Over the past thirty years, one of the most significant medical trends has been the development of less traumatic or minimally invasive methods of treating disease.

Minimally invasive surgery reduces the trauma of open surgery, and interventional procedures cause even less trauma and can reach many areas of the body that robotic surgery cannot reach. Each year, catheter-based technologies are used for millions of interventional diagnostic and therapeutic medical procedures worldwide. However, manually-controlled hand-held catheter delivery devices, even in the hands of the most skilled specialists, have inherent instrument control limitations. In traditional interventional procedures, devices are manually manipulated by physicians, who twist and push the external ends of the instrument in an iterative process that attempts to thread the internal end of the instrument through tubular anatomic structures to a specific treatment site. Manual control of the working tip of the catheter becomes increasingly difficult as more turns are required to navigate the instrument to the treatment site.

These control problems are significant in constrained tubular spaces such as blood vessels, and become even more difficult in unconstrained spaces such as the atria and ventricles of the heart. In addition, while sophisticated imaging, mapping and location-sensing systems have provided visualization for interventional procedures and allowed physicians to treat more complex conditions using flexible instruments, the substantial lack of integration of these information systems requires the physician to mentally integrate and process large quantities of information from different sources in real time during an interventional procedure. Each of these systems displays data differently, requiring physicians to continuously reorient themselves to the different formats and displays as they shift their focus from one data source to the next while at the same time manually controlling an inherently difficult to control catheter.

The Company’s patient-side module is a robotic manipulator actuated by motors that control pull-wires in the Artisan control catheters. The manipulator is mounted on an articulating or pivoting arm that is in turn mounted to the procedure table in the EP lab or other treatment room. The manipulator may be directed over the patient during a procedure and thus positioned optimally for that procedure.

The Company’s disposable Artisan control catheter and sheath assembly consists of a telescoping set of control catheters that are integrated to provide the desired motion of the tip of a diagnostic or therapeutic catheter that is inserted through the center lumen of the Artisan control catheter. In this manner, the Artisan assembly is designed to accurately control the movement of an existing mapping catheter chosen by the physician. As a result, physicians are not limited to using particular proprietary catheters as is the case with the magnetic-based remote system.

The Company’s disposable Artisan control catheter and sheath are designed to move together or independently, and can move with multiple degrees of freedom when attached to the robotically-controlled motors of the Sensei system. In addition, the Company’s system has a programmable chip that prevents use of its system with Artisan control catheters that have been previously used and that restricts other control catheters from being plugged into the Sensei system patient-side module.

The Company’s Elite flexible transseptal system consists of a needle and dilator assembly that are designed to puncture and expand the atrial septum of the heart in order to allow access to the left heart chambers. This device is used when a physician wishes to accomplish a mapping or ablation procedure in the left atrium or ventricle.

Selling, general and administrative expenses were $3.6 million for the six months ended June 30, 2006, compared to $1.6 million for the six months ended June 30, 2005.

Interest income was $708,000 for the six months ended June 30, 2006, compared to $145,000 for the six months ended June 30, 2005.

Interest expense was $338,000 for the six months ended June 30, 2006, compared to none for the six months ended June 30, 2005.