Milestone Scientific Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussions of the financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements contained in this report and in connection with management’s discussion and analysis and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission, or SEC on April 15, 2025. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements, within the meaning of Section 21E of the Exchange Act, which involve risks and uncertainties. The actual results may differ materially from those anticipated in these forward-looking statements.

OVERVIEW

Milestone Scientific is a biomedical technology company that patents, designs, develops, and commercializes innovative diagnostic and therapeutic injection technologies for medical and dental applications. Since our inception, we have pioneered proprietary computer-controlled injection systems that are proven, reliable, and well established in clinical use. Our common stock has been listed on the NYSE American since June 1, 2015, under the symbol “MLSS.” The Company’s mission is to redefine the global standard of care for injection techniques by improving precision, efficiency, and patient comfort while reducing the anxiety associated with traditional injections.

Our proprietary Dynamic Pressure Sensing (DPS®) Technology System enables controlled flow and real-time pressure monitoring at the needle tip, facilitating safer and more consistent drug delivery and fluid aspiration. This platform supports multiple medical and dental applications, including accurate epidural space identification in regional anesthesia procedures.

In dentistry, our Wand® device—marketed as CompuDent® and STA Single Tooth Anesthesia System®—is a single-use disposable handpiece suitable for all local anesthetic procedures. The dental systems are marketed in the United States, Canada, and more than 40 other countries. In medicine, our CompuFlo® Epidural Computer Controlled Anesthesia System has received FDA 510(k) clearance for use in the lumbar, thoracic, and cervical thoracic junction regions of the spine, as well as CE Mark approval for commercialization across most European countries.

The recent issuance of a chronology-specific CPT code by the American Medical Association represents a significant advancement, expanding reimbursement potential for epidural procedures using the CompuFlo® system and supporting broader adoption in anesthesia and pain management practices across the United States. Milestone Scientific and its subsidiaries hold over 317 U.S. and international patents, with additional applications pending. These patents encompass innovations in computer-controlled drug delivery, dynamic pressure sensing, automated flow regulation, tissue identification, and anesthetic injection devices.

Milestone Scientific remains focused on advancing efforts to achieve the following three primary objectives:

• Establishing Milestone’s DPS Dynamic Pressure Sensing (DPS®) technology platform as the standard of care in painless and precise drug delivery—providing, for the first time, objective visual and audible in-tissue pressure feedback—and continuing to expand platform applications.
• Transitioning from a research and development organization to a commercially focused medical device company, following the successful FDA clearance of our first medical device.
• Expanding the global footprint of our CompuFlo® Epidural and CathCheck® Systems through a targeted field sales force and strategic partnerships with distribution companies worldwide.

Our dental devices have been used to administer more than 95 million injections worldwide. Each of our devices is designed with a corresponding single-use disposable handpiece, providing a recurring revenue stream following the initial device sale. Currently, we continue to sell disposable handpieces unique to our legacy products—The Wand® and CompuDent®—to customers who have not yet upgraded to our current dental product, the STA Single Tooth Anesthesia System®.

The Single Tooth Anesthesia System (Dental)

Since its introduction in early 2007, the STA Single Tooth Anesthesia System® and earlier computer-controlled local anesthetic delivery (C-CLAD) devices have been used to deliver more than 95 million safe, effective, and comfortable injections. The instrument has been favorably evaluated in numerous peer-reviewed clinical studies and publications. There is a growing consensus among users that the STA System is a valuable and beneficial instrument that is positively transforming dental practice worldwide.

Medical Market Product

In June 2017, Milestone Scientific received FDA clearance to market the CompuFlo® Epidural Computer Controlled Anesthesia System in the United States for epidural injections.

In May 2022, the Company received a chronology-specific CPT code for its technology from the American Medical Association, marking an important milestone. Effective January 1, 2023, this temporary tracking code enables clinicians to submit reimbursement claims to healthcare insurers for epidural sterile injections in the lumbar, thoracic, and cervical thoracic junction regions of the spine. This CPT code significantly expands the reimbursement potential for epidural procedures in pain management utilizing the CompuFlo® Epidural System, supporting broader clinical adoption.

The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category Certain reclassifications have been made to the 2025 unaudited condensed consolidated financial statements to conform to the 2024 unaudited condensed consolidated financial statement presentation. These reclassifications had no effect on net loss or cash flows as previously reported.:

21

Current Product Platform

See Note 1, “Organization and Business”.

Results of Operations

The following table sets forth the consolidated results of operations for the three and nine months ended September 30, 2025 and 2024, respectively. The trends suggested by this table may not be indicative of future operating results:

Three months ended September 30, 2025, compared to three months ended September 30, 2024

Net sales for 2025 and 2024 were as follows:

Consolidated revenue for the three months ended September 30, 2025, was approximately $2.4 million, compared to $2.5 million for the same period in 2024, representing a decrease of approximately $154,000, or 6%. The decline in total revenue was primarily attributable to lower international and e-commerce dental sales, partially offset by new contributions from the Company’s re-entry into the China market and modest growth in institutional sales.

Revenue from Dental Service Organizations (DSOs), government agencies, and dental schools increased slightly to approximately $83,000 for the three months ended September 30, 2025, compared to $81,000 in the prior-year period, reflecting steady institutional demand.

E-commerce dental revenue totaled approximately $1.0 million for the three months ended September 30, 2025, compared to $1.1 million for the same period in 2024, a decrease of approximately $105,000, or 9%. The decline was primarily driven by reduced order volume from certain online distributors and the timing of promotional campaigns during the quarter.

International dental revenue decreased to approximately $1.0 million in the third quarter of 2025, compared to $1.2 million in the third quarter of 2024, a reduction of approximately $242,000, or 20%. The decrease was largely the result of slower distributor purchasing activity in certain European markets, partially offset by resumed sales in China.

Sales in China for the three months ended September 30, 2025, were approximately $200,000, compared to no sales in the same period of 2024. The increase reflects the Company’s successful efforts to reestablish operations and distribution channels in the region following prior-year market disruptions.

Revenue from the medical segment totaled approximately $41,000 for the three months ended September 30, 2025, compared to $47,000 in the same period of 2024, a decrease of approximately $6,000, or 13%. The decline was primarily related to the timing of equipment sales and ongoing efforts to expand awareness and adoption of the Company’s CompuFlo® Epidural and CathCheck® Systems within the U.S. pain management market.

Gross Profit for 2025 and 2024 were as follows:

Consolidated gross profit for the three months ended September 30, 2025, was approximately $1.6 million, compared to $1.8 million for the same period in 2024, representing a decrease of approximately $195,000, or 11%. The decline in gross profit was primarily attributable to lower revenue levels during the quarter, particularly within international and e-commerce dental sales, as well as a slight shift in the sales mix toward lower-margin products and markets. Gross margin remained strong overall, reflecting the Company’s continued focus on cost management and operational efficiency.

Selling, general and administrative expenses for 2025 and 2024 were as follows:

Consolidated selling, general, and administrative (SG&A) expenses for the three months ended September 30, 2025, were approximately $2.7 million, compared to $3.1 million for the same period in 2024, representing a decrease of approximately $325,000, or 10%. The reduction primarily reflects management’s continued focus on cost containment and operational efficiency.

Employee salaries and benefits decreased by approximately $147,000 for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to workforce realignment and headcount optimization. In addition, the Company achieved further savings of approximately $178,000 through reductions in marketing, consulting, professional service fees, insurance, royalties, regulatory, travel, and other general administrative expenses.

These cost reduction measures are part of management’s ongoing initiatives to streamline operations, align expenses with current revenue levels, and support the Company’s transition toward sustainable profitability

Research and Development for 2025 and 2024 were as follows:

Consolidated research and development (R&D) expenses for the three months ended September 30, 2025, were approximately $16,000, compared to approximately $232,000 for the same period in 2024, representing a decrease of approximately $216,000, or 93%. The decrease reflects management’s strategic decision to delay development activities related to the next-generation STA Single Tooth Anesthesia System® instrument.

This temporary reduction in R&D spending allows the Company to focus financial resources on the commercial expansion of existing products and the continued global rollout of its CompuFlo® and CathCheck® Systems, while maintaining flexibility to resume development activities at a later date based on market conditions and strategic priorities.

Profit (Loss) from Operations for 2025 and 2024 were as follows:

The loss from operations for the three months ended September 30, 2025, was approximately $1.1 million, compared to $1.5 million for the same period in 2024, representing an improvement of approximately $335,000, or 22%. The reduction in operating loss was primarily attributable to lower selling, general, and administrative (SG&A) expenses and reduced research and development (R&D) expenditures during the quarter.

Management’s ongoing cost-control initiatives, combined with the Company’s focus on operational efficiency and disciplined spending, contributed to the improvement in quarterly operating performance despite a modest decline in consolidated revenue.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024

Net sales for 2025 and 2024 were as follows:

Consolidated revenue for the nine months ended September 30, 2025, was approximately $6.9 million, compared to $6.6 million for the same period in 2024, representing an increase of approximately $300,000, or 5%. The year-over-year improvement was primarily driven by higher international and medical sales, partially offset by declines in e-commerce and institutional dental revenue.

Revenue from Dental Service Organizations (DSOs), government agencies, and dental schools totaled approximately $277,000 for the nine months ended September 30, 2025, compared to $316,000 in the prior-year period, reflecting a decrease of approximately $39,000, or 12%.

E-commerce dental revenue decreased to approximately $3.3 million for the nine months ended September 30, 2025, from $3.5 million for the same period in 2024, a decline of approximately $239,000, or 7%. The reduction was primarily attributable to lower order volumes and timing differences in recurring purchases from certain online distributors.

International revenue for the nine months ended September 30, 2025, was approximately $2.9 million compared to $2.7 million for the same period in 2024, an increase of approximately $211,000, or 8%.

Sales in China for the nine months ended September 30, 2025, were approximately $310,000, compared to no sales in the same period of 2024. The increase reflects the Company’s successful efforts to reestablish operations and distribution channels in the region following prior-year market disruptions.

Medical revenue also increased, totaling approximately $125,000 for the nine months ended September 30, 2025, compared to $74,000 in the prior-year period, representing an increase of approximately $51,000, or 69%. The increase primarily reflects ongoing progress in expanding the clinical use and adoption of the CompuFlo® Epidural and CathCheck® Systems within the pain management and anesthesia markets.

Gross Profit for 2025 and 2024 were as follows:

Consolidated gross profit for the nine months ended September 30, 2025, and 2024 was approximately $4.9 million for each period, reflecting no material change year over year. Stable gross profit performance was primarily the result of consistent product margins, favorable manufacturing cost management, and a balanced sales mix between domestic and international markets.

Despite modest fluctuations in regional and product-level revenue, the Company maintained gross margin stability through ongoing operational efficiencies, disciplined pricing strategies, and continued supply chain optimization.

Selling, general and administrative expenses for 2025 and 2024 were as follows:

Consolidated selling, general, and administrative (SG&A) expenses for the nine months ended September 30, 2025, and 2024 were approximately $9.0 million in both periods, reflecting a slight net increase of approximately $58,000 year over year. The modest change primarily resulted from higher consulting, professional, and regulatory expenses totaling approximately $611,000, which were largely offset by reductions in employee salaries and benefits, marketing, warehousing, and travel expenses amounting to approximately $552,000.

The overall stability in SG&A spending demonstrates management’s ongoing focus on expense control, operational efficiency, and resource optimization, while continuing to support the Company’s commercial initiatives and regulatory compliance activities

Research and Development for 2025 and 2024 were as follows:

Consolidated research and development (R&D) expenses for the nine months ended September 30, 2025, were approximately $437,000, compared to $641,000 for the same period in 2024, representing a decrease of approximately $204,000, or 32%. The decrease primarily reflects the Company’s decision to delay development activities related to the next-generation STA Single Tooth Anesthesia System®.

This strategic decision allows the Company to conserve resources and prioritize commercialization efforts for its existing product portfolio, including the continued expansion of the CompuFlo® Epidural and CathCheck® Systems, while maintaining the flexibility to resume product development as market conditions and business priorities warrant.

Profit (Loss) from Operations for 2025 and 2024 were as follows:

The loss from operations for the nine months ended September 30, 2025, was approximately $4.6 million, compared to $4.7 million for the same period in 2024, representing an improvement of approximately $98,000, or 2%. The modest improvement primarily reflects lower research and development (R&D) expenses during the period, partially offset by slightly higher consulting, professional, and regulatory costs within selling, general, and administrative (SG&A) expenses.

Management remains focused on further improving operating results through disciplined expense management, cost optimization initiatives, and the continued expansion of higher-margin product sales across both the dental and medical segments

Liquidity and Capital Resources

Cash Flows

The following table summarizes our sources and uses of cash for the nine months ended:

Operating Activities

Net cash used in operating activities increased by approximately $1.3 million for the nine months ended September 30, 2025, compared to the same period in 2024. The increase was primarily driven by a higher net loss of $4.6 million during the period, partially offset by non-cash adjustments and changes in working capital items. Management continues to monitor cash usage closely and implement measures aimed at improving operational efficiency and aligning expenses with revenue growth.

In April 2024, we received approximately $2.0 million, net of expenses, from the sale of New Jersey net operating losses (“NOL”), that were eligible for purchase under the State of New Jersey’s Economic Development Authority’s New Jersey Technology Business Tax Certificate Transfer Program (“ NJEDA Program”). For the nine months ended September 30, 2024, the Company recorded approximately $2.0 million in gain on sale of net operating losses within the unaudited condensed consolidated statement of operations.

Pursuant to the NJEDA program, the Company must retain a physical presence in the state of New Jersey for 5 years after the sale of the NOLs. If the Company does not retain a physical presence during the 5 years after the sale of the NOLs, the Company can be liable to pay the state of New Jersey up to $2.2 million of the surrendered NOLs

Investing Activities

Net cash used in investing activities decreased by approximately $3.0 million for the nine months ended September 30, 2025, compared to the same period in 2024. The change was primarily attributable to the sale of $3.0 million in marketable securities during the prior-year period, which increased cash flows in 2024. As of September 30, 2025, the Company held no marketable securities, reflecting a strategic decision to allocate available funds toward supporting ongoing operations and commercialization efforts.

Financing Activities

Net cash provided by financing activities increased by approximately $553,000 for the nine months ended September 30, 2025, compared to the same period in 2024. The increase primarily resulted from the issuance of $800,000 in convertible notes payable during 2025, compared to $200,000 raised through a public placement offering in 2024. The Company continues to evaluate financing opportunities to support working capital requirements, product commercialization, and potential future growth initiatives.

Consideration of Company’s ability to continue as a going concern

The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP), which contemplate the continuation of the Company as a going concern. The going concern basis assumes that assets will be realized and liabilities will be settled in the ordinary course of business at the amounts disclosed in the unaudited condensed financial statements.

Since its inception, the Company has incurred aggregate losses of approximately $132.7 million. Operating losses were approximately $1.1 million and $4.6 million for the three and nine months ended September 30, 2025, respectively. As of September 30, 2025, Milestone Scientific had cash and cash equivalents of approximately $1.3 million and working capital of approximately $3.1 million. Net cash flows used in operating activities were approximately $2.7 million and $1.4 million for the nine months ended September 30, 2025, and 2024, respectively. Based on the Company’s available cash resources, recurring operating losses, accumulated deficit, and the need for additional capital to finance ongoing operations. Management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of one year from the date these unaudited condensed financial statements are issued.

Management is actively pursuing additional sources of funding through equity and debt financing to support the Company’s operating plan. Although Milestone Scientific has successfully raised capital in the past, there can be no assurance that additional financing will be available on acceptable terms, or at all. The terms of any such financing may adversely affect the rights or holdings of existing stockholders.

The Company continues to focus on generating positive cash flow from operations by increasing revenue from its dental business worldwide, expanding sales of its medical devices and disposables in the United States and abroad, and reducing operating expenses. However, the continuation of operations is dependent upon the Company’s ability to raise additional capital and ultimately achieve sustained profitability.

Milestone Scientific is a “smaller reporting company” as defined by Regulation S-K and, as such, is not required to provide the information required by this item.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Principal Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), refers to controls and other procedures designed to ensure that information required to be disclosed by a company in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company is accumulated and communicated to management, including the principal executive and principal financial officers (or persons performing similar functions), as appropriate, to allow timely decisions regarding required disclosure.

Management recognizes that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving its objectives. Accordingly, management must apply judgment in evaluating the cost-benefit relationship of potential control enhancements. Based on their evaluation, our Chief Executive Officer and Principal Accounting Officer concluded that, as of September 30, 2025, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

We routinely review and evaluate our internal control over financial reporting and periodically make changes intended to enhance its effectiveness. During the quarter ended September 30, 2025, there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except as disclosed below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A, of our 2024 Annual Report.

Changes to United States tariff and import/export regulations may have a material adverse effect on our business, financial condition, and results of operations.

The United States has recently enacted and proposed to enact significant new tariffs, and President Trump has directed various federal agencies to evaluate key aspects of U.S. trade policy to evaluate key aspects of U.S. trade policy to further evaluate key aspects of U.S. trade policy further. There has been and are ongoing discussions and commentaries regarding potential significant changes to U.S. trade policies, treaties, and tariffs. There exists significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties, and tariffs. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. We source essential elements used in our products from China. We have significant sales in jurisdictions outside the United States. Any of these factors could depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business, financial condition, and results of operations.

Government Action on tariffs, and other funding, may impede our ability to conduct our research and to raise capital.

Early 2025 federal government actions to impose tariffs and limit research grants and other funding, including funding for universities and research enterprises, may cause disruption to our business. These actions include the imposition of tariffs and ending or restructuring government research funding generally or in conjunction with higher learning institution funding. These government actions have been only recently implemented; therefore, the full impact has yet to be realized by the Company. Nonetheless, (i) tariffs are likely to increase the cost of doing business and to make it more difficult to obtain items where imported equipment is required by our own activities and the activities of our collaborative and research partners, and (ii) ending or reducing research funding is likely to make it more challenging to find collaborative research partners to work with us as government funding is an indirect support for our research and product development activities. We also believe that as research funding impacts our collaborative research partners is reduced or withdrawn, it will make raising capital for the Company more difficult, as investors will want to know if the Company will be able to use the proceeds with fully funded entities for product development.