Greetings, and welcome to the InspireMD Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jeremy Feffer, Investor Relations for InspireMD. Thank you. You may begin.

Thank you, Melissa. Good morning, everyone, and thank you for joining us for the InspireMD second quarter 2019 business update conference call. On the line with us today are Jim Barry, Chief Executive Officer of InspireMD; and Craig Shore, Chief Financial Officer. We will start with an overview of the Company results and our recent highlights, and we will then open up the call up for your questions. Before we begin, let me take a minute to note that this conference call may contain forward-looking statements. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. Such information is subject to known and unknown risks, uncertainties, and other factors that can influence actual results or events and cause actual results or events to differ materially from those stated, anticipated, or implied in the forward-looking information. Listeners are cautioned not to place undue reliance on forward-looking information as no assurance can be given after the future results, levels of activities, or achievements. Having addressed that, it’s my pleasure to turn the call over to Jim Barry. Please go ahead, Jim.

Thank you, Jeremy, and thanks to all of you for joining us on the call and the webcast today. While Craig will review our financial results in detail in a few minutes, I want to begin by commenting on revenue and specifically the reported year-to-date revenue. Total revenue through the first three months of the year was $1.8 million. This represents a decrease of $241,000 or 12% as compared to the comparable period in 2018. CGuard for the first six months of the year was $1.5 million, a decline of 10% as compared to the comparable period in 2018. As you recall, during the first quarter of this year, our sterilization partner experienced equipment issues that resulted in our inability to sterilize product for most of the quarter. As such, we had a shortage of product that was available to ship to our distributors and customers for the majority of the first three months of this year. However, we immediately engaged in other sterilization provider conducted all the testing and validation required, submitted a comprehensive package to our European Notified Body which subsequently approved our new supplier in early April, thus completely resolving the issue. The product that was shipped in the first quarter was mostly from inventory from year-end 2018. This is inventory that we maintained on an ongoing basis to allow us to react quickly and bill orders as they come in. However, the consequences of the lack of supply of CGuard to the market during this time period had a major impact on our revenue, not only in Q1 but had additional unintended consequences in Q2. Examples of these unintended consequences were the inability to open new CGuard centers in our key markets and where typical ongoing CGuard sales and procedures were lost due to the reluctance…

Thanks, Jim. For the three months ended June, 30, 2019, revenue was $1,354,000, representing an increase of 35% from the comparable period in 2018. This increase was predominantly driven by 34% increase in sales of CGuard EPS from $833,000 in the second quarter of 2018, to $1,116,000 in the second quarter of 2019, and a 40% increase in sales of MGuard EPS from $170,000 in the second quarter of 2018, to $238,000 in the second quarter of 2019. Both increases were due to the shipments during the second quarter of this year of approximately $592,000 of backlog that accumulated in the first quarter that we were unable to previously ship. These increases, however, were partially offset by sales decreases in certain of our markets during three months ended June 30, 2019, resulting from new orders being delayed while the product backlog was being cleared. The Company’s gross profit for the quarter ended June 30, 2019 was $442,000 compared to a gross profit of $277,000 for the same period in 2018. Gross margin increased to 32.6% in the second quarter of 2019 from 27.6% in the same period in 2018. This increase in gross profit resulted primarily from a $180,000 increase in revenues, less the related material and labor costs, as discussed above, and a receipt of $135,000 compensation from the our former third-party sterilizer for the delays related to the product sterilization interruption during the first quarter of 2019. These increases were offset by $69,000 of expenses related to upgrades made to the Company’s production facilities, $40,000 of expenses pertaining to annual and new employee training of the production workers and an increase of $41,000 in miscellaneous expenses. Total operating expenses for the quarter ended June 30, 2019 were $2,625,000, an increase of 50% compared to $1,750,000 for the same period in 2018. This increase was primarily due to an increase in clinical expenses associated with CGuard EPS, mainly related to IDE efforts in 2019 and due to a salary related accrual reversal in the Q2 2018 that did not repeat itself in the same period this year. Financial expenses for the quarter were $23,000 compared to financial income of $846,000 for the same period in 2018. This decrease in financial income of $869,000 was predominately due to a non-cash income associated with our preferred stock in the second quarter of 2018, which did not occur during this quarter. Net loss for the second quarter of 2019 totaled $2,206,000, or $1.59 per basic and diluted share, compared to a net loss of $627,000, or $7.66 per basic and diluted share, for the same period in 2018. As of June 30, 2019, cash and cash equivalents were $4,823,000, compared to $9,384,000. Our forecasted cash and equivalents are expected to finance our operations and development plan through the end of 2019. At this point, I’ll turn the call over to the operator for questions. Operator?

[Operator instructions] Our first question comes from the line of Vernon Bernardino of H.C. Wainwright. Please proceed with your question.

Hi, guys. Thanks for taking my question. And congrats on the results. It looks very positive. The backlog seems to be behind and the issues with the sterilizer also, the third-party sterilizer. I was just wondering if you could stress a little bit more about the expectations for the expected backlog and future sales. I think you had mentioned, Jim, that part of the sales were affected in the second quarter because you couldn’t open new service centers or just didn’t have product. Could you just go over the details again, please?

Yes, sure. I think that’s exactly right, Vernon. So, what I call, unintended consequences. Having to clear the backlog sort of caused a little bit of delay on what orders that might have typically come in Q2. And as I said, we’ve been spending a lot of time with the distributors sort of reassuring them, getting the product back out in the market, getting the backlog not only on the shelves but getting used, so that new orders could come in. And as I said, we’re starting to see those new orders come in right now. So, again, I hope and believe that this is a onetime incident, and we will be back to full production and hopefully growth.

So, it looks like then perhaps, overall revenue in the third quarter should be slightly better and maybe even more than slightly better?

Vernon, as you know, we’re not going to comment on that just yet. and I also want to start seeing how things roll out. But so far, we’re feeling pretty optimistic.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I’ll turn the floor back to Mr. Barry for any final comments.

Okay. So, thank you. That concludes today’s call. Thanks again for taking the time to join us and hear the latest on the Company. I wish you all good day and look forward to speaking with you again on the next quarterly update in November.

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.