Milestone Scientific(MLSS) - 2021 Q3 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for Milestone Scientific Inc Unaudited Condensed Consolidated Financial Statements This section presents Milestone Scientific Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in equity, and cash flows, for the periods ended September 30, 2021 Condensed Consolidated Balance Sheets This section provides the unaudited condensed consolidated balance sheets for Milestone Scientific Inc. as of September 30, 2021, and December 31, 2020 Consolidated Balance Sheet Highlights (Unaudited) | | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $19,159,331 | $18,554,869 | | Total Assets | $20,077,487 | $19,571,450 | | Total Current Liabilities | $3,529,243 | $2,877,894 | | Total Liabilities | $4,049,448 | $3,464,482 | | Total Stockholders' Equity | $16,028,039 | $16,106,968 | - Cash and cash equivalents stood at approximately $14.5 million as of September 30, 2021, a slight increase from $14.2 million at the end of 2020[13] Condensed Consolidated Statements of Operations This section presents the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020 Statement of Operations Summary (Unaudited) | | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Product sales, net | $2,108,233 | $1,246,110 | $7,458,678 | $3,225,170 | | Gross profit | $1,360,236 | $836,489 | $4,531,884 | $2,200,223 | | Loss from operations | ($1,980,921) | ($1,476,728) | ($5,837,866) | ($6,258,225) | | Net loss | ($2,055,434) | ($1,502,014) | ($5,738,084) | ($6,293,169) | | Net loss per share (Basic & Diluted) | ($0.03) | ($0.02) | ($0.08) | ($0.11) | Condensed Consolidated Statements of Changes in Stockholders' Equity This section details the unaudited condensed consolidated statements of changes in stockholders' equity for the three and nine months ended September 30, 2021 and 2020 - Total stockholders' equity slightly decreased from $16.11 million at the start of 2021 to $16.03 million at the end of Q3 2021[16][17] - The net loss for the period was largely offset by proceeds from warrant and stock option exercises[16][17] Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 Cash Flow Summary (Unaudited) | | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,629,025) | ($6,346,160) | | Net cash used in investing activities | ($19,486) | ($21,438) | | Net cash provided by financing activities | $3,915,339 | $19,300,229 | | Net increase in cash | $266,828 | $12,932,631 | | Cash at end of period | $14,490,745 | $14,448,903 | Notes to Condensed Consolidated Financial Statements This section provides explanatory notes accompanying the unaudited condensed consolidated financial statements, detailing significant accounting policies and financial disclosures - Management believes the company has sufficient liquidity, with approximately $14.5 million in cash, to support operations for more than a year from the financial statement issue date[26] - The company received forgiveness for its approximately $276,000 Paycheck Protection Program (PPP) loan during the quarter ended June 30, 2021[48][82] - Due to geo-economic uncertainty with US-China relations, the company recorded an allowance of $269,973 against accounts receivable related to Milestone China for the quarter[72] - The company operates through two reportable segments: Dental and Medical[97][98] - For the nine months ended September 30, 2021, the Dental segment generated $7.3 million in sales and $1.8 million in operating income, while the Medical segment had $124k in sales and an operating loss of $3.0 million[97][98] Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides an analysis of the company's financial condition and results of operations, focusing on revenue growth, operating expenses, and liquidity Overview This section provides an overview of the company's strategic objectives and market approaches for its dental and medical segments - The company's primary objectives are to establish its DPS Dynamic Pressure Sensing technology as the standard-of-care, transition to a commercially focused medical device company, and expand the global footprint of its CompuFlo Epidural and CathCheck System[126] - In the dental market, the company shifted its US and Canada strategy from an exclusive distribution agreement with Henry Schein to multiple non-exclusive agreements with various distributors to increase market penetration[127][128] - In the medical market, the company is expanding its direct sales force in the U.S. to drive adoption of the CompuFlo Epidural System, which now includes the CathCheck™ feature for monitoring catheter placement[131][132] Results of Operations This section details the company's financial performance, including revenue and expense trends for the reported periods Q3 2021 vs. Q3 2020 Revenue Comparison | | 2021 | 2020 | Increase (Decrease) | | :--- | :--- | :--- | :--- | | Dental Revenue | $2,076,233 | $1,240,110 | $836,123 | | Medical Revenue | $32,000 | $6,000 | $26,000 | | Total Sales, Net | $2,108,233 | $1,246,110 | $862,123 | - For Q3 2021, SG&A expenses increased by approximately $693,000 year-over-year, primarily due to hiring additional employees for the commercialization of the CompuFlo® Epidural System and increased marketing expenses as offices reopened[144] Nine Months 2021 vs. 2020 Revenue Comparison | | 2021 | 2020 | Increase (Decrease) | | :--- | :--- | :--- | :--- | | Dental Revenue | $7,334,628 | $3,209,370 | $4,125,258 | | Medical Revenue | $124,050 | $15,800 | $108,250 | | Total Sales, Net | $7,458,678 | $3,225,170 | $4,233,508 | - The operating loss for the nine months ended September 30, 2021, decreased to $5.8 million from $6.3 million in the prior-year period, as strong revenue growth offset increased operating expenses[153] Liquidity and Capital Resources This section discusses the company's cash position, working capital, and management's assessment of its ability to fund operations - As of September 30, 2021, the company had cash and cash equivalents of approximately $14.5 million and working capital of $15.7 million[154] - Management believes that following two capital raises in 2020, the company has sufficient liquidity to support operations for at least a year[155] Quantitative and Qualitative Disclosures About Market Risk The company is a "smaller reporting company" as defined by Regulation S-K and is therefore not required to provide the information for this item - As a "smaller reporting company," Milestone Scientific is not required to provide information for this item[156] Controls and Procedures The Chief Executive Officer evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2021. There were no material changes in internal control over financial reporting during the last fiscal quarter - The CEO concluded that disclosure controls and procedures were effective as of September 30, 2021[157] - No material changes to internal controls over financial reporting occurred during the quarter[159] PART II—OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other required disclosures Legal Proceedings The company reports that it is not involved in any material litigation - Milestone Scientific is not involved in any material litigation[160] Risk Factors This section outlines key risks, primarily focusing on the ongoing COVID-19 pandemic's potential impact on business operations, supply chain, and employee health - The COVID-19 pandemic continues to pose a material risk to business operations, financial results, and demand for products[161] - The company is experiencing supply chain delays and shortages, particularly for goods from China, due to the pandemic[162] - The health and remote work status of employees, along with management's focus on mitigating pandemic effects, could impair business management and elevate operational risks[163] Unregistered Sales of Equity Securities and Use of Proceeds During the third quarter of 2021, the company issued an aggregate of 93,694 shares of common stock to various consultants and for investor relations services. These issuances were made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 - During Q3 2021, the Company issued a total of 93,694 shares of common stock for consulting and investor relations services[167][168][169] - These securities were issued in reliance upon the exemption from registration afforded by Section 4(a)(2) of the Securities Act[167][168][169] Defaults Upon Senior Securities Not applicable - Not applicable[170] Mine Safety Disclosures Not applicable - Not applicable[171] Other Information No other information was reported for this item - None[172] Exhibits This section lists the exhibits filed with the 10-Q report, including CEO certifications and Inline XBRL data files - Lists exhibits filed with the report, including CEO certifications (Exhibits 31.1, 32.1) and Inline XBRL data files (Exhibit 101 series)[173]