Good day, and thank you for standing by. At this time I would like to welcome everyone to IRIDEX Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the conference over to Philip Taylor, Investor Relations. Please go ahead.

Thank you and thank you all for participating in today's call. Joining me from the company are David Bruce, Chief Executive Officer; and Fuad Ahmad, Interim Chief Financial Officer. Earlier today, IRIDEX released financial results for the quarter ended June 29, 2024. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical facts, including, but not limited to, statements concerning our strategic goals and priorities, product development matters, sales trends and the markets in which we operate. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place reliance on these statements. For a discussion of the risks and uncertainties associated with our business, please see our most recent Form 10-K and Form 10-Q filings with the SEC. IRIDEX disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast today, August 08, 2024. And with that, I'll turn the call over to Dave.

Good afternoon and thank you all for joining us today. On the call I'll start by discussing our recent business progress, including our second quarter 2024 performance. Then I will provide updates on our strategic review process and color around our recent financing. Following that, Fuad will provide details on the second quarter financials and we will open the call to questions. During the company's 30 plus year history, we've maintained a deep commitment to improving treatments for patients with sight-threatening eye conditions through technical innovations such as the introduction of the 577 nanometer laser, our patented tissue-sparing MicroPulse technology, and non-incisional laser treatment for glaucoma. We've established a reputation for driving clinical proofs for laser treatment systems used by retina specialists and we continue to be the leading provider of non-incisional transscleral laser treatment in the glaucoma market. Now, let's review second quarter highlights and recent business progress made. Second quarter 2024 revenue was $12.6 million, representing sequential growth of 7% from the first quarter of 2024. Overall, our results demonstrate recovery of capital equipment in the retina business and recovery of probe sales in the glaucoma business. In glaucoma, elimination of the uncertainty regarding U.S. Medicare reimbursement from late 2023 is driving stabilization for MicroPulse TLT procedures in the U.S. and we're beginning to benefit from a firmer capital equipment environment. We saw notable strength in our retina business segment from the sale of PASCAL scanning laser systems, growing double digits year-over-year. In addition, we closed on some extended cycle equipment purchases, but in general cycles remain elongated. We continue to expect our differentiated features and clinical evidence supporting IRIDEX technology, plus our upcoming launch of our new IRIDEX 532 and 577 single spot laser platforms, to sustain our leading market position. In glaucoma, the Cyclo G6 product family revenue was $3.3 million, representing sequential growth from the first quarter, primarily driven by a 12% increase in Cyclo G6 probe sales. Compared to the second quarter of 2023, glaucoma revenue was down $0.3 million due mainly to softness in system sales. System sales have been impacted by the ongoing capital purchasing constraints and some procedural reimbursement uncertainty. We sold 15,100 G6 probes driven by increased awareness of reimbursement stability in the U.S. and a strong recovery internationally. Probe orders were slightly down compared to the prior year period, but that was before the various Medicare administrators created reimbursement concerns with their issuances and then withdrawals of coverage limiting LCDs. While we're encouraged to see improvement sequentially in our glaucoma laser system sales, we already have a strong U.S. installed base and we're placing a greater emphasis on driving probe utilization, which drives penetration into the large moderate stage patient opportunity and produces better gross margins. In our retina segment, product revenue was $7.3 million, representing sequential growth of 8% from the first quarter and growth of 6% from the prior year period. We saw strength in PASCAL scanning laser systems and closings on extended cycle equipment purchases resulting from the improvements in the interest rate and exchange rate macro environment. Changing topics, as you know, IRIDEX is actively engaged in a strategic review process. The company is pursuing a transaction or series of transactions that will benefit its stockholders. Discussions relating to our various product lines are ongoing, and the processes remain dynamic. At this time, we are not able to share specific updates regarding potential transactions, but we remain committed to pursuing all options to unlock value for our stockholders, and our goal is to reach a transaction this fiscal year. To support the strategic review process, in May, the Board of Directors promoted our Chief Operating Officer, Patrick Mercer, to President. Patrick now holds both positions and has assumed broader responsibility in driving our operational execution, cost reductions, and prudent asset management. I continue in my role as Chief Executive Officer and member of the Board, with increased focus on the strategic alternatives process, sales growth, and capital management. Earlier this week, we announced a private placement financing of a senior convertible note with Lind Partners for net proceeds of $3.4 million and the option to issue a second note for an additional proceeds of $1.5 million. The financing improves our balance sheet and secures operating runway for the company to pursue both our strategic process and further business growth recovery. Several benefits make this financing favorable for the company: flexible and low risk-adjusted cost of capital with optionality for discounted early prepayment in the event of a transaction and reduced dilution in the event of conversion at a share price premium. To conclude, managing our capital and expenses prudently is a top priority, and we expect to continue making progress improving our operating cash flow. We have structured and funded the company to provide appropriate liquidity runway in the business to achieve success with our strategic process and continue our growth recovery to benefit IRIDEX stockholders. With that, I will turn the call over to Fuad.

Thank you, Dave. Good afternoon, everyone, and thank you for joining us today. I would like to begin by reviewing our financial performance for the second quarter ended June 29, 2024. Total revenue in the second quarter of fiscal 2024 was $12.6 million, representing sequential growth of 7% from the first quarter of 2024 and roughly flat compared to $12.9 million in the same period of the prior year. As Dave mentioned, these results demonstrate a recovery trend in our businesses. Now on to the product level details. Total revenue from Cyclo G6 product family in the second quarter was $3.3 million, an increase of $0.4 million versus the first quarter of 2024. This is driven primarily by a recovery in probe sales. This is also a decrease of approximately $0.3 million versus the second quarter of 2023 due to the continuing softness in system sales impacted by ongoing capital purchase headwinds. We sold 15,100 Cyclo G6 probes in the second quarter, representing a sequential increase of 14% compared to the first quarter of 2024. This was driven by strong recovery in O-U.S. and by a stabilized glaucoma procedure reimbursement environment in the U.S. Overall, probe sales recovered towards historical business patterns compared to 15,500 sold in the second quarter of 2023. We sold 28 Cyclo G6 systems in the quarter compared to 22 in the first quarter and 41 in the prior year period. As previously mentioned, the year-over-year decline was largely due to the ongoing capital purchase headwinds, although conditions improved slightly in the second quarter, which led to the sequential improvement. Our retina segment revenue in the second quarter of 2024 was $7.3 million, up 8% compared to the first quarter of 2024 and up 6% compared to the prior year period. The second quarter growth compared to both periods was primarily driven by strengthening system sales internationally and conversions from the elongated purchase cycles experienced in the prior quarters. Other revenue, which includes royalties, services, and other legacy products, decreased to $2 million in the second quarter of 2024 compared to $2.3 million in the second quarter of 2023. The decline was attributed to reduced royalty revenue from expired patent licensing, service revenue, and certain other revenue. Gross profit for the second quarter of 2024 was $5.1 million compared to $5.4 million in the prior year period. Our overall gross margin was 40.7% compared to 41.7% in the second quarter of 2023. The decline in gross margin was due to a shift in product mix and a reduction of high-margin royalty revenue. Operating expenses in the second quarter of 2024 were $7.8 million, a decrease of $0.5 million compared to $8.3 million in the same period last year. The decrease in operating expenses was a result of continuing cost reduction initiatives and would have been greater without the inclusion of G&A expenses related to the company’s strategic process not incurred in the prior year. Our net loss in the second quarter of 2024 was $2.7 million or $0.16 per share compared to a net loss of $2.8 million or $0.17 per share for the same period in 2023. Now on to our cash position and cash flows. Cash and cash equivalents totaled $4.1 million as of June 29, 2024. The net cash reduction in the quarter was $1.3 million. Note that the cash balance as of June 29 did not include $3.4 million of net proceeds from the convertible note offering that was announced and closed this week. The proceeds from the offering will be used primarily to improve our working capital. Therefore, we expect net cash usage in the third quarter to be slightly higher than in the second quarter as this additional liquidity will be used to optimize our working capital position, improve our supply chain relationships, and manage short-term cash variability. In summary, we have strengthened our balance sheet and continue making meaningful progress in decreasing operating costs. We remain focused on the company’s future growth and making significant progress in the strategic review to unlock shareholder value by reaching a transaction this fiscal year. Dave and I would now like to open the call for questions.

Thank you. We will now begin the question-and-answer session. We have a question comes from the line of Tom Stephan with Stifel. Your line is open.

Great. Can you hear me okay?

Yes. Hi, Tom.

Wonderful. First question for me is just on G6. Dave, can you talk about your view on the competitive landscape? Just as it relates to G6, as we look ahead long-term, infinite is gaining traction, I think, in the moderate to severe patient population. Alcon bought BELKIN. I think that device may be launching in the U.S. soon. Then we obviously have iDose. I guess can G6 hold its own long-term in this, I’d say, rapidly growing competitive environment?

Yes, thanks for the question, Tom. Yes, I think the unique aspect of a non-incisional treatment it’s repeatable and doesn’t preclude other procedures is going to continue to be in a category of its own in that moderate-stage patient. And one of the key opportunities, and we’re seeing more usage in this area, for example, is post cataract with or without a MIGS procedure, two or three years out, pressures start to rise again, and something needs to be done. And the question becomes, do you go to additional incisional procedures? Or do you buy some non-incisional runway, as we call it, through a treatment or a sequence of treatments with MicroPulse TLT, for example, that brings pressures under control and extends that runway before you have to start using up space both real estate? And a lot of these are one and done. So, we think that uniqueness continues to carry on. The BELKIN system is really in the early-stage patient. It’s basically an automated SLT-style procedure. And so we don’t really see that as competition in the more moderate-stage patient where they’ve gone through SLT already. They’ve experienced one or multiple drops and have kind of run out of that ability to control pressures.

Got it. That’s great color. Thanks Dave. And then my second question is just on the strategic review process. I believe that’s gone on for maybe close to a year now. Dave, are you able to talk about what the limiting factors have been or some of the key hurdles, just when you look at the business? And then I believe you said you’re prioritizing getting a deal done by the end of the fiscal year. Is there anything that informs that timing? Is that balance sheet related? So, two-parter there, just on hurdles and limiting factors and then timing. Thanks.

Yes, sure. Yes so, we announced the end of August last year. So, we had contemplated and began the process, hired a banker, started putting together presentations and reaching out, the process that occurs in those times. I will give you my own opinions. I think last year was a pretty difficult M&A environment in the micro-cap space in particular. Things have started to improve this year. We’ve had conversations. Earlier this year we did comment on one of our calls that we expected a transaction to occur soon, and that transaction turned not to occur. So, that’s the risk of kind of giving a prognosis on what will come and when. We are still targeting something in this calendar year. And as you know, the process is long until announcement. You have conversations with people. You go through diligence processes and negotiation of purchase agreements and transition agreements and all those kinds of things to get to a signature, and that’s when you announce. So, it can take a long time to execute on these things. And then there’s that period of discussions across a number of parties. It takes a while. And we’re not trying to necessarily rush through the process. At the same time, we keep reiterating, we are serious about finding value-enhancing transactions. And I’m comfortable we’re at the stage of discussions where we think it’s a realistic target to get something this fiscal year.

Got it. Thanks Dave.

There are no further questions at this time. Mr. David Bruce, I turn the call back over to you.

Thank you, operator. Thank you all for joining the call. We had a solid performance this quarter, and we look forward to building on that and reporting in quarters to come. Thank you all.

This concludes today’s conference call. You may now disconnect.