Ladies and gentlemen, thank you for standing by. Welcome to the Second Sight year-end earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on today’s date, March 9, 2017. It is now my pleasure to turn the conference over to Lisa Wilson, Investor Relations for Second Sight. Please go ahead.

Thank you, Johnny. Good afternoon and welcome to Second Sight’s fourth quarter 2016 earnings call. This is Lisa Wilson, investor relations for Second Sight. With me on today's call are Dr. Robert Greenberg, Chairman of the Board of Directors; Will Maguire, President and Chief Executive Officer; and Tom Miller, Chief Financial Officer of Second Sight. At the close of market, the company issued a press release detailing financial results for the quarter ended December 31, 2016. The press release can be accessed through the Investor Relations section of the Second Sight website at SecondSight.com. You can also access the webcast of this call from there. Before we get started, I would like to remind everyone that any statements made on today’s conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Second Sight management as of today and involve risks and uncertainties, including those noted in this afternoon’s press release and Second Sight’s filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Second Sight specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. A telephone replay of the call will be available shortly after completion of this call for the next two weeks. You'll find dial-in information in today's press release. The archived webcast will be available for one month on the company's website, SecondSight.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on March 9, 2017. Since then, Second Sight may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings. And with that, I'll turn the call over to Second Sight’s Chairman Dr. Bob Greenberg.

Thank you, Lisa. And thank you all for joining our call this afternoon. As we turn the page on 2016 to focus on implementing a refined commercial strategy in 2017, I’d like to take a moment to recap some of the meaningful actions we took to address the challenges of the past year and to better position Second Sight to take advantage of the exciting opportunities ahead of us. Our efforts with CMS resulted in a successful increase in the Medicare hospital outpatient payment rate for 2017 from $95,000 to $150,000 for the Argus II and the implantation procedure. This allows centers to appropriately be reimbursed for both the device and the surgery and we expect it to have a positive impact on a number of US implants performed in 2017. In addition, our application for two new Category III CPT codes for postsurgical programming and reprogramming the Argus II were approved and become effective on July 1, 2017. We also implemented a revised Centers of Excellence strategy and formed additional distribution partnerships outside the US, and you'll hear more about that from Will. On the R&D and clinical front, we have also made progress toward expanding our addressable population. We successfully implanted a wireless visual cortical stimulator in a human subject providing the initial proof of concept and early safety and performance data to support the Orion I program. We expect to file FDA and European submissions this year to clinically test this groundbreaking technology that has the potential to restore useful vision to patients who are blinded by nearly all currently untreatable causes. And, of course, we remain committed to improving the patient experience with the Argus II which is why we are developing and begun testing new retinal simulation techniques in our patients. Our goal is to continue to improve the quality of the vision achieved with the Argus II and also to expand our treatable population to better cited RP and AMD patients. We’re confident that our efforts in 2017 will lead to broader adoption of the Argus II and demonstrate the ability of our technology to treat an even greater number of individuals. I will now turn the call over to Tom Miller, our CFO, who will review our fourth quarter results. Tom?

Thanks, Bob. For the fourth quarter of 2016, net sales were $715,000 compared to $2.4 million in the fourth quarter of 2015. The decrease in revenue was mainly driven by the decrease in units sold, which declined from 21 units in 2015 to 7 in 2016. The average revenue per implant was $102,000 in the fourth quarter of 2016 compared to $112,000 in the fourth quarter of 2015. With the increase in the CMS reimbursement rate for 2017, we expect that our average revenue per implant will be in the range of $110,000 to $120,000 in 2017 depending on the geographic mix of implants. We generated a gross loss of $2.6 million in the quarter compared to a gross profit of $691,000 in the fourth quarter of 2015. The cost of sales for the fourth quarter of 2016 was $3.3 million and includes approximately $686,000 of unabsorbed production costs due to lower production volumes and a $2.3 million charge for excess inventory. We took certain steps during 2016 to reduce our manufacturing production and will continue to monitor our inventory levels. When demand dictates, we will resume normal production of Argus II implants. Until then, we expect to continue to generate unabsorbed manufacturing overhead costs, although we do not anticipate further large inventory reserves. We still believe that the Argus II can generate a solid, positive gross margin as sales ramp in future periods. R&D costs, net of grant revenues, were $2.1 million during the fourth quarter of 2016 compared to $546,000 in the prior year quarter. The increase was primarily due to higher spending on staffing, outside consultants and services, as well as the utilization of excess capacity and manufacturing to help develop the Orion prototype and other new products. In 2017, we expect to see R&D costs continue at current spending levels. Clinical and regulatory costs decreased to $748,000 during the fourth quarter of 2016 compared to $967,000 in the prior-year quarter due in part to lower new patient enrollment and post-market clinical trials. We expect clinical expense to increase in 2017 as we begin clinical trials for the Orion cortical prosthesis and better cited patient trials with the Argus II. Selling, general and administrative costs were relatively flat at $5 million versus $4.7 million in the fourth quarter of 2015. Our net loss for the fourth quarter of 2016 was $10.4 million or $0.24 per share. This compares to a net loss of $5.5 million or $0.15 per share for the fourth quarter of 2015. Our non-GAAP net loss for the fourth quarter was $0.17 per share compared to non-GAAP net loss of $0.13 in the fourth quarter of 2015. A full reconciliation of our GAAP net loss to our non-GAAP net loss, including the per-share reconciliation, can be found in the tables at the end of our earnings release. Moving to the balance sheet, as of December 31, 2016, we had $10.9 million of cash and money market funds with no debt. We are also pleased to announce the successful completion of our oversubscribed rights offering. We expect to receive approximately $19.7 million of cash after deducting costs related to the offering. The offering was priced at $1.47 per unit and we sold approximately 13.7 million units. Each unit consists of one share of common stock and a warrant to purchase an additional share of common stock at an exercise price of $1.47. The warrants have a five-year life, are exercisable on issuance and will be listed for trading on the NASDAQ under the symbol EYESW. We expect to issue the new shares and warrants in the next several business days. The shares will be immediately tradable and we expect warrants will be tradable later in the week after final clearance by NASDAQ is received. This cash should last us until the first quarter of 2018 and possibly beyond that if we see strong sales in 2017. With that, I’ll turn the call over to Will.

Thank you, Tom. As Tom noted earlier, we performed seven implants in Q4. Two of these were in North America and five were outside North America. For the full year of 2016, we performed 42 implants globally. As Bob outlined, we made progress on several important points last year to refine our strategy and position ourselves for a stronger 2017 and beyond. We expect implant volumes to grow in 2017 due to our efforts to increase reimbursement coverage globally, coupled with the implementation of our revised US Centers of Excellence strategy. In fact, as of today, we have completed nine surgeries this year and have an additional six scheduled before quarter-end. Please keep in mind that scheduled surgeries can be canceled or rescheduled for subsequent quarters. Let’s now review progress in the US and Canada. We’re building a platform based on Centers of Excellence, capable of delivering a full range of high-quality services critical to optimal patient outcomes, including patient recruitment, post-surgical programming and artificial vision rehab. In 2016, we had in-depth discussions with the majority of our existing US implanting centers and spent time with dozens of our Argus patients to critically assess the support we were providing and identify areas of improvement. Our revised US Centers of Excellence program is a direct result of this assessment. In short, we are establishing a network of high-quality surgical centers that are committed to performing a volume of four plus implants per year, possess the ability to do patient screening and post-surgery programming and are capable of managing the artificial vision rehab process. The majority of our new centers will be located in geographic areas with existing MAC reimbursement coverage in order to draw from a larger pool of prospective patients. Let’s review some of our efforts to address the needs of our Centers of Excellence. First, after doing limited patient outreach in the US throughout much of 2016, we are aggressively moving ahead in our patient outreach efforts. We also hired two medical professionals to clinically screen prospective patients before referring them to a center. This streamlines the screening process for our accounts and provides a much higher percentage of qualified patients. These efforts in Q4 produced 485 inquiries with 85 prospective patients who were then referred to a medical professional for a clinical phone screen. Of these 85 prospective patients, approximately 15 have been deemed current candidates and have been or will be screamed at our implanting centers. Some of these patients have already been scheduled for surgery in Q1 or Q2 and the balance are likely candidates to move ahead at some point in the near future. This is an important base we're building and managing. We now maintain frequent contact with these potential patients via our patient nurturing program. We continued our outreach efforts in Q1 and see very similar numbers. This database will provide an increasingly important direct link with the current and new centers of excellence. Second, we addressed the time required for postsurgical programming and reprogramming. As discussed in the past, we reduced programming time from two days to about a half-day with software improvements. As Centers of Excellence repeat the process on a more consistent basis, the programming process will become routine and less time-consuming. Third, and perhaps most importantly, we are focused on improving and standardizing the postsurgical experience of the patients during artificial vision rehabilitation. As we talked to many patients and rehab care providers, several themes emerged. One, the quality and quantity of rehab received by each patient varied greatly. Second, the first 90 to 120 days are extremely critical for ensuring the patient gets high-quality instruction and remains motivated to incorporate Argus in their daily lives. As discussed in the past, each patient should undergo two basic types of rehab. First, low-vision training at the hospital or eye center and then orientation and mobility training at the residence and surrounding community. In hospital or eye center rehab focuses on recognition of shapes, letters and motion. This rehab is reimbursed by Medicare and performed most often by occupational therapists with low-vision expertise working at the eye center or hospital. The subsequent rehab takes place at the patient's home and in community and focuses on improving their mobility and orientation skills, such as they go about their daily lives – as they go about their daily lives. Since the second phase must be handled locally, we found quite a bit of variation in the quality and quantity of rehab provided. Various third-party organizations provide these services with funding from state and some charitable donations. We’re partnering closer with these organizations to ensure proper support for all patients, especially during their first 90 to 120 days post-surgery. As part of the partnership, we strive to ensure all providers provide consistent high quality rehab tailored to Argus patients and the unique nature of artificial vision. Making this rehab consistent and accessible for Argus II recipients is critical to achieving positive patient outcomes as well as reassuring surgeons that their patients will have the support required to gain maximum benefit from the surgery. The rehabilitation network needed for the artificial vision patients simply did not exist before we took on this commercial venture. We’re building that and learning along the way how critical it would be once we move into higher patient volume markets, like better vision RP, AMD and cortical stimulation. So, this work, while hugely important to our commercial activities today, is also a significant market development activity that prepares for the larger patient volume markets we expect to serve in future years. Finally, we have addressed the overall financial proposition of being an Argus Center of Excellence in the US. As outlined earlier, CPT codes will be available on July 1 to facilitate the billing for programming and reprogramming services. Next, as previously mentioned, the average national reimbursement of $150,000 for the device and procedure in 2017 represents an increase in excess of 50% versus 2016. This higher reimbursement rate allows us to price appropriately and ensure the institution is able to recoup all cost associated with the Argus surgery. Medicare coverage in the US remains unchanged with 5 of the 12 MAC jurisdictions in the US currently covering the Argus II. As a reminder, patients in non-covered regions, who have Medicare Advantage Plan, have the option pursuing Argus II technology by getting a preauthorization from the insurance provider. The Agency for Healthcare Research and Quality recently completed a technical assessment on retinal prosthesis in the Medicare population in Q4. The results of this study as well as additional clinical data published in 2016 serve as a basis for continued engagement with the remaining MACs to pursue reimbursement in those regions. We're hopeful these developments, coupled with refinements to our MAC coverage strategy, will drive additional growth through expanded coverage in 2017 and beyond. We expect to open a number of new Centers of Excellence in 2017 with a focus on areas with existing MAC coverage, such as Boston, Florida and New York. Adding the right centers with proper expectations and support is much more important than the number of new centers. With that being said, I still believe it is realistic to expect the addition of 5 to 10 centers in the US during 2017. Turning to our efforts outside the US, in Q4, England’s National Health Service acted on a recommendation from advisers to the government’s healthcare funding authority to fund a selected group of patients blind from Retinitis Pigmentosa, giving them access to the Argus II. With two centers, one in Manchester and one in London, we expect that a number of procedures will be covered in the second half of 2017, as part of this funding program known as commissioning through evaluation. In January of this year, the German Institute for the Hospital Remuneration System renewed its full reimbursement approval for epiretinal prosthesis, such as Argus II, for up to 15 hospitals under the annual NUB reimbursement program. We also continue making progress to secure funding in additional regions of Italy and are progressing with reimbursement application processes in Turkey and in Belgium. These reimbursement achievements and our ongoing efforts to expand coverage should support continued strong interest in our product throughout Europe and the Middle East. We’re also making progress in our pursuit of new distributor markets and expect to have regulatory approval and our first implants in Iran, Taiwan and South Korea this year. Sources of funding for implants will vary by market and may include charitable donations, hospital level funding, and/or eventual countrywide or regional reimbursement. As recently announced, Professor Stano Rizzo in Florence, Italy implanted his 30th Argus II patient. The Second Sight team in Italy has done an excellent job of partnering with Professor Rizzo for patient outreach efforts as well as developing a network of post-surgery artificial vision rehab providers throughout the country. Professor Rizzo and his site provide a blueprint for centers around the world as we strive to create other high-volume, competent Argus II Centers of Excellence. Turning to R&D and clinical research, we see significant opportunity for growth in treating better cited individuals. Most legally blind RP patients, those whose vision is 2200 or worse have vision that’s still too good to qualify for the Argus II given its current clinical indications. As a reminder, the Argus II is approved only for RP patients with bare or no light perception in the US and for patients with severe to profound vision loss due to outer retinal degeneration in Europe. Many of the patients we screen actually see too well and don't qualify for treatment. These better cited individuals may have a very small field of view and can sometimes only see hand motion, but are still disqualified for Argus. In order to reach this much larger pool of patients, who might benefit from the Argus II device, we have taken several development efforts and will conduct clinical work to study Argus in better cited patients. I’d like to review these efforts now. First, we're continuing the previously discussed R&D work to improve resolution through retina stimulation techniques. We are attempting to produce spots of light between physical electrodes, thereby producing virtual electrodes which may increase the effective resolution of the Argus II beyond the current 60 electrodes. Through another effort, the aim is to create sharper, smaller spots of light from each electrode. These efforts are software-based and do not require new implant. Initial results from tests conducted during the fourth quarter of 2016 and early in 2017 are encouraging and we’ll prioritize these efforts in 2017 to determine the benefit to existing and future RP patients. On the clinical research front, we will continue our retina stimulation testing with current US Argus recipients. We also intend to start a clinical trial in Europe with better cited RP patients. The purpose of this trial would be twofold. First, we want to test our current Argus technology with these better cited patients to understand the benefit in patients with healthier retinas. Second, we want to also test the new retina stimulation techniques with these patients in order to quantify the incremental improvement in performance. If successful with these efforts, we will pursue regulatory approvals and an expansion of our clinical indications and reimbursement coverage to include this larger proportion of better cited RP individuals. Treating patients with dry AMD also remains an interesting opportunity for us. We continue patient testing in our UK feasibility study, which was fully enrolled in 2016. Our patients enjoy the device and some report that they have been able to integrate their residual peripheral vision with the artificial vision provided by the Argus II without confusion. Going forward, it is our hope that the new retina stimulation techniques we are developing will allow us to deliver an even better experience for these AMD patients. To that end, we plan to submit a revised protocol on the first half of 2017 that allows us to test these retina simulation techniques with the AMD subjects. As with the RP clinical work, our desire is to understand the incremental performance benefit provided to this patient population. Although we have not yet demonstrated concrete benefits for these patients, with an estimated 2 million people legally blind from AMD worldwide, this could be a very important market for us in future years. Now, let me turn to our exciting work in visual cortical stimulation. This technology has the potential to restore sight to a portion of the roughly 5.8 million people worldwide who are blind due to untreatable causes. As we noted in our Q3 call, we are highly encouraged by the implementation and activation of a wireless cortical stimulator in a young woman at UCLA. In this procedure, we took a commercially available eight-electrode device and then planted it on the visual cortex of the brain, in the same spot where we plan to implant our 60-electrode device, the Orion I. We were able to apply energy and generate spots of light without any serious adverse events. We continue to test and monitor this patient and are collecting important data as part of that follow-up. Because the Orion I is based on technology used in the Argus II, we are able to leverage the reliability of the Argus platform and minimize some of the engineering investment cost and risk. We plan to file an Investigational Device Exemption application to the FDA and expect to begin the human feasibility study this year. In parallel, we will also file with the European agency to begin a feasibility trial for Orion I at a site outside the US in 2017. At this point, the design, development and testing of the implant is largely complete and most remaining development work centers on the externals. We look forward to sharing more information with you on this exciting opportunity as it progresses. One final note on R&D. We recently announced the appointment of David Jakes as VP of Research and Development. David is a great addition to our team and someone who has worked with us over the past seven or eight months as a consultant. He brings much experience in a commercial environment and will focus on predictable execution of our R&D projects. I think it is also worth noting that we undertook a few initiatives in the second half of 2016 designed to improve our R&D execution and build capabilities needed for future growth. First, we partnered with an experienced provider of medical device software development services to supplement our internal software development capabilities. Second, we hired a firm to lead the implementation of an improved process for project planning and project execution. Both initiatives are already showing positive [indiscernible] will result in greater R&D effectiveness and productivity in 2017 and beyond. In conclusion, I’d like to review our key objectives for this year. Number one, validate our recently implemented Centers of Excellence commercial model in the US. Our success here will be measured by increasing the number of centers performing at least one new implant per quarter during 2017. Number two, demonstrate the ability to treat better cited individuals in 2017. Success will be measured by clinical testing in humans that gives us confidence that we will be able to expand our addressable market. And finally, number three, implant Orion I in humans during 2017. Success will be measured by the successful implantation and activation of Orion I in a human subject. In conclusion, I am encouraged by the progress we're making on the commercial, R&D and clinical research fronts. I’m grateful for the efforts of the dedicated Second Sight employees and thank our investors for their continued support, especially with respect to our recently completed rights offering. With that, I will open the call for questions. Operator, please proceed with instructions.

[Operator Instructions]. Okay. Let's see here. Our first question comes from the line of Amit Dayal with Rodman & Renshaw. Please go ahead.

Thank you. It looks like we’re off to a stronger start in 2017, at least in term of the pace of the implants, do you think there is a possibility over the next few weeks, as the quarter ends, to add potentially more to the six scheduled implants?

Yeah, Amit. This is Will. I’ll answer that. There is a chance, I would say, at this point – it’s a pretty small chance because it does take some time to get a patient scheduled and make all the necessary arrangements to ensure the surgery goes all smoothly. I do know there are quite a few other patients in the queue. There is a chance one of those could be pulled into the quarter, but at this point, my expectation is additional patients would be scheduled in Q2.

And this number that you’ve given, the nine that have already been implanted and the six scheduled, this is both the US and international?

That is correct. That is correct.

Got it. And in regards to the revised strategy around building sales through the Centers of Excellence and providing this extended patient rehab support, how will that factor into maybe some cost increases on your side, if you could provide any color on that.

For the most part, the specific piece you’re asking about is the rehabilitation. And we're not necessarily going to be the providers of that rehabilitation service. What we're doing is we’re working with the various third-party providers – I’m talking specifically about the US right now – to make sure that we have kind of a standardized rehab program and then we’re able to identify and make sure the rehab providers are trained and competent and we have someone following up with the patient on a regular basis. So as an example, we don’t see much change really from 2016 to 2017 in our overall commercial spend. We’ll probably have one, maybe two people in the US that would be – that would have some of their responsibility to include rehab and following up to make sure all patients are getting proper rehab. But, again, it’s not going to be necessarily a service that we’re going to take on and have to bear the expense of. We do want to make sure it's happening. We do want to make sure it's standardized and happening appropriately, but it’s not something that we’ll take on and do as a company.

Understood. Moving on this high reimbursement rates of around 150K levels, are you seeing more interest and activity now that that issue is out of the way and you have that grid established?

It’s a good question. What happened last year, as you recall, we had a reduction in the rate. So, we had pass-through status at 143,000, 144,000 per device. It moves into a set reimbursement rate or an average reimbursement rate of $95,000 in the. Some confusion resulted because we didn’t decrease our selling price for the first quarter of the year. So, hospitals had basically a delta of $50,000 between what they were being reimbursed and what we were charging. No Medicare patients were done during that time period. We did start decreasing our price at the end of Q1 – or discounting, should I say, and we got our price closer to the expected reimbursement. But to be honest1, there was still some confusion with some of the accounts and some of the accounts had lingering concerns as to whether or not they were going to get appropriately reimbursed in 2016. I think, at this point, all of that has been cleared up, Amit. We have a much higher rate. We are pricing now I think very appropriately, so that when we go through and we talk to an account about what their expected reimbursement is and what our price, the account is now confident that they can do Argus cases and not lose money. So, they’re going to get reimbursement for not only our device, but for all the associated costs with the Argus case. So, it does take that off the table as a big concern on the financial front. I really think, though, that a lot of the confidence that we have in increased US volume in the US, though, is really more around the Centers of Excellence model and these other things that we have kind of tackled for the accounts. So, making sure that we have a more aggressive, but also much more thorough, patient recruitment process, so we’re going to be sending more patients to the accounts, but those patients are going to be – are going to have a much higher likelihood of actually being an Argus candidate. They’ve got a simplified programming system now. It’s going to take less time. They’re going to get reimbursed for it starting mid-year. And then, finally, as we were just discussing, I think the accounts will have also more confidence that any patients that undergo a surgery will get the proper rehab, not only in the hospital, but once they leave the hospital and go home, and that should lead ultimately to, we think, making it easier for a center to be an Argus center and also increasing their confidence in having good patient outcomes.

Understood. Thank you for that. Moving on to your comments maybe modifying the product, the Argus II product to get better cited RP patients, it looks like this effort will require some type of regulatory approval. So maybe two questions on that. One is, what is the time line before all of this materializes? And the second question is around, what this does for you in terms of addressable market?

Sure. Let me take maybe the timeline first. So, think of 2017 as being the year in which we’ll really prove the feasibility of this. So, by the end of the year, we want to have collected data in humans showing that that we can improve their vision and improve their vision to a point where we think we could go out and get regulatory approval and reimbursement coverage. Now, as far as – if you look forward, it’s a little difficult because we don't yet know the magnitude of the improvement, nor do we necessarily know which methods or which techniques we’re going to use to get the desired improvement. But I think it's safe to say that if things progress as we see them now, we would probably see some of these retina stimulation techniques being available in Europe in 2018. So, we would have – in some cases, we have broader indications or labeling in Europe right now that would allow us treat these patients, so then we will just have to really have the improved retina stimulation techniques approved, have some data to support it. We think physicians could start treating some of these patients. For the US, again, it’s a little hard to predict, but I would say most likely the US would be not before the end of 2018 and probably more likely maybe early 2019, if I’m getting my years correct here. And again, that’s before we would have regulatory approvals and reimbursement. To answer your second question around – what does it do for our addressable market? It is a little bit difficult to answer that. I can tell you what we know. First, we know there is approximately 375,000 people that are legally blind from RP globally and we know that right now – we think we can only treat a minority of these patients, Amit – those that have barely light or no light perception in the US. Unfortunately, there's really no market data right now that allows you to understand what percentage of patients are no light or bare light or even what percentage are – can see hand motion or finger counting. And I think this is because most government benefits are triggered when someone reaches legally blind status and then there's not much tracking of these patients past that. Also, there’s not really a need for much market data because until recently there hasn’t been any technologies that could treat any of these patients either. But again, if we just take what we learned from our patient outreach and our screening efforts, as well as conversations with physicians and other professionals at our centers, again, we have a very strong belief that the minority of them are qualified for Argus right now and the majority of them still have vision that’s too good. Can’t give hard numbers. We think it’s a meaningful increased available to us. We think it’s worth prioritizing these efforts super high for us in 2017. And as we start getting results and we start doing some testing, we certainly could probably give more color and a better indication of what we think we’re going to see from a market expansion.

Got it. And in regards to AMD and the Orion opportunity, from a timeline perspective, again, if you could provide any granularity on when at least you might start seeing – if all goes well and according to plan, when you might start seeing some initial sort of implants, I guess, for those two products.

Hey, Amit. This is Bob. So, as you know, on the AMD front, we currently have patients implanted – we have a number of patients implanted. This year, we’ll begin testing additional software algorithms in an effort to demonstrate improved performance above their residual vision. And similarly, with the Orion, we’ll begin clinical trial testing with patients this year. On the Orion front, we have significantly greatly increased confidence now that we have implanted the patient at the end of last year with the – essentially a prototype type device that allowed us to test the concept. We see now, in this patient, who has a wireless implantable stimulator over her visual cortex, we see that she's able to now see phosphenes with no adverse events, at levels that we – at current levels that expect her to have in the Orion. So, this year, we should have proof of concept for both – understand where we sit in patients for both the AMD patients and the Orion subjects. And what we would expect based on the performance that we see in each of those cases is that we’d be able to then get regulatory and reimbursement approvals over the next few years. So, it’s hard to pin down, as Will said before, with the better vision RP patients. It's hard to pin down exactly how long the regulatory reimbursement timelines will be until we have the patient data to know how good or how much we’re able to improve the performance. But we would hope that later this year we’ll be in a position to be able to give finer estimates for what exactly that will be.

I appreciate that. Thank you for the color. And, I guess, my last question is around what we should be assuming for the diluted share count post this offering.

Amit, this is Tom. So, at year-end, we have about the 42.7 million shares outstanding and this rights offering is another 13.7 million shares. And just so you’re clear, the uptick between September and December 31 was the issuance and the completion of the long-term investor rights basically that we issued in November. So, we have about 56.4 million shares outstanding. And then in terms of potentially dilutive shares if that’s what you’re asking about, we disclosed that in our 10-K. And when you add in the 13.7 million warrant and some options we issued after year-end, we have about 21.7 million potentially dilutive securities outstanding. I would like to point out that over 5 million of those are fairly out of the money right now. So, about 16 million. And when I say in the money, $2 or less. Does that answer your question?

No, I appreciate that. Yes, that was the color I was looking for. Thank you so much, Tom. That’s all I have, guys. Looking forward towards stronger [indiscernible] in 2017.

Great, thanks.

Thank you for your question. Our next question comes from the line of Ning Jia with Century Management. Please go ahead.

Hey, guys. Thanks for taking my questions. My first questions are regarding a company called eSight. So, my sense is that their current device is addressing a different market. It seems like they’re addressing the patients who are legally blind, but whose visions are probably still too good for Argus II. And you’re doing software upgrade for Argus II for those better cited patients. So, how much overlap – I guess, how much market overlap is there between the market they’re addressing and the market you’re trying to address with your software upgrade? And longer term, how much of a threat do you think eSight is given their device only costs $10,000 and doesn’t require surgery.

Sure. This is Bob. So, eSight has been in the news a bit lately. And for [ph] folks who may not be familiar with it, a little background, it’s a low vision device. It’s not a medical device. And what that means is it doesn't qualify for Medicare reimbursement because it's devices that are low vision or hearing aids are specifically excluded from reimbursement by Medicare. So, it’s a self-pay device. And it retails, as you said, for about $10,000. It doesn't restore vision, like the Argus II does. What it does do is it enhances residual vision. So, as you said, patients with much better vision than what we have today and your question about will our software algorithms improve the quality of the vision to the point where we would start – where they could start impacting our market, we don't think so. So, we think that our – we don't see any overlap for the foreseeable future. We actually see it as more of a complementary technology. We think that will improve the addressable population, but not to the point of nearly normal vision that eSight system is addressing today. So, it’s more of a complementary device, self-pay, not really impacting our market anytime soon.

Okay. And longer-term, is that a threat for your Orion device?

No. So, similarly for the Orion – our expectation is that the Orion would also begin with the worst affected patients, so patients who are completely blind. And for the Orion patients, many of those will – the real target for the Orion patients are patients – there is no overlap at all because they’re patients who have a damaged optic nerve. So, they might not even have eyes, all things that the eSight would require. eSight essentially requires near normal vision or what's known as low vision. Patients have to be able to see to benefit from the eSight device. And because it’s not actually restoring vision, it’s essentially enhancing vision by improving things like contrast enhancement. So, it's like turning up the contrast on your television. You still need to be able to see the television. But in case of the Orion, many of the patients that will be eligible for the Orion might not have eyes at all, might have a damaged optic nerve, might have glaucoma that's completely destroyed their vision or diabetic retinopathy that’s completely destroyed their vision that make them eligible for the Orion. So, even longer-term, we don't see it as impacting our market.

Thank you for the detailed answer. So, my other question is related to your patient outreach strategy. So, first, is radio still the main marketing channel. And second, what are the current barriers to get the patients become aware of your device and what other marketing strategies are you contemplating?

Okay. So, I think [indiscernible]. This is will. So, right now – and I’ll talk primarily for the US, but it’s similar outside the US as well. The majority of our outreach is through radio ads. So, we are conducting radio ads. We’ll go into a market and conduct radio ads basically during the day and at night. A lot of blind individuals will be up at night as well. So, we will conduct radio ads. We give them a 1-800 number to call into. And then, as we described earlier, we have a couple of layers of screening that we go through now. And I can kind of give you an update on where we’re at. So, in the US, through our outreach efforts, we have 218 patients in our database now. And these patients have – the 218, all of them have been through a screening with our customer service folks here in California. So, they’ve gone through a screening and we’ve asked them some basic questions around – do you have Retinitis Pigmentosa, what level of sigh do you have and things like that. What we have now that I talked about earlier then is what we call kind of a clinical screen. Again, it’s via the phone and it's done by one of a couple of people that we have contracts with who are medical professionals to conduct these phone screens. And out of that 218, we have 23 that have successfully passed this clinical phone screen. And of that 23 then, 18 are currently in the process of being scheduled for an evaluation at one of our implanting centers and five have been evaluated and deemed good candidates for surgery and are now awaiting surgery. And I think – either four or five of those are actually on the schedule to be implanted now. So, that’s kind of the process. I would say in the US, primary source for patients is through the radio ads. We’re getting quite a good response from those now. But we do, though, interface with other organizations, Foundation for Fighting Blindness, for example. On a regular basis, we’ll present and attend some of their local meetings. There are other organizations that will have annual meetings that we will attend and have a presence and potentially present it as well really. But, really, it’s going to be centered – we think the most cost-effective way to reach a large number of patients going forward will be these radio ads. And then, of course, we target the radio ads for geographic areas where we have centers, especially now with our Centers of Excellence. So, we’ll target those areas. And then, one final thing and I mentioned it in the prepared remarks. But we do have – as part of our overall marketing program now, we do have what we call our patient nurturing program. It’s basically software that allows us – once we start building this database, that allows us to stay in touch with these patients. We provide them relevant news stories, updates, company updates and things like that. So, as we come across patients, we mentioned earlier, the number one reason they potentially don't pass a screen right now could be vision is too good, but that means a lot of those patients could be – unfortunately could be candidates for an Argus at a later point in time. So, we do want to keep them in our database. We do want to stay in touch with them. And potentially, we schedule another evaluation for them at some point in time. Does that answer your question?

Yes, sure. I have a follow-up on that. So, why haven’t you guys run a social media campaign? I know your targeted patients probably can’t use social media for obvious reasons, but their friends and family do. So, why not a social media campaign?

We do. I don’t have like a summary of it now, but we do have outreach through social media. So, we distribute a lot of company information as well as new stories related to the to the company through social media. We actually have a firm that we work with to reach out and to make sure we’re populating social media with updates and stories and things of patient interest like that. I’d just say the – and we do have – if you look at our database of patients, we certainly have – we certainly have gained some of those patients from social media outreach and from inquiries from social media through our website potentially. But I’d still say, probably the overwhelming majority of them come from the radio ads that are very specific in targeting patients.

Okay, sounds good. Thanks a lot. That’s all from me.

Okay, great. Thanks.

Thank you for you question. Our next question comes from the line of Dallas Salazar with Atlas Consulting. Your line is open. Please proceed.

Hey, guys. Thanks for taking questions. I might have missed this earlier in the Q, but now that the 2017 reimbursement rate is set for the Argus II, are you guys seeing an uptick in implant volumes? And then secondarily, can you contextualize kind of the level of activity for expectations, sort of your internal expectations so far?

Sure, I can address that. We did talk about that earlier. But let me give you the highlights. Yes, the new reimbursement rate in the US of $150,000, it’s definitely a very good thing for the company. We had issues with reimbursement last year. And the majority the first quarter of last year, reimbursement rate was $50,000 below what we were selling the device for. So, we did not have – hardly any actually Medicare surgeries during that time period. What’s important, though, I think is the overall reimbursement rate and how we’re pricing, so that we’re pricing at a point where the institution not only gets reimbursed for our device, but all the related cost of the surgery. And that's where we’re at right now. So, we feel really good about the reimbursement rate. We feel good about our pricing and our pricing strategy, and I’d say all of the feedback from our customers has been the same that they don't view reimbursement or the cost of the device or the procedure as an impediment for them going forward. But we did mention – I think it's worth mentioning again that we think the number one reason that we’re going to experience higher demand in the US in 2017 or higher implant levels is because of our focus on the Centers of Excellence program and the work we’ve done to only address maybe price or the economics of doing a case, but all the work we’ve done to make sure that there is kind of an aggressive, but efficient patient outreach program that the sites are well trained to do the programming, that it doesn't take two days, it’s down to half-day. Starting mid-year, they get reimbursed for that. And then, finally, that there’s a good system in place to ensure all the patients get the necessary rehab and the people who are providing the rehab are getting proper instruction, so that each patient gets equally good chance to have a good outcome and to get the most from their device. So, we think it’s a combination of all of these things that are really giving the centers in the US much more confidence to move forward. As far as what does that translate to, we’re not – we still aren’t giving guidance, although what we’ve said is we expect a strong Q1. We did mention that we have either a scheduled or completed 15 cases in Q1. And I’ll also say that we’re already seeing cases scheduled – quite a few cases scheduled out in Q2 right now. So, we’re comfortable that we’re going to see increased volumes and we think it's going to carry over from Q1 into Q2. And at this point, there’s no reason to believe the full year in the US is not stronger than it's been in the past.

Thank you, guys. Appreciate the reiteration. That’s all that I have.

Sure, thanks.

Thank you for your question. There are no further questions on the line. I will turn it back over to Will McGuire. Thank you for your participation in our call today. As always, we appreciate the support of our shareholders as we pursue our common goal of restoring vision to the blind. Have a great day.

Ladies and gentlemen, that does conclude the conference call for today. We do thank you for your participation and ask that you please disconnect your lines.