Welcome to the Skyline Medical Conference Call. At this time all participants are in a listen-only mode. Following a management's prepared remarks, we hold a Q&A session. [Operator Instructions]. As a reminder, this conference is being recorded, May 16, 2017. I would now like to turn the conference over to Ms. Kim Golodetz. Please go ahead, ma'am.

Thank you. This is Kim Golodetz with LHA. Thank you all for participating in today's call. Joining me from Skyline Medical are Dr. Carl Schwartz, Chief Executive Chairman, David Johnson, Chief Operating Officer and Peter Alex, Vice President of Sales. Joining us for the Q&A portion of today's call, we also will have Bob Myers, Chief Financial Officer. Yesterday Skyline Medical issued a news release announcing 2017 First Quarter Financial Results, along with the business update. If you have not received this news release or if you would like to be added to the Company's email distribution list, please call LHA in New York at 212-838-3777 and speak with Carolyn Curran. Before we begin, I would like to caution that comments made during this conference call by management will contain forward-looking statements regarding the operations and future results of Skyline Medical. I encourage you to review the Company's filings with the Securities and Exchange Commission, including without limitation the Company's Forms 10-K and 10-Q which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Factors that may affect the Company's results include, but are not limited to product demand, market acceptance, impact of competitive products and prices, product development, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks. All forward-looking statements speak only as of today's date, May 16, 2017 and except as required by law, the Company assumes no obligation to update these forward-looking statements whether as a result of any new information, future events, changed circumstances or otherwise. With that said, I would like to turn the call over to Dr. Carl Schwartz. Carl?

Thank you Kim, and many thanks to each of you for joining us this morning. As you saw from yesterday's press release and SEC filings, our revenue is clearly are moving in the right direction. Indeed for Q1 we reported an 81.5% increase in year-over-year growth, as well as a significant increase in gross margins to just under a 79%. We are very encouraged by the strength in financial and operational performance. We also are very pleased with the momentum we are creating in broadening awareness of STREAMWAY System, generating sales leads and increase quotes. We owe this improvement in part to the hiring of four new regional sales managers to start the year, and to a thoughtful and impactful sales and marketing strategy spearheaded by Peter Alex, and directed mainly to radiology suites. Recall that radiology procedures, particularly paracentesis and thoracentesis procedures involve a large volume of fluids, and as such, our ideally suited to the STREAMWAY System. Accordingly, we had a successful presence this past March at the association of Hospital Radiology Administrators Association or AHRA Medical Imaging Management Spring Conference in Savannah, Georgia. This week we are exhibiting at the AHRA a local meeting in San Antonio, Texas, and at the CleanMed Conference in Minneapolis, that later conference focuses on environmental sustainability in the health sector. I want to note that these types of activities along with an internal sales staff were non-existent a year ago at Skyline, so these are just a few of the many tangible examples of our progress. We are optimistic that our new sales and marketing staff along with our focus marketing efforts will result in a growing number of customer leads. The number of potential customers seeking live demonstration of the STREAMWAY continues to grow and we are working to convert…

Thank you, Carl. Good morning everyone. As Carl mentioned, we've been concentrating our efforts on having Skyline Medical and our STREAMWAY System recognized as meeting all domestic and international standards to allow marketing our products globally. I will briefly review the process we need to go through to achieve the CE Mark, which allows marketing our product in the EU. Initially, as everybody should be aware that STREAMWAY System one designed to following a strict set of guidelines that our U.S. Code of Federal Regulations or CFR requires. Now Skyline has been successfully audited by the FDA to this standard and this is allowed us to market our product in the U.S. The international community however has a number of other standards that a company needs to show compliance with in order to market in their regions. In order to show compliance internationally and pursue the CE Mark recognition, Skyline Medical has done the following. First we hired a notified body to audit our internal quality system to the international recognized quality system, ISO 13485:2003, that one pertains to medical devices. Our notified body is called the British Standards Institute or BSI. We achieved ISO 13485 certification on June 21, 2016, and we successfully passed a surveillance audit on March 20, 2017. We have also completed the essential requirements documentation for the MDD 93/42/EEC. It's called the Medical Device Directive for Europe. This documentation identifies approximately 50 detailed requirements that our product has to meet, along with documentation referencing how we meet those requirements using accepted harmonized standards. Third, we hired an Electrical Safety Testing laboratory name TUV, which is internationally recognized to perform testing on the STREAMWAY System to various specifications. Of note compliance what these standards is recognized globally, not just in the U.S., Canada and Europe. These…

Thanks Dave, and it's a pleasure to be speaking with all of you today. At the start of 2017, we embarked on building a U.S. sales model that focused on creating a direct sales force followed by adding qualified and experienced independent sales representatives throughout the year. The direct sales team has been hired and trained. The regional sales managers are actively engaging new prospect through sales and tradeshow activity, are supporting our installed base which is contributing to increased disposable consumption and higher margins, and they are accelerating unit quotations for prospective customers 2017 through 2018 budget, which will lead to increased sales. We are now in the second phase of our U.S. sales model and have begun the process of recruiting and interviewing 10-99 independent sales representatives or commission-only reps in 50 U.S. markets including Alaska and Hawaii. We expect to be making offers in the second quarter to several candidates who will complement our direct sales model, our good strategic fit and will protect the brand momentum we've established for the last several months. These independent reps are an adjunct to building prospects in increasing the number of live demonstrations and will become the foundation for building or STREAMWAY installations into all 50 states. We will be phasing in these independent reps throughout 2017. Customer engagement in the field is paramount to the success of any medical device capital equipment product. In the STREAMWAY direct-to-drain technology is no exception. Engagement brings advantages to the entire team within a facility from the individuals who are involved with the product introduction, during the demonstration of product trial, and throughout the product selection committee review process. Our newly created sales team is now actively engaging all these STREAMWAY stakeholders. I want to share with you today who these multiple stakeholders…

[Operator Instructions] And your first question is from the line of Desmond Fargo, a Private Investor.

Hi. How are you Carl and Skyline team?

Very good.

I just had a quick question about EOR and as far as what's happening with negotiations with that?

EOR, we're still exploring our options with them and what other things maybe available to us in the government space. It's a huge space and we're concerned about not limiting ourselves. And so, at this point, it's ongoing. We'll be doing – we'll be announcing more near future I think, you'll be very pleased.

With all due respect sir, you know limiting yourself to just MUNRO Enterprises is what's ironic to me. Do you have any information regarding what's happening with that company?

We are not limiting ourselves to MUNRO Enterprises. They have handed off most of their contacts to us and we will be proceeding accordingly to find the people we want to handle our government efforts at this point. So, we aren't limiting ourselves to MUNRO.

Okay. Well, hopefully I can email you about other questions I guess. Thank you so much for your time.

Sure.

Our next question is from the line of Ben Reed with Maxim Group.

Hi guys. So, it sounds like you had a little bit of delay with the CE Mark approval. Just to clarify, the one last thing you are waiting for is the NRTL Certificate, right?

Yes.

So that's it. From today's date, how long do you think it would take to get that done and then to actually hear back on CE Mark approval. It sounds like it could be imminent, but you still have to send it to your guys, who have to talk to the authorities, give us a time frame of when we'll actually hear back on CE Mark approval?

Dave, I'll take that. This is Bob Myers. Ben, how are you?

Doing well.

Good. Good. We've learned in the past that giving timeframes on something that we don't control is a – just not a way of dealing well with our shareholders. It's not fair to them, nor is it fair to us. Dave, as he explained in his discussion, quite a stringent procedures and the delays that we've had that really were not through us and we really have pushed everything we can. At this point we're hoping it's imminent, but to tell you that it's one week or two weeks, or two days of this time is just not practical.

Alright. So, what you have to do is today, hopefully if everything goes well, you submit that to your guys and then they submit it to the authorities and we'll wait to hear back, right? That's the steps?

Dave?

Basically after the documentation has been uploaded, so it's in for review. I just need to upload our NRTL Certificate for final review. And I can't control how long they take, but it doesn't seem like it's going to be a real long process. But like Bob said, giving a date has hurt us and the confidence of the shareholders in the past. So I feel very comfortable that it's imminent. We have done everything on our part. All the other technical documentation and technical files have been uploaded, and the last piece is that NRTL certificate.

Got it. All right, that clarifies the things. And it's great, I know it's painful when you don't hit these endpoints, but then the day you do, you just stock takes off, so looking forward to it, and thanks for taking the questions.

Thanks.

[Operator Instruction]. Your next question is from the line of [Michael Deep] with BDT Trading. Please go ahead.

My question is in regards to the other two GPOs. We were supposed to have analyzed by January 1 of this year. What's the status on those two?

Peter?

We are in the process of negotiating terms and conditions with two other GPOs, so I can't say that those discussions are active and these things take us several months to kind of complete. They do go through a review committee. We are looking at having these completed we think by the fourth quarter, at the latest that's what our discussions are saying right now. I know that Dave is involved here with the one in particular, and before he makes a comment on that, I will provide some thought to in that we are being approached by more and more GPOs or local IDMs in terms of enhanced agreements on a monthly basis. And it's going to become a very active part of our sales focus and repertoire in the coming months. But Dave, do you want to comment on one as well?

Sure. Thanks Pete. One of the GPOs that we are basically agreed upon with our contract with them in the terms and conditions, however, their contract doesn't become effective until the fourth quarter of 2017. Typically they go out by 18 months early and try to get new products into their mix. The Vizient we were awarded Innovative Technology Award by them. So we were able to start and contract early on under the innovative product side of it. The other GPO is typically have a – every three years their contracts come up for review, and we were approached as Pete said by a few of them and we get approached all the time that they want our product in their mix. But this one that we just agreed to everything that doesn't take effect until the fourth quarter.

Did that answer the question you had regarding GPO, sir?

Yes. Thank you very much.

You're welcome.

Your next question is from the line of Casey Stallone. Please go ahead.

Hi, guys. How is going?

Good.

Good.

In the past after the increase in authorized shares, you guys mentioned trying to acquire complementary devices. Are we still moving forward with that?

Yes. Yes, we are. We are actively looking to advance our company and broaden our product offerings. And in one short word, yes, we are actively looking.

Okay, great. Also Bob mentioned last call that the blackout period will be ending soon after the filing, should we be expecting some insight advance in the near future.

Yes. I think that will be in place shortly.

This is Bob. The actual blackout period of the Company ends two days after the filing which was May 15 yesterday, so that opens up after tomorrow.

Okay, great. Thank you.

Your next question is from the line of James McCauley with MetLife. Please go ahead.

Good morning guys. Thanks very much for taking my question. First a comment, it just seems to me that the past three conference calls are very similar to this one we're having today, except that today was more of a kind of a sales pitch to an end user as opposed to shareholders. Are we satisfied with the efforts that we are making, I mean nothing has changed the stock with this company for the past year other than sales milestones. And just things aren't panning out from a shareholder perspective and probably for you guys as well, I know lot of things are out of your control, but what are we doing, and if it's a company where shareholders would be interested, because right now I mean just the time Tim handed off the mic to the management team, the stock got up to 35%. The CE Mark, it's amazing that you guys didn't know that the CE Mark had all these requirements. Typically it takes by the month and a half for this to happen. Two months. It's just like we are stumping all over each other. This is a simple stuff. You guys are over complicating it, I believe then do we have response for that?

May I take the call?

Sure.

This is Bob. Thank you. Look, your questions are very valid and all of this is taking time that we have fought through for years. I am with this company for five years. We took it over in a situation where it was almost completely a non-existent ready to fall. We had to restructure our company, restructure the product and restructure our debt, and we did so. We did it in a period of time when money was very, very, very difficult, and we fought for five years to build this product and to recoup our finances between our balance sheet and to raise money to get on the NASDAQ Exchange and we have done all of that. Then we've turned around and found ourselves with loss of momentum in the sale cycle that takes some time. And we have worked hard to build our sales force to increase our ability to sale in a cycle that is long to the hospital system. We've also could not begin our search for the CE Mark until we pass certain things in this country, which we did and we have worked very, very diligently to do all of it at the same time investigate our VA situation and our Canadian situation to get a medical device license. And for the first time after Carl took over, we have found ourselves in the last few months with cash in the bank. NASDAQ completely taking care of in compliance, a product that is bulletproof and working absolutely beautifully, an expansion into Canada, a CE Mark that is taken months, and keep in mind that it might take a month and a half for a huge company to get that taken care of the first small company that goes to these bodies. Once in a blue moon, they don't then go over for us. We are not Medtronic and we're not J&J. They do it at their time limit and we can only do what we can at our end. We don't want to see this stock dropped, at the same token we are in this for the long haul and hopefully our shareholders are few. And we are progressing in the right direction and we have seen huge things in the last year that we haven't seen in a long time. And I think that the prognosis is great for the rest of this year and our set up of sales going into the ensuing year in 2018.

Bob, thanks for that. Please go ahead.

I am sorry. This is Dave Johnson. I just want to address a misnomer that I believe I heard that CE Mark, a typical time period to attain the CE Mark, if you need to get your quality system certified, which we did is for an electro mechanical device to go through testing, to go through and get your quality system certified. For electro mechanical devices, it takes approximately 18 months. If you are going to have an implantable product out there, a lot of times it might take up to three years, but that if you have all of your ducks in a row first time and you are able to get compliance or get put on the, as Bob said on the top shelf when you're not competing with the GE and 3M and St. Jude with their time, because they put millions of dollars through these tests houses versus once every seven years we come to them. So I hate. There is no excuses. We are doing everything on our end. We did identify that it was going to take a big effort and we are almost home.

I appreciate that. I am not questioning the efforts that are being made by management, but just it relates to comments called, Steve mentioned that the CE Mark is imminent within weeks, and now I am here in 18 months. So, you can understand the concern. I don't know if I'm speaking for everyone obviously, but you can understand the concerned just would be in – you got to manage our expectations better, if not that is why I'll stop this collapsing.

We agree with you and that's why we have not turned around to give you any further timeline on this, timelines that we don't control. We are no longer in 18 month period. We are at the very tail end of it. The minute we have news, we will get it to our shareholders. And there is nothing more we can do, but fight to get this done and get it done as well as possible.

Thank you very much gentlemen. I appreciate it. Thanks.

Thank you.

Your next question is from the line of [Steve Rowe Jockey] a Private Investor. Please go ahead.

Hi guys. I wanted to see if you could give us some figures on how many quotes went out this quarter compared to the previous quarter, so Q1 versus Q4 of last year? And also you sold three units in Q1, do you have any projections for Q2?

All right. Go ahead, Peter.

Yeah. I can address the quotes year-over-year in terms of that in first quarter of 2016, we did not have a dedicated or internal sales force to speak of. We have since then in Q1 of 2017 that was a month that a quarter that we had to hire, train and develop these regional managers. During that process of hiring, developing and training, our quotes increased significantly. I think we reported last time that we had several million dollars in outstanding quotes that we were seeing at that time. There was an increase over last year. I don't have the exact figure in front of me, but I can tell you this that we have added four new regional managers and I would expect quotes to increase exponentially as a result of adding those incremental people on board. Quotes do take a while. They are the trigger to the sale. Our team is highly focused and engaged on these quotes, and not only quoting but providing consultative options to people both on the operating and capital side of the budget. So, we do expect good things to come from this. It's a longer sales cycle that can go anywhere from three to 18 months. Our goal is to trying to press that down. And quoting is the first to trigger that activity to occur. With regards to anything else that you might have that encourage you ask a follow up question.

The four regionals, are they internal employees?

They are. They're direct employees of the Company.

Okay. And the 10-99 that you're looking to hire, will they be representing other products?

10-99s are independent reps. They typically carry and manage products for multiple companies. Our attention on the 10-99 reps is not just any rep, but we are looking for rap with synergy into our call space. It was one of the reasons why I wanted to mention the stakeholders. So stakeholders are critically important for us getting in to the hospital. Is not just a particular department, such as an operating room, but there are multiple departments such as the OR, IR, GI, another subspecialties like respiratory, the emergency room, urology. Those departments require unique fit and we want to make sure that the 10-99 reps complement our call points, as well as the stakeholders and also fit the company in terms of – they are going to be engaged in our product at a very high level and not see our product as a cursory or added product at the low end of their product holding group. So, I am thinking that that will be the basis for which we will be able to grow. We are focusing across over 50 markets, major markets in the United States. We will be slowly bringing these on in a very kind of calculated fashion to make sure that we don't disrupt the momentum that we have currently.

Okay. Thank you.

Thank you.

Your next question is from the line of Steven Fayne, a Private Investor. Please go ahead.

On April 24, you paid a consultant with 100,000 shares of stock. Question and a point, why would you pay a consultant with stock instead of cash, and number two, this is self-dilution of your retail base which kills you. So, would like to know circumstances behind issuing stock for what appears to be a normal business operating expenses, a consultant expense? And also is this consultant tied in to the CE Mark consultancy you've mentioned before? Thanks.

Excuse me. Go ahead Bob on that one.

Sure. Firstly, it's not an uncommon crack as to take certain consultants in stock and not cash, especially when you are on a very limited cash budget and trying to continue cash flow. Additionally, this consultant was – it's not involved with the CE, whatsoever. This consultant is involved with helping us acquire synergistic products and helping us acquire a company that we are looking into that we hope to come to agreement with during the course of this year. They have also placed us in – in the Pennsylvania region with customers that have purchased from us and they are also a stock advisor. By issuing them the stock and though we hate to do that as a general practice of our own, by doing that, they don't – it's under rule 144 and they don't have ability to have income or do anything with stock for six months. And it also part of that deal that they have to perform for us. So, they have been a very patient company, a company that's taken us through this last year without any payment and in the discretion of management, it was really important for us to maintain our cash flow and instead of paying them what would have been about $200,000 or $300,000 in cash, it was something where we could do it by the 100,000 shares of stock.

Your next question is from the line of Daniel Watkins a Private Investor. Please go ahead.

Hello.

Hello.

Hi, I was wondering what are the reasons why you had a blackout period and if you anticipate any future blackout periods?

Carl, I'll grab that again.

Sure.

A blackout period is mandatory by the SEC. It's to prevent insider trading when we have knowledge of things that's going on in the Company and plus it would mislead the market if we all of a sudden started buying before let say we were going to put out a quarterly announcement and that would mislead the market. So there are mandatory blackout periods surrounding your reporting times. You have to stop two weeks in the prior to the end of the quarter and you are not allowed to buy until two days after you file. And then unfortunately it extends very from long period of time in the beginning of the year, because your 10-K is overlapping with your 10-Q for the first period of 2017 because of the two week periods and the fact that you generally file towards the end of the deadline. So, this is mandated by the SEC and we follow those rules explicitly.

I see. Alright. Thank you.

Ladies and gentlemen, that is all the time we have today for questions. Speakers please continue with your presentation or any closing remarks.

Yes. This is Dr. Schwartz. We expect a continued revenue growth this year as a result of several initiatives including our increased direct sales staff, the opportunity with Vizient and the additional network of distributors both in North America and Europe. So, in closing, I want to thank you all for the time today and for your interest in our company. We are looking forward to executing on our milestones in 2017 and are optimistic about our future. Have a good day. Thank you.

Ladies and gentleman, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your lines.