Stereotaxis, Inc.

Good morning. Thank you for joining us for Stereo Taxes third quarter 2021 earnings conference call. Certain statements during the conference call and question and answer period to follow may relate to future events, expectations, and such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involved known and unknown risks, uncertainties, and other factors which may cause the actual results performance, or achievements of the company in the future to be materially different from the statements that the company's executives may make today. These risks are described in detail in our public filings with the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements. At this time, all participants have been placed in a listen-only mode. The floor will be open for questions and comments following the presentation. As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to your host, David Fishel, Chairman and CEO of Stereo Taxes.

Thank you, Operator, and good morning, everyone. I'm joined today by Kim Peary, our Chief Financial Officer. We are proud of the progress made on multiple fronts in the third quarter. We continue to demonstrate both year-over-year and sequential revenue growth driven by increased adoption of our robotic systems. We initiated a strategic collaboration with Microport UP that serves as the foundation for a new geographic pillar for our business in China. We made meaningful progress on a wave of upcoming innovations, and we did this while establishing new headquarters, expanding our team, and maintaining financial discipline. I'll discuss each of these in a bit more detail. System revenue in the third quarter reflects the successful installation and launch of a Genesis and Model S system at Princess Grace Hospital in Monaco, as well as the shipment of a Genesis and Model S system to Missouri Baptist in St. Louis. Both hospitals have begun performing procedures, and we are pleased with the launches. Since our last call, we received orders for two additional Genesis systems, one from a hospital establishing a new robotic electrophysiology program in Europe, and the second from a US hospital that is upgrading its existing robotic lab. We made progress on multiple other capital processes during the quarter and expect additional near-term orders. This activity supports our confidence in our previously provided guidance of approximately a doubling of robotic system revenue next year. Strength of our system revenue more than counteracted the impact of resurgence of COVID and hospital staffing shortages had on recurring revenue by depressing procedure volumes. We saw the brunt of this impact in August across several geographies with a return towards more normal activity through September and October. We continue to view renewed adoption of robotic systems as the first significant wave of revenue growth in our strategic innovation plan to be followed in relatively rapid succession by additional waves. We are aggressively advancing these subsequent waves of innovation and revenue growth. Our proprietary, robotically navigated ablation catheter represents the second wave in our strategic innovation plan. Supply chain challenges that had delayed production were successfully addressed late in the summer, and ACIPCA has been ramping up manufacturing of the hundreds of catheters needed for submissions for European approval and a US IDE study. We remain on track with the timelines provided on the last call, expect to complete the manufacturing and testing early next year. and believe that will allow for initial revenue contribution from the catheter in Europe in 2022 and a potential US regulatory approval in 2023. We continue to work energetically on a third wave of innovations that we are looking forward to showcase at Innovation Day next month, tentatively planned for Monday, December 13th. As mentioned on previous calls, these innovations not only expand our robotic technology to new clinical applications, but also enhance our opportunity in EP and across interventional medicine. We view these innovations as transformative for Stereotaxis' strategic and financial future and are very excited to share them with you. Geographically, our strategy has been to deliver this revenue growth with a focus on the United States and Europe. As a small company pioneering transformative technology with very long growth runway, geographic focus is prudent. On our last call, I mentioned that we were seeing particularly high customer and strategic interest in China and that China was thus emerging as a potential third geographic pillar for our business. We were very pleased to enter into strategic collaboration with Microport EP as a realization of that promise. Microport is one of the largest and most successful medical device companies in China, specifically in the cardiovascular field. Microport EP has built a particularly broad platform of EP products and a commercial team that is serving hundreds of customers across China. Our collaboration calls for the development of a robust ecosystem of products in China surrounding our robotic technology, including integration of MicroPort's mapping system with our robots and the development of robotically navigable catheters and regulatory approvals for Genesys and future innovations. Since entering into the collaboration, both teams have begun working together on development, regulatory, and commercial activities with an aim towards substantial long-term revenue growth and value creation. China is a unique region where many of the benefits of our robotic technology are pronounced, and with the right ecosystem of products, I believe we could see a very significant business there with the potential to sell tens of systems a year. We expect this ecosystem of technologies, catheters, integrated mapping, and robotics, to come into focus in 2023 and to support a substantial commercial effort then. In a similar way to how we're building the foundations for long-term growth in China, we are investing in the foundations for substantial growth here. The most tangible activities include the build-out of our new headquarters and growth of our team. Seria Texas' new headquarters in downtown St. Louis is in the final stages of being built out, and we plan to move our office there in the middle of December. Our new space will support improved collaboration, an expanded team, and several times greater manufacturing capacities. It's a more modern office and was a financially thoughtful move. Already this year, our team has expanded by 14 additional net hires. This growth and enhancement of our team is across all parts of the business, with a particular focus on R&D, manufacturing and service operations, and clinical regulatory and quality. These are the right areas to invest at this point in our growth cycle, and we have a strategy for how to build a substantially larger commercial sales team as our new catheter and future innovations come to market. We are glad that we have been able to make these investments in a financially prudent fashion. We have maintained a relatively low cash utilization of about $2 million through the first nine months of this year. And even with substantial costs to build out the new headquarters and advance several innovations, we expect to end the year with greater than $40 million in cash. Kim will now provide some commentary on our financial results, and then I will make a few financial comments as well before opening the call to Q&A.

Thank you, David, and good morning, everyone. Revenue for the third quarter of 2021 totaled $9.1 million, a 5% increase from the prior year third quarter. System revenue of $3.5 million includes the delivery of Genesis RMN systems in both the U.S. and Europe. Recurring revenue for the quarter was $5.3 million, consistent with the prior year third quarter and pressured by a resurgence of COVID that depressed procedure volumes across various geographies. Gross margin for the third quarter of 2021 was 52% of revenue with system gross margin of 5% and recurring revenue gross margin of 86%. System gross margins reflect an allocation of overhead and other expenses and do not reflect a normalized expected margin from system revenue. which we expect to be north of 30% for the full year. Operating expenses in the quarter of $9.4 million included $2.6 million in non-cash stock compensation expense. Excluding stock compensation expense, adjusted operating expenses were $6.8 million compared to $5.5 million in the prior year third quarter. Increased adjusted operating expenses continue to reflect R&D project spending and measured investment in key business functions. Operating loss and net loss for the third quarter of 2021 were $4.6 million compared to $1.6 million in the previous year. Adjusted operating loss and adjusted net loss excluding non-cash stock compensation expense were $2 million for the quarter both compared to the prior year quarter adjusted operating and net loss of 0.8 million. Negative free cash flow for the third quarter was 1.5 million compared to 0.2 million for the prior year third quarter. Negative free cash flow for the first nine months of 2021 totaled 1.9 million compared to 3.9 million during the same period the previous year. At September 30th, we had cash and cash equivalents of 42.8 million. I will now hand the call back to David.