Welcome to the Second Quarter and Year-End Earnings Conference Call. My name is Martin, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Mr. Craig Tagawa. Mr. Tagawa, you may begin.

Thank you, Martin, and thank you, all, for joining us for AMS' 2012 Second Quarter and First Half Financial Results Conference Call and Webcast. Please note that various remarks that we may make on this conference call about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K for the year ended December 31, 2011, the quarterly report on form 10-Q for the quarter ended March 31, 2012, and the definitive proxy statement for the Annual Meeting of Shareholders held on June 7, 2012. The company assumes no obligation to update the information contained in this conference call. Prior to discussing second quarter results, I would like to recap for you some of the actions that management has taken and that are in progress that excite us about the future prospects of American Shared Hospital Services. One, the radiosurgery radiation therapy business model of partnering with hospitals that American Shared developed has proven to be a successful model as exhibited by 13 years of consecutive pretax profits. Further, we still believe the implementation of the Affordable Care Act with its promise of increasing the number of insured Americans will have a positive impact on our business. Two, to date, we have upgraded 10 of our existing Gamma Knife units to the Gamma Knife Perfexion. We believe the Gamma Knife Perfexion with its capability of treating a greater number of indications than prior models will result in increased treatments, revenues and profits in the…

Thanks, Craig. For the 3 months ended June 30, 2012, revenue increased 1.9% to $4,284,000 compared to $4,206,000 for the second quarter of 2011. The number of procedures performed on Gamma Knife Perfexion systems supplied by AMS increased 3.8% for the second quarter and 4.1% for the first 6 months of 2012 compared to the same periods of 2011. The total number of procedures performed in AMS Gamma Knife business increased 17.1% for this year's second quarter and 10.9% for the first 6 months compared to the same periods of 2011, primarily reflecting the opening of a new Gamma Knife site in Turkey earlier this year. The incremental revenue generated from the growth in procedure volume was partially offset by the loss of revenue from the expiration of a customer contract at one of our sites and the early termination in the third quarter of 2011 of the existing 10-year lease on the Gamma Knife system AMS supplied to Lehigh Valley Hospital. Lehigh's impact on the revenue comparisons will diminish significantly in the second half, as it made a smaller contribution to last year's third quarter, and we recognized 0 revenue from Lehigh in last year's fourth quarter. Net income for the second quarter of 2012 was $15,000 or $0.00 per diluted share. This compares to net income of $21,000 or $0.00 per diluted share for the second quarter of 2011. Gross margin for this year's second quarter was unchanged compared to the second quarter of 2011 at 43.7% and increased sequentially compared to gross margin of 41.7% for the first quarter of 2012 and 39.5% for the fourth quarter of 2011. Selling and administrative expenses for the second quarter of 2012 were $1,109,000 compared to the $1,041,000 for the second quarter of 2011. Operating income for this year's second quarter was unchanged compared to the second quarter of 2011 at $225,000. For the 6 months ended June 30, 2012, revenue increased to $8,687,000 compared to $8,573,000 for the first 6 months of 2011. Net income for the first 6 months of 2012 was $24,000 or $0.01 per diluted share compared to net income for the first 6 months of 2011 of $42,000 or $0.01 per diluted share. Cash flow, as measured by earnings before interest taxes, depreciation and amortization or EBITDA, was $1,988,000 for the second quarter and $4,127,000 for the first 6 months of 2012 compared to $2,034,000 for the second quarter and $4,081,000 for the first 6 months of 2011. On the balance sheet at June 30, 2012, cash, cash equivalents and certificates of deposit were $9,997,000 compared to $11,580,000 at December 31, 2011. Shareholders' equity at June 30, 2012, was $25,196,000 or $5.47 per outstanding share. This compares to shareholders' equity at December 31, 2011, of $25,171,000 or $5.46 per outstanding share. Craig?

Thank you, Norm. Now I would like to open the call to questions. Martin, we are ready for the first question.

[Operator Instructions] And we have a question from Lenny Dunn of Freedom Investors.

I have a question, but -- I have a couple of questions, but I want to start by saying that I very much appreciate you reinstating the share buyback. I hope that it's acted on. I was very happy to see that there was some insider buying and would actually look forward to seeing a little bit more insider buying in addition to what we've already seen at these levels because it's such a large discount from the solid book value, which is conservatively stated on your balance sheet. Also, very much appreciate the fact that you're moving out of the expensive, high-rent district to easier-to-pay rent space and that you've eliminated one employee. I don't know. You might now at 10 be at as far down as you can go or if there's no need for 10, then go to 9. But if there is a need for 10, then stay there. Now I'm also glad to see that the basic business is looking very bright going forward because as much as I'm looking forward to the proton beam therapy, seeing earnings from that is a good year away at least. So I'd like to see money earned in the interim. Now my questions have to do with are you receiving pressure from Mevion to act so at least get the first one out the door? Because I know we have deposits on 2 of them. And also, are you receiving pressure from some of the hospitals, which are obviously interested in getting the thing up and running, too? So with the clock running, I guess, are you receiving pressure from those 2 sources?

What I would tell you, Lenny, is that we work cooperatively both with our hospital partners and with Mevion in contracting the timing of this. We hope to start construction on our first site, as I mentioned earlier, very shortly. So I think we will start rolling these out as our hospital partners are ready. As well, because remember they have to make a capital commitment as well under the -- what the structures that we use. So I think -- in short, I think we will start our first one very shortly, and I think then you'll see a progression thereafter.

I would think that once somebody's up and running, that you'd -- for competitive reasons, the demand would certainly pick up. but I think you got to get the first one up and running. When is Barnes going to be treating patients?

I think they're scheduled to treat at least a patient before the end of the year.

Okay, because I think that will help, too, once there's some success with the system. But clearly, the pricing advantage of the Mevion system had the prices that people have to pay that didn't contract for it years ago is still very favorable, and obviously, our prices are even better, and we put $1 million deposit on these things years ago. So it's -- I think we're in a very good shape but would like to start seeing this look more like a highly profitable business than hopefully, a profitable business in another year or 2 because we've been waiting a long time. And I think you'll share the -- you feel the same way. So -- I mean how the -- those are my questions and statements.

[Operator Instructions] We do have a question from Robert Basey [ph] .

I'm interested in Mevion. You claim you have a 1% interest in that company. I'd like to know what you've paid for it and what the fair market value of that 1% of Mevion is worth today.

We paid approximately $2.7 million for that equity interest as to what the fair market value were. Since it's privately held, there is -- it's a little difficult to tell right today what that value is. But I think what we said in our previous announcements is that based on some of the fundings that they have done that we believe that are the value that we've stated was temporarily impaired, but we believe that once these units start ramping up, that the true value of Mevion will now come out. But it will take a little time for that to be known.

Currently, we have no questions in queue. [Operator Instructions] And we have a question from Anthony Marchese.

I don't know if anybody really or people really -- investors really appreciate the cash flow that you guys generate, so hopefully, we can get to that point. I guess my question relates to, do have any plans on -- I mean, you have a compelling story I believe. Do you have any plans to do any kind of roadshow? Or what kind of investor relations activities do you have planned to, I guess, get the word out? I realize you're busy selling PBR machines, but do you have any plans to take the show on the road so to speak?

Yes, Tony, this is Dr. Bates. Yes, we do. We were delaying that until there was FDA approval. Remember, we only got FDA approval...

Right. No, and that's why I say, now you have a real story.

Now we have a story to tell. So we will be starting that, yes.

And we have another question here from Tony Kamin.

Question is in I know that prior to the FDA approval, there were a number of institutions that would not be able to consider a proton machine. Since the FDA approval, can you talk about how you see your potential sales pipeline changing and give us a sense of what the interest -- what the latent interest might be out there nationally for the kind of Mevion system that you can provide to hospitals?

Oh, we've done an analysis quite some time ago what we believe the market was or is, and we believe that the market in the United States is between 400 and roughly 25 and 850 treatment rooms. And if you look at where we are currently, there's only about 40 to 50 treatment rooms in operation. So from that standpoint, we think the market is just in its infancy yet, and there's a lot of room for growth. And we think the 1 and 2 room models that we've talked about is the wave of the future. And I -- what I can tell you is we have gotten a lot more interest recently now that Mevion has received FDA approval, and we're pursuing those opportunities. I'll let Dr. Bates provide his comments regarding your question.

Yes, I think the only thing that I could say on this is that if you looked at new orders for the large 3 and 4 room machines, I think there's only been 1 or 2 in the last 6 months to 12 months. So I think the direction of the market is, clearly, it suits our business strategy of doing the one-room machine. And I -- it wasn't mentioned, but it's my understanding that Mevion now has a backlog of about $300 million worth of orders, which is all so very exciting, which I think adds to their valuation.

Well, but in terms of your own potential sales pipeline, are you guys ramping up your sort of marketing efforts now that there's FDA approval? Or it just seems like there's going to be a lot of market share up for grabs, and I'm hoping that we are able to capture the -- a big percentage of it.

Yes, we are -- we actually get calls because people know we own systems already and that we have an investment in Mevion. We will. Right now, we are concentrating on getting the first one up and running, so -- but we're also pursuing other opportunities at the same time. So we will not let opportunities pass us by if that's the question, Tony.

And if this is the appropriate term, we have a built-in market where there are 20-odd hospitals where we are now with our Gamma Knives. That will be one of the first places that we will go for marketing. And we're already getting interest from those hospitals.

Right. And interest just for me, people that are newer to the story and just making sure that you're still comfortable with this, I think on prior calls, you'd indicated that you think each room, treatment room can produce about $7.5 million of EBITDA annually. And when you compare that to your current market cap of whatever it is, $13 million, $14 million, it's so dramatic. Is that still -- as you look at it, is that $7.5 million still a reasonable amount?

Yes, I think in the past we've given guidance in terms of where we think it is. And each project will differ in the $6 million to $7 million EBITDA range, but it's clearly a significant number when you look at what our current EBITDA is. And that's on a per room basis.

Well, yes, I mean, in the sense that the first 2 proton beam machines can equal your current market cap in terms of EBITDA to market cap. I just think that what remains astounding to those of us who followed this for a while, it's just the non -- that sort of the non-awareness that I think is out there in the market and in terms of what this can -- this opportunity can be for your company. So hopefully, with the first one starting construction, the market will start to record this some reasonable valuation.

And we have a question from Mason Matschke of Raymond James.

My question was first of all, I was disappointed when the news came out with Mevion and the share price reacted negatively, and so I agree and I hope that with what Tony Marchese has said, I'd love for you guys to go out and tell the story on the road, and I think that more people that are in this area that buy micro cap stocks should have the opportunity to know the story. And then I just wanted to kind of get a feeling what the company trading at its current discount to book value. What you believe would be the #1 thing that you could do that could impact the current value of the shares in the next year that may close that gap?

I think we're doing -- in answer to your question, Mason, I think we're looking at some several fronts. If you look at a more in a short-term strategic basis as to the long term that we've outlined earlier, is obviously, the upgrades in Perfexion units, we think that has potential. The Perfexion, we believe is the most accurate system and the fastest in treating metastatic brain tumors. And one of the reasons why we think that's so important is that metastatic brain tumors, there are roughly between 180,000 and 200,000 of those diagnosed annually, and about half of those can be treated radiosurgically. So there's a pool of patients of about between 90,000 to 100,000 annually that can be treated radiosurgically. And if you look at the number that is expected to be treated radiosurgically, this year, it's about 17,000 or 19% of that market. So we think there is a big untapped market, but we think that the literature that is coming out now that more strongly suggest the efficacy of radiosurgery and Gamma Knife Perfexion radiosurgery for metastatic tumors will prevail. So we think we're laying the groundwork to start treating additional patients in the future as radiosurgery becomes more to the forefront in how these indications are treated. We're also looking to, as you mentioned before, to expand our international business, and I think we're looking to see that, that will grow in the future as well.

Ernie, why don't you say a word about the international and how it's doing now and what you think it will contribute in terms of EBITDA?

Well, just adding to what Craig said, we've been up and running for almost a year now with our Gamma Knife site at Baskent University in Southern Turkey. In addition, we also have an access radiosurgery unit there, which is almost operating its full capacity right now, treating as many as 35 patients a day. So we're actually very pleased at this stage with our operations in Turkey, and we're seeing positive cash flow and net income pretty much across the board. So we think that it's a very good start to the international business there. And as Craig mentioned earlier, we expect Peru to come online early next year, and we think that, that would also add to the bottom line for the business as well. So we think the prospects are good. We're being very selective about the new potential sites that we're considering. There are a number of opportunities for us internationally, but as I said, we are being very, very selective to ensure that those projects that we do undertake are profitable.

And we have a question from Lenny Dunn of Freedom Investors.

This isn't really questions because, again, I'm very pleased to see you getting the SG&A under control; and clearly, we can see some serious earnings going forward just as currently structured. And I certainly encourage a roadshow now that you have a story with a timeline to tell rather than, hopefully, we get FDA approval. It didn't make much sense to go on a roadshow until you did get it. One of the -- somebody had asked what the Mevion valuation could be. I think it wouldn't be out of the question to see $1 billion market cap on Mevion with the number of orders they have and with the FDA-approved system that is clearly cost effective next to the $120 million systems that Varian has out there. And I would think the hospitals are having trouble getting financing for the $120 million system. So unless somebody has grandiose ideas, there's no reason not to just go with the Mevion system. So our 1% can be worth a lot of money. And I would expect them probably to go public maybe midyear next year once they get enough of these sold because they have the right story to tell. But anyhow, that's my 2 cents worth.

This is Dr. Bates. I do want to make a comment on the Affordable Care Act with its promise to increase the number of insured to about 30 million. And when that becomes effective, I think we'll see an increase in our business.

And we have no further questions in queue.

Thank you for joining us this morning, and we look forward to speaking with you on our 2012 third quarter results conference call in about 3 months.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.