-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DN24lIkgTpxDakiLOUSjNNjCiaZP6/sB0fPL2rJmQkQYNq1eYxUATYP6j0rGnT11 7qSXbwjzdkMtl+xkUmN6wA== 0001169232-02-001099.txt : 20020819 0001169232-02-001099.hdr.sgml : 20020819 20020819092452 ACCESSION NUMBER: 0001169232-02-001099 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020819 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MILESTONE SCIENTIFIC INC/NJ CENTRAL INDEX KEY: 0000855683 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 133545623 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-14053 FILM NUMBER: 02741966 BUSINESS ADDRESS: STREET 1: 220 S ORANGE AVE STREET 2: LIVINGSTON CORPORATE PARK CITY: LIVINGSTON STATE: NJ ZIP: 07039 BUSINESS PHONE: 2013793171 MAIL ADDRESS: STREET 1: 44 KEAN ROAD STREET 2: 220 SOUTH ORANGE AVE CITY: LIVINGSTON STATE: NJ ZIP: 07039 FORMER COMPANY: FORMER CONFORMED NAME: U S OPPORTUNITY SEARCH INC DATE OF NAME CHANGE: 19920703 10QSB 1 d51365_10qsb.txt FORM 10QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Mark One |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2002 OR |_| 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 0-26284 MILESTONE SCIENTIFIC INC. (Exact name of Registrant as specified in its charter) Delaware 13-3545623 State or other jurisdiction (I.R.S. Employer or organization) Identification No.) 220 South Orange Avenue, Livingston, New Jersey 07039 (Address of principal executive office) (Zip Code) (973) 535-2717 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) or the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ___ As of August 15, 2002, the Registrant had a total of 12,433,370 shares of Common Stock, $.001 par value, outstanding. 1 FORWARD LOOKING STATEMENTS When used in this Quarterly Report on Form 10-QSB, the words "may", "will", "should", "expect", "believe", "anticipate", "continue", "estimate", "project", "intend" and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act regarding events, conditions and financial trends that may affect the Company's future plans of operations, business strategy, results of operations and financial condition. The Company wishes to ensure that such statements are accompanied by meaningful cautionary statements pursuant to the safe harbor established in the Private Securities Litigation Reform Act of 1995. Prospective investors are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such forward-looking statements should, therefore, be considered in light of various important factors, including those set forth herein and others set forth from time to time in the Company's reports and registration statements files with the Securities and Exchange Commission (the "Commission"). The Company disclaims any intent or obligation to update such forward-looking statements. 2 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES I N D E X
PAGE ---- PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets June 30, 2002 (Unaudited) and December 31, 2001 4 Condensed Consolidated Statements of Operations Three and Six Months Ended June 30, 2002 and 2001 (Unaudited) 5 Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2002 and 2001 (Unaudited) 6-7 Notes to Condensed Consolidated Financial Statements 8-14 ITEM 2. Management's Discussion and Analysis or Plan of Operations 15 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 22 SIGNATURES 23 EXHIBITS 24
3 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2002 2001 ------------ ------------ (Unaudited) (Audited) ASSETS Current assets: Cash $ 22,592 $ 15,742 Accounts receivable, net of allowance for doubtful accounts of $41,501 and $54,865 in 2002 and 2001, respectively 402,478 363,743 Inventories 115,988 162,640 Advances to contract manufacturer 251,781 315,000 Prepaid expenses 40,972 30,985 ------------ ------------ Total current assets 833,811 888,110 Property and equipment, net 200,844 207,823 Advances to contract manufacturer - long-term 324,258 374,529 Deferred debt financing costs 321,501 32,915 Other assets 32,333 12,362 ------------ ------------ Totals $ 1,712,747 $ 1,515,739 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities: Accounts payable, including $70,866 and $43,000 to a related party in 2002 and 2001, respectively $ 1,170,382 $ 1,063,363 Accrued expenses 97,377 105,410 ------------ ------------ Total current liabilities 1,267,759 1,168,773 Accrued interest 252,984 221,982 Accounts payable, including $250,000 and $272,866 to a related party in 2002 and 2001, respectively 358,899 338,940 Deferred compensation payable to officer/stockholder 160,000 491,346 Notes payable 4,418,460 3,553,665 Notes payable-officer/stockholder 200,000 200,000 ------------ ------------ Total liabilities 6,658,102 5,974,706 ------------ ------------ Commitments and contingencies Stockholders' deficiency: Common stock, par value $.001; authorized, 25,000,000 shares; 12,345,870 issued as of June 30, 2002 and 11,372,847 issued as of December 31, 2001 12,346 11,373 Additional paid-in capital 36,608,010 36,090,566 Accumulated deficit (40,368,991) (39,346,570) Unearned advertising (285,204) (302,820) Treasury stock, at cost, 100,000 shares (911,516) (911,516) ------------ ------------ Total stockholders' deficiency (4,945,355) (4,458,967) ------------ ------------ Totals $ 1,712,747 $ 1,515,739 ============ ============
See Notes to Condensed Consolidated Financial Statements. 4 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2002 2001 2002 2001 ---- ---- ---- ---- Net sales $ 1,160,129 $ 918,441 $ 2,181,717 $ 2,180,812 Cost of sales 515,756 484,720 981,771 1,056,557 ------------ ------------ ------------ ------------ Gross Profit 644,373 433,721 1,199,946 1,124,255 ------------ ------------ ------------ ------------ Selling, general and administrative expenses 937,932 1,358,577 1,835,208 3,172,125 Research and development expenses 15,084 9,363 45,379 28,081 ------------ ------------ ------------ ------------ Totals 953,016 1,367,940 1,880,587 3,200,206 ------------ ------------ ------------ ------------ Loss from operations (308,643) (934,219) (680,641) (2,075,951) Other income 24,000 -- 48,000 -- Interest, net (217,567) (174,981) (389,780) (368,572) ------------ ------------ ------------ ------------ Net loss $ (502,210) $ (1,109,200) $ (1,022,421) $ (2,444,523) ============ ============ ============ ============ Loss per share - basic $ (.04) $ (.10) $ (.08) $ (.22) ============ ============ ============ ============ Weighted average shares outstanding 12,245,870 11,272,847 12,171,450 11,014,765 ============ ============ ============ ============
See Notes to Condensed Consolidated Financial Statements. 5 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited)
2002 2001 ----------- ----------- Operating activities: Net loss $(1,022,421) $(2,444,523) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of advertising costs 17,616 6,484 Amortization of debt discount and deferred financing costs 129,999 145,972 Depreciation 28,419 41,009 Common stock issued for services -- 150,000 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (38,735) 129,416 (Increase) decrease in inventories 46,652 (240,759) Decrease in advances to contract manufacturer 113,490 304,530 (Increase) decrease in prepaid expenses (9,987) 99,203 Increase in other assets (19,971) (2,044) Increase in accounts payable 126,978 376,399 Increase in accrued interest 259,781 225,206 Decrease in accrued expenses (8,033) (14,991) Increase in deferred compensation 160,000 175,000 ----------- ----------- Net cash used in operating activities (216,212) (1,049,098) ----------- ----------- Investing activities - capital expenditures (21,440) (9,012) ----------- ----------- Financing activities: Payments on line of credit (114,960) -- Proceeds from sale of common stock -- 500,000 Proceeds from issuance of notes and lines of credit, net 400,000 409,779 Payments for deferred financing costs (40,538) -- ----------- ----------- Net cash provided by financing activities 244,502 909,779 ----------- ----------- Net increase (decrease) in cash 6,850 (148,331) Cash, beginning of period 15,742 172,867 ----------- ----------- Cash, end of period $ 22,592 $ 24,536 =========== ===========
See Notes to Condensed Consolidated Financial Statements. 6 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited) Supplemental schedule of noncash financing activities: In January 2002, the Company issued 33,840 units consisting of one share of common stock and one warrant to purchase an additional share of common stock in exchange for payment of accrued interest totaling $27,072. In January 2002, in consideration for payment of $491,346 in deferred compensation, the Company issued 614,183 units (consisting of one share of common stock and one warrant to purchase an additional share of common stock). In January 2002, pursuant to the 20% promissory note agreements, the Company converted $63,377 of accrued interest into additional principal. In April 2002, pursuant to the 20% promissory note agreements, the Company converted $65,168 of accrued interest into additional principal. In April 2002, pursuant to the debt restructuring, the Company recorded a deferred financing charge of $329,572. This resulted in an increase to notes payable of $140,203 and accrued interest of $189,369. In January 2001, pursuant to the 20% promissory note agreements, the Company converted $51,111 of accrued interest into additional principal. In January 2001, the Company granted warrants to purchase 20,000 shares of common stock (with an estimated fair value of $23,400) in connection with $100,000 drawn from a $1,000,000 credit facility provided by a major existing investor. This resulted in an initial increase to debt discount and to additional paid-in capital. In February 2001, the Company issued 27,641 shares of common stock in exchange for payment of accrued interest totaling $36,279. In February 2001, the Company issued 92,308 shares of common stock with a value of $150,000 for services rendered. In March 2001, pursuant to a $500,000 line of credit agreement, the Company granted warrants to purchase 100,000 shares of common stock (with an estimated fair value of $80,000). This resulted in an initial increase to debt discount and in additional paid-in capital. In March 2001, the Company granted warrants to purchase 390,625 shares of common stock with an estimated fair value of $324,418 for advertising services. This amount was recorded in stockholders' deficiency as an increase to unearned advertising and to additional paid-in capital. In April 2001, pursuant to the 20% promissory note agreements, the Company converted $53,472 of accrued interest into additional principal. 7 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - Summary of accounting policies: The unaudited condensed consolidated financial statements of Milestone Scientific Inc. and Subsidiaries (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2001 included in the Company's Annual Report on Form 10-KSB. The accounting policies used in preparing these financial statements are the same as those described in the December 31, 2001 financial statements. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring entries) necessary to present fairly the financial position as of June 30, 2002 and the results of operations for the three and six months ended June 30, 2002 and 2001 and cash flows for the six months ended June 30, 2002 and 2001. The results reported for the three and six months ended June 30, 2002 are not necessarily indicative of the results of operations, which may be expected for a full year. Note 2 - Basis of presentation: As of June 30, 2002, Milestone had $22,592 in cash and a working capital deficiency of $433,948. As listed below and further described in Note 4, to date, several additional steps have been taken in addition to cost containment policies to improve liquidity and meet Milestone's working capital needs until it is able to achieve and sustain profitability. In order for the Company to sustain its operation in its present state through July 1, 2003, it is currently dependent on the equity line (See Note 5). Amounts available under this equity line are dependent on the Company's stock price and the trading volume since it could impact management's ability to fund the Company's operations. If the Company is unable to obtain the required funding under the equity line, management will have to obtain such financing from alternative sources. However, management cannot assure that the Company will be able to obtain any alternative funding. In January 2002, Milestone issued 33,840 units in exchange for payment of accrued interest totaling $27,072. In addition, the Company issued 614,183 units to its Chief Executive Officer "CEO" in consideration for payment of $491,346 in deferred compensation. Each unit consisted of one share of common stock and one warrant to purchase an additional share of common stock. The warrants are exercisable at $.80 per share through January 31, 2003, at $1.00 per share through January 31, 2007 and thereafter at $2.00 per share through January 31, 2007. On February 19, 2002, the Company issued a $150,000 promissory note to an existing investor. The note bears interest at 8% if paid in cash and 10% if paid in stock and matures on August 1, 2003. 8 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 2 - Basis of presentation (continued): On March 28, 2002, the Company entered into an agreement with a vendor to issue a total of 187,500 units having an aggregate fair value of $150,000 for payment on accounts payable of $93,924 and for future services of $56,076. Each unit consisted of one share of common stock and one warrant to purchase an additional share of common stock at an expense of $.80 per share through January 31, 2003, at $1.00 per share through January 31, 2004 and thereafter at $2.00 per share through January 31, 2007. As of June 30, 2002, the outstanding payable to the vendor was $108,899 and it was recorded as long term. The common stock was issued in July 2002. On March 29, 2002, the Company entered into the following agreements for: o Deferring payment on accounts payable to a related party totaling $272,866 at December 31, 2001 until January 2, 2003. o Extending the maturing date of its $200,000 obligation and accrued interest of $26,600 as of December 31, 2001, to its CEO until January 2, 2003. o Deferring payment on $320,000 of the CEO's $350,000 salary until January 2, 2003. o Establishing a 6% $100,000 line of credit with its CEO through January 2, 2003, payable on April 2, 2003. All of the agreements with the exception of the line of credit were amended on August 13, 2002 to provide the following: o Extending the maturity date of its 9% $200,000 obligation and accrued interest of $35,650 until July 2, 2003. o At the option of the Company's Board of Directors, $250,000 on the accounts payable to the related party can be paid through the issuance of the Company's common stock. o Deferring payment on $160,000 at June 30, 2002 of the CEO salary until July 2, 2003. On April 12 and April 15, 2002, the Company entered into the following agreements with existing noteholders: The Company received the required consents from the senior secured zero coupon 20% promissory noteholders whose outstanding face value (principal plus accrued interest) was collectively greater than 80% of the total outstanding face value of the obligation (all of the noteholders gave their consent) and the following occurred: (1) the notes were extended to July 1, 2003 and (2) the interest rate was reduced to 6% if paid in cash or reduced to 12% if paid in common stock. Additionally, at the option of the Company, the face value on the maturity dates will be payable either in cash or in the Company's common stock, valued at the average closing price per share for the five trading dates prior to July 1, 2003. Furthermore, for these holders, the Company will issue shares of the Company's common stock with a value of $120 for each $1,000 face amount outstanding at maturity. As a result, the Company recorded deferred financing charges of $329,572 which are being amortized to interest expense over the remaining life of these notes. 9 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 2 - Basis of presentation (concluded): o Extending the 20% promissory notes to July 1, 2003 and lowering the interest rate from 20% to 6% if paid in cash or to 12% if paid in common stock. o Extending the 8% $500,000 promissory note to August 1, 2003. o Extending the 10% line of credit for $500,000 to August 1, 2003. o Establishing a 6% $200,000 line of credit with an existing investor through January 2, 2003. o Allowing the Company to issue additional unsecured debt so long as the maturity date is subsequent to August 1, 2003. On May 28, 2002, the Company received from an existing investor $250,000, which provides for interest at 8% if paid in cash and 10% if paid in stock and contain an equity conversion feature. (See Note 4) In addition, as described in Note 5, Milestone has an equity line commitment through January 1, 2004 to sell up to 2,100,000 shares of its common stock. Milestone's right to draw upon this facility and the amount of each draw is subjected to certain limitations. The most restrictive of which is the investor or any of its affiliates can not directly own more than 9.9% of the Company's then outstanding number of shares of common stock unless the Company either issues (i) additional shares of common stock, (ii) converts any of its debt and or (iii) the investor is unable to sell to third parties any of the shares previously purchased, the Company only has the ability to sell approximately 1,250,000 shares from which it will derive proceeds of approximately $570,000. At August 13, 2002, without any restrictions and based on the closing stock price, the maximum proceeds that the Company could receive would be approximately $919,000. Note 3 - Loss per share: Basic loss per common share is computed using the weighted average number of common shares outstanding. Options and warrants to purchase 4,415,855 shares of common stock were outstanding as of June 30, 2002, but were not included in the computation of diluted loss per share because the effect would have been anti-dilutive. Note 4 - Notes payable: 10% senior secured promissory notes: On March 16, 2001, the Company restructured its obligations to the holders of its 10% Senior Secured Promissory Notes. Under the terms of the agreement, each of the noteholders agreed to exchange their 10% Notes for a new, zero coupon note (the "Zero Coupon Note") (a) paying interest at 20% per annum until maturity on March 31, 2002, (b) having a face amount equal to the outstanding principal owed to the noteholders plus accrued interest and interest payable until maturity, (c) giving the Company the option to pay the face value of the 10 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 4 - Notes payable (continued): notes in cash or in shares of common stock, provided that the shares have been registered under the Securities Act of 1933, and (d) paying each noteholder 108% of the face value of his Zero Coupon Note, including unearned interest to maturity, if there is a change of control of Milestone. Moreover, the warrants previously issued to the noteholders were repriced back to the initial exercise price of $1.75 per share at the date of grant. As a result of the Company restructuring its obligations, the unamortized portion of the debt discount and deferred financing costs were being amortized through March 31, 2002. On March 31, 2002, the holders agreed to extend the maturity date up to 30 days. Subsequently on April 15, 2002, the holders additionally agreed to extend the maturity date to July 1, 2003. In connection with the extension, the Company recorded $16,215 in deferred financing charges relating to professional fees and $140,203 of deferred financing costs relating to consideration issued to the note holders valued at $120 per share of the Company's common stock for each $1,000 face amount outstanding at maturity which increased the aggregate carry value of the notes by $140,203. These deferred financing costs are being amortized through July 1, 2003. Accordingly, these zero coupon notes including accrued interest have been recorded as long-term in the consolidated financial statements. $500,000 line of credit: On March 9, 2001, the Company obtained from a major existing investor, a 10%, $500,000 line of credit, which was to mature on August 31, 2002. Additionally, the Company pays a 2% facility fee on the line outstanding balance. At the option of the Company, interest and the facility fee would have been payable either on (i) August 31, 2002 in cash, or (ii) quarterly in shares of the Company's common stock. In connection with obtaining the line of credit, the lender received warrants to purchase 100,000 shares of common stock at an exercised price of $1.10. The estimated fair value of the warrants, which amounted to $40,000, was recorded as a debt discount and was being amortized through August 31, 2002. In addition, the Company incurred deferred financing fees of $28,384 which was being amortized to August 31, 2002. As of June 30, 2002, the Company has drawn down the $385,040 from the line of credit. Moreover, the line of credit agreement has been amended to allow the Company to use funds available under this agreement for general corporate purposes. On April 15, 2002, the investor agreed to extend the line of credit and payment for interest to August 1, 2003. In connection with the extension, the Company incurred $4,054 of deferred financing charges. Accordingly, the deferred financing charges and the unamortized debt discount are being amortized through August 1, 2003. Accordingly, the line of credit including accrued interest has been recorded as long-term in the consolidated financial statements. 11 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 4 - Notes payable (continued): 20% promissory notes: In August 2000, the Company borrowed $1,000,000 which consists of two loans from two funds managed by Cumberland Associates LLC, and bear interest at 20% per year and payable in cash or through the issuance of additional 20% notes on which both interest and principal are payable. The loans are secured by substantially all assets of the Company and are subordinated to the zero coupon notes dated, March 16, 2001. The loans are prepayable in cash at any time, and are prepayable, with accrued interest, in the Company's common stock at the option of the Company after March 31, 2001. Stock issued in payment of this debt will be valued at 85% of the then market prices. During 2001, the Company converted $222,417 of accrued interest into principal. On April 12, 2002, Cumberland Associates LLC agreed to extend the maturity date of these loans through July 1, 2003. In connection with the extension, the Company recorded $16,215 of deferred financing charges relating to professional fees and $189,369 relating to consideration issued to the note holders valued at $120 per share of the Company's common stock for each $1,000 face amount outstanding at maturity. The $189,369 has been recorded as interest payable as a long term liability in the consolidated financial statements. Accordingly, the deferred financing costs and the unamortized financing charges are being amortized through July 1, 2003. Accordingly, these loans have been recorded as long-term debt in the accompanying consolidated financial statements. As of June 30, 2002, if the 20% promissory notes were converted into common stock, the Company would have to issue approximately 3,136,000 shares of its common stock. 8% promissory notes: On July 31, 2000, the Company established a $1,000,000 credit facility with a major existing investor. Initially, $500,000 was borrowed under the line, which was due on June 30, 2003. In December 2000 and January 2001, the Company borrowed under the credit facility an additional $400,000 and $100,000, respectively, due on December 31, 2003. In connection with the initial $500,000, the investor received five-year warrants to purchase 70,000 shares of the Company's common stock, exercisable at $3.00 per share. In connection with the $400,000, the investor received five-year warrants to purchase 80,000 shares of the Company's common stock exercisable at $1.25 per share. In connection with the $100,000, the investor received five-year warrants to purchase 20,000 shares of the Company's common stock at $1.25 per share. On April 15, 2002, the investor agreed to extend the maturity date of the $500,000 originally due June 30, 2003 to August 1, 2003. Accordingly, in connection with the extension, the Company incurred $4,054 of deferred financing charges relating to professional fees. Accordingly, the deferred financing costs and the unamortized debt discount are being amortized through August 1, 2003. Accordingly, 12 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 4 - Notes payable (concluded): these loans have been recorded as long-term debt in the accompanying consolidated financial statements. $250,000 promissory note: On May 28, 2002, the Company received $250,000 from an existing investor which provides for interest at 8% if paid in cash and 10% if paid in stock. The note will convert into the Company's common stock if the Company issues 1,000,000 shares or raises at least $1,000,000 from the sale of equities prior to August 1, 2003, at the price in that transaction but not less than $.50 per common share, or more than $2.00 per share. $150,000 promissory note: On February 19, 2002, the Company issued a $150,000 promissory note to an existing investor. The note bears interest at 8% if paid in cash and 10% if paid in stock and matures on August 1, 2003. For the six months ended June 30, 2002, interest was accrued at 10%. Note 5 - Equity line commitment: In January 2001, Milestone entered into a three-year private equity line agreement with Hillgreen Investments Limited ("Hillgreen"), a British Virgin Islands corporation, pursuant to which Hillgreen is obligated to purchase, subject to the fulfillment of specified conditions, up to 2,100,000 shares of Milestone common stock over the next 36 months. Hillgreen has allocated $20,000,000 to fund its purchase obligations. The transaction was arranged by Jesup & Lamont Securities Corporation, a New York based investment banking firm. Milestone's right to draw upon this facility is subject to a number of limitations and conditions, including a limitation on the amounts sold to Hillgreen within specified periods. Subject to these and other conditions and limitations, Milestone will have full control over the timing of any financing under the equity line and is under no obligation to sell any shares to Hillgreen. Any shares that are sold will be priced at 87.5% of the volume weighted average market price of Milestone common stock during a fixed period prior to the sale. Milestone has discretion to establish a floor price below which shares will not be sold by Milestone to Hillgreen. Note 6 - Contingencies: In March 2001, the Company entered into an advertising agreement with News USA, Inc. and Vested Media Partners, Inc. (the "Agreement") to increase the awareness of healthcare professionals and the public to the benefits of The Wand(R) and the CompuFlo(TM) technologies. Under the Agreement, News USA is required to prepare articles and advertisements for the Company's products and technologies and place them in newspapers and on radio stations. News USA has guaranteed 72,000 media placements during the 18-month term of the Agreement. In exchange for these services the Company granted warrants to purchase 1,171,875 shares of common stock exercisable on the following dates and prices over the life of the Agreement; (1) $1.28 during the first 18 months, (2) $2.25 during the next nine months and (3) $3.00 during the next nine months. 13 MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 6 - Contingencies (concluded): The Agreement provides for a termination clause in the fourth month if the Company's average closing stock price does not exceed $2.25 during the first ten days of the fourth month provided that the Company has received 24,000 publications. Accordingly, the remaining two-thirds of the warrants to purchase the Company's common stock would not become exercisable. However, the vendor can recommence producing the publications whenever the Company's average closing stock price for a ten day period exceeds $2.25. At the end of the ninth month at the option of the vendor, if the Company's stock price has not averaged $2.25 for a ten day period, the Agreement can be terminated and, accordingly, two-thirds of the warrants remaining to purchase the Company's common stock will be forfeited or the vendor could resume fulfilling one-half of its obligation in three months and the remaining obligation in the next six months. In March 2001, the Company initially recorded unearned advertising cost of $324,218 which represents the estimated fair value of the 390,625 of the warrants for one-third of the total warrants granted based on the 24,000 minimum placements. The unearned advertising costs are being amortized as publications are received by the Company over the minimum placements. As of June 30, 2002, unearned advertising costs was $285,204 and during the six months ended June 30, 2002, the Company recorded $17,616 in advertising expenses relating to placements during the period. The estimated fair value of the remaining warrants to purchase 781,250 of the Company's common stock have not been recorded in the Company's consolidated financial statements due to the likelihood that the Agreement will not be fulfilled. Note 7 - Subsequent Event: On August 13, 2002, the Company received an $85,000 commitment from an existing investor. The Company will receive the $85,000 during the third quarter in exchange for a promissory note. Interest per annum is 8% if paid in cash and 10% if paid in stock. The note will convert into the Company's common stock if the Company issues 1,000,000 shares or raises at least $1,000,000 from the sale of equities prior to August 1, 2003, at the price in that transaction but not less than $.50 per common share, or more than $2.00 per share. 14 ITEM 2. Management's Discussion and or Analysis Plan of Operations Summary of Significant Account Policies Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to accounts receivables, inventories, advances to its contract manufacturer, stock based compensation and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions. Overview The results from operations for the three and six months ended June 30, 2002, reflect Milestone's concentrated effort to drastically reduce its overhead while slowly growing its user base in the dental market and introducing the Wand(R) technology in a variety of medical disciplines. The year to date loss of approximately $1 million represents a 58% reduction from the same period in 2001. During the six months ended June 30, 2002, Milestone reduced its average monthly cash used from operations to approximately $36,000, completed a $4.1 million debt restructuring program, and obtained $400,000 in additional financing. The program included equity conversions; deferring payment on certain payables until January 2, 2003 and July 2, 2003; a restructuring of all debt originally maturing in 2002. Furthermore, Milestone signed an agreement for the distribution of CompuDent(TM) in the Eastern U.S., a national hair restoration provider agreed to equip its offices with the CompuMed(TM), and the U.S. Patent Office granted a Notice of Allowance for broad patent protection of a new safety engineered needle technology to be issued to the Company. Statement of Operations Three months ended June 30, 2002 compared to Three months ended June 30, 2001 Net sales for the three months ended June 30, 2002 and 2001 were $1,160,129 and $918,441 respectively. The $241,688 or 26% increase is attributable primarily related to a 32% or $160,000 increase in domestic sales of The Wand(R) handpiece, CompuMed(TM) sales of approximately $82,000 and a $28,000 increase in sales of CompuDent(TM). Cost of sales for the three months ended June 30, 2002 and 2001 were $515,756 and $484,720, respectively. The $31,036 increase is attributable primarily to higher foreign and domestic sales volume. For the three months ended June 30, 2002, the Company generated a gross profit of $644,373 or 56% as compared to a gross profit of $433,721 or 47% for the three months ended June 30, 2001. The increase in gross profit is mainly attributable to an increase in domestic sales of The Wand(R) handpiece and CompuMed(TM) sales. 15 Selling, general and administrative expenses for the three months ended June 30, 2002 and 2001 were $937,932 and $1,358,577, respectively. The $420,645 decrease is attributable primarily to an approximate $399,000 decrease in expenses associated with the sale and marketing of The Wand(R) technology due to the transitioning of its sales force to independent representatives and an approximate $61,000 decrease in legal fees. The Company had incurred additional legal expenses in 2001 as it entered and advertising agreements and completed registrations for medical patents; and additional patents on The Wand(R) and CompuFlo(TM) technologies. Research and development expenses for the three months ended June 30, 2002 and 2001 were $15,084 and $9,363, respectively. The $5,721 increase is the result of higher costs incurred during the second quarter of 2002, which were associated with the development of the Company's safety needle. The loss from operations for the three months ended June 30, 2002 and 2001 were $308,643 and $934,219, respectively. The $625,576 decrease in loss from operations is explained above. The Company incurred interest expense of $217,567 for the three months ended June 30, 2002 as compared to $176,165 for the three months ended June 30, 2002. The increase is attributable to higher average borrowing in 2002. The net loss for the three months ended June 30, 2002 was $502,210 as compared to a net loss of $1,109,200 for the three months ended June 30, 2001. The $606,990 decrease in net loss is attributable to lower selling and administrative expenses and a higher gross margin on a higher level of sales as explained above. Six months ended June 30, 2002 compared to Six months ended June 30, 2001 Net sales for the six months ended June 30, 2002 and 2001 were $2,181,717 and $2,180,812, respectively. The $905 increase is attributable primarily to 6.6% or $60,000 increase in domestic sales of The Wand(R) handpiece, a $153,000 increase in The Wand(R) handpiece sales to foreign distributors and the CompuMed(TM) sales of approximately $115,000. The increase is partially offset by an approximately $275,000 decrease in sales of CompuDent(TM). Lower CompuDent(TM) sales in the U.S. are the direct result of the downsizing of the Company's sales and marketing effort. Cost of sales for the six months ended June 30, 2002 and 2001 were $981,771 and $1,056,557 respectively. The $74,786 decrease is attributable primarily to lower foreign and domestic unit sales volume. For the six months ended June 30, 2002, the Company generated a gross profit of $1,199,946 or 55% as compared to a gross profit of $1,124,255 or 52% for the six months ended June 30, 2001. Selling, general and administrative expenses for the six months ended June 30, 2002 and 2001 were $1,835,208 and $3,172,125 respectively. The $1,336,917 decrease is attributable primarily to an approximate $262,000 decrease in expenses associated with the sale and marketing of The Wand(R) technology due to the transitioning of its sales force to independent representatives and an approximate $262,000 decrease in legal fees. In addition, during the first quarter of 2001, the Company issued 92,308 shares for services rendered with a value of $150,000 in non-cash compensation or consulting services. The Company had incurred additional legal expenses in 2001 due to advertising agreements; medical patent registrations; and additional patents on The Wand(R) and CompuFlo(TM) technologies. 16 Research and development expenses for the six months ended June 30, 2002 and 2001 were $45,379 and $28,081, respectively. The $17,298 increase is the result of higher costs incurred during the second quarter of 2002, which were associated with the development of the Company's safety needle. The loss from operations for the six months ended June 30, 2002 and 2001 were $1,880,587 and $3,200,206, respectively. The $1,319,619 decrease in loss from operations is explained above. The Company incurred interest expense of $389,780 for the six months ended June 30, 2002 as compared to $371,180 for the six months ended June 30, 2001. The increase of $18,600 is attributable to higher average borrowing in 2002. The net loss for the six months ended June 30, 2002 was $1,022,421 as compared to a net loss of $2,444,523 for the six months ended June 30, 2001. The $1,422,102 decrease in net loss is attributable to lower selling and administrative expenses and a higher gross margin on the same level of sales. Liquidity and Capital Resources At June 30, 2002, Milestone had $22,592 in cash, a working capital deficiency of $433,948. For the six months ended June 30, 2002, the Company increased cash by $6,850. For the six months ended June 30, 2002, the Company's net cash used in operating activities was $216,212. This was attributable primarily to a net loss of $1,022,421 adjusted for noncash items of $17,616 for amortization of advertising costs, $129,999 for amortization of debt discount and deferred financing costs and $28,419 for depreciation; a $38,735 increase in accounts receivable; a $46,652 decrease in inventories; a $113,490 decrease in advances to contract manufacturer; a $9,987 increase in prepaid expenses; an increase in other assets of $19,971 a decrease in accrued expenses of $8,033 a $259,781 increase in accrued interest; a $126,978 increase in accounts payable; and an $160,000 increase in deferred compensation. For the six months ended June 30, 2002, the Company used $21,440 in investing activities for capital expenditures. For the six months ended June 30, 2002, the Company generated $244,502 from financing activities as it issued promissory notes to an existing investor totaling $400,000 which was offset by the Company paying down $114,960 of its $500,000 line of credit and paying $40,538 of financing costs relating to its debt restructuring . As of June 30, 2002, Milestone had $22,592 in cash and a working capital deficiency of $433,948. As listed below, several steps have been taken to improve liquidity and meet Milestone's working capital needs: In January 2002, Milestone issued 33,840 units in exchange for payment of accrued interest totaling $27,072. In addition, the Company issued 614,183 units issued to its CEO in consideration for payment of $491,346 in deferred compensation. Each unit consisted of one share of common stock and one warrant to purchase an additional share of common stock. On February 19, 2002, the Company issued a $150,000 promissory note to an existing investor. The note bears interest at 8% if paid in cash and 10% if paid in stock and matures on August 1, 2003. 17 On May 28, 2002, the Company received $250,000 from an existing investor which provides for interest at 8% if paid in cash and 10% if paid in stock. The existing investor is entitled to convert the note into the Company's common stock only upon the Company issuing 1,000,000 shares or raising at least $1,000,000 prior to August 1, 2003, at a price greater than $.50 per common share, but not exceeding $2.00 per share. On March 29, 2002, the Company entered into the following agreements for: o Deferring payment on accounts payable to a related party totaling $272,866 at December 31, 2001 until January 2, 2003. o Extending the maturing date of its $200,000 obligation and accrued interest of $26,600 as of December 31, 2001, to its CEO until January 2, 2003. o Deferring payment on $320,000 of the CEO's $350,000 salary until January 2, 2003. o Establishing a 6% $100,000 line of credit with its CEO through January 2, 2003, payable on April 2, 2003. All of the agreements with the exception of the line of credit were amended on August 13, 2002 to provide the following: o Extending the maturity date of its 9% $200,000 obligation and accrued interest of $35,650 until July 2, 2003. o At the option of the Company's Board of Directors, $250,000 on the accounts payable to the related party can be paid through the issuance of the Company's common stock. o Deferring payment on $160,000 at June 30, 2002 of the CEO salary until July 2, 2003. On April 12 and April 15, 2002, the Company entered into the following agreements with existing noteholders: o The Company received the required consents from the senior secured zero coupon 20% promissory noteholders whose outstanding face value (principal plus accrued interest) was collectively greater than 80% of the total outstanding face value of the obligation all of the noteholders gave their consent and the following occurred: (1) the notes were extended to July 1, 2003 and (2) the interest rate was reduced to 6% if paid in cash or reduced to 12% if paid in common stock. Additionally, at the option of the Company, the face value on the maturity dates will be payable either in cash or in the Company's common stock, valued at the average closing price per share for the five trading dates prior to July 1, 2003. Furthermore, for these holders, the Company will issue shares of the Company's common stock with a value of $120 for each $1,000 face amount outstanding at maturity. As a result, the Company recorded deferred financing charges of $329,572 which are being amortized to interest expense over the remaining life of these notes. o Extending the 20% promissory notes to July 1, 2003 and lowering the interest rate from 20% to 6% if paid in cash or to 12% if paid in common stock. o Extending the 8% $500,000 promissory note to August 1, 2003. o Extending the 10% line of credit for $500,000 to August 1, 2003. o Establishing a 6% $200,000 line of credit with an existing investor through January 2, 2003. o Allowing the Company to issue additional unsecured debt so long as the maturity date is subsequent to August 1, 2003. On August 13, 2002, the Company received an $85,000 commitment from an existing investor. The Company will receive the $85,000 during the third quarter in exchange for a promissory note. Interest per annum is 8% if paid in cash and 10% if paid in stock. The note will convert into the Company's common stock if the Company issues 1,000,000 shares or raises at least $1,000,000 from the sale of equities prior to August 1, 2003, at the price in that transaction but not less than $.50 per common shares or more than $2.00 per common share. 18 In addition, Milestone has an equity line commitment through January 1, 2004 to sell up to 2,100,000 shares of its common stock. Milestone's right to draw upon this facility and the amount of each draw is subjected to certain limitations. The most restrictive of which is the investor or any of its affiliates can not directly own more than 9.9% of the Company's then outstanding number of shares of common stock unless the Company either issues (i) additional shares of common stock, (ii) converts any of its debt and or (iii) the investor is unable to sell to third parties any of the shares previously purchased, the Company only has the ability to sell approximately 1,250,000 shares which will derive proceeds of approximately $570,000. At August 13, 2002, without any restrictions and based on the closing stock price, the maximum proceeds that the Company could receive would be approximately $919,000. OPERATIONS The Company believes that CompuDent(TM), CompuMed(TM) and The Wand(R) technology represents a major advance in the delivery of local anesthesia and that the potential applications of this technology extends beyond dentistry. Based on scientific and anecdotal support, the Company contends that CompuMed(TM) could enhance the practices of the estimated 90,000 U.S. based physicians included in such non-dental disciplines as Podiatry, Hair Restoration Surgery, Plastic Surgery, Dermatology, colorectal surgery and procedures in Orthopedics, OB-GYN and Ophthalmology. Despite limited resources, the Company has continued its efforts to realize the market potential of The Wand(R) and become profitable. These steps include (i) relaunching of The Wand Plus(TM) drive unit domestically, under the name CompuDent(TM), (ii) distribution of CompuDent(TM) through a host of channels (i.e. independent sales representatives, an inside sales group and a major dental distributor), (iii) launching The Wand Plus(TM) drive unit for medical purposes and marketing it as CompuMed(TM), (iv) increasing presence at medical trade shows, (v) advertising to increase the awareness of the product, (vi) implementing cost reduction programs, and (vii) restructuring certain outstanding obligations. Management believes that these steps are critical to the realization of Milestone's long-term business strategy. In March 2002, Milestone announced an agreement whereby Medical Hair Restoration ("MHR") will equip each of its 21 Surgery centers in the U.S. with CompuMed(TM). In April 2002, Milestone announced that the United States Patent Office has granted a Notice of Allowance for broad patent protection of a new safety engineered needle technology to be issued to Milestone. When commercialized, this new technology will be used with a plethora of infusion devices, including the Company's CompuDent(TM) and CompuMed(TM) computer controlled local anesthetic delivery systems as well as the CompuFlo(TM), an enabling technology for computer controlled infusion, perfusion, suffusion and aspiration of fluids. It provides features previously unavailable to medical and dental practitioners; fully automated true single-handed activation with needle anti-deflection and force-reduction capability. In addition, practitioners can re-use this safety engineered device repeatedly during a single patient session making it highly functional in a wide variety of medical and dental applications. In April 2002, Milestone announced acceptance of an independent clinical study concluding that use of Milestone's computer controlled local anesthetic delivery technology in nasal and sinus surgery produced a "safe, acceptable, tolerable, and cost effective method of sedating patients creates a sense of security and adds to the ultimate satisfaction associated with nasal surgery." The study also concluded 19 "Recovery room and expensive hospital costs are avoided, making nasal surgery more affordable and within reach of a greater range of potential nose surgery patients." One of the study's authors, Dr. Pieter Swanepoel, a world-renowned surgeon, presented his study at the 8th International Symposium of the Academy in New York City in May 2002. The new technique is an adaptation of similar regional nerve blocking techniques used by dental surgeons and replaces the need for costly and invasive general anesthesia. Dr. Swanepoel in conducting his research using pre-production prototypes of our CompuFlo(TM) system, since it allowed him to measure flow rate and tissue pressure and determine parameters for optimal results. The core technology embodied in the CompuMed(TM) unit may be used to deliver local anesthesia within the parameters ascertained by Dr. Swanepoel to produce optimal results and then achieve conscious sedation in nasal surgery. In May 2002, Milestone signed a dental distribution agreement with Benco Dental under which Benco Dental will distribute CompuDent(TM) through their direct sales organization. Benco has the right to become the exclusive dental distributor in selected states within the United States if it achieves certain sales objectives. Milestone is providing the initial sales and product training to the entire Benco sales organization through September 2002. Following these initial training sessions, Milestone will support this effort through "Dealer Managers and Technical Support Specialists." Other Matters - American Stock Exchange On May 2, 2002, Milestone received a letter from the American Stock Exchange advising us that it had fallen below certain listing criteria and requesting that a recovery plan detailing any actions taken, or planned to be taken within the next 18 months to bring the Company into compliance with the continued listing standards. According to the letter, the Listing Qualifications Department management will then evaluate the plan, including any supporting documentation, and make a determination as to whether the Company has made a reasonable demonstration of an ability to regain compliance with the continued listing standards, in which case the plan will be accepted. On June 10, 2002 the Company submitted a detailed recovery plan to the American Stock Exchange showing how Milestone expects to achieve stockholder equity of $4,000,000 by December 31, 2003. In response, the Company have received informal advice from the American Stock Exchange that in view of the expected loss in 2002, we need to demonstrate how we will achieve $6,000,000 in stockholders' equity within the next 18 months. The company is now in the process of revising the plan in order to meet these requirements. If the revised plan is not accepted, the American Stock Exchange may initiate delisting proceedings. In the event that our securities are delisted from the American Stock Exchange, trading, if any, in the common stock and warrants would be conducted in the over the counter market in the so-called "pink sheets" or the NASD's "OTC Bulletin Board." Consequently the liquidity of the Company securities could be impaired, not only in the number of securities which could be bought and sold, but also through delays in the timing of transactions, reduction in security analysts and new media coverage of Milestone, and lower prices for our securities than might otherwise be obtained. If Milestone shares of common stock are removed or delisted from the American Stock Exchange the ability of stockholders to sell our common stock and warrants in the secondary market could be restricted. The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be an equity security that has a market price, as defined, of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions, including an exception of an equity security that is quoted on the American Stock Exchange. If our shares of common stock are removed or delisted from the American Stock Exchange, the security may become subject to rules that impose additional sales practice requirements on broker-dealers who sell these securities. For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchaser of such securities and have received the purchaser's written consent to the transactions prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a disclosure schedule prepared by the Securities and 20 Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered underwriter, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As such, the "penny stock" rules, in the event our securities are delisted from the American Stock Exchange, may restrict the ability of stockholders to sell our common stock and warrants in the secondary market. 21 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits: 99.1 Certification by Chief Executive Officer 99.2 Certification by Chief Financial Officer (b) Reports on Form 8-K: None 22 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned MILESTONE SCIENTIFIC INC. ------------------------- Registrant /s/Leonard Osser ------------------------------------ Leonard Osser Chairman and Chief Executive Officer /s/Thomas M. Stuckey ------------------------------------- Thomas M. Stuckey, Vice President and Chief Financial Officer Dated: August 15, 2002 23 EX-99.1 3 d51365_ex99-1.txt CERTIFICATION Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Milestone Scientific Inc on Form 10-QSB for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Leonard Osser Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Leonard Osser - ----------------- Leonard Osser Chief Executive Officer August 14, 2002 EX-99.2 4 d51365_ex99-2.txt CERTIFICATION Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Milestone Scientific Inc on Form 10-QSB for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas Stuckey Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Thomas M. Stuckey ----------------- Thomas M. Stuckey Chief Financial Officer August 14, 2002 -----END PRIVACY-ENHANCED MESSAGE-----