Jacob Goldberger - C. G. Capital Philippe Chauveau - Chairman Marc Oczachowski - Chief Executive Officer Francois Dietsch - Chief Financial Officer

Swayampakula Ramakanth - H.C. Wainwright

Greetings and welcome to the EDAP TMS Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A Question-and-Answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Jacob Goldberger with C. G. Capital. Thank you. You may begin.

Good morning and thank you for joining us for the EDAP TMS third quarter 2017 earnings conference call. On today’s call, we will hear from Philippe Chauveau, Chairman of the Board; Marc Oczachowski, Chief Executive Officer; and Francois Dietsch, Chief Financial Officer. Before we begin, I would like to remind everyone that management’s remarks today may contain forward-looking statements which include statements regarding the Company’s growth and expansion plans. Such statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ from those described in such forward-looking statements. Factors that may cause such a difference include, but are not limited to those described in the Company’s filings with the Securities and Exchange Commission. I would now like to turn the call over to EDAP’s Chairman, Mr. Philippe Chauveau.

Thank you, Jacob and thank you all for joining us this morning. Overall, EDAPs positive momentum continued through the third quarter of 2017. Mainly HIFU treatment driven revenue rose significantly during the period. The Ablatherm Fusion device was successfully cleared by the FDA and EDAP’s cash position remains strong at $21.3 million. EDAPs management team has successfully implemented its marketing and growth initiatives and the Company is positioned for success in the U.S. and internationally. I would now turn the call over to Marc Oczachowski, CEO of EDAP.

Thank you, Phillip. Good morning everyone, thank you for joining us for our third quarter conference call. Last night, we published a press release reporting third quarter revenue of €8.1 million and €25.1 of revenue for the first nine month of 2017 but slightly compared to €24.9 million for the first nine-months of 2016. Revenue for the quarter was negatively impacted by lower machine sales in both HIFU and [indiscernible], but was offset by 29% increase in HIFU treatment driven revenues. Urologists have long liked the procedure for prostate cancer that maintain the efficacy of traditional radical treatments while allowing patients to maintain their quality of life. We believe that the significant growth in our treatment volume is a reflection of physicians seeing the potential of HIFU to fill the gap between active surveillance and radical treatments. Q3 is always a slow quarter due to lower activities during the summer holiday season. We are pleased to see that despite this seasonal low trend our momentum continues with significant growth in our treatment driven revenue. This is a key indicator of HIFU adoption and recognition worldwide. We now enter the critical fourth quarter when hospitals attempt to utilize the remaining budget before the year ends. We have a very strong pipeline in both Lithotripsy and HIFU division. Our pipeline consists of some delayed deals that could not be closed in Q3 and some other deals added from our sales team’s prospection work. The entire Company is focused on closing these deals before the end of the year. Q3 was a very active quarter in term of regulatory news and projects for us. As announced on October 4th, we received FDA clearance of our Ablatherm Fusion devise by the FDA. Ablatherm Fusion incorporates EDAP’s proprietary fusion software which merges MRI and ultrasound images providing increased accuracy during planning and treatment for physicians. Many of our high volume users have initiated the upgrade process and we look forward to hearing about their experiences with the upgraded device. In parallel new 510(K) for the Focal One that was submitted to the FDA in September. The review process is ongoing and we are working closely with the agency to ensure that we can provide any and all information they require for the review process. As a reminder, this new submission is very similar to the previous one. The only changes are in the clinical section where we presented new data sets and here is a clinical evaluation of our Focal One device. The pending clearance of the Focal One continues to soften our 2017 revenues as many of our prospects and potential customers continue to delay their purchasing decisions. As discussed, the C-code reimbursement for HIFU for ablation of prostatic tissue became active on July 1st. CMS made some adjustments effective October 1st classifying HIFU as a device intensive procedure resulting in increased reimbursement for surgery centers. This is another healthy move towards adoption and recognition of the HIFU technology for prostate ablation in the U.S. We have been supporting our customers with the complex claims process through the implementation of an action plan ensuring that the C-code is active and reimbursement is recognized at original levels with the Medicare Administrative Contractors or MACs. In addition we designed and distributed a billing guide to our user community. The C-code is a significant mark of the progress that has been made in the urology community regarding education about HIFU. We know that there is a significant opportunity for HIFU to become the gold standard technique for prostatic tissue ablation and we plan to continue to work towards deeper reimbursement for this superior procedure to broaden the availability of HIFU treatment to as many patients as possible. Finally, we have been actively providing HIFU to U.S. urologists and patients by implementing education and informative campaigns on local networks and newspapers and organizing TV or radio interviews of new users enthusiastic about HIFU. Forbes Groups Radio hosted a lengthy discussion about prostate cancer and the use of HIFU with Dr. Dr. Brian J Miles, professor of urology at Weill Cornell Medical College of Common University at Houston Methodist Hospital. Dr. Miles specializing in urologic oncology especially cancer of the prostate. The interview covered HIFU treatment at length and included a discussion of where HIFU sits in the market of prostate cancer treatment. ABC 15 Arizona hospital discussion with Dr. Dr. Kashif Ali from Urologic Surgeons of Arizona, one of the first urologists performing prostatic tissue ablation with HIFU in Arizona. Dr. Ali discussed the positive outcome from his first two treatments using the other Ablatherm Robotic HIFU and the importance of HIFU as much for patients who wish to effectively receive a treatment and maintain their quality of life. Educational webinars on HIFU principles and the use of Ablatherm Robotic HIFU in the treatment of prostate pathology are regularly organized for U.S. urologists. We can assess the growing awareness for HIFU by the number of urologists being satisfied on our Phase I training webinar. Today, we have trained a total of [242] (Ph) urologists in the U.S., our U.S. marketing and sales teams remained focused on converting training doctors into Ablatherm users. Please refer to the EDAP’s website to access TV and radio interviews which again are very informative. I would now like to turn the call over to Francois for a overview of our performance.

Thank you, Marc and good morning everyone. Total revenue for the third quarter of 2017 was €7.1 million or $8.4 million compared to €8.0 million or $8.9 million for the third quarter of 2016. For Q3 2017, total revenue for the Lithotripsy division was €5.3 million or $6.3 million compared to €5.4 million or $6.5 million during the year ago period. During the third quarter of 2017, EDAP sold six Lithotripsy devices compared to 11 Lithotripsy devices during the third quarter of 2016. Total revenue in the HIFU business for the third quarter was €1.6 million or $2.2 million compared to €2.5 million or $2.8 million for the third quarter of 2016. During the third quarter of 2017, EDAP sold no HIFU devices compared to two Focal One devices during the third quarter of 2016. Whereas HIFU treatment driven revenue increased by 29% compared to Q3 2016. Gross profit for the third quarter of 2017 was €2.8 million or $3.3 million compared to €3.5 million or $3.9 million for the year ago period. Gross profit margin on net sales contracted from 43.2% in Q3, 2016 to 39.4% in the third quarter of 2017, primarily due to the lower revenue level. Operating expenses remind for the third quarter of 2017 at €3.5 million or $4.5 million for the third quarter of 2017 compared to €3.8 million or $4.2 million for the same period in 2016. Operating loss for the third quarter of 2017 was €1 million or $1.2 million compared to a [indiscernible] loss of €0.3 million or $0.4 million in the third quarter of 2016. Net loss for the third quarter of 2017 was €0.5 million or $0.6 million a loss of $0.02 a share per diluted share as compared to a net income of €1.3 million or $1.4 million, or income of $0.04 a share per diluted share in the year ago period. Net loss during the third quarter of 2017 included non-cash interest income of €0.5 million to adjust accounting fair value of the outstanding warrants. Now turning to the first nine-months of 2017. Total revenue was €25.5 million or $28.2 million up 1% compared to €24.9 million or $27.8 million during the first nine-months of 2016. For the first nine month of 2017 total revenue for the Lithotripsy division was €18.5 million or $20.3 million a growth of 15% compared to €15.7 million of $17.5 million for the year ago period. During the first nine-months of 2017, EDAP sold 21 Lithotripsy devices compared to 27 Lithotripsy devices during the year ago period. Actual revenue for the first nine-months of 2017 was €7.5 million or $7.9 million compared to €9.2 million or $7.3 million during the [indiscernible] last year. These decrease was primarily due to slow down of U.S. sales of HIFU devices, nevertheless HIFU treatment driven revenue continue to grow as we recorded 16% increase over the first nine-months of 2017. Gross profit for the first nine month of 2017 was €10.4 million or $11.7 million and gross profit margin and net sales was 41.4% compared to €11.2 million or $12.5 million and gross profit margin and net sales of 45% during the first nine-months of 2016. Gross profit margin declined primarily due to the adverse mix affect between HIFU and UDS. Operating loss for the first nine month of 2017 was €1.8 million or $2.5 million U.S. compared to an operating profit of €0.5 million or $0.5 million during the same period of 2015. Net loss for the first nine-months of 2017 was €0.6 million or $0.7 million a loss of $0.02 of share per diluted share compared to a net income of €5.5 million or $5.7 million, an income of $0.18 a share per diluted share during the first nine month of 2016. Net loss for the first nine-months of 2017 included non-cash interest income of €2.2 million to adjusted accounting fair value of those outstanding warrants. As of the 30 of September, 2017 cash and cash equivalent were €18 million or $21.3 million which mean that cash position at the end of the last quarter. I would now like to turn the call back over to Marc.

Thank you Francois. We are pleased with the progress we have made in educating the market about the benefit of HIFU for prostate ablation. We are proud of the advances made in the clearance of Ablatherm Fusion and eagerly await the approval of the Focal One HIFU device. We are continuing and keeping on pushing our revenue growth as these up sell teams are now focusing in converting their great pipeline of projects and leads and in closing as many deals as possible before the end of 2017. We are grateful for your continued support which enabled us to provide a paradigm shift in treatment to so many [indiscernible]. Thank you for joining us today and I would like now to begin our question-and-answer session. Operator.

Thank you. [Operator Instructions] Our first question comes from the line of Swayampakula Ramakanth with H.C. Wainwright, please proceed with your question.

Thank you. Good afternoon Marc. Two questions, so you recently got the approval of Fusion and how this appeal of the Fusion and ability to sell Fusion. How you are in your discussions with the potential clients.

Sorry. The line is not very good RK, can you repeat the question, I did not hear very well.

I'm sorry. How is approval of Fusion helping in discussions with potential clients.

So yes, it's definitely helping, as you know Fusion is a component that will help improving the targeting and the planning of the treatment. So it's really indeed an improvement on the Ablatherm as I said before in the call, we were already working in upgrading a number of our heavy load users in the U.S. with that and certainly is of some interest for some of our projects and leads. So that's a key component, that’s a key feature on our device.

And just coming into the just reported quarter the third quarter, is this a trend something that you expected like the third quarter with no sales in HIFU devices and also as you are suggesting about the fourth quarter could look better than the third quarter. Can you highlight or let us know a little bit about what sort of backlog you are having or at least highlight you know the typical conversations that you are having that makes you feel comfortable and confident about selling in the fourth quarter.

Okay. First of all, I mean we never expect [indiscernible] we know there is a seasonality and we know Q3 is usually the lowest quarter in the year for us. But we have got as I said earlier as well, we have got a number of lived in projects that we wanted to or we tried to close before the end of September that were kind of delayed for a number of reasons and that we are now - whether we have closed in October or we are about to close now. So actually we have a level of confidence on Q4 as we get some delayed project from Q3 and again we also as usual at this kind of the year are getting a number of very hot projects toward the end of the year where hospitals may usually need to get rid of their remaining budget and get some [liquidation] (Ph) done.

Okay. And then you received a C-code in the middle of 2017, what changes are you seeing in the marketplace for HIFU devices since the approval of the code?

Again the C-code is a temporary code that covers the facility fee only, so that’s helping but covering only sort of the treatment, because that’s already some health and that’s already giving some more access specifically Medicare patients to what the technology. So it certainly help us, well the business case to be easier to achieve so that investment could be done.

Okay. And then the last question from me is on Focal One, what sort of discussions are you having currently with the FDA and do you think that FDA will be able to approve this within that the timeline that - can we expect 120 days or from current I think that’s the timeline for them. So what is your feeling about it and what sort of discussion are you having with the FDA at this point?

So starting with the timing, again, it’s always very complicate and difficult to estimate or evaluate any time assumption with the FDA. So I won't be able to answer to you on that question. Now, the discussion we are having with the FDA and as you know and as I said earlier in the call, the main difference and the new part of our current 510(K) file is on the clinical section. So we are discussing with the FDA right now on clinical points.

Okay. Thank you and good luck for the fourth quarter.

Thank you.

[Operator Instructions]. Thank you. Mr. Oczachowski, there are no further questions at this time, I will turn the floor back to you for any closing comments.

Well again thank you everyone for joining us today and we look forward to keeping you posted on our next developments and achievements. I wish you all a great day. Bye.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.