Good morning everyone, and welcome to the Third Quarter 2015 Financial Results Conference Call for American Shared Hospital Services. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the call over to Dr. Ernest Bates, Chairman and Chief Executive Officer; Craig Tagawa, Chief Operating and Financial Officer; and Alexis Wallace, Controller of American Shared Hospital Services. Mr. Tagawa, you may begin.

Thank you Cynthia and thank you all for joining us for AMS’s third quarter 2015 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 31st, 2014, its Quarterly Report on Form 10-Q for the three months ended March 31st 2015 and June 30th 2015, and the definitive proxy statement for the Annual Meeting of Shareholders held on June 16, 2015. The company assumes no obligation to update the information contained in this conference call. M&A procedure volume remained solid in the third quarter albeit 33% below last year’s exceptionally strong third quarter, a slight decrease was primarily result of a scheduled Cobalt-60 reload at one of our sites this year. Operating income nevertheless increased, the result of lower interest expense and reduced SG&A as we remained focused on tightly controlling our operating costs. Net income attributable to AMS shareholders also increased. We believe our Gamma Knife business is well positioned for continued success. Construction at the AMS’s first proton therapy centre, UF Health Cancer Center at Health in Florida is nearing completion. This center is expected to begin treating patients in the first quarter of 2016. We expect to finalize and announce a permanent financing package for this project soon. We continue to believe that proton therapy represents an extraordinary growth opportunity for AMS. Hospitals around the…

Thank you, Craig. For the three months ended September 30, 2015, medical services revenue decreased 2.7% to $3,875,000 compared to medical services revenue of $3,982,000 for the third quarter of 2014. The decrease in revenue for this year’s third quarter was due, in part to several downtime at a customer site in order to perform a Cobalt-60 reload. Net income for this year’s third quarter increased to $43,000 or $0.01 per share. This compares to net income of $13,000 or $0.00 per share for the third quarter of 2014. The total number of procedures performed in AMS’ U.S. Gamma Knife business decreased 3% for the third quarter compared to the same period of 2014, reflecting downtime for the Cobalt-60 reload. Medical services gross margin for the third quarter of 2015 decreased to 37.5%, compared to medical services gross margin of 40.3% for the third quarter of 2014, primarily the result of lower treatment volume and a change in the mix of treatments by location. Operating income increased 15% to $315,000 for the third quarter of 2015 compared to operating income of $274,000 for the same period a year earlier. Pre-tax income, net of income attributable to non-controlling interest, increased to $135,000 for the third quarter of 2015 compared to pre-tax income, net of income attributable to non-controlling interest, of $42,000 for the third quarter of 2014. Selling and administrative expenses for the third quarter of 2015 decreased to $904,000 compared to SG&A expenses of $933,000 for the third quarter of 2014, primarily reflecting lower consulting fees. Interest expense decreased to $235,000 compared to interest expense of $396,000 for the third of 2014, the result of the closure of the Company's line of credit on January 2, 2015, the pay-down of the AMS's existing debt obligation for its IGRT device, and…

Thank you, Alexis. Cynthia, we are ready for the first question.

Thank you. [Operator Instructions] And our first question comes from Tony Kamin with Eastwood Partners. You may begin.

Hi, guys.

Hello.

Unfortunately, I missed the first few minutes, so you may have covered this. But I was hoping you could – if such an important event coming up the proton – the proton kick off in Florida. I wondered if you could give us a little bit more color about that in terms of may be what you know of where they’re at in their preparation. And then also maybe give us a better sense on your thoughts about the financing for this unit and then for future units?

Sure, what I can tell you is they’re moving rapidly through the insulation cycle. And we believe that probably in the late first quarter, if all goes as scheduled as it currently looks, they’ll start treating patients. They’ve got to go through the process of getting all the regulatory approvals, which that will occur probably during the first quarter. So, we still look like we’re on track to start late first quarter. Regarding the financing, I believe we’re now finishing up some of the – trying to get us into the last piece of documentation. So we hope to complete that fairly shortly. And I know we said that before, but I think we’re almost there at this point to complete that. So, we look forward to placing additional units. And we hope either through this lender or some other lenders that we’ve talked to that we can proceed out some additional projects in the not too distant future.

All right that would be very exciting with two other units. You’ve already partially purchased from MEVION. Can you also give a sense of – I’ve asked this previously on earlier calls, but your sense of how the market interest in general among hospitals is for taking a MEVION system and may be how that impacts, how are you sort of measure your own internal pipeline? Is that – if there is interest out there that’s growing? Is it positive for AMS as well?

Tony, yes I think it is. There was a recent meeting held. We’ve MEVION presented its machine. It was well received. They’re now three or four of these in operation and they’re all doing extremely well. The start-up of a unit in Jacksonville is the fastest start-up alluding [ph] proton beam facility in this country. So it’s very exciting and should probably know they have just completed around of financing rising over $100 million, and so things, very, look good. And there is extreme interest throughout the country now in protons, like we’ve never seen before. There is no explanation for why it certainly happened, but there is extreme interest.

And as it might – as you measure sort of your pipeline of incoming inquires or at least more outgoing that are interested in talking I mean is the level of activity around your discussions also increasing?

Yes, it is. As Craig has mentioned, we have proposed those in front of two hospitals in Southern California, one in the Midwest as we’re in discussions with, one that we’ve not presented proposal yet. And then our hometown of San Francisco, we feel reasonably confident that we will have at least signed an agreement with one of the hospitals in San Francisco within the next several weeks.

Well, that’s exciting. I think for those of us hooped in around the long time, it really feels like 2016 is going to be finally the real breakout year of real operations in proton. And you know if that is the case, it certainly strikes me that your equity is really substantially undervalued. So…

I think we see the light at the end of the tunnel. And I think the Orlando unit is going to do very well. They’re very excited about it. It’s a busy hospital. It’s going to do well.

Great, thank you. Thank you very much.

[Operator Instructions] And our next question comes from Lenny Dunn with Freedom Investors. You may begin.

Yes, good afternoon. You did tell me – you just say something to Tony Kamin that I guess really excited that – do you realistically think that you’ve got the San Francisco hospital signed up shortly?

I do believe so. There is not a hospital that will probably be a freestanding, but I am pretty confident that we will get one. And we are pretty far along in our negotiations with the hospital chain, but at the last minute they decided – at this point they don’t want to do it. But I am sure we’re going to find a replacement in the hospital. If not, we will probably do it as a freestanding unit, that’s not our preference we’d like to do with under arranged with the hospital, but there’s section, a need in San Francisco for proton beam machine and this is our hometown.

That would be great because that would actually if you got that signed up, you might have it ready by the end of 2016, is that too optimistic or…?

Craig is shaking his head, so I’ll let him to answer that.

Well, the signing is one thing, but in terms of the process, the process takes about close to a year to construct the facility and then about a year or two to install the unit get it going. So you’re looking at probably about a two-year, two and a half year process before you start treating.

Okay. Craig, you might explain briefly the reimbursement issues with an under arrangement versus a freestanding?

Well, I think the hospital rate is a rate determined by CMS, Centers for Medicare and Medicaid, and they determine that annually based on hospital based proton systems, based on their cost reports, as to what the rate should be. If you’re a freestanding center there are no mandated rates, but the rates that you would get from the Medicare [indiscernible]. So that rate is generally a little lower than the hospital based rates, but there in most cases they look like it is fairly similarly in amounts.

Okay. And then the next question is not as quite as positive, if you’re going to have a 2% reduction in revenues, the only way to make that up would be to have some cost reductions beyond which you’ve already done. Are there ways to do that?

I think as we’ve said in our press release we’re always looking at our cost and trying to reduce those where we can, so we’ll continue to do that. I think that’s a goal whether there’s a reduction and reimbursement or not, a reduction and reimbursement. So I think our focus doesn’t change, I think we’ll continue to look at our expenses and cut where we can.

So that you feel, there’s still some things that can be taken out of SG&A beyond which you’ve already done?

We haven’t identified anything specifically right now, but again we continue to look to make sure that we’ve been as efficient as possible.

Okay. The reason, I merging you to do that is that still the proton beam business is our future, the Gamma Knife businesses is a good recurring revenue business and I’d like see that as profitable as possible, while we’re waiting and even in the future.

We agreed, our emphasis is to continue to grow the Gamma Knife business, so not just – not try and grow, so we’re doing everything we can to increase the number of units that we have and what we also grow our proton business.

I want to add to that, Lenny that the company Leksell has come out with a new version of the Gamma Knife, it’s called the Icon. I think this is very exciting, it will allow us to treat with frames or without frames and also will allow treatment with fractionation, so that you can treat bigger tumor, so I suspect that, what we’re going to see is an increase in a number of cases that we’re doing with this new Gamma Knife and I think there is interest and that all ready, we’ve got inquires from hospitals that are looking to upgrade their units to the Icon.

Okay. Well that’s a good piece of news and the financing for their Orlando project, this is the first time I’ve seen you say soon, do you think soon would be well before the end of the year or?

Yes.

Well, I was hoping that, we’re going to able to announce it during this call, but we couldn’t get all the paperwork done in time. But it’s soon.

Good. That’s good because we’ll have an announcement that’s very positive of an earnings [indiscernible] three months before we can talk to you. So it’s good to see, good deal, you know that we had some good news probably very shortly. Thank you.

And our next question comes from Richard [indiscernible] capital advisors. You may begin.

Thank you, good afternoon. What is the schedule for expected Cobalt reloads over the next two to three quarters?

There won’t be any more this year, there are probably be a couple next year.

Do you think that will be more likely waited to the first or second half?

Probably to the second half.

Okay. And are there any significant renewals or that the things are upper renewal over the next 12 to 15 months?

We really don’t comment on that because it puts it as a competitive disadvantage, so we don’t comment on that.

Okay, but even though nobody really knows which one you are referring to. Could you do it just in a nameless way?

Yes, we have a couple that we are working on to renew.

Okay.

What we think…

I was, I’m sorry.

Since the Icon gives us a chance to get these renewals easier, because since it’s…

I was going to follow-up with Dr. Bates, I was under the impression the name is [indiscernible] but the prior sort of product that was allowing fractionation and I think we had a sort of a pallet grip, I was under the impression of that really didn’t achieved widespread interest, is it just a different product?

Yes, yes, it’s a marked improvement over that product, which most hospitals didn’t like, but it wasn’t easy to work with.

Was that because it was certain the pallet grip, or was it something else that changed?

No, I think it was just more cumbersome than the newer version which is the Icon [ph] which also has imaging which the other one didn’t. There were some centers that liked it very much and used it quite a bit, but then the Icon seems to with its imaging component, there is a lot more interest.

Are they actually, are they marketing it now or producing it now?

Yes, they are marketing it now. There is one in operation in Europe.

Yeah, they’re [indiscernible].

I’m sorry, sorry go ahead.

There are seven U.S. medical centers that are purchasing it.

Okay. And what is the cause of that versus the other in prior system?

Probably it’s about – probably about a $0.5 million more.

Okay, great, thank you.

You are welcome.

And Mr. Tagawa there are no further questions, would you like to make your closing remarks?

I don’t but Dr. Bates, I’ll let him make the closing remarks.

I just want to let you all know that we are very excited about things going forward, not only do we see the opportunity to sign more hospitals up within the next 12 months, but we also see opportunities to get new facilities coming into finance this. This is something that we’ve not had in the past. So we are very excited about that, and I’m excited about the Gamma Knife. I think it’s going to be a resurgence of the Gamma Knife business with this new icon. As Craig has told you, we are working with a lot of live new hospitals, that two down in Southern California, one in San Francisco, two in the Midwest and I think we’ll be able to get these financed. So I’ve nothing else to say.

This call will be available in digital replay immediately following today’s conference. To access the system dial 888-843-7419 and enter the passcode 4119-8398 followed by the # sign to access the replay. The webcast of this call will be available at www.ashs.com and www.earnings.com. This concludes today’s teleconference. Thank you for participating. You may now disconnect.