Good day. And welcome to the EDAP TMS First Quarter 2014 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to David Burke of The Ruth Group. Please go ahead.

Thank you, Denise. With us today from management are Philippe Chauveau, Chairman of the Board; Marc Oczachowski, Chief Executive Officer; and Eric Soyer, Chief Financial Officer. Before we begin, I’d like to remind everyone that management’s remarks today may contain forward-looking statements. These 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 the 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. Now, I’d like to turn the call over to Mr. Philippe Chauveau. Philippe?

Good day, everyone. And thank you for joining us on our first quarter 2014 investor conference call. As headlined in today’s press release, EDAP delivered record results for the first quarter and has achieved significant milestones since the beginning of 2014. Notably, EDAP generated all-time record high revenues of $10.6 million for the first quarter and strong operating profit of $765,000, a solid 7% of revenue. As we progress through the second quarter, EDAP has a good device backlog, which we believe will help us continue this strong momentum as we enter the second half of the year. Also of note, EDAP continues to make significant progress with its HIFU PMA process with the FDA, and has received HIFU’s reimbursement from France’s Health Ministry. With that, I’ll hand over to Marc.

Thank you, Philippe. And thank you all for joining us for our first quarter 2014 quarterly call. I will review recent developments across our business segments and then I will turn the call over to Eric to discuss the financial results for the quarter. Following Eric’s comments we will open the lines for any questions you may have. 2014 has gotten off to a great start and we are pleased with the direction in which the company is headed. Indeed, our sales in the first quarter 2014 reached an all-time record high. This was mainly due to significant HIFU sales, thanks to the great market enthusiasm and sales traction fueled by our recently launched Focal.One device, the only HIFU and non-invasive device dedicated to the focal treatment of prostate cancer. We are pleased to report that during the first quarter we sold a total of five HIFU devices, including three Ablatherm and two Focal.One devices. It is very exciting and promising to see such market momentum for our new and unique Focal.One device less than a year after being CE Marked. We clearly see growing interest in the device from urologists and we believe that there is a strong long-term potential for Focal.One to be viewed as the standard for care for the focal treatment of prostate cancer. Also of note, with regard to Focal.One, the first treatments in Germany were recently initiated by Dr. Andreas Blana, Chief of Urology at Fuerth Hospital. Dr. Blana is one of our global experts in HIFU with a long track record of treating prostate cancer patients utilizing our HIFU devices. He is well positioned to assess the clinical and technical differentiators of our devices. Putting these into numbers, our first quarter 2014 total sales grew by more than 30% as compared with the…

Thank you, Marc, and good morning, everyone. As Marc just outlined, we achieved record results during the first quarter 2014. More specifically, total revenue for the first quarter 2014 was €7.8 million or $10.6 million, a 31% year-over-year increase compared to €5.9 million or $7.8 million for the first quarter 2013. Total revenue for the HIFU division was €3.3 million or $4.5 million for the first quarter 2014, compared to €1.4 million or $1.8 million for the same period last year. Results for the first quarter of 2014 included the sale of three Ablatherm and two Focal.One devices. For the first quarter 2014, total revenue for the lithotripsy division was €4.5 million or $6.1 million, in line with €4.5 million or $6 million during the year-ago period. During the first quarter 2014, the company recorded sales of nine lithotripsy machines, comprised of seven Sonolith i-move devices, one Sonolith i-sys device, and one Sonolith Praktis device, compared to a total of 10 devices sold in the first quarter of 2013. Gross profit for the first quarter 2014 was €3.6 million or $4.9 million, compared to €2.2 million or $2.9 million for the year-ago period. Gross profit margin was 45.9% in the first quarter 2014, compared to 37.1% in the year-ago period. The change in the gross profit margin was mostly attributable to the increase in HIFU equipment sales. Operating expenses were €3.0 million or $4.1 million for the first quarter 2014, compared to €3.4 million or $4.5 million for the same period last year. As a result of our increased device sales during the quarter, operating profit was €558,000 or $765,000 for the first quarter 2014, compared to an operating loss of €1.2 million or $1.6 million in the first quarter of 2013. Most noticeably, this is the first time the company reported two sequential quarters with positive operating income. Net income for the first quarter 2014 was €840,000 or $1.2 million, or €0.04 per diluted share, as compared to a net loss for the first quarter 2013 of €3.9 million or $5.1 million, or €0.21 per diluted share. At March 31, [2013] (ph), cash and cash equivalents, including short-term treasury investments, were €6.4 million or $8.9 million. The €1.2 million cash utilization in the first quarter was attributed to increased receivables related to increased sales in the first quarter to be collected over the second and third quarters. With that, I will turn the call over to the operator who will open the line for questions. Thank you.

(Operator Instructions) And the first question will come from Suraj Kalia of Northland Securities. Please go ahead.

So Marc, two things. Congrats on the French reimbursement, also the EAU guidelines, I think that bodes well. Keying off of the EAU part of the equation, Marc, maybe you can walk us through, if I remember correctly, some time back there was some discussion about mostly some of the early academic centers the ones that were in the trials in Europe, where you are seeing Ablatherm, how are you seeing changes, I know it’s a little early, but what changes are you seeing in the field that potentially bodes well from a utilization perspective, from a capital, sales perspective and just from an adoption perspective in Europe?

Again, the EAU guidelines are seen and followed by most of the urologists in Europe and in some other countries. And it’s a kind of again a warranty given by the urology authority that the technology is recognized and has proven again by publications of clinical trials that it brings a added value in the treatment of prostate cancer. So I think it still has an impact in the making of a broader adoption of the technology among the urologists fraternity.

And Marc, let’s say hypothetically, January 1, 2015, you will have U.S. FDA approval for Ablatherm. Marc, can you walk us through leading up to January 1, 2015, how do you see the sales force, the initial target centers that you guys want to go after? Any color would be great.

It’s a nice question, even though it’s a bit early for me to further comment on that. And I think one of the key milestones that we need to go through before starting to speak about that and even more publicly will definitely be the panel meeting.

And Marc, finally on the Focal.One, obviously you’ll have, right out the gate you’ve done a pretty good job on Focal.One in Europe, walk us through -- how should we look upon what physicians and clinicians are looking at? I’m just trying -- any color on adoption on the sentiment related to Focal.One would be greatly appreciated. Thank you for taking my questions.

Focal.One, what we can see as we are starting its sales and installations across Europe is we can really see a different population of urologists being interested in Focal.One as compared to the population that [was totally][ph] into the Ablatherm. And again, these urologists that are getting their first units installed are really surgeons oriented urologists that are really looking for a solution and an additional option to treat their prostate cancer patients without giving them surgery. So really I mean what we anticipated in the discussion we’ve had while we were developing Focal.One is really becoming true as we are now implementing the installation of these new units, meaning that these high level surgery center, high level surgeon urologists losing kind of market share and a number of patients as surgery again in a lot of the early stage patients, is seen as another treatment and again they need a solution to give an appropriate treatment to these patients that again don’t want to be operated by surgery but don’t want to be also let on a watchful waiting status. So they really need that tool and we can see a very high enthusiasm and a very positive reception of Focal.One as the tool that will allow those big and luminary centers of surgery for prostate cancer to continue improving and increasing a number of procedures by adding Focal.One to their surgical practice.

Our next question will come from George Zavoico of H.C. Wainwright. Please go ahead.

Good morning and congratulations on the record results, very, very impressive. I have a question that sort of follows from the last one. The Focal.One versus the Ablatherm, I mean if I am a urologist and what would make me choose a Focal.One versus an Ablatherm? And do you see Focal.One eventually replacing Ablatherm because of its enhanced capabilities?

Actually, not, it’s really a range of products. So there are significant differences between the two devices. Even though we don’t see a lot of centers getting the two devices, it’s more of a strategic choice when you want to invest into an Ablatherm or a Focal.One. Again, Focal.One is really dedicated for the focal treatment of prostate cancer, so it’s a great addition to a surgical practice and also there is the question of price because both devices having some substantial differences in terms of capabilities in both imaging and treatments would have different prices. So the choice for a urologist would be more in the use, in the intensive use of the device between focal and between a [relative] [ph] treatment I would say and also we give a choice, a financial choice, in terms of investment as Focal.One is a more expensive device than Ablatherm.

And turning to the regulatory environment in the U.S., assuming you get Ablatherm PMA approval, how does that position Focal.One because I presume obviously you’d like to move Focal.One into the U.S. market, would that then be -- is it different enough for it to be -- to need to be a PMA or could you do the 510(k) process for that which would be a faster and more efficient?

We are really working hard now in the final stages of Ablatherm PMA process, so we will continue focusing ourselves on the Ablatherm with the FDA and then once we’ve got something significant there, we’ll see what will be the best way, but we can’t disclose and we can’t sort of comment on what would be the best strategy and also it will obviously depend on the regulations and the rules of the FDA process. We will obviously follow them.

And final question regarding the -- I mean you are clearly still selling a lot of equipment and you’re going to selling more Focal.Ones I hope. What about -- can you break down what the revenue was from RPPs and leases and do you tend to grow that and expand that capability and if it’s so how do you intend to do that?

On the first quarter we grew our numbers in both RPPs and the machine sales and we, as we announced, we started on our RPP development in Germany by treating patients at Dr. Blana’s facilities. We also started our RPP in France, so we anticipate to continue growing our RPP numbers by adding the Focal.One to the portfolio of RPP products.

Our next question will come from Oliver Garn of PSM. Please go ahead.

I’ve got some questions regarding the revenue and the backlog, how much of the revenue in Q1 was somehow transferred from Q4 of last year, so let’s say the deal that you closed in Q4 and it was executed in Q1, was it a large part or a small part, maybe you could comment on that.

Well, we certainly had some backlog at the end of Q4 that were confirmed books for order that we executed in Q1. Giving you the exact number would be difficult right now, but it’s always the same that we kind of sign contracts and then for hospital availability for (indiscernible) consultation, and we sometimes deliver them on the next quarter, so and we’ve got some of the last year deals that were kind of delayed and we’re able to close in Q1, so again that’s a normal kind of process that sometimes the deals that we close on a quarter end, they are executed and recognized on the next quarter. So that happened really in Q4 and Q1.

Was it a large part or a small part?

We had a strong backlog as we announced. It was -- I mean to tell you if it was the majority on that, I don’t know, it was regular in terms of transferring deals from one quarter to the other in terms of between contracts and execution. I think it will be again, as we announced, in the press release as we have a strong backlog entering Q2 so we’ve got also deal close at the end of Q1 that will be executed and recognized in Q2.

That would be the second question. Could you quantify the backlog, somehow or the sales leads or something?

We quantified it and we announced that we had entering Q2 backlog of 10 lithotripsy devices and two HIFU devices.

Sorry, I didn’t understand.

We announced in the press release that was released this morning that we had 10 lithotripsy backlog and two HIFU devices backlog at the beginning of Q2.

(Operator Instructions) The next question will come from [Kerry Trechardin] [ph] a private investor. Please go ahead.

On your recent press release, you mentioned the revenue per procedure used for the prostate treatment in Germany, is this a unit that you own or how do you range sale of the device, I mean it’s going to be generating revenue to EDAP on a per procedure basis?

It is a device. The (indiscernible) is a device that we own at EDAP and we will provide services on the device on a multi-year basis usually to hospitals that would [use] (ph) the device.

This is a business model that I’m in favor of because it is a -- once the revenue per procedure is known then investors can quantify and forecast future revenues. Right now, this is one thing that I believe has been folding the valuation of the company down because there has not been good visibility of this number. And I’m wondering if sometime in the future you’ll be letting investors and owners know what you are actually trying to make on a per procedure basis, has that never been publicized?

No.

Also, on units that you had sold outright, what are you doing to increase disposable revenues per procedure for units sold, and is there a revenue stream from disposables on a per use basis?

When we sell the device, there is a single use disposable associated with the treatment using the device, so if we have to treat a patient with our device, we will have to buy a single-use disposable from us that is called Abla pack on the Ablatherm and Focal pack on the Focal.One.

And what type of disposable is this, is this some kind of a cover or is it something mechanical or electrical or what, can you describe that?

It’s a tubing system plus a cover of the probe that includes as well a chemical solution liquid that would help a good continuation of the waves that we can deliver the entire images from the probe to the prostates and we’ll also use that liquid that’s again using the system of tubes that we have on the disposable to cool the rectum walls so that we can avoid overheating at the rectum wall.

This is a suite of let’s say a kit of disposables that you require for each use?

Exactly, it is a kit that -- it is required to be changed for each use. And it has a key role in the treatment.

And is there anybody who has been trying to sidestep the use of that kit and buying generic type equivalents?

No, because first of all there are no generic type of kits and you guys needed to enter a code, a password that is unique and related to one pack. So you need the pack plus the password, so even if you would get a pack, you won’t be able to get the password for the device. So it’s well protected.

That is fantastic. I didn’t think that you had this type of intellectual property. Now, what are you selling these disposable kits for, can you give investors an idea of how much revenue is generated on the sale of one disposable, one disposable and one procedure?

The price of the kit is on Focal.One around €900.

And what is the profit margin on that, I presume it would be quite high?

Yes, and I won’t disclose it.

When are you anticipating? You have the French reimbursement now approved and I would imagine that the EU in general would quickly adopt reimbursement protocol following on the tails of French approval, what would you anticipate to occur in the next 12 months?

Well, we usually don’t give too much of forward-looking statements, but again it is a significant progress in the adoption so that can certainly drive adoption on a larger scale and generate more sales and revenue for the company.

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Philippe Chauveau for any closing remarks.

There being no further questions, this concludes today’s EDAP investor call. Thank you everyone for participating on the call and I’ll talk you next time, good bye.