Greetings and welcome to the Milestone Scientific First Quarter 2020 Business Update Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, David Waldman, Investor Relations. Please go ahead, sir.

Good morning and thank you for joining Milestone Scientific's first quarter 2020 financial results conference call. On the call with us today are Len Osser, Interim Chief Executive Officer, and Joseph D'Agostino, Chief Financial Officer. The company issued a press release today, Monday, May 18th, containing first quarter 2020 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. The company's management will now provide prepared remarks, reviewing the financial and operational results for the first quarter ended March 31, 2020. Before we get started, we'd like to remind everyone that during this conference call we may make forward-looking statements regarding timing and financial impact of Milestone's ability to implement its business plan, expected revenues and future success. These statements involve a number of risks and uncertainties, and are based on assumptions involving judgments with respect to future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond Milestone's control. Some of the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements are general economic conditions, failure to achieve expected revenue growth, changes in our operating expenses, adverse patent rulings, FDA or legal developments, competitive pressures, changes in customer and market requirements and standards, and the risk factors detailed from time-to-time in Milestone's periodic filings with the Securities and Exchange Commission, including without limitation Milestone's report on Form 10-K for the year ended December 31, 2019, and Milestone's report on Form 10-Q for the second quarter ended June 30, 2020. These forward-looking statements made during this call are based upon management's reasonable beliefs as of today's date, May 18, 2020. Milestone undertakes no obligation to revise or update publicly any forward-looking statements for any reason. With that, we'll now turn the call over to Len Osser, Interim Chief Executive Officer. Please go ahead, Len.

Thank you, David. And thanks, everyone, for joining us on the call today. Considering that we just had a conference call on May 5, I'll try to keep this call short, providing more time for your questions. As we indicated on our last call, we continue to witness growing interest in the new CathCheck system, which is now in a pilot at a leading medical institution in the United States. CathCheck marks a technological leap forward in both the capabilities and intellectual property surrounding the CompuFlo epidural system, adding another 20 years to our patent protection. This capability makes CompuFlo the first and only known commercially available instrument that can identify the presence of a pressure waveform signal that can be used to confirm proper placement of a catheter anywhere in the body. This can be accomplished in an objective way in seconds as opposed to using the conventional subjective method, taking between 20 and 40 minutes. Using CathCheck, physicians and nurses can not only determine what is the objective pressure at the tip of the needle, but can now monitor the presence or absence of a pulsatile waveform – that's a heartbeat – to determine the placement of the catheter. Importantly, this capability saves time and money and provides much better patient care. A major university hospital, familiar with CompuFlo, was attracted to our new CathCheck technology, given its ability to minimize contact between the patient and provider, which is especially important during the COVID-19 pandemic. Specifically, the doctors and nurses have been handling patients with the virus and they immediately recognize that the less you handle patients, the less you are subjected to the possibility of contracting the virus or transmitting the virus. Within a short period of time, we delivered the instrument and the disposables. We are…

Thank you, Leonard. Revenue for the three months ended March 31, 2020 was $1.8 million versus $1.9 million for the first quarter of 2019. Dental revenue for the three months ended March 31, 2020 and 2019 were approximately $1.8 million and $1.9 million respectively. Dental revenue decreased by approximately $112,000 primarily due to a decrease in device and handpiece sales in the United States and Canada by approximately $272,000 and a decrease in Milestone China revenue of approximately $50,000, offset by an increase in international handpiece sales by approximately $219,000. Medical revenue for the three months ended March 31, 2020 and March 31, 2019 were nominal, reflecting our strategy to place the instrument with KOLs at no cost to drive awareness and then adoption of the instrument. Gross profit for the quarter ending 2020 was approximately $1.3 million or 71% of revenue, which is $1.3 million or 68% of revenue for the first quarter of 2019. Operating loss for the three months ended March 31, 2020 was approximately $1.6 million versus an operating loss of approximately $818,000 in the same period last year. This increase in operating loss is primarily attributable to an increase in selling, general and administrative expenses of approximately $676,000, and an increase of approximately $101,000 in research and development. The increase in selling, general and administrative expenses reflects an increase in professional fees of approximately $487,000 due to the company seeking business alternatives, in addition to possible capital funding. Net loss for the three months ended March 31, 2020 was approximately $1.6 million or $0.03 per share versus a net loss of approximately $800,000 or $0.02 per share for the comparable period in 2019. I would like to now turn your attention to liquidity and capital resources. At March 31, 2020, the company had cash and cash equivalents of $766,000 compared to cash and cash equivalents of approximately $1.5 million as of December 2019. Cash and cash equivalents as of March 31, 2020 does not include the $4.7 million financing completed in April of 2020. As of March 31, 2020, total current assets were approximately $5.3 million compared to total current assets of approximately $6.1 million as of December 31, 2019. At March 31st, 2020, the company had working capital of approximately $21,000 versus working capital of $1.2 million at December 31, 2019. At this point, I'd like to turn the call back to Leonard. Leonard?

Thank you, Joseph. We continue to make technological advancements, which we believe will support our commercial efforts going forward. Our technology can be used for a variety of epidural procedures and other medical applications. However, our initial focus is on the labor and delivery market. We remain encouraged by the outlook for the business, and especially the market potential for the CompuFlo epidural system. We are working towards the transformation of the procedures and ultimately becoming the standard of care. Despite the turbulence in the market connected to COVID-19 pandemic, as Joseph mentioned, we completed a $4.7 million financing of what we believe were favorable terms relative to the market price at that time. We believe this financing gives us additional cash one way as we continue the commercial rollout of the CompuFlo epidural system and the CathCheck system. We are committed to driving shareholder value and look forward to providing further updates as developments unfold, I'd like to thank you for joining the call today. I'd like to wish that you all remain very safe and careful at this time. And we'd like to open up the call for questions. operator?

Thank you. [Operator Instructions]. Our first question today is coming from Anthony Vendetti from Maxim Group. Your line is now live.

Good morning, Leonard. Good morning, Joe.

Good morning, Anthony.

Hope you're all staying safe and healthy.

We certainly are trying, yes. Safe and healthy and getting fatter every day.

I was wondering if you could talk about the impact of COVID-19 not just on the dental business, but on the ability to roll out CompuFlo, the epidural system. I know you talked about engaging with the GPOs. And is that pretty much pretty much on hold or is there a way that you've been able to make some progress there?

Yeah. Well, there are a few different answers to a few different questions. We are not stymied at all in our efforts with the GPOs. That's moving ahead because that's really supplying information to them. And we're making considerable progress with one in particular, given the fact that we're unique and we have no competition. So, that has not been stymied at all, I believe, by COVID-19. Commercially, yeah, you cannot get into a university or a hospital in the United States as a vendor. Having said that, given what I mentioned earlier regarding a major institution in the pilot study of CathCheck, our executive salesperson has been allowed in twice now because of CathCheck and the importance of CathCheck. So, that is, in fact, moving ahead. We have hired two people, I guess, immediately prior to the pandemic for selling in different areas of the country. So, they have been trained and they are reaching out by phone, by Skype, by Zoom, but unfortunately, of course, we cannot go into the hospitals to demonstrate. So, we're doing whatever we can from a marketing perspective, but we're on hold other than the institutions that we've already been in, in a sales perspective. Does that answer the question, Tony?

Yes, Len. Okay. What's your best guess as you move forward with these GPOs and businesses start reopening, hospitals are probably going to start to – certain hospitals anyway will start to allow vendors in, particularly the ones that are not – have as many COVID-19 patients or, in some case, elective surgery hospitals, such as HSS here in New York, are opening back up for elective procedures, hips, knees and so forth, joints. As that starts to happen, you have a couple of salespeople, you have these negotiations with GPOs, do you think it's a in-a-couple-of-weeks situation where you're going to start to be able to get into certain hospitals or you still think they're a couple months away?

I think that once they start allowing salespeople to come in – and this will be done on a basis of state by state, hospital by hospital – I think that we can move rather quickly through the process because we're not stymied as far as procedures go because we're in labor and delivery. So, that happens no matter what. So, that has not been the issue for us at all. The issue is getting in front of the new hospitals that – the chairman going through the normal procedure. But in quite a number of hospitals in the United States, we're already very much along that procedure. And the last thing that we that we needed was the economic validation to go to the purchasing department of the hospitals. Unfortunately, none of that is active at the moment. But when that opens up, we are at the end of that procedure with very, very compelling proof, given the recent independent study on the economics. So, I believe we can – as soon as they open up and they're ready to start purchasing a product other than COVID-19 product, we can move very quickly. I don't know the timing, obviously, because I don't think anyone does at this point.

Sure. And then, on the CathCheck, you said that's potentially going to extend the patent life of your CompuFlo system. Have you already applied for that patent extension? Or is that in the process?

No, we have been awarded that patent, I believe, about – I believe it was about six weeks ago that we announced that. So, we already have that patent. That patent is secured, which allows us to do that. But keep in mind, Anthony, having founded the space of drug delivery by computer and having Dr. Hochman, the world authority on computerized drug delivery and our resident inventor for about 20 years, we keep doing this. As you noticed, in the last quarter, we increased R&D expenses by $101,000. So, we continue to leapfrog ourselves. So, there's every reason to believe, if you believe that history repeats itself, that we will continue to do so, thereby continuing to extend our patent portfolio.

Okay. And on CathCheck, just to further elaborate on what you said on the call, you said it's possible that the CathCheck system, since that is obviously quite spread through every hospital, not just obviously labor and delivery, it's possible that business opportunity could end up being larger than the epidural market. Correct?

Yeah, absolutely. The epidural market, though, for us is very low. It's about a $5 billion market here. It's one of these smaller medical markets, as you know. The CathCheck at the moment is reduced only for labor and delivery by us because that's what our focus and effort is and we're trying to control our cash as best as we possibly can. So, we're looking now for the success in the labor and delivery segment of the epidural market. However, catheters are used all over the body. We have the advantage in labor and delivery of having the alarm be the patient herself because it's used for pain management. So, the patient is the one telling the anesthesiologist doing the rounds that she's in pain, so she's the indicator. So, then, you would use the CathCheck to determine whether she's in pain because of insufficient drug dosage or has the catheter actually become dislodged. And, as you know, that's 20 to 40 minute procedure which we reduce down to under 10 seconds. However, one doesn't have that alarm of the patient in other catheter placements. For example, for any drug where you're using a catheter to deliver the drug into the body. So, for example, and I don't know if this is a good example, but if you're injecting, let's say, a chemotherapy agent or anything into a certain part of the body and you have either misplaced – in other words, placed the catheter not in the specific area that you targeted or the catheter for some reason has now become dislodged as the drug is entering the body, the drug will have no effect. But you don't know that as the practitioner. It will take days or weeks of seeing that the patient is not reacting to the benefits of the drug for you to then make the determination, is the drug the wrong drug, is the drug delivered in an insufficient amount, or has the catheter become dislodged. We can tell them – we can not only with our instrument place the catheter in the ideal target, but we can also check from time to time during the drug delivery of whether the catheter remains in the right location. So, the possibility of CathCheck being used for many other drug delivery procedures throughout the body should be quite large. So, we've begun looking into that a few weeks ago.

Okay, yeah. No, that's very helpful. Thanks very much. I'll hop back in queue.

Thank you, Anthony.

Thank you. [Operator Instructions]. We've reached the end of the question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

I'd like to thank everyone for joining us. I'd like to thank you for your patience. We are as a team working tenaciously to bring our product to the forefront of this particular area of medicine. Please stay safe and very careful. And when we have further developments, we will happy to report them. All the best. Good day.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.