Milestone Scientific Inc.: Form 10-Q for the period ended Mar 31, 2026

The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2025.

This discussion contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements.

OVERVIEW

Milestone Scientific Inc. is a biomedical technology company that designs, develops, patents, and commercializes innovative diagnostic and therapeutic injection technologies for medical and dental applications. The Company’s common stock trades on the NYSE American under the symbol “MLSS.”

The Company’s proprietary Dynamic Pressure Sensing Technology® (DPS) platform is a computer-controlled system designed to improve the precision, efficiency, and patient comfort of injections by regulating flow rate and monitoring pressure at the needle tip in real time.

The Company operates in two reportable segments:

• Dental, which represents the Company’s primary source of revenue and is driven by sales of instruments and recurring handpiece consumables; and
• Medical, which represents a strategic growth area focused on the commercialization of the CompuFlo® Epidural System.

The Company continues to focus on expanding adoption of its DPS technology platform, advancing commercialization of its Medical segment, and maintaining disciplined cost management while supporting targeted growth initiatives.

The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment, product category:

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 months ended March 31, 2026 and 2025, respectively. The trends suggested by this table may not be indicative of future operating results:

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Three months ended March 31, 2026 compared to three months ended March 31, 2025

Net sales for 2026 and 2025 were as follows:

Total product sales for the three months ended March 31, 2026 were approximately $2.2 million, compared to approximately $2.2 million for the same period in 2025, representing a decrease of approximately $70,000, or 3%.

Dental product revenue was approximately $2.05 million, representing a decrease of approximately $127,000, or 6%, compared to the prior period. The change in Dental revenue primarily reflects lower international distributor demand during the quarter. The Company believes this was influenced by ongoing geopolitical conditions, including the Russia–Ukraine conflict and recent instability in the Middle East, which impacted purchasing patterns in certain markets.

Revenue from China was not recognized during the current period, compared to approximately $110,000 in the prior period. The Company has received a purchase order in April 2026, indicating renewed activity in that market.

Medical revenue increased to approximately $108,000, compared to approximately $51,000 in the prior period, representing growth of approximately 110%, reflecting continued early-stage adoption of the Company’s medical products.

Overall, the Company maintained a relatively stable revenue base, with modest variability primarily attributable to external market conditions.

Gross profits for 2026 and 2025 were as follows:

Gross margin was approximately 72.3%, compared to approximately 73.8% in the prior period.

The decrease in gross profit was primarily attributable to lower Dental segment sales. The slight decline in gross margin reflects a combination of factors, including product mix and lower sales volume, as well as cost pressures, including tariffs on certain imported components. These factors were partially offset by improved contribution from the Medical segment.

Selling, general and administrative expenses for 2026 and 2025 were as follows:

Selling, general and administrative expenses decreased by approximately $884,000 or 27.2%, to $2.37 million for the current period compared to $3.26 million in the prior period. The decrease was primarily attributable to a significant reduction in professional fees, lower research and development spending, and reduced marketing-related expenditures.

Professional fees declined by approximately $893,000, or 69.5%, primarily due to lower legal, consulting, and other outside service costs incurred during the current period compared to the prior year. In addition, marketing expenses decreased by approximately 34.3%, reflecting reduced promotional and advertising activities, while royalty expense decreased by 15.0%.

Partially offsetting these decreases were increases in certain operating expense categories, including salaries and compensation, warehousing, and quality control and regulatory expenses. Salaries and compensation increased by approximately 3.8%, reflecting ongoing personnel-related costs to support operations. Warehousing expenses increased by 6.1%, while QC and regulatory expenses increased by 12.6%, primarily due to higher operational and compliance-related activities.

Research and Development for 2026 and 2025 were as follows:

Research and development expense decreased by approximately $369,000, as no R&D expenses were incurred during the current period compared to the prior period.

The Company continues to evaluate its research and development priorities and may make targeted investments in future periods to support product enhancements, new applications, and long-term growth initiatives.

Profit (Loss) from Operations for 2026 and 2025 were as follows:

Loss from operations improved to approximately $828,000 for the three months ended March 31, 2026, compared to approximately $2.0 million in the prior period, representing an improvement of approximately $1.2 million, or 58%.

The improvement was primarily attributable to reduced operating expenses, partially offset by lower gross profit.

Liquidity and Capital Resources

Cash Flows

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

Net cash provided by operating activities was approximately $87,000 for the three months ended March 31, 2026, compared to net cash used in operating activities of approximately $1.0 million in the prior period. This improvement was primarily driven by reduced net loss and favorable changes in working capital.

Net cash used in investing and financing activities was minimal in both periods.

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

As of March 31, 2026, the Company had cash and cash equivalents of approximately $1.2 million and working capital of approximately $2.5 million.

The Company has incurred recurring operating losses and has an accumulated deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

On April 20, 2026, the Company completed a private placement of 7,962,963 units at a purchase price of $0.27 per unit, generating gross proceeds of approximately $2.15 million, consisting of $1.80 million in cash and a reduction of $351,000 in outstanding principal of the Company’s outstanding convertible notes, the holders of which applied such principal amounts toward the purchase of units in the offering in lieu of cash (the “Private Placement”)

The Company’s ability to continue as a going concern is dependent upon its ability to generate sufficient revenue, manage operating expenses, and obtain additional financing, if necessary.

The Company believes that its current cash resources, together with expected collections and financing proceeds, will be sufficient to support near-term operations. However, there can be no assurance that additional financing will be available on acceptable terms, or at all.

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 March 31, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such an evaluation, our Chief Executive Officer and Principal Accounting Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

We routinely review our internal control over financial reporting and, from time to time, make changes intended to enhance the effectiveness of our internal control over financial reporting. During the three months ended March 31, 2026, we made no changes to our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that we believe materially affected, or are reasonably likely to affect, our internal control over financial reporting materially.

Except as disclosed below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A, of our 2025 Annual Report.

Our ability to continue as a going concern may adversely affect our business

The Company has incurred significant losses since its inception and continues to experience operating losses. Although operating performance improved during the three months ended March 31, 2026, including positive operating cash flow, there can be no assurance that the Company will sustain profitability or positive cash flows in future periods. As of March 31, 2026, the Company had limited cash resources, and these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company may need to raise additional capital through equity or debt financings, and such financing may not be available on acceptable terms, or at all.

We are dependent on our dental product line for the majority of our revenue

A significant portion of the Company’s revenue is derived from its dental products, particularly the STA Single Tooth Anesthesia System® and related handpieces. Any decline in demand, increased competition, pricing pressures, or disruption in distribution channels for these products could have a material adverse effect on the Company’s financial condition and results of operations.

Our medical product commercialization efforts may not achieve the expected adoption

The Company is in the process of expanding the commercialization of its medical products, including the CompuFlo® Epidural Computer Controlled Anesthesia System. While the Company has obtained 510(k) clearance from the FDA, CE mark approval for European markets, and a Category III CPT code to support reimbursement submissions, adoption by healthcare providers may take longer than expected and the Company has maintained a material allowance against slow-moving Medical finished goods inventory as a result. Factors such as continued reimbursement uncertainty, clinician adoption rates, competition, and sales execution capacity may further limit the Company’s ability to generate meaningful revenue from its medical segment, and there can be no assurance that the Company’s investment in medical inventory and commercialization efforts will be recovered.

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 further. There have 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 important 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, research grants, and other funding may impede our ability to conduct our research and to raise capital.

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. To the extent the Company seeks to invest in product enhancements or next-generation development, including further advancement of the CompuFlo® Epidural platform, government actions that constrain collaborative research funding may reduce the pool of available research partners and increase the cost and difficulty of such efforts. In addition, tariffs are likely to increase the cost of doing business, particularly given the Company’s reliance on Chinese manufacturers for handpieces and other key components, and reduced research funding may make it more difficult for the Company to attract capital from investors who consider the availability of funded development partners as part of their investment analysis.

We are subject to risks related to international operations and geopolitical conditions

The Company generates a meaningful portion of its revenue from international markets through a global distribution network spanning more than 30 countries. International operations are subject to risks including economic instability, regulatory changes, supply chain disruptions, and geopolitical events. For example, ongoing geopolitical tensions, including conflicts in Eastern Europe and the Middle East, have disrupted certain markets served by the Company’s international distributors and may adversely impact demand, distribution, and revenue in affected regions. Continued or escalating geopolitical instability could further negatively impact the Company’s international sales.

Our business is subject to significant risks arising from our dual exposure to China as both a manufacturing source and a sales market.

The Company relies on Chinese third-party manufacturers for a substantial portion of its products and also previously generated revenue from Chinese distributors. During the three months ended March 31, 2026, revenue from China declined to $0, compared to $110,000 in the prior period. Simultaneously, escalating U.S.-China trade tensions and newly imposed tariffs have increased the cost of sourcing products and components from China. This dual exposure - reduced revenue from Chinese customers and increased costs from Chinese suppliers - may materially and adversely affect our results of operations. Furthermore, regulatory actions by either the U.S. or Chinese government, including export controls, retaliatory trade measures, restrictions on technology transfer, or sanctions, could further disrupt our supply chain or eliminate our ability to sell into the Chinese market entirely. Any such developments could have a material adverse effect on our business, financial condition, and results of operations.

Our operating results may fluctuate due to changes in product mix and demand

The Company’s results of operations may fluctuate from period to period due to changes in product mix, including variations between instrument and handpiece sales, as well as geographic demand. Shifts in product mix, pricing, or customer purchasing patterns may impact on gross margins and overall profitability.

We rely on key personnel and consultants

The Company’s success depends in part on the continued services of key executives, consultants, and technical personnel. The loss of key individuals or the inability to attract and retain qualified personnel could adversely affect the Company’s ability to execute its business strategy, maintain key relationships, and advance its commercialization efforts.

Our common stock may be delisted from NYSE American if we fail to regain compliance with continued listing standards by April 8, 2027.

Our common stock is listed on NYSE American under the symbol “MLSS.” On October 8, 2025, the Company received a written notice from NYSE American stating that it is not in compliance with the continued listing standards set forth in Sections 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide, which require minimum stockholders’ equity of $4 million and $6 million, respectively, for companies with sustained operating losses. As of March 31, 2026, the Company’s total stockholders’ equity was approximately $2.3 million - below both thresholds - and the Company has reported net losses in each of the past five fiscal years. The Company submitted a plan of compliance to NYSE American and has been permitted to continue listing during the plan period, subject to periodic review. The compliance deadline is April 8, 2027. While the April 2026 Private Placement increased the Company’s stockholders’ equity and liquidity, the Company cannot assure that it will achieve the required equity thresholds within the required timeframe, particularly given its ongoing operating losses and going concern uncertainty. If NYSE American initiates delisting proceedings, the liquidity and market price of our common stock would likely be materially and adversely affected, and our ability to raise additional capital through equity or debt financing - which we may need to fund continuing operations - would be significantly impaired.

Our April 2026 private placement and outstanding convertible instruments create significant dilution risk for existing stockholders.

In April 2026, the Company issued 7,962,963 units in a private placement at $0.27 per unit, each consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $0.3375, exercisable for three years. This issuance increased the Company’s outstanding shares by approximately 10%. If all warrants are exercised, existing stockholders would experience an additional approximately 10% dilution, generating up to approximately $2.69 million in gross proceeds. In addition, following the partial conversion of $351,000 of principal in connection with the private placement, the Company has approximately $449,000 in aggregate outstanding principal under its Convertible Notes, which are convertible into shares of common stock at the option of the holders or the Company at a conversion price not less than $0.50 per share. Given the Company’s recurring operating losses and going concern uncertainty, we may need to pursue additional equity or debt financings in the future, which would further dilute existing stockholders. Cumulative dilution from these instruments and any future financings may depress the trading price of our common stock and adversely affect stockholder value.