what they request us to do is build them a device, build them a product. they want to pay us a fee for engineering services effectively to design and build a product for us. That's a relatively -- not a relatively -- that's a very low-margin business that we're not the right company to be in that business and a major distraction from the opportunity that we have ahead of us in limb lymphedema. So there's -- it's not that we wouldn't consider a license. Of course, we would. We're talking to a number of players that could benefit from this type of technology, but there's not a whole lot to work with there from a patent IP standpoint or that these other potential users of the technology would be willing to pay for. And so it's not a priority of ours right now. We're really going to focus in on the oncology opportunity ahead.
Okay. What is the current state of the hemodialysis or renal study?
We did a study. The data has been partially with us. However, we've been having to clarify, perfect, if you will, the data over the last several months, and we've recently reached that point where we think we've got what we need. Unfortunately, we just haven't had the resources to do this. I think I've mentioned in the past that we really only have one resource in the entire company that can do that type of work, and they've been focused on other priorities. With Steve -- Dr. Steven Chen now on board, we do plan -- and also our program manager who can help us manage through the effort, we do plan on getting to that and seeing what we have. That was an observational study. So it's really going to be a very early step in the overall development of the commercial product. So we still have much more clinical work to do, likely more from what we've learned just in general, so far about cost structure in that industry, margin structure in that industry, we would likely need to develop a completely different technology than our relatively expensive SOZO technology. And the commercial entree right now is not obvious to anybody. So it would be quite an effort there as well.
So the current status of that hemodialysis or renal study is that it's on hold, but we are going to get to it in the same way that we're continuing to move forward with [ clear ], so the contraindications and we have a number of small studies underway in those areas, trying to sort out where the opportunity might exist.
Okay. Two more questions here. Since the commencement of the new Board, there has been an increase in the selling pressure and performance -- [ did I ] read this one? Oh, I'm sorry. No, I didn't. From recent market announcements, the majority of the new Board are not shareholders, whereas the previous Board had their interest aligned somewhat with their share ownership. Does the new Board plan on buying market -- shares on market? When is there usually an open period for buying shares on market?
Obviously, the Board has certain requirements around shareholder ownership that I'm sure they will adhere to, and they have expressed their intention to buy shares on the market -- on the open market in future periods when we have open windows. Those open windows can't be exactly predicted with what we've had going on here recently. The windows have been closed for quite some time and will continue through our AGM. But again, the Board has expressed their intention to acquire in the open market.
Last one, when will we hear from the Board?
They're working their way through the process of onboarding, as mentioned. They're mostly there. We still have a handful of deliverables to them and more meetings that we'll be undertaking to answer questions. But our AGM is coming up at the end of November, and they will be there in force and available to answer questions from you directly.
Again, I'll just reiterate, we're really well aligned from a strategy standpoint. From a details and execution standpoint, there's still a lot to work through, but I don't see any big red flags or things that are worrisome to me. It's just a matter of time and education and getting them comfortable with what they're seeing and hearing. But again, the end of November, you can expect to see them at the AGM, and I'm sure we'll be happy to answer your questions there.
All right. We've made it true. Let's see if there are -- hopefully, we've covered off on the remaining questions that might be coming from a couple of people, but let's figure it out. Nick?

Question and Answer Operator MessageOperator (Operator)
[Operator Instructions] Next question will be from [ Mariam Lee ], private investor.

AnswerUnknown Attendee (Attendees)
You've got mentioned breakdown of expansion to NCCN institutions and IDNs and the new ones, you able to say how many new ones there are? And also, could you even give us some examples of some of these new institutions taking on SOZO?

AnswerTimothy Cruickshank (Executives)
Great. Thanks, Mariam. Yes. So last quarter, we didn't add any additional new NCCN centers, but we saw a lot of expansion. So across the U.S., I think there were 5 NCCN centers that added additional devices, our systems during the quarter. We don't always give out the specific names of them, but we are happy with the progress we're seeing with the existing accounts. And I know in the pipeline, there are a handful of new NCCN centers that are close to the finish line. So as we get to critical mass in those states, that would be the final late -- the last trigger point for getting those ones across the line. There are 3 to 4 additional near-term opportunities with NCCN centers that we're expecting to come in soon.

AnswerUnknown Attendee (Attendees)
And what about new organizations in tires like new health facilities like I think last quarter you had the [ Texas Best ] centers or something. Have you got any new ones out there, new change of health facilities?

AnswerTimothy Cruickshank (Executives)
Yes. So quite a number in the works. But really, I mean this concept of critical mass is key to getting their attention in getting these types of things over the line. So I mean, the example we gave of the IDN in Michigan, the final piece that we needed there after having them in the works for some time with them actually proactively reaching out to us once they realize we did hit critical mass. So it's going to take that to see a large number of these additional IDNs coming through.
The best place we can focus our time right now is that land and expand strategy that we've been utilizing for some time now where we're developing further deeper programs at the existing IDNs is a much better use of our sales team's time in the short term while we build towards critical mass. So we're hyper focused on creating reference sites, creating stronger and stronger programs in our existing IDNs as opposed to getting the remaining ones over the line. But they are working on that in the background and those will come as critical mass is achieved.

AnswerRichard Valencia (Executives)
The one thing I want to reiterate, we've talked about this quite a few times about the impact of the guidelines, the NCCN guidelines. So the impact of the NCCN guidelines is very significant. It's what leads to private payer reimbursement in a lot of cases. And again, in the U.S., once private payer reimbursement begins, it rarely ever stops at any -- I've never heard of a case of it stopping. At some point, once payers begin reimbursing --private payers begin reimbursing, it's just a matter of time and the work effort that has to go in to create awareness and give them the data and then have them update the medical policy and eventually, you have 100% coverage across the entire country. That will happen for the company. But what doesn't necessarily happen is that neither payers nor providers sit around scanning the NCCN guidelines looking for changes. They look for inquiries from vendors, from providers, from patients, from regulating authorities before they move.
And so we immediately, of course, upon word of the guidelines, activated our market access team to begin building these coalitions and influencing our provider customers to request the changes. But you do not see a significant shift in sales volume or uptick in new customers that haven't really already been early adopters, investing in the technology until you get to critical mass. The guidelines are not what moves the needle in and of itself. The guidelines are what gets the needle moving on private payer reimbursement and that private payer reimbursement reaching critical mass is what then moves the needle with system sales. But even that doesn't happen overnight because you still have quite a bit of a work effort to get them educated on the guidelines. There's still changing clinical workflow. Anytime any institution has to change clinical workflow, it involves multiple layers of the organization and a lot of work on their side.
So we have all of that work to do that we're investing in now that we're bringing the right people in to do the work. We're acquiring and developing the right systems to manage the scale, but we're doing that in, as Tim has mentioned, 4 or 5x already in a measured way so that we don't get too far ahead of ourselves, but we focused most of our investment early on in 2 areas, sales, sales and marketing, I'll say. We also hired a downstream marketing or a marketing communications person that's focused on lead generation and supporting the sales team. And the other area is in building the right systems within the organization to support the scale.
We operate on very antiquated systems. It's very difficult for us to manage the sales pipeline and have it be predictable. It's difficult for us to do our financials in 2 different currencies with the systems that we have today. So all of that, we're now investing in and building out so that we're ready for the scale when we get there. I know it's a little bit of a tangent from your question, Mariam, but I did want to make it clear that we've told you before, these next few quarters are really going to be about building and readying for that scale as we get to critical mass, but it's all about getting to critical mass before we're going to start seeing things shift in a significant way. And over the next couple of quarters, we're going to start seeing many more markets come on to critical mass and a much greater opportunity for our sales team to start bringing in new and expanding existing accounts.
All right. We have one more?

Question and Answer Operator MessageOperator (Operator)
We have 1 more question left. We have time for a brief question. That will come from [indiscernible].

QuestionUnknown Analyst (Analysts)
Yes. A quick question. I invested in the company because of the potential in renal at the time the FDA issued the permit for the device to be used in dialysis patients. The interval that is lapsed between the end of the observational study in October last year and now is frankly ludicrous. Do you recommend that people like I who have invested in the company in good faith because of the potential of this technology in renal patients and most specifically dialysis patients should sell their shares with you as the current Managing Director?

AnswerRichard Valencia (Executives)
I don't recommend that anybody sell their shares in ImpediMed right now. The opportunity that's presented to this company is unlike many opportunities at any business in health care -- U.S. health care ever sees. And so a strong recommendation is that you remain a shareholder. On the other hand, I wasn't here when that work was done. I didn't have anything to do with your decision to invest in the company. And so I'll have to leave that up to you as to what you decide you want to do going forward. But in terms of the opportunity ahead of this business, where we sit right now, it's a very unique and a very large opportunity for us that I think is very, very exciting.

QuestionUnknown Analyst (Analysts)
With the change in Board has there been no rethink as to the priority given to the renal program?

AnswerRichard Valencia (Executives)
I prefer to leave that one up to the Board, and you can ask them that question directly at the AGM. But I can tell you that, as I've mentioned several times before, we educated them on everything that we've got here within the company in terms of technology, in terms of the clinical research that we've done, in terms of commercialization opportunities, in terms of partnerships that we have pursued in the past in renal and other areas, and we came away aligned on the current strategy.
Okay. Well, I do believe we're through all of the questions that came online and really want to thank you all for joining us once again. And as mentioned several times before, the Board will be out there at the end of the month for the AGM, and I look forward to your attendance there and asking them any additional questions that you have. But with that, I think we will wrap up. Thank you.

Question and Answer Operator MessageOperator (Operator)
Thank you. Conference has now concluded. Thank you for participating today. You may now disconnect.