Greetings and welcome to the EDAP TMS Fourth Quarter and Full Year 2016 Results Call. [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 fourth quarter and full year 2016 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. This call is being recorded and includes a slide presentation which is being webcast. To view the webcast, please visit the investor information section of www.edap-tms.com. 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, and once again thank you all for joining us today. The year 2016 was a tremendous year for EDAP. We continued to expand the global reach of an incredible HIFU devices, allowing an ever increasing number of patients access to this revolutionary treatment for early stage prostate cancer. As a result of our dedicated team’s continuous successful efforts, we reached record revenue in 2016. Now, I would like to introduce Marc Oczachowski, our CEO.

Thank you, Philippe. Welcome and good morning everyone. As you saw in our press release yesterday evening, full year 2016 revenue grew 10.4% to €35.6 million compared to €32.3 million for 2015. Revenue from our HIFU division increased approximately 63% over the close of 2016 compared to 2015 as the total market begins to embrace this novel technology. We are pleased that the business continues to maintain its double digit growth momentum and record breaking sales milestones for the last three years. Our significant progress and expansion in HIFU sales has been the primary driver for this growth and continued expansion of global gross margins which increased over 300 basis points to 46.1% during 2016 from 42.8% in 2015. I am pleased to announce that our continued sales growth in combination with a focussed disciplined approach to the management of expenses and investments during the year, we have achieved yet another year of profitability with an operating profit of almost $0.5 million. 2016 was clearly another productive year during which we accomplished a number of significant milestones within the HIFU divisions as a result of our recent launch of the technology in the U.S. market since its approval during the fourth quarter of 2016. U.S. market penetration has started rapidly at the beginning of 2016. We implemented a strategy that’s focussed on targeting academic centers to build awareness and global adoption of the technology. As a result, EDAP now has HIFU systems available in the most prestigious institutions for prostate cancer management in the country such as USC in Los Angeles, University of Miami, Duke University, the Cleveland Clinic, and many others. What’s more impressive about the early adoption of our technology is that most of those centers were already renowned in Robotic surgery processes of prostate cancer. It was…

Thank you Marc and good morning everyone. I will now take a few minutes to review our financial results for the three and 12-months period ended December 31st 2016. The revenue for the fourth quarter of 2016 was €10.7 million or $11.4 million, a decline of 9.3% compared to €11.8 million or $12.8 million during the fourth quarter of 2015. This decrease was due in large part to an unusual large amount of lithotripsy equipments sold during Q4 2015 even if HIFU revenue reached a record level on Q4 2016. The total revenue in the HIFU business for the fourth quarter of 2016 was €4.6 million or $4.9 million compared to €3.3 million or $3.6 million for Q4 2015. This 38.3% increase is based on growth in both further equipment and treatment driven revenue. For Q4, 2016 total revenue for the lithotripsy division was €6.1 million or $6.5 million compared to €8.5 million or $9.2 million during the year ago period, the 27.9% decrease. During the fourth quarter of 2016 the company recorded sales of 9 lithotripsy machines which compares to an extraordinary total of 25 devices sold in the fourth quarter of 2015. Gross proceeds for the fourth quarter of 2016 was €5.2 million or $5.3 million compared €5.6 million or $5.7 million for the year ago period. Gross profit margin and net sales improved from 45% in the fourth quarter of 2015 to 48.8% in Q4 2016 since primarily to the favourable mix of the sale between HIFU and UDS. Operating Profit for the fourth quarter of 2016 amounted to €0.3 million or $0.4 million compared to an operating profit of €1.6 million or US$1.7 million in the fourth quarter of 2015. Net loss for the fourth quarter of 2016 was €1.3 million or US$1.4 million, or a…

Thanks, Francois. 2016 was a tremendous year for EDAP. This is successfully broke into the U.S. marketplace with Ablatherm and so continued expansion globally. The potential for growth in 2017 is considerable both the C-Code we will proceed and Focal One that the approval represent significant milestone for EDAP in the U.S. and would remove major workloads [ph] to our ability to provide patients with the treatments that Ablatherm improve their quality of life. Demand for [Indiscernible] treatments in the global clinical community has flourished, thanks to the marketing efforts our team and we are grateful for the opportunity to positively impact the lives of so many men. Thank you all for joining us today and I would like to begin our question-and-answer session. Operator, please.

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

Thank you. Good morning, Marc.

Good morning RK.

Couple of questions, I know you gave us a little bit of an update on the reimbursement process. Could you kindly give us a little bit more detail in terms of where you are in the process? How long would it take for you to get your initial C-Code? And what else you need to give to the CMS to get your CPK – CPT, sorry?

So, as I just said, we submitted our complete clinical dossier to CMS at the end of February of this year. The process is normally pretty quick, so the expectation is to get some feedback from CMS somewhere in summer. And then we’ll have an answer about the C-Code and its positioning as well. As I said, the C-Code is a temporary code that is allocated for three years, and that gives you time to build a deeper and more comprehensive clinical file and a clinical file as well to apply for CPT Code. So basically the C-Code is kind of a quick procedure to the low-innovative technologies to get a temporary reimbursement while you’re building that CPT Code.

And that C-Code is applicable to the both Ablatherm and Focal One. Is that right?

Yes. It’s not device related. It’s technology related and treatment related.

Okay. Fantastic. And then, regarding Focal One, how would you characterize your interactions with FDA at this point. And where in the process do you think FDA is generally -- what is the expectation of the management in terms of approval?

As you know, it’s complicated to get expectations somewhere on the midyear file. But basically we've been in the process for almost a year now, and we’re working on it and we are – I would say close to the end. But again, it’s difficult even close to the end to tell you anything about timing and expectation.

You talked a little bit about the demand for Focal One and demand for Ablatherm and how things are progressing during the second half of this year. From that, can you kind of help us understand what sort of demand is there for Focal One? It looks like though there is an underlying demand for the technology, there is some kind of trying to figure out which technology to go far, so how are you helping out your prospective clients? How to think through this process and how they can use one or the other and what are the benefits?

As I said, since we announced and we announced the key and we said few times that Focal One was filed with the FDA. People trying up, like I said that clearly between making a decision for one or the other, so some of them are kind of waiting and again timing with the FDA is always something very difficult to evaluate. So people would be waiting. Again the interest is not only on Focal One, I think the interest is really on the technology, on the capability of the technology to do partial treatments, to do Focal approach of process ablation and also to use it for radiation failures [ph]. So, yes, that you know since more devices would be available to people who kind of see what will be new and what would be matching better their expectation and need in terms of device. So, we're working actively again in kind of maintaining and entertaining those prospects and projects that we're adding here today to our pipeline to ensure that we would be able to give them and to provide them with the right answer for the right news [ph].

Okay. And the last question from me. In the last 15, 16 months since approval of Ablatherm, how is the [indiscernible] adoption and demand compared to your expectations going in? And also you started this program of trying to get some of these key centers educate the community doctors [indiscernible]. So how is that process working? And is that working on par or you still have to increase such sessions? Is the strategy working or do you need to make some tweaks to that strategy?

No. I think it's working very well and again we get a number of major institutions. You know, the start of the new technology in a hospital always takes time because you need to train the people and you know the first case is people would like to see and follow-up the patient to get confidence and to be more comfortable in recruiting patients and all that. So we're going through that and we can see our first centers having already one year of follow-up in their first treatment with very promising results. We got our first centers doing their first biopsies today on the first patient treated at their [Indiscernible] and it looks very good, so I think we’re building not only adoption and technician but also building our clinical history of the U.S. we build nice institutions and building it very well.

Perfect. Congratulations and looking forward a great 2017.

Thanks RK.

Thank you. Our next question comes from the line of Stanley Mason, Private Investor. Please proceed with your questions.

Good morning, Marc.

Good morning.

Good morning. I just have few questions. With the FDA process going forward, approximately how many times has the clock [ph] been stopped due to questioning back in forth additional information. Because normally as we’ve discussed over different conversations in the past we would've expected within a year approval of Focal One, and obviously we haven't reached that goal and it must be because the FDA has presented numerous questions that have stopped the clock. Maybe I'm wrong in that assessment but that is what it appears to me to be?

Well, it’s not too much, the number of times or the number of questions, because some questions may even stop the clock, some of the questions might be stopping clock and it all depends the time you have to get the proper answer to the FDA. So, that's why time is very difficult to evaluate for maybe a project. So I don't exactly know how many times we’d stop the clock and how many questions did we have in total. But we had some interactive review. We had been stopping the clock question and answer and sometimes you get questions that requires to go into the -- into a very fine and deep review of patient size and clinical data that may take some times.

Okay. Now Focal One is approved in Canada now, right?

Yes.

And I don't think -- did you report how many Focal Ones’ you’ve sold in the last 2016?

We sold eight Focal Ones in 2016.

Compared to 2015 how many?

It was four I think.

Okay. Good, understood. And another question, obviously you’re in some very major high profile log institutions in the U.S., and now and then we see a report that you did one and the – that DaVinci did one. I forget what institution that was. But we know that you’ve done one here, one there and one so many there and here, but how many overall procedures would you say have been done in the United States regardless to reimbursement?

It’s difficult to exactly know, because there are facts where see the number of disposables and so we don’t known on a real-time basis how many they had and tell exactly, but we’ve done 200. I think it would more then offer 200 patients now at least.

Okay. That’s good. And obviously trying to get a CPT Code, your competitor must be working on this as well. And should they get the CPT Code or their application had been in before yours. Once a CPT code is approved, it’s approved no matter which company is using HIFU, I would imagine?

Yes. That’s correct. And actually we’re working jointly on building the C-Code and reimbursement process as it is a common goal.

Okay. So you’re working on and you know they’re working it on it too, right?

Yes. And we’re working on it together.

Excellent, excellent. I’m sorry, I didn’t hear you correctly. Okay. Well, that’s and then right, does Canada have a similar type of CPT code where they’re reimbursing?

Well, as I said before, we’re working now on the C-Code and once we get a C-Code and we can start the process for CPT code that’s much stronger. So the C-Code as I said to a sort of temporary reimbursement that will give us time to build the blogs [ph] for CPT Code, that takes more time.

Okay. But, so the two countries right now that have reimbursement are Germany and France, or there are others?

No. They are many others like Switzerland as well. We have U.K. on a registered basis [ph]. There are different countries that are offering their reimbursement now in Europe. Italy as well reimbursing the treatment, so now there are more countries that are offering reimbursement on HIFU.

Excellent. That’s end my questions. Thank you very much and good luck.

Thanks.

Thank you. [Operator Instructions] Our next question comes from the line of Mike Donovan, Private Investor. Please proceed with your questions.

Good morning to you all. This is Mike Donovan, been an investor, multiple years now, have thought this should have already come to fruition, a lot better than what it is. And I just noticed looking on the Internet, the cancer centers of America advertises HIFU. And I know you have a competitor here that claims they sold several hundred machines, they have a new updated one that’s already been approved by the FDA. I just wonder why we’re not making better penetration with actual companies that are treating cancer in the United States instead of just going to the Universities as such. I understand training the people up and everything like that, but why do you feel like we’re not getting better penetration at companies that treat cancer and hospitals that treat cancer?

I don’t really pick that question, but again we’re not only targeting the universities and academic centers. As I said in the call we also partnering with mobile services and mobilizers that are providing our technology to smaller hospitals, smaller service centers and private groups of urology. And by the way several hundred equipments from our competitor I don't think your source of information is good.

Okay, well that’s what they claim on their website.

Well they can it’s probably several hundreds of trained doctors but not machines and we claim more than 200 doctors trained on our device as well. So, again – it’s a question of education so the first step is to indicate patient, doctors or physicians so they are able to recruit and explain the treatment and the technology to their patients so then they can switch to the next level which is treating them by using weather fixed equipment in big centers or mobile equipments that – in the next [ph] sets of the technology. So it takes a little while and as I said as well there are some limiting factors like reimbursement and [Indiscernible] that make the penetration probably slower than you would have expected, but again we have to build blocks [ph] we have to build the market, we have to create a recognition of a technology that is based on clinical data and experience and that’s what we are doing and our competitors are doing that as well.

Right. I guess my main question is why cancer centers of America and M.D. Anderson Cancer and some of the major cancer centers. I know this does – I know it’s getting known because everybody I talk to here in Conroe, Texas just outside of Houston has had a discussion with their doctor about HIFU, the potential use in HIFU on their case. So I know the word is getting around that it’s available. I just feel like possibly maybe or I’ll look at selling the lesser machine to somebody or atleast in the lesser machine to somebody to get them going with your product until Focal One gets approved as a potential sales tool to get your product in instead of competitors product in because the United States is going to be a large market for anybody if they can get going. That’s all I had to say. I own more shares than everybody on the management team and the board of directors, and I owned more than a lot of the other institutional investors that’s why I am kind of saddened by what’s being going on as if I have a lot invested in this company and had high hopes for it so far.

Thank you. Mr. Oczachowski, there are no further questions at this time. I’d like to turn the floor back to you for any final remarks.

Well thank you and thanks again for joining us today and we are looking forward to updating you soon on our major projects and developments. Thank you, and have a nice day.

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