UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 2024 ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-14053 Milestone Scientific Inc. (Exact name of registrant as specified in its charter) Delaware 13-3545623 State or other jurisdiction of Inco ...

ROSELAND, N.J., May 13, 2024 (GLOBE NEWSWIRE) -- Milestone Scientific Inc. (NYSE:MLSS), a leading developer of computerized drug delivery instruments, that provide painless and precise injections, today announced that it will host a conference call at 8:30 AM Eastern Time on Thursday, May 16th, 2024, to discuss the company’s financial results for the first quarter ended March 31, 2024, as well as the company’s corporate progress and other developments. The conference call will be available via telephone by ...

PRC Alliance Pain Relief Center operates 8 locations across central Florida Dr. Bakshi reports 100% success performing Epidural Steroid Injection (ESI) procedures during evaluation period ROSELAND, N.J., April 03, 2024 (GLOBE NEWSWIRE) -- Milestone Scientific Inc. (NYSE:MLSS), a leading developer of computerized drug delivery instruments that provide painless and precise injections, today announced that it has commenced sales of CompuFlo® Epidural disposables into PRC Alliance Pain Relief Center at Ormond B ...

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Milestone Scientific Inc. develops and commercializes proprietary computer-controlled anesthetic delivery devices using DPS Dynamic Pressure Sensing Technology for global dental and medical markets - Milestone Scientific develops proprietary computer-controlled anesthetic delivery devices using DPS Dynamic Pressure Sensing Technology for dental and medical applications[10](index=10&type=chunk)[140](index=140&type=chunk)[142](index=142&type=chunk) - The company's dental products (CompuDent®, STA Single Tooth Anesthesia System®) are sold in over 41 countries, while the medical CompuFlo® Epidural System has FDA clearance and CE mark approval[11](index=11&type=chunk)[143](index=143&type=chunk) - A chronology-specific CPT Code for the CompuFlo Epidural System, effective January 1, 2023, is expected to accelerate its commercial rollout in the U.S. by expanding reimbursement potential[21](index=21&type=chunk)[144](index=144&type=chunk)[151](index=151&type=chunk) - Milestone Scientific holds approximately **245 U.S. and foreign patents** and **36 registered trademarks** related to its drug delivery technologies[25](index=25&type=chunk)[144](index=144&type=chunk) - The company relies on informal arrangements with third-party manufacturers in the U.S. and China for its products and handpieces, without minimum purchase commitments[27](index=27&type=chunk)[28](index=28&type=chunk) [Item 1A. Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) Milestone Scientific faces significant risks including a history of operating losses, negative cash flows, and dependence on third-party manufacturers - Milestone Scientific has incurred significant operating losses (**$7.1 million in 2023**, **$8.8 million in 2022**) and negative cash flows, indicating a need for additional funding[54](index=54&type=chunk)[56](index=56&type=chunk) - The company's reliance on third-party manufacturers, particularly the sole handpiece manufacturer in China, exposes it to supply chain disruptions and geopolitical risks[74](index=74&type=chunk)[80](index=80&type=chunk) - International sales constituted approximately **45% of total sales in 2023**, exposing the company to risks such as foreign currency fluctuations, political instability, and trade barriers[63](index=63&type=chunk)[64](index=64&type=chunk) - The company's ability to generate revenue from its CompuFlo Epidural System is dependent on physician acceptance and adequate reimbursement from healthcare payers, which remains uncertain[65](index=65&type=chunk)[67](index=67&type=chunk) - The market price of Milestone Scientific's common stock may be volatile due to factors such as failure to meet analyst expectations, sales of substantial amounts of common stock, and competitive developments[103](index=103&type=chunk)[104](index=104&type=chunk) [Item 1B. Unresolved Staff Comments](index=19&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments were reported[122](index=122&type=chunk) [Item 1C. Cybersecurity](index=22&type=section&id=Item%201C.%20Cybersecurity) Milestone Scientific's board oversees cybersecurity risks, with management responsible for administration and no material incidents identified - The board of directors, via the audit committee, oversees cybersecurity risks, receiving quarterly reports from management[123](index=123&type=chunk) - Management, under the CEO, administers the cybersecurity program, supported by external security service providers for monitoring and threat detection[124](index=124&type=chunk)[126](index=126&type=chunk) - The company has not identified any cybersecurity incidents or threats that have materially affected its business, strategy, results of operations, or financial condition[127](index=127&type=chunk) [Item 2. Description of Property](index=22&type=section&id=Item%202.%20Description%20of%20Property) Milestone Scientific's principal executive office is a leased facility in New Jersey, with a third-party distribution center in Pennsylvania - The company's headquarters are located at a leased facility in Roseland, New Jersey, with monthly lease payments of **$9,275**[128](index=128&type=chunk) - A third-party distribution and logistics center in Pennsylvania manages shipping and order fulfillment[128](index=128&type=chunk) - Milestone Scientific does not own or plan to invest in any real property[129](index=129&type=chunk) [Item 3. Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) Milestone Scientific is not currently involved in any material litigation - The company is not involved in any material litigation[130](index=130&type=chunk) [Item 4. Mine Safety Disclosure](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to Milestone Scientific Inc - Mine Safety Disclosure is not applicable to the registrant[131](index=131&type=chunk) PART II [Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20for%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Small%20Business%20Issuer%20Purchases%20of%20Equity%20Securities) Milestone Scientific's common stock is listed on the NYSE American, with approximately 97 stockholders of record, and no cash dividends are expected - Milestone Scientific's common stock (MLSS) has been listed on the NYSE American since June 1, 2015[132](index=132&type=chunk)[140](index=140&type=chunk) Common Stock Price Range | Quarter | 2023 High ($) | 2023 Low ($) | 2022 High ($) | 2022 Low ($) | | :--- | :--- | :--- | :--- | :--- | | First Quarter | 1.00 | 0.46 | 2.20 | 1.13 | | Second Quarter | 1.22 | 0.72 | 1.60 | 0.75 | | Third Quarter | 1.35 | 0.81 | 1.27 | 0.71 | | Fourth Quarter | 1.00 | 0.56 | 0.87 | 0.45 | - As of March 29, 2024, there were approximately **97 stockholders of record** and **3,318 beneficial owners** of common stock[134](index=134&type=chunk) - The company has not paid and does not expect to declare or pay any cash dividends in the foreseeable future[105](index=105&type=chunk)[135](index=135&type=chunk) [Item 6. Reserved](index=23&type=section&id=Item%206.%20Reserved) This item is reserved as Milestone Scientific is a "smaller reporting company" and is not required to provide the information - Milestone Scientific is a "smaller reporting company" and is not required to provide the information for this item[137](index=137&type=chunk) [Item 7. Management's Discussion and Analysis or Plan of Operations](index=24&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20or%20Plan%20of%20Operations) Milestone Scientific reported increased consolidated revenue and gross profit in 2023, leading to a decreased operating loss, while assessing going concern viability - Consolidated revenue increased by approximately **$1.0 million** to **$9.8 million in 2023**, up from **$8.8 million in 2022**[163](index=163&type=chunk) Consolidated Revenue by Segment (2023 vs. 2022) | Segment | 2023 Sales ($) | 2022 Sales ($) | Change ($) | | :--- | :--- | :--- | :--- | | Dental | 9,761,444 | 8,753,156 | 1,008,288 | | Medical | 66,000 | 52,750 | 13,250 | | **Total Sales, Net** | **9,827,444** | **8,805,906** | **1,021,538** | - E-commerce revenue, launched January 3, 2023, contributed approximately **$4.8 million in 2023**, offsetting the termination of the Henry Schein distribution agreement[163](index=163&type=chunk)[165](index=165&type=chunk) Consolidated Gross Profit (2023 vs. 2022) | Segment | 2023 Gross Profit ($) | 2022 Gross Profit ($) | Change ($) | | :--- | :--- | :--- | :--- | | Dental | 7,030,018 | 5,446,175 | 1,583,843 | | Medical | (237,406) | (545,361) | 307,955 | | **Total Gross Profit** | **6,792,612** | **4,900,814** | **1,891,798** | - Consolidated gross profit increased by approximately **$1.9 million (40%) in 2023**, driven by higher margins from E-Commerce sales[166](index=166&type=chunk) Consolidated Operating Expenses (2023 vs. 2022) | Expense Category | 2023 ($) | 2022 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Selling, general and administrative | 13,135,796 | 12,514,323 | 621,473 | | Research and development | 701,378 | 1,150,209 | (448,831) | | Depreciation and amortization | 61,912 | 63,755 | (1,843) | | **Total Operating Expenses** | **13,899,086** | **13,728,287** | **170,799** | - Loss from operations decreased by approximately **$1.7 million**, from **$8.8 million in 2022** to **$7.1 million in 2023**, due to higher dental sales and increased margins[162](index=162&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) Cash Flows Summary (2023 vs. 2022) | Activity | 2023 ($) | 2022 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Operating Activities | (5,326,129) | (6,031,996) | 705,867 | | Investing Activities | (2,972,172) | (8,527) | (2,963,645) | | Financing Activities | 2,560,735 | (8,544) | 2,569,279 | | **Net Decrease in Cash** | **(5,737,566)** | **(6,049,067)** | **311,501** | - The company's current cash and liquidity are projected to be sufficient for the next 12 months, supported by potential positive cash flow from the NJ NOL Program and efforts to increase revenue and reduce expenses[159](index=159&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [Item 7A. Quantitative and Qualitative Disclosure about Market Risk](index=31&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) Milestone Scientific is exempt from providing quantitative and qualitative disclosures about market risk due to its "smaller reporting company" status - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a "smaller reporting company"[179](index=179&type=chunk) [Item 8. Financial Statements](index=31&type=section&id=Item%208.%20Financial%20Statements) The consolidated financial statements for Milestone Scientific Inc. are presented starting on page F-1 of the report - The financial statements are located starting on page F-1 of the annual report[180](index=180&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=31&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Milestone Scientific reported no changes in or disagreements with its accountants on accounting and financial disclosure matters - There were no changes in or disagreements with accountants on accounting and financial disclosure[181](index=181&type=chunk) [Item 9A. Controls and Procedures](index=31&type=section&id=Item%209A.%20Controls%20and%20Procedures) Milestone Scientific's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[182](index=182&type=chunk) - Management also concluded that internal control over financial reporting was effective as of December 31, 2023[183](index=183&type=chunk) - No material changes were made to internal control over financial reporting during the year ended December 31, 2023[184](index=184&type=chunk) [Item 9B. Other Information](index=32&type=section&id=Item%209B.%20Other%20Information) No other information was required to be reported under this item - No other information was reported under this item[185](index=185&type=chunk) [Item 9C. Disclosure regarding Foreign Jurisdiction that Prevent inspections](index=32&type=section&id=Item%209C.%20Disclosure%20regarding%20Foreign%20Jurisdiction%20that%20Prevent%20inspections) Milestone Scientific has no disclosures regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections were reported[186](index=186&type=chunk) PART III [Item 10. Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16 (a) of the Exchange Act](index=33&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20Promoters%20and%20Control%20Persons%20and%20Corporate%20Governance%3B%20Compliance%20with%20Section%2016%20%28a%29%20of%20the%20Exchange%20Act) Milestone Scientific's corporate governance includes a Board with separate Chairman and CEO roles, independent directors, and policies for risk management and ethics - The Board of Directors maintains separate roles for Chairman (Neal Goldman) and CEO (Jan Adriaan Haverhals) to ensure effective governance and oversight[188](index=188&type=chunk)[198](index=198&type=chunk) - The Board oversees risk management, identifying material risks and integrating risk management into corporate strategy[199](index=199&type=chunk) - Key committees include Audit, Compensation, and Nominating and Corporate Governance, with Benedetta Casamento, Neal Goldman, and Michael McGeehan identified as independent directors[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[204](index=204&type=chunk)[209](index=209&type=chunk) - The company has an insider trading compliance policy and a code of ethics, and all Section 16(a) filing requirements were complied with for 2023[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - A clawback policy allows for the recovery of 'excess' compensation granted based on financial reporting measures in the event of an accounting restatement[214](index=214&type=chunk) [Item 11. Executive Compensation](index=38&type=section&id=Item%2011.%20Executive%20Compensation) This section details executive compensation for the CEO and former CFO, including salary, bonuses, and equity awards, and illustrates pay versus performance Summary Compensation Table (2023 vs. 2022) | Name and Principal Position | Year | Salary ($) | Bonuses ($) | Option Awards ($) | Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Jan Adriaan (Arjan) Haverhals (CEO) | 2023 | 350,000 | 281,853 | - | 48,412 | 680,265 | | Jan Adriaan (Arjan) Haverhals (CEO) | 2022 | 350,000 | 246,603 | 216,385 | 28,153 | 841,141 | | Peter Milligan (CFO) | 2023 | 70,000 | 100,000 | - | - | 170,000 | Pay versus Performance Table (2023 vs. 2022) | Year | Summary Compensation Table Total for PEO($) | Compensation Actually Paid to PEO($) | Total Shareholder Return ($) | Net Income ($) | | :--- | :--- | :--- | :--- | :--- | | 2023 | 680,265 | 680,265 | 150.00 | (6,929,104) | | 2022 | 841,141 | 649,824 | 22.86 | (8,706,131) | - CEO Arjan Haverhals' employment agreement includes a base salary of **$350,000** and performance-based bonuses up to **$400,000 annually**, payable in cash and stock[224](index=224&type=chunk)[339](index=339&type=chunk) Outstanding Equity Awards for Named Executive Officers (December 31, 2023) | Name | Number of Securities Underlying Vested Options () | Number of Securities Underlying Nonvested Options () | Number of Shares or Units of Stock that have not vested () | Market Value of Shares or Units of Stock that have not vested ($) | | :--- | :--- | :--- | :--- | :--- | | Jan Adriaan (Arjan) Haverhals | 159,676 | 96,620 | 319,546 | 220,487 | | Leonard Osser | 1,528,400 | 1,207,293 | 2,272,713 | 1,568,172 | | **Grand Total** | **1,688,076** | **1,303,913** | **2,592,260** | **1,788,659** | [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=42&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details beneficial ownership of common stock by principal stockholders, executive officers, and directors, and information on equity compensation plans Beneficial Ownership of Common Stock (March 15, 2024) | Names of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percentage | | :--- | :--- | :--- | | Jan Adriaan (Arjan) Haverhals | 319,546 | 0.42% | | Neal Goldman | 2,112,834 | 2.77% | | Benedetta Casamento | 269,659 | 0.35% | | Michael McGeehan | 505,407 | 0.66% | | Leonard Osser | 5,166,428 | 6.78% | | Dr. Didier Demesmin | - | -% | | Gian Domenico Trombetta | 10,484,597 | 13.76% | | All directors & executive officers as group (7 persons) | 18,858,472 | 24.75% | Equity Compensation Plan Information (December 31, 2023) | Plan | Number of Securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options ($) | Number of securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Grants under our 2020 Equity Incentive Plan | 3,128,652 | 2.30 | 9,174,520 | | **Total** | **3,128,652** | **-** | **9,174,520** | - The 2020 Equity Incentive Plan, amended in 2023, allows for awards of up to **11,500,000 shares of common stock** and expires in December 2030[236](index=236&type=chunk)[327](index=327&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=44&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Milestone Scientific engages in various related party transactions, including supply agreements, sales to a formerly owned entity, and consulting arrangements - Milestone Scientific has a supply agreement with United Systems, a related party, for handpieces; purchases were approximately **$2.3 million in 2023** and **$3.4 million in 2022**[237](index=237&type=chunk)[355](index=355&type=chunk) - Sales to Milestone China, a formerly owned entity, amounted to approximately **$270,000 in 2023** and **$630,000 in 2022**[238](index=238&type=chunk)[356](index=356&type=chunk) - Consulting fees of **$100,000** were paid to K. Tucker Andersen, a significant stockholder, in both 2023 and 2022[239](index=239&type=chunk)[356](index=356&type=chunk) - Royalty fees of approximately **$485,000** and consulting fees of **$156,000** were expensed to the Director of Clinical Affairs in 2023[240](index=240&type=chunk)[357](index=357&type=chunk) - Leonard Osser has a Royalty Sharing Agreement and Succession Agreement, with expenses of **$200,000 each** for his employment and consulting agreements in both 2023 and 2022[241](index=241&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk) [Item 14. Principal Accounting Fees and Services](index=45&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Milestone Scientific incurred audit and tax fees from Marcum LLP in 2023 and 2022, with all engagements pre-approved by the Audit Committee Principal Accounting Fees (2023 vs. 2022) | Fee Type | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Audit Fees | 295,200 | 267,000 | | Tax Fees | 42,000 | 40,000 | | Audit Related Fees | - | - | | All Other Fees | - | - | - All audit and non-audit services provided by the independent accountants were pre-approved by the Audit Committee[249](index=249&type=chunk)[250](index=250&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=46&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the Annual Report on Form 10-K - The report includes financial statements, certificates of incorporation, by-laws, equity incentive plans, and various agreements as exhibits[251](index=251&type=chunk)[253](index=253&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) The Annual Report on Form 10-K was signed on March 29, 2024, by the Chief Executive Officer, Chairman, and all Directors - The report was signed by the Chief Executive Officer, Chairman, and all Directors on March 29, 2024[254](index=254&type=chunk)[255](index=255&type=chunk) [REPORT INDEX TO CONSOLIDATED FINANCIAL STATEMENTS](index=49&type=section&id=REPORT%20INDEX%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This index provides a guide to the consolidated financial statements and accompanying notes for the years ended December 31, 2023 and 2022 - The index lists the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Stockholders' Equity, Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements[257](index=257&type=chunk) [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](index=50&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) Marcum LLP issued an unqualified opinion on Milestone Scientific's consolidated financial statements for 2023 and 2022, with no critical audit matters identified - Marcum LLP provided an unqualified opinion, stating the financial statements present fairly in all material respects[259](index=259&type=chunk) - No critical audit matters were identified during the audit[263](index=263&type=chunk) - Marcum LLP has served as the company's auditor since 2016[264](index=264&type=chunk) [CONSOLIDATED BALANCE SHEETS](index=51&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The consolidated balance sheets present Milestone Scientific's financial position as of December 31, 2023 and 2022, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheet Highlights (December 31, 2023 vs. 2022) | Item | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | 2,977,713 | 8,715,279 | | Marketable securities | 2,976,573 | - | | Total current assets | 10,794,469 | 12,970,504 | | Total assets | 11,371,512 | 13,702,086 | | Total current liabilities | 3,076,713 | 3,299,675 | | Total liabilities | 3,359,000 | 3,695,652 | | Total stockholders' equity | 8,012,512 | 10,006,434 | - Cash and cash equivalents decreased significantly from **$8.7 million in 2022** to **$3.0 million in 2023**, while marketable securities increased from **$0 to $3.0 million**[266](index=266&type=chunk) - Total liabilities decreased from **$3.7 million in 2022** to **$3.4 million in 2023**[266](index=266&type=chunk) [CONSOLIDATED STATEMENTS OF OPERATIONS](index=52&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The consolidated statements of operations show Milestone Scientific's financial performance for 2023 and 2022, with increased net product sales and a decreased net loss Consolidated Statements of Operations Highlights (2023 vs. 2022) | Item | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Product sales, net | 9,827,444 | 8,805,906 | | Cost of products sold | 3,034,832 | 3,905,092 | | Gross profit | 6,792,612 | 4,900,814 | | Selling, general and administrative expenses | 13,135,796 | 12,514,323 | | Research and development expenses | 701,378 | 1,150,209 | | Loss from operations | (7,106,474) | (8,827,473) | | Net loss attributable to Milestone Scientific Inc. | (6,929,104) | (8,706,131) | | Net loss per share (Basic and Diluted) | (0.10) | (0.12) | - Net product sales increased by approximately **$1.0 million**, and gross profit increased by **$1.9 million in 2023** compared to 2022[268](index=268&type=chunk) - Net loss attributable to Milestone Scientific Inc. decreased from **$8.7 million in 2022** to **$6.9 million in 2023**[268](index=268&type=chunk) [CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY](index=53&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS%27%20EQUITY) The consolidated statements of changes in stockholders' equity reflect movements in common stock, additional paid-in capital, and accumulated deficit for 2023 and 2022 Changes in Stockholders' Equity Highlights (2023 vs. 2022) | Item | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Balance January 1 | 10,006,434 | 16,215,382 | | Stock based compensation | 1,467,425 | 1,499,302 | | Common stock issued in public offering (net) | 2,570,101 | - | | Repurchase of noncontrolling interest | (214,000) | - | | Net loss | (6,980,947) | (8,772,866) | | Balance December 31 | 8,012,512 | 10,006,434 | - Total stockholders' equity decreased from **$10.0 million in 2022** to **$8.0 million in 2023**[270](index=270&type=chunk) - A public offering of common stock generated net proceeds of approximately **$2.6 million in 2023**[270](index=270&type=chunk) - The company repurchased the remaining minority stake of Milestone Medical, Inc. for **$214,000 in December 2023**[270](index=270&type=chunk)[321](index=321&type=chunk) [CONSOLIDATED STATEMENTS OF CASH FLOWS](index=54&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The consolidated statements of cash flows detail the sources and uses of cash for 2023 and 2022, showing changes in operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (2023 vs. 2022) | Activity | 2023 ($) | 2022 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Cash flows used in operating activities | (5,326,129) | (6,031,996) | 705,867 | | Cash flows used in investing activities | (2,972,172) | (8,527) | (2,963,645) | | Cash flows provided by (used in) financing activities | 2,560,735 | (8,544) | 2,569,279 | | **Net decrease in cash and cash equivalents** | **(5,737,566)** | **(6,049,067)** | **311,501** | - Cash flows used in operating activities decreased by **$0.7 million in 2023**, primarily due to an increase in cash used in working capital activities offset by employees paid in common stock[172](index=172&type=chunk)[272](index=272&type=chunk) - Cash flows used in investing activities increased by **$3.0 million in 2023**, driven by the purchase of **$7.9 million in marketable securities**, partially offset by **$5.0 million in sales**[173](index=173&type=chunk)[272](index=272&type=chunk) - Cash flows provided by financing activities increased by **$2.6 million in 2023**, mainly from **$3.0 million in gross proceeds** from a public offering of common stock[174](index=174&type=chunk)[272](index=272&type=chunk) [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=55&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes provide detailed information on Milestone Scientific's organization, business, liquidity, and significant accounting policies, including specific notes on inventories, fixed assets, and related party transactions - Milestone Scientific's core business involves proprietary computer-controlled anesthetic delivery devices for dental and medical markets, including the CompuFlo® Epidural System[275](index=275&type=chunk) - The company has incurred total losses of **$123.3 million since inception** and relies on cash flow forecasts and potential capital raises to address going concern uncertainties[278](index=278&type=chunk)[279](index=279&type=chunk) - Revenue from product sales is recognized upon transfer of control, generally at shipment, with an E-Commerce platform launched in January 2023 for direct sales[285](index=285&type=chunk)[286](index=286&type=chunk) - Inventories are stated at the lower of cost or net realizable value, with an allowance for slow-moving medical finished goods of approximately **$258,000 in 2023**[295](index=295&type=chunk)[316](index=316&type=chunk) - The company holds approximately **$3.0 million in U.S. treasury securities** as marketable securities, classified as Level 1 in the fair value hierarchy[293](index=293&type=chunk)[307](index=307&type=chunk) - Federal net operating loss carry-forwards totaled approximately **$74.5 million** as of December 31, 2023, with a full valuation allowance due to uncertainty of future realization[343](index=343&type=chunk)[345](index=345&type=chunk) - Total operating lease liabilities were **$385,280** as of December 31, 2023, with a weighted average remaining lease term of **3.25 years**[364](index=364&type=chunk)[365](index=365&type=chunk) - Subsequent events include the underwriter's exercise of an over-allotment option for **372,110 common shares** and the exercise of warrants for **103,500 common shares** in January 2024[368](index=368&type=chunk) [NOTE A — ORGANIZATION AND BUSINESS](index=55&type=section&id=NOTE%20A%20%E2%80%94%20ORGANIZATION%20AND%20BUSINESS) This note describes Milestone Scientific's core business of developing computer-controlled anesthetic delivery devices for dental and medical applications - Milestone Scientific, incorporated in 1989, develops proprietary computer-controlled anesthetic delivery devices for dental (CompuDent®, STA Single Tooth Anesthesia System®) and medical (CompuMed®, CompuFlo® Epidural System) applications[275](index=275&type=chunk) - The company received **510(k) marketing clearance** from the FDA for the CompuFlo® Epidural Computer Controlled Anesthesia System in June 2017[275](index=275&type=chunk) - A new CompuPulse System, combining CompuWave technology with a manual syringe, received a Notice of Allowance from the USPTO in 2020, offering a low-cost alternative for needle and catheter placement verification[277](index=277&type=chunk) [NOTE B- LIQUIDITY AND UNCERTAINTIES](index=55&type=section&id=NOTE%20B-%20LIQUIDITY%20AND%20UNCERTAINTIES) Milestone Scientific has a history of significant operating losses and relies on cash and marketable securities, along with future capital raises, to maintain liquidity - Milestone Scientific has incurred total losses of **$123.3 million since inception**, with operating losses of **$7.1 million in 2023** and **$8.8 million in 2022**[278](index=278&type=chunk) - As of December 31, 2023, the company had **$6.0 million in cash and marketable securities** and **$7.7 million in working capital**[278](index=278&type=chunk) - Management's cash flow forecasts indicate sufficient liquidity for the next 12 months, supported by the New Jersey Technology Business Tax Certificate Transfer Program (NJ NOL Program) and efforts to increase revenue and reduce expenses[279](index=279&type=chunk) [NOTE C — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=56&type=section&id=NOTE%20C%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines Milestone Scientific's accounting principles, including consolidation, revenue recognition, cash management, marketable securities, and R&D expenses - The consolidated financial statements are prepared in accordance with GAAP and include wholly-owned and majority-owned subsidiaries[281](index=281&type=chunk) - Revenue from product sales is recognized when control is transferred to the customer, generally upon shipment, with no post-sale obligations other than normal commercial warranty[285](index=285&type=chunk) - The E-Commerce platform, launched January 3, 2023, sells STA Single Tooth Anesthesia Systems® and handpieces directly to dental offices in the U.S., recognizing revenue at shipment[286](index=286&type=chunk) - Marketable securities, primarily U.S. treasury securities, are measured at fair value (Level 1) with unrealized gains and losses recorded in interest income[292](index=292&type=chunk)[293](index=293&type=chunk)[307](index=307&type=chunk) - Research and development costs, mainly for new product development, are expensed as incurred[300](index=300&type=chunk) - The company adopted ASU 2016-13 (Credit Losses) and ASU 2019-10 (Effective Dates) as of January 1, 2023, with no material impact on financial statements[314](index=314&type=chunk)[315](index=315&type=chunk) [NOTE D — INVENTORIES](index=61&type=section&id=NOTE%20D%20%E2%80%94%20INVENTORIES) This note details the composition of Milestone Scientific's inventories, including finished goods and component parts, and the allowance for slow-moving items Inventories (December 31, 2023 vs. 2022) | Item | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Dental finished goods | 2,404,970 | 1,315,263 | | Medical finished goods | 14,730 | 334,124 | | Component parts and other materials | 218,486 | 142,948 | | **Total inventories** | **2,638,186** | **1,792,335** | - An allowance for slow-moving medical finished goods was recorded at approximately **$258,000 in 2023** and **$582,000 in 2022**[316](index=316&type=chunk) [NOTE E — ADVANCES ON CONTRACTS](index=61&type=section&id=NOTE%20E%20%E2%80%94%20ADVANCES%20ON%20CONTRACTS) This note describes advances on contracts representing funding for future inventory purchases for dental STA and epidural products - Advances on contracts represent funding for future dental STA and epidural inventory purchases, totaling approximately **$1.4 million in 2023** and **$1.3 million in 2022**[317](index=317&type=chunk) [NOTE F— FURNITURE, FIXTURES AND EQUIPMENT](index=61&type=section&id=NOTE%20F%E2%80%94%20FURNITURE%2C%20FIXTURES%20AND%20EQUIPMENT) This note provides details on Milestone Scientific's furniture, fixtures, and equipment, including their cost, accumulated depreciation, and net value Furniture, Fixtures and Equipment, Net (December 31, 2023 vs. 2022) | Item | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Total Cost | 928,634 | 923,757 | | Less accumulated depreciation | (918,610) | (905,611) | | **Total, Net** | **10,024** | **18,146** | - Depreciation expense was **$12,999 in 2023** and **$14,180 in 2022**[318](index=318&type=chunk) [NOTE G —INTANGIBLES, NET](index=61&type=section&id=NOTE%20G%20%E2%80%94INTANGIBLES%2C%20NET) This note outlines Milestone Scientific's intangible assets, primarily patents, including their cost, accumulated amortization, and expected future amortization expense Intangibles, Net (December 31, 2023 vs. 2022) | Item | Cost ($) | Accumulated Amortization ($) | Net ($) | | :--- | :--- | :--- | :--- | | Patents-foundation intellectual property (2023) | 1,377,863 | (1,199,227) | 178,636 | | Patents-foundation intellectual property (2022) | 1,377,863 | (1,149,907) | 227,956 | - Amortization expense for patents was approximately **$49,000 in 2023** and **$50,000 in 2022**[319](index=319&type=chunk) - Expected annual amortization expense for existing intangibles is approximately **$34,000 for 2024**, **$28,000 for 2025**, **$28,000 for 2026**, and **$86,000 for 2027**[319](index=319&type=chunk) [NOTE H — STOCKHOLDERS' EQUITY](index=62&type=section&id=NOTE%20H%20%E2%80%94%20STOCKHOLDERS%27%20EQUITY) This note details changes in stockholders' equity, including a public offering, repurchase of noncontrolling interest, and information on outstanding warrants and shares to be issued - A public offering on December 10, 2023, resulted in the sale of **4,765,000 common shares** at **$0.63 per share**, generating approximately **$2.6 million in net proceeds**[320](index=320&type=chunk) - The company repurchased the remaining minority stake of Milestone Medical, Inc. for **$214,000 in December 2023**, recording a charge to additional paid-in capital of approximately **$485,000**[321](index=321&type=chunk) Warrants Outstanding (December 31, 2023) | Item | Value | | :--- | :--- | | Warrant shares outstanding | 314,572 | | Weighted Average exercise price ($) | 0.50 | | Weighted Average remaining life (years) | 0.10 | | Intrinsic value ($) | 59,737 | - As of December 31, 2023, there were **3,098,917 shares to be issued**, including **2,571,292 deferred under employment agreements** and **527,625 for non-employees**[323](index=323&type=chunk)[324](index=324&type=chunk)[326](index=326&type=chunk) [NOTE I — STOCK OPTION PLANS](index=63&type=section&id=NOTE%20I%20%E2%80%94%20STOCK%20OPTION%20PLANS) This note describes Milestone Scientific's equity incentive plan, stock-based compensation expense, and activity related to employee and non-employee stock options - The Amended and Restated 2020 Equity Incentive Plan was amended on June 28, 2023, increasing the maximum common stock shares to **11,500,000** and expiring in June 2031[327](index=327&type=chunk) - Stock-based compensation expense recognized was approximately **$0.9 million in 2023** and **$1.0 million in 2022**[328](index=328&type=chunk) - As of December 31, 2023, there was **$1.5 million of unrecognized compensation cost** related to non-vested options, expected to be recognized over a weighted average period of **2.3 years**[329](index=329&type=chunk) Employee Stock Option Activity (December 31, 2023) | Item | Number of Options | Weighted Averaged Exercise Price ($) | | :--- | :--- | :--- | | Options outstanding January 1, 2023 | 3,059,989 | 2.36 | | Forfeited or expired during 2023 | (23,000) | - | | Options outstanding December 31, 2023 | 3,036,989 | 2.29 | | Exercisable, December 31, 2023 | 1,732,084 | 2.21 | Non-Employee Stock Option Activity (December 31, 2023) | Item | Number of Options | Weighted Averaged Exercise Price ($) | | :--- | :--- | :--- | | Options outstanding January 1, 2023 | 91,663 | 1.75 | | Granted during 2023 | 8,333 | 0.89 | | Exercised during 2023 | (8,333) | 0.75 | | Options outstanding December 31, 2023 | 91,663 | 1.76 | | Exercisable, December 31, 2023 | 83,332 | 1.86 | [NOTE J–EMPLOYMENT CONTRACT AND CONSULTING AGREEMENTS](index=64&type=section&id=NOTE%20J%E2%80%93EMPLOYMENT%20CONTRACT%20AND%20CONSULTING%20AGREEMENTS) This note details employment and consulting agreements with key individuals, including compensation, royalty fees, and severance provisions - K. Tucker Andersen, a significant stockholder, received **$100,000** for financial and business strategic services in both 2023 and 2022[334](index=334&type=chunk) - The Director of Clinical Affairs received approximately **$485,000 in royalty fees** and **$156,000 in consulting fees in 2023**[335](index=335&type=chunk) - Leonard Osser's Royalty Sharing Agreement and Succession Agreement resulted in **$200,000 expenses each** for his employment and consulting agreements in 2023 and 2022[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk) - Arjan Haverhals' employment agreement, effective January 1, 2022, includes a base salary of **$350,000** and performance-based bonuses up to **$400,000**, with severance provisions[339](index=339&type=chunk) [NOTE K — INCOME TAXES](index=65&type=section&id=NOTE%20K%20%E2%80%94%20INCOME%20TAXES) This note explains Milestone Scientific's income tax accounting, including deferred tax assets, valuation allowances, and net operating loss carry-forwards - Milestone Scientific accounts for income taxes using the asset and liability method, establishing valuation allowances for deferred tax assets when realization is uncertain[340](index=340&type=chunk) - A full valuation allowance has been provided for all deferred tax assets due to the company's history of operating losses and uncertainty regarding future realization[342](index=342&type=chunk)[345](index=345&type=chunk) - As of December 31, 2023, federal net operating loss carry-forwards were approximately **$74.5 million**, with **$36.4 million generated after 2018** available indefinitely[343](index=343&type=chunk) - State net operating losses were approximately **$63.3 million** as of December 31, 2023, available through December 2041[344](index=344&type=chunk) [NOTE L — SEGMENT AND GEOGRAPHIC DATA](index=67&type=section&id=NOTE%20L%20%E2%80%94%20SEGMENT%20AND%20GEOGRAPHIC%20DATA) This note provides financial data segmented by the company's Dental and Medical operations, as well as geographic sales distribution - The company operates in two reportable segments: Dental and Medical, with Corporate Services covering executive management, investor relations, and compliance costs[348](index=348&type=chunk) Net Sales by Segment (2023 vs. 2022) | Segment | 2023 Net Sales ($) | 2022 Net Sales ($) | | :--- | :--- | :--- | | Dental | 9,761,444 | 8,753,156 | | Medical | 66,000 | 52,750 | | **Total net sales** | **9,827,444** | **8,805,906** | Operating Income (Loss) by Segment (2023 vs. 2022) | Segment | 2023 Operating Income (Loss) ($) | 2022 Operating Income (Loss) ($) | | :--- | :--- | :--- | | Dental | 2,128,199 | 1,121,815 | | Medical | (3,708,170) | (4,788,105) | | Corporate | (5,526,503) | (5,161,183) | | **Total operating loss** | **(7,106,474)** | **(8,827,473)** | Total Product Sales by Geographic Area and Product Category (2023) | Geographic Area | Dental Instruments ($) | Dental Handpieces ($) | Dental Accessories ($) | Medical Instruments ($) | Medical Handpieces ($) | Total Product Sales ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Domestic: US | 1,002,697 | 4,270,898 | 75,285 | 1,000 | 12,000 | 5,361,880 | | International: Rest of World | 1,251,354 | 2,845,734 | 45,476 | 25,000 | 28,000 | 4,195,564 | | International: China | 270,000 | - | - | - | - | 270,000 | | **Total Product Sales** | **2,524,051** | **7,116,632** | **120,761** | **26,000** | **40,000** | **9,827,444** | [NOTE M-- CONCENTRATION](index=68&type=section&id=NOTE%20M--%20CONCENTRATION) This note discusses Milestone Scientific's reliance on third-party manufacturers, the contribution of its E-Commerce platform, and concentrations in accounts receivable and payable - Milestone Scientific relies on informal arrangements with third-party U.S. manufacturers for its STA, CompuDent, and CompuMed devices, without long-term contracts or minimum purchase commitments[351](index=351&type=chunk) - The E-Commerce platform accounted for **48% of net product sales** for the year ended December 31, 2023[352](index=352&type=chunk) - As of December 31, 2023, three distributors accounted for **39%**, **38%**, and **15% of accounts receivable**, respectively[353](index=353&type=chunk) - Three vendors accounted for **37%**, **17%**, and **12% of accounts payable** and related party accounts payable as of December 31, 2023[354](index=354&type=chunk) [NOTE N -- RELATED PARTY TRANSACTIONS](index=69&type=section&id=NOTE%20N%20--%20RELATED%20PARTY%20TRANSACTIONS) This note details transactions with related parties, including purchases from United Systems, sales to Milestone China, and fees paid to significant stockholders and executives - Purchases from United Systems, a related party and principal handpiece supplier, were approximately **$2.3 million in 2023** and **$3.4 million in 2022**[355](index=355&type=chunk) - Sales to Milestone China, a formerly owned entity, were **$270,000 in 2023** and **$630,000 in 2022**[356](index=356&type=chunk) - Royalty fees of **$485,000** and consulting fees of **$156,000** were expensed to the Director of Clinical Affairs in 2023[357](index=357&type=chunk) - Leonard Osser's employment and consulting agreements resulted in **$200,000 expenses each** for 2023 and 2022, related to his role as Vice Chairman and consulting services[360](index=360&type=chunk)[361](index=361&type=chunk) [NOTE O — COMMITMENTS](index=70&type=section&id=NOTE%20O%20%E2%80%94%20COMMITMENTS) This note outlines Milestone Scientific's contractual commitments, including purchase orders for instruments and lease obligations for its Roseland facility - The company has a purchase order commitment of approximately **$2.3 million** for STA CompuDent® instruments as of December 31, 2023, with **$1.3 million already paid as advances**[362](index=362&type=chunk) - The Roseland Facility lease, commenced January 8, 2021, has monthly payments ranging from **$9,275 to $10,898** over a seven-year term[363](index=363&type=chunk) Maturity of Lease Liabilities (December 31, 2023) | Year | Operating Lease ($) | Finance Lease ($) | | :--- | :--- | :--- | | 2024 | 133,560 | 10,740 | | 2025 | 136,343 | 433 | | 2026 | 139,125 | - | | 2027 | 35,477 | - | | **Present Value of lease liabilities** | **385,280** | **10,698** | [NOTE P — BENEFIT PLAN](index=72&type=section&id=NOTE%20P%20%E2%80%94%20BENEFIT%20PLAN) This note describes Milestone Scientific's Defined Contribution Plan, allowing eligible employees to contribute to their retirement savings - Milestone Scientific offers a Defined Contribution Plan allowing eligible employees to contribute part of their salary, with the company covering administrative costs[367](index=367&type=chunk) [NOTE Q — SUBSEQUENT EVENTS](index=72&type=section&id=NOTE%20Q%20%E2%80%94%20SUBSEQUENT%20EVENTS) This note reports on significant events occurring after the balance sheet date, including an underwriter's over-allotment option exercise and warrant exercises - On January 12, 2024, the underwriter exercised its over-allotment option for **372,110 common shares**, generating **$216,847 in net proceeds**[368](index=368&type=chunk) - Since December 31, 2023, the company issued **103,500 common shares** from warrant exercises at **$0.50**, yielding **$51,647**[368](index=368&type=chunk)

ROSELAND, N.J., March 14, 2024 (GLOBE NEWSWIRE) -- Milestone Scientific Inc. (NYSE:MLSS), a leading developer of computerized drug delivery instruments that provide painless and precise injections, today announced that it has commenced sales of CompuFlo® Epidural disposables to Omaha Pain Physicians, a comprehensive medical pain management center in Omaha, NE. Omaha Pain Physicians is focused on treating patients with acute and chronic pain. Adoption of the technology by this clinic follows a successful eva ...

ROSELAND, N.J., Feb. 28, 2024 (GLOBE NEWSWIRE) -- Milestone Scientific Inc. (NYSE:MLSS), a leading developer of computerized drug delivery instruments that provide painless and precise injections, today announces it has commenced direct sales of its STA Single Tooth Anesthesia System® (STA) with Meridian Endo & Perio, a large endodontics, periodontics and implant dentistry practice with three offices in Wisconsin. Dr. Lisa Teel, periodontist and implant surgeon with Meridian Endo and Perio, stated, "Our pra ...

ROSELAND, N.J., Jan. 16, 2024 (GLOBE NEWSWIRE) -- Milestone Scientific Inc. (NYSE:MLSS), a leading developer of computerized drug delivery instruments that provide painless and precise injections, today provided the following letter to shareholders from the Company's CEO, Arjan Haverhals, including updates regarding commercialization of the CompuFlo® technology and initial reimbursements of CompuFlo by commercial payors and Medicare: To our valued shareholders, While we recognize commercializing a new medic ...

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q%20Filing%20Information) [Registrant Details](index=1&type=section&id=Registrant%20Details) Milestone Scientific Inc. filed its Form 10-Q as a non-accelerated, smaller reporting company, with 71,048,241 common shares outstanding - Milestone Scientific Inc. is a non-accelerated filer and a smaller reporting company[1](index=1&type=chunk) - As of November 14, 2023, the registrant had **71,048,241 shares of Common Stock**, $0.001 par value outstanding[2](index=2&type=chunk) [Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) Forward-looking statements are subject to risks including continued operating losses, funding needs, and reliance on third-party manufacturers - Forward-looking statements are subject to numerous risks and uncertainties, including continued operating losses, the need for additional funding, and reliance on third-party manufacturers[6](index=6&type=chunk) - Milestone Scientific disclaims any intent or obligation to update such forward-looking statements[6](index=6&type=chunk) [Trademarks](index=3&type=section&id=Trademarks) Milestone Scientific Inc. owns registered U.S. trademarks for its products, including CompuDent®, CompuFlo®, and The Wand® - Milestone Scientific owns registered U.S. trademarks including CompuDent®, CompuFlo®, DPS Dynamic Pressure Sensing technology®, SafetyWand®, STA Single Tooth Anesthesia Device®, and The Wand®[7](index=7&type=chunk) [PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Milestone Scientific's unaudited condensed consolidated financial statements, including balance sheets, operations, and cash flows, are presented [Condensed Consolidated Balance Sheets](index=4&type=section&id=Balance%20Sheets%20as%20of%20September%2030%2C%202023%20(Unaudited)%20and%20December%2031%2C%202022) The balance sheet shows a decrease in total assets and stockholders' equity, primarily due to reduced cash and cash equivalents Balance Sheet Summary | Metric | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $2,170,593 | $8,715,279 | | Marketable securities | $2,450,470 | - | | Total current assets | $9,972,611 | $12,970,504 | | Total assets | $10,583,558 | $13,702,086 | | Total current liabilities | $3,278,840 | $3,299,675 | | Total liabilities | $3,590,533 | $3,695,652 | | Total stockholders' equity | $6,993,025 | $10,006,434 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Statements%20of%20Operations%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202023%20and%202022%20(Unaudited)) Net product sales increased, gross profit rose, and net loss improved due to reduced operating expenses Statements of Operations Summary | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Product sales, net | $2,059,284 | $2,215,699 | $7,566,848 | $6,564,969 | | Gross profit | $1,503,434 | $1,452,735 | $5,282,118 | $3,815,809 | | Total operating expenses | $3,010,139 | $3,466,230 | $10,409,051 | $10,628,665 | | Loss from operations | $(1,506,705) | $(2,013,495) | $(5,126,933) | $(6,812,856) | | Net loss attributable to Milestone Scientific Inc. | $(1,466,294) | $(1,971,803) | $(4,990,277) | $(6,732,007) | | Net loss per share (Basic and Diluted) | $(0.02) | $(0.03) | $(0.07) | $(0.10) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20September%2030%2C%202023%20and%202022%20(Unaudited)) Stockholders' equity decreased due to net loss, while additional paid-in capital increased from common stock issuance for compensation Stockholders' Equity Summary | Metric | Balance Jan 1, 2023 | Balance Sep 30, 2023 | | :--------------------------------- | :------------------ | :------------------- | | Common Stock Amount | $69,306 | $70,894 | | Additional Paid in Capital | $127,478,325 | $129,487,592 | | Accumulated Deficit | $(116,410,405) | $(121,400,682) | | Total Stockholder Equity | $10,006,434 | $6,993,025 | - Stock-based compensation for the nine months ended September 30, 2023, totaled **$1,113,427**[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030%2C%202023%20and%202022%20(Unaudited)) Net cash used in operating activities decreased, but investing activities led to a significant outflow, resulting in a net decrease in cash Cash Flows Summary | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(5,024,264) | $(6,786,037) | | Net cash used in operating activities | $(4,080,330) | $(4,942,360) | | Net cash used in investing activities | $(2,457,870) | $(3,827) | | Net cash used in financing activities | $(6,486) | $(6,486) | | Net decrease in cash and cash equivalents | $(6,544,686) | $(4,952,673) | | Cash and cash equivalents at end of period | $2,170,593 | $9,811,673 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the financial statements, covering organization, liquidity, accounting policies, and segment data [NOTE 1 — Organization and Business](index=10&type=section&id=NOTE%201%20%E2%80%94%20ORGANIZATION%20AND%20BUSINESS) Milestone Scientific develops computer-controlled anesthetic delivery devices for dental and medical applications using DPS Dynamic Pressure Sensing Technology® - Milestone Scientific develops computer-controlled anesthetic delivery devices using DPS Dynamic Pressure Sensing Technology® for dental and medical applications[21](index=21&type=chunk) - Dental devices (CompuDent®, STA Single Tooth Anesthesia System®) are sold in the U.S., Canada, and over 41 other countries[22](index=22&type=chunk) - The CompuFlo® Epidural Computer Controlled Anesthesia System has FDA 510(k) marketing clearance for lumbar, thoracic, and cervical thoracic junction of the spinal region, and CE mark approval for European countries[22](index=22&type=chunk) [NOTE 2 — Liquidity and Uncertainties](index=10&type=section&id=NOTE%202%20%E2%80%94%20LIQUIDITY%20AND%20UNCERTAINTIES) Despite cumulative losses, management believes the company has sufficient cash for the next 12 months due to cost-cutting and NOL program participation - Total losses since inception are **$121 million**, with operating losses of **$5.1 million** for the nine months ended September 30, 2023[23](index=23&type=chunk) - Management believes there is no substantial doubt about the company's ability to continue as a going concern for the next year due to cost-cutting

Milestone Scientific Inc. (NYSE:MLSS) Q2 2023 Earnings Conference Call August 15, 2023 8:30 AM ET Company Participants David Waldman - Investor Relations Arjan Haverhals - Chief Executive Officer Peter Milligan - Chief Financial Officer Conference Call Participants Anthony Vendetti - Maxim Group Tucker Andersen - Above All Advisors Operator Greetings, and welcome to the Milestone Scientific Second Quarter 2023 Financial Results and Business Update Conference Call. At this time, all participants are in a lis ...

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section provides basic identification and filing status for Milestone Scientific Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 [Registrant Details](index=1&type=section&id=Registrant%20Details) This section details Milestone Scientific Inc.'s identification, filing status, and classification as a smaller reporting company for its Q2 2023 Form 10-Q - Milestone Scientific Inc. is filing its Quarterly Report on Form 10-Q for the quarter ended June 30, 2023[1](index=1&type=chunk) - The company is incorporated in Delaware with Commission file number **001-14053**[1](index=1&type=chunk) - Milestone Scientific Inc. is classified as a **'Smaller reporting company'** and is not a 'well-known seasoned issuer' or an 'emerging growth company'[1](index=1&type=chunk) - As of August 14, 2023, there were **71,365,659 shares** of Common Stock, $0.001 par value, outstanding[1](index=1&type=chunk) [Table of Contents](index=2&type=section&id=TABLE%20OF%20CONTENTS) This section outlines the report's structure, detailing financial information in Part I and other disclosures in Part II [PART I—FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) Part I of the report covers the company's financial information, including condensed consolidated financial statements, management's discussion and analysis of financial condition and results of operations, quantitative and qualitative disclosures about market risk, and controls and procedures [PART II—OTHER INFORMATION](index=2&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) Part II outlines other relevant information such as legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, other information, and exhibits [Forward-Looking Statements and Trademarks](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides cautionary statements regarding forward-looking information and lists the company's registered trademarks [Forward-Looking Statements](index=3&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides cautionary statements regarding forward-looking information, emphasizing that actual results may differ materially due to various risks and uncertainties - Forward-looking statements are subject to numerous risks and uncertainties, and actual results may differ materially[5](index=5&type=chunk) - Key risks include continued operating losses, potential inability to raise additional funding, early-stage acceptance of medical products, reliance on two third-party manufacturers, and risks associated with international sales (including China)[5](index=5&type=chunk) - Milestone Scientific disclaims any intent or obligation to update forward-looking statements[5](index=5&type=chunk) [Trademarks](index=3&type=section&id=Trademarks) Milestone Scientific Inc. owns several registered U.S. trademarks related to its dental and medical technologies - Milestone Scientific owns registered U.S. trademarks including CompuDent®, CompuMed®, CompuFlo®, DPS Dynamic Pressure Sensing technology®, Milestone Scientific ®, CathCheck®, the Milestone logo ®, SafetyWand®, STA Single Tooth Anesthesia Device®, and The Wand ®[6](index=6&type=chunk) [PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) Part I presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Milestone Scientific Inc. and its subsidiaries, including balance sheets, statements of operations, statements of changes in stockholders' equity, statements of cash flows, and comprehensive notes detailing accounting policies, liquidity, segment data, and commitments [Condensed Consolidated Balance Sheets](index=4&type=section&id=Balance%20Sheets) The balance sheets provide a snapshot of the company's financial position as of June 30, 2023, and December 31, 2022, showing a decrease in total assets and stockholders' equity Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2023 | December 31, 2022 | Change (Absolute) | Change (%) | | :-------------------------------- | :-------------- | :---------------- | :---------------- | :--------- | | Cash and cash equivalents | $3,701,453 | $8,715,279 | $(5,013,826) | -57.53% | | Marketable securities | $1,981,180 | $- | $1,981,180 | N/A | | Total current assets | $10,500,076 | $12,970,504 | $(2,470,428) | -19.05% | | Total assets | $11,151,452 | $13,702,086 | $(2,550,634) | -18.61% | | Total current liabilities | $3,109,356 | $3,299,675 | $(190,319) | -5.77% | | Total liabilities | $3,449,789 | $3,695,652 | $(245,863) | -6.65% | | Total stockholders' equity | $7,701,663 | $10,006,434 | $(2,304,771) | -23.03% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Statements%20of%20Operations) The statements of operations show improved financial performance for the three and six months ended June 30, 2023, with significant increases in product sales and gross profit, leading to a reduced net loss compared to the prior year periods Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2023 | 2022 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :------------ | :---------------- | :--------- | | Product sales, net | $2,909,966 | $1,648,368 | $1,261,598 | 76.54% | | Gross profit | $1,890,059 | $680,648 | $1,209,411 | 177.69% | | Selling, general and administrative expenses | $3,937,281 | $3,282,322 | $654,959 | 19.95% | | Research and development expenses | $213,647 | $266,560 | $(52,913) | -19.85% | | Loss from operations | $(2,277,550) | $(2,884,879) | $607,329 | -21.05% | | Net loss attributable to Milestone Scientific Inc. | $(2,216,317) | $(2,858,481) | $642,164 | -22.47% | | Net loss per share (Basic and Diluted) | $(0.03) | $(0.04) | $0.01 | -25.00% | Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2023 | 2022 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :------------ | :---------------- | :--------- | | Product sales, net | $5,507,564 | $4,349,270 | $1,158,294 | 26.63% | | Gross profit | $3,778,682 | $2,363,074 | $1,415,608 | 59.82% | | Selling, general and administrative expenses | $7,011,012 | $6,397,948 | $613,064 | 9.58% | | Research and development expenses | $353,994 | $731,027 | $(377,033) | -51.58% | | Loss from operations | $(3,620,226) | $(4,799,361) | $1,179,135 | -24.57% | | Net loss attributable to Milestone Scientific Inc. | $(3,523,983) | $(4,760,204) | $1,236,221 | -25.97% | | Net loss per share (Basic and Diluted) | $(0.05) | $(0.07) | $0.02 | -28.57% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Statements%20of%20Changes%20in%20Stockholders'%20Equity) The statements detail changes in stockholders' equity for the three and six months ended June 30, 2023 and 2022, reflecting impacts from stock-based compensation, common stock issuances for services and bonuses, and net losses - Total stockholders' equity decreased from **$10,006,434** at January 1, 2023, to **$7,701,663** at June 30, 2023[11](index=11&type=chunk) - Stock-based compensation contributed **$793,102** to additional paid-in capital for the six months ended June 30, 2023[11](index=11&type=chunk) - Net loss for the six months ended June 30, 2023, was **$(3,523,983)** attributable to Milestone Scientific Inc., impacting accumulated deficit[10](index=10&type=chunk)[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) The statements of cash flows indicate a significant net decrease in cash and cash equivalents for the six months ended June 30, 2023, primarily driven by cash used in operating activities and a substantial investment in marketable securities Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Metric | 2023 | 2022 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :------------ | :---------------- | :--------- | | Net cash used in operating activities | $(3,027,126) | $(3,801,065) | $773,939 | -20.36% | | Net cash (used in) provided by investing activities | $(1,982,376) | $85 | $(1,982,461) | -2332307.06% | | Net cash used in financing activities | $(4,324) | $(4,234) | $(90) | 2.13% | | Net decrease in cash and cash equivalents | $(5,013,826) | $(3,805,214) | $(1,208,612) | 31.76% | | Cash and cash equivalents at end of period | $3,701,453 | $10,959,132 | $(7,257,679) | -66.22% | - A significant portion of cash used in investing activities in 2023 was due to the purchase of marketable securities (**$1,981,180**)[15](index=15&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements, covering the company's organization, liquidity, significant accounting policies, and specific financial line items [NOTE 1 — Organization and Business](index=9&type=section&id=NOTE%201%20%E2%80%94%20Organization%20and%20Business) Milestone Scientific Inc. is a biomedical technology company focused on computer-controlled anesthetic delivery devices for dental and medical applications, including the STA Single Tooth Anesthesia System® and CompuFlo® Epidural System - Milestone Scientific Inc. develops and commercializes proprietary, computer-controlled anesthetic delivery devices for medical and dental use, such as the DPS Dynamic Pressure Sensing Technology® System[19](index=19&type=chunk)[20](index=20&type=chunk) - Key products include CompuDent® and STA Single Tooth Anesthesia System® for dentistry, sold in the U.S., Canada, and 38 other countries, and the FDA-cleared CompuFlo® Epidural Computer Controlled Anesthesia System for spinal regions[19](index=19&type=chunk) - The company's common stock trades on the NYSE American under the symbol **'MLSS'** since June 1, 2015[20](index=20&type=chunk) [NOTE 2 — Liquidity and Uncertainties](index=9&type=section&id=NOTE%202-%20LIQUIDITY%20AND%20UNCERTAINTIES) Despite accumulated losses of $120 million since inception and operating losses of $3.6 million for the six months ended June 30, 2023, management believes current cash and dental business support are sufficient to cover operating requirements and medical device commercialization for the next twelve months - Milestone Scientific has incurred total losses of **$120 million** since inception and operating losses of **$3.6 million** for the six months ended June 30, 2023[21](index=21&type=chunk) - Management believes the company has sufficient cash and dental business support to meet operating requirements for the next twelve months, concluding no substantial doubt about its ability to continue as a going concern[21](index=21&type=chunk)[22](index=22&type=chunk) - The company's continued operations depend on its ability to raise additional capital until it achieves profitability[22](index=22&type=chunk) - The Ukraine conflict has led to decreased international sales to Ukraine and halted sales to Russia, impacting business and results of operations[24](index=24&type=chunk) [NOTE 3 — Summary of Significant Accounting Policies](index=10&type=section&id=NOTE%203%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and policies used in preparing the condensed consolidated financial statements, including principles of consolidation, basis of presentation, use of estimates, revenue recognition, and treatment of various financial instruments and expenses [Principles of Consolidation](index=10&type=section&id=Principles%20of%20Consolidation) The financial statements consolidate Milestone Scientific Inc. and its wholly-owned (Wand Dental) and majority-owned (Milestone Medical) subsidiaries, eliminating all significant intra-entity transactions - The financial statements include Milestone Scientific and its wholly-owned subsidiary Wand Dental, Inc., and majority-owned subsidiary Milestone Medical, Inc.[25](index=25&type=chunk) [Basis of Presentation](index=10&type=section&id=Basis%20of%20Presentation) The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC regulations, and do not include all disclosures required for complete annual statements - Interim financial statements are prepared in accordance with GAAP and SEC rules for Form 10-Q, and do not include all information required for complete annual financial statements[26](index=26&type=chunk) [Use of Estimates](index=10&type=section&id=Use%20of%20Estimates) Management makes significant estimates for financial reporting, including allowances for doubtful accounts, inventory valuation, going concern assessments, stock compensation, and deferred tax asset valuation allowances - Significant estimates include allowance for doubtful accounts, inventory valuation, going concern considerations, stock compensation expense, and valuation allowances on deferred tax assets[27](index=27&type=chunk) [Revenue Recognition](index=10&type=section&id=Revenue%20Recognition) Revenue from product sales, primarily dental instruments and handpieces, is recognized when control is transferred to the customer, typically upon shipment - Revenue is recognized when customers obtain control of promised goods or services, generally upon shipment[28](index=28&type=chunk)[29](index=29&type=chunk) - The company launched an E-Commerce platform on January 3, 2023, for direct sales of STA Single Tooth Anesthesia Systems® and handpieces to U.S. dental offices[30](index=30&type=chunk) - An allowance of approximately **$179,000** for product returns from a terminated major U.S. distributor was reversed as no returns were presented by March 31, 2023[32](index=32&type=chunk) [Cash and Cash Equivalents](index=11&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents decreased significantly from $8.7 million at December 31, 2022, to $3.7 million at June 30, 2023 Cash and Cash Equivalents | Metric | June 30, 2023 | December 31, 2022 | | :------------------------ | :-------------- | :---------------- | | Cash and cash equivalents | $3,701,453 | $8,715,279 | - Approximately **$3.4 million** (June 30, 2023) and **$8.3 million** (December 31, 2022) in cash, cash equivalents, and marketable securities exceeded FDIC insurance limits[35](index=35&type=chunk) [Marketable Securities](index=11&type=section&id=Marketable%20Securities) The company holds approximately $2.0 million in U.S. treasury securities as of June 30, 2023, with maturities within 3 to 6 months, measured at fair value - As of June 30, 2023, the Company held approximately **$2.0 million** in U.S. treasury securities with maturity dates within 3 and 6 months[37](index=37&type=chunk) - Marketable securities are measured at fair value, with unrealized gains/losses recorded in the statements of operations[36](index=36&type=chunk) [Accounts Receivable](index=11&type=section&id=Accounts%20Receivable) Accounts receivable, net of allowance for doubtful accounts, increased from $693,717 at December 31, 2022, to $789,584 at June 30, 2023 Accounts Receivable, Net | Metric | June 30, 2023 | December 31, 2022 | | :------------------------ | :-------------- | :---------------- | | Accounts receivable, net | $789,584 | $693,717 | | Allowance for doubtful accounts | $27,000 | $10,000 | - E-commerce payments are settled within 2 business days, while distributor credit sales are due within 90 days or less[38](index=38&type=chunk)[39](index=39&type=chunk) [Inventories (Accounting Policy)](index=12&type=section&id=Inventories) Inventories are valued at the lower of cost (FIFO method) or net realizable value, with provisions for excess, slow-moving, defective, and obsolete items recorded quarterly - Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value[40](index=40&type=chunk) - A provision for excess, slow-moving, defective, and obsolete inventory is recorded based on sales expectations and technological obsolescence[40](index=40&type=chunk) [Basic and Diluted Net Loss Per Common Share](index=12&type=section&id=Basic%20and%20Diluted%20Net%20Loss%20Per%20Common%20Share) Basic and diluted net loss per common share are calculated based on net loss applicable to common stockholders and weighted average shares outstanding Weighted Average Shares Outstanding (Basic and Diluted) | Period | 2023 | 2022 | | :-------------------------------- | :------------ | :------------ | | Three months ended June 30 | 72,333,656 | 70,356,796 | | Six months ended June 30 | 72,048,223 | 70,585,590 | - Potentially dilutive outstanding stock options, unissued restricted stock awards, and warrants were excluded from diluted EPS calculations due to net losses, as their effect would be anti-dilutive[43](index=43&type=chunk) [Stock-Based Compensation (Accounting Policy)](index=12&type=section&id=Stock-Based%20Compensation) Stock-based compensation for employees, non-employees, directors, and officers is recognized as an operating expense over the service period, based on grant-date fair values - Stock-based compensation is recognized as an operating expense over the service period, based on grant-date fair values, for all share-based payments[44](index=44&type=chunk) [Recent Accounting Pronouncements](index=12&type=section&id=Recent%20Accounting%20Pronouncements) The company adopted ASU 2019-10, which deferred the effective date of ASU 2016-13 (Measurement of Credit Losses on Financial Instruments), effective January 1, 2023 - The company adopted ASU 2019-10 (deferring ASU 2016-13 on credit losses) effective January 1, 2023[46](index=46&type=chunk) - The adoption of ASU 2019-10 did not have a material impact on the company's financial statements[46](index=46&type=chunk) [NOTE 4 — Inventories](index=13&type=section&id=NOTE%204%20%E2%80%94%20INVENTORIES) Total inventories increased to $2.19 million as of June 30, 2023, from $1.79 million at December 31, 2022, primarily due to an increase in dental finished goods Inventories Breakdown | Category | June 30, 2023 | December 31, 2022 | | :------------------------ | :-------------- | :---------------- | | Dental finished goods | $1,833,864 | $1,315,263 | | Medical finished goods | $208,081 | $334,124 | | Component parts and other materials | $151,118 | $142,948 | | Total inventories | $2,193,063 | $1,792,335 | - An allowance of approximately **$1.1 million** (June 30, 2023) and **$1.0 million** (December 31, 2022) has been recorded for slow-moving medical finished goods due to slow adoption of epidural instruments and handpieces[48](index=48&type=chunk) [NOTE 5 — Advances on Contracts](index=13&type=section&id=NOTE%205%20%E2%80%94%20ADVANCES%20ON%20CONTRACTS) Advances on contracts, primarily for future STA devices and epidural instruments/parts, remained stable at approximately $1.3 million as of June 30, 2023, and December 31, 2022 - Advances on contracts for STA devices, epidural instruments, and replacement parts were approximately **$1.3 million** as of June 30, 2023, and December 31, 2022[49](index=49&type=chunk) - These advances are classified as current based on the estimated annual usage of the underlying inventory[49](index=49&type=chunk) [NOTE 6 — Stockholders' Equity](index=13&type=section&id=NOTE%206%E2%80%94%20STOCKHOLDERS'%20EQUITY) This note details changes in stockholders' equity, including warrant activity, shares to be issued, stock option plans, and restricted stock awards [Warrants](index=13&type=section&id=Warrants) The number of outstanding warrants significantly decreased from 4,268,221 at January 1, 2023, to 314,572 at June 30, 2023, primarily due to expirations Warrant Activity (Six Months Ended June 30, 2023) | Metric | Number of Warrant Shares | | :------------------------ | :----------------------- | | Outstanding at January 1, 2023 | 4,268,221 | | Expired or cancelled | (3,953,649) | | Outstanding at June 30, 2023 | 314,572 | - The weighted average exercise price for outstanding warrants at June 30, 2023, was **$0.50**, with a remaining life of **0.60 years**[50](index=50&type=chunk) [Shares to Be Issued](index=13&type=section&id=Shares%20to%20Be%20Issued) Shares to be issued, including those deferred under employment agreements and for services rendered to non-employees, increased to 2,762,765 at June 30, 2023, from 2,440,673 at January 1, 2023 Shares to Be Issued Activity | Metric | June 30, 2023 | June 30, 2022 | | :------------------------ | :-------------- | :-------------- | | Shares-to-be-issued, outstanding January 1 | 2,440,673 | 2,066,343 | | Granted in current period | 322,092 | 108,148 | | Shares-to be issued outstanding June 30 | 2,762,765 | 2,027,153 | - As of June 30, 2023, **2,380,068 shares** were deferred for issuance to the CEO and other employees upon employment termination, and **382,697 shares** were to be issued to non-employees for services rendered[51](index=51&type=chunk)[52](index=52&type=chunk) [Stock Options Plans](index=14&type=section&id=Stock%20Options%20Plans) The 2020 Equity Compensation Plan allows for various awards, including options; employee stock options outstanding remained stable at 3,059,989, while non-employee options increased slightly - The 2020 Equity Compensation Plan authorizes up to **11,500,000 shares** for awards and expires in June 2031[55](index=55&type=chunk) Employee Stock Option Activity (Six Months Ended June 30, 2023) | Metric | Number of Options | | :------------------------ | :---------------- | | Options outstanding January 1, 2023 | 3,059,989 | | Options outstanding June 30, 2023 | 3,059,989 | | Exercisable, June 30, 2023 | 1,481,651 | - Total employee stock-based compensation cost was approximately **$457,000** for the six months ended June 30, 2023[56](index=56&type=chunk) [Restricted Stock Awards](index=14&type=section&id=Restricted%20Stock%20Awards) Non-vested restricted stock awards increased to 513,107 shares at June 30, 2023, with new grants to Board members in June 2023 totaling 617,978 shares Restricted Stock Award Activity (Six Months Ended June 30, 2023) | Metric | Number of Shares | | :------------------------ | :--------------- | | Non-vested as January 1, 2023 | 435,293 | | Granted | 617,978 | | Vested | (540,164) | | Non-vested as June 30, 2023 | 513,107 | - **617,978 restricted stock awards** were granted to Board members in June 2023 at **$0.89 per share**, vesting 25% on grant date and 25% quarterly thereafter[61](index=61&type=chunk) - The company recognized approximately **$307,000** for restricted stock expenses related to Board members for the six months ended June 30, 2023[61](index=61&type=chunk) [NOTE 7 — Income Taxes](index=15&type=section&id=NOTE%207%20%E2%80%94%20INCOME%20TAXES) Milestone Scientific has established a 100% valuation allowance against all its deferred tax assets due to uncertainty regarding their future realization - A **100% valuation allowance** has been established for all deferred tax assets due to uncertainty of future realization[62](index=62&type=chunk) - The utilization of net operating losses may be substantially limited by 'change of ownership provisions' under Section 382 of the Internal Revenue Code[62](index=62&type=chunk) [NOTE 8 — Segment and Geographic Data](index=15&type=section&id=NOTE%208%20%E2%80%94%20SEGMENT%20AND%20GEOGRAPHIC%20DATA) The company operates in two reportable segments: Dental and Medical, with the Dental segment showing strong growth in net sales and operating income, while the Medical segment continued to incur operating losses Net Sales by Segment (Three Months Ended June 30) | Segment | 2023 | 2022 | Change (Absolute) | Change (%) | | :------------------------ | :------------ | :------------ | :---------------- | :--------- | | Dental | $2,912,166 | $1,609,768 | $1,302,398 | 80.91% | | Medical | $(2,200) | $38,600 | $(40,800) | -105.70% | | Total net sales | $2,909,966 | $1,648,368 | $1,261,598 | 76.54% | Operating Income (Loss) by Segment (Six Months Ended June 30) | Segment | 2023 | 2022 | Change (Absolute) | Change (%) | | :------------------------ | :------------ | :------------ | :---------------- | :--------- | | Dental | $1,240,884 | $517,262 | $723,622 | 139.89% | | Medical | $(1,685,832) | $(2,851,374) | $1,165,542 | -40.88% | | Corporate | $(3,175,278) | $(2,465,249) | $(710,029) | 28.80% | - For the three months ended June 30, 2023, domestic dental sales (instruments, handpieces, accessories) totaled **$1,422,780**, international (Rest of World) dental sales were **$1,219,386**, and China dental instrument sales were **$270,000**[65](index=65&type=chunk) - For the six months ended June 30, 2023, domestic dental sales totaled **$2,809,903**, international (Rest of World) dental sales were **$2,423,661**, and China dental instrument sales were **$270,000**[66](index=66&type=chunk) [NOTE 9 — Concentrations](index=17&type=section&id=NOTE%209%20%E2%80%93%20CONCENTRATIONS) The company relies on informal arrangements with third-party U.S. manufacturers for its STA devices and epidural instruments, posing a risk if these relationships are terminated - Milestone Scientific relies on informal arrangements with third-party U.S. manufacturers for STA devices and epidural instruments, without long-term contracts or minimum purchase commitments, posing a risk of supply interruption[67](index=67&type=chunk) - For the three months ended June 30, 2023, the E-Commerce platform accounted for **43%** of net product sales, and one distributor accounted for **11%**; for the six months ended June 30, 2023, E-Commerce accounted for **42%** of net product sales[68](index=68&type=chunk) - As of June 30, 2023, three distributors accounted for **40%**, **16%**, and **11%** of accounts receivable, respectively[69](index=69&type=chunk) [NOTE 10 — Related Party Transactions](index=18&type=section&id=NOTE%2010%20--%20RELATED%20PARTY%20TRANSACTIONS) The company has significant related party transactions, including purchases from United Systems, royalty fees and consulting fees paid to the Director of Clinical Affairs, and compensation agreements with Mr. Osser - Purchases from United Systems, a related party manufacturer, were approximately **$1.3 million** for the six months ended June 30, 2023[71](index=71&type=chunk) - Royalty fees to the Director of Clinical Affairs were approximately **$267,000** for the six months ended June 30, 2023, with an additional **$78,000** in consulting fees[74](index=74&type=chunk) - Compensation of **$100,000** each was recorded for the Managing Director, China Operations (Mr. Osser) and U.S. Asian Consulting Group, LLC (Mr. Osser's company) for the six months ended June 30, 2023[76](index=76&type=chunk) [NOTE 11 — Commitments](index=18&type=section&id=NOTE%2011%20%E2%80%94%20COMMITMENTS) The company has a purchase commitment of approximately $2.9 million for 3,000 STA instruments as of June 30, 2023, with $1.2 million already paid - As of June 30, 2023, the company had a purchase commitment of approximately **$2.9 million** for **3,000 STA instruments**, with **$1.2 million** already paid as advances on contracts[77](index=77&type=chunk) Lease Commitments (Six Months Ended June 30, 2023) | Metric | Value | | :-------------------------------- | :---------- | | Cash paid for operating lease liabilities | $63,763 | | Cash paid for finance lease liabilities | $5,370 | | Weighted Average Remaining Lease Term (Finance leases) | 1.5 years | | Weighted Average Remaining Lease Term (Operating leases) | 3.75 years | | Weighted-average discount rate (Operating leases) | 9.20% | | Weighted-average discount rate (Finance leases) | 9.20% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, highlighting operational overview, detailed results of operations, and an assessment of liquidity and capital resources [Overview](index=20&type=section&id=OVERVIEW) Milestone Scientific is a biomedical technology company focused on computer-controlled injection technologies for medical and dental markets, aiming to establish its DPS Dynamic Pressure Sensing technology as the standard of care - Milestone Scientific aims to establish its DPS Dynamic Pressure Sensing technology platform as the standard-of-care in painless and precise drug delivery[85](index=85&type=chunk) - The company is transitioning from R&D to a commercially focused medical device company, expanding its global footprint for the CompuFlo Epidural and CathCheck System[85](index=85&type=chunk) - The CompuFlo Epidural System received a chronology-specific CPT Code in May 2022, effective January 1, 2023, to facilitate reimbursement for epidural procedures[89](index=89&type=chunk) - On February 27, 2023, the CompuFlo® Epidural System received **510(k) FDA clearance** for use in the thoracic region of the spine, expanding its prior lumbar region approval[90](index=90&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section analyzes the consolidated results of operations, detailing changes in net sales, gross profit, operating expenses, and overall loss from operations for the three and six months ended June 30, 2023, compared to the prior year [Three Months Ended June 30, 2023 vs. 2022](index=23&type=section&id=Three%20months%20ended%20June%2030,%202023%20compared%20three%20months%20ended%20June%2030,%2C%202022) For the three months ended June 30, 2023, consolidated revenue increased by 76.5% to $2.9 million, driven by the new E-Commerce platform and international sales Key Financial Changes (Three Months Ended June 30) | Metric | 2023 | 2022 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :------------ | :---------------- | :--------- | | Total sales, net | $2,909,966 | $1,648,368 | $1,261,598 | 76.54% | | Dental sales | $2,912,166 | $1,609,768 | $1,302,398 | 80.91% | | Medical sales | $(2,200) | $38,600 | $(40,800) | -105.70% | | Total gross profit | $1,890,059 | $680,648 | $1,209,411 | 177.69% | | Selling, general and administrative expenses | $3,937,281 | $3,282,322 | $654,959 | 19.95% | | Research and development expenses | $213,647 | $266,560 | $(52,913) | -19.85% | | Loss from operations | $(2,277,550) | $(2,884,879) | $607,329 | -21.05% | - E-commerce revenue for the three months ended June 30, 2023, was approximately **$1.2 million**, replacing revenue from the previous U.S. distributor, Henry Schein[95](index=95&type=chunk) - International revenue increased by **$588,000**, including **$270,000** from China, for the three months ended June 30, 2023[95](index=95&type=chunk) [Six Months Ended June 30, 2023 vs. 2022](index=24&type=section&id=Six%20months%20ended%20June%2030,%202023%20compared%20six%20months%20ended%20June%2030,%202022) For the six months ended June 30, 2023, consolidated revenue increased by 26.6% to $5.5 million, primarily due to the E-Commerce platform's $2.2 million revenue Key Financial Changes (Six Months Ended June 30) | Metric | 2023 | 2022 | Change (Absolute) | Change (%) | | :-------------------------------- | :------------ | :------------ | :---------------- | :--------- | | Total sales, net | $5,507,564 | $4,349,270 | $1,158,294 | 26.63% | | Dental sales | $5,503,564 | $4,303,120 | $1,200,444 | 27.89% | | Medical sales | $4,000 | $46,150 | $(42,150) | -91.33% | | Total gross profit | $3,778,682 | $2,363,074 | $1,415,608 | 59.82% | | Selling, general and administrative expenses | $7,011,012 | $6,397,948 | $613,064 | 9.58% | | Research and development expenses | $353,994 | $731,027 | $(377,033) | -51.58% | | Loss from operations | $(3,620,226) | $(4,799,361) | $1,179,135 | -24.57% | - E-commerce revenue for the six months ended June 30, 2023, was approximately **$2.2 million**[100](index=100&type=chunk) - International revenue increased by **$403,000**, though China revenue decreased by **$90,000**, for the six months ended June 30, 2023[100](index=100&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Milestone Scientific continues to experience operating losses and negative cash flows but believes it has sufficient cash and dental business support for the next twelve months, supplemented by $2.0 million in U.S. treasury securities - Milestone Scientific has incurred annual operating losses and negative cash flows from operating activities since inception[105](index=105&type=chunk) Liquidity Snapshot (June 30, 2023) | Metric | Amount | | :------------------------ | :----------- | | Cash and cash equivalents | $3.7 million | | Working capital | $7.4 million | | U.S. treasury securities | $2.0 million | - Net cash used in operating activities was approximately **$3.0 million** for the six months ended June 30, 2023, an improvement from **$3.8 million** in the prior year[105](index=105&type=chunk) - Management believes current cash, cash flow, and dental business support are sufficient to mitigate expected expenditures for the Epidural medical device commercialization and other operating/development programs for the next twelve months[105](index=105&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a 'smaller reporting company,' Milestone Scientific Inc. is not required to provide specific quantitative and qualitative disclosures about market risk - Milestone Scientific is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a **'smaller reporting company'**[106](index=106&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) The Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2023, concluding they are effective - The CEO and CFO concluded that disclosure controls and procedures were **effective** as of June 30, 2023[107](index=107&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023[108](index=108&type=chunk) [PART II—OTHER INFORMATION](index=26&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) Part II covers other essential information, including risk factors, legal proceedings, and exhibits [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes to risk factors previously disclosed in the 2022 Annual Report on Form 10-K[109](index=109&type=chunk) [Item 1B. Unresolved Staff Comments](index=26&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - No unresolved staff comments[110](index=110&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the current report - This item is not applicable[111](index=111&type=chunk) [Item 3. Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the current report - This item is not applicable[112](index=112&type=chunk) [Item 4. Mine Safety Disclosure](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the current report - This item is not applicable[113](index=113&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the current report - This item is not applicable[114](index=114&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and Inline XBRL documents - Exhibits include Rule 13a-14(a) and Section 1350 Certifications from the Chief Executive Officer and Chief Financial Officer[116](index=116&type=chunk) - Inline XBRL documents (Instance, Taxonomy Extension Schema, Calculation, Label, Presentation, Definition Linkbase) are filed as exhibits[116](index=116&type=chunk) [Signatures](index=28&type=section&id=Signatures) This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report [Signatures](index=28&type=section&id=Signatures) The report is duly signed on behalf of Milestone Scientific Inc. by its Chief Executive Officer, Arjan Haverhals, and Chief Financial Officer, Peter Milligan, as of August 14, 2023 - The report was signed by Arjan Haverhals, Chief Executive Officer, and Peter Milligan, Chief Financial Officer, on August 14, 2023[120](index=120&type=chunk)