UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarter ended
| | 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
Milestone Scientific Inc.
(Exact name of registrant as specified in its charter)
| | |
| State or other jurisdiction of Incorporation or organization | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered |
| | |
Securities registered pursuant to section 12(g) of the Act: NONE.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☑ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☑ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of 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. ☑
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. ☑
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large, accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☑ | Smaller reporting company | |
| Emerging Growth Company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of November 14, 2023, the registrant has a total of
DOCUMENTS INCORPORATED BY REFERENCE
None
MILESTONE SCIENTIFIC INC.
Form 10-Q
TABLE OF CONTENTS
| PART I—FINANCIAL INFORMATION |
||
| Item 1. |
Condensed Consolidated Financial Statements |
|
| Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022 |
4 |
|
| Statements of Operations for the three and nine months ended September 30, 2023 and 2022 (Unaudited) |
5 |
|
| Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022 (Unaudited) |
6 |
|
| Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (Unaudited) |
8 |
|
| Notes to Unaudited Condensed Consolidated Financial Statements |
9 |
|
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
25 |
| Item 4. |
Controls and Procedures |
25 |
| PART II—OTHER INFORMATION |
||
| Item 1. |
Legal Proceedings |
25 |
| Item 1A. |
Risk Factors |
25 |
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
25 |
| Item 3. |
Defaults Upon Senior Securities |
25 |
| Item 4. |
Mine Safety Disclosures |
26 |
| Item 5. |
Other Information |
26 |
| Item 6. |
Exhibits |
27 |
| Signatures |
28 |
|
FORWARD-LOOKING STATEMENTS
When used in this Quarterly Report on Form 10-Q, 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 of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding events, conditions and financial trends that may affect Milestone Scientific’s future plans of operations, business strategy, results of operations and financial condition. Milestone Scientific 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. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Milestone Scientific’s plans and objectives are based, in part, on assumptions involving the continued expansion of its business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Milestone Scientific. Although Milestone Scientific believes that its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. Considering the significant uncertainties inherent in the forward-looking statements included herein, our history of operating losses that are expected to continue, requiring additional funding which we may be unable to raise capital when needed (which may force us to delay, curtail or eliminate commercialization efforts of our CompuFlo Epidural Computer Controlled Anesthesia System), the early stage operations of and relative lack of acceptance of our medical products, relying exclusively on two third parties to manufacture our products, changes to our distribution arrangements exposes us to risks of interruption of marketing efforts and building new marketing channels, changes in our informal manufacturing arrangements made by the manufacturer of our products and disruptions at the manufacturing facility of our manufacturers, including shortages of or delays in obtaining chips and other components, exposes us to risks that may harm our business, raising additional funds by issuing securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights, if physicians do not accept nor use our CompuFlo Epidural Computer Controlled Anesthesia System, our ability to generate revenue from sales will be materially impaired, exposure to the risks inherent in international sales and operations, including China, and developments by competitors may render our products or technologies obsolete or non-competitive, the inclusion of such information should not be regarded as a representation by Milestone Scientific or any other person that the objectives and plans of Milestone Scientific will be achieved. Prospective investors are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and the 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 Milestone Scientific’s reports, including without limitation, Milestone Scientific's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”). Milestone Scientific disclaims any intent or obligation to update such forward-looking statements.
Milestone Scientific is the owner of the following registered U.S. trademarks: CompuDent®; CompuMed®; CompuFlo®; DPS Dynamic Pressure Sensing technology®; Milestone Scientific ®; CathCheck®; the Milestone logo ®; SafetyWand®; STA Single Tooth Anesthesia Device®; and The Wand ®.
Part I- Financial Information
Item 1. Financial Statements
MILESTONE SCIENTIFIC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2023 | December 31, 2022 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities | | |||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Inventories | ||||||||
| Advances on contracts | ||||||||
| Total current assets | ||||||||
| Furniture, fixtures and equipment, net | ||||||||
| Intangibles, net | ||||||||
| Right of use assets finance lease | ||||||||
| Right of use assets operating lease | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable, related party | ||||||||
| Accrued expenses and other payables | ||||||||
| Accrued expenses, related party | ||||||||
| Current portion of finance lease liabilities | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current portion of finance lease liabilities | ||||||||
| Non-current portion of operating lease liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments | ||||||||
| Stockholders’ equity | ||||||||
| Common stock, par value $;authorized shares; shares issued and shares outstanding as of September 30, 2023; shares; shares issued and shares outstanding as of December 31, 2022 | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost, shares | ( | ) | ( | ) | ||||
| Total Milestone Scientific, Inc. stockholders' equity | ||||||||
| Noncontrolling interest | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
MILESTONE SCIENTIFIC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the three months ended September 30, 2023 |
For the three months ended September 30, 2022 |
For the nine months ended September 30, 2023 |
For the nine months ended September 30, 2022 |
|||||||||||||
| Product sales, net |
$ | $ | $ | $ | ||||||||||||
| Cost of products sold |
||||||||||||||||
| Gross profit |
||||||||||||||||
| Selling, general and administrative expenses |
||||||||||||||||
| Research and development expenses |
||||||||||||||||
| Depreciation and amortization expense |
||||||||||||||||
| Total operating expenses |
||||||||||||||||
| Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Interest income |
||||||||||||||||
| Loss before provision for income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Provision for income taxes |
||||||||||||||||
| Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net loss attributable to noncontrolling interests |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net loss attributable to Milestone Scientific Inc. |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per share applicable to common stockholders— |
||||||||||||||||
| Basic and Diluted |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Weighted average shares outstanding and to be issued— |
||||||||||||||||
| Basic and Diluted |
||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
MILESTONE SCIENTIFIC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
(UNAUDITED)
| Common Stock |
Common Stock Amount |
Additional Paid in Capital |
Accumulated Deficit |
Noncontrolling Interest |
Treasury Stock |
Total Stockholder Equity |
||||||||||||||||||||||
| Balance January 1, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Stock based compensation |
- | - | - | |||||||||||||||||||||||||
| Common stock issued to board of directors for services |
( |
) | - | - | - | |||||||||||||||||||||||
| Common stock to be issued to employees for bonuses |
- | - | - | - | - | |||||||||||||||||||||||
| Common Stock issued to Consultants |
||||||||||||||||||||||||||||
| Net loss |
- | - | - | ( |
) | ( |
) | - | ( |
) | ||||||||||||||||||
| Balance at March 31, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Stock based compensation |
- | - | - | - | - | |||||||||||||||||||||||
| Common stock issued to be employee for bonus |
- | |||||||||||||||||||||||||||
| Common stock to be issued for payment of consulting services |
||||||||||||||||||||||||||||
| Common stock issued to board of directors for services |
) | |||||||||||||||||||||||||||
| Net loss |
- | - | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||
| Balance at June 30, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Stock based compensation |
- | - | ||||||||||||||||||||||||||
| Common stock issued to be employee for compensation |
- | - | ||||||||||||||||||||||||||
| Common stock to be issued for payment of consulting services |
||||||||||||||||||||||||||||
| Common stock issued to board of directors for services |
( |
) | ||||||||||||||||||||||||||
| Net loss |
- | - | - | ( |
) | ( |
) | - | ( |
) | ||||||||||||||||||
| Balance at September 30, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
MILESTONE SCIENTIFIC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022
(UNAUDITED)
| Common Stock |
Common Stock Amount |
Additional Paid in Capital |
Accumulated Deficit |
Noncontrolling Interest |
Treasury Stock |
Total Stockholder Equity |
||||||||||||||||||||||
| Balance January 1, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Stock based compensation |
- | - | - | |||||||||||||||||||||||||
| Common stock to be issued to employees for bonuses |
- | - | - | - | - | |||||||||||||||||||||||
| Net loss |
- | - | - | ( |
) | ( |
) | - | ( |
) | ||||||||||||||||||
| Balance at March 31, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Stock based compensation |
- | |||||||||||||||||||||||||||
| Common stock issued to employee for compensation |
- | - | - | |||||||||||||||||||||||||
| Common stock to be issued for payment of consulting services |
- | - | - | |||||||||||||||||||||||||
| Common stock issued to board of directors for services |
- | - | - | |||||||||||||||||||||||||
| Common stock issued to board of directors for vested awards | ( |
) | ||||||||||||||||||||||||||
| Common stock to be issued to employees for bonuses |
( |
) | ||||||||||||||||||||||||||
| Net loss |
- | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||
| Balance June 30, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
| Stock based compensation |
- | - | - | - | - | |||||||||||||||||||||||
| Common stock to be issued for payment of consulting services |
||||||||||||||||||||||||||||
| Net loss |
- | ( |
) | ( |
) | (1,985,483 | ) | |||||||||||||||||||||
| Balance September 30, 2022 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
MILESTONE SCIENTIFIC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
(UNAUDITED)
| September 30, 2023 |
September 30, 2022 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation expense |
||||||||
| Amortization of intangibles |
||||||||
| Stock based compensation |
||||||||
| Inventory Reserve |
||||||||
| Employees paid in stock |
||||||||
| Expense paid in stock |
||||||||
| Unrealized gain on marketable securities | ||||||||
| Bad debt expense |
||||||||
| Amortization of right-of-use asset |
||||||||
| Changes in operating assets and liabilities: |
||||||||
| Decrease (increase) in accounts receivable |
( |
) | ||||||
| Increase in inventories |
( |
) | ( |
) | ||||
| Increase in advances on contracts |
( |
) | ( |
) | ||||
| Increase in prepaid expenses and other current assets |
( |
) | ( |
) | ||||
| Increase in accounts payable |
||||||||
| (Decrease) increase in accounts payable, related party |
( |
) | ||||||
| Decrease in accrued expenses |
( |
) | ( |
) | ||||
| Increase (decrease) in accrued expenses, related party |
( |
) | ||||||
| Decrease operating right of use lease asset |
( |
) | ( |
) | ||||
| Net cash used in operating activities |
$ | ( |
) | $ | ( |
) | ||
| Cash flows from investing activities: |
||||||||
| Purchase of furniture, fixtures, and equipment |
( |
) | ( |
) | ||||
| Sale of Marketable securities |
||||||||
| Purchase of Marketable securities | ( |
) | ||||||
| Net cash used in investing activities |
$ | ( |
) | $ | ( |
) | ||
| Cash flows from financing activities: |
||||||||
| Payments finance lease obligations |
( |
) | ( |
) | ||||
| Net cash used in financing activities |
$ | ( |
) | $ | ( |
) | ||
| Net decrease in cash and cash equivalents |
( |
) | ( |
) | ||||
| Cash and cash equivalents at beginning of period |
||||||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
MILESTONE SCIENTIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 — ORGANIZATION AND BUSINESS
All references in this report to “Milestone Scientific,” “us,” “our,” “we,” the “Company” or “Milestone” refer to Milestone Scientific Inc., and its consolidated subsidiaries, Wand Dental, Inc., and Milestone Medical, Inc. (all described below), unless the context otherwise indicates. Milestone Scientific is the owner of the following registered U.S. trademarks: CompuDent®; CompuFlo®; DPS Dynamic Pressure Sensing technology®; Milestone Scientific ®; CathCheck®; 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, revolutionary, computer-controlled anesthetic delivery device, its DPS Dynamic Pressure Sensing Technology® System, to meet the needs of various subcutaneous drug delivery injections and fluid aspiration – enabling healthcare practitioners to achieve multiple unique benefits that cannot currently be accomplished with the 160-year-old manual syringe. Our proprietary DPS Dynamic Pressure Sensing technology is our technology platform that advances the development of next-generation devices. It regulates flow rate and monitoring pressure from the tip of the needle, through platform extensions for local anesthesia for subcutaneous drug delivery, used in various dental and medical injections. It has specific medical applications for epidural space identification in regional anesthesia procedures and intra-articular joint injections.
Our device, using The Wand®, a single use disposable handpiece, is marketed in dentistry under the trademarks CompuDent® and STA Single Tooth Anesthesia System®, and is suitable for all dental procedures that require local anesthetic. The dental devices are currently sold in the United States, Canada and in over 41 other countries. Milestone Scientific also has 510(k) marketing clearance from the U.S. Food and Drug Administration (FDA) on the CompuFlo® Epidural Computer Controlled Anesthesia System in the lumbar thoracic and cervical thoracic junction of the spinal region. In addition, we have obtained CE mark approval for certain medical devices, which can be marketed and sold in most European countries.
NOTE 2- LIQUIDITY AND UNCERTAINTIES
The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. Total losses since inception have been $
Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue from its dental business worldwide, the generation of revenue from its medical devices and disposables business in the United States and worldwide, and a reduction in operating expenses. However, the Company’s continued operations will depend on its ability to raise additional capital through various potential sources until it achieves profitability, if ever.
In addition to its employees, the Company relies on (i) distributors, agents, and third-party logistics providers in connection with product sales and distribution, and (ii) raw material and component suppliers in the U.S., Europe, and China. If the Company, or any of these entities, encounter any disruptions to its or their respective operations or facilities, or if the Company or any of these third-party partners were to shut down for any reason, including by fire, natural disaster, such as a hurricane, tornado or severe storm, power outage, systems failure, labor dispute, pandemic or other public health crises, or other unforeseen disruption, then the Company or they may be prevented or delayed from effectively operating its or their business, respectively.
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission (SEC) and include the accounts of Milestone Scientific and its wholly owned and majority owned subsidiaries, including, Wand Dental (wholly owned), and Milestone Medical (majority owned). All significant, intra-entity transactions and balances have been eliminated in the consolidation.
2. Basis of Presentation
The unaudited condensed consolidated financial statements of Milestone Scientific have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022, included in Milestone Scientific's Annual Report on Form 10-K.
3. Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to the inventory valuation, and cash flow assumptions regarding evaluations of going concern considerations. Actual results could differ from those estimates.
4. Revenue Recognition
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To perform revenue recognition, the Company performs the following five steps:
| i. | identification of the promised goods or services in the contract; |
| ii. | determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; |
| iii. | measurement of the transaction price, including the constraint on variable consideration; |
| iv. | allocation of the transaction price to the performance obligations based on estimated selling prices; and |
| v. | recognition of revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. |
The Company derives its revenues from the sale of its products, primarily dental instruments, handpieces, and other related products. The Company sells its products directly to consumers in the United States and through a global distribution network that includes both exclusive and non-exclusive distribution agreements with related and third parties.
Revenue from product sales is recognized upon transfer of control of a product to a customer, generally upon date of shipment. The Company has no obligation on product sales for any installation, set-up, or maintenance, these being the responsibility of the buyer. Milestone Scientific's only obligation after sale is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty period.
E-Commerce
As of January 3, 2023, the Company launched an E-Commerce platform, selling and shipping STA Single Tooth Anesthesia Systems® (STA) and handpieces directly to dental offices and dental groups within the United States. Our E-commerce portal accepts online payments via credit and debit cards. The cost of delivery is charged to customer along with appropriate sales tax. The Company recognizes revenue from product sales at the time the product ships to a customer via a third party.
Sales Returns
The Company records allowances for product returns as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns is required, including the customers’ return rights and the Company’s historical experience with returns and the amount of product in the distribution channel not consumed by end users and subject to return. The Company relies on historical return rates to estimate returns.
The Company terminated its major U.S. distributor contract as of December 31, 2022. That distributor had return rights in connection with this contract termination that extended through March 31, 2023. The Company recorded allowance of approximately $
Financing and Payment
The Company's payment terms differ by geography and customer, but payments from distributors are required within 90 days or less from the date of shipment. The E-commerce portal sells directly to end users and accepts online payments via credit and debit cards via a third-party. These payments from the third-party are settled within two business days.
Disaggregation of Revenue
The Company operates in
5. Cash and Cash Equivalents
Milestone Scientific considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of September 30, 2023 and December 31, 2022, Milestone Scientific has approximately $
6. Marketable Securities
The Company’s marketable securities are comprised of treasury bills with original maturity greater than three months from date of purchase. The Company’s marketable securities are measured at fair value and are accounted for in accordance with ASU 2016-01. Unrealized holding gains and losses on treasury bills are recorded in interest income on the unaudited condensed consolidated statements of operations. Dividend and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of the marketable securities.
The appropriate classification of marketable securities is determined at the time of purchase and evaluated as of each reporting balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Declines in the fair values of equity securities that are considered other-than-temporary, are charged to other income (expense), net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. As of September 30, 2023, the Company held approximately $
7. Accounts Receivable
The E-commerce portal sells directly to end users and accepts online payments via credit and debit cards via a third-party credit card processor. These payments are settled within 2 business days of the transactions. Sales to distributors are on credit terms. The Company estimates losses from the ability or inability of its distributor to make payments on amounts billed.
Distributors credit sales are due 90 days or less from the date of invoicing. As of September 30, 2023 and December 31, 2022, accounts receivable was recorded, net of allowance for doubtful account of $
8. Inventories
Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in, first-out method) or net realizable value. Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess, slow moving, defective, and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence, and product expiration requirements.
The valuation allowance creates a new cost basis for the inventory, and it is not subsequently marked up through a reduction in the valuation allowance based on any changes in the underlying facts and circumstances. When the valuation allowance is initially recorded, the increase to the allowance is recognized as an increase in cost of sales. The valuation allowance is only reduced if or when the underlying inventory is sold or destroyed, at which time cost of sales recognized would include the previous adjusted cost basis.
9. Basic and Diluted Net Loss Per Common Share
Milestone Scientific presents “basic” earnings (loss) per common share applicable to common stockholders and, if applicable, “diluted” earnings (loss) per common share applicable to common stockholders pursuant to the provisions of ASC 260, “Earnings per Share”. Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding and to be issued common shares as follows:
10. Stock-Based Compensation
Milestone Scientific accounts for stock-based compensation under ASC Topic 718, Share-Based Payment. ASC Topic 718 requires all share-based payments to employees, non-employees, directors, and officers, including grants of employee stock options, to be recognized in the unaudited condensed consolidated statements of operations over the service period, as an operating expense, based on the grant-date fair values.
11. Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the guidance on measuring credit losses for certain financial assets measured at amortized cost, including trade receivables. The FASB has subsequently issued several updates to the standard, providing additional guidance on certain topics covered by the standard. This update requires entities to recognize an allowance for credit losses using a forward-looking expected loss impairment model, taking into consideration historical experience, current conditions, and supportable forecasts that impact collectability. As January 1, 2023, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) the adoption of this ASU does not have a material impact on our financial statements.
In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic, 326), Derivatives and hedging (Topic 815), and Leases (Topic 842): Effective dates, which deferred the effective date of ASU 2016-13 for the Company. As a result of ASU 2019-10, ASU 2016-13 is effective for all entities with fiscal years beginning after December 15, 2022, including interim periods. As January 1, 2023, the Company adopted ASU 2019-10, Financial Instruments - Credit Losses (Topic, 326), Derivatives and hedging (Topic 815), and Leases (Topic 842) the adoption of this ASU does not have a material impact on our financial statements.
NOTE 4 — INVENTORIES
Inventories consist of the following:
| September 30, 2023 | December 31, 2022 | |||||||
| Dental finished goods | $ | $ | ||||||
| Medical finished goods, net | ||||||||
| Component parts and other materials | ||||||||
| Total inventories | $ | $ | ||||||
The Company has recorded an allowance on slow moving Medical finished goods due to the slow adoption of the epidural instruments and handpieces for approximately $
NOTE 5 — ADVANCES ON CONTRACTS
The advances on contracts represent funding of future STA devices, epidural instruments, and epidural replacements parts. The balance of the advances as of September 30, 2023 and December 31, 2022 is approximately $
NOTE 6— STOCKHOLDERS’ EQUITY
Warrants
The following table summarizes information about shares issuable under warrants outstanding as of September 30, 2023:
| Warrant shares outstanding | Weighted Average exercise price | Weighted Average remaining life | Intrinsic value | |||||||||||||
| Outstanding at January 1, 2023 | - | |||||||||||||||
| Issued | - | - | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired or cancelled | ( | ) | - | - | ||||||||||||
| Outstanding and exercisable at September 30, 2023 | ||||||||||||||||
Shares to Be Issued
As of September 30, 2023 and 2022, there were
As of September 30, 2023 and 2022, there were
The following table summarizes information about shares to be issued on September 30, 2023 and 2022.
| September 30, 2023 | September 30, 2022 | |||||||
| Shares-to-be-issued, outstanding January 1, 2023 and 2022, respectively | ||||||||
| Granted in current period | ||||||||
| Issued in current period | ( | ) | ||||||
| Shares-to be issued outstanding September 30, 2023 and 2022, respectively | ||||||||
Stock Options Plans
The Milestone Scientific Inc. 2020 Equity Compensation Plan, as amended and restated (the "2020 Plan"), provides for awards of restricted common stock, restricted stock units, options to purchase common stock and other awards, up to a maximum
Milestone Scientific recognizes compensation expense over the requisite service period. For three and nine months ended September 30, 2023, Milestone Scientific recognized approximately $
A summary of option activity for employees under the plans and changes during the nine months ended September 30, 2023 is presented below:
| Number of Options | Weighted Averaged Exercise Price $ | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Options Value $ | |||||||||||||
| Options outstanding January 1, 2023 | - | |||||||||||||||
| Granted during 2023 | - | - | ||||||||||||||
| Exercised during 2023 | - | - | ||||||||||||||
| Forfeited or expired during 2023 | ( | ) | - | - | ||||||||||||
| Options outstanding September 30, 2023 | - | |||||||||||||||
| Exercisable, September 30, 2023 | - | |||||||||||||||
A summary of option activity for non-employees under the plans and changes during the nine months ended September 30, 2023 presented below:
| Number of Options | Weighted Averaged Exercise Price $ | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Options Value $ | |||||||||||||
| Options outstanding January 1, 2023 | ||||||||||||||||
| Granted during 2023 | 222 | |||||||||||||||
| Expired during 2023 | ( | ) | - | - | ||||||||||||
| Options outstanding September 30, 2023 | ||||||||||||||||
| Exercisable, September 30, 2023 | ||||||||||||||||
For the three and nine months ended September 30, 2023, Milestone Scientific recognized approximately $
The information below summarizes the restricted stock award activity for the nine months ended September 30, 2023.
| Number of Shares | Weighted Average Grant-Date Fair Value per Award | |||||||
| Non-vested as January 1, 2023 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Cancelled | ( | ) | - | |||||
| Non-vested as September 30, 2023 | ||||||||
As of September 30, 2023, there were
As of June 28, 2023, the Company entered into restricted stock agreements with members of the Board of Directors of the Company. The Company granted
NOTE 7 — INCOME TAXES
The utilization of Milestone Scientific's net operating losses may be subject to a substantial limitation due to the "change of ownership provisions" under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carry forwards before their utilization. Milestone Scientific has established a
NOTE 8 — SEGMENT AND GEOGRAPHIC DATA
We conduct our business through reportable segments: Dental and Medical. These segments offer different products and services to different customer bases. The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under “Corporate Services” below and these include costs associated with executive management, investor relations, patents, trademarks, licensing agreements, new instrument developments, financing activities and public company compliance.
The following tables present information about our reportable and operating segments:
| For the Three Months ended September 30, | For the Nine Months ended September 30, | |||||||||||||||
| Sales | ||||||||||||||||
| Net Sales: | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Dental | $ | $ | $ | $ | ||||||||||||
| Medical | ||||||||||||||||
| Total net sales | $ | $ | $ | $ | ||||||||||||
| Operating Income (Loss): | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Dental | $ | $ | $ | $ | ||||||||||||
| Medical | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Corporate | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Depreciation and Amortization: | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Dental | $ | $ | $ | $ | ||||||||||||
| Medical | ||||||||||||||||
| Corporate | ||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Income (loss) before taxes and equity in earnings of affiliates: | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Dental | $ | $ | $ | $ | ||||||||||||
| Medical | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Corporate | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total loss before taxes and equity in earnings of affiliate | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Total Assets | September 30, 2023 | December 31, 2022 | ||||||||||||||
| Dental | $ | $ | ||||||||||||||
| Medical | ||||||||||||||||
| Corporate | ||||||||||||||||
| Total assets | $ | $ | ||||||||||||||
The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category:
| Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | |||||||||||||||||||||||
| Domestic: US | Dental | Medical | Grand Total | Dental | Medical | Grand Total | ||||||||||||||||||
| Instruments | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Handpieces | ||||||||||||||||||||||||
| Accessories | ||||||||||||||||||||||||
| Grand Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| International: Rest of World | ||||||||||||||||||||||||
| Instruments | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Handpieces | ||||||||||||||||||||||||
| Accessories | ||||||||||||||||||||||||
| Grand Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Total Product Sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | |||||||||||||||||||||||
| Domestic: US | Dental | Medical | Grand Total | Dental | Medical | Grand Total | ||||||||||||||||||
| Instruments | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Handpieces | ||||||||||||||||||||||||
| Accessories | ||||||||||||||||||||||||
| Grand Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| International: Rest of World | ||||||||||||||||||||||||
| Instruments | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Handpieces | ||||||||||||||||||||||||
| Accessories | ||||||||||||||||||||||||
| Grand Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| International: China | ||||||||||||||||||||||||
| Instruments | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Handpieces | ||||||||||||||||||||||||
| Accessories | ||||||||||||||||||||||||
| Grand Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Total Product Sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
NOTE 9 – CONCENTRATIONS
Milestone Scientific has informal arrangements with third-party U.S. manufacturers of the STA devices, and epidural instruments pursuant to which they manufacture these products under specific purchase orders which contain advance requirements but without any long-term contract or minimum purchase commitment. Advances on contracts have been classified as current at September 30, 2023 and December 31, 2022. The termination of the manufacturing relationship with any of these manufacturers could have a material adverse effect on Milestone Scientific’s ability to produce and sell its products. Although alternate sources of supply exist, and new manufacturing relationships could be established, Milestone Scientific would need to recover its existing tools or have new tools produced. Establishment of new manufacturing relationships could involve significant expense and delay. Any curtailment or interruption of the supply, because of termination of such a relationship, would have a material adverse effect on Milestone Scientific’s financial condition, business and results of operations.
On January 3, 2023, the Company launched an E-Commerce platform selling and shipping STA Single Tooth Anesthesia System® (STA) and handpieces directly to dental offices and dental groups within the U.S. For the three months ended September 30, 2023, E-Commerce accounted for
We had
As of September 30, 2023 we had
NOTE 10 -- RELATED PARTY TRANSACTIONS
United Systems
Milestone Scientific has a supply agreement with United Systems (whose controlling shareholder, Tom Cheng, is a significant stockholder of Milestone Scientific), the principal manufacturer of our handpieces, pursuant to which manufacture is under specific purchase orders, but without minimum purchase commitments. Purchases from this manufacturer were approximately $
As of September 30, 2023 and December 31, 2022, Milestone Scientific owed this manufacturer approximately $
Other
During 2022, K. Tucker Andersen, a significant stockholder of Milestone Scientific, entered into an agreement with Milestone Scientific to provide financial and business strategic services. Expenses recognized on this agreement were $
Royalties payable to our Director of Clinical Affairs was approximately $
As of September 30, 2023 and December 31, 2022, Milestone Scientific owed the Director Clinical Affairs for royalties of approximately $
Pursuant to a Succession Agreement dated April 6, 2021 between Leonard Osser and the Company: (i) the Employment Agreement dated as of July 10, 2017 between Mr. Leonard Osser and the Company, pursuant to which upon Mr. Osser stepping down as Interim Chief Executive Officer of the Company, the Company agreed to employ him as Managing Director, China Operations of the Company (the “China Operations Agreement”), and (ii) the Consulting Agreement dated as of July 10, 2017 (the “Consulting Agreement”) between the Company and U.S. Asian Consulting Group, LLC, a company of which Mr. Osser is a principal, the compensation under the China Operations Agreement was modified to reduce the overall compensation by $
NOTE 11 — COMMITMENTS
(1) Contract Manufacturing Agreement
Milestone Scientific has informal arrangements with third-party manufacturers of the STA devices, and epidural instruments pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. The Company has a purchase commitment for the delivery of
(2) Leases
Operating Leases
The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:
| ● | As the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company has utilized its incremental borrowing rate based on the long-term borrowing costs of comparable companies in the Medical Device industry. | |
| ● | Since the Company elected to account for each lease component and its associated non-lease components as a single combined lease component, all contract consideration was allocated to the combined lease component. | |
| ● | The expected lease terms include non-cancellable lease periods. Renewal option periods are not included in the determination of the lease terms as they were not reasonably certain to be exercised. |
The components of lease expense were as follows:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||
| Cash paid for operating lease liabilities | $ | $ | $ | $ | ||||||||||||
| Cash paid for finance lease liabilities | ||||||||||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities (1) | ||||||||||||||||
| Property and equipment obtained in exchange for new finance lease liabilities | ||||||||||||||||
| Weighted Average Remaining Lease Term | ||||||||||||||||
| Finance leases (years) | ||||||||||||||||
| Operating leases (years) | ||||||||||||||||
| Weighted-average discount rate – operating leases | % | |||||||||||||||
| Weighted-average discount rate – finance leases | % | |||||||||||||||
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussions of the financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements contained in this report and in connection with management's discussion and analysis and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission, or SEC on March 30, 2023. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements, within the meaning of section 21E of the Exchange Act, that involve risks and uncertainties. The actual results may differ materially from those anticipated in these forward-looking statements.
OVERVIEW
Milestone Scientific is a biomedical technology company that patents, designs, develops and commercializes innovative diagnostic and therapeutic injection technologies and devices for medical and dental use. Since our inception, we have engaged in pioneering proprietary, innovative, computer-controlled injection technologies, and solutions for the medical and dental markets. We believe our technologies are proven and well established. Our common stock was initially listed on the NYSE American on June 1, 2015, and trades under the symbol “MLSS”.
We have focused our resources on redefining the worldwide standard of care for injection techniques by making the experience more comfortable for the patient by reducing the anxiety and stress of receiving injections from the healthcare provider. Our computer-controlled injection devices make injections precise, efficient, and virtually painless.
We have developed a proprietary, revolutionary, computer-controlled anesthetic delivery device, our DPS Dynamic Pressure Sensing Technology® System, to meet the needs of various subcutaneous drug delivery injections and fluid aspiration – enabling healthcare practitioners to achieve multiple unique benefits that cannot currently be accomplished with the 160-year-old manual syringe. Our proprietary DPS Dynamic Pressure Sensing technology is our technology platform that advances the development of next-generation devices. It regulates flow rate and monitoring pressure from the tip of the needle, through platform extensions for local anesthesia for subcutaneous drug delivery, used in various dental and medical injections. It has specific medical applications for epidural space identification in regional anesthesia procedures.
Our device, using The Wand®, a single use disposable handpiece, is marketed in dentistry under the trademark CompuDent®, and STA Single Tooth Anesthesia System® and is suitable for all dental procedures that require local anesthetic. The dental devices currently are sold in the United States, Canada and in over 41 other countries. Milestone Scientific also has 510(k) marketing clearance from the U.S. Food and Drug Administration (FDA) on the CompuFlo® Epidural Computer Controlled Anesthesia System in the lumbar, thoracic and cervical thoracic junction of the spine region. In addition, Milestone Scientific has obtained CE mark approval and can be marketed and sold in most European countries.
Our recent receipt of chronology-Specific CPT Code for the Company's technology by the American Medical Association marks an important milestone, that could increase the potential number of anesthesia pain management clinics adopting the CompuFlo instrument. A CPT code expands the potential for reimbursement of epidural procedures in pain management utilizing the CompuFlo Epidural System., which should help accelerate the commercial roll-out of CompuFlo in the U.S
Milestone Scientific and its subsidiaries currently hold over 245 U.S. and foreign patents, and many patents pending and patent applications. The Company’s patents and patent applications relate to drug delivery methodologies, Peripheral Nerve Block, drug flow rate measurement, pressure/force computer-controlled drug delivery with exit pressure, dynamic pressure sensing, automated rate control, automated charging, drug profiles, audible and visual pressure/force feedback, tissue identification, identification of a target region drug delivery injection unit, drug drive unit for anesthetic, handpiece, and injection device.
Milestone Scientific remains focused on advancing efforts to achieve the following three primary objectives:
| ● |
Establishing Milestone’s DPS Dynamic Pressure Sensing technology platform as the standard-of-care in painless and precise drug delivery, providing for the first time, objective visual and audible in-tissue pressure feedback, and continuing to expand platform applications; |
| ● |
Following obtaining successful FDA clearance of our first medical device, Milestone Scientific is transitioning from a research and development organization to a commercially focused medical device company; and |
| ● |
Expanding our global footprint of our CompuFlo Epidural and CathCheck System by utilizing a targeted field sales force and partnering with distribution companies worldwide. |
Our dental devices have been used to administer tens of millions of injections worldwide. Each of our devices has a related single use disposable handpiece, leading to a continuing revenue stream following sale of the device. At present, we sell disposable handpieces unique to our legacy product (the Wand and CompuDent) to users who have not upgraded to our current dental product, the STA Single Tooth Anesthesia System.
Building on the success of our proprietary, core technology platform for dental injections, and desiring to pursue other growth opportunities, we have begun to expand the uses and applications of our proprietary, patented technologies to achieve greater operational efficiencies, enhanced patient safety and therapeutic adherence, patient satisfaction, and improved quality of care across a broad range of medical specialties.
We intend to continue to expand the uses and applications of our DPS Dynamic Pressure Sensing technology. We believe that we and our technology solutions are recognized by key opinion leaders (i.e., academics, anesthesiologists and practicing dentists whose opinions are widely respected), industry experts and medical and dental practitioners as a leader in the emerging, computer-controlled injection industry.
The Single Tooth Anesthesia System (Dental)
Since its market introduction in early 2007, the STA Single Tooth Anesthesia System and prior C-CLAD devices have been used to deliver over 90 million safe, effective, and comfortable injections. The instrument has also been favorably evaluated in numerous peer-reviewed, published clinical studies and associated articles. Moreover, there appears to be a growing consensus among users that the STA Instrument is proving to be a valuable and beneficial instrument that is positively impacting the practice of dentistry worldwide.
Medical Market Product
In June 2017, we received FDA regulatory clearance to sell the CompuFlo Epidural Computer Controlled Anesthesia System in the United States for epidural injections.
In May, 2022, the Company received a chronology-specific CPT Code for the Company's technology by the American Medical Association, which marks an important milestone that could increase the potential number of anesthesia pain management clinics adopting the CompuFlo instrument. Effective January 1, 2023, this temporary tracking code allows clinicians to submit claims to healthcare insurance providers using the Company’s technology for Epidural Sterile Injections in the lumbar, thoracic, cervical thoracic junction of the spinal region for reimbursement. A CPT code expands the potential for reimbursement of epidural procedures in pain management utilizing the CompuFlo Epidural System, which should help accelerate the commercial roll-out of CompuFlo in the United States.
On February 27, 2023, the Company announced that its CompuFlo® Epidural System has received 510(k) FDA clearance for use in the thoracic region of the spine, including the cervical thoracic junction. This approval expands upon the Company’s prior approval of CompuFlo for use within the lumbar region of the spine, where the focus has been epidural analgesia during labor and delivery procedures.
Our recent receipt of chronology-Specific CPT Code for the Company's technology by the American Medical Association marks an important milestone, that could increase the potential number of anesthesia pain management clinics adopting the CompuFlo instrument. A CPT code expands the potential for reimbursement of epidural procedures in pain management utilizing the CompuFlo Epidural System, which should help accelerate the commercial roll-out of CompuFlo in the U.S.
The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category:
| Three Months Ended September 30, 2023 |
Three Months Ended September 30, 2022 |
|||||||||||||||||||||||
| Domestic: US |
Dental |
Medical |
Grand Total |
Dental |
Medical |
Grand Total |
||||||||||||||||||
| Instruments |
$ | 230,615 | $ | - | $ | 230,615 | $ | 164,341 | $ | 7,500 | $ | 171,841 | ||||||||||||
| Handpieces |
1,007,930 | - | 1,007,930 | 678,473 | 1,700 | 680,173 | ||||||||||||||||||
| Accessories |
14,822 | - | 14,822 | 24,304 | 24,304 | |||||||||||||||||||
| Grand Total |
$ | 1,253,367 | $ | - | $ | 1,253,367 | $ | 867,118 | $ | 9,200 | $ | 876,318 | ||||||||||||
| International: Rest of World |
||||||||||||||||||||||||
| Instruments |
$ | 88,019 | $ | - | $ | 88,019 | $ | 436,069 | $ | - | $ | 436,069 | ||||||||||||
| Handpieces |
700,697 | 6,000 | 706,697 | 881,616 | - | 881,616 | ||||||||||||||||||
| Accessories |
11,201 | - | 11,201 | 21,696 | - | 21,696 | ||||||||||||||||||
| Grand Total |
$ | 799,917 | $ | 6,000 | $ | 805,917 | $ | 1,339,381 | $ | - | $ | 1,339,381 | ||||||||||||
| Total Product Sales |
$ | 2,053,284 | $ | 6,000 | $ | 2,059,284 | $ | 2,206,499 | $ | 9,200 | $ | 2,215,699 | ||||||||||||
The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category:
| Nine Months Ended September 30, 2023 |
Nine Months Ended September 30, 2022 |
|||||||||||||||||||||||
| Domestic: US |
Dental |
Medical |
Grand Total |
Dental |
Medical |
Grand Total |
||||||||||||||||||
| Instruments |
$ | 726,104 | $ | - | $ | 726,104 | $ | 442,336 | $ | 7,500 | $ | 449,836 | ||||||||||||
| Handpieces |
3,277,830 | - | 3,277,830 | 2,275,865 | 25,750 | 2,301,615 | ||||||||||||||||||
| Accessories |
59,336 | - | 59,336 | 73,210 | 2,100 | 75,310 | ||||||||||||||||||
| Grand Total |
$ | 4,063,270 | $ | - | $ | 4,063,270 | $ | 2,791,411 | $ | 35,350 | $ | 2,826,761 | ||||||||||||
| International: Rest of World |
||||||||||||||||||||||||
| Instruments |
$ | 961,224 | $ | - | $ | 961,224 | $ | 1,050,443 | $ | - | $ | 1,050,443 | ||||||||||||
| Handpieces |
2,222,707 | 10,000 | 2,232,707 | 2,265,367 | 20,000 | 2,285,367 | ||||||||||||||||||
| Accessories |
39,647 | - | 39,647 | 42,434 | - | 42,434 | ||||||||||||||||||
| Grand Total |
$ | 3,223,578 | $ | 10,000 | $ | 3,233,578 | $ | 3,358,244 | $ | 20,000 | $ | 3,378,244 | ||||||||||||
| International: China |
||||||||||||||||||||||||
| Instruments |
$ | 270,000 | $ | - | $ | 270,000 | $ | - | $ | - | $ | - | ||||||||||||
| Handpieces |
- | - | - | 359,964 | - | 359,964 | ||||||||||||||||||
| Accessories |
- | - | - | - | - | - | ||||||||||||||||||
| Grand Total |
$ | 270,000 | $ | - | $ | 270,000 | $ | 359,964 | $ | - | $ | 359,964 | ||||||||||||
| Total Product Sales |
$ | 7,556,848 | $ | 10,000 | $ | 7,566,848 | $ | 6,509,619 | $ | 55,350 | $ | 6,564,969 | ||||||||||||
Current Product Platform
See Note 1, “Organization and Business”.
Results of Operations
The following table sets forth the consolidated results of operations for the three and nine months ended September 30, 2023 and 2022, respectively. The trends suggested by this table may not be indicative of future operating results:
| For the three months ended September 30, 2023 |
For the three months ended September 30, 2022 |
For the nine months ended September 30, 2023 |
For the nine months ended September 30, 2022 |
|||||||||||||
| Operating results: |
||||||||||||||||
| Product sales, net |
$ | 2,059,284 | $ | 2,215,699 | $ | 7,566,848 | $ | 6,564,969 | ||||||||
| Cost of products sold |
555,850 | 762,964 | 2,284,730 | 2,749,160 | ||||||||||||
| Gross profit |
1,503,434 | 1,452,735 | 5,282,118 | 3,815,809 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling, general and administrative expenses |
2,823,765 | 3,283,378 | 9,834,781 | 9,681,326 | ||||||||||||
| Research and development expenses |
170,478 | 166,191 | 524,472 | 897,218 | ||||||||||||
| Depreciation and amortization expense |
15,896 | 16,661 | 49,798 | 50,121 | ||||||||||||
| Total operating expenses |
3,010,139 | 3,466,230 | 10,409,051 | 10,628,665 | ||||||||||||
| Loss from operations |
(1,506,705 | ) | (2,013,495 | ) | (5,126,933 | ) | (6,812,856 | ) | ||||||||
| Other income, and interest net |
30,600 | 28,012 | 102,669 | 26,819 | ||||||||||||
| Net loss |
(1,476,105 | ) | (1,985,483 | ) | (5,024,264 | ) | (6,786,037 | ) | ||||||||
| Net loss attributable to noncontrolling interests |
(9,811 | ) | (13,680 | ) | (33,987 | ) | (54,030 | ) | ||||||||
| Net loss attributable to Milestone Scientific Inc. |
$ | (1,466,294 | ) | $ | (1,971,803 | ) | $ | (4,990,277 | ) | $ | (6,732,007 | ) | ||||
Three months ended September 30, 2023 compared three months ended September 30, 2022
Net sales for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 2,053,284 | $ | 2,206,499 | $ | (153,215 | ) | |||||
| Medical |
6,000 | 9,200 | $ | (3,200 | ) | |||||||
| Total sales, net |
$ | 2,059,284 | $ | 2,215,699 | $ | (156,415 | ) | |||||
Consolidated revenue for the three months ended September 30, 2023 and 2022 was approximately $2.1 million and $2.2 million, respectively, a decrease of approximately $156,000. As of January 3, 2023, the Company launched an E-Commerce platform, to replace its previous U.S. distribution arrangement with Henry Schein by selling and shipping the STA Single Tooth Anesthesia System® (STA) and handpieces directly to end users, including dental offices and dental groups, within the U.S. E-commerce revenue for the three months ended September 30, 2023 was approximately $1.2 million. The Company recorded no revenue from Henry Schein for the three months ended September 30, 2023 compared to approximately $715,000 recorded for the three months ended September 30, 2022. Revenue from other U.S. distributors was approximately $48,000 for the three months ended September 30, 2023, a decrease of $105,000 compared to September 30, 2022. For the three months ended September 30, 2023, international revenue was approximately $800,000 a decrease of $538,000, compared to September 30, 2022.
Gross Profit for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 1,515,993 | $ | 1,446,111 | $ | 69,882 | ||||||
| Medical |
(12,559 | ) | 6,624 | $ | (19,183 | ) | ||||||
| Total gross profit |
$ | 1,503,434 | $ | 1,452,735 | $ | 50,699 | ||||||
Consolidated gross profit for the three months ended September 30, 2023 was approximately $1.5 million, an increase of approximately $50,000, compared to approximately $1.4 million for the same period in 2022. The increase was due to higher margin sales associated with the launch of the E-Commerce platform.
Selling, general and administrative expenses for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 934,477 | $ | 979,911 | $ | (45,432 | ) | |||||
| Medical |
678,456 | 933,218 | (254,762 | ) | ||||||||
| Corporate |
1,210,832 | 1,370,249 | (159,417 | ) | ||||||||
| Total selling, general and administrative expenses |
$ | 2,823,765 | $ | 3,283,378 | $ | (459,611 | ) | |||||
Consolidated selling, general and administrative expenses for the three months ended September 30, 2023, and 2022 were approximately $2.8 million and $3.3 million, respectively. The decrease of approximately $460,000 is due to factors in several areas. Employee salaries and benefits expenses decreased approximately $169,000 for the three months ended September 30, 2023 compared to the same period in 2022. The Company decreased quality control, regulatory, professional fees, travel and royalties expenses approximately by $389,000. With the launch of the E-Commerce platform marketing and warehousing expense increased for the three months ended September 30, 2023, by approximately $73,000 compared to the same period in 2022. The Company recorded an increase in other selling, general and administrative expenses of approximately $25,000 for the three months ended September 30, 2023 compared to the same period in 2022.
Research and Development for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 121,991 | $ | 156,336 | $ | (34,345 | ) | |||||
| Medical |
48,487 | 9,855 | 38,632 | |||||||||
| Corporate |
- | - | - | |||||||||
| Total research and development |
$ | 170,478 | $ | 166,191 | $ | 4,287 | ||||||
Consolidated research and development expenses for the three months ended September 30, 2023 and 2022 were approximately $170,000 and $166,000, respectively. The increase of approximately $4,300 is related to the Company's progress in developing the next generation STA Single Tooth Anesthesia System, offset by an decrease in medical cost for the epidural consumables.
Profit (Loss) from Operations for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 458,474 | $ | 308,913 | $ | 149,561 | ||||||
| Medical |
(740,087 | ) | (937,468 | ) | 197,381 | |||||||
| Corporate |
(1,225,092 | ) | (1,384,940 | ) | 159,848 | |||||||
| Total loss from operations |
$ | (1,506,705 | ) | $ | (2,013,495 | ) | $ | 506,790 | ||||
The loss from operations was approximately $1.5 million and $2.0 million for the three months ended September 30, 2023 and 2022, respectively, a increase of approximately $0.5 million. As stated above, the increase in the loss from operations is driven, in part by higher dental sales, and the lowers the higher selling, general and administrative expenses during such period.
Nine months ended September 30, 2023 compared nine months ended September 30, 2022
Net sales for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 7,556,848 | $ | 6,509,619 | $ | 1,047,229 | ||||||
| Medical |
10,000 | 55,350 | $ | (45,350 | ) | |||||||
| Total sales, net |
$ | 7,566,848 | $ | 6,564,969 | $ | 1,001,879 | ||||||
Consolidated revenue for the nine months ended September 30, 2023 and 2022 was approximately $7.6 million and $6.6 million, respectively, an increase of approximately $1.0 million. As of January 3, 2023, the Company launched an E-Commerce platform, selling and shipping the STA Single Tooth Anesthesia System® (STA) and handpieces directly to end users, including dental offices and dental groups, within the U.S. E-commerce revenue for the nine months ended September 30, 2023 was approximately $3.5 million. The Company terminated its major United States distributor, Henry Schein, as of December 31, 2022. The distributor had return rights through March 31, 2023 under the distribution contract, for which the Company recorded at December 31, 2022 an allowance of approximately $179,000 for such returns. This allowance was reversed as of March 31, 2023.
The Company recorded no revenue from Henry Schein for the nine months ended September 30, 2023, compared to approximately $2.4 million recorded for the nine months ended September 30, 2022. Revenue from other U.S. distributors was approximately $480,000 for the nine months ended September 30, 2023, an increase of $55,000 compared to September 30, 2022. For the nine months ended September 30, 2023, international revenue was approximately $3.2 million, a decrease of $135,000 compared to September 30, 2022. For the nine months ended September 30, 2023, the Company reported approximately $270,000 revenue from China, a decrease of approximately $90,000.
Gross Profit for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 5,375,274 | $ | 4,207,376 | $ | 1,167,898 | ||||||
| Medical |
(93,156 | ) | (391,567 | ) | $ | 298,411 | ||||||
| Total gross profit |
$ | 5,282,118 | $ | 3,815,809 | $ | 1,466,309 | ||||||
Consolidated gross profit for the nine months ended September 30, 2023 increased by approximately $1.5 million, or 40%, compared to the same period in 2022. The increase was due to higher margins sales associated with the launch of E-Commerce platform. The Company recorded approximately $91,000 for inventory that was obsolete and or expired.
Selling, general and administrative expenses for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 3,217,690 | $ | 2,529,352 | $ | 688,338 | ||||||
| Medical |
2,260,834 | 3,346,113 | (1,085,279 | ) | ||||||||
| Corporate |
4,356,257 | 3,805,861 | 550,396 | |||||||||
| Total selling, general and administrative expenses |
$ | 9,834,781 | $ | 9,681,326 | $ | 153,455 | ||||||
Consolidated selling, general and administrative expenses for the nine months ended September 30, 2023, and 2022 were approximately $9.8 million and $9.7 million, respectively. The increase of approximately $153,000 is due to several factors. Employee salaries and benefits expenses decreased approximately $190,000 for the nine months ended September 30, 2023 compared to the same period in 2022. The Company decreased quality control, regulatory, and travel expenses approximately by $290,000 compared to the same period in 2022. The Company increase professional fees, and royalties expenses approximately by $191,000 compared to the same period in 2022.With the launch of the E-Commerce platform marketing and warehousing expense increased for the nine months ended September 30, 2023, by approximately $290,000 compared to the same period in 2022. The Company recorded an increase in other selling, general and administrative expenses of approximately $153,000 for the nine months ended September 30, 2023 compared to the same period in 2022.
Research and Development for 2023 and 2022 were as follows:
| 2023 |
2022 |
Change |
||||||||||
| Dental |
$ | 454,791 | $ | 849,112 | $ | (394,321 | ) | |||||
| Medical |
69,681 | 48,106 | 21,575 | |||||||||
| Corporate |
- | - | ||||||||||
| Total research and development |
$ | 524,472 | $ | 897,218 | $ | (372,746 | ) | |||||
Consolidated research and development expenses for the nine months ended September 30, 2023 and 2022 were approximately $524,000 and $897,000, respectively. The decrease of approximately $373,000 is related to the Company's progress in developing the next generation STA Single Tooth Anesthesia System, offset by an increase in medical cost for the epidural consumables.
Profit (Loss) from Operations for 2023 and 2022 were as follows:
| Loss |
2023 |
2022 |
Change |
|||||||||
| Dental |
$ | 1,699,354 | $ | 826,175 | $ | 873,179 | ||||||
| Medical |
(2,425,918 | ) | (3,788,842 | ) | 1,362,924 | |||||||
| Corporate |
(4,400,369 | ) | (3,850,189 | ) | (550,180 | ) | ||||||
| Total loss from operations |
$ | (5,126,933 | ) | $ | (6,812,856 | ) | $ | 1,685,923 | ||||
The loss from operations was approximately $5.1 million and $6.8 million for the nine months ended September 30, 2023 and 2022, respectively, a increase of approximately $1.7 million. As stated above, the increase in the loss from operations is driven by higher dental sales, which offset the higher selling, general and administrative expenses during period.
Liquidity and Capital Resources
The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. Total losses since inception have been $121 million. The operating losses were $1.5 million and $5.1 million for three and nine months ended September 30, 2023, respectively. Management has prepared cash flow forecasts covering a period of 12 months from the date of issuance of these financial statements. As a result of the forecast, management believes that the Company has sufficient cash, as a result of slowing down production on new technology, research, and development, terminating certain consulting agreements, and managing inventory purchases from our manufacturers. Additionally, the Company was approved on September 12, 2023 to sell Net Operating Losses through the New Jersey Technology Business Tax Certificate Transfer Program (“NJ NOL Program”), a program established by NJ Law and administered by the New Jersey Economic Development Authority (“NJEDA”). Management believes this will generate positive cash flow in the near future. Management has concluded that there is no substantial doubt about the Company’s ability to continue as a going concern for the period of one year from the issuance of these financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Milestone Scientific is a “smaller reporting company” as defined by Regulation S-K and, as such, is not required to provide the information required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Principal Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer, and Principal Accounting Officer, concluded that, as of September 30, 2023, our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
We routinely review our internal control over financial reporting and from time to time make changes intended to enhance the effectiveness of our internal control over financial reporting. During the nine month ended September 30, 2023, we made no changes to our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that we believe materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A, of our 2022 Annual Report.
Item1B. Unresolved Staff Comments
None.
Item 2. Unregistered Sales of Equity Securities and use of proceeds
Not applicable.
Item 3. Default upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosure
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Financial Statement Schedules
| Exhibit No |
Description |
|
| 31.1 |
||
| 32.1 |
||
| 101.INS |
Inline XBRL Instance Document* |
|
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document* |
|
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document* |
|
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document* |
|
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document* |
|
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document* |
|
| 104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * |
Filed herewith. |
| ** |
Furnished herewith and not filed, in accordance with item 601(32) (ii) of Regulation S-K. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MILESTONE SCIENTIFIC INC. |
|||
| /s/ Arjan Haverhals |
|||
| Arjan Haverhals |
|||
| Chief Executive Officer |
|||
| (Principal Accounting Officer) |
|||
| Date: November 14, 2023 |
Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certification
I, Arjan Haverhals, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Milestone Scientific Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, considering the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under the supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under the supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report the conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on the most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 14, 2023
|
/s/ Arjan Haverhals |
|
Arjan Haverhals |
|
Chief Executive Officer |
|
Principal Executive Officer |
Exhibit 32.1
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. (“Milestone”) on Form 10-Q for the period ending September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Arjan Haverhals Chief Executive Officer of Milestone, 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, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Milestone.
Date: November 14, 2023
|
/s/ Arjan Haverhals |
|
Arjan Haverhals Chief Executive Officer Principal Financial Officer |
A signed original of this certification has been provided to Milestone and will be retained by Milestone and furnished to the Securities and Exchange Commission or its staff upon request.
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
| Common stock, shares issued (in shares) | 70,893,748 | 69,306,497 |
| Common stock, shares outstanding (in shares) | 70,860,415 | 69,273,164 |
| Treasury stock, shares (in shares) | 33,333 | 33,333 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Product sales, net | $ 2,059,284 | $ 2,215,699 | $ 7,566,848 | $ 6,564,969 |
| Cost of products sold | 555,850 | 762,964 | 2,284,730 | 2,749,160 |
| Gross profit | 1,503,434 | 1,452,735 | 5,282,118 | 3,815,809 |
| Selling, general and administrative expenses | 2,823,765 | 3,283,378 | 9,834,781 | 9,681,326 |
| Research and development expenses | 170,478 | 166,191 | 524,472 | 897,218 |
| Depreciation and amortization expense | 15,896 | 16,661 | 49,798 | 50,121 |
| Total operating expenses | 3,010,139 | 3,466,230 | 10,409,051 | 10,628,665 |
| Loss from operations | (1,506,705) | (2,013,495) | (5,126,933) | (6,812,856) |
| Interest income | 30,600 | 28,012 | 102,669 | 26,819 |
| Loss before provision for income taxes | (1,476,105) | (1,985,483) | (5,024,264) | (6,786,037) |
| Provision for income taxes | 0 | 0 | 0 | 0 |
| Net loss | (1,476,105) | (1,985,483) | (5,024,264) | (6,786,037) |
| Net loss attributable to noncontrolling interests | (9,811) | (13,680) | (33,987) | (54,030) |
| Net loss attributable to Milestone Scientific Inc. | $ (1,466,294) | $ (1,971,803) | $ (4,990,277) | $ (6,732,007) |
| Net loss per share applicable to common stockholders— | ||||
| Basic and Diluted (in dollars per share) | $ (0.02) | $ (0.03) | $ (0.07) | $ (0.1) |
| Weighted average shares outstanding and to be issued— | ||||
| Basic and Diluted (in shares) | 73,730,921 | 70,975,420 | 72,374,693 | 70,480,706 |
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) |
Board of Directors [Member]
Common Stock [Member]
|
Board of Directors [Member]
Additional Paid-in Capital [Member]
|
Board of Directors [Member]
Retained Earnings [Member]
|
Board of Directors [Member]
Noncontrolling Interest [Member]
|
Board of Directors [Member]
Treasury Stock, Common [Member]
|
Board of Directors [Member] |
Consultant [Member]
Common Stock [Member]
|
Consultant [Member]
Additional Paid-in Capital [Member]
|
Consultant [Member]
Retained Earnings [Member]
|
Consultant [Member]
Noncontrolling Interest [Member]
|
Consultant [Member]
Treasury Stock, Common [Member]
|
Consultant [Member] |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Noncontrolling Interest [Member] |
Treasury Stock, Common [Member] |
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance (in shares) at Dec. 31, 2021 | 68,153,336 | |||||||||||||||||
| Balance at Dec. 31, 2021 | $ 68,153 | $ 124,915,560 | $ (107,704,274) | $ (152,541) | $ (911,516) | $ 16,215,382 | ||||||||||||
| Stock based compensation | 305,370 | 0 | 0 | 305,370 | ||||||||||||||
| Common stock to be issued to employees for bonuses | 164,385 | 164,385 | ||||||||||||||||
| Net loss | (1,901,723) | (17,502) | (1,919,225) | |||||||||||||||
| Net loss | (1,901,723) | (17,502) | (1,919,225) | |||||||||||||||
| Balance (in shares) at Mar. 31, 2022 | 68,153,336 | |||||||||||||||||
| Balance at Mar. 31, 2022 | $ 68,153 | 125,385,315 | (109,605,997) | (170,043) | (911,516) | 14,765,912 | ||||||||||||
| Balance (in shares) at Dec. 31, 2021 | 68,153,336 | |||||||||||||||||
| Balance at Dec. 31, 2021 | $ 68,153 | 124,915,560 | (107,704,274) | (152,541) | (911,516) | 16,215,382 | ||||||||||||
| Net loss | (6,786,037) | |||||||||||||||||
| Net loss | (6,786,037) | |||||||||||||||||
| Balance (in shares) at Sep. 30, 2022 | 68,907,394 | |||||||||||||||||
| Balance at Sep. 30, 2022 | $ 68,907 | 126,666,340 | (114,436,281) | (206,571) | (911,516) | 11,180,879 | ||||||||||||
| Balance (in shares) at Mar. 31, 2022 | 68,153,336 | |||||||||||||||||
| Balance at Mar. 31, 2022 | $ 68,153 | 125,385,315 | (109,605,997) | (170,043) | (911,516) | 14,765,912 | ||||||||||||
| Stock based compensation | $ 0 | 392,266 | 0 | 0 | 0 | 392,266 | ||||||||||||
| Common stock issued for services (in shares) | 12,879 | |||||||||||||||||
| Common stock issued for services | $ 13 | 12,864 | 12,877 | |||||||||||||||
| Common stock to be issued to employees for bonuses | 147 | (147) | 0 | 0 | 0 | 0 | ||||||||||||
| Net loss | $ 0 | 0 | (2,858,481) | (22,848) | 0 | (2,881,329) | ||||||||||||
| Common stock to be issued for payment of consulting services (in shares) | 246,028 | |||||||||||||||||
| Common stock to be issued for payment of consulting services | $ 246 | 345,689 | 345,935 | |||||||||||||||
| Common stock issued to be employee for compensation | $ 225 | $ (225) | $ 0 | $ 0 | $ 0 | $ 0 | 27 | 39,973 | 40,000 | |||||||||
| Net loss | $ 0 | 0 | (2,858,481) | (22,848) | 0 | (2,881,329) | ||||||||||||
| Common stock issued to employee for compensation (in shares) | 224,850 | 27,051 | ||||||||||||||||
| Common stock to be issued to employees for bonuses (in shares) | 147,338 | |||||||||||||||||
| Balance (in shares) at Jun. 30, 2022 | 68,811,482 | |||||||||||||||||
| Balance at Jun. 30, 2022 | $ 68,811 | 126,175,735 | (112,464,478) | (192,891) | (911,516) | 12,675,661 | ||||||||||||
| Stock based compensation | 400,202 | 400,202 | ||||||||||||||||
| Net loss | $ 0 | 0 | (1,971,803) | (13,680) | 0 | (1,985,483) | ||||||||||||
| Common stock to be issued for payment of consulting services (in shares) | 95,912 | |||||||||||||||||
| Common stock to be issued for payment of consulting services | $ 96 | 90,403 | 0 | 0 | 0 | 90,499 | ||||||||||||
| Net loss | $ 0 | 0 | (1,971,803) | (13,680) | 0 | (1,985,483) | ||||||||||||
| Balance (in shares) at Sep. 30, 2022 | 68,907,394 | |||||||||||||||||
| Balance at Sep. 30, 2022 | $ 68,907 | 126,666,340 | (114,436,281) | (206,571) | (911,516) | 11,180,879 | ||||||||||||
| Balance (in shares) at Dec. 31, 2022 | 69,306,497 | |||||||||||||||||
| Balance at Dec. 31, 2022 | $ 69,306 | 127,478,325 | (116,410,405) | (219,276) | (911,516) | 10,006,434 | ||||||||||||
| Stock based compensation | 388,772 | 0 | 0 | 388,772 | ||||||||||||||
| Common stock issued for services (in shares) | 256,868 | 242,335 | ||||||||||||||||
| Common stock issued for services | $ 258 | $ (258) | $ 0 | $ 242 | $ 125,758 | $ 0 | $ 0 | $ 0 | $ 126,000 | |||||||||
| Common stock to be issued to employees for bonuses | 50,000 | 50,000 | ||||||||||||||||
| Net loss | (1,307,666) | (11,665) | (1,319,331) | |||||||||||||||
| Net loss | (1,307,666) | (11,665) | (1,319,331) | |||||||||||||||
| Balance (in shares) at Mar. 31, 2023 | 69,805,700 | |||||||||||||||||
| Balance at Mar. 31, 2023 | $ 69,806 | 128,042,597 | (117,718,071) | (230,941) | (911,516) | 9,251,875 | ||||||||||||
| Balance (in shares) at Dec. 31, 2022 | 69,306,497 | |||||||||||||||||
| Balance at Dec. 31, 2022 | $ 69,306 | 127,478,325 | (116,410,405) | (219,276) | (911,516) | 10,006,434 | ||||||||||||
| Net loss | (5,024,264) | |||||||||||||||||
| Net loss | (5,024,264) | |||||||||||||||||
| Balance (in shares) at Sep. 30, 2023 | 70,893,748 | |||||||||||||||||
| Balance at Sep. 30, 2023 | $ 70,894 | 129,487,592 | (121,400,682) | (253,263) | (911,516) | 6,993,025 | ||||||||||||
| Balance (in shares) at Mar. 31, 2023 | 69,805,700 | |||||||||||||||||
| Balance at Mar. 31, 2023 | $ 69,806 | 128,042,597 | (117,718,071) | (230,941) | (911,516) | 9,251,875 | ||||||||||||
| Stock based compensation | 404,330 | 404,330 | ||||||||||||||||
| Common stock issued for services (in shares) | 192,835 | |||||||||||||||||
| Common stock issued for services | $ 193 | (193) | 0 | 0 | 0 | 0 | ||||||||||||
| Common stock to be issued to employees for bonuses | $ 0 | 217,500 | 0 | 0 | 0 | 217,500 | ||||||||||||
| Net loss | (2,216,317) | (12,511) | 0 | (2,228,828) | ||||||||||||||
| Common stock to be issued for payment of consulting services (in shares) | 109,204 | |||||||||||||||||
| Common stock to be issued for payment of consulting services | $ 109 | 56,677 | 0 | 0 | 0 | 56,786 | ||||||||||||
| Net loss | (2,216,317) | (12,511) | 0 | (2,228,828) | ||||||||||||||
| Balance (in shares) at Jun. 30, 2023 | 70,107,739 | |||||||||||||||||
| Balance at Jun. 30, 2023 | $ 70,108 | 128,720,911 | (119,934,388) | (243,452) | (911,516) | 7,701,663 | ||||||||||||
| Stock based compensation | 320,325 | 0 | 0 | 0 | 320,325 | |||||||||||||
| Common stock issued for services (in shares) | 154,486 | |||||||||||||||||
| Common stock issued for services | $ 154 | (154) | 0 | 0 | 0 | 0 | ||||||||||||
| Net loss | (1,466,294) | (9,811) | (1,476,105) | |||||||||||||||
| Common stock to be issued for payment of consulting services (in shares) | 631,523 | |||||||||||||||||
| Common stock to be issued for payment of consulting services | $ 632 | 396,510 | 0 | 0 | 0 | 397,142 | ||||||||||||
| Common stock issued to be employee for compensation | 50,000 | 0 | 0 | 0 | 50,000 | |||||||||||||
| Net loss | (1,466,294) | (9,811) | (1,476,105) | |||||||||||||||
| Balance (in shares) at Sep. 30, 2023 | 70,893,748 | |||||||||||||||||
| Balance at Sep. 30, 2023 | $ 70,894 | $ 129,487,592 | $ (121,400,682) | $ (253,263) | $ (911,516) | $ 6,993,025 |
Note 1 - Organization and Business |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
NOTE 1 — ORGANIZATION AND BUSINESS
All references in this report to “Milestone Scientific,” “us,” “our,” “we,” the “Company” or “Milestone” refer to Milestone Scientific Inc., and its consolidated subsidiaries, Wand Dental, Inc., and Milestone Medical, Inc. (all described below), unless the context otherwise indicates. Milestone Scientific is the owner of the following registered U.S. trademarks: CompuDent®; CompuFlo®; DPS Dynamic Pressure Sensing technology®; Milestone Scientific ®; CathCheck®; 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, revolutionary, computer-controlled anesthetic delivery device, its DPS Dynamic Pressure Sensing Technology® System, to meet the needs of various subcutaneous drug delivery injections and fluid aspiration – enabling healthcare practitioners to achieve multiple unique benefits that cannot currently be accomplished with the 160-year-old manual syringe. Our proprietary DPS Dynamic Pressure Sensing technology is our technology platform that advances the development of next-generation devices. It regulates flow rate and monitoring pressure from the tip of the needle, through platform extensions for local anesthesia for subcutaneous drug delivery, used in various dental and medical injections. It has specific medical applications for epidural space identification in regional anesthesia procedures and intra-articular joint injections.
Our device, using The Wand®, a single use disposable handpiece, is marketed in dentistry under the trademarks CompuDent® and STA Single Tooth Anesthesia System®, and is suitable for all dental procedures that require local anesthetic. The dental devices are currently sold in the United States, Canada and in over 41 other countries. Milestone Scientific also has 510(k) marketing clearance from the U.S. Food and Drug Administration (FDA) on the CompuFlo® Epidural Computer Controlled Anesthesia System in the lumbar thoracic and cervical thoracic junction of the spinal region. In addition, we have obtained CE mark approval for certain medical devices, which can be marketed and sold in most European countries. |
Note 2- Liquidity and Uncertainties |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Substantial Doubt about Going Concern [Text Block] |
NOTE 2- LIQUIDITY AND UNCERTAINTIES
The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. Total losses since inception have been $121 million. The operating losses were $1.5 million and $5.1 million for three and nine months ended September 30, 2023, respectively. Management has prepared cash flow forecasts covering a period of 12 months from the date of issuance of these financial statements. As a result of the forecast, management believes that the Company has sufficient cash, as a result of slowing down production on new technology, research, and development, terminating certain consulting agreements, and managing inventory purchases from our manufacturers. Additionally, the Company was approved on September 12, 2023 to sell Net Operating Losses through the New Jersey Technology Business Tax Certificate Transfer Program (“NJ NOL Program”), a program established by NJ Law and administered by the New Jersey Economic Development Authority (“NJEDA”). Management believes this will generate positive cash flow in the near future. Management has concluded that there is no substantial doubt about the Company’s ability to continue as a going concern for the period of one year from the issuance of these financial statements.
Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue from its dental business worldwide, the generation of revenue from its medical devices and disposables business in the United States and worldwide, and a reduction in operating expenses. However, the Company’s continued operations will depend on its ability to raise additional capital through various potential sources until it achieves profitability, if ever.
In addition to its employees, the Company relies on (i) distributors, agents, and third-party logistics providers in connection with product sales and distribution, and (ii) raw material and component suppliers in the U.S., Europe, and China. If the Company, or any of these entities, encounter any disruptions to its or their respective operations or facilities, or if the Company or any of these third-party partners were to shut down for any reason, including by fire, natural disaster, such as a hurricane, tornado or severe storm, power outage, systems failure, labor dispute, pandemic or other public health crises, or other unforeseen disruption, then the Company or they may be prevented or delayed from effectively operating its or their business, respectively. |
Note 3 - Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||
| Notes to Financial Statements | |||||||||||
| Significant Accounting Policies [Text Block] |
NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission (SEC) and include the accounts of Milestone Scientific and its wholly owned and majority owned subsidiaries, including, Wand Dental (wholly owned), and Milestone Medical (majority owned). All significant, intra-entity transactions and balances have been eliminated in the consolidation.
2. Basis of Presentation
The unaudited condensed consolidated financial statements of Milestone Scientific have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022, included in Milestone Scientific's Annual Report on Form 10-K.
3. Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to the inventory valuation, and cash flow assumptions regarding evaluations of going concern considerations. Actual results could differ from those estimates.
4. Revenue Recognition
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To perform revenue recognition, the Company performs the following five steps:
The Company derives its revenues from the sale of its products, primarily dental instruments, handpieces, and other related products. The Company sells its products directly to consumers in the United States and through a global distribution network that includes both exclusive and non-exclusive distribution agreements with related and third parties.
Revenue from product sales is recognized upon transfer of control of a product to a customer, generally upon date of shipment. The Company has no obligation on product sales for any installation, set-up, or maintenance, these being the responsibility of the buyer. Milestone Scientific's only obligation after sale is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty period.
E-Commerce
As of January 3, 2023, the Company launched an E-Commerce platform, selling and shipping STA Single Tooth Anesthesia Systems® (STA) and handpieces directly to dental offices and dental groups within the United States. Our E-commerce portal accepts online payments via credit and debit cards. The cost of delivery is charged to customer along with appropriate sales tax. The Company recognizes revenue from product sales at the time the product ships to a customer via a third party.
Sales Returns
The Company records allowances for product returns as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns is required, including the customers’ return rights and the Company’s historical experience with returns and the amount of product in the distribution channel not consumed by end users and subject to return. The Company relies on historical return rates to estimate returns.
The Company terminated its major U.S. distributor contract as of December 31, 2022. That distributor had return rights in connection with this contract termination that extended through March 31, 2023. The Company recorded allowance of approximately $179,000 for those returns within its December 31, 2022 financial statements. As of September 30, 2023 no returns have been presented, and the Company reversed the allowance for sales returns.
Financing and Payment
The Company's payment terms differ by geography and customer, but payments from distributors are required within 90 days or less from the date of shipment. The E-commerce portal sells directly to end users and accepts online payments via credit and debit cards via a third-party. These payments from the third-party are settled within two business days.
Disaggregation of Revenue
The Company operates in two operating segments: dental and medical. Therefore, results of the Company's operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. See Note 8 for revenues by geographical market, based on the customer’s location, and product category for the three and nine months ended September 30, 2023 and 2022.
5. Cash and Cash Equivalents
Milestone Scientific considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of September 30, 2023 and December 31, 2022, Milestone Scientific has approximately $2.2 million and $8.7 million, respectively of cash and cash equivalents. As of September 30, 2023, Milestone Scientific had approximately $1.7 million in cash, cash equivalents, and marketable securities in accounts that exceeded the Federal Deposit Insurance Corporation insurance limit of $250,000.
6. Marketable Securities
The Company’s marketable securities are comprised of treasury bills with original maturity greater than three months from date of purchase. The Company’s marketable securities are measured at fair value and are accounted for in accordance with ASU 2016-01. Unrealized holding gains and losses on treasury bills are recorded in interest income on the unaudited condensed consolidated statements of operations. Dividend and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of the marketable securities.
The appropriate classification of marketable securities is determined at the time of purchase and evaluated as of each reporting balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Declines in the fair values of equity securities that are considered other-than-temporary, are charged to other income (expense), net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. As of September 30, 2023, the Company held approximately $2.4 million in U.S. treasury securities, with maturity dates within 3 and 6 months of the balance sheet date. 7. Accounts Receivable
The E-commerce portal sells directly to end users and accepts online payments via credit and debit cards via a third-party credit card processor. These payments are settled within 2 business days of the transactions. Sales to distributors are on credit terms. The Company estimates losses from the ability or inability of its distributor to make payments on amounts billed.
Distributors credit sales are due 90 days or less from the date of invoicing. As of September 30, 2023 and December 31, 2022, accounts receivable was recorded, net of allowance for doubtful account of $26,000 and $10,000, respectively.
8. Inventories
Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in, first-out method) or net realizable value. Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess, slow moving, defective, and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence, and product expiration requirements.
The valuation allowance creates a new cost basis for the inventory, and it is not subsequently marked up through a reduction in the valuation allowance based on any changes in the underlying facts and circumstances. When the valuation allowance is initially recorded, the increase to the allowance is recognized as an increase in cost of sales. The valuation allowance is only reduced if or when the underlying inventory is sold or destroyed, at which time cost of sales recognized would include the previous adjusted cost basis.
9. Basic and Diluted Net Loss Per Common Share
Milestone Scientific presents “basic” earnings (loss) per common share applicable to common stockholders and, if applicable, “diluted” earnings (loss) per common share applicable to common stockholders pursuant to the provisions of ASC 260, “Earnings per Share”. Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding and to be issued common shares as follows: 73,730,921 and 70,975,420 for the three months ended September 30, 2023 and 2022, respectively; and 72,374,693 and 70,480,706 for the nine months ended September 30, 2023 and 2022, respectively. The calculation of diluted earnings per common share is like that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options and warrants, were issued during the period. Since Milestone Scientific had net losses in the nine months ended September 30, 2023 and 2022, the assumed effects of the exercise of potentially dilutive outstanding stock options, unissued restricted stock awards (“RSA”) and warrants, were not included in the calculation as their effect would have been anti-dilutive. Such outstanding options, RSA's and warrants totaled 3,930,654 and 8,135,704 for the nine months ended September 30, 2023 and 2022, respectively.
10. Stock-Based Compensation Milestone Scientific accounts for stock-based compensation under ASC Topic 718, Share-Based Payment. ASC Topic 718 requires all share-based payments to employees, non-employees, directors, and officers, including grants of employee stock options, to be recognized in the unaudited condensed consolidated statements of operations over the service period, as an operating expense, based on the grant-date fair values.
11. Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the guidance on measuring credit losses for certain financial assets measured at amortized cost, including trade receivables. The FASB has subsequently issued several updates to the standard, providing additional guidance on certain topics covered by the standard. This update requires entities to recognize an allowance for credit losses using a forward-looking expected loss impairment model, taking into consideration historical experience, current conditions, and supportable forecasts that impact collectability. As January 1, 2023, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) the adoption of this ASU does not have a material impact on our financial statements.
In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic, 326), Derivatives and hedging (Topic 815), and Leases (Topic 842): Effective dates, which deferred the effective date of ASU 2016-13 for the Company. As a result of ASU 2019-10, ASU 2016-13 is effective for all entities with fiscal years beginning after December 15, 2022, including interim periods. As January 1, 2023, the Company adopted ASU 2019-10, Financial Instruments - Credit Losses (Topic, 326), Derivatives and hedging (Topic 815), and Leases (Topic 842) the adoption of this ASU does not have a material impact on our financial statements. |
Note 4 - Inventories |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Text Block] |
NOTE 4 — INVENTORIES
Inventories consist of the following:
The Company has recorded an allowance on slow moving Medical finished goods due to the slow adoption of the epidural instruments and handpieces for approximately $1.0 million as of September 30, 2023 and December 31, 2022. The Company recorded approximately $90,000 for obsolete parts and material related to the epidural instrument. |
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Note 5 - Advances on Contracts |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Advances to Contract Manufacturer [Text Block] |
NOTE 5 — ADVANCES ON CONTRACTS
The advances on contracts represent funding of future STA devices, epidural instruments, and epidural replacements parts. The balance of the advances as of September 30, 2023 and December 31, 2022 is approximately $1.7 million and $1.3 million, respectively. The advance is classified as current based on the estimated annual usage of the underlying inventory. |
Note 6 - Stockholders' Equity |
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| Equity [Text Block] |
NOTE 6— STOCKHOLDERS’ EQUITY
Warrants
The following table summarizes information about shares issuable under warrants outstanding as of September 30, 2023:
Shares to Be Issued
As of September 30, 2023 and 2022, there were 2,426,364 and 1,852,789, respectively, shares issuable, the issuance of which has been deferred under the terms of employment agreements with the Chief Executive Officer and other employees of Milestone Scientific. Such shares are issuable to each party upon termination of their respective employment.
As of September 30, 2023 and 2022, there were 382,696 and 174,364, respectively, shares issuable 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 on September 30, 2023 and 2022.
Stock Options Plans
The Milestone Scientific Inc. 2020 Equity Compensation Plan, as amended and restated (the "2020 Plan"), provides for awards of restricted common stock, restricted stock units, options to purchase common stock and other awards, up to a maximum 11,500,000 shares of common stock and expires in June 2031. Options may be granted to employees, directors, and consultants of Milestone Scientific for the purchase of shares of common stock at a price not less than the fair market value of common stock on the date of grant. In general, options become exercisable over a -year period from the grant date and expire years after the date of grant.
Milestone Scientific recognizes compensation expense over the requisite service period. For three and nine months ended September 30, 2023, Milestone Scientific recognized approximately $321,000 and $1.1 million, respectively, of total compensation cost, recorded in general and administrative expenses on the statement of operations. For three and nine months ended September 30, 2022, Milestone Scientific recognized approximately $233,000 and $1.1 million, respectively, of total compensation cost, recorded in general and administrative expenses on the statement of operations.
A summary of option activity for employees under the plans and changes during the nine months ended September 30, 2023 is presented below:
A summary of option activity for non-employees under the plans and changes during the nine months ended September 30, 2023 presented below:
For the three and nine months ended September 30, 2023, Milestone Scientific recognized approximately $3,800 and $17,000, respectively of expense related to non-employee options. For the three and nine months ended September 30, 2022, Milestone Scientific recognized approximately $5,000 and $15,000, respectively of expense related to non-employee options.
The information below summarizes the restricted stock award activity for the nine months ended September 30, 2023.
As of September 30, 2023, there were 18,947 restricted shares granted and deferred under the terms of employment agreements with each Territory Manager of Milestone Scientific. Such shares are expected to be issued to each party upon completion of years of employment. For the three and nine months ended September 30, 2023, the Company recognized stock compensation expense of approximately negative $36,500 and $17,700 respectively. For the three and nine months ended September 30, 2022, the Company recognized negative stock compensation expense of approximately $10,400 and $37,500, respectively, due to termination of certain employees who had not vested in their grant in the current period. For the nine months ended September 30, 2023, the total unrecognized compensation expense was approximately $5,200, related to unvested restricted stock awards, which the Company expects to recognize over an estimated weighted-average period of .46 years.
As of June 28, 2023, the Company entered into restricted stock agreements with members of the Board of Directors of the Company. The Company granted 617,978 restricted stock awards with a fair market value of $0.89 per share. Such restricted stock vests as follows: 25% on the grant date in June 2023, and 25% quarterly, on the first day of the following months: October 2023, January 2024, and April 2024. These awards vest immediately upon a change of control as defined in the agreements. For the three and nine months ended September 30, 2023, the Company recognized approximately $137,500 and $445,000, respectively, for restricted stock expenses recorded in general and administrative expenses on the statement of operations. For the nine months end September 30, 2023, the total unrecognized stock compensation expense was approximately $269,000 related to non-vested restricted stock awards with the members of the Board of Directors, which the Company expects to recognize over an estimated weighted average period of 0.50 years. |
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Note 7 - Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
NOTE 7 — INCOME TAXES
The utilization of Milestone Scientific's net operating losses may be subject to a substantial limitation due to the "change of ownership provisions" under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carry forwards before their utilization. Milestone Scientific has established a 100% valuation allowance for all its deferred tax assets due to uncertainty as to their future realization. |
Note 8 - Segment and Geographic Data |
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting Disclosure [Text Block] |
NOTE 8 — SEGMENT AND GEOGRAPHIC DATA
We conduct our business through reportable segments: Dental and Medical. These segments offer different products and services to different customer bases. The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under “Corporate Services” below and these include costs associated with executive management, investor relations, patents, trademarks, licensing agreements, new instrument developments, financing activities and public company compliance.
The following tables present information about our reportable and operating segments:
The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category:
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Note 9 - Concentrations |
9 Months Ended |
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Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Concentration Risk Disclosure [Text Block] |
NOTE 9 – CONCENTRATIONS
Milestone Scientific has informal arrangements with third-party U.S. manufacturers of the STA devices, and epidural instruments pursuant to which they manufacture these products under specific purchase orders which contain advance requirements but without any long-term contract or minimum purchase commitment. Advances on contracts have been classified as current at September 30, 2023 and December 31, 2022. The termination of the manufacturing relationship with any of these manufacturers could have a material adverse effect on Milestone Scientific’s ability to produce and sell its products. Although alternate sources of supply exist, and new manufacturing relationships could be established, Milestone Scientific would need to recover its existing tools or have new tools produced. Establishment of new manufacturing relationships could involve significant expense and delay. Any curtailment or interruption of the supply, because of termination of such a relationship, would have a material adverse effect on Milestone Scientific’s financial condition, business and results of operations.
On January 3, 2023, the Company launched an E-Commerce platform selling and shipping STA Single Tooth Anesthesia System® (STA) and handpieces directly to dental offices and dental groups within the U.S. For the three months ended September 30, 2023, E-Commerce accounted for 60% of net product sales and distributor accounted for 13% of net product sales. For the nine months ended September 30, 2023, E-Commerce accounted for 46% of net product sales. For the three months ended September 30, 2022, an aggregate of approximately 11% and 32% of the Company’s net sales were from two distributors. For the nine months ended September 30, 2022, an aggregate of approximately 36% of the Company’s net product sales were from one distributor.
We had four distributors that accounted for 41%, 24%, 13% and 10% of accounts receivable, respectively, for the nine months ended September 30, 2023. We had customers that accounted for 33%, and 20% of accounts receivable, respectively as of December 31, 2022.
As of September 30, 2023 we had two vendors that accounted for 35% and 19%, respectively, of accounts payable and accounts payable related party. We had vendor that accounted for 42% of accounts payable and accounts payable related party as of December 31, 2022. |
Note 10 - Related Party Transactions |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Notes to Financial Statements | |
| Related Party Transactions Disclosure [Text Block] |
NOTE 10 -- RELATED PARTY TRANSACTIONS
United Systems
Milestone Scientific has a supply agreement with United Systems (whose controlling shareholder, Tom Cheng, is a significant stockholder of Milestone Scientific), the principal manufacturer of our handpieces, pursuant to which manufacture is under specific purchase orders, but without minimum purchase commitments. Purchases from this manufacturer were approximately $636,000 and $1.9 million, respectively for the three and nine months ended September 30, 2023. Purchases from this manufacturer were approximately $658,000 and $2.3 million, respectively, for the three and nine months ended September 30, 2022.
As of September 30, 2023 and December 31, 2022, Milestone Scientific owed this manufacturer approximately $630,000, and $819,000, respectively, which is included in accounts payable, related party and accrued expense, related party on the unaudited condensed consolidated balance sheets.
Other
During 2022, K. Tucker Andersen, a significant stockholder of Milestone Scientific, entered into an agreement with Milestone Scientific to provide financial and business strategic services. Expenses recognized on this agreement were $25,000 and $75,000 for three and nine months ended September 30, 2022, respectively. The agreement was not renewed for 2023.
Royalties payable to our Director of Clinical Affairs was approximately $104,000 and $370,000 for the three and nine months ended September 30, 2023, respectively. Royalties payable to our Director of Clinical Affairs was approximately $108,000 and $322,000 for the three and nine months ended September 30, 2022, respectively. Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $39,000 and $117,000 for the three and nine months ended September 30, 2023 and 2022, respectively.
As of September 30, 2023 and December 31, 2022, Milestone Scientific owed the Director Clinical Affairs for royalties of approximately $104,000 and $120,000, respectively, which is included in accounts payable, related party and accrued expense, related party, in the condensed consolidated balance sheet.
Pursuant to a Succession Agreement dated April 6, 2021 between Leonard Osser and the Company: (i) the Employment Agreement dated as of July 10, 2017 between Mr. Leonard Osser and the Company, pursuant to which upon Mr. Osser stepping down as Interim Chief Executive Officer of the Company, the Company agreed to employ him as Managing Director, China Operations of the Company (the “China Operations Agreement”), and (ii) the Consulting Agreement dated as of July 10, 2017 (the “Consulting Agreement”) between the Company and U.S. Asian Consulting Group, LLC, a company of which Mr. Osser is a principal, the compensation under the China Operations Agreement was modified to reduce the overall compensation by $100,000 to $200,000, split equally between a cash amount and an amount in shares, and the compensation under the Consulting Agreement was increased by $100,000 to $200,000, equally split between a cash amount and an amount in shares, which shares were formerly payable under the China Operations Agreement. Compensation under the China Operations Agreement and the Consulting Agreement are payable for 9.5 years from May 19, 2021. The Company recorded expense of $50,000 and $150,000 related to the Managing Director, China Operations for the three and nine months ended September 30, 2023 and 2022, respectively. The Company recorded expense of $50,000 and $150,000 related to the US Asian Consulting Group, LLC for the three and nine months ended September 30, 2023 and 2022, respectively. |
Note 11 - Commitments |
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| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Text Block] |
NOTE 11 — COMMITMENTS
(1) Contract Manufacturing Agreement
Milestone Scientific has informal arrangements with third-party manufacturers of the STA devices, and epidural instruments pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. The Company has a purchase commitment for the delivery of 2,800 STA instruments as of September 30, 2023. As of September 30, 2023, the purchase order commitment was approximately $2.7 million, and approximately $1.7 million was paid and reported in advances on contracts in the condensed consolidated balance sheet. As of December 31, 2022, the purchase order commitment was approximately $1.7 million, and approximately $1.2 million was paid and reported in advances on contracts in the condensed consolidated balance sheet. The advances on contracts represent funding of future epidural instruments, and epidural replacements parts. The balance of the advances as of September 30, 2023 and December 31, 2022 is approximately $41,000. The advance is classified as current based on the estimated annual usage of the underlying inventory.
(2) Leases
The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:
The components of lease expense were as follows:
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Significant Accounting Policies (Policies) |
9 Months Ended | ||||||||||
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Sep. 30, 2023 | |||||||||||
| Accounting Policies [Abstract] | |||||||||||
| Consolidation, Policy [Policy Text Block] | 1. Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission (SEC) and include the accounts of Milestone Scientific and its wholly owned and majority owned subsidiaries, including, Wand Dental (wholly owned), and Milestone Medical (majority owned). All significant, intra-entity transactions and balances have been eliminated in the consolidation. |
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| Basis of Accounting, Policy [Policy Text Block] |
2. Basis of Presentation
The unaudited condensed consolidated financial statements of Milestone Scientific have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022, included in Milestone Scientific's Annual Report on Form 10-K. |
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| Use of Estimates, Policy [Policy Text Block] |
3. Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to the inventory valuation, and cash flow assumptions regarding evaluations of going concern considerations. Actual results could differ from those estimates. |
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| Revenue [Policy Text Block] |
4. Revenue Recognition
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To perform revenue recognition, the Company performs the following five steps:
The Company derives its revenues from the sale of its products, primarily dental instruments, handpieces, and other related products. The Company sells its products directly to consumers in the United States and through a global distribution network that includes both exclusive and non-exclusive distribution agreements with related and third parties.
Revenue from product sales is recognized upon transfer of control of a product to a customer, generally upon date of shipment. The Company has no obligation on product sales for any installation, set-up, or maintenance, these being the responsibility of the buyer. Milestone Scientific's only obligation after sale is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty period.
E-Commerce
As of January 3, 2023, the Company launched an E-Commerce platform, selling and shipping STA Single Tooth Anesthesia Systems® (STA) and handpieces directly to dental offices and dental groups within the United States. Our E-commerce portal accepts online payments via credit and debit cards. The cost of delivery is charged to customer along with appropriate sales tax. The Company recognizes revenue from product sales at the time the product ships to a customer via a third party.
Sales Returns
The Company records allowances for product returns as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns is required, including the customers’ return rights and the Company’s historical experience with returns and the amount of product in the distribution channel not consumed by end users and subject to return. The Company relies on historical return rates to estimate returns.
The Company terminated its major U.S. distributor contract as of December 31, 2022. That distributor had return rights in connection with this contract termination that extended through March 31, 2023. The Company recorded allowance of approximately $179,000 for those returns within its December 31, 2022 financial statements. As of September 30, 2023 no returns have been presented, and the Company reversed the allowance for sales returns.
Financing and Payment
The Company's payment terms differ by geography and customer, but payments from distributors are required within 90 days or less from the date of shipment. The E-commerce portal sells directly to end users and accepts online payments via credit and debit cards via a third-party. These payments from the third-party are settled within two business days.
Disaggregation of Revenue
The Company operates in two operating segments: dental and medical. Therefore, results of the Company's operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. See Note 8 for revenues by geographical market, based on the customer’s location, and product category for the three and nine months ended September 30, 2023 and 2022. |
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| Cash and Cash Equivalents, Policy [Policy Text Block] |
5. Cash and Cash Equivalents
Milestone Scientific considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of September 30, 2023 and December 31, 2022, Milestone Scientific has approximately $2.2 million and $8.7 million, respectively of cash and cash equivalents. As of September 30, 2023, Milestone Scientific had approximately $1.7 million in cash, cash equivalents, and marketable securities in accounts that exceeded the Federal Deposit Insurance Corporation insurance limit of $250,000. |
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| Marketable Securities, Policy [Policy Text Block] |
6. Marketable Securities
The Company’s marketable securities are comprised of treasury bills with original maturity greater than three months from date of purchase. The Company’s marketable securities are measured at fair value and are accounted for in accordance with ASU 2016-01. Unrealized holding gains and losses on treasury bills are recorded in interest income on the unaudited condensed consolidated statements of operations. Dividend and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of the marketable securities.
The appropriate classification of marketable securities is determined at the time of purchase and evaluated as of each reporting balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Declines in the fair values of equity securities that are considered other-than-temporary, are charged to other income (expense), net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. As of September 30, 2023, the Company held approximately $2.4 million in U.S. treasury securities, with maturity dates within 3 and 6 months of the balance sheet date. |
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| Accounts Receivable [Policy Text Block] |
7. Accounts Receivable
The E-commerce portal sells directly to end users and accepts online payments via credit and debit cards via a third-party credit card processor. These payments are settled within 2 business days of the transactions. Sales to distributors are on credit terms. The Company estimates losses from the ability or inability of its distributor to make payments on amounts billed.
Distributors credit sales are due 90 days or less from the date of invoicing. As of September 30, 2023 and December 31, 2022, accounts receivable was recorded, net of allowance for doubtful account of $26,000 and $10,000, respectively. |
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| Inventory, Policy [Policy Text Block] |
8. Inventories
Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in, first-out method) or net realizable value. Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess, slow moving, defective, and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence, and product expiration requirements.
The valuation allowance creates a new cost basis for the inventory, and it is not subsequently marked up through a reduction in the valuation allowance based on any changes in the underlying facts and circumstances. When the valuation allowance is initially recorded, the increase to the allowance is recognized as an increase in cost of sales. The valuation allowance is only reduced if or when the underlying inventory is sold or destroyed, at which time cost of sales recognized would include the previous adjusted cost basis. |
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| Earnings Per Share, Policy [Policy Text Block] |
9. Basic and Diluted Net Loss Per Common Share
Milestone Scientific presents “basic” earnings (loss) per common share applicable to common stockholders and, if applicable, “diluted” earnings (loss) per common share applicable to common stockholders pursuant to the provisions of ASC 260, “Earnings per Share”. Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding and to be issued common shares as follows: 73,730,921 and 70,975,420 for the three months ended September 30, 2023 and 2022, respectively; and 72,374,693 and 70,480,706 for the nine months ended September 30, 2023 and 2022, respectively. The calculation of diluted earnings per common share is like that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options and warrants, were issued during the period. Since Milestone Scientific had net losses in the nine months ended September 30, 2023 and 2022, the assumed effects of the exercise of potentially dilutive outstanding stock options, unissued restricted stock awards (“RSA”) and warrants, were not included in the calculation as their effect would have been anti-dilutive. Such outstanding options, RSA's and warrants totaled 3,930,654 and 8,135,704 for the nine months ended September 30, 2023 and 2022, respectively. |
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| Share-Based Payment Arrangement [Policy Text Block] |
10. Stock-Based Compensation Milestone Scientific accounts for stock-based compensation under ASC Topic 718, Share-Based Payment. ASC Topic 718 requires all share-based payments to employees, non-employees, directors, and officers, including grants of employee stock options, to be recognized in the unaudited condensed consolidated statements of operations over the service period, as an operating expense, based on the grant-date fair values. |
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| New Accounting Pronouncements, Policy [Policy Text Block] |
11. Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which amends the guidance on measuring credit losses for certain financial assets measured at amortized cost, including trade receivables. The FASB has subsequently issued several updates to the standard, providing additional guidance on certain topics covered by the standard. This update requires entities to recognize an allowance for credit losses using a forward-looking expected loss impairment model, taking into consideration historical experience, current conditions, and supportable forecasts that impact collectability. As January 1, 2023, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) the adoption of this ASU does not have a material impact on our financial statements.
In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic, 326), Derivatives and hedging (Topic 815), and Leases (Topic 842): Effective dates, which deferred the effective date of ASU 2016-13 for the Company. As a result of ASU 2019-10, ASU 2016-13 is effective for all entities with fiscal years beginning after December 15, 2022, including interim periods. As January 1, 2023, the Company adopted ASU 2019-10, Financial Instruments - Credit Losses (Topic, 326), Derivatives and hedging (Topic 815), and Leases (Topic 842) the adoption of this ASU does not have a material impact on our financial statements. |
Note 4 - Inventories (Tables) |
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Note 6 - Stockholders' Equity (Tables) |
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Note 8 - Segment and Geographic Data (Tables) |
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Note 11 - Commitments (Tables) |
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| Lease, Cost and Other Information [Table Text Block] |
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Note 2- Liquidity and Uncertainties (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
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| Retained Earnings (Accumulated Deficit) | $ (121,400,682) | $ (121,400,682) | $ (116,410,405) | ||
| Operating Income (Loss) | $ (1,506,705) | $ (2,013,495) | $ (5,126,933) | $ (6,812,856) | |
Note 3 - Summary of Significant Accounting Policies (Details Textual) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
|
Sep. 30, 2023
USD ($)
shares
|
Sep. 30, 2022
shares
|
Sep. 30, 2023
USD ($)
shares
|
Sep. 30, 2022
shares
|
Dec. 31, 2022
USD ($)
|
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| Allowance for Sales Returns | $ 0 | $ 179,000 | |||
| Number of Operating Segments | 2 | ||||
| Cash, Uninsured Amount | $ 1,700,000 | $ 1,700,000 | |||
| Marketable Securities, Current | 2,450,470 | 2,450,470 | 0 | ||
| Accounts Receivable, Allowance for Credit Loss | $ 26,000 | $ 26,000 | 10,000 | ||
| Weighted Average Number of Shares Outstanding, Basic (in shares) | shares | 73,730,921 | 70,975,420 | 72,374,693 | 70,480,706 | |
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | shares | 3,930,654 | 8,135,704 | |||
| US Treasury Securities [Member] | |||||
| Marketable Securities, Current | $ 2,400,000 | $ 2,400,000 | |||
| Money Market Funds [Member] | |||||
| Cash Equivalents, at Carrying Value | $ 2,200,000 | $ 2,200,000 | $ 8,700,000 | ||
Note 4 - Inventories (Details Textual) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Inventory Write-down | $ 90,000 | |
| Slow Moving Medical Finished Goods [Member] | ||
| Inventory Valuation Reserves | $ 1,000,000 | $ 1,000,000 |
Note 4 - Inventories - Summary of Inventories (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Component parts and other materials | $ 166,350 | $ 142,948 |
| Total inventories | 2,482,630 | 1,792,335 |
| Dental Segment [Member] | ||
| Finished goods, net | 2,090,638 | 1,315,263 |
| Medical Segment [Member] | ||
| Finished goods, net | $ 225,642 | $ 334,124 |
Note 5 - Advances on Contracts (Details Textual) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Advances on Inventory Purchases | $ 1,699,153 | $ 1,325,301 |
Note 6 - Stockholders' Equity - Warrants (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Outstanding (in shares) | 4,268,221 | |
| Outstanding (in dollars per share) | $ 2.18 | |
| Outstanding (Year) | 4 months 6 days | 6 months |
| Issued, number of shares (in shares) | 0 | |
| Issued, weighted average exercise price (in dollars per share) | $ 0 | |
| Exercised, number of shares (in shares) | 0 | |
| Exercised, weighted average exercise price (in dollars per share) | $ 0 | |
| Expired or cancelled, number of shares (in shares) | (3,953,649) | |
| Expired or cancelled, weighted average exercise price (in dollars per share) | $ 0 | |
| Outstanding (in shares) | 314,572 | 4,268,221 |
| Outstanding (in dollars per share) | $ 0.5 | $ 2.18 |
| Outstanding | $ 132,120 |
Note 6 - Stockholders' Equity - Summary of Shares to be Issued (Details) - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Shares-to-be-issued, outstanding (in shares) | 2,440,673 | 2,066,343 |
| Granted in current period (in shares) | 368,387 | 108,148 |
| Issued in current period (in shares) | 0 | (147,338) |
| Shares-to be issued outstanding September 30, 2023 and 2022, respectively (in shares) | 2,809,060 | 2,027,153 |
Note 6 - Stockholders' Equity - Schedule of Restricted Stock (Details) - Restricted Stock [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
shares
| |
| Non-vested as January 1, 2023 (in shares) | 435,293 |
| Non-vested as January 1, 2023 (in dollars per share) | $ / shares | $ 1.18 |
| Granted, Shares (in shares) | 617,978 |
| Granted, Weighted Average Grant-Date Fair Value per Award (in dollars per share) | $ / shares | $ 0.89 |
| Vested, Shares (in shares) | (540,164) |
| Vested, Weighted Average Grant-Date Fair Value per Award (in dollars per share) | $ / shares | $ 0 |
| Cancelled, Shares (in shares) | (30,676) |
| Non-vested as September 30, 2023 (in shares) | 482,431 |
| Non-vested as September 30, 2023 (in dollars per share) | $ / shares | $ 0.91 |
Note 7 - Income Taxes (Details Textual) |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Percentage of Valuation Allowance | 100.00% |
Note 8 - Segment and Geographic Data (Details Textual) |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Number of Reportable Segments | 2 |
Note 8 - Segment and Geographic Data - Summary by Reporting and Operating Segments (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Product sales, net | $ 2,059,284 | $ 2,215,699 | $ 7,566,848 | $ 6,564,969 | |
| Operating Income (Loss) | (1,506,705) | (2,013,495) | (5,126,933) | (6,812,856) | |
| Depreciation and Amortization | 15,896 | 16,661 | 49,798 | 50,121 | |
| Income (loss) before taxes and equity in earnings of affiliates: | (1,476,105) | (1,985,483) | (5,024,264) | (6,786,037) | |
| Total assets | 10,583,558 | 10,583,558 | $ 13,702,086 | ||
| Dental Segment [Member] | |||||
| Product sales, net | 2,053,284 | 2,206,499 | 7,556,848 | 6,509,619 | |
| Medical Segment [Member] | |||||
| Product sales, net | 6,000 | 9,200 | 10,000 | 55,350 | |
| Operating Segments [Member] | Dental Segment [Member] | |||||
| Product sales, net | 2,053,284 | 2,206,499 | 7,556,848 | 6,509,619 | |
| Operating Income (Loss) | 458,474 | 308,913 | 1,699,349 | 826,175 | |
| Depreciation and Amortization | 1,051 | 951 | 3,439 | 2,737 | |
| Income (loss) before taxes and equity in earnings of affiliates: | 458,504 | 307,699 | 1,698,790 | 822,270 | |
| Total assets | 5,338,522 | 5,338,522 | 3,875,978 | ||
| Operating Segments [Member] | Medical Segment [Member] | |||||
| Product sales, net | 6,000 | 9,200 | 10,000 | 55,350 | |
| Operating Income (Loss) | (740,087) | (937,468) | (2,425,913) | (3,788,842) | |
| Depreciation and Amortization | 585 | 1,019 | 2,247 | 3,056 | |
| Income (loss) before taxes and equity in earnings of affiliates: | (742,004) | (938,963) | (2,431,502) | (3,793,236) | |
| Total assets | 498,113 | 498,113 | 620,373 | ||
| Corporate, Non-Segment [Member] | |||||
| Operating Income (Loss) | (1,225,092) | (1,384,940) | (4,400,369) | (3,850,189) | |
| Depreciation and Amortization | 14,260 | 14,691 | 44,112 | 44,328 | |
| Income (loss) before taxes and equity in earnings of affiliates: | (1,192,605) | $ (1,354,219) | (4,291,552) | $ (3,815,071) | |
| Total assets | $ 4,746,923 | $ 4,746,923 | $ 9,205,735 | ||
Note 11 - Commitments (Details Textual) |
9 Months Ended | |
|---|---|---|
|
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
|
| Advances on Inventory Purchases | $ 1,699,153 | $ 1,325,301 |
| Purchase Commitment for Devices [Member] | ||
| Purchase Commitment Number Of Units | 2,800 | |
| Purchase Commitment, Remaining Minimum Amount Committed | $ 2,700,000 | 1,700,000 |
| Advances on Inventory Purchases | 1,700,000 | 1,200,000 |
| Purchase Commitment For Devices Beginning In 2021 [Member] | ||
| Advances on Inventory Purchases | $ 41,000 | $ 41,000 |
Note 11 - Commitments - Lease Expense (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Cash paid for operating lease liabilities | $ 34,320 | $ 31,999 | $ 98,083 | $ 95,996 |
| Cash paid for finance lease liabilities | $ 2,685 | $ 2,685 | $ 8,055 | 8,055 |
| Right-of-use assets obtained in exchange for new operating lease liabilities (1) | 663,009 | |||
| Property and equipment obtained in exchange for new finance lease liabilities | $ 43,242 | |||
| Finance leases (years) (Year) | 1 year 3 months 18 days | 1 year 3 months 18 days | ||
| Operating leases (years) (Year) | 3 years 6 months | 3 years 6 months | ||
| Weighted-average discount rate – operating leases | 9.20% | 9.20% | ||
| Weighted-average discount rate – finance leases | 9.20% | 9.20% | ||
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