Will Moore - President and CEO Susan Bruce - Executive Administrator Jim Mackaness - CFO and COO.

Larry Haimovitch - HMTC Paul Fred - Sam Bergman - Bayberry Asset Management Jason Stankowski - Clayton.

Greetings, and welcome to the IRIDEX Corporation 2015 First Quarter 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. It’s now my pleasure to introduce your host, Mr.

Will Moore, CEO of IRIDEX Corporation. Mr. Moore you may begin..

Thank you, operator. Before we get started with today’s call, I’m going to turn the line over to Susan Bruce our Executive Administrator to read the Safe Harbor message..

Thank you, Will. This conference call will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, relating to the effective currency exchange rate and other global and domestic market conditions; on the company’s business.

The products that’s composing sales on future periods demand for the company’s products and market acceptance of the company’s new products the launch date and adoption of the company’s iClip Closure Device. The adoption continue development pricing model and contribution to earnings in future periods of the company’s Cyclo G6 product platform.

The impact of these and other new products in the company’s business trends in the global healthcare marketplace with respect to the treatment of eye diseases, such as diabetic macular edema and glaucoma; the company’s growth strategy and growth opportunities, is including acquisitions; technology investments and strategic relationships; pricing of the company’s products.

The company’s operating expense controls and cost reduction programs; and the impact of these controls and programs on the company’s financial results; the company’s share repurchase program; the company’s financial outlook and performance in the second quarter of 2015, fiscal year 2015 and future periods; changes in the company’s margins in future periods regulatory developments and approval for company products and the impact of sales cycles; tax rate and cash requirements related to tax obligations in future periods and other industry like factors affecting the company’s business.

These statements are not guarantees of the future performance and actual results may differ materially from those described in these forward-looking statements as a result of a number of factors.

Please see a detailed description of these and other risks contained in our Annual Report on Form 10-K for the fiscal year ended January 2, 2015, filed with the Securities and Exchange Commission. Forward-looking statements contained in this conference call are made as of this date and will not be updated. Thank you. Will..

Thank you, Susan. I’ve been looking forward to today’s call and the opportunity to report on several items are very good news. To start the first quarter 2015 was the best Q1 we’ve ever had. Revenues were $10.8 million with growing contributions from the US sale channel with a modest decrease in the system sales internationally.

This was accomplished despite a currency volatility headwind that have been affecting all US dollar sellers. We estimate the pricing pressures created by the strong dollar cost as much as $500,000 in the first quarter revenue. We expect this will likely continue to be an issue in future quarters and we’ll be monitoring it closely.

Even better news than our continuing revenue strength is the rising contribution from consumables this includes probes and other single use products associated with ophthalmic laser procedures. Our total recurring revenue were up over $400,000 in the first quarter of 2015 or excuse me in comparison to 2014.

Our main goal to increasing the value of the businesses developing a steady, predictable, recurrent razorblade revenue stream that seeds off of laser equipment sales. One exciting new addition to this effort to single use MP3 probe used with our new G6 laser platform.

In addition we recently received a patent for our single use iClip Closure Device, which we hope to launch towards the end of this year or early next year. iClip is intended to replace certain sugaring techniques in eye surgery. In terms of building a larger consumable product portfolio we’re making good progress.

Another height of the quarter was the strong reception of our new glaucoma product platform the Cyclo G6 this platform includes dedicated laser and initially two single use probes including the newly patented MicroPulse P3.

We expect to introduce additional single use probes for the Cyclo G6 in the near future adding to our consumable product line in the glaucoma space. We launched the Cyclo G6 with two supporting poster presentations from our investigators at the February American Glaucoma Society AGS Meeting.

The responses rep and our sales team took orders immediately providing evidence for the product and positioning are correct. As most of you know glaucoma is a focus for us and we believe an important part of our future. Glaucoma has a chronic global disease and the leading cause of adult reverse irreversible blindness.

It has a large and growing patient population due to aging worldwide demographics. Current estimates are there are more than 4 million people in the US are affected and approximately 60 million people worldwide. We estimate our US market opportunity is an excess of $75 million today.

Glaucoma is a progressive disease requiring careful management over a long-term and treatment generally begins with a return of expensive eye drops. As the condition worsens treatment typically escalates to a variety of more invasive procedures. The current standard of care is unsustainable in most parts of the world.

Data presented at the AGS focused on the high cost to patients and their families. Worse the current standard of care frequently sales due to great difficulty most patients have with maintaining the strict regimens. We see physicians that see here for new treatments merging the gap between eye drops and invasive surgical procedures.

We believe there’s a huge promise in the new in between approach offered by our Cyclo G6 platform featuring our MicroPulse and P3 probe for glaucoma is cost effective, reimbursable, and may limit thermal spread in collateral tissue damage. We believe it is a single treatment procedure with durable results. One study by Dr.

Shultz, show the treatment provided relief for up to 18 months. And as easily administered and repeatable giving it a huge advantage in emerging undeveloped markets in Asia, Latin, America and Africa as well as the developed market like the US, Europe, and Japan.

Concluding my comments in this portion of the call we believe our new Cyclo G6 platform featuring our MicroPluse provides multiple benefit to the company it will deliver additional revenue via series proprietary single use delivery devices.

It is a means to expand our reach through a product group of ophthalmologist both within the US and around the world. We now have a substantial product offering for the glaucoma specialist the way that’s a way as well as comprehensive ophthalmologist have a reason to listen to us and try our new products.

With that I’ll turn the call over to our CFO and COO Jim Mackaness. Jim..

Thanks Will. As we noted in our press release and in WiIl’s comments our revenues for Q1 2015 were $10.8 million up 5% from Q1 2014 revenues. Total system sales in Q1 2015 were $5.6 million compared to $5.5 million in Q1 2014.

We showed excellent growth in domestic system sales up 25% to $2.1 million driven by increased sales of our premium product the IG 577 with MicroPulse and sales of TxCell scanning delivery device.

International systems sales did suffer from the movement in exchange rates and declined 9 % to $3.5 million recurring revenues were $5.2 million in Q1 2015 up from $4.8 million in Q1 2014 and an increase of $400,000 or 8%.

The growth was impart due to the early launch of the Cyclo G6 system, which is being introduced as a package consisting of a laser console and probes for 60 procedures and we also saw an increase in our base business a single used devices.

Gross margins in 2015 first quarter came in at 50.1% compared to 48.9 % for Q1 2014 we were pleased with this result given the challenges we faced with currency movement and the pricing pressure it creates internationally.

For the remainder of 2015 we see opportunities to margin improvement through volume efficiencies with anticipated revenue increases and anticipate increased sales associated with the launch of the Cyclo G6 system.

However, we’re launching the Cyclo G6 system with the disruptive pricing model and may choose to absorb some gross margin compression in the short-term. In addition the impacts of the recent foreign currency movement is likely to have a temporary negative impact on our gross margins.

On a final note related to the Cyclo G6 platform we launched with the business model that we think will be a plus going forward. To this point we’ll return to either capital equipment model or a consumable model where we’ve not combined the two in razorblade model.

Cyclo G6 platform provides us the advantages of both revenue streams and the associated benefits of having a growing installed base providing a regular predictable consumable revenue. As the market develops we look forward to update you on the success of that model within our overall business.

Operating expenses for Q1 2015 were $5.0 million, up from $4.5 million in Q1 2014. The growth over last year reflects a variety of investments both commercial and product development for near and long-term strategies to continue growing our market share and to take advantage of opportunities in both retina and glaucoma markets.

Consequently operating income in 2015 first quarter was $0.4 million compared with operating income of 0.6 million in the prior year’s first quarter. Net income for this year’s quarter was $0.2 million or $0.02 per share diluted share compared to $0.5 million or $0.05 per diluted share for the prior year period.

Please note that commencing with the first quarter of 2015 we were using a more normal to effective tax rate of 37.9% to book our tax provision, which resulted in us booking a provision of a $150,000.

Last year our effective tax rate was only 2.6% for the quarter, because of the movement in the valuation allowance we booked against non-deferred tax asset. This resulted us booking a provision of only $13,000 in Q1 2014. If you recall we released the vast majority of the valuation allowance in the fourth quarter of last year.

And at the end of last year we had a federal NOL of $12.5 million and therefore anticipate our cash tax payment to be fairly minimal for this year.

12:22 Looking ahead to 2015 we’re projecting revenues between $48 million to $51 million although we like many other have our eye on the impact to our business with the recent significant currency movements.

For the 2015 second quarter we anticipate revenues of between $10.7 million to $11.1 million gross margin is anticipated to come in between 49 % and 51% and operating expenses are expected to be between $5.0 million to $5.2 million.

Lastly during the quarter and to our repurchase program we purchased 22000 shares at an average price of $8.89 per share and at the end of the quarter we had $0.7 million left to invest. And with that I’ll turn the call back over to Will..

Thanks Jim. In conclusion this is a very exciting time for IRIDEX we are making steady progress and expanding the predicable, recurrent portion of our revenue stream particularly we are expanding our reach with intuitive to single use probes.

We are also making inroads with our value based medicine approach for emerging markets, which has added into our growth in the US.

We have just began our interest into the huge and rapidly growing glaucoma market, which we believe is a national fit for our technology and distribution channel .We now provide a new option to literarily millions of people around the world with glaucoma a durable and cost effective method of managing this dreadful disease. Dr.

Shultz study poster presentations and preliminary study is underway with the Cyclo G6 and MP3 probe point with solution for doctors who are losing compliance battle with their patients yet are reluctant to advance to more invasive treatment procedures.

This new product and our new pricing model will improve our ability to reach more patients, provide less lumpiness to our business, allow more predictably and provide additional efficiencies. We think we have identified a very large problem developed a great solution, which in turn could change as far as in the market perception of IRIDEX.

In our opinion we are becoming more relevant to the world of ophthalmology once again. Before closing I would continue to look for strategic areas to grow organically through acquisitions and we’ll also consider corporate relationships first via private labels or distributions and enhance our product portfolio.

With that I’ll turn the call over to the operator for questions.

Operator?.

Thank you. We’ll now be conducting a question-and-answer session [Operator Instructions]. Our first question comes from Larry Haimovitch with HMTC..

Good afternoon Jim. Good afternoon Will..

Hi Larry..

So, on your guidance you I think if I’m not mistaken you reiterated the same guidance you provided at the fourth quarter conference call was it $48 million to $51 million correct?.

Correct..

Okay so and you did $10.8 million this quarter and did I catch your guidance right $10.8 million to $11.1 million for Q2 Will?.

It was $10.7 million to $11.1 million..

Okay so roughly would be roughly $21.5 million of the half if you came in at the low end. So I’m just wondering that’s a pretty big that’s a very strong second half.

Can you discuss that is that’s something you’re looking for, because of the glaucoma initiative or perhaps the dollar not being such a problem in the second half or what’s your thinking on that Will?.

Well and I think that the demand for the products have been consistent and strong whenever you have some kind of volatility in currency whether it’s going up or going down the distributors tend to pause if it’s going down they think and as far as the dollar getting weaker they’re going to wait to see about facing orders later it’s going up they sit back and say oh this is going to cost me more so we see pausing effect.

I think what’s happening now as the currency is somewhat stabilized the euro is getting a little better we’ve seen a couple of things that happen our Japanese partner has come back on and said all right we’re ready to start doing business again we’ve gone through a few pricing programs with our distributors to deal with the fluctuations by putting volume purchases together versus buying one at a time.

So I’m comfortable at this stage as Jim, said in the call that we’re going to monitor it looking forward. But I think that situation just as exactly you said it’s a steep climb, but I don’t think we’re ready to say we can’t make it yet..

Okay so what’s the rise in the euro and what distributors getting more comfortable with the fluctuations and so on you think you will have a stronger second half.

Now did I hear Jim, that did I hear you say that Q1 international revenues were actually down versus the year before I didn’t catch the number, but I thought that’s what I heard?.

You did on the system side yes Larry..

Yeah and I would assume that strictly that strictly to do with the currency issue?.

Yes that’s what we Will mentioned we felt we less some revenue on the table if you like pushed out..

Yeah..

Because again you this pause affect just people trying to adjust to the change in the rights..

Well I know you’ve traveled in China recently I know you’ve been spending a lot of time overseas.

Are you feeling that momentum generally overseas is still very, very strong notwithstanding this temporary challenge with the currency or currencies?.

I think that yes I do the currency does cause me some concerns, but the advantage of Micro Pulse is there. The certain example you just mentioned China we’re about to commence a program in China I think it starts the 18, of May we’ve established a program where there are two doctors from the US going to China along with Mr.

Buckley, our VP of Marketing that will be joined with the physician at four different Universities.

One in Beijing, one in Shanghai, one Jingzhou, and the other one in Taipei city for there will be approximately 100 physician that each one listening to lectures and presentations by MicroPulse that’s going along with what we had put together before with the remote vision project. We’ve initiated our study in India with Aravind and L.V.

Prasad to look at the cost element not whether the science works or not, but it is better associated economically for the society.

And we’re working on another study in another country, which are later the next one that it concludes with 14 different Universities looking at it from social economic standpoint deciding how many injections they will use along with MicroPulse versus just using injections along. But yeah I feel very confident in that regard. .

Okay, good I have couple other questions, but I’ll jump back in the queue right now..

Our next question comes from Paul Fred, a private investor..

Yes. Thank you. And if we look at the minus 20% and the international system sales that I think assume or mostly accounted for by the currency issues. I’m wondering if you look behind the curtain there.

Are there competitors substitutes there are alternative purchases or is this primarily an issue with inventories I know you have a direct sales force as well as distributors so you must have some insight into this area.

Are these delayed purchases?.

Paul this is Will I’ll answer the question the direct operation is strictly in the US we do have our own employees throughout the world. But they all sell outside the U.S. or through distributors. So yes there’s always questions about inventories coming and going and we think we do a pretty good job at managing the inventory.

We do get affected by tenders, which we did not have any in Q1. And the other side is there is one competitors that pays off of the royalty for when they sell a product, but all other competitors did not have the future programs that we do. So what you’re seeing in my mind is two things.

One a slight delay in the international side and two the price compression caused by the strength of the dollar. So I really don’t see something behind the scenes that we’re losing any kind of business other distributors or excuse me other manufacturers..

Thanks and if I could just for one more and I’ll get in a queue.

Introducing products is there’s also a trends in investment more they’re in getting demos out there, getting advertise and distribution presentation et cetera, which would kind of imply that the expense profile relative to revenues might be going up in the second half I think have you got some kind of insight into that?.

Yes well I think in many regards we’re using a stage launch with the Cyclo G6 and particularly we’re talking about here and we feel that we have a good distribution channel in the US already set up with the combination of the direct and the independent.

I would anticipate to your point we’re increasing our expenditure little bit in sort of things like the trade shows, and though and some of our press and direct mail, which we typically do electronically to make sure that we reach out and publicize it so there will be a little bit of an increase there.

I think probably the other element that is for us to consider and we continue to show on it is the need for clinical. And so as we go forward with this product in the glaucoma we continue to listen very closely to the doctors to see if we have sufficient clinical evidence or if we need to stop making those investments.

So you could see a little bit more at the moment we don’t have anything dramatically lined up, but as I said that it’s logical that depending on the adoption right we may have to either put a little bit more into it or we’ll find that we have enough investments as we currently sit..

And so the second half we should think above an improved revenue growth rate from the new products probably somewhat of a lagging earnings growth rate and until all these things this onetime expenses are works through?.

I would say that’s correct yes..

Thank you..

Thank you..

Our next question comes from Sam Bergman with Bayberry Asset Management..

Hi Will and Jim, how are you?.

Hi Sam..

Hi Sam, we’re doing fine but both given out kind of under the weather..

It sounds like a lot of people on the East Coast so join the crowd hope you fill very quickly. Couple of questions in terms of tenders did you have any backlog from tenders in the fourth quarter going into the first quarter.

And can you give me a little color on the tenders for the second quarter and the rest of the year?.

We didn’t have any backlog for on tenders in the fourth quarter tenders generally don’t allow you to do that you get the order and you have a specific time to ship them though it’s so we didn’t have that part.

Now going forward we’re working on a number of tenders and I’m not going start talking about working on tenders I’m talking about one today and I get involved or like 10 years it’s more and I’ve got few of those that I’m working on some, but they’ve couple of more in the 10 to 12 unit range and a couple others are larger..

Okay so did you have any backlog that weren’t tenders in the fourth quarter going into the first quarter?.

No..

No.

In terms of the glaucoma product two modules are complete there’s a total of six and are there any more complete or what’s the expectations of those others coming on or coming live or going mainstream?.

Sam this is Jim, so I think you talk about the fact that we have two of the probes release already is that we see with the MicroPulse plus, EndoProbe and the G-Probe?.

Right..

Okay, yes so you’re correct in pointing out we made reference that there are another two that are currently if you like finalizing here. We do have to go through a various steps including making sure we hear our FDA it’s a fighting K but we did some FDA approval.

So that has its own so the timeline, but we haven’t pegged in that we anticipate seeing the other two coming onto the market before the end of this year and then there is a potential for two more behind that hence G6 that would fall into next year.

But we think the main sort of probes for sales would be the MicroPulse plus, EndoProbe we’re already having and perhaps one of the probes coming out later on this year, because that also some illumination will be a little bit of a unique feature. So we have two good probes in two more coming before the end of the year and then possibly two after..

So you feel that one of illumination could increase sales or move the product better than what it is right now even though you need some clinical studies?.

No I think we’d say that the MicroPulse plus, EndoProbe is the real sort of the real sizzle the real got one, which we have in the market. We have an illumination probe coming that we think is a good variation on the theme so we’re excited about it but I think we’d say that the currently the MP3 is the one that’s grabbing all the attention..

Thank you very much. Our next question comes from Larry Hemowich with HMPC. .

Following up on the previous question about the glaucoma probe you have the benefit now of two trade shows where you’ve shown the product. But love to get some of your feedback on what the doctors are saying.

What they like what they want to see improved and their overall reaction to using this in day to day practice?.

Good questions Larry, we did two things at these trade shows the American Glaucoma Society Meeting as well as the BSA Meeting both of them in San Diego. What we did is not only had our booth where we did demonstrations, but we had what we call the wet lab where people could go and touch it and try it and deal with on pigs eyes for example.

And so the response has to do with both a verbal visual type of things that we generally do with trade shows. But also with the ability to touch and see and feel how it works and that’s where you tend to get the aha moment sort of the excitement I said time and I know Jim did as well in both location.

So the response I think I’m going to say as having introduced the number of products of years it’s very positive and the reason it’s positive is the problem the physicians face today is that the patient comes in and they start out by giving them eye drops.

And we have to realize most of the patients are substantially over 65 and doing these eye drops and making sure you get them in on a regular basis happens correctly not only in time, but also getting them in your eye versus running down your cheek et cetera.

And when the physicians begin to lose that discussion with patients by saying are you taking your drops and so I try but your pressure so you got to do better this goes on for a little while the physician is reluctant to move into a little more severe type of intervention.

By coming to them and say we have this products the MicroPulse, which you both heard about seen in retina that provides limited to no tissue damage it has a very safe profile gets people to start to thinking about aha here’s a solution that says I have don’t have to tell Mr.

Jones once again one more time he’s got to do this I can treat them the procedure takes about 8 minutes. And the results are showing in both a clinical study and multiple pulse or presentations at seven different University settings, that it’s safe it reduces pressure and it stays down. So we really don’t get in discussions about pricing.

We get in discussions about how fast can we send the demo things of that nature. So it’s very exciting that the positioning is right and as I said earlier I think the marketing job, marketing companies or department did a great job at identifying the problem.

Engineering did a great job at designing a product that fits in a price point that works so I’m pretty happy..

Jim, when you put together and I’m we’ll do obviously in the Board, but when you guys put your guidance together and your 2015 plan.

Was the glaucoma business going to be in the seven figure range in other words a $1 million or more in your thinking?.

Yes we had a -- we got a stage launch, which would support just getting us over a $1 million bucks and for the year.

And we’re staging it, because as we’ll identify there’s a lot of excitement there is a little bit of art for the doctor and how they actually plan it’s a very straightforward procedure this we’ll make sure now it takes a couple of minutes.

But there’s quite a bit of art in just understanding how to do it so we really want to make sure that we have time to spend with the doctors to train them on that to make sure they good efficacy.

So we stage in the rollout so we have sort of a fairly sensible number of units so we’re looking to track to, but we would be looking to generate most of the $1 million bucks this year..

Okay. And then Jim, you and I talked about the new product that I saw at the ASCO Meeting that Nifty’s surgical tool that could be used both for glaucoma and for other uses.

Could you update in terms of where we’re from a likely launch into the US market?.

Yes that would be iClip this it’s a very microscopic I think a bit of the microscope almost microscopic stapler it’s -- it allows for wound closure in eye surgery situations. The original target that we’re looking for is the trabeculectomy we think it’s very, very beneficial in that situation.

We’ve made great steps with certainly the prototyping on the product probably the biggest risk item if you like, it will be continuing its progression through FDA process. We’ve had some very good early dialogue we feel we have a path that we can move forward on and presume that we can come back to the FDA with the answers to their questions.

We’re looking to see if we can’t move that through and therefore have a cleared and have the product sort of available for commercial offering to right at the end of this year beginning of next year probably as I said the it will really depend on each group took the FDA processes..

And what about overseas Jim?.

For new services Larry you mean?.

Yeah I mean for sale and new services yeah?.

Yeah I think initially at the moment we’re pacing how can I put it we are pacing with the FDA and are pacing on the development is in current so we’re kind of saying we’ll stay focused here.

If for some reason we were to find that that sort of becomes a longer lead item maybe then it becomes relevant to look at trying to bring it out in overseas markets, because it’s common sometimes to do that if you really get that local regulatory clearance a little bit easier.

At the moment as I said we see we’re making good progress here so that’s our focus..

Okay, got you. Thanks..

Our next question is from Jason Stankowski with Clayton..

New last name, but that’s okay..

We understood who you are when they said Clayton..

Good job in an another good quarter. I was just curious as you look at the glaucoma opportunity being down in one of the conferences I was kind of impressed with the interest from doctors well.

Is our manufacturing capacity kind of up to the task are we able to add extra shifts if the pull becomes very good or do we have to think about partners and other outsourced manufacturing if things kind of ramp in the back half of the year?.

We have the capability of doing it here we don’t need to get extra partners we could easily do an extra shift we can easily do we have our partner now so generate makes a lot of our laser components and for us and does some assembly.

So that’s not an issue I think it’s really Jason, it’s the understanding of the mix between probes whether they’re MP3s, G probes et cetera and the laser by that I mean I placed the laser are they using five per month, they’re using 10 per month, 20 per month.

And make it sure there is a controlled process on that, because the worst thing that would happen that is to sell lot of these lasers and then not to be able to supply the probes. So that reason why Jim talked about the stage life.

So you get the model or you get the model right going out and we’re saying all right it’s going to be between five and 20 probes for month what is it and that gives us the chance to be able to produce the probe we want before we release it to all our sales people and including internationally..

Are we producing the probes ourselves or is that outsourced as well and I would have thought that would be the least getting factor maybe I have misperception there?.

Jason you’re correct they’re outsourced we use third-party on the probes..

Can they scale up that we needn’t do?.

Yes, yeah, yep. We just its Will’s point we just want to try and understand that the throughput rate if you like that we’re going to start to see, but yeah as you said it’s easier to have that in the hands of third-parties, because they can scale more quickly..

And is that more, because you have to make volume commitments to kind of know your pricing once you kind of have things settled in here in terms of the rate so you don’t want to over commit or just trying to understand that logic?.

Well typically you’re going to take multiple week shift not a number of months to sort of rebalance your supply chain at any one time. If you come out too fast and you find out that your volume rates per box is too high you can’t get self to basically run out of air for a little bit.

And the biggest thing here is we want to make sure that the procedure becomes a habit to the doctor. So you can argue that if the guy basically stocks out for one to two week is that a big problem. Well then you’ve just lost the habit for two weeks and you rather not do that..

Right..

So we’d rather have the placed out with people trying to understand their volume rates and then we do buy ahead we’re buying ahead a couple of months, but we’re still talking about relatively small numbers as we scale off. So we just want to make sure we understand the rates and therefore we get the full casting and commitments lined up properly..

And you I think the group that was using a kind of our control group or test group over the last what it’s got to be about a year now or so sort of the proof-of-concept group.

Can you give us any feedback on where those doctors are in terms of have they continued their interest in the product are they kind of being weaned off of the test group pricing and termed it -- turned into commercial customers and our are they still using it in their practice even though that perhaps they’re paying for now rather than just getting it for free?.

Well I can definitely tell you that we’re weaning them onto the commercial product so that’s underway so they all will be moved into that and there’s been no pushback on that at all I did have chance to meet with the sales guys on the East Coast in April and we were fortunate to have a visit by one of the doctors one of the key opinion leaders Dr.

Radcliffe. And he made reference that yes he has three sites that he operates with in the New York area and he actually is claiming that he carries his later on his backpack as he move to site to site to site, because he doesn’t want to be in any site without the opportunity to do it.

So I think that’s a pretty strong test too and he has founded a very useful tool it is as he’s volumes are good I did ask him why his volumes were better and his answer was he just gets busy.

So I think that’s one of the reasons why we talk about making this we have to make sure we focus and spend time to make it a habit a high growth off usage, but he was very, very keen and he was talking to sales guys and explaining his enthusiasm so it’s great..

Yeah hopefully they sold him two more laser so he doesn’t have to have under his arm all day, but all right well good to hear it’s doing well thanks a lot for the hard work..

Okay, thanks Jason..

[Operator Instructions] Our next question comes from [indiscernible].

Good afternoon, gentlemen..

Good afternoon, Stan..

How are you?.

Good thank you..

I understand why there are proprietary position is with these products that you’re introducing and developing you’ve gone to China so what’s what do you feel is a protection on the products that you’re developing for glaucoma?.

I’ll response first and then Jim can jump in. I think Stan, the protection comes in the beginning from three sources one of which is intellectual property and you’ve heard us talk about the patent being issued on the iClip.

There is a patent on the MicroPulse P3 probe and on top of that the other protection has to do with the way we manufacture this using an RFID tag system that prevents others from tapping into our laser by producing some other probe and then trying to get our that to work with our laser.

So there’s three mechanism the other product that I think the protection comes from the same point and you may approach Jim talked about this in the past, which is it’s in the colors and appliance versus a full laser system internally and that is because we’ve tried to find a way to make this product this laser product specific so we can reduce the cost structure.

So that we can come with this model, which Jim has described earlier about a razorblade vis-à-vis meaning the laser so cheap we can put at in on a contract basis or use our probes. And then it becomes a rapid realistic grab and our pricing structure it says that I think we have a substantial window in front of us before somebody else shows up..

Well so commercially you feel very comfortable that we’re not going to get a lot of copycat cheap copycat?.

Well I think that my comment and my prepared remarks talked about I think given it’s relevant again. We’re having people watching here what we’re doing on a constant basis so we don’t get to sneak up on people as fast as we used to.

So then we’ll have to be a little more precise to what we do and in the past developed products come out with new things with some IP and whatever and in the beginning your price is so higher to make all your margin up for what that does is it attracts so many competitors that you’re fighting them later.

So Jim and I spend time taking out the right pricing model that gave us the margins we want, which is substantial, but not to the point where they’re greedy, which attracts the lot of competitors. So I think we’re in pretty good shape, we’re certainly going to find out and so far I’m pretty happy with the results.

But as you one just a second Stan to answer your question I can’t ever say we’ll never have competitors that will show I guarantee you..

Okay so in your we seem to be a volume or dollars they’re limited when do you see us start breaking out a little bit from our past history and we were doing good, but we’re not told you but I call great. Do you see that occurring into the next year or two.

You’re doing now you’re trying to model a program so when these stop modeling and start really been able to sell the concept come but you don’t have the clip yet so we can’t sell that.

When do you see sort of a breakout or change in what we’ve been used to the last several years?.

Well if you are asking for when do we see greater up-tick and in the increase in sales I mean I can sit here and look at Jim and come back and go well when we started about these things our quarters were left in $8 million now we’re reaching right around $11 million to $11 plus million that’s a pretty good increase and I expect that to continue to go up.

Now the issue what we had until today has been it’s very lumpy it’s hard we’re related you could have a good quarter or weak quarter a good quarter or weak quarter..

Right, right..

Now we’ve got a program in place that we place the laser and this is when you are talking about can we get expediential growth you place a laser they use probes every month and next month you place new lasers they use probes every month and after about a year so you got this installed base using probes that is on top of what you sell in hardware going forward.

So I think the -- what you’re seeing you’re talking strategically and you’re asking when that exact time is and that when that I’ll say an inflection point starts to increase up little bit even higher.

It’s probably 2016 I think you’ll see continue to see growth rate that are going to stay in the $10 million so we always said if we go better than $10 million we should get upwards M&A less than that we shouldn’t. And I think we can start seeing some in that when we have this expediential growth caused by the consumable thus tapped into our product. .

Do we have the marketing and sales capability domestically to do higher growth?.

Sure..

We do..

Yeah so I mean it’s the thing that the Jim did it’s couple of years ago buying the sales channel from Peregrine when we made that deal. We now have 30 people in the field 10 are on direct and 20 are independent and a lot of those guys that are independent have been selling glaucoma products.

We can touch a lot of physicians with 30 people both in retina and glaucoma along with the comprehensives..

Okay and so the margin on these new products would move us up from where we are we’ve been in kind of a range of in the 50% range.

Do you envision that we can move up the curve especially with these unique disposables?.

Yes Stan yep I mean that’s as we count in the past that that definitely been part of the long-term plan was to get initially was to get into the 50%, which is where we are now and then deal point yeah once we start the market with a Cyclo G6 appliance and we start to see the pull through on the probe side of the equation.

The probes are one of our better margin products so we’re just okay that’s behind and take us up and get us to the we always set ourselves for longer term goal of 55% and that’s how we’re planning to get there..

And the show the response you got from the show was extraordinary?.

I’ll respond to that Stan I’d say yes it was. There was a couple and there was one thing that became even very exciting for me besides our poster so we knew about it was a poster presentation from the University in Mexico City that was looking at glaucoma and the cost to treat their patients in their country.

And they said that the cost of treating glaucoma was reaching 40% of the personal family income that’s been unsustainable we’ve got to find a new way to do it and he saw our poster and he was over an artist at our booth and was asking me to get a hold of our Mexican rep to go see him. These things this is really kind of I find to be quite exciting..

So this is really a break well that’s good, that’s good okay, thank you I don’t want try or call up thank you..

All right thanks then..

[Operator Instructions] There are no further questions at this time, I would like to turn the floor back to Mr. Will Moore, for closing comments. .

Thank you, operator. And thank you all for listening there and participating in our call. I hope you can understand how excited we’re in regards to the glaucoma initiatives.

The one thing I’ll say with this we have to make sure that we maintain our patients with this passion, because the technique that Jim talked about is critical as well as the continued supply of our product both in lasers and probes.

And as we get that process well held out I think we can see a substantial ramp in the upcoming quarters and our revenues. With that I’ll say thank you and look forward to talking you in the future. .

This conclude today’s teleconference. You may disconnect your lines at this time. Thank you very much for your participation..