Note A - Organization, Business and Basis of Presentation

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE A

— ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION

All references in this report to “

Milestone Scientific,” “us,” “our,” “we,” or “Milestone” refer to Milestone Scientific Inc., and its consolidated subsidiaries, Wand Dental,  Milestone Advanced Cosmetic and Milestone Medical (all described below) and affiliate, Milestone Education (described below), unless the context otherwise indicates. Milestone Scientific is the owner of the following registered U.S. trademarks:

CompuDent®; CompuMed®; CompuFlo®; DPS Dynamic Pressure Sensing Technology®; Milestone Scientific ®; the Milestone logo ®; SafetyWand®; STA Single Tooth Anesthesia System®; and The Wand ®.

Milestone Scientific was incorporated in the State of Delaware in

August

1989.

Milestone Scientific has developed a proprietary, computer-controlled anesthetic delivery instrument, through the use of The Wand®, a single use disposable handpiece. The instrument is marketed in dentistry under the trademark CompuDent®, and STA Single Tooth Anesthesia System® and in medicine under the trademark CompuMed®. CompuDent® is suitable for all dental procedures that require local anesthetic. CompuMed® is suitable for many medical procedures regularly performed in Plastic Surgery, Hair Restoration Surgery, Podiatry, Colorectal Surgery, Dermatology, Orthopedics and a number of other disciplines. The dental instruments are sold in the United States and in over

47

countries abroad. There have been

no

medical instruments sold in the United States and limited amounts sold internationally as of the reporting date, although certain medical instruments have obtained CE mark approval and now can be marketed and sold in most European countries. Milestone Scientific’s products are manufactured by a

third

-party contract manufacturer.

In

May

of

2014,

Milestone Scientific completed a private placement (the “

May

2014

Financing”), which raised aggregate gross proceeds

$10

million, from the sale of

$3

million of our common stock,

$.001

par value per share (“common stock”)

(two

million shares at

$1.50

per share) and

$7

million of our Series A Convertible Preferred Stock

(7,000

shares at

$1,000

per share), convertible into common stock at

$2.37

per share (as adjusted to date) on

May

14,

2019,

or

$1.50

per share if certain conditions are not met; both subject to an anti-dilution adjustment.

On

June

1,

2015,

we listed our common stock on the NYSE MKT LLC (“

NYSE MKT”) under the ticker symbol “MLSS”.

In

June

2016,

Milestone Scientific raised an

additional

$2.0

million of gross proceeds in a private placement of

one

million shares of common stock, at a price of

$2.00

per share, to the same investors that participated in the 

May

2014

Financing.

In the

second

quarter of

2016,

Milestone Scientific initiated a share exchange program pursuant to which we exchanged

one

share of common stock for every

two

outstanding shares of Milestone Medical

(described below) common stock, a previously consolidated variable interest entity. As a result of the exchange program, at

December

31,

2016,

Milestone Scientific owned approximately

91%

of Milestone Medical.

In

July

2016,

Milestone Scientific filed for

510(k)

marketing clearance with the United States Food and Drug Administration ("FDA") Milestone Medical's epidural anesthetic injections

instrument. This clearance is necessary to begin commercialization of these medical instruments in the United States.

In

December

2016,

Milestone Scientific received notification from the FDA that based upon the

510(k)

application submitted for the Company's Compu-Flo Intra

Articular Computer Controlled Injection System, it did not adequately document that the device met the equivalency standard required for

510(k)

clearance. Following consultation with the FDA Office of Device Evaluation, we intend to provide additional data, which could include a new Human Factor Validation study (HFV Study) in support of a new

510(k)

application for the device. An HFV Study demonstrates the ease of use of a product. The cost to generate this incremental data is estimated to be approximately

$100,000.

In

December

2016,

Milestone Scientific completed an underwritten public offering of

2,000,000

shares of common stock and warrants to purchase up to

1,592,775

 shares of common stock, including

92,775

additional warrants pursuant to a partial exercise of the over-allotment option granted to the underwriters. The public offering price for each share and related warrant was

$1.50.

The warrants have a

three

-year term and an exercise price of

$2.55

per share. In

January

2017,

the underwriter exercised a portion of its over-allotment option to purchase an additional

123,700

shares of common stock at the public offering price of

$1.499

per share. The gross proceeds from this offering, including proceeds from partial exercises of the over-allotment option, were approximately

$3,200,000,

before deducting underwriting discounts and commissions and other offering expenses. This offering was covered by the prospectus supplement, filed with the SEC on

December

16,

2016,

to our shelf registration statement on Form S-

3

(SEC File No.:

333

-

209466).

As of

December

31,

2016,

Milestone Scientific's financial statements are consolidated to include the accounts of its wholly-owned,

 majority-owned subsidiaries variable interest entity including, Wand Dental, Inc., a Delaware corporation ("Wand Dental"), Milestone Advanced Cosmetic Systems, Inc. ("Milestone Advanced Cosmetic"), Milestone Medical Inc. ("Milestone Medical") and Milestone Education LLC ("Milestone Education"). Milestone Education are variable interest entity for which Milestone Scientific is the primary beneficiary. All significant, intra-entity transactions and balances have been eliminated in the consolidation. (See Note E to the Consolidated Financial Statements).

Milestone Scientific has incurred operating losses and negative cash flows from operating activities since its inception, except for

2013.

Milestone Scientific is actively pursuing the

generation of increased revenue, positive operating income and cash flow from operations. The previous equity financings provided Milestone Scientific with the opportunity to continue to develop medical instruments and aggressively market its already commercialized dental instruments throughout the world. Management believes its cash on hand and remaining net current assets are sufficient to meet its obligations over the next

twelve

months from the filing of this form

10K.

Milestone Scientific

may

need to raise additional capital prior to management's expected generation of sustainable positive cash flow from operating activities.