Milestone Scientific(US:MLSS)2026-03-31 20:02Regulatory Approvals and Compliance - The CompuFlo Epidural System received FDA 510(k) clearance in 2017 for lumbar epidural injections, with expanded clearance in 2023 for the thoracic region [30]. - The CompuFlo Epidural System has been assigned a Category III CPT code (0777T) by the American Medical Association, effective January 1, 2023, to facilitate reimbursement [30]. - The company must obtain MDR certification for its Class IIa and Class IIb devices by December 31, 2028, to continue marketing in the EU [65]. - The FDA's new Quality Management System Regulation (QMSR) will become effective on February 2, 2026, aligning U.S. requirements with ISO 13485 [59]. - The FDA typically responds to 510(k) Pre-market Notification submissions within 180 days, but there is no specific time limit for their response [55]. Financial Performance and Challenges - The company has incurred significant operating losses of $5.7 million and $6.8 million for the years ended December 31, 2025, and 2024, respectively [73]. - Net cash used in operating activities was approximately $2.9 million for the years ended December 31, 2025, and 2024 [76]. - The company has substantial doubt about its ability to continue as a going concern without raising additional capital due to recurring losses and an accumulated deficit [81]. - The company reported total assets of approximately $7.8 million and working capital of approximately $3.3 million as of December 31, 2025 [149]. - The company has stockholders' equity of approximately $3.3 million, which does not meet the NYSE American listing requirements of $4 million or more [151]. Market and Sales Dynamics - In 2025, export sales outside the United States represented approximately 45% of total sales, with products sold in about 37 countries and U.S. territories [84]. - The company relies heavily on its E-Commerce platform for sales, which was launched in January 2023, and any failure to maintain or expand this platform could negatively impact sales [82][83]. - The CompuFlo Epidural System is expected to generate substantially all medical product revenues in the near term, and its market acceptance is critical for revenue generation [85]. - Domestic product sales in the US amounted to $4,969,215 in 2025, compared to $5,254,331 in 2024, indicating a decline of about 5.4% [206]. - International sales (Rest of World) increased to $3,694,767 in 2025 from $3,375,597 in 2024, reflecting a growth of approximately 9.4% [206]. Research and Development - The company has delayed all research and development on its next-generation Single Tooth Anesthesia System due to cash management concerns, which may hinder its ability to compete effectively [88]. - The company plans to transition from a research-and-development-focused organization to a commercially oriented medical device company following FDA clearance of its products [205]. - The company is delaying research and development activities related to the next-generation Single Tooth Anesthesia System instrument to manage costs [214]. Intellectual Property and Competition - The company holds approximately 305 issued U.S. and foreign patents, covering various proprietary technologies related to drug delivery [29]. - The proprietary DPS technology differentiates the company's products by providing continuous real-time pressure feedback during injections [49]. - The company may face challenges in protecting its intellectual property rights, which could adversely affect its ability to prevent competition in the anesthetic delivery systems market [104]. - The company faces risks related to intellectual property, including potential infringement claims that could require costly negotiations for licenses or redesigns [171]. Operational Risks and Management - The company relies on third-party manufacturers for production, which exposes it to risks related to supply disruptions and quality issues [38]. - The company has limited internal experience in manufacturing operations and lacks the resources to produce its products independently [107]. - The company has been supplied by its current manufacturers since 1998 and 2003, but the informal purchase order arrangements do not guarantee price protection or supply commitments [108]. - Quality management is critical for the company's success, and any quality or safety issues could lead to regulatory actions and loss of customer confidence [114]. - The company may encounter difficulties in establishing new manufacturing relationships, which could involve significant expenses and delays [117]. Cybersecurity and IT Risks - The company relies heavily on IT systems and cloud-based platforms, making it vulnerable to cybersecurity incidents that could materially impact its business [176]. - The company maintains a cybersecurity program that includes periodic risk assessments and employee training [187]. - The company has not identified any cybersecurity incidents that have materially affected its business strategy or financial condition [189]. Leadership and Governance - The company has appointed Eric Hines as President and CEO, replacing Arjan Haverhals, who retired at the end of 2024 [105]. - The company is required to develop and implement effective internal controls over financial reporting as mandated by the Sarbanes-Oxley Act, with any failure potentially harming investor confidence [157]. Future Outlook and Funding - The company anticipates needing additional funding for operations, which may affect its ability to continue research and development programs [76]. - The company may need additional financing to execute its business plan, which may not be available on reasonable terms [148]. - Management's assessment of the company's ability to continue as a going concern is based on estimates regarding future revenues and access to additional capital [212].