Stereotaxis, Inc. (STXS) Q4 2019 Earnings Report, Transcript and Summary

Good morning. Thank you for joining us for Stereotaxis Fourth Quarter and Full Year 2019 Earnings Conference Call. Certain statements during the conference call and the question-and-answer period to follow may relate to future events, expectations and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve 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. [Operator Instructions]. As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to your host, David Fischel, Chairman and CEO of Stereotaxis.

Thank you, operator, and good morning, everyone. I'm joined today by Kim Peery, our Chief Financial Officer. My prepared remarks today will be a bit longer than normal. I want to use the occasion of this being our annual call to provide a broader overview of Stereotaxis, our vision and our goals. I’ll then review our accomplishments in 2019 and our focus and expectations for 2020. Stereotaxis is the global pioneer and leader of robotics for endovascular surgery. We have developed a highly innovative suite of robotic technologies that address the inherent limitations, risks and challenges posed by manual catheters. Endovascular surgery is a broad class of procedures, where a catheter is inserted into a blood vessel navigated through the vascular system to an area of interest and then use to deliver therapy. It has emerged in recent decades as the least invasive surgical option to treat a wide variety of conditions and has blossomed with many millions of catheter based surgeries performed annually. While manual handheld catheters are a testament to human ingenuity, their mechanism of action has fundamental flaws. During the procedure, therapy takes place at the catheter tip, but a manual catheter is held and manipulated by a physician's hand several feet away from the catheter handle. Using a manual catheter can be compared to writing in small font while holding a pencil from its eraser or watering plants while holding on to a gardening hose several feet back from the end. The mechanism leads to limited catheter precision, limited catheter stability and limited catheter reach. Since manual catheters need to be rigid to allow for physician control to reach the tip. There's increased risk of patient injury. Procedures are complex and operator dependent and visualization of a catheter requires X-ray exposing patients and physicians to radiation. Stereotaxis’ robotic platform is designed to address these inherent limitations, risks and challenges. It fundamentally transforms and improves catheter navigation by allowing for control of a catheter directly from the tip using precise computer controlled magnetic fields. The magnetic fields can be viewed as invisible tweezers, holding on to the catheter tip. Direct control of the tip leads to unprecedented precision and stability. It enables reaching areas unreachable by manual catheters. Since a robotic magnetic catheter does not require shaft rigidity, it can be designed to be gentle, increasing patient safety. Physicians operate with our robot from a computer cockpit seated and fully protected from radiation with full control over the procedure at their fingertips and within our ability to focus on the cognitive aspect of their profession, rather than the mechanical effort of manipulating a catheter. Our technology is a platform technology. And the benefits of robotic precision and safety are applicable across a broad spectrum of endovascular catheter based procedures. While, we have begun efforts to address various clinical applications, our primary focus is on one specific endovascular procedure, cardiac ablation for the treatment of arrhythmias. Arrhythmias are a common condition where the heartbeats are regularly. In a cardiac ablation procedure, a catheter is navigated into a patient's heart and used to deliver a blade of energy that stops rogue electrical impulses causing the arrhythmia. Cardiac ablation has become a widely accepted therapy over the last two decades, with over 1 million procedures performed annually, and over $4 billion in annual medical device sales. The benefits of robotic magnetic navigation, precision, stability, reach and safety are pronounced in cardiac ablation procedures. They are also not theoretical as there's extensive clinical and real world validation. Nearly 400 scientific publications, document the clinical benefits of Stereotaxis robotic technology. Stereotaxis’ website includes a searchable database of all of these publications, as well as the comprehensive analysis of head-to-head robotic versus manual studies that show dramatic improvements in patient outcomes, both safety and efficacy. Our clinical value is validated everyday in real world usage globally. Hundreds of physicians at over 100 leading hospitals have treated over 100,000 patients with our technology. On our website, we have testimonials from dozens of these physicians describing why they use robotics and the array of benefits it provides them, their patients and their practice. I have full confidence that Stereotaxis’ robotic technology and the robotic magnetic mechanism of action is the best way to treat patients and to address the inherent limitations and risks of manual endovascular surgery. Stereotaxis’ vision is to positively transform endovascular surgery with robotics in a similar fashion to have intuitive surgical transformed laparoscopic surgery. Cardiac ablation is our beachhead, and we will grow from there. Despite the significant benefits of our technology, our beachhead in cardiac ablation is still small. We have less than 1% market share in the cardiac ablation market, lead alone endovascular surgery more broadly. When I joined Stereotaxis three years ago, I recognized that it was a company with significant technological and clinical advantages, but also significant challenges. Initial missteps within an aggressive premature commercialization, poor allocation of financial and human resources, limited engagement with partners and potential partners in the industry, and the lack of a clear innovation and commercial strategy that Stereotaxis is in need of a turnaround. 2019 was a transformative year for Stereotaxis with significant progress across multiple fronts to bring about this turnaround. Our accomplishments can be measured in several key categories. First, financial. Stereotaxis starts 2020 in a position of financial strength. We have $30 million in cash and no debt on our balance sheet. We are investing in the drivers of long-term growth, while remaining prudent with shareholder capital, such that our existing balance sheet comfortably allows us to reach consistent, meaningful profitability. Our 2019 cash use of $4.6 million was entirely driven by incremental investments in R&D, and in working capital as we build inventory for commercialization of our novel Genesis robotic system. We are proud that in 2019, we were able to up-list onto the New York Stock Exchange and to attract high quality healthcare focused institutional firms to join us as investors. Second, commercial infrastructure. Stereotaxis’ commercial focus has been to develop the infrastructure and processes that ensure robotic practices are successful can grow and can showcase their clinical and technological leadership in their communities. This is a multifaceted effort, including having a world class clinical field team, enhancing our remote telemedicine support capability, developing training simulators, partnering with the physician led society for cardiac robotic navigation, supporting impactful clinical literature, establishing the Robotic EP Fellowship Program and providing customers with a marketing toolkit they can use to educate patients and referral physician. I'm proud of the infrastructure we have built and our early efforts to implement these capabilities. In 2019, we were delighted to celebrate the first graduating class of 13 robotic electrophysiology fellows. These fellows are the future leaders in electrophysiology and our engagement and support as they start their careers helps ensure that a new generation of physicians is confident in our technology and its clinical value. The Fellowship Program has grown to include over 40 fellows currently enrolled at over 20 hospitals globally. The quantity and quality of clinical literature also continues to grow, with 34 peer-reviewed publications in 2019, along with the initiation of a study for a cardiac ablation, initiation of two registries and continued enrollment in our randomized multicenter study to demonstrate superiority of robotics for ventricular tachycardia. We believe the MAGNETIC-VT trial can complete enrollment and report one year outcome data in the 2021, 2022 timeframe. As we enter a phase of renewed robotic system sales, Stereotaxis is incrementally investing, experimenting and establishing capabilities that will allow for a robust capital sales pipeline. We are building this capability in a methodical fashion along with the build-up of our supply chain and in a way that is prudent and sustainable. We are excited by the positive impact of resurgence and system sales will have for Stereotaxis, but also remain cognizant that ensuring the success of robotic practices is the best strategy for increased adoption of robotic systems and for enhancing long-term business value. We will continue to advance our commercial capabilities accordingly. The highlight of the past year with the significant progress made in our innovation and collaboration strategy. The Genesis Robotic system was the first meaningful leap forward in robotic magnetic navigation technology since the original launch of the Niobe system over 15 years ago. Feedback from dozens of physicians that have visited Stereotaxis to take Genesis for a test drive reinforce our confidence that the instantaneous responsiveness, reduced footprint and enhanced architecture will meaningfully improve the physician experience and lab efficiency. Combining Genesis with a tightly integrated proprietary fluoroscope was a novel strategy that allowed us to enhance the accessibility and affordability of a robotic lab, while making the [technical difficulty] servicing more customer friendly. On our last quarterly call, I described three main efforts related to Genesis. The regulatory process, supply chain optimization and engagement with customers. We were delighted last week to receive FDA clearance for Genesis. I want to congratulate the Stereotaxis team for this significant milestone, and thank to FDA for their diligent review and constructive engagement. On the supply chain, we continue to make good progress in building inventory and ensuring all our key suppliers have robust capacity to deliver sufficient quantity of components in a timely fashion. This is a continuous effort, but I'm pleased with how we are progressing. Commercially in Europe, we have begun -- we have been engaging with existing customers on replacement projects, and with new potential customers on building robotic EP labs. With last week's FDA clearance, we're now beginning to do the same in the U.S. I'm excited that in the past two months since the start of this year, we have received purchase orders for two robotic systems, one to a hospital that establishing a new robotic electrophysiology practice and one replacement system at an existing customer. We anticipate these systems being delivered to the customers and recognize this revenue in the second or third quarters of this year. While the purchase process for a robot is lengthy, involving multiple layers of hospital approval, extensive contracts, [often] the tender process and the coordination of construction schedules. I am pleased with activity taking place at multiple hospitals. The return to consistent and robust robotic system sales may not be linear, and it is very much real and starting. In 2019, we were also excited to announce multiple collaborations related to mapping technologies. Mapping technologies play a crucial role in cardiac ablation procedures by providing patient specific diagnostic information to guide therapy. The development of our OpenMapping software architecture to support broad mapping integration was an important step in creating a healthier ecosystem around robotics. Open ecosystems that support physician choice are ultimately best for patient care, for physicians, for providers and for overall progress. We were delighted to announce successful mapping integration with Acutus Medical, an exciting private company based in San Diego that has developed the highly innovative and differentiated mapping system. Our first integrated procedures have been well received, and we have multiple joint customers that are starting to adopt the two systems together. Late in 2019, we added to this ecosystem with successful integrations and procedures with pre-innovative, preoperative mapping technologies from inHEART, ADAS 3D and VIVO. The last significant strategic innovation announced in 2019 is our collaboration with Osypka to develop a proprietary next generation magnetic ablation catheter. The catheter is being designed to meaningfully improve patient care and the physician experience, but also serves to significantly improve Stereotaxis’ financial and strategic positioning. We expect the catheter to serve as the driver of a second more substantial wave of revenue growth on the heels of Genesis. Development of the catheter is advancing well. We were excited in February to successfully complete the first animal studies with prototypes of the catheter. We also had the benefit of being able to share the catheter with several sophisticated electrophysiologist and receive their feedback. We are very pleased with where we stand and making various small refinements to the catheter design to further optimize performance and anticipate finalizing the design in the near-term. We are proud of our robust investment in innovation and the impact that innovation will have on patients on our customers and on Stereotaxis. We're also cognizant that the technologies we have announced represent just the initial forays into what we can do. All of our technologies can be improved further, and we will improve them in the coming years. For various reasons it is prudent to own -- to advance R&D in a methodical fashion and to disclose new technologies only when relevant. We believe this is the right thing for long-term shareholder value. We've provided insight into our innovation strategy and focused on our most updated investor presentation available on our website. Kim will now discuss our financial results in more detail and then I'll make a few financial comments before opening the call to Q&A.

Thanks, David, and good morning everyone. Revenue for the fourth quarter of 2019 totaled $6.9 million. Recurring revenue for the quarter was $6.3 million and system revenue was $0.3 million. Revenue for the full year 2019 totaled $28.9 million. System revenue for the full year of $2.1 million increased from $1.6 million, primarily reflecting the establishment of a new robotic program. Recurring revenue for the full year 2019 of $25.8 million declined by 7% primarily due to reduced service revenue as certain inactive accounts age and do not maintain active service contracts. Gross margin for the fourth quarter and full year 2019 were approximately 75% and 79%. Operating expenses in the fourth quarter were $6.3 million consistent with the $6.4 million in the prior year quarter. Operating expenses for the full year 2019 totaled $27.6 million, up from $26.1 million in 2018, with the increase predominantly driven by investment in R&D, and non-cash general and administrative expense. Operating loss and net loss in the fourth quarter were $1.2 million and $1.1 million. For the full year, operating loss was $4.8 million with a net loss of $4.6 million. Negative free cash flow for the full year 2019 was $4.6 million compared to $2.8 million for the full year 2018. At December 31, 2019, Stereotaxis had cash and cash equivalents of $30.2 million and no debt. I will now hand the call back to David.

Thank you, Kim. This is a highly exciting time for Stereotaxis. We anticipate robust double-digit revenue growth in 2020 as commercialization of Genesis drives a resurgence in system sales to new and existing customers. As we progress in the year, we expect visibility into new robotic system orders to provide clarity and confidence into this revenue growth sustaining and potentially accelerating in 2021 and beyond. The addition of new robotic electrophysiology programs will support future increases in recurring revenue. The development of a proprietary magnetic ablation catheter is expected to contribute to revenue as an additional wave of revenue growth in 2021 and beyond. A few comments on the Corona virus outbreak. Please take my comments with the caveat that it is obviously a rapidly evolving situation and it is hard to predict the scale of impact the virus will have. From a supply chain perspective, we are relatively protected from reduced activity in China and do not anticipate a material impact to our sourcing of components or manufacturing of robots. We saw some of our suppliers struggle with sourcing sub components during the month of February when factories in China seem to be almost entirely closed. We have sensed that this slowdown is [technical difficulty] and have also taken proactive actions to reduce the risk that a prolonged reduction in Chinese manufacturing may have on us. From a revenue perspective, approximately 5% of our recurring revenue comes from China. In late January and through February, we saw almost no cardiac ablation procedures taking place in China. In March, we have started to see a gradual return to activity. It is difficult to assess the impact Corona virus may have on cardiac ablation procedures volumes outside of China as the virus spreads in Europe and the U.S. but we want to provide the context that most cardiac ablation procedures are not discretionary. They can be delayed but not indefinitely. Stereotaxis’ recurring revenue is also partially protected from any volatility and procedures, as approximately half of our annual recurring revenue comes from service contracts and service activity on our installed base. That concludes our prepared remarks. Operator, can you please open the line to questions?

Thank you. [Operator Instructions]. We'll take our first question from Josh Jennings with Cowen.

Hi, good morning. Congratulations, David on all the progress, the FDA approval of Genesis and the two system orders already this year. Just wanted to ask about the sales funnel both you've got Genesis approvals in internationally and in the U.S., maybe any high level color you can talk about in terms of the demand from your installed base and new customers. It sounds like one order from each new customers, one new customer and one replacement order?

Yes, that's correct. So in the prepared remarks, we mentioned that the two orders that we received in the first part of this year, one was the replacement system sale and the second was the system sale to a hospital that never had our system. And we are -- we -- kind of our focus has been like we've described on previous calls, one on ensuring that the replacement cycle opportunity becomes entirely real and my commentary doesn't change from the past where I expect the vast, vast majority, if not all, of the robotic systems as they approach the replacement cycle for their labs, to shift from Niobe, to Genesis. And then obviously, there is an effort to start to build also a Greenfield system sales, that is a more gradual effort. But, there's a natural level of Greenfield activity that we expect, because of physicians who move or fellows who graduate, or physicians that have seen our technology by their peers. And, we expect some of that and we're building the capability to be able to drive more robust Greenfield system sales as well.

Excellent, and then just any -- are you able to share whether or not those first two orders were accompanied by Stereotaxis’ Imaging Model S for those two customers?

Those two orders did include Stereotaxis’ Imaging Model S.

Excellent. And then on the Osypka collaboration, congrats on the animal study success, what are the next steps in development in the regulatory pathway, then you could lay that out and just whether we should still be expecting approval or CE Mark approval sometime in 2020?

Sure. So, we were very -- it was very exciting and in the beginning of nerve racking, to start the first animal studies with the catheter, and we did those animal studies here in St. Louis, at our facility. And, it went very well. We were overall pleased with the performance of the catheter, and with the new kind of the navigation capabilities. We're excited for how we think it's going to do in the field. And we're now refining that design. So like I've described previously, catheter design includes hundreds and hundreds of little decisions and you gradually iterate the design to make it better and better. We're now kind of continuing that iteration process. But, we expect that we will be able to do additional animal studies. And, hopefully a final or very near final design in the coming weeks. And, and then after you close the design, you do some of the manufacturing process validations. So you're required not just to ensure that the end product is the -- is kind of a good design, but that all the stages of the manufacturing process are also validated and are done consistently. And then -- and as we're doing these, we're also starting our engagement with the regulatory bodies in the Europe -- in Europe and starting to plan our strategy for the U.S. And so, I think kind of the plan of initial clinical 2020 is still the right plan and other than that, we're -- we were engaging with our regulatory body in Europe. We've had the initial discussions there. And then, we are starting to plan our engagement within the U.S. And our sense is that despite changes in the European regulations, the new MDR, our sense is that it will not impact the pathway for our catheter in Europe. But again, it's a little bit early. So maybe we'll be able to provide a little bit more guidance on the next [technical difficulty]….

We'll take our next question from Chris Vaster, private investor.

Hey, David, congratulations on the two new orders for Genesis and I have to say it's great to see the guidance of robust double-digit revenue growth including Corona virus, which has been, places questions around a lot of businesses as of late. Two of my questions were both asked and I appreciate the color on both. With respect to the -- you hinted again at beyond cardiac although your focus there and I understand you want to build on the, beachhead that you have there currently. But, you provided some call in the past beyond cardiac, could you just give a little color as to where your early focus is, I think neurosurgery something that came up in the past, is that still the lead if you will, outside of cardiac?

I've mentioned in the past that, that areas of interventional medicine endovascular and alumina applications, where reach or precision or stability or safety are kind of would help either improve clinical care or address unmet medical needs. That's kind of where we should focus our energies on. I believe neurovascular is one of those types of areas. I believe there’s others. And then -- and as we approach those areas, you want to do so in a way that enables -- that enables you to increase accessibility to robotics, and maybe to increase applications and beyond just one application per interventional device. And so, we're starting down that path to develop a solution that we think will have applicability across a broader range of applications. But, neurovascular indications are definitely one of those that are high in our mind.

Okay, great. And then with respect to announcement of new system orders, some robotic companies in the past have chosen to put out a press release immediately when they receive the order. Others wait until systems are installed. And last year, I think with the St. Louis, I’m sorry, the Kansas installation. You had put out a press release in advance of the system being fully installed, just I think was that -- which I believe was a Q3 event. Is there a reason that you haven't announced the two orders that you just mentioned on this call via press releases? Is that going to be a shift, should we expect to see these on these calls or will there'll be some more media around these new orders for Genesis?

That somewhat is internally driven, but it's also somewhat externally driven by the hospitals. I think that generally from an internal perspective, we want -- we don't want to be in a position where you're trying to announce every single individual capital sale. Again, as you think over the long-term, you want to shift towards more of a quarterly announcement rather than individual system orders. Obviously, we also do want our hospital customers to be able to showcase their leadership in their communities. And so there can be sometime releases that are driven by our joint efforts to improve their standing in their communities. But from our side, I think that general shift towards announcing financial performance on a quarterly basis feels like the right thing to do.

[Operator Instructions]. We'll take our next question from Edward Gilmore with Little Grapevine.

Hi, David, good morning and congrats on the progress so far. Just a question on the OpenMappingAPI. It seems like that is building towards a much larger strategic initiative for Stereotaxis. And I just wondered if you could add some color on how you expect that to drive revenue in the future. How many developers are currently using the API and then maybe what the next steps are, as far as the strategy for the API as a platform? Thank you.

Sure, and maybe I'll step back a little bit more broadly, the OpenMappingAPI is part of this broader concept. If you look at our four goals of our innovation collaboration strategy, our four goals are to improve patient care, to improve the physician experience, to improve the accessibility and affordability of our technology, and then lastly, to create an open collaborative ecosystem around robotics. And that fourth goal, creating an open ecosystem is really a philosophical view of how do you build kind of your technology? And how do you create a competitive ecosystem around it? Competitive ecosystems are the best in driving technological progress, in driving a kind of cost efficiency for your customers, and so, there is -- that's kind of a -- that's one of those basic tenants and how we're trying to build our technology across the board. Even in areas like X-ray, we're committed to an open ecosystem enabling any X-ray company to integrate with us, we just wanted to create a more competitive and a customer friendly ecosystem by introducing our own offering within it. And OpenMappingAPI is the same concept. But, in the mapping environment, where instead of doing one-off integrations, we didn't -- we implemented a software architecture that enables any mapping system to integrate with us with relative ease. We were delighted that Acutus Medical, obviously, integrated with us and last year we had -- we announced that I think around this time last year, and we have now several physicians in Europe who are using us together, and we have the first several -- the first joint installations in the U.S. and, so that again, this is part of a broader strategy that I believe a lot provides for a more attractive ecosystem around our technology that's ultimately good for physicians, good for patients, good for the hospitals and good for [technical difficulty].

We’ll take our next question from [Mike Hammer], private investor.

Great news today, excited for all of you. I've been a long time investor in Stereotaxis. In fact, there's been earnings call or two, that I was the only one asking the question. So I love the renewed interest. I love the long-term vision, the commitments to technology and the product development that you guys have even more than investor sentiment. So but I do have a more of an investor question, kind of surface [you one], but one nonetheless. What are maybe the reasons that some of the -- well, the quarterly reports are so much later than other companies?

Hi, Mike. I will let or you know what, let me try to answer that. I think generally -- we're just finishing our year-end audit around now. And my understanding is that this timing has been consistent for years and years and years in terms of our earnings call. So I don't read too much into it. Other than that, we want to have the call around when our audit has been completed. And, this somehow seems to have been the norm and that not much more to be right into that. I can see if Kim has any additional comments she wants to make.

I don't really have anything else to add to that. We are considered by SEC filing standards, we're still a smaller reporting company. So our 10-K is not due until the middle of the month. And as David said that just typically, the audit firms typically deal with the larger accelerated filers first and then they move to the smaller and accelerated filers. And so, that would be us and this is just how the timing kind of plays out.

Okay, thank you very much.

Sorry, we didn't have a more interesting answer.

We'll take our next question from Robert Riley with Clark Capital Management.

Yes. Good morning, David, another private investor here a very long time. Congrats on the forward progress. This is more for my own clarification. And it's something you've alluded to in the past, but with the existing systems that you have in place for those accounts, is there a formalized upgrade plan to bring them on to the new Genesis system or is that going to be a legacy part of your business that's either supported indefinitely or phased-out or a 5 or 10 year period?

So the hundred plus active Niobe customers, we expect them as they approach, a standard lab replacement, which means about every 8 to 14 years kind of we use about 10 years as an average. We expect them to replace their X-ray, their tables a lot of the other equipments in the room. And that seems to just be a standard practice across hospitals. And when that takes place, that's when we have opportunity to also change our robot. And we sense that opportunity even before Genesis was available, we were sensing that that opportunity existed. And we were being contacted by hospitals that were changing their labs, and asking us what to do with the Niobe system and we had no real competent response to them. And now, we have obviously a good solution for them to upgrade. And then -- and we expect that the vast majority will upgrade due to both the benefit and to the -- due to the desire not to have a system that will at some point then be 20 years old.

Okay, fair enough. That answers the question. And then, if I could just one more from a high level sales strategy. As you look at the real two markets out there, both Europe and United States. I would imagine that the existing customer conversion into a full EP upgrade with Genesis might be shorter than this missionary work that's required to go out and sell a brand new system with a brand new EP lab. Strategically, how are you managing that across the sales field, because, certainly you want to encourage both of those outcomes, but one might have a necessarily shorter sales cycle than the other?

Yes, that's a great question. And so, we have kind of a clinical team that is already operating at all of our existing robotic ablation practices. And so, our visibility into our existing customers is very, very good. And so, I have full confidence that our team is able to address their needs and [have] ability long in advance into replacement cycles as they're coming due and engaged with those hospitals and to drive that process. We obviously do want to drive also Greenfield systems because over the long-term, that's the driver of increased market share, and increased long-term growth. And so, there is effort underway to build that Greenfield sales capability. We have internally, we have a few individuals who are really kind of putting a lot of their effort primarily on the Greenfield side. We are starting to invest and to experiment with some top of funnel inside sales capabilities, using databases reaching out kind of in a broader fashion to fill our funnel and to see where opportunities in Greenfield sites may exist. And we've started to also implement a type of co-marketing relationship with a broader group that will also enhance our Greenfield capabilities. So I think like, I mentioned on the call, there's several ways that we're experimenting or establishing new capable abilities that would address also the Greenfield market.

Great, thank you. And if you have time, can you talk about the catheter tip size and the development with Osypka as it relates to cardio ablations and then moving into neurovascular, specifically, can the -- can -- what you're developing now move into other markets? I know we're talking, five or eight years down the road or is it going to be a complete new development cycle to get the catheter tip size down?

So I don't -- I didn't really understand your question about the catheter tip size down. The ablation catheter that we are developing in collaboration with Osypka is a cardiac ablation catheter. So it's designed really specifically for cardiac ablation procedures to treat arrhythmias. There's ways to design it to incorporate ways we think the cardiac ablation market may evolve in the future. And so, we're kind of – we are planning in advance, but it's really designed for that clinical application. When you look at other applications, you are likely to need another style of interventional device in order to address some of the other clinical applications. And so, that, that would be kind of some of the effort in order to address those other applications.

And that's a different style in terms of moving out of that space. So, specifically for ablations. Make sense. Thank you.

Okay, thank you.

We’ll take our next question from Brian Rackman, Retail Investor.

Good morning, David, and congratulations on the FDA approval.

Good morning. Thank you.

Just a quick breakdown, maybe I missed it. The two purchase orders are they both in the EU or is one in the U.S.?

We didn't disclose that as they are in various geographies.

Okay. All right. Thank you very much. That was the only question.

Thank you.

We have no more questions in the queue at this time.

Okay. Thank you very much for your continued support and interest in Stereotaxis. We're excited for the year ahead of us and look forward to speaking again in a couple months. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.