Good afternoon, everyone, and welcome to the Second Quarter ended June 30, 2018, Financial Results Conference Call for American Shared Hospital Services. [Operator Instructions] I will now turn the call over to Vivian Cervantes with Investor Relations.

Thank you, operator. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that we 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 SEC, including the company's annual report on Form 10-K for the year ended December 31, 2017, its quarterly report on Form 10-Q for the 3 months ended - and the definitive proxy statement of the Annual Meeting of Shareholders held on June 14, 2018. The company assumes no obligation to update the information contained in this conference call. With that, I would now like to turn the call over to Dr. Ernest Bates, Chairman and Chief Executive Officer. Dr. Bates, you may begin.

Thank you, Vivian. And thank you, everyone, for joining us on our second quarter 2018 earnings conference call. Our agenda this afternoon is as follows. Following my prepared remarks, Craig Tagawa, our Chief Operating and Financial Officer, will walk through business and operational results. Alexis Wallace, our Controller, will then provide our financial review. After which, we will open the call for your questions. To begin, the second quarter marked another period of execution from AMS. Total revenues increased nearly 5%. Our single room proton system at UF Health Center - Cancer Center-Orlando Health continued to record increasing system utilization, a key driver in our growth. Combined with prudent expense management and benefits from the Tax Act, we posted 154% earnings growth in the quarter. In the coming months, we expect current volume trends in proton therapy to persist, ongoing therapeutic applications of this technology with improving metrics from Gamma Knife as new systems steadily come online. We are also continuing to evaluate new projects in new territories and plan to provide timely updates. With that, let me now turn the call over to Craig.

Thank you, Dr. Bates, and good morning, everyone. We are pleased to report another quarter of growth with our proton therapy business, a key driver of our performance. Total revenue increase of 4.5% was led by 58.1% increase in proton therapy revenue, offsetting a 9.4% decrease in Gamma Knife business, which is currently in transition with new sites. In proton therapy, we saw an increase in fractions of 109 or up 9.2% to 1,298 during the quarter. Orlando Health has continued to expand its use of the proton system, and we continue to expect a steady flow of research studies demonstrating the clinical benefits of this advanced therapeutic technology. Combined with favorable reimbursement, including proposed increases of around 2.9% in 2019, we continue to believe proton therapy represents a significant long-term growth opportunity for us. As previously noted in our press release this morning, certain components of our company's proton therapy system sustained water damage resulting from the facility's water evacuation system. Our latest information is that patient treatments will commence this Monday, August 13, in line with our previously issued time line. We expect repairs to the system to be covered under existing insurance and any interruption in service also to be an insurable event after a 5-day waiting period. Accordingly, we do not currently anticipate that this interruption of service will have a significant impact on our financial performance. This is a temporary interruption and will not impact the expected long-term growth of the program. Turning to Gamma Knife. Total procedures declined by 41 or down 9.8% to 377 during the quarter. The decrease was due to previously reported transitions with 3 sites lost due to contract expirations, offset by the opening of two new sites. Cobalt-60 reload-related downtime at two sites also negatively affected procedure volumes. That said, volumes at our two new sites in Lima, Peru and Lincoln, Nebraska continue to ramp up, and we expect these sites to be accretive in 2018. In addition, we look forward to contributions from our recently announced third site in Merrillville, Indiana. We expect to begin treating patients in late 2018. I'll return the call over to Alexis for a detailed financial discussion.

Thank you, Craig. For the 3 months ended June 30, 2018, rental income from medical services increased 4.5% to $5,169,000 compared to rental income from medical services of $4,945,000 for the second quarter of 2017. Net income attributable to the company for the second quarter of 2018 was $287,000 or $0.05 per share. This compares to net income attributable to the company for the second quarter of 2017 of $113,000 or $0.02 per share. Second quarter revenue for our proton therapy system installed at Orlando Health increased 58.1% to $1,363,000 compared to revenue for the second quarter of 2017 of $862,000. Revenue from our Gamma Knife operations decreased 9.4% to $3,594,000 for the second quarter of 2018 compared to $3,968,000 for the second quarter of 2017 due primarily to site transition. Rental income from medical services gross margin for the second quarter of 2018 decreased to $2,081,000 or 40.3% of revenue compared to rental income from medical services gross margin of $2,251,000 or 45.5% of revenue for the second quarter of 2017. This reflected an increase in cost of revenue primarily attributable to the initiation of maintenance and service costs for the company's proton system at Orlando Health. Non-GAAP pretax income, net of income attributable to the non-controlling interest, was $456,000 for the second quarter of 2018. This compares with non-GAAP pretax income, net of income attributable to non-controlling interests, of $333,000 for the second quarter of 2017. Adjusted EBITDA, a non-GAAP financial measure, was $2,561,000 for the second quarter of 2018 compared to $2,549,000 for the second quarter of 2017. A reconciliation of GAAP to non-GAAP financial measures is provided in our press release from this morning for the second quarter 2018 results. Cash and cash equivalents was $3,493,000 on June 30, 2018, compared to $2,152,000 at December 31, 2017. Shareholders' equity at June 30, 2018, was $31,071,000 or $5.44 per outstanding share. This compares to shareholders' equity at December 31, 2017, of $29,885,000 or $5.23 per outstanding share. Operator?

Thank you. [Operator Instructions] And we have Anthony Marchese. Please go ahead.

Hi, guys. Another great quarter. So congratulations. Question for you is the future of getting more proton beam therapy machines into service. Obviously, Orlando has worked out thus far extremely well. What can you tell us about any plans for any potential future sites?

I think we're currently looking at several sites, and we've been starting negotiations at a couple of sites. A couple of them might be freestanding and a couple could be in partnership with hospitals. We're looking at what our best options are at this point.

Is financing at all an issue, I know last time, Dr. Bates said you had established a relationship with a real estate lender or lender that would take away the problem that some hospitals have in terms of financing this. So at this point, is financing the new proton beam therapy's an issue with you guys?

Well, it will always be an issue, but it's not a major issue. I think in the two sites that we're looking at right now that hopefully we'll have signed up in the near future, with one in San Francisco. And we do think that we will be able to get financing for that unit. In fact, we have just hired NBBJ, an architectural firm, to look at that site to make sure that, that track will be appropriate for the machine that we want to put in there. We also are looking at a site – two sites in Southern California, and we're reasonably confident that we can get those machines financed.

Okay. And just my final - it's not really a question. It's a comment. You generated $2.5 million in EBITDA, so you're on a $10 million run rate for the year. Stock trades at a $16 million market cap. You have pretty much minimal debt. All your debt is recourse. So I'm trying to figure out, what is it that investors, in your mind, are not seeing? Am I missing something here? I continue to be baffled by the low market cap relative to published EBITDA. What is it that can be done? I guess, do you guys plan on doing more investor outreach at this point?

Well, Anthony, we are doing that. We will be going to the Sidoti conference in New York in September, and we'll be going to another conference in Los Angeles in December. So we're doing more of that now with our new Investor Relations firm, who've been very helpful in that regard. I think the problem is that we have not announced a purchase of a machine for some time, and I think that's what people are looking for. But we are confident that that's going to happen now, particularly with MEVION having developed a HYPERSCAN or a pencil beam system. And this is what hospitals are waiting for.

I get it. Okay. Yes. In spite of not having a new machine, I would still argue that something trading under 2 times cash flow should be appealing to people. But in any case, congratulations again, and good luck on getting those new machines into an actual contract.

Thank you.

From Eastwood Partners, we have Tony Kamin. Please go ahead.

Hello. It looked to me…

Hello, Tony.

Hi. It looked to me like an excellent quarter. It's nice to see the cash on your balance sheet starting to build again as well as the book value. So Tony Marchese preempted a couple of my questions in terms of the proton beam. But I wanted to ask from a slightly different vantage point, it sounds like you've got some interesting near-term possibilities. How - can you comment on the wider pipeline for proton beam? And is the real performance that you're showing in Orlando helping you to make the case to more hospitals?

All right. I think what you're seeing is the single room concept is being adopted more and more by hospitals, either a 1 room or max two rooms. I think when the administrators look at some of the centers that have failed, they've been to 4 and 5 rooms, and they just have not worked out. They work out over time as the incidence rates for protons increases much like the Gamma Knife did over time. But at this point, it's really the single and two room systems that are really gaining traction, and that's what Dr. Bates has promulgated from the very beginning, to be the most clinically and cost effective. And I think we're seeing that come to pass. And I think, really, the only single room that people can really judge it upon is our system because we're the only publicly traded company. The rest is pretty much on hearsay as to how they're doing.

I think by the end of 2018, we'll probably have 8 MEVION centers in the United States, three will be treating with HYPERSCAN.

Well, again, I would think that your execution and identification of what Orlando could do speaks to the company's accumulated experience, building on your Gamma Knife experience. So I would hope that would make the institutions you're talking to more comfortable. Second question, if you could just talk a little in terms of potential pipeline for Gamma Knife or future Gamma Knifes.

As we mentioned, we're going to be putting one in Merrillville, Indiana the latter part of this year. We're just waiting for NRC clearance to get that installed. And we've been getting more and more calls from existing systems. They would like to do something with us in terms of our business model, where they might want to get an ICON upgrade and a Cobalt reload, which is pretty expensive. And they'd like to find some alternative financing, and they've heard about the way we do that. And we've been getting a couple of calls on that, that we're going to be considering. And there are some additional units that we're pursuing at this point. And so I think it looks fairly good in terms of the pipeline. I'm pleased with the pipeline increasing to be honest with you.

Great. Final question from me. Just in terms of the -- you mentioned, Craig, the research studies that you hope were coming out. Can you or Dr. Bates talk a little about what studies you're sort of anticipating? Or what you might be looking for in that regard?

Well, we think a new study is coming out showing that the biological effectiveness of protons is superior to that of photons. And I think we'll start seeing these papers shortly. And we do believe that we're going to be seeing better survival rates with protons than we see with photons.

And I think one of the other things that we're looking at -- centers are looking at, rather, is the radiation on the left breast and less toxicity to the heart by using protons. So I think we'll start seeing more studies as to the effectiveness of using protons for that. So we're encouraged that as we get more and more proton centers online -- and I would think that if you look at the U. S. News & World Report, of the top 10 cancer centers listed, 6 or 7 either already have protons or in the process of getting protons. I think that says a lot about where people see the direction for protons is going. Those are the -- really the top cancer centers in the United States, and most of them are adopting protons. So I think that will be good for the research aspects as well.

And it's our understanding that all the single room MEVION systems are possible to -- possibly one that is willing to upgrade to a HYPERSCAN.

It's really exciting stuff, and I hope maybe that research spurs Wall Street to potentially give you some more research coverage because I think it's a shame that such important work is not getting noticed really in Wall Street yet. But, thank you. And congratulations on a great quarter.

Thank you.

From Mutual Trust, we have Lenny Dunn. Please go ahead.

Hi, good afternoon. We're making steady progress, and I'm glad to see steady earnings. And just could you address what the number of proton centers that you think in the market is, the overall market in the United States as compared to what's installed?

I think when you look at it in terms of the number of rooms, and I think conservatively, based on some papers that have been circulated, we believe it's between -- conservatively between 500 and 600 rooms eventually the market would be. We're probably maybe at about 15% of that currently. So I think we have a long way to go. And just like radiosurgery, as more indications become proven to be beneficial, you'll see that number increase.

There is a very large growth opportunity here. And your constraints would only be by the number that you could actually get going in a given year rather than the size of the market.

Yes. There are approximately 60 designated cancer treatment centers in America. And it's our feeling that all of these will eventually have to have protons to provide total cancer care in the community.

Okay. And then I'm very encouraged by the fact that you were going to do a roadshow. I think the Sidoti conference is a particularly good fit, and then in December, which you're going to something in the San Francisco area, or where are you going in December?

I think it's Los Angeles.

Los Angeles.

Los Angeles. I apologize. So you'll have different coasts that you're getting in front of the people. But the Sidoti has a very good reputation, so I think that that's a very good start. And I think that what we need is just get some institutions aware that you exist out there. I think you have moved into obscurity, where the stock would be trading where it is. But hopefully, that ends now. So thank you again for the hard work you put in. And we certainly look forward to hearing an announcement on another proton beam center shortly. And you've indicated that finally, we're going to see something shortly. Thank you very much.

Thank you.

From Benjamin Edwards, we have Chuck Blatz. Please go ahead.

Hi, Dr. Bates and Craig, how are you doing?

Good.

In light of the changes that were made there, I noticed that you did enter this partnership with this PCG Advisory Group. And I take it that they, after a number of years, are now replacing Neil Berkman and associates. Is that correct?

That's correct.

Okay. So far, I've seen over the last few weeks, a month or so, since they've been on board that there's been an awful lot of exposure in volume and shares coming in, et cetera. So could you give a little color to exactly what these people have been able to do? And are they connected to getting you in front of other people, showing you the institutions that maybe the other group never was able to do, didn't do, et cetera? Just give us a little flavor on what you think of this group and how it can help you.

Well, we're going to do that in New York, when we go to the Sidoti conference, they're going to take us around to meet potential investors in the Northeast in September, so we're excited about that and are preparing for that. They're also helping us with our website, which we really need improvement in there, been very helpful with that. We think that's going to be good. We're going to be doing podcasts. We're going to be doing things that we didn't do before, under their guidance.

Well, that's good because I think this can make a major change to get that exposure that you sorely need and also at a point in time where you are about ready to, let's call it, launch visibility with things that maybe under the previous sort of lackluster advisory, you weren't going to get it or they ran out of client base or - I praise this. I think this is a great thing you've done.

Thank you.

So, good luck. Nice quarter and I’d like see it keep up too.

No further questions at this time. We'll now turn it back to Dr. Bates for closing remarks.

Thank you for joining us this afternoon. To briefly summarize, our businesses are well positioned to gain traction from the clinical and patient communities. With increasing procedure volumes in proton therapy, where we are well positioned with our single room solution, as well as Gamma Knife, we look forward to steady gains in revenue and earnings performance. We also remain opportunistic as we evaluate new sites in line with our goal to enable access to the best therapeutic technologies. We plan to provide timely updates as we continue to execute our programs. Thank you again for joining us, and we look forward to speaking with you on our third quarter conference call in November.

Ladies and gentlemen, this concludes today's conference. Thank you for joining. You may now disconnect.