R.J. Pellegrino - The Ruth Group Philippe Chauveau - Chairman Marc Oczachowski - CEO Eric Soyer - CFO

Matt Pommer - Roth Capital Partner Greg Ralph - Liberty Harbor Mark Wayneling - Paulson Investment Company

Good morning. My name is Shawn and I will be your conference operator today. At this time, I would like to welcome everyone to the EDAP third quarter 2008 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) I would now like to introduce Mr. R.J. Pellegrino of The Ruth Group. You may now begin your conference. R.J. Pellegrino: Thank you operator. With us today from management are Philippe Chauveau, Chairman of the Board, Marc Oczachowski, Chief Executive Officer and Eric Soyer, Chief Financial Officer. By now you should have received the copy of the earnings press release. If you have not received a copy, please call Stephanie Carrington at 646-536-7017 and she will fax or email you a copy. Before we begin, I would like to remind everyone that management's remarks today may contain certain forward-looking statements. Complete details of factors affecting forward-looking statements can be found in the company's SEC filings available on the company's website at www.edap-tms.com and are incorporated by reference for all remarks made during the course of this call. With that, I will now turn the call over to Philippe Chauveau, EDAP's Chairman of the Board.

I would like to share some opening remarks. First EDAP is well funded to execute and deliver our strategy. Second, EDAP has the momentum of machine and treatment revenue for growth in 2009. Thirdly, EDAP is progressing well with its HIFU FDA trials. Because of its strong cash position and solid order flow and backlog. EDAP is in good position to weather the current global economic storm. I will now hand over to Marc.

Thank you everyone for joining us on our third quarter 2008 earnings call. During today's call, I will review our fourth quarter 2008 outlook, provide additional comments on our strong cash position, discuss operations outside the US and explain our plans for expanding HIFU in Europe. Finally, I will provide a brief update on our US clinical trial. Before I turn to our third quarter 2008 performance, I would like to comment on the significant increase in order flow, we have experienced thus far in the fourth quarter. We are extremely encouraged with both our HIFU and lithotripsy backlog, which we believe will drive substantial revenue momentum in the fourth quarter. Midway through the fourth quarter, we already have a backlog of three of the Ablatherm machines equivalent to the number of machines, we sold during the entire nine months prior 2008. In addition to our current backlog, we continue to actively develop a robust pipeline of projects. Sales growth in our lithotripsy division looks just as promising with our two lithotripsy machines delivered in September, which will be recognized in our October 2008 sales period in compliance with accounting rules. At the beginning of the fourth quarter 2008, the company had a record backlog of 12 lithotripsy machines including six Sonolith I-Sys devices. Our strong backlog of machines across our entire product mix leads us firmly position for a solid growth in 2008. Our backlog of machines is complimented by our ample cash position, which was EUR14.1 million or US$91.8 million at September 30, 2008. Given today’s challenging economic climate and broader trends impacting equities across the board, we are confident that our robust cash position and innovative technology position has positioned us well in an uncertain macro environment. Most important, we are well funded to execute our growth strategy of investing in the expansion of Ablatherm-HIFU in Europe completing the U.S. ENLIGHT clinical trial and advancing our deep project pipeline. With approximately 17,700 treatments performed at 210 centers, EDAP has emerged as one of the global leaders in research and clinical progress in HIFU therapy for localized prostate cancer. With our solid IP portfolio, proven experience and strong cash position, we are well positioned to participate in the development of future of minimally invasive high flexions across multiple pathologies. This strength will allow us to successfully move forward in this volatile environment and deliver maximum value to our shareholders. Turning to our third quarter of 2008 outside of the U.S. We remained focused on increasing physician adoption and patient awareness of our Ablatherm-HIFU technology. EDAP had a major presence at several conferences in key European countries, where our product portfolio continues to expand. Our participation in two major European Urological Conferences, the 60th Annual Congress of the German Society of Urology, the DGU and the Italian Society of Urology, the SIU, provided EDAP with a unique opportunity to educate urologists about our minimally invasive HIFU technology for the treatment of localized prostate cancer. During prostate workshops urologists at all Ablatherm experience levels had the opportunity to access HIFUs robotized approach while sharing peer-to-peer experiences, with the technologies proven track record. Live Ablatherm demonstrations successfully showcased the advantages of non-invasive ultrasound treatments for both current and potential users. Over the course of our 20 years experience in HIFU, we have developed a strong global presence with a network of well established subsidiaries and distributors, that are driving increased patient awareness, give awareness of Ablatherm's safe ultrasound therapy. Not only are we expanding our professional supply, sales and training services across Europe, but we continue to actively train urologists, with our partners and distributors at new HIFU centers. EDAP has emerged as the clear leader in HIFU for the treatment of localized prostrate cancer, due to both, the superior technology called [Merit] for robotized technology and the deep establishment work of urology-specific distributors and subsidiaries we have across Europe. We will continue to lever our leading position to aggressively build the HIFU market and support the adoption for entire Europe product portfolio through aggressive, educational and marketing initiatives. During the third quarter 2008, we also capitalized on the opportunity to raise awareness of HIFU and all the significant modalities for prostrate cancer among U.S. urologists, who are primarily familiar with robotic urologic surgery. At the City of Hope Annual Conference on new technologies and innovative treatment strategies for genitourinary malignancies in San Diego, California, Dr. Douglas Chinn, of Chinn & Chinn Urology Medical Associates in Arcadia, California, highlighted the benefits of HIFU as a minimally invasive safe and proven alternative to all the prostate cancer treatment options. Dr. Chinn's lecture also reviewed the FDA process, an appropriate pathway for the patient access to HIFU technology by our ongoing U.S. ENLIGHT clinical trial. Turning to sales for the third quarter 2008. Our RPP business has stabilized, as I talked about on our last earnings call, we have implemented an RPP action program that will help to drive sales growth beyond current levels. Today's patient population is increasingly educated and taking on a more active role in evaluating treatment options. To capitalize on this patient awareness, we continue new aggressive sales and marketing efforts targeting both urologists and patients. This strategy in Italy and Germany has already resulted in an increase in RPP treatment for the month of October. We are also excited to see the expansion of our presence in Europe launching the first new mobile RPP sites in Netherlands. The centers first HIFU treatments were successfully completed with no complication and we are pleased to report that two additional hospitals have commenced EDAP's training program and are expected to start treating patients in the coming weeks. To further drive RPP market penetration across Europe, we are also executing new business models to provide our customers with a more flexible sales offering. We are confident that these new programs will effectively compliment our existing business models and broaden our RPP customer base by providing quicker, easier and expanded access to Ablatherm-HIFU. Our first quarter 2008 revenue reflected the anticipated seasonality for HIFU device sales. For the first nine months of 2008, we have sold a total of three Ablatherm-HIFU systems, equivalent to the number of HIFU devices sold during the same period of last year. For the third quarter 2008, our Lithotripsy division experienced a return of sales to expected normalized levels following a strong second quarter 2008. As I have stated earlier in my comments, we believe our robust backlog across our entire product portfolio delivers an excellent position to drive a substantial increase in sales growth during the fourth quarter of 2008. We are encouraged by the momentum from our marketing initiatives surrounding the U.S ENLIGHT clinical trial, which has corresponded with the significant increase in patient referrals to participating sites. We are confident that these trends in referral, is the first step towards increasing patient enrollment. With our recent stabilization of enrollment, we are aggressively working to improve the conversation rate of patient referrals in to actual treatments. Since initiating ENLIGHT, our patient-focused awareness program, have helped us to enroll a total of 49 subjects in the HIFU arm. More are expected to enroll in the coming weeks, including four patients currently scheduled to receive HIFU treatment in the next few days. We are confident that our referral efforts will drive increased enrollments and look forward to providing you updates on our progress. In conclusion, we are extremely encouraged with the outlook for the fourth quarter of 2008 and believe our referral backlog and the strong pipeline of projects we already have in hand will leave us in very well position for a great end of 2008. Our current backlog of machines is further supplemented by our ample cash position. The company remains in excellent financial health as a well funded position below this to continue investing in the growth of the company. In these uncertain financial times, we are confident our strong cash spending will allow us to weather the economic crisis and successfully move forward with our growth initiatives. Finally, we expect to make further progress on our U.S ENLIGHT clinical trial as we work to improve the conversion rate of patient referrals in to actual treatments. I will now turn the line over to Eric, who will review our third quarter 2008 financials.

Thank you, Marc. I will now discuss our third quarter 2008 financial results. Total revenue in the third quarter of 2008 was EUR4.6 million or $6.8 million compared to EUR4.7 million or $6.5 million for the same period in 2007. Our third quarter financial results reflected the anticipated seasonality for HIFU RPP sales and the return of lithotripsy sales to expected normalized levels over the period. In the third quarter of 2008, total revenue for our HIFU division was EUR1.9 million or $2.8 million flat from the same period in 2007 and reflected the sale of Ablatherm HIFU machines in the third quarter 2008. Revenues in our HIFU division were up 16.7% sequentially. For the nine months ended September 30, 2008, we sold three Ablatherm-HIFU machines equivalent to the three HIFU devices sold during the first nine months of 2007. Currently we have a strong backlog of three HIFU machines that we anticipate synchronizing by year end 2008 coupled with a strong pipeline of projects. Total revenue for EDAP’s lithotripsy division in the third quarter 2008 was EUR2.7 million or US$3.9 million compared to EUR2.8 million or US$3.9 million for the same period last year. In the third quarter of 2008, we sold seven machines, including one Sonolith I-Sys device. We also converted the portion of the second quarter 2008 backlog into revenue during the third quarter of 2008 and return to normalized machine sales as anticipated following a strong second quarter. Our current backlog in the fourth quarter consists of 12 lithotripsy machines, including six Sonolith I-Sys devices. During the third quarter 2008, our gross profit was EUR2 million or US$2.9 million compared to EUR1.8 million or $2.5 million for the third quarter 2007. Our gross profit margin increased to 43.8% up from 39.5% in the year ago period. The increase in gross profit and related rise in gross profit margin was due to improved margins from our lithotripsy business as well as a more favorable mix of machine sales. In the third quarter of 2008, our operating expenses of EUR3.3 million or $4.9 million were flat from the third quarter of 2007 and including EUR0.6 million related to the U.S. FDA ENLIGHT clinical trial for Ablatherm. Excluding clinical trial cost, our total operating expenses for the nine months period decreased EUR0.2 million or 2.7% as a result of incremental cost reduction programs mostly in G&A. While nine months operating loss for the period ended September 30, 2008 was EUR4.3 million up from EUR3.3 million in the year ago period based on an increase of EUR0.8 million related to the U.S. ENLIGHT clinical trial. Third quarter 2008, net loss was EUR4 million or EUR0.43 per diluted share, compared to a net loss of EUR1.4 million or EUR0.16 per diluted share in the same period of 2007. The net loss for the most recent quarter included a EUR2.5 million non-cash financial charge to adjust our convertible debt and outstanding warrants to fair value. At September 30, 2007, I am pleased to reiterate Marc's emphasis on the robust position of cash and cash equivalents including short-term treasury investments totaling EUR14.1 million or $19.8 million up 5.2% sequentially. We primarily attribute our positive cash flow for the third quarter 2008, to improved working capital requirements and the favorable currency evaluation of the U.S. dollar against the euro. Year-to-date our cash burn is EUR4.5million, in line with our expectations and includes EUR1.6 million dedicated to U.S. FDA clinical trials. During these difficult economic circumstances, we remain positioned to continue investing in our overall key initiatives for faltering growth across our entire product portfolio, advancing our U.S. ENLIGHT clinical trial and continuing the innovation of minimally invasive HIFU technology across multiple pathologies. As Marc mentioned earlier, we are all encouraged about EDAP's cash position during this difficult economic crisis, which provides us with a clear advantage to execute on our commercial and clinical development objectives. These fundamentals coupled with our current admission backlog will leave EDAP poised for a promising end to 2008. On that note, I would like to hand the call back to operator, to answer any questions, you may have. Operator?

(Operator Instructions) Your first question comes from the line of Matt Dolan from Roth Capital Partner. Your line is open. Matt Pommer - Roth Capital Partner: Good morning, guys. This is Matt Pommer in for Matt Dolan. He sends his apology; he's unable to make the call today.

Hi, Matt. Matt Pommer - Roth Capital Partner: Hi. Firstly, I was just wanting to first touch on your commentary about the order backlog and outlook for the fourth quarter, they are very positive. I was just wondering if you can comment on any color on the impact you may have seen from the macroeconomic weakness putting pressure on capital equipment sales procedure volumes and distributor performance both in the quarter and since the quarters ended?

Okay, Matt, that's a good question. Actually as you've noticed, we have a very strong backlog of machines what we call backlog just to clarify that is confirmed orders we have on hand and most of those orders will be delivered in Q4 indeed. And to answer your comment on the environment crisis, I have to say as we don't feel it yet, probably because budgets for hospitals are benefiting from a kind of momentum in the year of 2008. So I don't think we'll feel it until the end of the year. Matt Pommer - Roth Capital Partner: Okay, great. That's very helpful. I was wondering secondly with respect to the ENLIGHT clinical trial, if you could help us understand how patient enrollment will ramp in 2009 and your expectations for the distribution and level of spend in 2009 for the trial?

We have good expectation because as we explained and we started in February, March 2008 to implement and execute our marketing program to promote the trial and create awareness among American patients about the trial and we are getting the fruits of these efforts and we are seeing more and more patients we served from those marketing initiatives. So we believe and we are working now on a getting all the action, so that we can convert as much as those patients from referral to treated patients. Matt Pommer - Roth Capital Partner: Okay, great. And lastly is there any color you're willing to provide in terms of new product initiatives?

In term of new, I don't get your point. Matt Pommer - Roth Capital Partner: You mentioned a product pipeline.

Project pipeline. Matt Pommer - Roth Capital Partner: Project pipeline?

That means we have not only a strong and robust backlog, but we have also a lot of project in to the pipeline, but we are working on many projects for closing sales. Matt Pommer - Roth Capital Partner: Right. Okay. Great. Thank you very much guys.

You're welcome.

Thank you.

(Operator Instructions).Your next question comes from [Greg Ralph] from [Liberty Harbor]. Your line is open. Greg Ralph - Liberty Harbor: Yes. Thanks. Just curious. It seems like you're selling more HIFU machines in the current environment and RPP staying relatively stable. Just curious why we're not seeing a shift more toward RPP and how your customers are financing the purchase of these HIFU machines?

Thank you for the question. It's a great question and as we usually experience at the end of the year, there are a lot of capital investment done because of the hospital utilizing the rest of their budgets. So Q4, for the company at least is always a good quarter in term of capital equipment sales. Mainly we have good quarters in capital equipments sales in Q4 because of hospital trying to use the entire budget they have left. Greg Ralph - Liberty Harbor: Okay.

Before starting a new year. Greg Ralph - Liberty Harbor: And then in terms of the favorable backlog for Q4, as you said those are confirmed orders, does company received deposits from the customers on those orders in advance?

(inaudible)

It depends, but most of times, those capital equipments sales are having secured payment. So it’s whether letter of credit or down payments or things like that and we usually deliver upon complete payment or complete secured payment. Greg Ralph - Liberty Harbor: And so do you have secured payment for the three to be delivered in Q4?

Absolutely. Greg Ralph - Liberty Harbor: Okay. And then the FDA process, is the timing still the same in terms of when you're hoping to get FDA approval?

Yes, absolutely. We are continuing to expect the same timing as we described and again we are working actively in converting all the referrals and increase the peripherals we are getting from the ENLIGHT marketing initiatives. Greg Ralph - Liberty Harbor: And so timing's on track, in terms of budget for the project, is that on track as well?

Yes, absolutely. Greg Ralph - Liberty Harbor: Okay. And then the positive working capital for Q3, can you sort of break that down? There was no cash flow statement provided. So what was the positive working capital primarily from?

That was primarily from collection of cash receivables and the management of our inventory. Greg Ralph - Liberty Harbor: Okay. And then, last question, any developments on insurance reimbursement in France or other countries around the world?

In France, we are continuing our efforts towards this objective which is to get the technology reimbursed. We are these days participating to the French Urology Association annual meeting which is held nowadays in Paris and we are again working with the support of the French Urology Association in getting that reimbursed. But as usual, this is something which is depending on the government and public authorities and we have no control on dates and amounts. So, we are continuing our efforts and we are continuing to push the project to get it achieved but we've not visibility as usual. Greg Ralph - Liberty Harbor: And how about any other positive developments on that in any other countries?

We are working. But other countries are a little bit different in terms for reimbursement. As you know, we already reimbursed in Germany and Italy privately in the UK. We are and other markets also sometime organized that you have double-digit utilization like in Spain for example our [pure] private patient. So it's really different from one country to the other and we try of course to adapt ourselves and to adapt our offering to all those specificities. Greg Ralph - Liberty Harbor: Okay, great. And congrats on the positive guidance for Q4.

Thank you very much. Greg Ralph - Liberty Harbor: Thank you.

Next question comes from the line of [Mark Wayneling] from Paulson Investment Company. Your line is open. Mark Wayneling - Paulson Investment Company: Yes. I would like to ask a few questions. Can you tell me the number of centers that are presently offering Ablatherm in Europe?

As I mentioned in our conference call, we have today a total of 210 centers thoughtfully trained on Ablatherm HIFU. Mark Wayneling - Paulson Investment Company: And as far as the number of procedures, can you share the actual number of procedures of last years compared to this year?

Again that's our estimation and it's not completely accurate due to the difficulty of getting all the data. But we are today approximately to about 17,700 treatments performed so far. Mark Wayneling - Paulson Investment Company: That's in total, is it not?

That's in total absolutely. Mark Wayneling - Paulson Investment Company: Do you have a breakdown and so far as the quantity of treatments that were performed for 2007 as opposed to the number of treatments performed for 2008 to date?

We could have an estimate of that, but we don't have it precisely. As again, it is quite difficult to get all the data and numbers from 210 centers. So, that's again an estimation. And we need to further work on the figures to make exact comparison. But basically today, we have an approximate number of 17,700 treatments performed. Mark Wayneling - Paulson Investment Company: Right. Thank you.

(Operator Instructions) Sir, there are no further questions at this time. Mr. Chauveau, do you have any closing remarks.

As I close this conference call, let me repeat what I said at the opening, because of its strong cash position and solid order flow and backlog EDAP is in good position to weather the current global economic storm. On that, thank you for joining us and talk to you either sooner or at the next conference call.

[That does conclude] today's conference call.