10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-14053

MILESTONE SCIENTIFIC INC.

(Exact name of registrant as specified in its charter)

Delaware	13-3545623
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

220 South Orange Avenue, Livingston, New Jersey 07039

(Address of principal executive offices)

(973) 535-2717

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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.     x  Yes     ¨   No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     x  Yes     ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     ¨  Yes     x  No

As of May 13, 2014, the Issuer had a total of 17,905,465 shares of Common Stock, $.001 par value outstanding.

MILESTONE SCIENTIFIC INC

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements
	Condensed Balance Sheets
	March 31, 2014 (Unaudited) and December 31, 2013 (Audited)	4
	Condensed Statements of Income
	Three Months Ended March 31, 2014 and 2013 (Unaudited)	5
	Condensed Statement of Changes in Stockholders’ Equity
	Three Months Ended March 31, 2014 (Unaudited)	6
	Condensed Statements of Cash Flows
	Three Months Ended March 31, 2014 and 2013 (Unaudited)	7
	Notes to Condensed Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	18
Item 4.	Controls and Procedures	18
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	20
SIGNATURES		21

2

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’s future plans of operations, business strategy, results of operations and financial condition. Milestone wishes to ensure that such statements are accompanied by meaningful cautionary statements pursuant to the safe harbor established in the Private Securities Litigation Reform Act of 1995. Prospective investors are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and 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’s reports and registration statements filed with the Securities and Exchange Commission (the “Commission”). Milestone disclaims any intent or obligation to update such forward-looking statements.

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MILESTONE SCIENTIFIC INC.

CONDENSED BALANCE SHEETS

	March 31, 2014			December 31, 2013
	(Unaudited)			(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,398,847		$	1,147,198
Accounts receivable, net of allowance for doubtful accounts of $5,000 as of March 31,    2014 and $5,000 as of December 31, 2013		1,221,375			1,532,856
Inventories		1,744,946			1,321,652
Advances on contracts		1,763,280			727,478
Prepaid expenses and other current assets		242,718			150,451
Total current assets		6,371,166			4,879,635
Advances on contracts		218,875			1,580,874
Investment in Milestone Medical Inc		852,295			924,115
Investment in Milestone Education LLC		38,666			42,082
Furniture, Fixtures & Equipment, net of accumulated depreciation of $458,614 as of    March 31, 2014 and $476,884 as of December 31, 2013		24,562			23,988
Patents, net of accumulated amortization of $518,095 as of March 31, 2014    and $498,502 as of December 31, 2013		572,142			591,735
Other assets		12,917			12,917
Total assets	$	8,090,623		$	8,055,346
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	1,217,135		$	2,020,368
Customer advances		507,345
Accrued expenses and other payables		484,012			515,133
Total current liabilities		2,208,492			2,535,501
Commitments and Contingencies
Stockholders' Equity
Preferred Stock, par value $.001, 5,000,000 shares		—			—
Common stock, par value $.001; authorized 50,000,000 shares; 17,780,465 shares issued,    1,964,930 shares to be issued and 17,747,132 shares outstanding as of March 31, 2014;    17,759,540 shares issued, 1,839,930 shares to be issued, and 17,726,207 shares outstanding    as of December 31, 2013		19,745			19,599
Additional paid-in capital		66,844,506			66,677,200
Accumulated deficit		(60,070,604	)		(60,265,438	)
Treasury stock, at cost, 33,333 shares		(911,516	)		(911,516	)
Total stockholders' equity		5,882,131			5,519,845
Total liabilities and stockholders' equity	$	8,090,623		$	8,055,346

See Notes to Condensed Financial Statements

4

MILESTONE SCIENTIFIC INC.

CONDENSED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended March 31,
	2014			2013
Net sales	$	2,620,834		$	2,489,542
Cost of products sold		882,997			812,043
Gross profit		1,737,837			1,677,499
Selling, general and administrative expenses		1,392,869			1,387,901
Research and development expenses		15,720			121,837
Total operating expenses		1,408,589			1,509,738
Income from operations		329,248			167,761
Other income (expenses)
Other income		-			17,543
Interest expense		(475	)		(34,558	)
Loss from Medical Joint Venture		(130,523	)		—
Loss from Education Joint Venture		(3,416	)		—
Total other expenses, net		(134,414	)		(17,015	)
Net income	$	194,834		$	150,746
Net income
Basic	$	0.01		$	0.01
Diluted	$	0.01		$	0.01
Weighted average shares outstanding and to be issued -
Basic		17,787,352			16,351,894
Diluted		18,268,814			16,752,580

See Notes to Condensed Financial Statements

5

MILESTONE SCIENTIFIC INC.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2014

(Unaudited)

	Common Stock				Additional Paid-in		Accumulated			Treasury
	Shares		Amount		Capital		Deficit			Stock			Total
Balance, January 1, 2014		19,599,470	$	19,599	$	66,677,200	$	(60,265,438	)	$	(911,516	)	$	5,519,845
Options issued to employees and consultants		—		—		39,877		—			—			39,877
Exercise of stock options to be issued		95,000		95		37,905		—			—			38,000
Common stock to be issued for directors compensation		30,000		30		55,170		—			—			55,200
Common stock issued for payment of consulting services		13,939		14		22,486		—			—			22,500
Common stock issued for payment of employee compensation		6,986		7		11,868		—			—			11,875
Net income		—		—		—		194,834			—			194,834
Balance, March 31, 2014		19,745,395	$	19,745	$	66,844,506	$	(60,070,604	)	$	(911,516	)	$	5,882,131

See Notes to Condensed Financial Statements

6

MILESTONE SCIENTIFIC INC.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net income	$	194,834		$	150,746
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense		4,041			4,400
Amortization of patents		19,593			19,375
Common stock and options for compensation, consulting and vendor services		88,052			280,610
Accrued interest expense on notes payable		—			24,419
Bad debt reversal		—			(55,987	)
Loss on Earnings on Medical Joint Venture		130,523			—
Loss on Earnings on Education Joint Venture		3,416			—
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable		311,481			(246,594	)
(Increase) Decrease in inventories		(423,294	)		13,012
Decrease to advance on contracts		326,197			39,756
(Increase) Decrease to prepaid expenses and other current assets		(50,866	)		73,119
Decrease in accounts payable		(803,233	)		(306,322	)
Increase in customer advances		507,345			—
Decrease in accrued expenses		(31,121	)		(80,201	)
Net cash provided by (used in) operating activities		276,968			(83,667	)
Cash flows from investing activities:
Investment in Medical Joint Venture		(58,703	)		-
Investment in Education Joint Venture		—			(50,000	)
Purchases of property and equipment		(4,616	)		(856	)
Payment for patents rights		—			(9,122	)
Net cash used in investing activities		(63,319	)		(59,978	)
Cash flows from financing activities:
Proceeds from exercise of stock options		38,000			—
Proceeds from the sale of common stock		—			50,000
Proceeds from loan from related party		—			50,000
Net cash provided by financing activities		38,000			100,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		251,649			(43,645	)
Cash and cash equivalents at beginning of period		1,147,198			165,249
Cash and cash equivalents at end of period	$	1,398,847		$	121,604
Supplemental disclosure on non cash investing and financing activities:
Shares issued to employees in lieu of cash compensation	$	11,875		$	11,875
Shares to be issued to directors for prepaid directors' fees	$	55,200		$	-

See Notes to Condensed Financial Statements

7

MILESTONE SCIENTIFIC INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2014

ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION

Milestone Scientific Inc. (“Milestone”) or (“our”) was incorporated in the State of Delaware in August 1989.

The unaudited financial statements of Milestone have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

These unaudited financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2013 included in Milestone’s Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present Milestone’s financial position as of March 31, 2014 and the results of its operations for the three months then ended.

The results reported for the three months ended March 31, 2014 are not necessarily indicative of the results of operations which may be expected for a full year.

Milestone has incurred significant operating losses since its inception. Milestone has positive cash flows from operating activities for the three months ending March 31, 2014 of $276,968 and a negative cash flow of $83,667 for the three months ended March 31, 2013. At March 31, 2014, Milestone had cash and cash equivalents of $1,398,847 and a positive working capital of $4,162,674. The working capital increased by $1,818,540 as compared to December 31, 2013. The positive change in working capital is due to Milestone’s increased profitability and net cash flow resulting in an increase in current assets (cash, accounts receivable and classification of advances on contracts from noncurrent to current) and a reduction in accounts payable. Milestone is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue based upon management’s assessment of present contracts and current negotiations and reductions in operating expenses. As of March 31, 2014, Milestone does not expect to have sufficient cash reserves to meet all of its anticipated obligations for the next twelve months. Milestone may require the need for a higher level of marketing and sales efforts that at present it cannot fund. If Milestone is unable to continue to generate positive cash flows from its operating activities it will need to raise additional capital. There is no assurance that Milestone will be able to continue to generate positive operating cash flows or that additional capital can be raised on terms and conditions satisfactory to Milestone, if at all. If positive cash flow cannot be continued to be achieved or if additional capital is required and it cannot be raised, then Milestone would be forced to curtail its development activities, reduce marketing expenses for existing dental products or adopt other cost saving measures, any of which might negatively affect Milestone’s operating results.

Milestone’s historical, and the matters discussed above, raise substantial doubt about its ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 1 – SUMMARY OF ACCOUNTING POLICIES

Recent Accounting Pronouncements

For the discussion of recent accounting pronouncements, please refer to Note 2, “Summary of Significant Accounting Policies,” in the 2013 Annual Report on Form 10-K. Milestone did not adopt any new accounting pronouncements during the three months ended March 31, 2014 that had a material effect on Milestone’s condensed financial statements.

NOTE – 2 Basic and Diluted Net INCOME (Loss) Per Common Share

Milestone presents “basic” and “fully diluted” 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 FASB ASC Topic 260. 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 during each period. The calculation of diluted earnings per common share is similar to 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.

8

For the quarter ending March 31, 2014 and 2013, Milestone calculated basic and fully diluted earnings per common share as described in the previous paragraph.

NOTE – 3 ACCOUNTS RECEIVABLE

Milestone sells a significant amount of its product on credit terms to its major distributors. Milestone estimates losses from the inability of its customers to make payments on amounts billed. A majority of credit sales are due within ninety days from invoicing.    

NOTE – 4 INVESTMENT IN JOINT VENTURES

In March 2011, Milestone entered into an agreement with a People’s Republic of China (“PRC”) entity Beijing 3H Scientific Technology Co., Ltd (Beijing 3H), to establish a Medical Joint Venture entity in the PRC to develop intra-articular and epidural drug delivery instruments utilizing Milestone’s patented CompuFlo technology (the “Medical Joint Venture”). Beijing 3H agreed to contribute up to $1.5 million to this Medical Joint Venture entity, based on progress reports from Milestone and subject to refund if the instruments are not developed because of technological problems within 30 months of the inception date. Milestone evaluates the technological feasibility of the products to be developed using the CompuFlo technology periodically and at every reporting date to establish if circumstances indicate that the technology continues to be feasible. Based on the available evidence Milestone concluded that the contingency associated with the return of capital to Beijing 3H no longer existed as of December 31, 2013 since the instruments have advanced beyond the development stage and accordingly no amounts have been accrued in the accompanying financial statements relating to this contingency. Milestone, with the consent of Beijing 3H, organized a domestic research and development corporation to which the principal shareholders of Beijing 3H and other shareholders completed a capital contribution of $1,500,000. The Medical Joint Venture entity was initially owned fifty percent by shareholders of Beijing 3H and fifty percent by Milestone. Milestone contributed an exclusive worldwide royalty-free license to use CompuFlo technology to the Medical Joint Venture which was valued at approximately $245,000 and accounted for its investment in the Medical Joint Venture using the equity method of accounting. Further, Milestone was authorized by the Medical Joint Venture to manage and oversee the development of the two products for the Medical Joint Venture. In connection with this authorization, Milestone also entered into an agreement with a significant vendor to develop the two instruments included in the Medical Joint Venture.               

Milestone will have distribution responsibility in the U.S. and Canada. Beijing 3H will distribute products exclusively in the PRC, Macao, Hong Kong and other regions of Asia. The rest of the world responsibilities will be shared by Milestone and Beijing 3H.

In July 2013, Milestone entered a strategic partnership with the largest provider of specialty sales and distribution solutions for healthcare in the United States. During the three year strategic partnership, the distributor will hold the exclusive rights to market, resell, label and distribute Milestone’s CompuFlo injection technology for use in epidural applications for childbirth and other pain management needs in hospitals in the U.S.

In the fourth quarter of 2013, Milestone Medical issued 2 million shares of its common stock in a private placement offering at $1.50 per share ($3.0 million) in Poland. As a result of this sale, Milestone Medical received net proceeds of $2,363,000. The effect of this sale of new shares was to reduce Milestone’s ownership percentage from 50% to 45.5% (post transaction). Consistent with the equity method of accounting, the dilution in ownership percentage is treated as if the decreased percentage of ownership was the result of the sale of these shares. As a result, Milestone recorded in the fourth quarter of 2013, a $1,363,650 gain on dilution effect on Medical Joint Venture.

Milestone recorded a Loss on Medical Joint Venture of $130,523. The losses described represent 45.5% of the applicable losses recorded by medical joint venture during the three months ended March 31, 2014. Milestone utilizes the equity method of accounting to recognize its financial results of the joint venture.

Milestone expended $39,153 on behalf of the joint venture in the year ended December 31, 2013 for legal fees related to the FDA (510k) certifications. As part of the joint venture agreement, Milestone is to pay all fees related to the USA FDA certification process.

Milestone has an investment in the Joint Venture of $852,295 at March 31, 2014 and there are no remaining suspended losses.

The Medical Joint Venture’s cumulative expenses through for the quarter ending March 31, 2014 were approximately $287,000.

On July 1, 2013, Milestone Scientific Inc. and Milestone Medical Inc., a medical joint venture 45.5 percent of which is owned by Milestone, signed an agreement for the reimbursement of specific expenses incurred by Milestone Scientific Inc. specifically for the benefit of Milestone Medical Inc. The expenses related to the agreement that have not been paid are $48,641 as of March 31, 2014 and are included in accounts receivable, net. This includes $24,553 of charges for three months ended March 31, 2014.

9

In the first quarter of 2013, the CEO of Milestone loaned Milestone $50,000 for use in capitalizing a fifty percent equity portion in the joint venture with Milestone Education LLC (the “Education Joint Venture”). This balance is included in the accrued expenses on the condensed balance sheets. There is no interest to this agreement and the loan was paid in April 2014.

The Education Joint Venture is expected to provide training and education to our dentists throughout the world. Milestone accounted for its investment in the Education Joint Venture using the equity method of accounting. Milestone Education LLC began operation in 2013. As of March 31, 2014, the Education Joint Venture has incurred a loss of $6,830 and fifty percent of these losses are recorded in the Statement of Income for Milestone.

NOTE – 5 Stock Option Plans

A summary of option activity for employees under the plans and changes during the three months ended March 31, 2014, is presented below:

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2014		1,484,499		1.03		2.88		996,554
Granted		6,024		1.65		4.75		—
Exercised		60,000		0.40		—		—
Forfeited or expired		—		—		—		—
Outstanding, March 31, 2014		1,430,523		1.06		2.72		792,444
Exercisable, March 31, 2014		1,079,232		1.00		2.28		662,178

Milestone recognizes stock compensation expense on a straight line basis over the requisite service period. During the three months ended March 31, 2014, Milestone recognized $39,877 of total stock compensation cost. As of March 31, 2014, there was $357,790 of total unrecognized compensation cost related to non-vested options which Milestone expects to recognize over a weighted average period of 2.50 years. A six percent rate of forfeitures is assumed in the calculation of the compensation cost for the period.

Expected volatilities are based on historical volatility of Milestone’s common stock over a period commensurate with the anticipated term. Milestone uses historical data to estimate option exercise and employee termination within the valuation model.

A summary of option activity for non-employees under the plans and changes during the three months ended March 31, 2014, is presented below:

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2014		173,332		0.48		0.59		210,833
Granted		—		—		—		—
Exercised		35,000		0.40		—		—
Forfeited or expired		—		—		—		—
Outstanding, March 31, 2014		138,332		0.50		0.43		151,499
Exercisable, March 31, 2014		138,332		0.50		0.43		151,499

During the three months ended March 31, 2014, Milestone had no expenses related to non-employee options that vested during the period. There was no unrecognized compensation cost related to non-vested options as of March 31, 2014. A six percent rate of forfeitures is assumed in the calculation of the compensation cost for the period.

In accordance with the provisions of FASB ASC 505-50-15, all other issuances of common stock, stock options or other equity instruments to non-employees as consideration for goods or services received by Milestone are accounted for based on the fair value of the equity instruments issued (unless the fair value of the consideration received can be more reliably measured). The fair value of any options or similar equity instruments issued is estimated based on the Black-Scholes option-pricing model and the assumption that all of the options or other equity instruments will ultimately vest. Such fair value is measured as of an appropriate date pursuant to the guidance, (generally, the earlier of the date the other party becomes committed to provide goods or services or the date of performance by the other party is complete) and capitalized or expensed as if Milestone had paid cash for the goods or services.

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NOTE – 6 CONCENTRATION OF CREDIT RISK

Milestone’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and trade accounts receivable, and advances on contracts. Milestone places its cash and cash equivalents with large financial institutions. At times, such investments may be in excess of the Federal Deposit Insurance Corporation insurance limit. Milestone has not experienced any losses in such accounts and believes it is not exposed to any significant credit risks. Financial instruments which potentially subject Milestone to credit risk consist principally of trade accounts receivable, as Milestone does not require collateral or other security to support customer receivables, and advances on contracts. Milestone entered into a purchase agreement with a vendor to supply Milestone with 12,000 STA Instruments (5,633 instruments are remaining on the purchase order as of March 31, 2014). As part of these agreements, Milestone has advanced approximately $1,982,000 and $2,308,000 to the vendor for purchase of materials at March 31, 2014 and December 31, 2013, respectively. The advance will be credited to Milestone as the goods are delivered. Milestone does not believe that significant credit risk exists with respect to this advance to the contract manufacturer.

Milestone closely monitors the extension of credit to its customers while maintaining allowances, if necessary, for potential credit losses. On a periodic basis, Milestone evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. Management has provided a reserve that it believes is sufficient record accounts receivable at net realizable value as of March 31, 2014 and December 31, 2013.

NOTE – 7 ADVANCES ON CONTRACTS

The advances on contracts represent funding of future STA inventory purchases. The balance of the advances as of March 31, 2014 and December 31, 2013 is $1,982,155 and $2,308,352, respectively. The portion of the advance that is expected to be utilized in the next twelve months is classified as current asset, with the remainder classified as non-current asset.

NOTE – 8 CUSTOMER ADVANCES

As of March 31, 2014, several customers paid in advance for future shipments of merchandise. These advanced payments will be reduced as shipments are made in 2014.

NOTE – 9 NOTE PAYABLE

Milestone borrowed $450,000 from a shareholder in 2008. The loan was originally a short term loan with a maturity date of January 19, 2009. In December 2008, May 30, 2012 and on March 29, 2013, this loan was extended and the due datewaslast fixed at January 5, 2015. The loan accrues interest at 12% per annum, interest compounds quarterly, and interest and principal is due at the maturity. The loan and its related interest was converted to 614,344 shares of common stock on August 8, 2013.

Interest expense for the three months ended March 31, 2013 was $24,419. Accrued interest payable related to the note payable were $306,313 at March 31, 2013. The Company had also secured a line of credit, from this shareholder, for $1.3 million which was converted into equity in 2009. However, the accrued interest remaining on the line of credit was not converted and the remaining balance at March 31, 2013 was $74,669 and accrues interest at 6%, per annum.  

Additionally, Milestone has an agreement with the manufacturer of the CompuDent and STA instruments to accrue interest on their outstanding accounts payable balance. For the quarter ending March 31, 2013, the interest expense for this indebtness was $9,445.

NOTE – 10 INCOME TAXES

Milestone’s expected federal and state income tax liability and benefit computed at the statutory rate (40%) on the pre-tax income for the quarters ending March 31, 2014 and 2013 amounted to a liability of $151,000 and $42,000, respectively. Such expense was recognized in the accompanying financial statements as of March 31, 2014 with recognition of a net operating loss carryforward. Due to Milestone’s history of past operating losses, which required a full valuation allowances for all of Milestone’s deferred tax assets at March 31, 2014 and 2013, no recognition was given to the utilization of the remaining net operating loss carryforwards.

11

NOTE – 11 STOCK ISSUANCES

During the three months ended March 31, 2014, Milestone issued 6,986 shares of common stock valued at $11,875 for payment of employee compensation. In addition, 95,000 shares to be issued on the exercised of certain stock options at a price of $0.40 per share during the quarter ending March 31, 2014. Milestone issued 13,939 shares of common stock, valued at $22,500, for payment of consulting services. In the first quarter of 2014, Milestone’s to be issued shares for the Board are 30,000, valued at $55,200 for their Directors’ compensation.

NOTE – 12 RELATED PARTY

A shareholder of Milestone is also a shareholder of a major supplier of handpieces to Milestone. In addition, he is an investor in the PRC entity, Beijing 3H, which entered into a Medical Joint Venture agreement with Milestone. Milestone purchased $824,574 and $663,420 from the supplier for the three months ended March 31, 2014 and 2013, respectively. Milestone owed $671,777 and $1,024,653 to this supplier as of March 31, 2014 and December 31, 2013, respectively.

In the first quarter of 2013, the CEO of Milestone loaned the Company $50,000 for use in capitalizing a fifty percent equity portion in the joint venture with Milestone Education LLC. There is no interest to this agreement and the loan was paid in April 2014.

NOTE – 13 SIGNIFICANT CUSTOMERS

Milestone had three customers (distributors) for the three months ended March 31, 2014, that had approximately 57% of its net product sales and three customers (distributors) that had approximately 49% of its net product sales for three months ended March 31, 2013. Milestone had accounts receivable for one major customers that amounted to $621,062 representing 51% of gross accounts receivable as of March 31, 2014 and accounts receivable for one major customer that amounted to $732,762 representing 48% of gross accounts receivable as of December 31, 2013, respectively.

Milestone’s sales by product and by geographical region are as follows:

	Three Months Ended March 31,
	2014		2013
Instruments	$	840,981	$	517,450
Handpieces		1,733,217		1,925,663
Other		46,636		46,429
	$	2,620,834	$	2,489,542
United States	$	1,213,643	$	1,300,500
Canada		24,736		55,602
Other Foreign		1,382,455		1,133,440
	$	2,620,834	$	2,489,542

NOTE – 14 PENSION PLANS

Milestone has a defined contribution plan that allows eligible employees to contribute part of their salary through payroll deductions. Milestone does not contribute to this plan but does pay the administrative costs of the plan, which are not significant.

In March 2014, the Board of Directors approved the Compensation Committee’s request to amend the Chief Executive Officer of Milestone’s employment agreement to provide benefits to make payments of $203,111 per year for five years to the Executive, or as he directs such payments to a third party, to fund his acquisition of, or contribution to an annuity, pension, or deferred distribution plan or for an investment for the Executive and his family. For the quarter ended March 31, 2014, approximately $17,000 was charged to expenses for this commitment.

12

NOTE – 15 COMMITMENTS AND OTHER

Contract Manufacturing Arrangement

Milestone has informal arrangements for the manufacture of its products. STA, single tooth anesthesia, CompuDent and CompuMed instruments are manufactured for Milestone by Tricor Systems, Inc. pursuant to specific purchase orders. The STA and The Wand Handpiece with Needle is supplied to Milestone by a contractor in the United States, which arranges for its manufacture with two factories in China.

The termination of the manufacturing relationship with any of the above manufacturers could have a material adverse effect on Milestone’s ability to produce and sell its products. Although alternate sources of supply exist and new manufacturing relationships could be established, Milestone 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, whether or not as a result of termination of such a relationship, would adversely affect Milestone.

The technology underlying the SafetyWand and CompuFlo, and an improvement to the controls for CompuDent were developed by the Director of Clinical Affairs and assigned to us. Milestone purchased this technology pursuant to an agreement dated January 1, 2005. The Director will receive additional payments of 2.5% of the total sales of products using certain of these technologies, and 5% of the total sales of products using certain other of the technologies. In addition, the Director is granted, pursuant to the agreement, an option to purchase, at fair market value on the date of the grant, 8,333 shares of the common stock upon the issuance of each additional patent relating to these technologies. If products produced by third parties use any of these technologies (under license from us) then the Director will receive the corresponding percentage of the consideration received by Milestone for such sale or license. Milestone expensed the Director’s royalty fees of $104,197 and $93,186 for the three months ended March 31, 2014 and 2013, respectively. Additionally, Milestone expensed consulting fees to the Director of 14,300 and $39,000 for the three months ended March 31, 2014 and 2013, respectively.

In January 2010, Milestone issued a purchase order to Tricor Systems Inc for the purchase of 12,000 STA Instruments to be delivered over the next three years. The purchase order is for $5,261,640. As of March 31, 2014, Milestone’s production and sales of instruments to this commitment has been delayed. Consequently, advances on contracts have been classified as current and long term at March 31, 2014.

In August 2013, a shareholder of Milestone entered a three year agreement with Milestone to provide financial and business strategic services. The fee for these services are $100,000 annually.

Subsequent Events

In April 2014, the officers of Milestone elected to receive a total of approximately 980,000 shares of previously recorded shares to be issued. As a result, the 980,000 shares subsequent to March 31, 2014 will be recorded as issued and outstanding shares at March 31, 2014.

In May 2014, the State Food and Drug Administration of the PRC (SFDA) granted registration approval for the sale of the STA handpieces in China.

13

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussions of our financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this Form 10-Q. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements, within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements.

OVERVIEW

In 2014, Milestone remains focused on advancing efforts to achieve our two primary objectives; those being:

· Enhancing our global reach by partnering with distribution companies in the medical sector and

· Optimizing our tactical approach to product sales and marketing in order to materially increase penetration of the global dental and medical markets with our proprietary, patented Computer-Controlled Local Anesthesia Delivery (C-CLAD) solution, the STA Single Tooth Anesthesia Instrument (STA Instrument)

STA Instrument Growth

Since its market introduction in early 2007, the STA Instrument and a prior computerized controlled local anesthesia delivery product have been used to deliver over 49 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.

Global Distribution Network

United States and Canadian Market

In November 2012, Milestone entered an exclusive distribution and marketing agreement with a well known U.S. domestic manufacturer and distributor, for the sale and distribution of the STA instruments and handpieces in United States and Canada.

Milestone has a Domestic Sales Director to refocus our attention on the USA and Canadian markets. The mission of the Domestic Sales Director is to grow our business through marketing our STA Instrument to Dental Group Practices, as well as individual dental practitioners.

International Market

On the global front, we also have granted exclusive marketing and distribution rights for the STA Instrument to select dental suppliers in various international regions in Asia, Africa, South America and Europe. They include Istrodent in South Africa and Unident in the Scandinavian countries of Denmark, Sweden, Norway and Iceland.

In early October 2012, the State Food and Drug Administration (SFDA) of the People’s Republic of China approved Milestone’s Single Tooth Anesthesia System^® (STA System). In May 2014, the SFDA granted registration approval for the sale of the STA handpieces in China.

Shortly before the end of the second quarter 2009, we announced that we were refining our international marketing strategy to gain greater access to and penetration of the international dental markets for the STA Instrument, CompuDent and related disposable handpieces. The new sales strategy provides for increasing hands-on oversight and support of our existing international distribution network, while also attracting new distributors throughout Europe, Asia and South America. To assist in this endeavor, Milestone added in the spring of 2010 an International Sales Director to focus on growth of our products outside the USA and Canada.

In July 2011, we entered into a definitive joint venture agreement with Beijing 3H (Heart-Help-Health) Scientific Technology Co., Ltd. (Beijing 3H) for the development, commercialization, manufacture and marketing of epidural and intra-articular injection medical instruments. Milestone Scientific holds a 45.5% interest in the joint venture and shareholders of Beijing 3H and others holds a 45.5% interest (the “Medical Joint Venture”).The Beijing 3H shareholders include a large shareholder in Milestone who is also the principal of a supplier to Milestone.

14

Segmented Sales Performance

The following table shows a breakdown of Milestone’s product sales (net), domestically and internationally, by product category, and the percentage of product sales (net) by each product category:

	Three Months Ended March 31,
	2014				2013
DOMESTIC
Instruments	$	158,708	13.1	%	$	208,139	16.0	%
Handpieces		1,025,493	84.5	%		1,056,051	81.2	%
Other		29,442	2.4	%		36,310	2.8	%
Total Domestic	$	1,213,643	100.0	%	$	1,300,500	100.0	%
INTERNATIONAL
Instruments	$	682,273	48.5	%	$	309,311	26.0	%
Handpieces		707,724	50.3	%		869,612	73.1	%
Other		17,194	1.2	%		10,119	1.1	%
Total International	$	1,407,191	100.0	%	$	1,189,042	100.2	%
DOMESTIC/INTERNATIONAL ANALYSIS
Domestic	$	1,213,643	46.3	%	$	1,300,500	52.2	%
International		1,407,191	53.7	%		1,189,042	47.8	%
Total Product Sales	$	2,620,834	100.0	%	$	2,489,542	100.0	%

We earned gross profits of 66% and 67% for the three months ended March 31, 2014 and 2013, respectively. However, the revenues and related gross profits have not been sufficient to support overhead, new product introduction and research and development expenses. Although we anticipate expending funds for research and development in 2014, these amounts will vary based on the operating results for each quarter. We incurred operating losses and negative cash flows from operating activities every year since our inception, except for 2013. At March 31, 2014, we believe that we do not have sufficient cash reserves to meet all of our anticipated obligations for the next twelve months. We are actively pursuing the generation of positive cash flows from operating activities through increase in revenue, assessment of current contracts and current negotiations. There is no assurance that we will be able to achieve positive operating cash flows or that additional capital can be raised on terms and conditions satisfactory to us, if at all. If additional capital is required and it cannot be raised, then we would be forced to curtail our development activities, reduce marketing for existing dental products or adopt other cost saving measures, any of which might negatively affect our operating results.

Summary of Significant Accounting Policies, Judgments and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to accounts receivable, inventories, stock-based compensation, and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions.

Accounts Receivable

The realization of accounts receivable current and long-term will have a significant impact on us. Consequently, Milestone estimates its allowance for doubtful accounts resulting from the inability of its customers to make payments for amounts billed. The collectability of outstanding amounts is continually assessed.

Inventories

Inventory costing, obsolescence and physical control are significantly important to the on-going operation of the business. Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in, first-out method) or market. Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess and obsolete inventory is recorded if required based on past and expected future sales.

15

Investment in Medical Joint Venture

We entered into a Medical Joint Venture with a third party, Beijing 3H, for the development and commercialization of two medical products. We own 45.5% percent of the Medical Joint Venture and have recorded our investment on the equity basis of accounting. Milestone’s proportionate share of expenses incurred by the Medical Joint Venture will be charged to the Statement of Operations on a periodic basis.

Impairment of Long-Lived Assets

Our long lived assets consisting principally of patents and trademarks are the foundation of our business. We review long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. The carrying value of the asset is evaluated in relation to the operating performance and future undiscounted cash flows of the underlying assets.

Revenue Recognition

Revenue from product sales is recognized net of discounts and allowances to the domestic distributors on the date of shipment for essentially all shipments, since the shipment terms are FOB warehouse. We will recognize revenue on date of arrival of the goods at the customer’s location where shipments are FOB destination. Shipments to international distributors are FOB the warehouse and revenue is therefore recognized on shipment. In both cases the price to the buyer is fixed and the collectability is reasonably assured. Further, we have no obligation on these sales for any post installation, set-up or maintenance, these being the responsibility of the buyer. Customer acceptance is considered made at delivery. Milestone’s only obligation after sale is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty periods, which volumes have historically been immaterial.

Results of Operations

The consolidated results of operations for the three months ended March 31, 2014 compared to the same three month period in 2013 reflect our focus and development on the Wand/STA Instrument, as well as continuing efforts on identifying collaborative partners which will allow for new product development utilizing our CompuFlo technology.

The following table sets forth, for the periods presented, the statement of operations data as a percentage of revenues. The trends suggested by this table may not be indicative of future operating results.

	Three Months Ended March 31
	2014					2013
Net sales	$	2,620,834		100	%	$	2,489,542		100	%
Cost of products sold		882,997		34	%		812,043		33	%
Gross Profit		1,737,837		66	%		1,677,499		67	%
Selling, general and administrative expenses		1,392,869		53	%		1,387,901		53	%
Research and development expenses		15,720		1	%		121,837		5	%
Operating expenses		1,408,589		54	%		1,509,738		58	%
Income from operations		329,248		13	%		167,761		6	%
Total other expenses		(134,414	)	-5	%		(17,015	)	-1	%
Net income	$	194,834		7	%	$	150,746		5	%

Three months ended March 31, 2014 compared to three months ended March 31, 2013

Total product sales for the three months ended March 31, 2014 and 2013 were $2,620,834 and $2,489,542, respectively. The total increase in product sales of $131,292 or 5%, in 2014 from 2013 is principally the result of increase in international revenues. Domestic instruments sales decreased by $49,430 in 2014 from 2013. In the domestic market, although the total handpiece sales decreased by $30,558 or 3% in 2014 over 2013, STA handpiece sales increased by $23,902 in 2014 over 2013. The training component of our business is showing positive results on the increased STA handpiece sales in the domestic market. On the international front, instruments sales increased in the first quarter of 2014 from 2013 by 372,961 or 121%, principally due to a significant increase in the sales of the STA Instruments by $383,086 in 2014 over 2013 due to a change in marketing strategy for our international business. Internationally, handpiece sales decreased by $161,887 or 19% due to a decrease in Wand handpieces sales of $365,450 in 2014 over 2013. STA handpiece sales increased by $203,563 or 67% for the first quarter 2014 over 2013. The sales of Wand Plus Instruments to the European community ceased in 2012 due to a change in the regulations. The Wand Plus users in Europe will continue to own, utilize and purchase the handpieces.

16

Cost of products sold for the three months ended March 31, 2014 and 2013 were $882,997 and $812,043, respectively, an increase of $70,954 or 9%.

For the three months ended March 31, 2014, Milestone generated a gross profit of $1,737,837 or 66%, as compared to a gross profit of $1,677,499, or 67%, for the three months ended March 31, 2013. The total increase in gross profit dollars of $60,338 is primarily due to an increase in revenue.  

Selling, general and administrative expenses for the three months ended March 31, 2014 and 2013 were $1,392,869 and $1,387,901, respectively. This increase in expenses of $4,968 is described in the following sections of this report. Milestone continues to focus on controlling expenses in all categories. The first quarter of 2014 noted several areas of savings as Milestone continues on its planned business model change, through the training and education hygienist program. First, marketing expenses decreased by approximately $19,000 as Milestone targeted this venue as a more costly method to present our Wand/STA Instrument.  Milestone has decided to focus its attention on the national shows that are focused on a higher attendance by individual dentists as well as dental practice groups. Additionally, a large portion of our previous marketing and selling costs in the U.S. and Canada are now incurred by our exclusive STA distributor. Sales expenses also decreased by approximately $12,000 during the first quarter of 2014 principally in travel related cost. Other expenses for the quarter increased by approximately $153,000 as compared to the same period in 2013. The reserve for bad debt increased by approximately $56,000 as Milestone reversed a portion of the bad debt reserve based on payments made by a Chinese distributor in the first quarter of 2013 and the reserves were completely reversed in 2013. Consulting expenses increased by approximately $60,000. There was an increase in royalty commission by approximately $11,000 as compared to the same period in 2013. International travel cost increased by approximately $4,000. The offset for other expenses are the decreases in excise tax of approximately $20,000 due to the new law passed in 2013. Salaries decreased by approximately $99,000 in this quarter over the comparable quarter in the prior year. Legal fees decreased by approximately $17,000 in the aggregate for routine litigation and patent annuities.

Research and development expenses for the three months ended March 31, 2014 and 2013 were $15,720 and $121,837, respectively, a decrease of $106,117 or 87%, due to the software enhancement of the STA Instrument in 2013.

The income from operations for the three months ended March 31, 2014 and 2013 was $329,248 and $167,761, respectively. The $161,487, or 96%, increase is explained above.

Interest expense of $34,558, relating to the $1.3 million line of credit which was subsequently converted into common stock in December 2009 and the $450,000 long term note payable, was charged for the three months ended March 31, 2013, this was converted to common stock on August 8, 2013. (see Note 8 to the financials). Additionally, Milestone accrued interest expense of $9,445 and $20,901 for the overdue accounts payable on the balance to the instrument assembler at March 31, 2013 and this did not happen in 2014.

There is a Loss on the Medical Joint Venture of $130,523 for the quarter ending March 31, 2014. There was a Loss on the Education Joint Venture of $3,415 for the quarter ending March 31, 2014.

For the reasons explained above, net income for the three months ended March 31, 2014 and 2013 was $194,834 and $150,746, respectively. The $44,088, or 29%, increase in net income is primarily a result of an increase in gross margin dollars of $60,338 enhanced by an increase in selling, general and administrative expenses of $4,969 and an increase of $133,939 for the non-cash loss on the joint ventures offset by a decrease in research and development expense of $106,117.

Liquidity and Capital Resources

As of March 31, 2014, Milestone had cash and cash equivalents of $1,398,847 and a positive working capital of $4,162,674. Milestone had net income of $194,834 and $150,746 for the three months ended March 31, 2014 and 2013, respectively. The positive working capital of $4,162,674 in 2014 was the result of classification of the advances on contracts from noncurrent to current because of the 5,633 STA instruments Milestone will receive in 2014. Additionally, the accounts payable due this supplier is $76,102 as of March 31, 2014. This represents a $38,742 increase over December 31, 2013.

There was a substantial increase in working capital at March 31, 2014, of $1,818,540 from $2,344,135 at December 31, 2013. The net current asset increased by $1,491,531. The significant current asset changes are: current accounts receivable decreased by $311,481, cash increased by $251,649 and inventory increased by $423,294. Current liabilities decreased by $327,008.

17

Milestone, at March 31, 2014, has agreed to accept the remaining 5,633 STA instruments by November 30, 2014, thereby decreasing the noncurrent advances on contracts of $1,361,999. Milestone continues to take positive steps to maintain adequate inventory levels and advances on contracts to maintain available inventory to meet our domestic and international sales requirements.  Cash flows from operating activities for the three months ended March 31, 2014 and 2013 were a positive $276,968 and a negative $83,667, respectively.

For the three months ended March 31, 2014, our net cash provided by operating activities was $276,968. This was attributable primarily to a net income of $194,834 adjusted for noncash items of $245,625, principally common stock issued for compensation, consulting and vendor services, and changes in operating assets and liabilities of $163,491.

Milestone has incurred operating losses and negative cash flows from operating activities since its inception, except for the four quarters of 2013. Milestone is actively pursuing the generation of positive cash flows from operating activities through increases in revenues based upon management’s assessment of present contracts and current negotiations and reductions in operating expenses. As of March 31, 2014, Milestone believes that it does not have sufficient cash reserves to meet all of its anticipated obligations for the next twelve months. However, if Milestone requires a higher level of marketing and sales effort, or if Milestone is unable to continue generating positive cash flows from its operating activities it will need to raise additional capital. There is no assurance that Milestone will be able to continue to achieve positive operating cash flows or that additional capital can be raised on the terms and conditions satisfactory to Milestone if at all. If additional capital is required and it cannot be raised, then Milestone would be forced to curtail its development activities, reduce marketing expenses for existing dental products or adopt other cost savings measures, any of which might negatively affect Milestone’s operating results.

Milestone’s historical losses and negative operating cash flows raises substantial doubt about its ability to continue as a going concern. The accompanying financial statements do not include any adjustment that might result from the outcome of this uncertainty.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Milestone’s management, including the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design and operation of Milestone’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”). Based upon that evaluation, Milestone’s Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures as of the Evaluation Date are effective to ensure that information required to be disclosed in the reports Milestone 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 and that such information is accumulated and communicated to Milestone’s management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding disclosure.

There were no changes in Milestone’s internal control over financial reporting identified in connection with the evaluation that occurred during Milestone’s last fiscal quarter ended March 31, 2014 that have materially affected, or that are reasonably likely to materially affect, Milestone’s internal controls over financial reporting.

18

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

In the quarter ended March 31, 2014, Milestone issued total 20,925 shares valued at $34,375 as follows:

	Shares		$
Shares issued for services		13,939	$	22,500
Shares issued for Employee Compensation		6,986		11,875
		20,925	$	34,375

These issuances were exempt from registration pursuant to Section 4 (a)(2) of the Securities Act of 1933, as amended (the “Act”) and a legend restricting the sale, transfer, or other disposition of these shares other than in compliance with the Act was imprinted on stock certificates evidencing the shares.

ITEM 3. DEFAULT UPON SENIOR SECURTIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

19

ITEM 6. EXHIBITS

The following exhibits are filed herewith:

10.22	Amendment to the Employment Agreement with Leonard Osser, effective March 17, 2014.*
31.1	Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Chief Operating Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Chief Operating Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document. *
101.SCH	XBRL Taxonomy Extension Schema Document.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document. *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document. *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document. *
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document. *

* Filed herewith.

20

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/ Leonard Osser

Leonard Osser

Chief Executive Officer

(Principal Executive Officer)

/s/ Joseph D’Agostino

Joseph D’Agostino

Chief Operating Officer

Chief Financial Officer

(Principal Financial Officer)

Date: May 13, 2014

21

EX-10

Exhibit 10.22

Amendment No. 2 to the 2009 Employment Agreement

Amendment No. 2 to the Employment Agreement dated as of September 1, 2009 (the “2009 Employment Agreement”) between Leonard Osser (the “Executive”) and Milestone Scientific Inc. (the “Company”) as follows:

1. “Section 6. Other Benefits” of the 2009 Employment Agreement is hereby amended to add the following new paragraph (f);

(f)The Company will make payments of $203,111 per year for five years to the Executive, or as he directs such payments to a third party, to fund his acquisition of, or contribution to, an annuity, pension, or deferred distribution plan or for an investment for the Executive and his family.  During the 5-year period commencing in 2014 during which these payments are being made by the Company, the options, if any, payable to the Executive under paragraph 4(c) above shall equal the number of Bonus Shares included in the allotment of Bonus Shares for that year (rather than being in an amount equal to two times the number of Bonus Shares).  

2. This Amendment No. 2 supersedes and replaces Amendment No. 1 to the 2009 Employment Agreement.

3. Except as provided for herein, all other provisions of the 2009 Employment Agreement shall remain in full force and effect.

MILESTONE SCIENTIFIC INC.
By:	/s/ Joseph D’Agostino
	Joseph D’Agostino,
	Chief Operating and Chief Financial Officer
	/s/ Leonard Osser
	Leonard Osser

EX-31

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Leonard Osser, 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, in light of 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, fairly 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 my supervision, to ensure that material information relating to Milestone 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 our 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 our 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, Milestone’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and, I have disclosed, based on our 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 or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2014

/s/ Leonard Osser

Leonard Osser

Chief Executive Officer

(Principal Executive Officer)

EX-31

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Joseph D’Agostino, 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, in light of 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, fairly 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 my supervision, to ensure that material information relating to Milestone 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 our 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 our 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, Milestone’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and, I have disclosed, based on our 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 or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2014

/s/ Joseph D’Agostino

Joseph D’Agostino

Chief Operating Officer

Chief Financial Officer

(Principal Financial Officer)

EX-32

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 (the “Company”) on Form 10-Q for the period ending March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leonard Osser, 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

Dated: May 13, 2014

/s/ Leonard Osser

Leonard Osser

Chief Executive Officer

(Principal Executive 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.

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Milestone Scientific Inc (the “Company”) on Form 10-Q for the period ending March 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph D’Agostino, Chief Financial 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

Dated: May 13, 2014

/s/ Joseph D’Agostino

Joseph D’Agostino

Chief Operating Officer

Chief Financial 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.

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Pension Plans (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Employment benefits	$ 203,111
Number of years in providing benefits	5 years
Commitment expenses	$ 17,000

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Note Payable (Details Textual) (USD $)	0 Months Ended	3 Months Ended
	Aug. 08, 2013	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2008
Debt Instrument [Line Items]
Borrowed from shareholder				$ 450,000
Extended due date for loan borrowed		Jan. 05, 2015
Interest rate		12.00%
Converted common stock	614,344
Interest Expense		475	34,558
Accrued interest			306,313
Line of credit from shareholder			1,300,000
Accounts payable
Debt Instrument [Line Items]
Interest Expense			9,445
Line of Credit
Debt Instrument [Line Items]
Interest rate			6.00%
Interest Expense			24,419
Accrued interest			74,669
Interest converted into common stock			$ 0

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Significant Customers (Tables)

3 Months Ended

Mar. 31, 2014

Sales by Product and by Geographical Region

Milestone’s sales by product and by geographical region are as follows:

	Three Months Ended March 31,
	2014		2013
Instruments	$	840,981	$	517,450
Handpieces		1,733,217		1,925,663
Other		46,636		46,429
	$	2,620,834	$	2,489,542
United States	$	1,213,643	$	1,300,500
Canada		24,736		55,602
Other Foreign		1,382,455		1,133,440
	$	2,620,834	$	2,489,542

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Significant Customers (Details Textual) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014 Customer	Mar. 31, 2013 Customer	Dec. 31, 2013 Customer
Entity Wide Information Revenue From External Customer [Line Items]
Accounts receivable current and noncurrent percentage	51.00%		48.00%
Aggregate accounted of revenue	57.00%	49.00%
Product Sales and Significant Customers and Vendors (Textual) [Abstract]
Accounts receivable	$ 621,062		$ 732,762
Number of customers	3	3
Number of Customers involved in Accounts receivables	1		1

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Basic and Diluted Net Income (Loss) Per Common Share

3 Months Ended

Mar. 31, 2014

Basic and Diluted Net Income (Loss) Per Common Share

NOTE – 2 Basic and Diluted Net INCOME (Loss) Per Common Share

Milestone presents “basic” and “fully diluted” 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 FASB ASC Topic 260. 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 during each period. The calculation of diluted earnings per common share is similar to 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.

For the quarter ending March 31, 2014 and 2013, Milestone calculated basic and fully diluted earnings per common share as described in the previous paragraph.

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Stock Option Plans (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Summary of option activity for employees and non-employees
Number of Options, Exercised	95,000
Employee Stock Option
Summary of option activity for employees and non-employees
Number of Options, Beginning Balance	1,484,499
Number of Options, Granted	6,024
Number of Options, Exercised	60,000
Number of Options, Forfeited or expired
Number of Options, Ending Balance	1,430,523	1,484,499
Number of Options, Exercisable, Ending Balance	1,079,232
Weighted Averaged Exercise Price, Beginning Balance	$ 1.03
Weighted Averaged Exercise Price, Granted	$ 1.65
Weighted Averaged Exercise Price, Exercised	$ 0.40
Weighted Averaged Exercise Price, Forfeited or expired
Weighted Averaged Exercise Price, Ending Balance	$ 1.06	$ 1.03
Weighted Averaged Exercise Price, Exercisable, Ending Balance	$ 1.00
Weighted Average Remaining Contractual Life (Years), Outstanding	2 years 8 months 19 days	2 years 10 months 17 days
Weighted Average Remaining Contractual Life (Years), Granted	4 years 9 months
Weighted Average Remaining Contractual Life (Years), Exercisable	2 years 3 months 11 days
Aggregate Intrinsic Options Value, Beginning Balance	$ 996,554
Aggregate Intrinsic Options Value, Ending Balance	792,444	996,554
Aggregate Intrinsic Options Value, Exercisable, Ending Balance	662,178
Option Activity For Non Employees
Summary of option activity for employees and non-employees
Number of Options, Beginning Balance	173,332
Number of Options, Granted
Number of Options, Exercised	35,000
Number of Options, Forfeited or expired
Number of Options, Ending Balance	138,332	173,332
Number of Options, Exercisable, Ending Balance	138,332
Weighted Averaged Exercise Price, Beginning Balance	$ 0.48
Weighted Averaged Exercise Price, Granted
Weighted Averaged Exercise Price, Exercised	$ 0.40
Weighted Averaged Exercise Price, Forfeited or expired
Weighted Averaged Exercise Price, Ending Balance	$ 0.50	$ 0.48
Weighted Averaged Exercise Price, Exercisable, Ending Balance	$ 0.50
Weighted Average Remaining Contractual Life (Years), Outstanding	5 months 5 days	7 months 2 days
Weighted Average Remaining Contractual Life (Years), Exercisable	5 months 5 days
Aggregate Intrinsic Options Value, Beginning Balance	210,833
Aggregate Intrinsic Options Value, Ending Balance	151,499	210,833
Aggregate Intrinsic Options Value, Exercisable, Ending Balance	$ 151,499

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Investment in Joint Ventures (Details Textual) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	3 Months Ended		12 Months Ended	3 Months Ended					3 Months Ended		3 Months Ended
	Mar. 31, 2014 Products	Mar. 31, 2013	Dec. 31, 2013	Mar. 31, 2014 Medical Joint Venture Instruments	Dec. 31, 2013 Medical Joint Venture	Jul. 01, 2013 Medical Joint Venture	Mar. 31, 2013 Medical Joint Venture	Mar. 31, 2011 Medical Joint Venture	Mar. 31, 2014 Education Joint Venture	Mar. 31, 2013 Education Joint Venture	Mar. 31, 2014 Parent Company
Investment in Medical Joint Venture (Textual) [Abstract]
Joint venture owned by the entity	50.00%					45.50%		50.00%		50.00%
Contribution of Milestone in joint venture				$ 1,500,000							$ 245,000
Capital contribution				1,500,000
Instrument inception period				30 months
Contingency associated with the return of capital to Beijing 3H							0
Number of development of products for medical joint venture	2
Number of development of instruments				2
Loss from Medical Joint Venture	(130,523)
Sale of stock, number of shares					2
Sale of stock, price per share					$ 1.50
Sale of stock, value					3,000,000
Net proceeds received in joint venture					2,363,000
Percentage of ownership before transaction					50.00%
Percentage of ownership after transaction					45.50%
Gain on dilution effect					1,363,650
Legal fees related to the FDA (510k) certifications			39,153
Investment in Milestone Medical Inc	852,295		924,115
Total expenses incurred on joint venture				287,000
Reimbursable expense included in account receivable, net				48,641
Other charges	134,414	17,015		24,553
Loan from parent company CEO		50,000
Loss on joint venture									$ 6,830

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Stock Option Plans (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2014
Employee Stock Option
Stock Option Plans (Textual) [Abstract]
Milestone recognized total compensation cost	$ 39,877
Total unrecognized compensation cost related to non-vested options	357,790
Milestone recognize cost over a weighted average period	2 years 6 months
Stock Option Plans (Additional Textual) [Abstract]
Share based compensation arrangement by share based payment award compensation cost forfeiture rate	6.00%
Option Activity For Non Employees
Stock Option Plans (Textual) [Abstract]
Milestone recognized total compensation cost	0
Total unrecognized compensation cost related to non-vested options	$ 0
Stock Option Plans (Additional Textual) [Abstract]
Share based compensation arrangement by share based payment award compensation cost forfeiture rate	6.00%

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Concentration of Credit Risk (Details) (USD $)			3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 STA Instruments Instruments
Concentration of Credit Risk (Textual) [Abstract]
Number of instrument on purchase agreement			12,000
Payment of materials in advance	$ 1,982,000	$ 2,308,000
Number of instrument remaining on purchase order			5,633

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Summary of Accounting Policies

3 Months Ended

Mar. 31, 2014

Summary of Accounting Policies

NOTE 1 – SUMMARY OF ACCOUNTING POLICIES

Recent Accounting Pronouncements

For the discussion of recent accounting pronouncements, please refer to Note 2, “Summary of Significant Accounting Policies,” in the 2013 Annual Report on Form 10-K. Milestone did not adopt any new accounting pronouncements during the three months ended March 31, 2014 that had a material effect on Milestone’s condensed financial statements.

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Advances on Contracts (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Advances on Contracts (Textual) [Abstract]
Advances to contract manufacturer	$ 1,982,155	$ 2,308,352
Utilization period of advance	12 months

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Commitments and Other (Details Textual) (USD $)	1 Months Ended		3 Months Ended			3 Months Ended
	Aug. 31, 2013	Jan. 31, 2010 Instruments	Mar. 31, 2014	Mar. 31, 2012	Apr. 30, 2014 Subsequent Event	Mar. 31, 2014 Director	Mar. 31, 2012 Director
Commitments and Other (Additional Textual) [Abstract]
Additional payment received by using technology			2.50%
Additional payment received by using other technology			5.00%
Consulting fees			$ 14,300	$ 39,000
Shareholder agreement period	3 years
Servicing Fees	100,000
Shares issued					980,000
Shares outstanding					980,000
Commitments and Other (Textual) [Abstract]
Options to purchase common stock issued						8,333
Director's royalty fees						104,197	93,186
Issue of purchase order to Tricor Systems Inc		12,000
Purchase order		$ 5,261,640

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Condensed Balance Sheets (USD $)	Mar. 31, 2014	Dec. 31, 2013
Current Assets:
Cash and cash equivalents	$ 1,398,847	$ 1,147,198
Accounts receivable, net of allowance for doubtful accounts of $5,000 as of March 31, 2014 and $5,000 as of December 31, 2013	1,221,375	1,532,856
Inventories	1,744,946	1,321,652
Advances on contracts	1,763,280	727,478
Prepaid expenses and other current assets	242,718	150,451
Total current assets	6,371,166	4,879,635
Advances on contracts	218,875	1,580,874
Investment in Milestone Medical Inc	852,295	924,115
Investment in Milestone Education LLC	38,666	42,082
Furniture, Fixtures & Equipment, net of accumulated depreciation of $458,614 as of March 31, 2014 and $476,884 as of December 31, 2013	24,562	23,988
Patents, net of accumulated amortization of $518,095 as of March 31, 2014 and $498,502 as of December 31, 2013	572,142	591,735
Other assets	12,917	12,917
Total assets	8,090,623	8,055,346
Current Liabilities:
Accounts payable	1,217,135	2,020,368
Customer advances	507,345
Accrued expenses and other payables	484,012	515,133
Total current liabilities	2,208,492	2,535,501
Commitments and Contingencies
Stockholders' Equity
Preferred Stock, par value $.001, 5,000,000 shares
Common stock, par value $.001; authorized 50,000,000 shares; 17,780,465 shares issued, 1,964,930 shares to be issued and 17,747,132 shares outstanding as of March 31, 2014; 17,759,540 shares issued, 1,839,930 shares to be issued, and 17,726,207 shares outstanding as of December 31, 2013	19,745	19,599
Additional paid-in capital	66,844,506	66,677,200
Accumulated deficit	(60,070,604)	(60,265,438)
Treasury stock, at cost, 33,333 shares	(911,516)	(911,516)
Total stockholders' equity	5,882,131	5,519,845
Total liabilities and stockholders' equity	$ 8,090,623	$ 8,055,346

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Condensed Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income	$ 194,834	$ 150,746
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation expense	4,041	4,400
Amortization of patents	19,593	19,375
Common stock and options for compensation, consulting and vendor services	88,052	280,610
Accrued interest expense on notes payable		24,419
Bad debt reversal		(55,987)
Loss on Earnings on Medical Joint Venture	130,523
Loss on Earnings on Education Joint Venture	3,416
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable	311,481	(246,594)
(Increase) Decrease in inventories	(423,294)	13,012
Decrease to advance on contracts	326,197	39,756
(Increase) Decrease to prepaid expenses and other current assets	(50,866)	73,119
Decrease in accounts payable	(803,233)	(306,322)
Increase in customer advances	507,345
Decrease in accrued expenses	(31,121)	(80,201)
Net cash provided by (used in) operating activities	276,968	(83,667)
Cash flows from investing activities:
Investment in Medical Joint Venture	(58,703)
Investment in Education Joint Venture		(50,000)
Purchases of property and equipment	(4,616)	(856)
Payment for patents rights		(9,122)
Net cash used in investing activities	(63,319)	(59,978)
Cash flows from financing activities:
Proceeds from exercise of stock options	38,000
Proceeds from the sale of common stock		50,000
Proceeds from loan from related party		50,000
Net cash provided by financing activities	38,000	100,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	251,649	(43,645)
Cash and cash equivalents at beginning of period	1,147,198	165,249
Cash and cash equivalents at end of period	1,398,847	121,604
Supplemental disclosure on non cash investing and financing activities:
Shares issued to employees in lieu of cash compensation	11,875	11,875
Shares to be issued to directors for prepaid directors' fees	$ 55,200

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Stock Issuances (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2014
Stock Issuance (Textual) [Abstract]
Common stock issued for payment of employee compensation, shares	6,986
Common stock issued for payment of employee compensation	$ 11,875
Number of Options, Exercised	95,000
Price per share	$ 0.40
Common stock issued for payment of consulting services, shares	13,939
Common stock issued for payment of consulting services	22,500
Common stock to be issued for directors compensation, shares	30,000
Common stock to be issued for directors compensation	$ 55,200

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Commitments and Other

3 Months Ended

Mar. 31, 2014

Commitments and Other

NOTE – 15 COMMITMENTS AND OTHER

Contract Manufacturing Arrangement

Milestone has informal arrangements for the manufacture of its products. STA, single tooth anesthesia, CompuDent and CompuMed instruments are manufactured for Milestone by Tricor Systems, Inc. pursuant to specific purchase orders. The STA and The Wand Handpiece with Needle is supplied to Milestone by a contractor in the United States, which arranges for its manufacture with two factories in China.

The termination of the manufacturing relationship with any of the above manufacturers could have a material adverse effect on Milestone’s ability to produce and sell its products. Although alternate sources of supply exist and new manufacturing relationships could be established, Milestone 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, whether or not as a result of termination of such a relationship, would adversely affect Milestone.

The technology underlying the SafetyWand and CompuFlo, and an improvement to the controls for CompuDent were developed by the Director of Clinical Affairs and assigned to us. Milestone purchased this technology pursuant to an agreement dated January 1, 2005. The Director will receive additional payments of 2.5% of the total sales of products using certain of these technologies, and 5% of the total sales of products using certain other of the technologies. In addition, the Director is granted, pursuant to the agreement, an option to purchase, at fair market value on the date of the grant, 8,333 shares of the common stock upon the issuance of each additional patent relating to these technologies. If products produced by third parties use any of these technologies (under license from us) then the Director will receive the corresponding percentage of the consideration received by Milestone for such sale or license. Milestone expensed the Director’s royalty fees of $104,197 and $93,186 for the three months ended March 31, 2014 and 2013, respectively. Additionally, Milestone expensed consulting fees to the Director of 14,300 and $39,000 for the three months ended March 31, 2014 and 2013, respectively.

In January 2010, Milestone issued a purchase order to Tricor Systems Inc for the purchase of 12,000 STA Instruments to be delivered over the next three years. The purchase order is for $5,261,640. As of March 31, 2014, Milestone’s production and sales of instruments to this commitment has been delayed. Consequently, advances on contracts have been classified as current and long term at March 31, 2014.

In August 2013, a shareholder of Milestone entered a three year agreement with Milestone to provide financial and business strategic services. The fee for these services are $100,000 annually.

Subsequent Events

In April 2014, the officers of Milestone elected to receive a total of approximately 980,000 shares of previously recorded shares to be issued. As a result, the 980,000 shares subsequent to March 31, 2014 will be recorded as issued and outstanding shares at March 31, 2014.

In May 2014, the State Food and Drug Administration of the PRC (SFDA) granted registration approval for the sale of the STA handpieces in China.

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Related Party (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Related Party (Textual) [Abstract]
Purchased inventories	$ 824,574	$ 663,420
Payable	671,777		1,024,653
Loan amount to capitalize equity portion in joint venture	$ 50,000
Joint venture owned by the entity	50.00%

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Stock Option Plans (Tables)

3 Months Ended

Mar. 31, 2014

Summary of Option Activity for Employees and Non-Employees

A summary of option activity for employees under the plans and changes during the three months ended March 31, 2014, is presented below:

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2014		1,484,499		1.03		2.88		996,554
Granted		6,024		1.65		4.75		—
Exercised		60,000		0.40		—		—
Forfeited or expired		—		—		—		—
Outstanding, March 31, 2014		1,430,523		1.06		2.72		792,444
Exercisable, March 31, 2014		1,079,232		1.00		2.28		662,178

A summary of option activity for non-employees under the plans and changes during the three months ended March 31, 2014, is presented below:

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2014		173,332		0.48		0.59		210,833
Granted		—		—		—		—
Exercised		35,000		0.40		—		—
Forfeited or expired		—		—		—		—
Outstanding, March 31, 2014		138,332		0.50		0.43		151,499
Exercisable, March 31, 2014		138,332		0.50		0.43		151,499

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Organization, Business and Basis of Presentation

3 Months Ended

Mar. 31, 2014

Organization, Business and Basis of Presentation

ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION

Milestone Scientific Inc. (“Milestone”) or (“our”) was incorporated in the State of Delaware in August 1989.

The unaudited financial statements of Milestone have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

These unaudited financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2013 included in Milestone’s Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present Milestone’s financial position as of March 31, 2014 and the results of its operations for the three months then ended.

The results reported for the three months ended March 31, 2014 are not necessarily indicative of the results of operations which may be expected for a full year.

Milestone has incurred significant operating losses since its inception. Milestone has positive cash flows from operating activities for the three months ending March 31, 2014 of $276,968 and a negative cash flow of $83,667 for the three months ended March 31, 2013. At March 31, 2014, Milestone had cash and cash equivalents of $1,398,847 and a positive working capital of $4,162,674. The working capital increased by $1,818,540 as compared to December 31, 2013. The positive change in working capital is due to Milestone’s increased profitability and net cash flow resulting in an increase in current assets (cash, accounts receivable and classification of advances on contracts from noncurrent to current) and a reduction in accounts payable. Milestone is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue based upon management’s assessment of present contracts and current negotiations and reductions in operating expenses. As of March 31, 2014, Milestone does not expect to have sufficient cash reserves to meet all of its anticipated obligations for the next twelve months. Milestone may require the need for a higher level of marketing and sales efforts that at present it cannot fund. If Milestone is unable to continue to generate positive cash flows from its operating activities it will need to raise additional capital. There is no assurance that Milestone will be able to continue to generate positive operating cash flows or that additional capital can be raised on terms and conditions satisfactory to Milestone, if at all. If positive cash flow cannot be continued to be achieved or if additional capital is required and it cannot be raised, then Milestone would be forced to curtail its development activities, reduce marketing expenses for existing dental products or adopt other cost saving measures, any of which might negatively affect Milestone’s operating results.

Milestone’s historical, and the matters discussed above, raise substantial doubt about its ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Condensed Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Allowance for doubtful accounts	$ 5,000	$ 5,000
Accumulated depreciation on Furniture, Fixtures & Equipment	458,614	476,884
Accumulated amortization of patents	$ 518,095	$ 498,502
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	17,780,465	17,759,540
Common stock, shares to be issued	1,964,930	1,839,930
Common stock, shares outstanding	17,747,132	17,726,207
Treasury stock, at cost	33,333	33,333

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes

NOTE – 10 INCOME TAXES

Milestone’s expected federal and state income tax liability and benefit computed at the statutory rate (40%) on the pre-tax income for the quarters ending March 31, 2014 and 2013 amounted to a liability of $151,000 and $42,000, respectively. Such expense was recognized in the accompanying financial statements as of March 31, 2014 with recognition of a net operating loss carryforward. Due to Milestone’s history of past operating losses, which required a full valuation allowances for all of Milestone’s deferred tax assets at March 31, 2014 and 2013, no recognition was given to the utilization of the remaining net operating loss carryforwards.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	May 13, 2014
Document Document And Entity Information [Line Items]
Entity Registrant Name	MILESTONE SCIENTIFIC INC.
Entity Central Index Key	0000855683
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		17,905,465

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Stock Issuances

3 Months Ended

Mar. 31, 2014

Stock Issuance

NOTE – 11 STOCK ISSUANCES

During the three months ended March 31, 2014, Milestone issued 6,986 shares of common stock valued at $11,875 for payment of employee compensation. In addition, 95,000 shares to be issued on the exercised of certain stock options at a price of $0.40 per share during the quarter ending March 31, 2014. Milestone issued 13,939 shares of common stock, valued at $22,500, for payment of consulting services. In the first quarter of 2014, Milestone’s to be issued shares for the Board are 30,000, valued at $55,200 for their Directors’ compensation.

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Condensed Statements of Income (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net sales	$ 2,620,834	$ 2,489,542
Cost of products sold	882,997	812,043
Gross profit	1,737,837	1,677,499
Selling, general and administrative expenses	1,392,869	1,387,901
Research and development expenses	15,720	121,837
Total operating expenses	1,408,589	1,509,738
Income from operations	329,248	167,761
Other income (expenses)
Other income		17,543
Interest expense	(475)	(34,558)
Loss from Medical Joint Venture	(130,523)
Loss from Education Joint Venture	(3,416)
Total other expenses, net	(134,414)	(17,015)
Net income	$ 194,834	$ 150,746
Net income
Basic	$ 0.01	$ 0.01
Diluted	$ 0.01	$ 0.01
Weighted average shares outstanding and to be issued -
Basic	17,787,352	16,351,894
Diluted	18,268,814	16,752,580

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Stock Option Plans

3 Months Ended

Mar. 31, 2014

Stock Option Plans

NOTE – 5 Stock Option Plans

A summary of option activity for employees under the plans and changes during the three months ended March 31, 2014, is presented below:

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2014		1,484,499		1.03		2.88		996,554
Granted		6,024		1.65		4.75		—
Exercised		60,000		0.40		—		—
Forfeited or expired		—		—		—		—
Outstanding, March 31, 2014		1,430,523		1.06		2.72		792,444
Exercisable, March 31, 2014		1,079,232		1.00		2.28		662,178

Milestone recognizes stock compensation expense on a straight line basis over the requisite service period. During the three months ended March 31, 2014, Milestone recognized $39,877 of total stock compensation cost. As of March 31, 2014, there was $357,790 of total unrecognized compensation cost related to non-vested options which Milestone expects to recognize over a weighted average period of 2.50 years. A six percent rate of forfeitures is assumed in the calculation of the compensation cost for the period.

Expected volatilities are based on historical volatility of Milestone’s common stock over a period commensurate with the anticipated term. Milestone uses historical data to estimate option exercise and employee termination within the valuation model.

A summary of option activity for non-employees under the plans and changes during the three months ended March 31, 2014, is presented below:

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Outstanding, January 1, 2014		173,332		0.48		0.59		210,833
Granted		—		—		—		—
Exercised		35,000		0.40		—		—
Forfeited or expired		—		—		—		—
Outstanding, March 31, 2014		138,332		0.50		0.43		151,499
Exercisable, March 31, 2014		138,332		0.50		0.43		151,499

During the three months ended March 31, 2014, Milestone had no expenses related to non-employee options that vested during the period. There was no unrecognized compensation cost related to non-vested options as of March 31, 2014. A six percent rate of forfeitures is assumed in the calculation of the compensation cost for the period.

In accordance with the provisions of FASB ASC 505-50-15, all other issuances of common stock, stock options or other equity instruments to non-employees as consideration for goods or services received by Milestone are accounted for based on the fair value of the equity instruments issued (unless the fair value of the consideration received can be more reliably measured). The fair value of any options or similar equity instruments issued is estimated based on the Black-Scholes option-pricing model and the assumption that all of the options or other equity instruments will ultimately vest. Such fair value is measured as of an appropriate date pursuant to the guidance, (generally, the earlier of the date the other party becomes committed to provide goods or services or the date of performance by the other party is complete) and capitalized or expensed as if Milestone had paid cash for the goods or services.

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Investment in Joint Ventures

3 Months Ended

Mar. 31, 2014

Investment in Joint Ventures

NOTE – 4 INVESTMENT IN JOINT VENTURES

In March 2011, Milestone entered into an agreement with a People’s Republic of China (“PRC”) entity Beijing 3H Scientific Technology Co., Ltd (Beijing 3H), to establish a Medical Joint Venture entity in the PRC to develop intra-articular and epidural drug delivery instruments utilizing Milestone’s patented CompuFlo technology (the “Medical Joint Venture”). Beijing 3H agreed to contribute up to $1.5 million to this Medical Joint Venture entity, based on progress reports from Milestone and subject to refund if the instruments are not developed because of technological problems within 30 months of the inception date. Milestone evaluates the technological feasibility of the products to be developed using the CompuFlo technology periodically and at every reporting date to establish if circumstances indicate that the technology continues to be feasible. Based on the available evidence Milestone concluded that the contingency associated with the return of capital to Beijing 3H no longer existed as of December 31, 2013 since the instruments have advanced beyond the development stage and accordingly no amounts have been accrued in the accompanying financial statements relating to this contingency. Milestone, with the consent of Beijing 3H, organized a domestic research and development corporation to which the principal shareholders of Beijing 3H and other shareholders completed a capital contribution of $1,500,000. The Medical Joint Venture entity was initially owned fifty percent by shareholders of Beijing 3H and fifty percent by Milestone. Milestone contributed an exclusive worldwide royalty-free license to use CompuFlo technology to the Medical Joint Venture which was valued at approximately $245,000 and accounted for its investment in the Medical Joint Venture using the equity method of accounting. Further, Milestone was authorized by the Medical Joint Venture to manage and oversee the development of the two products for the Medical Joint Venture. In connection with this authorization, Milestone also entered into an agreement with a significant vendor to develop the two instruments included in the Medical Joint Venture.               

Milestone will have distribution responsibility in the U.S. and Canada. Beijing 3H will distribute products exclusively in the PRC, Macao, Hong Kong and other regions of Asia. The rest of the world responsibilities will be shared by Milestone and Beijing 3H.

In July 2013, Milestone entered a strategic partnership with the largest provider of specialty sales and distribution solutions for healthcare in the United States. During the three year strategic partnership, the distributor will hold the exclusive rights to market, resell, label and distribute Milestone’s CompuFlo injection technology for use in epidural applications for childbirth and other pain management needs in hospitals in the U.S.

In the fourth quarter of 2013, Milestone Medical issued 2 million shares of its common stock in a private placement offering at $1.50 per share ($3.0 million) in Poland. As a result of this sale, Milestone Medical received net proceeds of $2,363,000. The effect of this sale of new shares was to reduce Milestone’s ownership percentage from 50% to 45.5% (post transaction). Consistent with the equity method of accounting, the dilution in ownership percentage is treated as if the decreased percentage of ownership was the result of the sale of these shares. As a result, Milestone recorded in the fourth quarter of 2013, a $1,363,650 gain on dilution effect on Medical Joint Venture.

Milestone recorded a Loss on Medical Joint Venture of $130,523. The losses described represent 45.5% of the applicable losses recorded by medical joint venture during the three months ended March 31, 2014. Milestone utilizes the equity method of accounting to recognize its financial results of the joint venture.

Milestone expended $39,153 on behalf of the joint venture in the year ended December 31, 2013 for legal fees related to the FDA (510k) certifications. As part of the joint venture agreement, Milestone is to pay all fees related to the USA FDA certification process.

Milestone has an investment in the Joint Venture of $852,295 at March 31, 2014 and there are no remaining suspended losses.

The Medical Joint Venture’s cumulative expenses through for the quarter ending March 31, 2014 were approximately $287,000.

On July 1, 2013, Milestone Scientific Inc. and Milestone Medical Inc., a medical joint venture 45.5 percent of which is owned by Milestone, signed an agreement for the reimbursement of specific expenses incurred by Milestone Scientific Inc. specifically for the benefit of Milestone Medical Inc. The expenses related to the agreement that have not been paid are $48,641 as of March 31, 2014 and are included in accounts receivable, net. This includes $24,553 of charges for three months ended March 31, 2014.

In the first quarter of 2013, the CEO of Milestone loaned Milestone $50,000 for use in capitalizing a fifty percent equity portion in the joint venture with Milestone Education LLC (the “Education Joint Venture”). This balance is included in the accrued expenses on the condensed balance sheets. There is no interest to this agreement and the loan was paid in April 2014.

The Education Joint Venture is expected to provide training and education to our dentists throughout the world. Milestone accounted for its investment in the Education Joint Venture using the equity method of accounting. Milestone Education LLC began operation in 2013. As of March 31, 2014, the Education Joint Venture has incurred a loss of $6,830 and fifty percent of these losses are recorded in the Statement of Income for Milestone.

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Summary of Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Recent Accounting Pronouncements

Recent Accounting Pronouncements

For the discussion of recent accounting pronouncements, please refer to Note 2, “Summary of Significant Accounting Policies,” in the 2013 Annual Report on Form 10-K. Milestone did not adopt any new accounting pronouncements during the three months ended March 31, 2014 that had a material effect on Milestone’s condensed financial statements.

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Related Party

3 Months Ended

Mar. 31, 2014

Related Party Transactions

NOTE – 12 RELATED PARTY

A shareholder of Milestone is also a shareholder of a major supplier of handpieces to Milestone. In addition, he is an investor in the PRC entity, Beijing 3H, which entered into a Medical Joint Venture agreement with Milestone. Milestone purchased $824,574 and $663,420 from the supplier for the three months ended March 31, 2014 and 2013, respectively. Milestone owed $671,777 and $1,024,653 to this supplier as of March 31, 2014 and December 31, 2013, respectively.

In the first quarter of 2013, the CEO of Milestone loaned the Company $50,000 for use in capitalizing a fifty percent equity portion in the joint venture with Milestone Education LLC. There is no interest to this agreement and the loan was paid in April 2014.

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Customer Advances

3 Months Ended

Mar. 31, 2014

Customer Advances

NOTE – 8 CUSTOMER ADVANCES

As of March 31, 2014, several customers paid in advance for future shipments of merchandise. These advanced payments will be reduced as shipments are made in 2014.

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Concentration of Credit Risk

3 Months Ended

Mar. 31, 2014

Concentration of Credit Risk

NOTE – 6 CONCENTRATION OF CREDIT RISK

Milestone’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and trade accounts receivable, and advances on contracts. Milestone places its cash and cash equivalents with large financial institutions. At times, such investments may be in excess of the Federal Deposit Insurance Corporation insurance limit. Milestone has not experienced any losses in such accounts and believes it is not exposed to any significant credit risks. Financial instruments which potentially subject Milestone to credit risk consist principally of trade accounts receivable, as Milestone does not require collateral or other security to support customer receivables, and advances on contracts. Milestone entered into a purchase agreement with a vendor to supply Milestone with 12,000 STA Instruments (5,633 instruments are remaining on the purchase order as of March 31, 2014). As part of these agreements, Milestone has advanced approximately $1,982,000 and $2,308,000 to the vendor for purchase of materials at March 31, 2014 and December 31, 2013, respectively. The advance will be credited to Milestone as the goods are delivered. Milestone does not believe that significant credit risk exists with respect to this advance to the contract manufacturer.

Milestone closely monitors the extension of credit to its customers while maintaining allowances, if necessary, for potential credit losses. On a periodic basis, Milestone evaluates its accounts receivable and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions. Management has provided a reserve that it believes is sufficient record accounts receivable at net realizable value as of March 31, 2014 and December 31, 2013.

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Advances on Contracts

3 Months Ended

Mar. 31, 2014

Advances on Contracts

NOTE – 7 ADVANCES ON CONTRACTS

The advances on contracts represent funding of future STA inventory purchases. The balance of the advances as of March 31, 2014 and December 31, 2013 is $1,982,155 and $2,308,352, respectively. The portion of the advance that is expected to be utilized in the next twelve months is classified as current asset, with the remainder classified as non-current asset.

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Note Payable

3 Months Ended

Mar. 31, 2014

Note Payable

NOTE – 9 NOTE PAYABLE

Milestone borrowed $450,000 from a shareholder in 2008. The loan was originally a short term loan with a maturity date of January 19, 2009. In December 2008, May 30, 2012 and on March 29, 2013, this loan was extended and the due datewaslast fixed at January 5, 2015. The loan accrues interest at 12% per annum, interest compounds quarterly, and interest and principal is due at the maturity. The loan and its related interest was converted to 614,344 shares of common stock on August 8, 2013.

Interest expense for the three months ended March 31, 2013 was $24,419. Accrued interest payable related to the note payable were $306,313 at March 31, 2013. The Company had also secured a line of credit, from this shareholder, for $1.3 million which was converted into equity in 2009. However, the accrued interest remaining on the line of credit was not converted and the remaining balance at March 31, 2013 was $74,669 and accrues interest at 6%, per annum.  

Additionally, Milestone has an agreement with the manufacturer of the CompuDent and STA instruments to accrue interest on their outstanding accounts payable balance. For the quarter ending March 31, 2013, the interest expense for this indebtness was $9,445.

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Income Taxes (Details Textual) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Income Taxes (Textual) [Abstract]
Statutory rate, including state income tax	(40.00%)	(40.00%)
Amount of Pre-tax Income	$ 151,000	$ 42,000

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Pension Plan

3 Months Ended

Mar. 31, 2014

Pension Plans

NOTE – 14 PENSION PLANS

Milestone has a defined contribution plan that allows eligible employees to contribute part of their salary through payroll deductions. Milestone does not contribute to this plan but does pay the administrative costs of the plan, which are not significant.

In March 2014, the Board of Directors approved the Compensation Committee’s request to amend the Chief Executive Officer of Milestone’s employment agreement to provide benefits to make payments of $203,111 per year for five years to the Executive, or as he directs such payments to a third party, to fund his acquisition of, or contribution to an annuity, pension, or deferred distribution plan or for an investment for the Executive and his family. For the quarter ended March 31, 2014, approximately $17,000 was charged to expenses for this commitment.

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Organization, Business and Basis of Presentation (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Dec. 31, 2012
Organization, Business and Basis of Presentation (Textual) [Abstract]
Cash flow from operating activities	$ 276,968	$ (83,667)
Cash and cash equivalents	1,398,847	121,604	1,147,198	165,249
Working capital	4,162,674
Increase in working capital	$ 1,818,540

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Condensed Statement of Changes in Stockholders' Equity (Unaudited) (USD $)	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock
Beginning Balance at Dec. 31, 2013	$ 5,519,845	$ 19,599	$ 66,677,200	$ (60,265,438)	$ (911,516)
Beginning Balance, shares at Dec. 31, 2013		19,599,470
Options issued to employees and consultants	39,877		39,877
Exercise of stock options to be issued	38,000	95	37,905
Exercise of stock options to be issued, shares	95,000	95,000
Common stock to be issued for directors compensation	55,200	30	55,170
Common stock to be issued for directors compensation, shares	30,000	30,000
Common stock issued for payment of consulting services	22,500	14	22,486
Common stock issued for payment of consulting services, shares	13,939	13,939
Common stock issued for payment of employee compensation	11,875	7	11,868
Common stock issued for payment of employee compensation, shares	6,986	6,986
Net income	194,834			194,834
Ending Balance at Mar. 31, 2014	$ 5,882,131	$ 19,745	$ 66,844,506	$ (60,070,604)	$ (911,516)
Ending Balance, shares at Mar. 31, 2014		19,745,395

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Accounts Receivable

3 Months Ended

Mar. 31, 2014

Accounts Receivable

NOTE – 3 ACCOUNTS RECEIVABLE

Milestone sells a significant amount of its product on credit terms to its major distributors. Milestone estimates losses from the inability of its customers to make payments on amounts billed. A majority of credit sales are due within ninety days from invoicing.    

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Accounts Receivable - (Details)	3 Months Ended
	Mar. 31, 2014
Accounts Receivable - Current (Textual) [Abstract]
Due period for credit sales	90 days

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Significant Customers (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Sales by product and by geographical region
Total sales	$ 2,620,834	$ 2,489,542
United States
Sales by product and by geographical region
Total sales	1,213,643	1,300,500
Canada
Sales by product and by geographical region
Total sales	24,736	55,602
Other Foreign
Sales by product and by geographical region
Total sales	1,382,455	1,133,440
Instruments
Sales by product and by geographical region
Total sales	840,981	517,450
Handpieces
Sales by product and by geographical region
Total sales	1,733,217	1,925,663
Other
Sales by product and by geographical region
Total sales	$ 46,636	$ 46,429

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Significant Customers

3 Months Ended

Mar. 31, 2014

Significant Customers

NOTE – 13 SIGNIFICANT CUSTOMERS

Milestone had three customers (distributors) for the three months ended March 31, 2014, that had approximately 57% of its net product sales and three customers (distributors) that had approximately 49% of its net product sales for three months ended March 31, 2013. Milestone had accounts receivable for one major customers that amounted to $621,062 representing 51% of gross accounts receivable as of March 31, 2014 and accounts receivable for one major customer that amounted to $732,762 representing 48% of gross accounts receivable as of December 31, 2013, respectively.

Milestone’s sales by product and by geographical region are as follows:

	Three Months Ended March 31,
	2014		2013
Instruments	$	840,981	$	517,450
Handpieces		1,733,217		1,925,663
Other		46,636		46,429
	$	2,620,834	$	2,489,542
United States	$	1,213,643	$	1,300,500
Canada		24,736		55,602
Other Foreign		1,382,455		1,133,440
	$	2,620,834	$	2,489,542