NOTE

8—

STOCKHOLDERS’ EQUITY

PUBLIC OFFERING AND PRIVATE PLACEMENT

February 2019,

Milestone Scientific consummated a public offering and a private placement of Common Stock. The public offering generated gross proceeds of approximately

$2.0

million for the issuance of

5,715,000

shares of common stock and warrants to purchase

1,428,750

shares of common stock. The warrants have a term of

years and are exercisable at

$0.50

per share. Subsequent, to the public offering the underwriter exercised its over-allotment option and paid approximately

$198,000

for

567,400

additional shares of common stock and

141,850

warrants.

Also, in

February 2019,

the Company generated gross proceeds from a private placement of approximately

$250,000

for

714,286

shares of common stock and warrants to purchase

178,571

shares of common stock from

Bp4

S.p.A., a principal stockholder of Milestone Scientific, that exercised its right to participate on a pro-rata basis on the recent public offering.

Bp4’s

CEO is a director of Milestone Scientific and also Chief Executive Officer and Director of Wand Dental, a wholly owned subsidiary of Milestone Scientific. The warrants have a term of

years and are exercisable at

$0.50

per share.

See Note

14,

Subsequent Events for more information on the equity raise in

April 2020.

WARRANTS

The following table summarizes information about shares issuable under warrants outstanding at

March 31, 2020:

	Warrant shares outstanding			Weighted Average exercise price		Weighted Average remaining life		Intrinsic value
Outstanding at January 1, 2020		1,074,171		$	0.50	$	4.10		956,012
Issued		-			-		-		-
Exercised		(460,725	)		0.50		-		630,389
Expired or cancelled		-			-		-		-
Outstanding and exercisable at March 31, 2020		613,446		$	0.50	$	3.85		-

Exercisable at March 31, 2020		613,446		$	0.50	$	3.85		460,085

The following table summarizes information about shares issuable under warrants outstanding at

March 31, 2019:

	Warrant shares outstanding		Weighted Average exercise price		Weighted Average remaining life		Intrinsic value
Outstanding at January 1, 2019		1,500,000	$	2.55	$	0.97		-
Issued		1,749,171	$	0.50	$	4.85		-
Exercised		-	$	-	$	-		-
Expired or cancelled		-	$	-	$	-		-
Outstanding and exercisable at March 31, 2019		3,249,171	$	1.45	$	2.94		-

Exercisable at March 31, 2019		3,249,171	$	1.45	$	2.94		-

PREFERRED STOCK

May 2014,

Milestone completed a private placement, which raised gross proceeds of

$10

million, from the sale of

million of Milestone Scientific common stock (

two million

shares at

$1.50

per share) and

million of our Series A Convertible Preferred Stock ("Preferred Stock") (

7,000

shares at

$1,000

per share). These shares were convertible, at the option of the holder, into the number of shares of common stock equal to the stated value divided by

$2.545,

subject to anti-dilution adjustments, at any time before

May 14, 2019.

These shares were mandatory convertible on

May 14, 2019,

into the number of shares of common stock equal to the stated value divided by

$2.54

per share or

$1.50

per share if the common stock does

not

trade at

$3.15

for period of time, as defined by the agreements, both subject to anti-dilution adjustment.

May 14, 2019,

the mandatory conversion date, the Preferred Stock was converted at a rate of

$1.17

per common share resulting in the issuance of

5,982,906

shares of common stock.

SHARES TO BE ISSUED

As of

March 31, 2020,

there were

2,306,698

shares to be issued whose issuance has been deferred to the Chief Executive Officer, Chief Financial Officer and other employees of Milestone Scientific. As of

March 31, 2019,

there were

2,127,843

shares, whose issuance has been deferred to the Chief Executive Officer, Chief Financial Officer and other employees of Milestone Scientific. Such shares will be issued to each party upon termination of their employment.

As of

March 31, 2020,

and

2019,

there were

159,835

and

679,867

shares, respectively, to be issued to non-employees, respectively, that will be issued to non-employees for services rendered. The number of shares was fixed at the date of grant and were fully vested upon grant date.

The following table summarizes information about shares to be issued at

March 31, 2020

and

2019,

respectively.

	March 31, 2020			March 31, 2019

Shares-to-be-issued, outstanding January 1, 2020 and 2019, respectively		2,375,7603			2,470,565
Granted in current period		102,768			337,145
Issued in current period		(11,995	)		-
Shares-to be issued outstanding March 31, 2020 and 2019, respectively		2,466,5339			2,807,710

OUTSTANDING EQUITY INSTRUMENTS IN EXCESS OF AUTHORIZED SHARES

As a result of the shares and warrants issued in the public and private offerings as well as other issuance of common stock during

2019,

the Company did

not

have a sufficient number of authorized shares of common stock to cover the exercise and issue of outstanding equity instruments. Therefore, as of

March 31, 2019,

the warrants issued in the public and private placement were classified as liabilities. As long as the warrants remained liability-classified, they were continued to be re-measured each reporting period, with any increase or decrease in value recorded as a loss or gain in the condensed consolidated statement of operations.

The initial fair value of the warrants was determined using a Black-Scholes option pricing model. The following assumptions were used to value the warrants at the grant date:

	Warrants
Expected Term (years)	5 years
Volatility		85	%
Dividend yield		0.00	%
Exercise Price	$	0.50
Risk-free interest rate		2.50	%
Weighted average fair value of warrants granted	$	0.22
Number of shares underlying warrants granted		1,749,171

As these warrants are liability-classified, they were revalued at

March 31, 2019

using the following assumptions:

	Warrants
Expected Term (years)		4.9
Volatility		85	%
Dividend yield		0.00	%
Exercise Price	$	0.50
Risk-free interest rate		2.23	%
Weighted average fair value of warrants granted	$	0.19

Additionally, approximately

90,000

of the shares to be issued were also classified as liability until there was a sufficient number of authorized shares of common stock to cover the issuance of the shares. These shares were valued at the trading price of a share of the Company’s common stock (

$0.33

upon the creation of the liability and as of

March 31, 2019)

and are continuously re-measured each reporting period, with any increase or decrease in value recorded as a loss or gain in the condensed consolidated statement of operations. For the

three

months ended

March 31, 2019

the Company has recorded a gain of approximately

$40,000

in relation to the revaluation of the derivative warrants and shares to be issued. There were

derivative instruments during the

three

months ended

March 31, 2020.

December 17, 2019,

the Company’s shareholders approved an increase to the authorized share limit to

75,000,000.

December 17, 2019,

the Company reclassified all derivative liabilities related to the insufficient number of authorized shares to stockholders’ equity.