Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the IRIDEX conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star one. I would now like to turn the conference over to Trip Taylor, Investor Relations for IRIDEX. You may begin. Thank you, and thank you all for participating in today's call. Joining me from the company are Patrick Mercer, IRIDEX's Chief Executive Officer, and Will Moore, a member of the company's board of directors, one of two new directors recently appointed following the strategic investment made by Novel Inspiration International. Before we begin, I'd like to remind you that the company 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 fact, 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 discussion of the risks and uncertainties associated with our business, please see the 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, April 16th, 2025. With that, I'll turn the call over to Patrick. Good afternoon, everyone, and thank you for joining us. Today, we will be discussing three important topics with the intention of providing stockholders with information relating to the current and much-improved state of IRIDEX's business and our path forward working with our new strategic investor, Novel Inspiration. The three topics are, first, a review of the operating changes and improvements we have made over the last two quarters, particularly the significant cost cuts that we have made to bring our spending in line with continuing revenues. This has very quickly led to break-even, or better, adjusted EBITDA and cash flow operations. Second, I will speak briefly on the company's preliminary Q1 2025 results. Third, Will Moore and I will provide color around the recent strategic investment in the company and the resulting partnership between IRIDEX and Novel Inspiration. After that, we will invite questions for call participants. Let me begin things by reviewing the material changes we have made to our business operations since I took over as CEO at the beginning of October last year. Starting in the fourth quarter of 2024, we have aggressively executed a number of significant cost reduction programs designed to bring our operating expenses in line with our revenue. As highlighted in our earnings call last month, we quickly accomplished our goal of delivering positive adjusted EBITDA in the fourth quarter and reporting a 10% sequential increase in revenue. Our top-line results totaled $12.7 million in the fourth quarter, with CycloG6 glaucoma product sales growing 9% year over year. As we communicated via a press release this week, our strong fourth-quarter results were followed by first-quarter 2025 results that demonstrated continued operating momentum and financial discipline. For the second consecutive quarter, we reported year-over-year revenue growth and expect positive adjusted EBITDA. We are very encouraged by the speed and continuing progress from our efforts. Demand for our CycloG6 product line remains strong, supported by improving commercial performance in the glaucoma segment, consistent with our expectations following the LCD reimbursement change, which we believe favors our non-MIGS treatment offering. On March 19, 2025, we announced a $10 million investment in IRIDEX by Novel Inspiration. This transaction was done at a price of $2 per share on an as-converted to common basis, inferring a valuation premium for the company of nearly 2x where the stock had been trading in the weeks leading up to the transaction. The ophthalmic sector in which the company operates is currently engaged in a very involved and therefore very slow-moving consolidation. The latest example came only nine days following the Novel investment when, on March 28, 2025, Topcon Japan announced a management buyout to be supported by KKR. As we've been discussing since our recent strategic announcement, the Novel investment must be considered in the ongoing industry consolidation. Rather than continue to wait indefinitely for the larger players to find room in their schedules to complete a transaction with IRIDEX, we have partnered with Novel, who sees the significant value of the IRIDEX franchise and the potential to enhance that value by becoming a more active participant in the ongoing market reshuffle. Starting in October 2024, in reaction to recognition that our strategic process was not proceeding on the path and timeline originally intended, we began taking steps to position and strengthen our business for the longer term. This led in March 2025 to Novel's investment and this call where we will discuss why Novel invested $10 million at a premium valuation of $2 per share and why they negotiated the opportunity to invest an additional $10 million to support further growth and product development initiatives. This new partnership reveals a shared vision for innovation and long-term value creation. Novel is not a passive financial investor. It is an active investor in our space with the ability to not only recognize the significant value inherent to our business, but also to add sector experience and the interest and ability to add additional growth capital as our value creation plans and opportunities develop. To speak more about the strategic rationale and what this partnership means for IRIDEX moving forward, I'll now turn the call over to Will Moore, a former CEO and a past and present member of our board of directors, who also identified the opportunities present for IRIDEX right now and who brought us together with Novel. Will? Thank you, Patrick. I'm very pleased to be participating in this call with the opportunity to provide insight and context for Novel's strategic investment in IRIDEX. As part of this, I'd first like to share some information on my professional background and experience. I have over 30 years of executive management experience in the captive disposable med tech market. This experience involves both public and private companies. I've been involved in two initial public offerings involving medical device companies, one with Goldman Sachs and the other with Cowen Incorporated, now TD Cowen. As an entrepreneur and operating company executive, I've raised capital from venture investors, private equity, and with the help of investment banks. I'm a co-founder of Natus Medical, a medical device company that saw great success leading to an exit value of greater than $1 billion. I've served on multiple public boards of directors, and my career has largely been focused around identifying small public companies that, despite having great brands, have fallen out of favor and are discounted by the market. Often, these companies have gone through periods where they lacked fiscal discipline, having been pursuing poor strategies, failed to execute, or all of the above. IRIDEX and Novel Inspiration are two entities well known by me, but I have complementary ambitions. It seemed to me an obvious opportunity to make the introductions that led to Novel's investment in IRIDEX. Novel's strategy is simple: to invest in companies that are undervalued with a loyal base of global customers, stable revenue, with clear opportunities to improve operations. Novel's long-term objective is to create shareholder value, increasing market valuations via simple approaches, most often based around improved strategies, more accountable operations, and often small accretive and synergetic acquisitions. IRIDEX is a well-established ophthalmic laser company with a great brand, global physician recognition stretching back 35 years. It has thousands of loyal customers and an installed base of product that must be counted in the tens of thousands. The company has continuing business potential that is currently being greatly and improperly discounted by the public investment community. IRIDEX's prior cash burn has likely had an effect of discounting its market value. That was a result of an overly ambitious product release strategy and has not played out as originally expected. IRIDEX's recent actions and its greatly improved operating results over the last two quarters demonstrate that the company can execute, and its new leadership has financial discipline necessary to secure a future that Novel believes will lead to continued growth and greater profitability. Going forward, we think Cecil will be a product of several things. One is optimizing gross margin and, two, better and faster responsiveness to customers, especially those working with IRIDEX through an international distributor. One of the governance and oversight changes that we've put in place to address these areas of focus is a new strategy and budget committee for the board of directors. The plan is for this committee to increase accountability, more quickly identify departments that are not meeting the objectives and goals, and thereby improve short-term and long-term operating execution. The strategic budget committee will also seek to drive the identification of revenue growth opportunities, both in IRIDEX's historic segments and customers where the company's strong international distribution platform can be quickly and effectively leveraged. We expect this effort will involve pursuing some small accretive acquisitions. This thinking is the rationale for Novel having negotiated the ability to invest an additional $10 million in the company. The first $10 million is intended to be more than sufficient for the company's normal operations, given its new financial discipline. The second $10 million is intended to help finance growth and acquisition opportunities. We believe the Novel investment and the prior operational improvements have greatly decreased the risk of IRIDEX's business model, and we are confident that Novel working with the company validates IRIDEX's potential to create value, improved operations, and global distribution of its leading technology and others. In coming days, I hope to be part of an effort to reach out to the company's largest shareholders to discuss our strategy and garner support for our go forward business plan. Operator, please begin the question and answer portion of this call. Thank you. Thank you. We will now begin the question- and- answer session. If you have dialed in and would like to ask a question, please press Star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press Star one to join the queue. We do request for today's session that you please limit to one question and one follow-up question. Thank you. Our first question comes from the line of Aaron Warwick with Breakout Investors. Your line is open. Hey, thanks for taking my call. Am I understanding correctly, I guess from what you're saying, that you are now interested in potentially making an acquisition yourself, but also at the same time, not just what you said today, but also on the Q4 call, it sounds like you're still open to transactions that might involve selling some of your assets, even though the official strategic review has completed. Is that accurate? You're interested in both making acquisitions and possibly selling assets as well? Hi, Aaron. This is Patrick. Thanks for the question. Yes to both. One of the reasons we came to one of the things we liked about working with Novel on the transaction is they had a shared strategy. One of those strategies where we were open to folding other companies into IRIDEX, bringing those assets in-house. Also, obviously, any offer that the company gets, if it makes sense for the shareholders, would be considered. I mean, we're not in the same place we were back in Q4 where we were low on cash. We're in a much better cash position now. Of course, any offer that was brought before the company, if it made sense for the shareholders, the board of directors would consider it. Just to reiterate on the first part of your question, we do share the strategy that we will look at opportunities to acquire assets that are accretive to our business. Okay. Are you, I mean, in terms of the growth that you're talking about and that Novel seems to have identified some opportunities for you as well, should we expect that on both the retina and glaucoma side, or is it just going to be more one side than the other? Hopefully, we'll see. Yeah. So yeah, this is Will. The issue that we look at doing investments, our strategy all along follows a model that was built underneath Natus Medical. That is we have to reach a point where we have a valuation that's reasonable. I mean, currently, we're valued at roughly $16 million-$18 million. With a stable business of $48 million-$50 million and $10 million in cash, we think it's clearly undervalued. We've got to pick that up so that our stock has some value to it. Then we can look at acquisitions that are undervalued and roll those into our business. That's how you're getting the accretive situation. Now, having said that, the cost of doing business in opening up new distribution channels, calling on new doctors, is very expensive. We will focus on companies that provide product to the customer base we have so we can utilize the current distribution channel and leverage our distributors on a global basis. Excellent. Excellent. Is it okay for me to ask one more question, or do I need to find if I can't? Sure. Yeah. Yeah. Especially when we're talking about international stuff, and I know you guys have been involved in that for a while, what kind of impact are you thinking there could be with the tariff policy? I know there's a lot of uncertainty around that, but how much do you see that potentially impacting you, and how much can you mitigate it? Yeah, I'll take that. Look, while we do rely on some outsourced components globally, particularly around precision or electronic components, these are only between about 10%-15% of our system components. We feel that one of the advantages is that 90% of our manufacturing is already done in the US. That would put us in a stronger position than many of our competitors, particularly those that are dependent on overseas production. We'll still see an impact because of some of those components, raw materials that we do have to procure that are outside. Again, those are small, and we're far less exposed to the cost and the logistics disruptions than some of our competitors are when they start importing finished devices. We actually see this as a competitive advantage, especially in the US. Good to hear. The 10%-15%, is that in China, Japan? Whereas can you say where and perhaps it's in your 10? Yeah. I mean, I would probably say a lot of it. I would say probably 7% of that. I would say half is China, and the others is all over, quite frankly. Okay. Okay. Thank you, guys, for the time. I'll let others step in now. Thank you. Our next question comes from the line of Jason Stankowski with Clayton Partners. Your line is open. Hey, guys. Hey, guys. Thanks for doing the call. I guess you mentioned that the board and management was disappointed with the strategic process, and you could not get people's attention. Obviously, the new product rollouts and the money losing that has happened at the company has also disappointed shareholders as well. Can you talk a little to the recent results, maybe, and how they might lead to a different path now that we have this new partner? Are there efficiencies that can be brought that just were not acted upon because of sort of legacy thinking? How different is it going to be going forward? There has been a lot of restarts at this company for a long time. We were investors probably 15 years ago when there was a restart, and it kind of petered out. Maybe some context on why this can work right here, right now, and what you're willing to do to make it different and enduringly different, I guess, going forward. All right. Jason, look, we want you back. If you were an investor, we want you back. First, I'll say that. Listen, let's start. Your question, you said a lot there, so I'm going to break it down a little bit, and then if you need to follow up if I missed something. Look, we were in a strategic process, and it wasn't a complete failure. We had many interested parties. We were really close with two of them. We were really at the altar with one of them. Quite frankly, those parties entered a strategic process and themselves got acquired. That was last year. Since we were spending too much money last year, we took action. We reduced our spend dramatically. We got ourselves financially healthy. We're reporting positive about two quarters in a row. You're asking what's going to be different? I mean, the difference is we're not burning cash. We're trying to first prove that we can be good stewards of money financially. That's number one. We've taken the action internally. We looked at every line item of expense. We cut people. We cut processes. We cut waste. We looked at everything. We're running lean and mean now as an organization, but we are turning things around, and we feel good about it. You asked, we did this partnership. The reality was we were getting low on cash. That's no secret when we went into this relationship. Now we're not looking at that as a negative anymore. We're okay in that position. We still have IRIDEX has still strong brand recognition, particularly on the retina side. We've gotten good news from the LCD announcement on reimbursement. We got a potential to fold companies into IRIDEX if that's what we want to do. We have the opportunity to still explore other options for strategic partners. We are very happy with the relationship. Are you still? Go ahead. Are you still manufacturing lasers in Mountain View, California? We are manufacturing some. We're manufacturing some in Mountain View and some elsewhere, other places in the U.S. When we moved on from the investment, it boggles my mind that the board and who can afford to manufacture commodity products in the most expensive town probably in the world or nearly right next to Google's offices? Is that something that's on the table to actually it can't be efficient. I didn't think it was 15 years ago or 12 years ago when we exited, but it seems like an obvious thing that just has never been done. Right. Yeah. Jason, this is Will. I'm glad to hear your voice. Good to talk to you again. To do something that we're as investment with Novel, things will not be the same. There will be changes. We understand. I mean, there's things going on with tariffs we don't have control over. What Patrick's done is control over the cost at this point in time, and he's right-sized the business. He and I have been talking about this for a while. He's done a good job. The next thing, he is an expert when it comes to operations and transferring technology. I'm sure he's going to do a good job with doing that because we totally agree with you that we are in one of the highest-priced areas to manufacture product, which is fine if you have high-margin products and you can afford to pay a lot of money to people. That's not this business. We're in a commodity competitive marketplace. We realize that. Luckily, we have connections with Costa Rica from Patrick and through Asia with me that we are looking at all avenues. The other piece to answer your question, and I think where it really comes into play, this company was developed by an engineer to design and build product. We are now a company that's more of a marketing company. What we will be doing is outsourcing as much as possible. We will be doing accretive acquisitions to add to the profile. You're being a financial genius you are, as you're going to understand that when we do accretive acquisitions, if our multiple, it's like one and a half, two-time sales, we find somebody that's at one-time sales, we drop their money, their revenue inside of our business, we get leveraged that way. The other part is we're on a path to move the company up substantially in revenue, not just a slow growth. What will happen in the first phases that we're dealing with is Patrick will work with getting this outsourcing done. We've put together the strategic committee on the board, which will allow us to identify when we're not meeting certain goals more rapidly, and we will work as a team to be able to come up with where these acquisitions are. Those will depend on whether tariffs are there or not there, which might put into where we have locations we go to. Okay. Yeah. I guess I'll just leave it with it'd be great to hear a commitment that there's, forget the manufacturing location, but just company-wide, that there are no sacred cows to sort of be beholden to. You'll take a fresh look at everything and optimize sort of regardless of the internal inertia. You'll bring a sense of the shareholders or a sense of urgency to the plan, not just, I understand there's a lot of constituents, but in this company, the shareholders have really seemingly not been kept at the table the whole time, as is evidenced by stock price, the cash burn. I guess one more thing that I'll leave you with or ask you about. You mentioned revenue multiples, and hopefully that ends up attracting growth investors and different types of investors. I think right now where you're valued, your Achilles heel is the lack of any cash generation. Are you committed to in the development of growth, are you committed to staying cash flow neutral or positive? Are you looking to be positive while we go on that journey with you? Kind of how do you think about that? Because revenue doesn't do much for a company that's having to go out and look for money at low valuations. I'm just curious how you're thinking about that. Thanks. Sure, Jason. Yeah. I I always love your questions. No sacred cows. You have to look at what Patrick's done and what the board has done. The board has changed, been reshaped with myself and Nick Chin. Patrick has taken and controlled the expand. He basically follows the model. I have so much revenue, I have to produce so much profit. That's the first phase. It's stabilized, and then he's got to show you that he can manage money. That is the case. Right now, the only people that we think we can talk to are really deep value investors. That's what we'll focus on. As we get better, we'll continue to move up that line to people that are more in the momentum or other areas. This is a slow process, but it's not and it's complicated. It's not trivial, but it's straightforward. We've done it a couple of times in my career, and it's clear that it's been done here a couple of times too. The real piece is getting the multiple on this company up, and that's going to come with some growth and some increased profitability. Patrick's given us the commitment that he, under normal circumstances, which is not what we're in right now with tariffs and things, will maintain profitability on a go-forward basis. Hopefully that answers your question. If it didn't, you know how to find me. Our next question comes from the line of Mark Gomez with Pipeline Data. Your line is open. Hi, gentlemen. Great progress there. It strikes me that you have two businesses, right? One that hit critical mass several years ago, decade in fact, and another that holds great promise, perhaps more so than the first, but still requires great investment. Is there any sense that you can give us as to how profitable the original business is and how much of a cash drain the other is? I think what's interesting here is what I'm saying is that the value of the total enterprise has probably been obfuscated by the fact that you do have these two entities that have two completely different profiles. Wall Street, when an enterprise like that separates into its two constituents, a great deal of shareholder value is unlocked. Thank you. Yeah. I think I understand your question. Yeah, we are seeing our retina business is, it's a 3%-4% grower every year, but currently it brings in two-thirds of the revenue. Our glaucoma business, we made a bet on our glaucoma business last year and earlier in 2023. We hired a bunch of salespeople. We went and tried to grow that business, and we were not successful. We did not have some of our ducks in a row as far as what settings should be used, and we had to take another look at that. We have improved that. We now have settings that work and show efficacy in the marketplace. With the new LCD and our new focus on looking at the post-MIGS category and being used earlier in the continuum of care for glaucoma, we really do believe that's the growth side of our business, and we should see that growth continue. We are going to continue to see the 3%-4% growth in our retina business. It is a capital equipment business that, as you know, with inflation in the last year, has taken a really big hit. We are going to continue to focus on that. Did I answer your question? I want to make sure I answered your question first, where you were going with that. Ideally, we would get a sense as to the profitability of each unit, right? And in lieu of that, maybe just some qualitative sense. Just to illustrate that the retina business is sort of a cash cow sitting within the organization where there also exists the glaucoma business, which holds great promise but requires continued investment. Yeah. I mean, on the retina side, as far as profitability, we are predicting flat year over year. In our retina business, it is relatively, it's been a 3%-4% growing business profit-wise. Overall, we're not projecting any kind of real profit there. We are continuing to grow that business because it does deliver $30 million in revenue. We're going to focus on our higher margin products with our recurring revenue on our probe side, which delivers around 80% gross margins. That's where our real focus is of the business, and that's where we really need to see the growth on that recurring revenue. Right. Is there any sense that you could provide with regard to how much of a cash drain the glaucoma business is? Historically, it hasn't been a cash drain. We will not be moving forward. I'm sorry. I don't know what's behind me. We see it as great profit moving forward. We don't see it as a cash drain. This is Will. I'm going to jump in with this a little bit. You have a variety of products, and their disposables, as Patrick just said, have a high margin. You can't get to the disposables unless you sell some of the hardware. Sometimes you're going to have hardware which has a lower margin. The resolve to deal with that is to find a way to be able to manufacture it at a cheaper location than where we are and maybe redesign componentry to the current market conditions. You have to sell hardware, which is always in our business because there's so many competitors. It's always competitive. The trade-off is we can look at selling a piece of hardware for a certain dollar amount and then see the tail of disposables to last for 10-15 years. I do not want to discount the idea of not selling retina because the hardware is not as valuable. It is valuable to be the base of business for your disposable, which is the business we really want to be in. That is the term we call captive disposables. Once they make the investment of your equipment, they are going to buy disposables, and they are going to buy it for at least 10 years because that is the amortization period they take in the hospital. Hopefully that is a little more clarity for you. Yeah. That's great, Colin. Thank you. That concludes the question- and- answer session. I would like to turn the call back over to Mr. Patrick Mercer for closing remarks. Thank you for your time and attention today. That concludes our call. We appreciate all the questions, and we're happy to take future questions directly to us. Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.