Jeremy Feffer – LifeSci Advisors Philippe Chauveau – Chairman of the Board Marc Oczachowski – Chief Executive Officer Francois Dietsch – Chief Financial Officer

Swayampakula Ramakanth – H.C. Wainwright Mike Benoit – Private Investor Nicole Gabreski – LifeSci Capital

Good day, and welcome to the EDAP TMS First Quarter 2018 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Jeremy Feffer. Please go ahead, sir.

Thank you, Casey. Good morning and thank you for joining us for the EDAP TMS first quarter 2018 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 risks and uncertainties 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 over the call over to EDAP’s Chairman, Philippe Chauveau. Philippe?

Thank you, Jeremy and thank you all for joining us today. Our company continued to progress with the following significant accomplishments. First, we have complied and submitted the data requested by the FDA following our April 4 meeting. Second, U.S. HIFU revenue posted positive growth due in parts to improving utilization and the improving reimbursement landscape. Third, the University of Miami published encouraging preliminary data showing reduced side effects from focal therapy for prostate cancer versus radical prostatectomy and radiation therapy. Fourth, we successfully established our new representative office in South Korea, which provides more efficient direct sales to customers and therefore improved margins. And fifth, EDAP’s UDS division including Lithotripsy, posted solid growth in Q1 and remained among the world’s leaders in urology. And finally, EDAP continue to manage it’s cash balance effectively ending the quarter with cash of more than €18 million. I will now turn the call to EDAP’s CEO, Marc Oczachowski. Marc?

Thank you, Philippe, and good morning everyone and thank you for joining us for our first quarter 2018 conference call. Last night we published first quarter 2018 revenue of €9.2 million as compared to €8.7 million in the prior year period. Francois will detail our financial results a bit later on. But in short, we were pleased to see a return to revenue growth in the quarter especially on the HIFU side. As we discussed last quarter, hospital customers in the U.S. continue to delay their purchase of HIFU system while waiting for Focal One clearance, by a way of update on the Focal One 510(k) filed with the FDA and the follow up to the April 4 meeting with the agency, we complied and submitted all the additional data requested. FDA is currently finalizing it’s review and we look forward to receiving a verdict soon. While we continue to receive positive feedback on our Ablatherm Fusion device, it remains relatively clear from conversations with hospitals and clinicians that they are waiting for Focal One. There is a clear interest and need for focal therapy which provides accurate and MR-fused imaging precise and efficient therapeutic HIFU imaging and of treatment validation imaging with contrast enhanced ultrasound. To this end, we were extremely pleased with the preliminary results from the first U.S. clinical cohort study of focal therapy using Ablatherm, completed at the University of Miami Miller School of Medicine. The study found that patients experienced fewer side effects of incontinence in their function, which are commonly associated with standard prostate cancer treatments like radical prostatectomy and radiation therapy. With the goal of collecting high quality clinical data on hundreds of patients, the consortium of renowned medical institutions in addition to Miami Miller School and including Weill Cornell Houston Methodist Hospital, Duke University and the University of Southern California are also participating to this study. Results are being tracked and folded into a new database called for USA Registry, within urologist around the U.S. great access to short and long-term HIFU outcomes. These results are extremely validating and supportive of the safety and efficacy of HIFU as lithotripsy tabulation tool and we look forward to building on this data. In the meantime, we did experience greater year-over-year results in our HIFU business inspite the ongoing Focal One overhang particularly in the U.S. Total HIFU revenue grew 4.9%, while the revenue per installed device grew 26% in the U.S. Existing gradually increasing utilization among the current users. We are also encouraged by the strong pipeline of projects and leagues of sales and marketing team in the U.S. have developed and we are focused on building on this momentum. We continue to work on expanding coverage and on educating more physicians to make our innovative HIFU technology available to all patients in the U.S. Also as we discussed last quarter, we are very excited, we have Cigna as the first major U.S. private health insurance company to reimburse prostate cancer patients who’s failed radiation and are eligible for HIFU as a salvage therapy. Cigna’s strategic coverage decision signals a clear shift in the private self insurance market regarding HIFU procedures as Cigna’s 15.9 million enrollees now have access to salvage therapy. Cigna’s policy aligns with the guidelines of the National Comprehensive Cancer Network that men with localized prostate cancer may benefit from salvage HIFU, particularly for patients with recurrent prostate cancer, following radiation therapy to meet certain medical criteria. The NCCN is along with the American Society of Clinical Oncology the most authoritative guideline issuing bodies for cancer cure in the U.S. We are in active discussions with other payers to further expand coverage to ensure that all patients who can benefit from HIFU can have access to it. We were also happy with the news that historically on the HIFU company is focused on developing equipment for echotherapy, the HIFU approach in the treatment of benign thyroid and breast tumors, sold it’s first Echopulse system to EDAP as part of our partnership to distribute Echopulse in France. This partnership will enable us directly on to offer hospitals a greater HIFU portfolio. We will immediately start operating the device on the mobile basis, to serve identified hospital in France within the framework of the new reimbursement process granted to HIFU to treat breast benign tumors. We’re really excited to start commercializing HIFU for another application than prostate cancer in France. As we’re strongly believe for the long time the great flow HIFU can play in being standard of care ablation tool for many organs and pathologies. Finally, we’re excited to participate in the American Urological Association Annual Meeting beginning later this week in San Francisco, where we will host a group in the main exhibit hall and encourage all the bay area to come and see our technology in person. Turning to our Lithotripsy business, we continue to see solid growth, as sales increased 6.3% year-over-year, driven primarily by strong disposable sales. This remains a relatively mature market, so it is dynamic and subject to burgeoning replacement cycle. While we did not see growth in our system sales, we were pleased to see solid utilization growth suggesting that ours is among the preferred technologies of treatment of urinary stones. As an interesting note on the ESWL market, EDAP participated in April of this year in a seminar organized by famous Prof. Traxer in Paris. He invented 30 U.S. KOLs and 30 European KOLs specialized in urinary tract stone treatments. Most of them were dedicated to ureteroscopy and other invasive treatments. The ureteroscopy has lately been growing in terms of the number of stone cases worldwide and during the discussion of the seminar, it was confirmed that this trend could be more effect. When urologist were asked, what treatment would be their first choice, if there would be a stone patient and majority of them, about 65% said, they have no doubt, they would choose the ESWL. As it is definitely the success and most efficient way to be treated for the stone. This was very important and it confirmed that that ESWL as drug future in the urinary tract stone management. And while not only emerged but certainly the treatment of choice for this disease. We believe there is a still room for growth in this business, for companies that are continuing to work and invest in bringing innovation in lithotripsy. Internationally, we continued to see solid growth in our distribution business, we were also very pleased to see an immediate positive impact on our gross margin in the first quarter of 2018 from our new selling organization in South Korea. But we established at end of 2017. This new and more direct distribution infrastructure gives us better access to key customer in that important Asian markets. This new model will help improve revenues and operating margins and we already saw benefits from that in the first quarter. And now, our CFO, Francois Dietsch, will provide a review of our financial results. Francois?

Thank you, Marc and good morning everyone. Please note that for the full year except for percentages are in euro. For conversion purposes, our average euro dollar exchange rate was 1.20 for the first quarter in 2018. Total revenue for the first quarter was €9.2 million, an increase of 5.6% versus the first quarter of 2017. On the HIFU side, we generated sales of €2.4 million, representing growth of 4.9% versus Q1 2017. [Indiscernible] in U.S. treatment revenue, the revenue per installed device go 26% year-over-year. I will now discuss, our future customers continue to deliver [indiscernible] in utilization among existing customers. During Q1 2018, we saw 1.1 compared to 1.1 in the same period of last year. In Q1 2018, total revenue was €6.7, a 5.5% increase versus Q1 2017, which means a new record for first quarter. We sold eight lithotripsy devices in the quarter, which was in line with sales during the year ago period. Sales of disposables up 33% year-over-year drove the growth during the quarter. Gross margin for the quarter was 43.5% and an increase of 270 basis points year-over-year. This trend was driven both by the growth of the activity and by our new training organization in Florida. Operating loss for the first quarter was €0.4 million as of 2018 in our lithotripsy business was offset by an operating loss in 2018. This compared to an operating loss of €0.4 million in the first quarter of 2017. Net income for Q1 2018 was €0.1 million or €0.00 per diluted share, as compared to a net income of €1.7 million, or €0.06 per diluted share in the prior year period. The first quarter, net income number including non-cash interest income of €0.6 million, versus the company’s share value of our outstanding warrants. Lastly, we exited the first quarter with a strong cash balance of €18.5 million. I will now turn the call back to Marc.

Thank you, Francois. We’re encourages to see increasing HIFU utilization and we are committed to investing further in our HIFU clinical pipeline as well as in physician and patient dedication. We also remain focused on our Focal One clearance process with the FDA and on securing additional commercial payer coverage for HIFU treatment. And we will look forward to showcasing our technology at AUA later this week. With that, we would now like to open up the call to your questions. Operator?

Yes, thank you. [Operator Instructions] We’ll take our first question from Swayampakula Ramakanth with H.C. Wainwright.

Good morning, Marc. Let me ask two questions. Just start off, you are talking about a registry and how would you use this registry data in terms of increasing adoption either within the U.S. or in ex-U.S. geographies?

The registry, first of all is a good way to collect the data and make sure collection is on the right way, but also a very important source of data itself to build publication and scientific publication that are the basic of again, creating adaption and scientific recognition on the community but also on the patient community.

Okay. And then in terms of getting additional payers to include HIFU within their therapeutic paradigm, we have seen Cigna and is there – have you started and looking – seeing any increases in terms of procedures now that you have signal on board and also how has that helped other payers or encouraged other players to include HIFU within their therapies, approved therapies, I mean?

Actually, we did – it’s too early to see an impact in terms of number of treatments but certainly it has created some build in momentum among the patient community and now regarding the other payers, I mean, we continue to contact and communicates with the major product in some of the payers in the U.S. to again increase willingness and add them taking HIFU into account in their coverage policy. And there is certainly some competition between these different private payers and I think ones that’s it may help others going into the HIFU coverage to be competitive.

Yes, thank you. And in terms of Focal One, could please give us an update on what is your current expected timeline for getting this approved in the U.S.?

Again, R.K, you know that it’s very difficult to give some expectation in terms of time in such a project for clearance that we – I think we believe that we are really at the final stage and we should get an answer from the FDA in a pretty quick time. It’s just a matter of some weeks, I think.

Okay. So you gave the final piece of data that they need and so it’s just – is it like another 30 days, 60 days or still this is an open timeline?

You know, again, the FDA has no real obligation in time, they’re following a clock, they can be expected if they want to. So again, that's difficult to give an exact number, but we’re certainly closer to it than the start, that was – again, that was the final addition in data that we were asked to or requested to give and that’s what given now. So that’s the final review.

Okay. And then with the recent addition of South Korean – it's a South Korean – I'm not going to say subsidiary, but you have an office in South Korea I believe. So how – what should we think about the HIFU and lithotripsy market in South Korea and other Asian countries outside of Japan where are you already have established? And how easy is that to penetrate into these geographies?

In South Korea, we’ve been adding more representatives for a long time now. We just last year changed the structure to be more direct and not have any intermediate company in between us – in between our representatives and customer. But we are direct to access more contribution in terms of margin were in use and also better control on the market. It’s an important market, it’s called EDAP, as we will have approximately 55 to 60 lithotripsy machine installed in South Korea. So it’s a big market, there is a lot of recurring revenue out of consumer growth and maintenance for efficacy. We also have another machine there and we have approved few months ago Focal One in South Korea. So we have started already to promote Focal One in South Korea and we have strong expectation as it is a big market with lot of appetite for an unavailing technology.

Okay. Good. Thank you.

Thank you, again.

[Operator Instructions] We will take our next question from Mike Benoit, Private Investor.

Good morning. You talked about the Focal One device; medical facilities are waiting on the approval in the U.S. before they do anything. Can you give any idea of how many corporations are waiting in line to purchase the Focal One device?

Good morning, Mike. Well, we have a very strong pipeline of projects to give you an exact number of how many projects we have would not be very relevant. But we have an increasing number of projects in our pipeline of projects. And we are noting that at the end of the process most of them are putting their final decision on hold until they know exactly what’s happening with Focal One, will Focal One be available or not before making the final decision in terms of purchasing one of the other equipment. So that’s what – we’re still working on our recent projects.

The thing that bothers me is that if Focal One is acknowledged throughout the world except the U.S., I think the U.S. needs to wake up and see what this technology is all about because they should – it seems like every quarter you guys keep being told or waiting for the FDA, we’re waiting for the FDA. It’s kind of aggravating waiting for the FDA…

Yes. I agree with you. And again, I think that we are at the final stage of the review process and I strongly believe that during the next conference call, I mean, the next quarterly conference call we might be having a decision done before that.

All right, thank you very much. Good luck.

Thanks, Mike.

We’ll take our next question from Nicole Gabreski with LifeSci Capital.

Hi, good morning. Just a couple of questions. So kind of going back to the previous question about how the registry will help and you’d commented about being able to build a scientific publication. You guys have – I mean, there are a number of scientific publication out there that have shown that the efficacy of HIFU technology. But I’m wondering if there is something else that you are hoping to get out of the publication, some other things to help, I guess, move over investor concerns or physician concerns?

Well, one important thing is that, new registry we’re thinking about is a U.S.-based registry that has been designed and built for our U.S. users and that’s when you – as again, we addressed for clearance a few years ago on HIFU for ablation of prostate tissue. And to build reimbursement for example, is very important to us American publication to build American reimbursements. And on our CPT path, it’s an important component. So that registry will continue heavily to bring new publication and again scientific tickers from the U.S. – from U.S. institution, from U.S. patients which are very important in terms of building the reimbursement process. And again, it’s also important to have new publication from new institution and that’s one of the goal. And the registry will help strict to that and we will also help strict the, I would say, post market study after approval. So that’s both – also on the FDA could check that everything is going well and results are confirm to what we’ve got in our submissions.

Thanks. And then just as a second question, and I apologize if I missed this. There was an increase in operating expenses for Q1 this year versus 2017. Look like it was increases in SG&A primarily. I was wondering if you could just speak to that.

No, the primary increase in our expenses were more on sales and regulatory for different projects that we have like marketing uncertainties in the U.S. and also some regulatory projects in both the U.S. and Japan.

Okay, okay. Thank you.

You’re welcome.

And that concludes today’s question-and-answer session. At this time, I’d like to turn the conference back to your host for any additional or closing remarks.

Thank you. And thank you again to – everyone for participating on today’s call. We look forward to updating you on our commercial and development activities again in the near future. You all have a great day.

And that concludes today’s presentation. Thank you for your participation. You may now disconnect.