Oscar L. Thomas – Vice President-Business Affairs and Secretary Kimble L. Jenkins – Chief Executive Officer and Chairman David W. Carlson – Chief Financial Officer.

Greetings and welcome to the MRI Interventions Inc. Third Quarter 2014 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I’d now like to turn the conference over to your host, Mr. Oscar Thomas. Thank you Mr. Thomas, you may begin..

Great. Good afternoon and thank you for joining us. With me are Kim Jenkins, our CEO; Frank Grillo, our President; and David Carlson, our CFO. Before we begin, I want to point out that some statements we make during today’s call will be forward-looking statements.

Any statements we make today whether in our prepared remarks or in our response to questions that are not statements of historical facts may be deemed to be forward-looking statements.

Forward-looking statements by their nature address matters that, to different degrees, are uncertain and involve risks and they are made based on current beliefs of MRI Interventions’ management.

Uncertainties and risks may cause our actual results and the timing of events to differ materially from those expressed or implied in forward-looking statements we make today.

Detailed information regarding the risks and uncertainties that could affect our actual results and the timing of events are described in the Risk Factors section of the Form 10-Q that we filed with the SEC on August 11, 2014 as well as the Form 10-Q that we will be filing with the SEC tomorrow.

You can find our SEC filings in the Investors Section of our website at mriinterventions.com. With that, I’ll turn the call over to Kim..

Thanks, Oscar, and good afternoon everyone. Thank you for joining us for our Q3 2014 earnings call. On behalf of the management team and employees of MRI Interventions, we appreciate your interest in our Company, and for those of you who are shareholders, thank you for your support, we’re honored to be working for you in building this great Company.

I’m pleased to welcome Mr. Frank Grillo, our President and incoming CEO on his first MRI Interventions earnings call. As many of you know, Frank joined us last month from Intuitive Surgical where he was the Senior Executive serving as Vice President of Marketing and Business Development.

I know you look forward to hearing directly from Frank about his impression to the company after his first six weeks and his plans for the future. I’ll now turn the call over to David Carlson, our CFO, to walk you through our third quarter results, and then Frank and I will come back to you with some additional comments..

Thanks, Kim. I’ll first cover the results for the quarter and then we’ll talk about our year-to-date results. Disposable product revenues were $577,000 in Q3 of this year compared to $470,000 in the third quarter of 2013, representing growth of 23%.

During the quarter, we’ve recognized $11,000 in product revenues related to our ClearPoint capital products compared to $380,000 in the same period in 2013. This is a nature of capital product sales, capital product revenues can vary significantly from quarter-to-quarter.

Other service revenues related mostly to ClearPoint service agreements and installation services were $45,000 in Q3 of this year and $28,000 for the same period last year.

Total product and other service revenues for the quarter were $633,000 compared with $878,000 in Q3 of last year, with the decline relating totally to ClearPoint capital product sales.

Development service revenues of $49,000 related to contract product development were earned during Q3 of 2013 and no such revenues were recorded during the third quarter of this year. The decrease reflects the completion of the development project the Company has performed on a contract basis.

The Company does not expect development services to be an ongoing source of revenues. Cost of product revenues was $316,000 for Q3 of 2014 compared to $365,000 for the same period last year, a decrease of 13%. Research and development costs were $873,000 in Q3 of 2014 compared to $725,000 for the same period in 2013.

Selling, general and administrative expenses were $2.1 million in the third quarter of this year compared to $1.7 million for Q3 of 2013. Net other expense was $743,000 for Q3 of 2014 compared to $1.2 million for the same period last year. Net interest expense was $286,000 for Q3 of this year compared with $122,000 for Q3 of 2013.

Our net loss for the quarter was $3.6 million or $0.06 per share compared with a net loss of $3.2 million or $0.05 per share in Q3 of last year. During the first nine months of 2014, disclosable product revenues were $1.9 million compared with $1.2 million for the same period in 2013, representing growth of 56%.

ClearPoint capital product sales were $492,000 in the first nine months of this year compared to $586,000 for the same period in 2013. Other service revenues related mostly to installation services and ClearPoint service agreements were $85,000 for the first nine months of 2014 compared to $28,000 for the same period last year.

Total product and other service revenues were $2.5 million for the first nine months of 2014 compared to $1.8 million for the first nine months of last year, an increase of 38%. Development service revenues related to contract product development were $104,000 for the first nine months of 2014 compared to $268,000 for the same period in 2013.

The Company recorded license revenues of $650,000 during the first nine months of 2013 while no such revenues were recorded during the same period in 2014. The decrease was attributable to the expiration of the revenue recognition period for license fees the Company received in 2008 from Boston Scientific that were deferred and recognized over time.

Cost of product revenues was $1.2 million for the first nine months of 2014 compared to $888,000 for the same period last year, an increase of 40%. Research and development costs were $2.6 million for the first nine months of 2014 compared to $2.2 million for the same period in 2013.

Selling, general and administrative expenses were $5.8 million for the first nine months of 2014 compared to $5 million for the first nine months of 2013. During the first nine months of 2014, the company recorded a gain of $4.3 million related to the sale of certain intellectual property to Boston Scientific.

The purchase price was satisfied through the cancellation of notes payable previously issued to Boston Scientific in the aggregate principal amount of $4.3 million. The Company recorded a gain equal to the purchase price as the asset sold had not been previously recorded on the Company’s balance sheet.

Net other income was $746,000 for the first nine months of 2014 compared to $378,000 million for the same period last year. Net interest expense for the first nine months of 2014 was $714,000 compared with $342,000 for the same period in 2013.

For the first nine months of 2014, the Company recorded a net loss of $2.6 million, which resulted in a loss of $0.04 per share compared to a net loss of $5.4 million or $0.09 per share for the same period last year. A few comments on the balance sheet, we ended the quarter with a cash balance of $1.9 million.

Our cash burn for the quarter was impacted by the first semiannual interest payment of $224,000 related to the notes we issued in our debt financing in Q1. Our accounts receivable collections continue to be predictable and steady.

As reported, we ended the quarter with a DSO of 59 days after adjusting for the impact of amounts and accounts receivable related to service agreements for which revenue has been deferred, our adjusted DSO is 46 days.

Our inventory levels have increased by approximately $779,000 since the year-end as a result of planned growth in sales and the impact of product line extensions. When comparing our September 30 balance sheet with our balance sheet at year-end, there has been a $4 million reduction in current liabilities. With that, I’ll turn it back over to Kim..

Thanks, David. I’ll make a few quick comments about the quarter and then turn the call over to Frank. First, a comment about our ClearPoint capital sales and additional progress on growing our ClearPoint footprint. As David mentioned, we did not report any system sales during our third quarter.

As we stated before, revenue from the sale of capital can vary significantly from quarter-to-quarter. This occurred in Q3. It’s a nature of our capital equipment revenue stream and except worth impact on Q3 revenues it’s not a source of meaningful concern for us. We are continuing to make solid progress in building out our ClearPoint footprint.

During the third quarter, we installed systems at two new sites and in a strong start to this fourth quarter, we’ve already signed up two additional sites, one of those the capital sale and the other under our ClearPoint Placement Program. Turning to disposable, as David stated, we recorded $577,000 in revenues from the sale of disposable products.

This is our second highest quarter ever and up 23% over Q3 of last year. During the quarter, we continued to make solid and significant progress in building the value of our ClearPoint franchise.

Our ClearPoint system continues to perform well, neurosurgeon interest and support for ClearPoint continues to grow, and the footprint of our ClearPoint installed base continues to expand. Taken together, these are the fundamental building blocks of our business. The foundation of our business is continuing to grow and get stronger.

I’m thrilled to have Mr. Frank Grillo joining us as President and soon incoming CEO on January 01. This is a major development for our company and one that positions us very well for the future. Over the course of the summer, I led the executive search effort. We had a number of very talented executives interested in the position.

However, when we met with Frank, it was immediately clear that his experience and proven track record in driving the commercial growth of disruptive technologies are ideal fit for what we need here at MRI Interventions.

We hired Frank directly from Intuitive Surgical, where he was an integral part of the senior leadership team serving as Vice President of Marketing and New Business Development.

As most of you know, Intuitive Surgical has been an extraordinary success as $17 billion market cap company and maker of the da Vinci Surgical System, which in itself is a very disruptive technology.

In his position at Intuitive, Frank was a central part to the da Vinci commercialization effort and he was tested with driving both adoption and utilization. The experience and knowledge Frank gained through that process will now hawk eye us in our commercialization of Clearpoint.

Prior to Intuitive Surgical, Frank was a Senior Executive at Kyphon where he led the marketing authorization for the company’s $400 million U.S. based business, another big med tech success story. Kyphon was acquired by Medtronic in 2007 for $4.2 billion.

Before Kyphon, Frank spent a decade in multiple roles with Boston Scientific including Vice President of Marketing for the company’s Women’s Health, Urology and Gynecology Division. So this is the beginning of an exciting and important new chapter for MRI Interventions.

In my role as Executive Chairman, I am looking forward to working with Frank in supporting his leadership of the company. Now with that, I’d like to turn the call over to Frank..

Thanks and thank you for that introduction. I appreciate it. To begin with, I want to say how excited I am to be here and to build on a solid foundation that has been put in place over the last few years under Kim’s leadership.

I appreciate the opportunity to share my initial thoughts on the company and our opportunities going forward, and also where I will focus our efforts going forward. First, it is clear to meet that MRI Interventions has a proven product and a strong base of initial users. With ClearPoint, we also have a tremendous market opportunity.

Over the summer, we retained a third party consulting firm to conduct extensive market research to assist us in our targeting efforts and to help us better understand our market opportunity. After evaluating the data collected by that firm, I believe the annual U.S. ClearPoint opportunity is more than 55,000 procedures per year.

This market size is based upon estimates of the potential for knee replacement, laser ablation for both epilepsy and brain tumors and brain biopsy procedures using our current ASP that translates into an annual revenue of over $400 million in just the U.S., revenue potential of over $400 million each year, that’s a significant market opportunity and we’re just getting started.

Now let me give you some details behind that aggregate number by looking at the three main disease stages that ClearPoint enabled therapies currently address. We had a strong value proposition in treatments with Parkinson’s disease, epilepsy and brain tumors.

At 55,000 potential ClearPoint procedures per year that I just mentioned, deep brain stimulation, electrode placement for Parkinson’s accounts for 12,500 potential procedures for an annual revenue opportunity of more than $90 million.

For epilepsy, laser ablation and RNF [ph] knee replacement represent an annual opportunity of approximately 28,000 procedures by more than 200 million revenue potential. And for brain tumors laser ablation and biopsy account for up to 14,000 potential procedures, which is more than a $100 million per year in revenue opportunity.

These are big markets and our timing is right to be pursuing that. Why do I say that because each of these markets is poised for significant growth. Take the deep brain DBS market for example. Medtronic estimates the two-thirds of patients opted out of DBS therapy, many due to the nature of the electrode implantation surgery.

By offering a real time image guided approach, we make these surgeries more attractive for number of those patients and we believe that our technology can help grow the DBS market. Based on public information and typical regulatory timeframes, we believe that St. Jude will likely be entering the U.S. DBS market next year.

A new entrant in the DBS market we’re going competition and that will also bring growth to the market. For epilepsy in brain tumors minimally invasive laser ablation is showing tremendous potential as a surgical alternative to the highly invasive open craniotomy and resection procedures.

As many of you know, Medtronic completed its acquisition of Visualase in Q3 of this year. ClearPoint is complementary to the Visualase technology and we worked closely with Visualase in recent years to combine our two systems to enable a fully MRI guided same setting laser ablation procedure.

Medtronic has now added the Visualase’s laser ablation to its portfolio of neuro therapies within that surgical technologies business meaning that a sales force somewhere between 5 and 10 times to size of the Visualase sales force. We’ll now be selling laser ablation to neurosurgeons in neuro science centers across the country.

We believe recent clinical data, which I’ll speak about in more detail in a minute from the added sales of marketing resource as a result of the Medtronic Visualase transaction both points to the potential for rapid growth in these markets and a resulting use of ClearPoint.

Finally, with respect to brain tumors, we are already seeing an increase in utilization of ClearPoint the biopsies and hybrid procedures such as the biopsy, cyst drainage and laser ablation case performed by Dr. Chen, University of California, San Diego, which may have read about in our press release in August of this year. I met with Dr.

Chen at the Congress of Neurological Surgeons last month in Boston. He is an enthusiastic opponent of utilizing the ClearPoint system in its treatment of brain tumors. I look forward to working with him and other oncologic neurosurgeons, who uncover new applications for the use of ClearPoint in their efforts to provide better care for their patients.

As I said at the beginning of my remarks, I am fortunate to have inherited a solid foundation of Congress to build. Our body of users includes many of the most respected neurosurgical centers and surgeons in the United States and the interest of ClearPoint among physicians and patients is strong.

In addition to the strong base of users, I’m pleased to see the growing breadth of clinical data that supports these at ClearPoint. And a recent paper out of UCS – UCSF and published in January of this year in the journal neuro surgery clinics of North America.

It was stated that placement of DBX reeds [ph] under real-time MRI guidance provides the benefits of the increased patient comfort, increase anatomic accuracy and potentially decrease risk of intracranial bleeding.

As another example of the growing clinical dataset, just a few weeks ago, I sat in the audience at the Congress of Neurological Surgeons in Boston, as Dr. Robert Gross of Emory presented data on laser ablation therapy for which he uses our ClearPoint system to precisely place the laser catheter in the brain. Results Dr. Gross presented were astounding.

He’s achieving the seizure freedom rates with this minimal invasive procedures as has and typically reported within open craniotomy and resection, but with better comment about [constant] (ph) on traditional invasive approach. In his presentation at CNS, Dr.

Gross said that recent literature where 82% of patients undergoing open resection suffered from cognitive impairment, while zero of its 19 laser ablation patients suffered from cognitive impairment. Dr.

Gross’ early clinical data, is fantastic news for us, as we work to increase ClearPoint utilization in these types of cases and most importantly, it’s fantastic news for patients.

These are just a few of the great examples of the growing data in support of ClearPoints benefits, not only DBX replacement, but also in several other neurosurgical procedures. Although, I’ve been with MRI for only slightly more than a month, we’ve already made significant progress in ramping up our commercial efforts.

We have a great sales and clinical support team in place and we have an opportunity to increase their effectiveness. I strongly believe a very tight coordinated sales training process is a key component to success and we have already began to implement the first phases of an enhanced sales training program. .

In summarizing these priorities, it’s easiest to categorize them into four areas. First, increase utilization at existing ClearPoint sites, this means targeting the high volume DBS epilepsy in tumor surgeons and gaining a greater share of their procedure volumes.

It also means expanding the use of ClearPoint applications like laser ablation in tumor biopsy within existing accounts, working closely with surgeons to gain more access to their MRI scanner time. And it means we must enhance case repeatability through standardization and enhanced staff training. Second, meaning to continue to expand our cap base.

Here, we need to engage at an early stage more than just a functional neurosurgeon when talking about growing ClearPoint into hospital. Those early discussions, we should be engaged with the oncologic [ph] neurosurgeon for example as well as the functional neurosurgeon.

Strong clinical support is a key driver to getting ClearPoint into a hospital and can also assist in compressing the sales cycle for our capital equipment. As we discussed, MRI-guided procedures with neurosurgeons we also want to encourage the evaluation in trial at ClearPoint.

To make this trial easy, we began to ClearPoint Placement Program several quarters ago. This program has been an effective tool in growing the ClearPoint footprint, so we plan to continue it going forward. Third, we need to improve our communication with the medical community.

When we discuss the concept of utilizing an MRI in real-time to guide neurosurgery, most neurosurgeons readily agree with the concepts. Our ClearPoint product enjoys the support of neurosurgeon thought leaders throughout the country.

We need to increase peer-to-peer events and enhance our medical conference presence, enabling these current neurosurgeons to tell other neurosurgeons about their positive experience with ClearPoint and the advantages of real-time MRI guidance.

We also need to do a better job of highlighting the existing publish data supporting ClearPoint and better communicating a ClearPoint value proposition across multiple procedures. And finally, we will continue to drive additional applications for our ClearPoint platform. Our current involvement in six promising drug trials is a good example.

I believe we can continue to grow the number of drug trials that involve ClearPoint and expand the use of ClearPoint to include additional neurosurgical procedures. Our goal is to ensure a seamless integration of our ClearPoint platform with the most effective current and future focal neurosurgical therapies. This is an exciting time for our company.

I’m delighted to have joined such a dedicated team committed to making neurosurgery better for both the patient and the physician. We have a solid foundation, a tremendous market opportunity and a plan for the future. With that, I’ll open the call to questions..

Thank you. (Operator Instructions) At this time, there are no questions in the question queue. (Operator Instructions) This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation..