Jim Byers - Investor Relations Bill Mills - Chairman and Chief Executive Officer Marty Stammer - Chief Financial Officer

Good day and welcome to the Stereotaxis Second Quarter 2016 Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Jim Byers of MKR Group. Please go ahead, sir.

Thank you, operator and good afternoon everyone. Thank you for joining us today for the Stereotaxis’ conference call and webcast to review financial results for its 2016 second quarter ended on June 30, 2016. Before we get started, we would like to remind you that during the course of this conference call, the company might make projections and other forward-looking statements regarding future events or the future financial performance of the company. These include, without limitation statements regarding future operating results, growth opportunities and other statements that reflects Stereotaxis’ plans, prospects, expectations, strategies, intentions and beliefs. These statements are subject to many risks and uncertainties that could cause actual results to differ materially from expectations. For a detailed discussion of the risks and uncertainties that affect the company’s business and that qualify the forward-looking statements made on this call, we refer you to the company’s periodic and other public filings filed with the SEC, including its most recent Forms 10-Q and 10-K and the Form 8-K filed today. The company’s projections and forward-looking statements are based on factors that are subject to change, and therefore, these statements speak only as of the date they are given. The company assumes no obligation to update any projections or forward-looking statements. In addition, regarding orders and backlog, there can be no assurance that the company will recognize revenue related to its purchase orders and other commitments at any particular period or at all because some of these purchase orders and other commitments are subject to contingencies that are outside of the company’s control. And in addition, these orders and commitments maybe revised, modified or canceled either by their expressed terms as a result of negotiations or by project changes or delays. With that said, I would now like to turn the call over to Bill Mills, Chairman and CEO of Stereotaxis.

Thanks, Jim. Good afternoon, everyone and thank you for joining us today for a review of second quarter and first half 2016 results. With me is our CFO, Marty Stammer. Following our prepared remarks, we will open up the call to questions. Our progress during the second quarter includes further clinical adoption in our installed base driven by continued growth in ventricular tachycardia, or VT procedures. We also completed multiple new Niobe system installations, including our second installed site in Japan. And we continued to advance our platform with product enhancements that optimize therapy delivery and improve patient lives, in this case, with the introduction last month of our second generation V-CAS Deflect system in Europe. We remain focused on leveraging our unique underlying strengths in VT and advancing our position in the worldwide VT markets. This past quarter represents the 10th consecutive quarter we have achieved year-over-year growth in VT procedures and the fourth quarter in a row we have generated year-over-year growth greater than 20%. As I have noted before, with the number of VT procedures performed worldwide each year estimated at more than 60,000 and growing at a rate of 10% or better, we believe the VT market currently represents a nearly $100 million market opportunity for us on an annual basis, most of which is yet to be converted to remote magnetic navigation. With our increased VT volume and consistently strong service contract revenue, we have maintained healthy recurring revenue, which comprises a solid, high margin segment of our business. Our magnetic platform has architectural advantages in the treatment of the most complex arrhythmias compared to traditional approaches. Supported by a substantial and growing body of clinical studies by highly respective institutions in VT therapies, our clinical teams can speak authoritatively about the Niobe systems ability…

Thanks Bill and good afternoon everyone. Revenue in the second quarter was $7.9 million, a decrease of 19% from $9.7 million in the year ago quarter and down 9% sequentially from $8.6 million in the first quarter. System revenue was $900,000, down 70% from $3.1 million in the second quarter of 2015 and down 55% sequentially from $2.1 million in the first quarter. In the second quarter, we recognized revenue of $300,000 on Niobe ES installations, $500,000 in Odyssey solution sales and $100,000 in Vdrive system installs. During the quarter, we generated new capital orders of $800,000 compared to $1.6 million in new capital orders in the second quarter of 2015 and no new capital orders in the first quarter. At quarter end, our backlog was $3.5 million. Recurring revenue in the quarter was $6.9 million compared to $6.6 million, both in the prior year quarter and the first quarter. Total procedures were relatively unchanged from the prior year with VT procedures increasing 24% year-over-year. Gross margin in the second quarter 2016 was $6.8 million or 86.1% of revenue compared to $6.7 million or 69.5% of revenue in the year ago second quarter and $6.5 million or 74.8% of revenue in the first quarter. Second quarter gross margin was the result of a higher mix of recurring revenue as well as strong capital and recurring margins. Operating expenses were $8.4 million, unchanged from the year ago quarter and up sequentially from $8 million in the first quarter. Operating loss was $1.6 million in the 2016 second quarter, a 5% improvement from $1.7 million in the prior year second quarter and a 10% increase from $1.5 million in the first quarter. Interest expense was $800,000 in all three quarters. Net loss for the second quarter of 2016 was $2.3 million or…

Thanks Marty. Headed into the second half of 2016, we remain intent on building a continually growing and increasingly compelling body of clinical evidence along with strong clinical support to further drive VT volume growth in existing sites as well as capital selling success with high volume VT centers. To that end, we are progressing our magnetic VT study, our first prospective multi-center randomized superiority study comparing the long-term patient outcomes, realized with a Niobe system in treating VT compared to manual approaches. We are in a unique position not only in the VT market, but with practitioners looking to transform their EP services through innovative, automated solutions that enable them to concentrate on therapy planning and management, rather than the mechanics and execution of the procedure and to do so with complete confidence in procedure safety, accuracy and efficacy. We look forward to sharing our progress with you in the coming quarters. And with that, we will open up the call to your questions. Operator?

Okay. Operator, thank you and I would like to thank each of you for your support. We appreciate you being with us today and we look forward to speaking with you again in the next quarter. And wish you a good afternoon.

And ladies and gentlemen, this does conclude today’s conference. Thank you, everyone, for your participation. You may now disconnect.