Good day, everyone. Welcome to the Milestone Scientific Inc. First Quarter 2026 Financial Results and Business Update Conference Call. It is now my pleasure to turn the floor over to your host, James Carbonara from Hayden IR. The floor is yours.

Thank you, operator. Before we begin, please note that today's call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Please refer to our earnings press release as well as our filings with the SEC, including our 2025 Form 10-K for a discussion of these risks. A replay of this call will be available shortly after its conclusion. With that, I'll turn the call over to our CEO, Eric Hines.

Thank you, James, and good morning, everybody, and thank you for joining our call today. I especially want to thank everybody who participated in our PIPE in April and your continued support for Milestone. It is greatly appreciated. Our first quarter results reflect continued progress as we execute on the foundation we established in 2025. We remain focused on building a disciplined operating model where spending is aligned with revenue generation and clear return on investment. That focus is reflected in our results. We maintained a relatively stable revenue base in the quarter despite the inability to ship certain booked orders to the Middle East due to the ongoing global conflict in the region. Even with that headwind, we reduced operating expenses by approximately $1.3 million or more than 30% year-over-year, significantly narrowing our losses while we align the company for growth. At the same time, we are beginning to see early signs of traction in the areas that we see as key growth drivers. Starting with our dental business, which remains the backbone of the company. We continue to execute on the national rollout of our ambassador program following its expansion in January, resulting in 173 applications, 73 active ambassadors and 25 new demos and multiple new sales. Engagement levels have been encouraging. And while we expect the financial impact to build over time, we believe this initiative is strengthening our commercial presence and positioning us for improved performance in the back half of the year. Internationally, we continue to pursue additional registrations, which we believe can open meaningful new markets over time. Turning to the medical side. CompuFlo continues to gain traction and is becoming an increasingly important part of our growth strategy. In the first quarter, medical revenue more than doubled year-over-year, reflecting early-stage adoption and growing interest from clinicians. While we are still in the early innings, the progress reinforces our view that the CompuFlo represents a significant long-term opportunity for the company. We also continue to build our infrastructure required to support that growth. Following the launch of our CompuFlo Advisor Program in February, we now have more than 8 physician partners actively engaged in 6 pending, supported by a dedicated reimbursement infrastructure with over 50 claims submitted across 3 MACs, specifically Novitas, Palmetto and First Coast. This is a critical component of our strategy as adoption in the medical market is closely tied to both clinical validation and reimbursement support. In addition, we remain focused on expanding Medicare coverage, onboarding 7 new distribution partners and advancing opportunities with both national and local VA channels. Furthermore, we have started a digital marketing campaign across multiple channels for CompuFlo, resulting in 152 leads. These initiatives are designed to convert early clinical interest into sustained utilization over time. Subsequent to the end of the quarter, we strengthened our balance sheet through a $2.15 million financing. This provides us with additional flexibility to invest in key growth initiatives, including sales expansion, inventory and digital marketing, while maintaining the disciplined approach to capital allocation that we've emphasized since last year. Turning to our outlook. We are reaffirming our 2026 guidance. We continue to expect total revenue in the range of $9.8 million to $10.2 million, representing a double-digit year-over-year growth. Within that, we expect CompuFlo revenue to grow at an even greater pace over the remainder of 2026 compared to 2025. Combined with the structural cost reductions implemented last year, this level of growth is expected to drive improved operating leverage and a meaningful reduction in cash burn. Our goal is to reach cash flow breakeven in early 2027 through disciplined execution, investing only where we see clear returns and building a business that can deliver sustainable long-term shareholder value. I'll now turn the call over to Keisha to review our financials. Keisha?

Thank you, Eric, and good morning, everyone. Total revenue was flat at approximately $2.2 million for both the three months ended March 31, 2026 and 2025. Gross profit was $1.56 million, roughly in line with the $1.65 million for the prior year period. Importantly, our gross margins remain robust at 72.3% compared to 73.8% in the prior period. Operating loss was $828,000, an improvement of 58% or $1.2 million compared to the operating loss of $2 million in the prior period. Net loss was $840,000 compared to the net loss of $2 million for the prior period year-over-year. The net loss was narrowed by 58% or $1.2 million. With that, I'd like to turn it back over to the operator for questions.

Your first question is coming from Anthony Vendetti with Maxim Group.

Before I focus on the medical growth CompuFlo sales, which I'm glad to see the progress there, I wanted to just — you said in your prepared remarks that there were some revenue that was impacted in the Middle East. Do you have a range of what that revenue was and where you're able to get that shipped in the second quarter? Or is it because of the ongoing conflict that it's sort of in limbo?

Thanks, Anthony. That's a good question and it's one that we're very familiar with, as you can imagine. So yes, we have about $200,000 in bookings that we were unable to ship due to the regional conflict over in the Strait of Hormuz. So subsequently to that, we have now shipped a majority of that. I think we've got a little bit remaining for this quarter. But had we been able to ship those orders, we would have seen an increase in sales over the prior quarter. So it did impact the revenues, as you heard. And fortunately, we've been able to ship a considerable amount of it here already in Q2.

Okay. Great. And then the doubling of CompuFlo medical revenue. That's great to hear. Do you have a — and I know we're coming off a low base, but — are you going to provide that number? And then just if you could get more into some of the numbers you mentioned: there's 152 leads, you have 8 physician partners, I missed the number that you said were pending. But in terms of the leads, can you talk about where that was before this quarter? And then the ability to turn those leads into partners? How long do you think that takes? What's the average conversion into a partner in terms of time?

Yes. So a lot of intersecting points there with the question. So first, I guess, on the CompuFlo side of the equation, as indicated in the earnings report, we generated about — I believe it was $108,000 in revenue for Q1. We see that trend continuing through Q2. And then we see — once we get through the Medicare reimbursement, which we plan to initiate formal discussions with Medicare based on the number of claims that we've now got in the system here in early June time frame. So that's sort of the critical point that we'll get to. We'll probably start with our friends down in Florida and First Coast. So we expect, again, the trend to continue on the growth cycle on the CompuFlo side. And if we're able to get through the Medicare reimbursement with a reasonable reimbursement number, we have nonlinear opportunities moving into the second half of the year, but again, mostly dependent on the Medicare reimbursement. As it relates to the number of leads that we're generating now, CompuFlo more or less from a digital marketing perspective in social media, was not even on the map. And so we launched the CompuFlo sort of adjacent to the stuff that we're doing in dental. And we're frankly very surprised at the impact of digital marketing. So we're getting anesthesia, neurologists, all sorts of different people, neurosurgeons reaching out to us. And again, we were a little bit surprised to get 152 leads and probably generating anywhere from 20 to 30 new leads per week and following up with those folks, of course. So the impact on the digital marketing was a bit surprising. But it's all together with the distribution partners that we've signed on, with the direct salesperson that we've got out there in the field, we are seeing a lot of activity across every front. And it's in every aspect of epidural injections, from spinal stimulation to neurosurgeons to conventional interventional pain folks. And we are also seeing a lot of traction with the university community in academia. So we're seeing opportunities to meet with very large name brand institutions out there in the field. And I think you'll see that we continue to have research papers published. There was one recently that was published, UTMB, spinal stimulation. So we're getting traction all across the board. And I guess the last question that you asked was around just the timing. So in spite of Medicare reimbursement not being exactly where we want it to be, we are seeing orders that turn around as quickly as a week. As people go out, they'll demonstrate the solution. They'll see the enthusiasm. They'll identify the niche cases where this makes a lot of sense initially. And we're seeing purchases turn around that quickly, which, again, is quite surprising in light of the fact that we're still not where we need to be with the Medicare reimbursement. So just a lot of really positive momentum. The trick here is obviously to convert that to revenue and then to be able to expand nonlinearly. And all of that comes in conjunction with getting the MACs approvals and reimbursement back where we want it to be.

Okay, yes. No — that sounds — yes, no, yes, almost — yes, I think you answered all of it, but I'm just going to do a follow-up on two points. One is it sounds like your DTC marketing is, like you said, maybe even surprised you, working really well, 20 to 30 new leads per week. Is there — do you need to put more effort behind that or is it working perfectly, no change there? And then you said you're going to initiate formal claims to submit to Medicare. Can you just elaborate a little bit more on what you can do from your end as a company to try to — and I know it's the government, so it's not that you can expedite it, but to make sure that you're checking all the boxes to get this reimbursement as soon as possible and then whatever time frame you can outline for when you expect that to happen?

It always amazes me how the analysts seem to get it right. I used to work for a software company, Gartner. You would think that they didn't know exactly what was going on and then they would ask these questions and they would just be spot on. So you asked about the 152-odd leads that we've been receiving. We're getting an equal amount on the dental side. And so one of the challenges on following up on the leads is all these doctors are working during the day; most of the dentists are off, for instance, on either Wednesday or Friday. So following up on the leads, we haven't completely solved that challenge yet because it's very difficult. Even though they fill out two or three pages of forms and show a clear interest, getting back in touch with them is difficult. And so it's been a little bit tricky to follow up on the leads just from the standpoint that these folks are doing procedures usually during the workday. So we're working on that. And yes, we do need more horsepower to chase after those leads. As far as Medicare reimbursement, I think as I indicated in our last call, we've got a dedicated team led by a lady by the name of Evelyn Gittinger, who has 20-plus years in prosecuting opportunities on the Medicare side of the equation along with the call center. And we've got a very outlined plan that, again, puts us back in front physically of probably First Coast in June. And then we've got an entire roadmap that leads us to our submission for a Category I authorization for the February meeting of next year. And so that requires submission probably in the November time frame. They really look at three different things. They look at utilization, which is why we're generating the claims. They look at the clinical need and they look at physicians that are supporting you and willing to be there to talk about why there's a clinical need. And then finally, they look at the different societies that are also engaged in this process and, to an extent, some of the research that's happening soon at the University of Kansas, University of Minnesota and already at University of Texas Medical Branch. There's more coming on that front as far as opportunities at some name brand institutions. So we have a plan: utilization, clinical validation, physician support and society engagement. We're executing on those fronts with the call center support for offices and an organized reimbursement team.

Your next question is coming from Bruce Jackson with StoneX.

Just a couple of follow-up questions on the dental ambassador program. This is fairly new. Are you seeing anything in terms of repeat sales? Or how do you feel about the trajectory here? Should we be thinking it's going to be kind of a slow trajectory and then building later in the year? Or could we see something as soon as the second quarter?

It's a question I asked my sales team yesterday, but a good question. Thanks, Bruce. Good to hear your voice. The ambassador program, we launched it as a pilot in December, then we kind of fully launched it in January. And again, we were surprised that we got so many applications. In fact, we were — each of them is a W-9 contractor, and there's opportunity for them to earn money if they generate demos and so forth. And so we had more than we expected. We did a couple of training sessions and some follow-ups. But what we've learned is it's probably the Pareto principle: about 20% of them are having an impact. The other 80% are either putting it on their LinkedIn page that they're an ambassador or are less active. So we are hiring a person to take over that program. One of the actual ambassadors, we're going to bring on and have her really spearhead leading that team. We expect that like anything else, 20% to 30% of those people will be active and engaged in really driving demos and results. So it's still a little bit early days as it relates to that, but we fully expect that that will be a significant contribution in the second half of the year, and it's already showing results even with just having launched it just a few months ago.

Okay. Great. And then looking at the international business, I believe you've got some new product registrations in process and I think Japan is one of the countries. What are the countries where you've got new product registrations in process? And what might be the timing on getting those approved?

So we break them down into tiers: Tier 1, 2 and 3. The three that you're referring to are India, Mexico and Japan. We expect India and Mexico here in the next quarter. Japan might be a little bit longer, probably more in the September time frame. So any impact from those three will be at best in Q4. But these are major markets with especially large cosmetic dentistry opportunities in them. There are also Turkey and a handful of others that are being pursued. We're trying to be very selective because the registration process in itself is time-consuming and there's costs associated with it. So we're trying to be a little bit more selective. There's a handful of others already in process—some of the Central Asian countries, Uzbekistan and Kazakhstan and a handful of others, which are probably more like Tier 2 or Tier 3 markets.

Okay. And then getting back to the Medicare reimbursement roadmap. So going to sit down with First Coast this summer and then submit in November. Then would February be like the official—when is everything in place where the physician doesn't have to think about whether or not this is covered?

So we will receive reimbursement well prior to moving to a Category I authorization. It will still be under a CPT code during the period from July through March or April of next year. So it will still be a Category III approval, but the reimbursement hopefully will be in a much better spot than it is right now, back to the roughly $325 range that it was prior to low utilization. The company was a little bit fortunate to get reimbursement previously, but they didn't follow through with supporting the doctors to submit cases and didn't have the infrastructure in place to do that and the utilization was not what it needed to be. So we flipped the script and we're focused on utilization and submission to drive reimbursement. We will be able to see what the reimbursement will be well prior to moving to a Category I, and once it gets to Category I, then it's more of a rubber stamp. Even with Category III reimbursement, there's still some work that needs to be done and thus the call center that we've enlisted to help office managers when they're submitting under a Category III code. So you should expect improved reimbursement visibility well before Category I status.

Yes, absolutely. And then last question for me. The expense control has been very tight. I'm just kind of wondering going forward with you having a number of initiatives in place that may have some cost implications. What's your outlook for operating expenses over the next couple of quarters?

I don't think we're going to have the big results that we've had in the first handful of quarters. I do think you'll see some modest continued reduction in expenses. There's still some things that we have an opportunity to cut. We are on track and on budget across almost every single aspect of the business as far as expense reduction, and we're really not seeing much of an impact inhibiting us from continuing to put some of the initiatives in place. With all the stuff that we've cut and the people that we're adding and the initiatives that we're adding, we're still within the budget for 2026. You'll see additional expense cuts, but not to the magnitude that you've seen in the first two quarters.

Your next question is coming from John Korb.

Well, I'll be kind again this time. Let me start off by saying I'm delighted that you're at the helm. I get the feeling that if anybody can put this together, you can. You took this job at a time when Milestone was up against it. So I don't think you would have taken the job unless you had really a strong conviction of the open-ended possibilities for the company, both in CompuFlo and the dental side. Needless to say, it hasn't unfolded the way I might have envisioned some time ago where some clinician would use this product at CompuFlo and say, 'Where has this been all my life?' Get together all the clinicians in the company and say, 'You're all going to use this,' and then there'd be a huge launch. It hasn't worked out that way. Could you just elucidate a little bit on your vision for the company and how it might unfold even if it's inaccurate? Does the CompuFlo side depend on this advisor program? Is that what it is? And how does that work with physicians and the advisor program? Why is that needed? And let's say one is successful, how will that translate to wider adoption or will it not? I'm just having a little bit of trouble getting my head wrapped around how this might all unfold in the future.

You and I have a lot of the same questions, and I think we're uncovering them. You're absolutely right that I believed in the technology, and that's part of the reason I came back to join the company because I just couldn't understand how something that made so much sense wasn't more widely adopted. When I jumped on board, I found the water a little bit deeper than I expected, but that's okay. That's normal in this world of microcaps. The good news is the technology still speaks for itself, and it does all the things that were advertised. I think the challenge for the company was that they saw this great product and they thought it made so much sense and they sort of sprayed in a shotgun approach and got ahead of themselves. Stepping back and looking at the relaunch of the advisor program, we find people that get excited about CompuFlo are probably a little more on the academic side. So it's not necessarily mainstream folks treating epidurals as a commodity; we're seeing initial traction in more complex cases—thoracic, cervical, spinal cord stimulation, unique anatomy, scoliosis and OB/GYN where it started in labor and delivery. In some cases the academic community and younger doctors push the envelope and adopt new technology faster. I think what we will find over time is that there is a substantial opportunity across many aspects of spine and pain, and we will become a significant player or a niche player within those areas. People who embrace this first are usually academics and younger clinicians who want new tools. Dr. Sayed on our board will tell you it just makes sense for doctors working in the epidural space to use additional guidance. Fluoroscopy helps, but CompuFlo offers a meaningful adjunct. I don't have every answer today, but the feeling right now is it's very broad. We see applications across all aspects of pain, and the people that see it and use it believe in it. The research supports significant reductions in complications, and that will drive adoption over time.

It was a long-winded question, so I appreciate the long-winded answer. I just wanted to get your feel for what you were thinking. We're thinking along the same lines. I'm sure the water has been a little deeper, but I appreciate your diligence and the way you're handling Milestone so far. I'll be following you and talk to you again in three months.

Your next question is coming from Gary Carroll.

The pain man is on board here. I have a couple of questions. You mentioned the distribution partners a couple of times. So who are they exactly? Do we have distributors on board? Are they helping us round up doctors? What's the story on that?

100%. We've got, I believe, eight distribution partners on board now with a handful in the hopper. Typically, these organizations are like Axial was back in the day—there are a handful of folks with their own respective networks. So we have distributors on board with quotas, if you will, and we're already seeing activity. In fact, we just had an order come through from one recently. So yes, we've got eight. The total number of salespeople across those distribution companies is anywhere from two to five people per company. So call it 20 to 30 people out there that have quotas. Josh Walker, our salesperson, is leading that campaign. And those will only grow.

Who, by the way, is doing a fantastic job. He is an exuberant, just a great asset. Josh is doing a fantastic job for you. I know we got a lot of activity here in Florida. You said there's eight docs so far on board with about 50 cases submitted. Has Evelyn given us any indication of what she thinks we need to have submitted as far as numbers for her to go meet with First Coast and sit down and say it's being utilized and where that takes us timeline-wise to get the T-code, some reimbursement back? Do we have any idea on that numbers-wise?

Yes. I think we hit that mark already. Unfortunately, probably half of those are commercial payers versus Medicare. There's a timing aspect: submissions don't necessarily happen on the day of the procedure. They get flipped over to the back office at the respective pain clinic, and sometimes it takes two weeks or up to a month, depending on backlog, to get those submitted. Once they get submitted, there's another lag of anywhere from 30 to 45 days to receive the EOBs back. So it's a bit of a process. It takes probably around 60 days between procedure and actually getting some information back from Medicare. So 50, call it 25 that have actually been Medicare claims is probably enough. We'll probably wait until the first part of June, as we pointed out, to reengage there. We're already getting some indications that things are progressing. So sometime in early June we'll reengage with the folks at First Coast.

Do we have anybody on board, Eric, that is actually working with the billing people at the various ambassadors that we currently have on board to help them expedite the claims being submitted into Medicare?

Yes. We've got a call center of three people that are there to answer questions and to help with the submissions with the Medicare billing people at the offices.

And I want to mention something else that was brought up about academia. Five years ago, when Eric Gilbert was the Vice President, I took him to Boca Regional Hospital to a group of very experienced anesthesiologists. They loved the device. They said, 'We haven't had a wet tap in 10 years, we don't need it, but this should be in every teaching institution in the country.' You're right. They had young doctors who would use this in a heartbeat. Are we focused on any big medical schools right now trying to get this thing in there?

Yes. Josh will be up next week on the East Coast, and I think we all know where a lot of the big academic universities are on the East Coast. So yes, it's one pillar of our strategy; it includes the teaching hospitals. We've heard from every doctor we've spoken with that this makes total sense to have in teaching hospitals. They're less concerned about Medicare reimbursement when a university wants to purchase equipment for their students. We're working through budget cycles within university systems to be part of those procurements. It's a process, but it's foundational because the students leave and want to continue to use the unit in their next roles.

All right. It sounds like you're making great progress. I have just one more question. What's our inventory like? Do we have adequate inventory of the CompuFlo units and disposables to get us down the road a ways, given supply chain concerns? Are we comfortable with the inventory we have on hand?

Yes. We've got plenty of inventory. We're watching it very closely because it's a chicken-and-egg sort of thing: if we do get the reimbursement back to where we want it, demand could increase quickly. So yes, we're monitoring that and trying to conserve dollars while making sure we have enough. Each unit, if used at 50 cases per month, represents about $75,000 to $125,000 per unit in revenue. We're careful with where we put the units because we want them to be in reasonably high-volume opportunities, but we've got plenty of inventory to get us to much bigger numbers than we have now.

I don't want to take up any more of your time. You guys are doing a hell of a job. I think this company has a future when it was getting ready to go over the cliff. We're here. I appreciate you guys, support you 100%. Keep up the good work.

Appreciate your help, Gary.

There appear to be no further questions in queue. I would now like to turn the floor back over to Eric Hines, Chief Executive Officer, for closing remarks.

Thank you. I just want to again thank the shareholders for being such great shareholders and say that we're trying to do everything that we can. We appreciate your help. Any insight that you can bring along the way is helpful. So if there are opportunities that you think we should be pursuing, my phone is mostly on all the time. Please reach out. We're making progress. We're not quite there yet, but encouraged by the momentum that we see across all aspects of the business. Thank you, and have a great day.

Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.