Stereotaxis Inc (STXS) 2011 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Stereotaxis to report first-quarter 2011 financial results and conduct conference call.

During today's presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). Today's conference is being recorded May 2, 2011.

I would now like to turn the conference over to our host, Greg Gin.

Good afternoon everyone. Thank you for joining us for the Stereotaxis conference call and webcast to review the financial results for the first quarter of 2011 which ended on March 31, 2011.

Before we get started, we'd like to remind you that during the course of this conference call, the Company may make projections and other forward-looking statements regarding future events or the future financial performance of the Company, including without limitation statements regarding future operating results, growth opportunities and other statements that reflect 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 qualify forward-looking statements beyond this call, we refer you to the Company's recent public filings filed with the SEC, specifically the Form 10-K for the fiscal year ended December 31, 2010. 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 in any particular period or at all because some of these purchase orders and other commitments are subject to contingencies that are outside of our control. In addition, these orders and commitments may be revised, modified, or canceled either by their expressed terms or the results of negotiations or by (technical difficulty) changes or delays.

Now I'll turn the call over to Mike Kaminski, President and Chief Executive Officer of Stereotaxis.

Good afternoon everyone. Thank you for joining us today on our first-quarter 2011 conference call. With me today is Dan Johnston, our Chief Financial Officer.

I'll start with our prepared remarks with a review of the first quarter and then preview our exciting key product introduction scheduled for the HRS meeting in San Francisco this week. Including in our new releases are the Epoch platform that we announced in the press release a few days ago. Dan will then discuss the financials before we open it up to questions.

So let me get started. In the first quarter, we generated $10.2 million in revenue, including $4.3 million in capital and $5.9 million in recurring revenue. Gross margins remained strong at 71%, and operating expenses were in line with our expectations, reflecting an increased spending in the Odyssey infrastructure and the Asia-Pacific channel. New orders totaled $7.1 million, virtually identical to the $7.2 million reported in the prior-year period and reflecting first-quarter seasonality.

NIOBE orders at $4.6 million were less than our expectations due to the delayed customer decisions. Conversely, our NIOBE pipeline of late-stage customers continued to demonstrate a growing interest in our platform, driven by the rebounding of reference sites in North America and the expansion into Eastern Europe and Asia. Modeling our sales process and the conversion of late-stage customers into orders supports our forecast for growth in new orders this year on the platform.

Odyssey incoming orders of $2.5 million, including 45% of orders coming from standard labs, continue to demonstrate strong market interest for Odyssey as a clinical networking platform for all interventional suites. NIOBE utilization continued to grow in the fourth quarter over the fourth quarter of 2010, although not reflected in the recurring revenue due to fluctuations in shipments of disposables. As we indicated on our fourth-quarter results call, we expected the first quarter would be challenging.

I'll now discuss the factors that impacted our first quarter and the actions we're taking that give us confidence that we will exceed our expectations for the year. As we discussed in the fall, we did experience a delay in the imaging partner's magnetic model being shipped for a six-month period. I'm pleased to announce that this is on schedule to be resolved and shipments will resume this quarter.

More importantly, I want to discuss the overall NIOBE trend. To start, let me provide some historical perspective on NIOBE sales. Since 2003, we have systematically grew new NIOBE annual placements until the irrigated catheter delay and recall in 2007 and '08. Since that period, NIOBE orders that we converted revenue in a given year have ranged from 20 to 30 per year, indicating an adoption rate that we believe does not reflect our systems value in this high-growth market. With approximately 400 new or renovated EP labs built per year globally, the market potential is much greater than the 20 or 30 NIOBEs we have historically sold. We firmly believe we can accelerate the sales rate of 50 to 100 platforms per year with the right system enhancements, combined with NIOBE proven safety and efficacy benefits.

We have conducted a comprehensive research to identify our customer needs for this important system enhancement and to drive optimum workflow. In discussions with customers, we identified areas of improvements to include controlling all devices throughout the robotic platform, not just the magnetic catheter, real-time movement, increased navigation speed, and greater versatility. Following this research, in early 2010, we made the decision to enhance the magnetic platform. The results of our investment are seen in our new Epoch platform that we are very excited to be launching at HRS this week. We designed our Epoch platform to deliver a more efficient and enhanced EP workflow and offer dynamic magnetic catheter control as the foundation of a modular platform for the EP lab while maintaining NIOBE's established advantage in procedure safety, radiation reduction and clinical outcome.

In terms of improved efficiency, initial lab testing on the Epoch suggests we will reduce complex ablation times by to 30 to 40 minutes from our current performance. Epoch improves the magnetic platform while expanding the robotic or mechanical manipulation of a broad set of disposable devices when in use with Vdrive.

Let me provide some more specifics on the operating performance of Epoch. First, a significant increase in the system responsiveness. The Epoch platform will improve catheter response time from 2 to 5 seconds after a command to below 200 milliseconds. This faster response time is nearly equal to real-time movement for physicians. Shortly after HRS, you can view the improvements on our Company website.

Second, faster and improved accuracy in targeting the catheter movement to clinical endpoints. This is achieved through a combination of software upgrades along with the integration with the Carto 3 [2R] system.

Third, improved user-interface, or UI. Epoch will have a new UI that simplifies commands, adds new features such as contacting monitoring, all focused on the goal of automatically duplicating users' proven techniques and shortening the learning curve.

Fourth, reduce size. The volume of space that the magnets take up have been decreased by 20%. We believe this will enhance our ability to move outside of EP applications, such as renal ablation for hypertension.

Fifth, build in electronics for Vdrive upgrade. It's an important addition to our platform that allows us to capture and manipulate manual devices used in conjunction with an ablation catheter. Early use of the Vdrive in Europe has been extremely positive with clinicians asking us to expand the platform to include [Cheese], ICE catheters and potentially other devices. The Vdrive platform has an independent growth capability beyond the magnetic cloud.

Six, the Odyssey integration under the Epoch platform. Odyssey sales ratio to NIOBE is approaching 90%, and creating a seamless UI with Odyssey allows us to improve the Epoch workflow and increase the average new platform revenue per system. Importantly, the Epoch solution has been market tested. Over the past several months, we've brought in physicians to run the system in St. Louis and we've delivered and tested components such as the Vdrive in Europe. Last week, one of our customers performed the first Vdrive fixed curve sheath procedure which allowed easy mutilation of the combination of a sheath and the magnetic catheter. The next planned extension is a release of a deflectable sheath designed to enhance the ability to shift pivot points and to access different areas of the heart with greater ease and consistent contact. It's just the beginning of this important product extension.

Early market feedback has been very positive and resulted in users adopting the Vdrive module for a high percent of the magnetic procedures. Additionally, the launch of the Vdrive will enhance our ability to capture innovation and incorporate it into a robotic solution.

We are currently expecting Epoch installations to begin in Q3 with the full release of the Epoch solution in Q4. Importantly, all NIOBE 2 installations are upgradable to the Epoch product. We are discontinuing the NIOBE 2 platform and we recognize that any product changeover requires careful management. We've had preliminary discussions with customers and we are confident that launching the Epoch will change the excitement and adoption of our platform. The sales teams will be discussing the transitions with the impacted customers during the HRS and EUROPACE symposiums.

Now let's turn to the Odyssey product line. Odyssey revenue in the first quarter was $2.7 million, up 200% from the $800,000 in 2010. Revenue for standard labs represented 52% of the total, which is a reflection of our continued progress in this important segment. New product -- our new orders were $2.5 million with 45% weighted towards standard labs. To date, approximately 170 Odyssey systems, including cinema products, have been sold in more than 24 countries.

We continue to receive strong interest in our Odyssey offering due to its ability to provide a seamless integration of lab information into a proprietary network which sends data efficiently inside and outside of the hospital network. This potentially transforms the way healthcare is delivered. Although telemedicine has been available for some time, our product solution meets a unique need in interventional labs to integrate multiple live data streams into a patient record, condense the record through bookmarks into a seamless transmitting of the data over a standard Internet. Odyssey surpasses boundaries often thought of as impossible to overcome, opening the door for a whole new way of thinking. Hospital executives are empowered by Odyssey to drive initiatives that improve care, enhance educational programs, as well as implement performance metrics, increase referrals and market services throughout (technical difficulty) global community.

To expand our offering even further, we plan to launch the sale of the Odyssey Cinema Studio at this year's HRS, the revolutionary product platform for collaboration broadcasting and presentation editing. This product combines the capabilities of our premier Cinema solution with the Studio production console to place every element needed for professional collaboration and broadcast events at your fingertips, including PowerPoint, cinema case viewing, audiovisual telepresence, moderator chat, among other items. Event of this magnitude today generally require significant costs, complexity, and time to prepare, while Odyssey Studio offers an integrated solution to conduct these types of events with ease.

Sales outside of NIOBE labs provide the greatest opportunity for Odyssey with Stereotaxis, with more than 16,000 interventional labs worldwide representing an estimated $1 billion addressable global market. The previously announced Siemens relationship further validates our Odyssey technology and the significant market opportunities to establish it as a leading clinical network platform.

While the highlights of HRS for us will certainly be the launch of the Epoch solution and the Odyssey product line enhancement, it's important not to lose sight of the exceptional science that will be presented at this year's conference by our physicians on our current technology. There will be 10 podium discussions and 10 poster presentations on the scientific program -- at the scientific program during the meeting that detail our continued leadership in complex ablation. These abstracts cover the whole specter of electrophysiology, including a-fib, atrial tach, VT, and SVT as well as congenital heart.

It's worth mentioning again that there will be an atrial fib outcome data presented from highly respected centers such as Texas cardiac Arrhythmia Institute, Ohio State, the Asklepios Klinik from Hamburg, as well as others. We continue to demonstrate our leadership in VT ablation with several key and very visible presentations from groups such as University of Oklahoma, Heart Center in Leipzig and [Hominis] Hospital in Prague.

We are also well aware of additional very compelling abstracts that are now being developed into publication. We look forward to sharing the specifics of this data as they become available. But first let me share with you the results of a stellar publication that just came out within the last two weeks. Doctor [Sili Turip] and the Group of Rotterdam have been working for some time on a very large series comparing magnetic to nonmagnetic ablation. We previously reported interim data that was presented at the EUROPACE in last year's meeting. This research has now been completed and published in a peer-reviewed journal, EUROPACE. In a series of 610 total ablation patients, both major and total complication rates were significantly less than the Stereotaxis group when compared to a statistically similar conventional ablation group. In addition, [fur] exposure was significantly reduced, with no sacrifice of either acute or chronic success. We've previously talked with many of you about the positive impacts on patient safety, but it's extremely rewarding to see the clear benefit detailed in a peer-reviewed journal.

In summary, we remain confident in the potential of Stereotaxis. We're increasingly strong and large, growing markets, and we are focused on innovation to drive long-term growth. With our new Epoch platform and our key product enhancements, we are posed to become a standard of care for complex EP procedures. We remain focused on enhancing our value proposition, increasing clinical adoption, and driving long-term growth.

Now let me turn it over to Dan who can review with you the first-quarter financials.

Good afternoon. Revenue for the first quarter was $10.2 million, a decrease of 3.7% versus $10.6 million in revenue for the prior year. Systems revenue totaled $4.3 million versus $5.2 million a year ago. We recognized revenue on one NIOBE system, three less than a year ago. This year's first-quarter system was placed in North America.

Odyssey revenue came in $2.7 million, a 240% increase from last year's first quarter. Over half of Odyssey's revenue came from non-NIOBE labs.

Recurring revenue grew 10.3% versus last year to $5.9 million. The growth was due to a greater number of procedures and favorable pricing. Procedure growth was driven by improved clinical adoption and the expansion of our installed base.

New orders for the first quarter totaled $7.1 million, including $4.6 million for four NIOBE systems. One was placed in North America and three in our EMEA region. We had $2.5 million of new Odyssey orders which are concentrated in North America.

Backlog at the end of March increased to $44 million, up from $43 million at year-end. Gross margins for the first quarter were $7.2 million. As a percentage of revenue, the first-quarter gross margin of 70.6% was down from 72.5% reported in the first quarter a year ago.

Systems gross margin percentage was down due to the mix of Odyssey versus NIOBE sales.

Recurring revenue margins remained strong during the quarter. Operating expenses were just under $16 million for the first quarter of 2011, compared with $14 million in the first quarter of last year, an increase of 14.5%.

R&D expenses are flat as last year's costs for Vdrive development have been shifted to the Epoch product line.

Sales and marketing expenses increased 25%, or about $1.6 million, year-to-year. 25% of this increase is related to non-cash compensation expense driven by equity grants. Another 25% of the increase is driven by the expansion of our marketing team. The balance relates to additional costs associated with strengthening and enlarging the European and Odyssey sales teams.

G&A expenses increased approximately 9%, largely due to an increase in the training programs designed to drive utilization. The net result was an operating loss of $8.8 million compared with $6.3 million in the first quarter of last year. We reported a net loss of $9.5 million, or $0.17 per share, versus a net loss of $8.4 million, or $0.17 per share, in the first quarter a year ago. Average shares outstanding for the first quarter were 54.7 million shares compared with 49.6 million shares in the same quarter last year, reflecting the issuance of 4.6 million shares as part of our follow-on stock offering completed in November of 2010.

We used $11 million in cash during the quarter compared with $6.4 million last year. $2.1 million of this $4.6 million increase relates to higher operating losses. $600,000 is related to higher payments to Biosense for debt repayment, and the remaining balance comes from working capital.

Now, turning to the balance sheet, cash totaled $30.4 million at March 31, 2011. Total current and long-term debt is $33.5 million at March 31, up about $4.6 million from year-end 2010. We have $17 million drawn on our $30 million working capital line we have with Silicon Valley Bank.

Finally, I'd like to discuss our goals for 2011. In February, we indicated that total revenue would range from $65.1 million to $70.1 million. While Q1 orders for NIOBE were weaker than expected, we are extremely excited about the rollout of our new Epoch platform, and we believe the expected benefits surrounding procedure efficacy and efficiency will re-energize our robotic market. In migrating customers to this new platform, we will need to be highly focused on meeting their expectations for possessing and upgrading to the latest technology. As such, near-term execution of this migration will be critical.

With the Epoch transition and the soft order pattern in Q1, achieving our outlook for new capital orders and revenue growth will largely depend on the market acceptance of Epoch. We are pleased with the continued strength of Odyssey. Our commercial teams are now expecting Odyssey to deliver from the high end to above our range for Odyssey revenue for the full year. As such, we think the next few months will be important in clarifying our 2011 and 2012 revenue and new order growth rates.

Today, our internal forecast remains within the overall revenue, new order, and gross margin percentage ranges provided during our last call. Obviously, we'll continue to update you as the year progresses.

Closer in, from a second-quarter revenue perspective, we see total revenue in the low to mid teen range in millions of dollars.

Regarding our operating expenses, we have elected to increase our spending around Epoch R&D and Odyssey commercial costs. Our aim is to ensure we invest in those activities that drive execution. As such, we are now anticipating spending in the $64 million to $65 million range for the full year.

With that, I'll turn it back over to Mike.

We are now ready to open it up to questions.

(Operator Instructions). Sameer Harish, ThinkEquity.

Hi guys. Good afternoon. I thought maybe we could start off with Vdrive. Can you maybe talk about the opportunity there in non-EP labs, and can it be used independently of the NIOBE? Just maybe any comment there?

Yes, so Vdrive -- the answer to your question is technically yes, it can be independent of NIOBE. This year, it will be largely -- it will be only used with NIOBE. We are beginning to get requests to look at manipulation of other devices that could be outside of just the NIOBE footprint, for example like an ICE catheter -- some other diagnostic instruments that the physician wants to manipulate in relation to any procedure they do, not just a magnetic procedure. So we're going to consider that. I think it certainly can help us also outside of EP procedures. As you know, on the vascular platform, being able to anchor the sheath, a guide sheath, as well as using the ability to navigate through a distal lesion, is a useful combination for both products.

Great. In terms of the Epoch, have you talked about, as you transaction out of NIOBE 2, what the pricing for the Epoch platform looks like? How were you expecting to handle upgraded systems that are already -- NIOBEs that are placed that want to upgrade?

We -- the pricing premium we are working through right now. We think it certainly can be well over $100,000 for the Epoch features. We're going to -- we are working right now through how to handle the installed base for those getting the newest -- a new installation of NIOBE 2 versus those in the pipeline. Certainly what we'll do is work through incentives to make it more interesting for customers to upgrade faster. So, we anticipate we'll be in a position to upgrade in existing installed base customers right at the end of the year. We're going to first handle the new installs.

A quick housekeeping question. What was the J&J payment on the quarter Dan?

It was $1.6 million.

$1.6 million. Thank you.

Tao Levy, Collins Stewart Investments.

First, with the Epoch, can you take orders on those?

Yes. So it's released and we can take orders.

Okay.

in the US, not the Vdrive, but Epoch platform, yes. The Vdrive is -- we anticipate approval in the first half of next year.

So you can already start taking orders (multiple speakers)

For Epoch.

For Epoch, right, okay. If I look at the backlog, it didn't really -- it looks like it didn't change from the fourth quarter. Sequentially you had some more order, you had some minuses. Were there any systems that got pulled out of that?

Yes. Tao, we started with $43 million and we wound up at $44 million. I may have said $43 million, but we had seven new orders and four in orders going out the door. We actually canceled two NIOBE labs. One was in Korea, it was an old order that's been around for over four years and just isn't progressing, so we've taken that out of backlog. Then we also took a system in Madrid. The hospital is having some financial issues, so we are -- we decided to go ahead and take that out of backlog as well. So we canceled two.

But the right number is $44 million?

Yes, I think (multiple speakers).

And also what's -- if you're going to upgrade from a NIOBE 2 to an Epoch, you mentioned earlier on maybe that's potentially a $100,000 upgrade. What's the cost for that transition?

A lot of it is programming that's already been expensed through our P&L, but the physical cost -- there's going to be some physical things with regard to covers which really won't cost a whole lot different than what they are today. They are physically smaller, so they take up less room. If you upgrade somebody, you obviously have to replace those covers, somebody from the existing installed base. The rest of it is probably less than $10,000 in componentry with regard to computers and whatnot, but most of the upgrade is related to software. Now, again, that's absent a Vdrive.

And absent of Odyssey too. Because we are going to obviously use the opportunity to go back into an installed base and talk about the new value proposition and how they should, if they haven't bought Odyssey, how they should look at upgrading (inaudible).

Yes, and I think Mike's comment about somewhere around $100,000 will be somewhat time-dependent but it also again doesn't include an Odyssey, doesn't include a Cinema, does include Vdrive. That's more just a standard NIOBE 2, the new Epoch version of NIOBE.

Then just the last question is a little bit more a bigger picture. So Q1 was a little bit of a shortfall, but you're keeping essentially the revenue guidance, the order outlook essentially intact, but it seems like there's probably a lot more risk to that guidance at this point just in front of this new product launch than you would've anticipated a quarter ago. If you could talk about that and also if you could talk about, you know, the dynamics that you are seeing out there in terms of EP labs looking to acquire capital equipment again and making sure that what you're seeing in the first quarter isn't something that the industry isn't necessarily going through. Thanks.

Yes, so let me address your question on guidance first. We are -- obviously, as Dan mentioned, we're going to have to handle Epoch very well, the transition from NIOBE to Epoch. If you look at entering the year versus where we are now, I think there is upside in Odyssey versus what we discussed to the extent that there is a little bit of downside in NIOBE. So I think if you look at the shifting, overall the range we feel comfortable with, the mixing a little bit, and it will really matter on -- the key question will be how can we transition customers from NIOBE 2 to Epoch in a timely way.

As far as customer buying patterns, we see the funnel continue to show a pretty robust pattern of growth. In fact, we are adding customers, our site visits are up, and I think largely that's a direct reflection of in North America we have stronger reference sites. So -- and then we are growing geographically our footprint, the eastern block is picking up a lot of interest for us as we expand outside in Asia of course as we've talked about. So geographically we are seeing a growth in the US, we are seeing more people in the funnel in a later stage as a result of just stronger references between [sides].

(Operator Instructions). Spencer Nam, Madison Williams.

How are you guys doing? So I have a couple of questions here. First of all, in terms of the Epoch transition, I was wondering if your NIOBE -- the new orders in Q1 were somewhat affected by Epoch, the customers thinking about Epoch upgrade potentially. I'm curious how the conversations went with your potential customers or target customers with respect to this new rollout and what kind of feedback you're getting from the customers and so forth.

Yes, you know, we tried to keep Epoch as quiet as possible to the release last week. That doesn't mean that we were entirely successful doing that, so it's hard to measure the customer impact. I can tell that once we begin customer discussions which was largely in the last few weeks, it had been very positive, so customers that we've exposed it to. Of course we had a selected group of physicians that helped us test it, but customers we exposed it to have been very positive about what they believe the value it'd bring to them. So we think there's a couple of impacts obviously. It will facilitate moving people through the decision process who have been sitting on the fence. Obviously, I think it will help us in a great way drive utilization, because many of the things that have kept people from going through the learning curve have been the things that Epoch is going to address -- efficiency and the ease-of-use that allows them to, in a shorter period of time, get up to full value. So there's a lot of good things. It's hard for us to measure the impact on Q1, although the sales pipeline still looks very robust. Now, we are going to look at building that pipeline and accelerating decisions through so we can go from first call to order faster.

Great. That's helpful. In terms of just the -- I know you guys are making a lot of splash. It sounds like based on your comments you're making a big splash at HRS this year. I'm just curious how the community is looking at the robotic ablation technology at this point. Whether there is -- there isn't a change in the attitudes or the approach from the customers on adopting NIOBEs of the world or Epochs of the world. Is it -- what are you seeing that's different from previous years or previous months that the next six months, the next 12 months will have a difference or a trend or whether things will get even more exciting?

Well, let me address it through kind of a global answer to that -- is we saw a difference in interest when we hit VT as a key application. With that, it came out in some of the scientific literature a while back. All of a sudden physicians were very -- we got much more interested in looking at robotics as a platform.

Now, we've had some very compelling data come out from Professor Peponi and others. I think there's five journals now that have produced some AF results. That also has got people engaged in the efficacy part of robotics. If you look at what robotics should do is bring precision and a consistency of output.

Now, the next hurdle for us really was to drive efficiency because in the commercial sites, safety was a given with us from early on. Efficacy was beginning to be proven in the last 12 months, and then they were looking at "I have to be more efficient, I might be a sole operator." So the opportunity to look at how we can help them be a remote sole operator and improve a consistency of efficiency really was the next step. I think that will launch us into the majority of customers in a bigger way. That's why, as we go back and confirm that statement, that's where we really are excited about breaking through to the majority of the EP sites, not just the early adopters and innovators.

Great, that's helpful. Then in terms of the operating expenses that you guys are guiding a little higher than previous estimates, is that related to Epoch launch and just the sales and trading ramp up are associated with that? Should we think of it that way?

Yes, I think that's exactly right. Really two elements -- one is driving Epoch to an accelerated timeline to actually be able to execute this migration seamlessly, so we're going to spend a little more money in R&D to get things done quicker, outsource them, nonrecurring engineering type of items, things like that. We are also investing in the Odyssey commercial team and expanding that footprint a little bit more as well, but most of the spending is around Epoch.

Got it. Then a couple of quick housekeeping questions. One of them may be housekeeping; the other one is just a clarification. My sense is that your disposables revenues for this quarter were sequentially down from last quarter. I was curious. It seems like that was the first time it had happened in a while. I was curious what may have led to that?

As I mentioned, I'll let Dan give color to this, utilization was up. There was some shipping of fourth quarter that could have happened in first quarter. That kind of put some noise in that, but utilization in Q1 was up. So we saw nice growth in Q1 in utilization. (multiple speakers)

Are you saying that per system in placement, that the actual system utilization was the -- case volume was up per System on average?

I'm saying total cases completed was up. I'd have to look at that exact number. It might be slightly up, but the total cases were up. There may be some currency mix in there, I don't know you, but in general, there was nice growth in utilization for the quarter -- quarter-over-quarter growth and year-over-year.

It's not just installed base. It's actually the utilization per site is increasing as well.

There's the answer.

Got it. Then the final question is the optics supply issue. I'm not sure if I picked it up early on, whether you had addressed that. Has that been resolved, and it's back to normal?

Yes. It's resolved. The first shipment will occur this quarter, as expected.

Okay, great. Thank you.

I show no further questions at this time. I'd like to turn the conference back to management for closing remarks.

Thank you everybody for attending, and we look forward to seeing whoever is attending the HRS conference. We do have an investor symposium at the show on Friday. If you want any more information on that, please get a hold of Greg Gin and he'd be happy to share that. So thank you and look forward to seeing you later this week.

Ladies and gentlemen, this concludes the Stereotaxis to Report First-Quarter 2011 Financial Results and Conduct Conference Call. If you'd like to listen to a replay of today's conference, please dial 1-800-406-7325 or 303-590-3030 and enter the access code of 4434733#. Thank you for your participation. You may now disconnect.