MILESTONE SCIENTIFIC INC. 10-Q

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussions of the financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements contained in this report and in connection with management's discussion and analysis and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission, or SEC on March 30, 2020. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements, within the meaning of section 21E of the Exchange Act, that involve risks and uncertainties. The actual results may differ materially from those anticipated in these forward-looking statements. OVERVIEW Our common stock was listed on the NYSE American on June 1, 2015 and trades under the symbol “MLSS”. We have developed a proprietary, computer-controlled anesthetic delivery instrument, using The Wand, a single use disposable handpiece. The instrument is marketed in dental sector under the trademark CompuDent ®, and STA Single Tooth Anesthesia System and in medical sector under the trademark CompuMed. CompuDent is suitable for all dental procedures that require local anesthetic. CompuMed is suitable for many medical procedures regularly performed in plastic surgery, hair restoration surgery, podiatry, colorectal surgery, dermatology, orthopedics, and several other disciplines. The dental instruments are sold in the United States, U.S. territories, Canada, and in over 58 other countries abroad. In June 2017, the FDA approved our 510(k) applications for marketing clearance in the United States of our CompuFlo Epidural Computer Controlled Anesthesia System. We are in the process of meeting with medical device distributors within the United States and Europe. There have been five medical instruments sold in the United States in 2018 and limited amounts sold internationally as of the reporting date. Certain of our medical instruments have obtained European CE mark approval and can be marketed and sold in most European countries. Milestone Scientific remains focused on advancing efforts to achieve the following four primary objectives: ● Establishing Milestone’s DPS Dynamic Pressure Sensing technology platform as the standard-of-care in painless and precise drug delivery, providing for the first time, objective visual and audible in-tissue pressure feedback, and continuing to expand platform applications; ● Following obtaining successful FDA clearance of our first medical devices, Milestone Scientific is transitioning from a research and development organization to a commercially focused medical device company; ● Expanding our global footprint of our CompuFlo Epidural System by partnering with distribution companies worldwide; and ● Continuing the development of our proprietary cosmetic injection device for delivery of botulinum toxin (such as Botox® and Dysport®) Wand STA Dental Market Since its market introduction in early 2007, the Wand/STA Instrument and prior C-CLAD products have been used to deliver over 66 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. Beginning January 1, 2016, Milestone Scientific entered into a non-exclusive distribution agreement with Henry Schein, Inc. (“Henry Schein”). In June 2016, that agreement was replaced with an exclusive distribution arrangement for our dental products for the United States and Canada with Henry Schein. Under this arrangement we have a semi-dedicated independent sales force visiting dentists. To date, Henry Schein has endeavored to accomplish the goals set forth in the exclusive distribution agreement for The Wand STA instrument and handpieces, including training of its exclusive products sale’s specialists. Specifically, up to 25 exclusive product sales specialists have now been fully trained as experts in the features, advantages and benefits of The Wand/ STA instrument and handpieces and all are currently in the field selling the instrument. 26 Henry Schein increased the number of exclusive product specialist in 2019 and trained an additional customer service representative to support dentists across North America through its exclusive product sales customer call center, as business volume increases. On the global front, we have granted exclusive marketing and distribution rights for the Wand/STA Instrument to select dental suppliers in various international regions in Asia, Africa, South America, and Europe. They include FM Produkty Dla Stomatologii in Poland and Unident AB in the Scandinavian countries of Denmark, Sweden, Norway, and Iceland. In October 2012, the State Food and Drug Administration (CFDA) of the People’s Republic of China approved our Wand/STA Single Tooth Anesthesia System (STA System). In May 2014, the CFDA also approved the Wand STA handpieces for sale in China. Medical Market In September 2014, Milestone Medical received CE clearance to distribute their epidural and intra-articular instruments in the European Community (EU). Milestone Medical signed a distribution agreement in March 2015 with a medical distributor in Poland for the distribution of the epidural instrument. This distribution agreement was terminated in late 2016 due to the distributor’s inadequate performance under the distribution agreement. Milestone Medical is continuing to pursue distributors for the instrument in the EU community. During 2016, Milestone Scientific filed for 510(k) marketing clearance with the U.S. Food and Drug Administration (FDA) for both intra-articular and epidural injections with the CompuFlo Epidural System. In June 2017, the FDA approved the CompuFlo Epidural System for epidural injections. Milestone Scientific is in the process of meeting with medical device distributors within the United States and foreign markets. Milestone Scientific’s immediate focus is on marketing its epidural device throughout the United States and Europe. In December 2016, we received notification from the FDA that based upon the 510(k)-application submitted for intra- articular injections, we did not adequately document that the device met the equivalency standard required for 510(k) clearances. Following consultation with the FDA Office of Device Evaluation, we filed a new 510(k) application for the device in June 2018. In August 2018, the FDA provided Milestone Scientific with a list of questions on the intra-articular 510(k) application filed in June 2018. Due to the delay in responding to the FDA questions Milestone Scientific will be required file a new 510(K) application. In January 2019, the Company announced the results of a four hundred patient clinical trial by researchers from the University of Miami, University of Texas, and Northwestern University, and two prominent California-based pain clinics. Published-Ahead-of-Print in Anesthesia & Analgesia (the official Journal of the International Anesthesia Research Society), the randomized, controlled study compared the effectiveness of the CompuFlo Epidural System in labor and delivery and chronic pain management, where loss of resistance and fluoroscopy are the current standards of care. The CompuFlo Epidural System was found to be ninety-nine percent successful in objectively identifying the epidural space even in challenging patients with a higher body mass index. In February 2019, the Company announced a new 120-patient clinical study published in Anesthesiology Research & Practice that verifies the CompuFlo Epidural System consistently differentiates false loss of resistance from true loss of resistance during epidural placement. In all cases where the CompuFlo Epidural System’s pressure measurements were used to objectively identify the epidural space, the block was performed successfully with no complications. In February 2019, the Company announced Ospedale “Pugliese Ciaccio” di Catanzaro is the first hospital in Italy to use the CompuFlo Epidural System for all epidurals in labor and delivery. For a local hospital performing a limited number of epidurals, the CompuFlo Epidural System offers a real-time, objective tool for accurate epidural space identification to help reduce failure rates and accidental dural punctures that can require further treatment and interventions. In April, 2019 the Company entered the medical education market with the introduction of the CompuFlo ® Epidural Trainer (CompuFlo Trainer), an instructional instrument that uses pressure sensing technology to improve epidural placement success. The Company has signed an agreement to distribute the CompuFlo Trainer with American 3B Scientific, a leading supplier of didactic material for medical education. In June 2019 the Company announced the results of two research abstracts featuring the CompuFlo Epidural device at Euroanesthesia 2019, Europe's largest annual event showcasing the latest knowledge in the field of anesthesia. The abstracts were presented during scientific poster sessions highlighting how CompuFlo's objective detection of tissue pressure makes challenging procedures with difficult patients more efficient and accelerates clinical competency for trainee. 27 In October 2019, the Company announced the first international multicenter study to compare the incidence of accidental dural puncture using the CompuFlo Epidural System versus the continuous loss of resistance (LOR) technique. The study collected records between 2015 and 2019 of epidural administration on labor and delivery patients using the CompuFlo Epidural System from four institutions, one in the U.S., one in Chile, and two from Italy. Among the four sites, there were 812 patients who received epidural analgesia with CompuFlo, and none had accidental dural puncture regardless of the composition of the epidural performer types. The Company also announced that Professor Rovnat Babazade, MD, University of Texas Medical Branch at Galveston, Department of Anesthesiology, presented a poster at the ANESTHESIOLOGY® 2019 Annual Meeting in Orlando, Florida, entitled, "International Multicenter Study of Accidental Dural Puncture Rate; Comparison of the CompuFlo with Traditional Method''. ANESTHESIOLOGY 2019, hosted by the American Society of Anesthesiologists (ASA), unites more than 14,000 clinicians, thought leaders and professionals from around the world. In November 2019, the Company and 3B Scientific, the world's leading supplier of didactic material for medical education, signed a global agreement expanding distribution of the CompuFlo Trainer. The expanded agreement allows 3B Scientific to capitalize on momentum from strong interest in the CompuFlo Trainer at its unveiling at Euroanesthesia 2019 and the Association of Women's Health, Obstetric and Neonatal Nurses meeting, and gives more anesthesia instructors the ultimate solution to accelerate the epidural procedure's learning curve and trainee success. Covid-19 Pandemic While the COVID-19 pandemic did not materially adversely affect the Company’s financial results and business operations in the Company’s first fiscal quarter ended March 31, 2020, economic and health conditions in the United States and across most of the globe have changed rapidly since the end of the first quarter. In the short-term, demand for the Company’s products has decreased, notably in our dental and medical divisions. Such decrease demand may or may not continue and/or demand may or may not increase from historical levels depending on the duration and severity of the COVID-19 pandemic, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extensions of time for restrictions that have been imposed to date, and numerous other uncertainties. Such events may result in business and manufacturing disruption, inventory shortages, delivery delays, and reduced sales and operations, any of which could materially affect our business, financial condition, and results of operations. The Company’s employees are being affected by the COVID-19 pandemic. The majority of our office and management personnel are working remotely. The health of the Company’s workforce is of primary concern and the Company may need to enact further precautionary measures to help minimize the risk of our employees being exposed to the coronavirus. Further, our management team is focused on mitigating the adverse effects of the COVID-19 pandemic, which has required and will continue to require a large investment of time and resources across the entire Company, thereby diverting their attention from other priorities that existed prior to the outbreak of the pandemic. If these conditions worsen, or last for an extended period of time, the Company’s ability to manage its business may be impaired, and operational risks, cybersecurity risks and other risks facing the Company even prior to the pandemic may be elevated. The COVID-19 pandemic is affecting the Company’s customers, suppliers, vendors, and other business partners, but the Company is not able to assess the full extent of the current impact nor predict the ultimate consequences that will result therefrom. The COVID-19 pandemic is affecting the Company’s operations in the second quarter and may continue to do so indefinitely thereafter. All of these factors may have far reaching impacts on the Company’s business, operations, and financial results and conditions, directly and indirectly, including without limitation impacts on the health of the Company’s management and employees, manufacturing, distribution, marketing and sales operations, customer and consumer behaviors, and on the overall economy. The scope and nature of these impacts, most of which are beyond the Company’s control, continue to evolve and the outcomes are uncertain. Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the three and six month period ended June 30, 2020 are not necessarily indicative of the results to be expected for the full fiscal year. Management cannot predict the full impact of the COVID-19 pandemic on the Company’s sales channels, supply chain, manufacturing, and distribution nor to economic conditions generally, including the effects on consumer spending. The ultimate extent of the effects of the COVID-19 pandemic on the Company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of time even after the pandemic might end. 28 The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Domestic-US Devices $ - $ 130,138 $ 525 $ 232,205 Handpieces $ 38,812 897,357 $ 635,490 1,597,316 Other $ 1,542 31,358 $ 21,590 45,753 Total Domestic US $ 40,354 $ 1,058,853 $ 657,605 $ 1,875,274 International ROW Devices $ 31,800 $ 357,796 $ 281,904 $ 665,068 Handpieces 87,632 764,163 $ 1,018,123 1,485,067 Other 7,888 27,039 $ 21,428 48,350 Total International-ROW $ 127,320 $ 1,148,998 $ 1,321,455 $ 2,198,485 International-China Devices $ - $ - $ - $ - Handpieces - 50,000 - 100,000 Other - - - Total International $ - $ 50,000 $ - $ 100,000 Total Product Sales $ 167,674 $ 2,257,851 $ 1,979,060 $ 4,173,759 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 June 30, 2020 and 2019, respectively. The trends suggested by this table may not be indicative of future operating results: Three months Ended June 30, 2020 2019 Operating results: Product sales, net $ 167,674 $ 2,257,851 Cost of products sold 55,626 752,183 Gross profit 112,048 1,505,668 Operating expenses: Selling, general and administrative expenses 3,176,768 2,517,970 Research and development expenses 108,170 95,529 Loss from operations (3,172,890 ) (1,107,831 ) Other income, and loss on earning net (5,312 ) 54,588 Net loss (3,178,202 ) (1,053,243 ) Net loss attributable to noncontrolling interests 11,738 11,959 Net loss attributable to Milestone Scientific Inc. $ (3,166,464 ) $ (1,041,284 ) 29 The following table sets forth the consolidated results of operations for the six months ended June 30, 2020 and 2019, respectively. The trends suggested by this table may not be indicative of future operating results Six months ended June 30, 2020 2019 Operating results: Product sales, net $ 1,979,060 $ 4,173,759 Cost of products sold 615,326 1,370,876 Gross profit 1,363,734 2,802,883 Operating expenses: Selling, general and administrative expenses 5,929,580 4,627,023 Research and development expenses 215,650 101,875 Loss from operations (4,781,496 ) (1,926,015 ) Other income, and loss on earning net (9,659 ) 79,577 Net loss (4,791,155 ) (1,846,438 ) Net loss attributable to noncontrolling interests24,476 24,476 22,402 Net loss attributable to Milestone Scientific Inc. $ (4,769,646 ) $ (1,824,036 ) Cash flow: June 30,2020 June 30, 2019 Net cash used in operating activities $ (4,111,504 ) $ (622,279 ) Net cash used in investing activities $ (15,499 ) $ (8,104 ) Net cash provided by financing activities $ 19,220,948 $ 2,224,547 Three months ended June 30, 2020 compared three months ended June 30, 2019 Net sales for 2020 and 2019 were as follows: 2020 2019 Decrease % Dental $ 165,674 $ 2,242,751 (2,077,077 ) -92.61 % Medical 2,000 15,100 (13,100 ) -86.75 % Total sales, net $ 167,674 $ 2,257,851 $ (2,090,177 ) -92.57 % Consolidated revenue for the three months ended, June 30, 2020 and 2019 were approximately $167,000 and $2.2 million, respectively. Dental revenue for the three months ended, June 30, 2020 and 2019 were approximately $166,000 and $2.2 million, respectively. Dental revenues decreased by approximately $2.1 million, which is related to COVID-19 pandemic affecting the Company’s customers, suppliers, vendors, and other business partners. In the short-term, demand for the Company’s products has decreased, notably in our dental divisions. Such decreased demand may or may not continue and/or demand may or may not increase from historical levels depending on the duration and severity of the COVID-19 pandemic, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extensions of time for restrictions that have been imposed to date, and numerous other uncertainties. The majority of our office and management personnel are working remotely. As a result of the reduced hours and closings of dental offices throughout the country and the rest of the world due to the continuing spread of COVID-19, our revenue for the second quarter was, and possibly the third quarter, will be materially and adversely affected. At this point in time, it is too early to determine an estimate of what the third quarter impact will be, or the effect COVID-19 may have on our fourth quarter revenue. In addition, it is too early to determine what the effect will be on the anticipated commercialization of our CompuFlo Epidural system as a medical device in 2020 30 Gross Profit for 2020 and 2019 were as follows: 2020 2019 Decrease % Dental $ 111,285 $ 1,499,329 (1,388,044 ) -92.584 % Medical 763 6,339 (5,576 ) -87.96 % Total gross profit $ 112,048 $ 1,505,668 $ (1,393,620 ) -92.56 % Consolidated gross profit for the three months ended June 30, 2020 and 2019 approximately 67% and 68%, respectively. Selling, general and administrative expenses for 2020 and 2019 were as follows: 2020 2019 Increase % Dental $ 761,495 $ 870,548 $ (109,053 ) -12.53 % Medical 707,048 574,772 132,276 23.01 % Corporate 1,708,225 1,072,650 485,569 45.27 % Total selling, general and administrative expenses $ 3,176,768 $ 2,517,970 $ 658,798 26.16 % Consolidated selling, general and administrative expenses for the three months ended June 30, 2020 and 2019, were approximately $3.1 million and $2.5 million, respectively. The increase of approximately $658,000 is categorized in several areas. Employee salaries, and benefits expenses increased approximately $256,000 during the three months ended June 30, 2020, the Company hired additional employees to work on the commercialization of the CompuFl o® Epidural System. The company incurred an expense of approximately $370,000 related to a settlement with United Systems, see Note 6. Research and Development for 2020 and 2019 were as follows: 2020 2019 Increase % Dental $ - $ - $ - 0.00 % Medical 108,144 95,529 12,615 13.21 % Corporate - - - 0.00 % Total research and development $ 108,144 $ 95,529 $ 12,615 13.21 % Consolidated research and development expenses for the three months ended, 2020 and 2019, were approximately $108,000 and $96,000, respectively. The increase is due to upgrades and enhancement of the CompuFlo ® Epidural System and handpieces. Profit (Loss) from Operations for 2020 and 2019 were as follows: 2020 2019 Decrease % Dental Medical $ (650,236 ) $ 629,474 $ (1,279,710 ) -203.30 % Corporate (814,429 ) (664,658 ) (149,771 ) 22.53 % Total loss from operations (1,708,225 ) (1,072,647 ) (635,578 ) 59.25 % $ (3,172,890 ) $ (1,107,831 ) $ (2,065,059 ) 186.41 % The loss from operations was approximately $3.1 million and $1.1 million for the three months ending June 30, 2020 and 2019, respectively. The increase loss is the result decreased in dental revenue, of the reduced hours and closings of dental and medical offices throughout the country and the rest of the world due to the continuing spread of COVID-19, we anticipate that our revenue for the third quarter, and possibly the fourth quarter, will be materially and adversely affected. 31 Six months ended June 30, 2020 compared to Six months ended June 30, 2019 Net sales for 2020 and 2019 were as follows: 2020 2019 Decrease % Dental $ 1,969,260 $ 4,158,259 (2,188,999 ) -52.64 % Medical 9,800 15,100 (5,300 ) -35.10 % Total sales, net $ 1,979,060 $ 4,173,359 $ (2,194,299 ) -52.58 % Consolidated revenue for the six months ended June 30, 2020 and 2019 were approximately $1.9 million and $4.1 million, respectively. Dental revenue for the six months ended June 30, 2020 and 2019 were approximately $2 million and $4.2 million, respectively. Dental revenues decreased by approximately $2.1 million, which is related to COVID-19 pandemic affecting the Company’s customers and other business partners. In the short-term, demand for the Company’s products has decreased, notably in our dental and medical divisions. Such decreased demand may or may not continue and/or demand may increase from historical levels depending on the duration and severity of the COVID-19 pandemic, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extensions of time for restrictions that have been imposed to date, and numerous other uncertainties. Such events may result in business and manufacturing disruption, inventory shortages, delivery delays, and reduced sales and operations, any of which could materially affect our business, financial condition, and results of operations. The majority of our office and management personnel are working remotely. As a result of the reduced hours and closings of dental offices throughout the country and the rest of the world due to the continuing spread of COVID-19, our revenue for the second quarter was, and possibly the third and fourth quarters, will be materially and adversely affected. At this point in time, it is too early to determine an estimate of what the third or fourth quarter impact will be, or the effect COVID-19 may have on our fourth quarter revenue. In addition, it is too early to determine what the effect will be on the anticipated commercialization of our CompuFlo Epidural system as a medical device in 2020. Gross Profit for 2020 and 2019 were as follows: 2020 2019 Increase Decrease % Dental $ 1,358,680 $ 2,796,171 (1,437,491 ) -51.41 % Medical 5,054 6,712 (1,658 ) -24.70 % Total gross profit $ 1,363,734 $ 2,802,883 $ (1439,149 ) -51.35 % Consolidated gross profit for the six months ended June 30, 2020 and 2019 approximately 71% and 68%, respectively. Selling, general and administrative expenses for 2020 and 2019 were as follows: 2020 2019 Increase % Dental $ 1,582,510 $ 1,674,731 $ (92,221 ) -5.51 % Medical 1,273,671 1,061,178 212,493 20.02 % Corporate 3,073,399 1,891,114 1,182,285 62.52 % Total selling, general and administrative expenses $ 5,929,580 $ 4,627,023 $ 1,302,557 28.15 % Consolidated selling, general and administrative expenses for the six months ended June 30, 2020 and 2019, were approximately $5.9 million and $4.6 million, respectively. The increase of approximately $1.3 million is categorized in several areas. Employee salaries, bonuses and benefits expenses increased approximately $789,000 during the six months ended June 30, 2020, the Company hired additional employees to work on the commercialization of the CompuFlo® Epidural System. The company expense approximately $370,000 of bad debt related to a settlement with United Systems, see Note 6. Office expense increased approximately $143,000 for the relocation of the company office and other related costs. 32 Research and Development for 2020 and 2019 were as follows: 2020 2019 Increase % Dental $ - $ - $ - - Medical 215,650 101,875 113,775 111.68 % Corporate - - - Total research and development $ 215,650 $ 101,875 $ 113,775 111.68 % Consolidated research and development expenses for the six months ended, June 30, 2020 and 2019, were approximately $215,000 and $102,000, respectively. The increase is due to upgrades and enhancement of the CompuFlo® Epidural System and handpieces. Profit (Loss) from Operations for 2020 and 2019 were as follows: 2020 2019 Increase % Dental Medical $ (223,856 ) $ 1,121,440 $ (1,345,296 ) -119.96 % Corporate (1,484,241 ) (1,156,341 ) (327,900 ) 28.36 % Total loss from operations (3,073,399 ) (1,891,114 ) (1,182,285 ) 62.52 % $ (4,781,496 ) $ (1,926,015 ) $ (2,855,481 ) 148.26 % The loss from operations was approximately $4.7 million and $1.9 million for the six months ending June 30, 2020 and 2019, respectively an increase of approximately $2.8 million. This increase is the result of a decrease in revenues due to the reduced hours and closings of dental and medical offices throughout the country and the rest of the world due to the continuing spread of COVID-19. We anticipate that our revenue for the third quarter, and possibly the fourth quarter, will be materially and adversely affected. Liquidity and Capital Resources On June 30, 2020, Milestone Scientific had cash and cash equivalents of approximately $16.6 million and working capital of approximately $16.5 million versus working capital of $1.2 million on December 31, 2019. For the six months ended June 30, 2020, we had negative cash flows from operating activities of approximately $4.2 million compared to $622,000 for the six months ended June 30, 2019. In the second quarter of 2020 the Company completed two capital raises. In April 2020, the Company completed a Common Stock Offering generating gross proceeds of approximately $5.1 million (5,420,000 common shares and 2,710,000 warrants). The combined price of the shares and warrants was $0.95 per share. The warrants are exercisable at a price of $1,20 per share and have an expiration of three (3) years from the issue date. In June 2020, the Company completed a second Common Stock Offering generating gross proceeds of approximately $14.6 million (6,770,000 common shares and 3,749,000 warrants). The combined price of shares and warrants of was $2.15 per share. The warrants are exercisable at a of $2.60 and expire three (3) years from the issue date. See Note 9. With the combination of these two Common Stock Offerings, the Company has sufficient liquidity to support operations for at least a year after the condensed consolidated financial statements issue date. Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue from its dental business worldwide, the generation of revenue from its medical devices and disposables business in the United States and worldwide, as well as considering other strategic plans or transactions. However, the COVID-19 pandemic is expected to have a continued adverse effect on the Company’s operations and cash flows for at least in the next two quarters and possibly longer depending on the length and severity in of the pandemic in important dental markets. Now that the CompuFlo Epidural System has obtained FDA clearance in the United States (June 2017), the development costs were reduced in 2019 but the selling costs are expected to continue to increase. The FDA clearance has provided the Company with the opportunity to establish distribution in the U.S. The Company plans to restart the 510K application process for the intra-articular device later this year, subject to available internal resources. 33 Item 3. Quantitative and Qualitative Disclosures about Market Risk Milestone Scientific is a “smaller reporting company” as defined by Regulation S-K and, as such, is not required to provide the information required by this item.