Good afternoon everyone and welcome to the 2017 first quarter 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 Paulette and thank you all for joining us for AMS' 2017 first quarter 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 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, 2016. The company assumes no obligation to update the information contained in this conference call. First-quarter net income increased by nearly six times compared to the first quarter of 2016. And revenue was up 16%. Gross margin was up versus prior year as was EBITDA. And we achieved these gains despite having a couple of Gamma Knife units offline for Cobalt-60 reloads during this year's first quarter. AMS' improved financial performance continues to be driven by our first proton center at UF Health Cancer Center, Orlando Health, which began treating patients in April 2016. Treatment volumes at the center increased to 1,220 fractions in the first quarter compared to 1,019 fractions performed in last year's fourth quarter, 869 fractions performed in the third quarter and 442 fractions performed in the second quarter. Reliability and throughput of the MEVION S250 proton system we supplied Orlando Health is meeting or exceeding our expectations and we believe there is room for further growth in treatment volume. On the Gamma Knife side of our business, as I said before, the decrease in revenue in this year's first quarter was the anticipated result of routine Cobalt-60 reloads at two of our centers. Keep in mind that as we previously announced, we will lose one of our sites due to the expiration of its contract term in this year's second quarter. However looking forward ahead, we expect the Gamma Knife Perfexion system we recently contracted to supply to Bryan Medical Center in Lincoln, Nebraska to begin treating patients in this year's second half. We also expect patient treatments to begin in this year's third quarter on a Gamma Knife located at the Air Force Hospital in Lima, Peru. We see many attractive growth opportunities in both our Proton and our Gamma Knife businesses. We believe this reflects the steady accumulation of research and clinical evidence supporting these modalities in the treatment of many cancers. We are focused on taking advantage of these opportunities to build on the success we have achieved to-date. We are confident that AMS will deliver future growth in the years ahead. Now I will turn the call over to Alexis Wallace to go over the financial results in detail. Alexis?

Thank you Craig. For the three months ended March 31, 2017, medical services revenue increased 16% to $4,914,000 compared to medical services revenue of $4,238,000 for the first quarter of 2016. First quarter revenue for the company's initial proton therapy system installed at The Marjorie and Leonard Williams Center for Proton Therapy at UF Health Cancer Center, Orlando Health in Florida was $1,155,000. Revenue for the company's Gamma Knife operations decreased to $3,619,000 for the first quarter of 2017 compared to $4,125,000 for the first quarter of 2016, primarily because of the two sites that were offline during the year's first quarter for Cobalt-60 reload. Net income attributable to the company for the first quarter of 2017 increased to $293,000 or $0.05 per share. This compares to net income attributable to the company for the first quarter of 2016 of $51,000 or $0.01 per share. Medical services gross margin for the first quarter of 2017 increased to 47.7% of revenue, compared to medical services gross margin of 40.9% of revenue for the first quarter of 2016, primarily reflecting the increase in revenue from proton therapy. Operating income increased 51.1% to $754,000 for the first quarter of 2017 compared to operating income of $499,000 for the same period a year earlier. Income before income taxes increased 91.4% to $758,000 for the first quarter of 2017 compared to $396,000 for the first quarter of 2016. Non-GAAP pretax income, net of income attributable to non-controlling interest, was $509,000 for the first quarter of 2017. This compares to non-GAAP pretax income, net of income attributable to non-controlling interest, of $115,000 for the first quarter of 2016. Selling and administrative expenses for the first quarter of 2017 increased to $1,139,000, compared to selling and administrative expenses of $949,000 for the first quarter of 2016. Interest expense increased to $453,000 for the first quarter of 2017 compared to interest expense of $285,000 for the first quarter of 2016, primarily reflecting the addition of the proton center in Orlando. Adjusted EBITDA, a non-GAAP financial measure, was $2,616,000 for the first quarter of 2017 compared to $2,129,000 for the first quarter of 2016. Please refer to the financial statements included with our press release for a reconciliation of GAAP to this non-GAAP financial measure. At March 31, 2017, cash and cash equivalents was $2,403,000, compared to $2,871,000 at December 31, 2016. Shareholders' equity at March 31, 2017 was $27,774,000 or $4.87 per outstanding share. This compares to shareholders' equity at December 31, 2016 of $27,173,000 or $4.97 per outstanding share. Craig?

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

[Operator Instructions]. Our first question comes from Tony Kamin from Eastwood Partners. Please go ahead.

Hi. It seems to me that the second quarter or this quarter would was in many ways, in may metrics, maybe the second best quarter AMS has had in probably a decade. So I guess I am little surprised that the reaction of the shares and just want to try to understand a little better the delta between maybe what expectations were and where you ended up. So Craig, you mentioned that the cobalt reload is routine maintenance. Can you talk a little bit more about how often the gamma knifes have to go through cobalt reload?

Sure. The cobalt has a half-life of 5.3 years approximately which, means that at that point a treatment would take approximately twice as long as from when the cobalt is initially loaded. So there is a time factor involved in doing treatments. So historically, we have done reloads at year six to around year seven. So, for each unit that's what we expect that we will do.

Okay. So this is for each unit, it's once every few years occurrence?

Correct.

Okay.

Every six to seven years, the occurrence for each unit.

Okay. And then on the SG&A side, I saw that inched up a bit. Was there anything extraordinary or one-time about the SG&A increasing this quarter?

Hi Tony. This is Alexis.

Hi Alexis.

We had some one-time legal expenses. Our building running is up compared to the first quarter of last year, because we did move offices in August of 2016. Our lease is up and we were subleasing a portion of our office at that time last year. So there is a handful of one-off related to legal and then the building.

Okay. So if you hadn't had the cobalt reloads and the one time SG&A things, would it be fair to think that the earnings per share would have been closer to what you achieved in the last quarter?

Yes We think that's reasonable.

Okay. Next question is on, you have one expiring gamma knife machine. Does the company believe the two machines that are coming in over the next couple of quarters will substantially make up for the loss in revenue of the machine that you are expiring on?

Yes. We believe it will. There is no, since these are new units coming on, there is no guarantee as to what their volumes would be. But yes, we believe that they can compensate from a revenue standpoint.

Okay. And then a couple more for Dr. Bates. Dr. Bates, can you talk about the size of the pipeline as you see it for proton beams? Obviously, you have been working on it for some time. And I am curious also with the change from Obamacare to whatever Trumpcare is going to be. I would guess there might be both positive and negative implications around that. I have heard anecdotally that hospitals are maybe going a little more slowly on their purchases. At the same time, I would think that this would encourage hospitals to want to share risk and that that could be very favorable to a company with the business model of AMS.

You are absolutely correct, Tony. I think there is some concern about the American Healthcare Act and how it will impact on hospitals going forward with their CapEx expenditures. And I suspect that will be down for hospitals. So this will be a good thing for companies like ourselves who we think can solve that problem. In terms of the pipeline, we are talking to, at the present time, we are actively negotiating with a hospital Connecticut. We are doing the same with a hospital in Illinois. Two hospitals in Southern California. Of course, we are putting another unit in at our unit in Orlando. We are also talking with a hospital in Northern California, one in Indiana and one in the Central Valley and also one in Ohio. So it's a very active pipeline. We are feeling comfortable that we will get many of these. I don't think I can give you a timetable of when we are going to get them. As I said, there is some uncertainty about what Washington is going to do. But I reasonably confident that we will get most of these.

Great. Next question. Dr. Bates, on sort of the clinical research developments around proton beams, I feel like it seems like there is a lot less of the kind of reviews on protons that there were years ago and then in fact it's becoming really regarded as the highest standard of care for many treatments. Is that correct? And what do you see in the clinical research environment?

That is correct. There was a study recently done in the U.K. showing not just protons, but photons both in treating prostate cancer, particularly those cancers that people were thinking that watchful waiting was the appropriate treatment for those. And now we know that's not the case, because when these cancers come back, they are more malignant. So the feeling now is and the consensus is that these patient should be treated. So I think you are going to see a number of prostate cancers that are being treated with radiation therapy including proton is going to go up. Ernie, you have been at recent meetings. What have the papers shown?

There are recent papers that have come out just recently. There is the annual proton conference, PTCOG, international conference and there were some poster sessions that had taken place. So we think a number of these recent clinical papers will be sent out from a widespread reading. We will be sure to share those with you Tony.

Great. And final question, it's been a while that the shares have been, I think, under $4. So I was curious, is the company, I know at one point you had buyback authorization and I wonder, is that still in effect? And if the shares continue to stay under pressure, is that something the company could consider?

It's still in effect. And we have not brought that up with the Directors recently, but it's certainly something that we could consider. But you understand that we will be needing most of our cash for deposits on these machines that we are hopefully are going to sign up in the next several months.

Okay. Great. well, thank you guys very much.

Our next question comes from Lenny Dunn from Freedom Investors Corporation. Please go ahead.

Good afternoon. And decent quarter and considering the downtime on the cobalt, I think a fairly good one. There's a couple of things. First, you wrote down the Mevion investment a while back and it would appear to me that Mevion is selling all these machines now with them appearing to have a machine of choice that the Mevion investment probably through valued upwards. Am I guessing wrong there?

Well, from a GAAP standpoint, we are not able to revalue it up. So the only time that at this point you will see a revaluation up is when we actually decide to sell the shares. And at that point, it either will be a gain, loss or neutral depending on how that transaction is valued.

Do you think that they are now reconsidering going public again?

We talk with them frequently. There has been no mention recently of them going public. And if they do go public, it's not clear whether they will go public in America or in China. We are just not certain.

They may do better going public in China. But going either way, that would be an event that you could then, price of shares based on the public market.

That's correct.

Okay. And I am certainly encouraged by the number of proton installations that you could potential get. Clearly there is a long time between signing and the actual getting them up and running. But still, there is only so many that you can do at one time. What would you, if somebody, if they came, if you able to close three deals next year, I mean now, to build next year, wouldn't that be about the maximum amount that you could possibly handle?

I think it depends on how we structure the transactions. If we structure the transactions much like we did with Orlando, I think we could actually take on more. But if we did a turnkey, I think you are probably correct, three is the max or three would a good number.

Okay. And you have two at favorable pricing, so that would also be helpful. Now, we keep hearing that you are fairly close. Do you realistically think that you have will at least one signed up in the next three months?

Hopefully we will but we just can't promise that. As I said, hospitals and you recall that our model essentially is that the hospital provides the construction for the machine and we provide the machine and hospitals are so concerned about their funding of the construction. So it's going to take a little bit longer than what we thought previously. And that again has a lot to do with what's going on in healthcare in Washington.

Okay. There is uncertainty at this point, but anyhow, you are grinding out of nickels, can't hurt, before 1997, book values weren't real. So I am little disappointed we are trading below that. I thought we would go up a little on the report today, but apparently one or two shareholders wanted out and just got out. So it will be tougher but I am not disappointed with the results you showed. I am bit disappointed by the market reaction to them. It doesn't make a lot of sense. But you can't read other people's minds.

I couldn't say we are worried about Orlando. We are still excited about how that machine is doing right now. And we expect that to grow.

Yes. I think they are very pleased with the technical aspects of the equipment, the results that they are seeing preliminarily on the patients that they are treating and they are very pleased with the system and we think there is still capacity to grow.

Okay. The story is good and you have done occasional road shows. Do you have anything planned in the near-term?

Well, we are focused on proton.

That I understand. But I think we need a little more exposure.

I am sorry. Lenny, I didn't hear you. Did you say road shows?

Yes.

Yes. I think we are planning on one in Los Angeles this year and Craig, is there one on the East Coast this year?

Yes, that we might go to.

I think we need some exposure because whoever got out, clearly I disagree with the decision, but they did and we need to get some new shareholders involved and I think it's a very good story to tell. A good entry point for somebody.

Thank you.

[Operator Instructions]. And we do have a question online from Anthony McKeith [ph], private investor. Please go ahead.

Yes. Hi guys. A question regarding Orlando. I understand what you reported in terms of fractions. What is the realistic maximum that you guys feel that that facility, there's two questions. One, what's the theoretical, not theoretical, but what's the practical maximum that you can achieve? And secondly, you guys mentioned that Orlando is or might be considering a second machine and what are the, if any, limiting factors to their actually going ahead? Obviously they have a lot of experience at the machine and are pleased with it. So it would seem to me that, at least from my vantage point, it shouldn't be a difficult decision.

Answering the theoretical. It really depends on the type of indications that you are treating. Pediatric patients take longer. Prostate patients take the shorter. And there is an in-between for some of the most of the other types of indications. I would say, theoretically, between 30 and 35 a day is depending on what the volume of pediatric patients you are treating. But that would be my guess.

And what are you at re right now on average?

I think in the first quarter, I think we were in the lower 20s. Lower 20-25.

Okay. So there is another potential 50% greater throughput depending on --

Correct.

Okay. All right. And I guess the second question, if you can discuss it, what's the limiting factor? Is it capital?

Yes. I think capital. I think these are not inexpensive to put in and I think we are just all looking at -- they are looking at options as to where they could put it. It's not easy to site these systems, especially in an urban environment and they are doing some research in terms of that and looking as to what the cost component of that would be.

And Tony, there is a commitment to get them the latest and the best Mevion and that would be the new Hyperscan. And that has been installed at Georgetown, but has not been FDA approved yet. And it's clear to us that that is what Orlando wants, is the Hyperscan. So I don't think they are going to make a decision until they know the status of the Hyperscan upgrade for the Mevion machine.

Yes. I think when you look at the machines that would complement each other, there are certain things that, our current double scatter machine does better for certain indications. So they would like to have one of each.

I see. Okay. Thanks.

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

Dr. Bates, would like to make a comment?

Good. We are still very encouraged by what's going on with protons. I am excited about the hospitals that we have talked to. We are talking to several a month. They all are committed to eventually upgrading their cancer department with protons and I think we are going to be make ourselves available that opportunity. I think we picked a good partner in Mevion, but we are excited about the other equipment that's coming out there from Varian and IBA and I think what we have proven, without a doubt, is the proper approach of this business is the single room machine.

I would like to thank everyone for joining us this afternoon and we look forward to speaking with you in August on our second quarter and first half results conference call.

Thank you. 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 44932897 followed by the pound sign to access the replay. The webcast of this call will be available at www.ashs.com and www.streetevents.com. This concludes today's teleconference. Thank you for participating and you may now disconnect.