What changed in this filing

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Item 1A. Risk Factors

2021-03-31 compared with 2020-03-30 · 43 added, 29 removed, 271 unchanged (21% of the section changed)

8 unchanged sentences

Because of the risks and uncertainties associated with product acceptance, we are unable to predict the extent of any future losses, whether we will ever generate significant revenues or if we will ever achieve or sustain profitability.

Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.

The report of our independent auditors on our consolidated financial statements for the period ended December 31, 2019 included an emphasis of matter paragraph indicating that there is substantial doubt about our ability to continue as a going concern.

Our auditors’ doubts are based on our recurring losses from operations and working capital deficit.

As a result of the reduced hours and closings of dental offices throughout the country and the rest of the world due to continuing spread of Covid-19, we anticipate that our revenue for the second quarter, and possibly the third quarter, will be materially and adversely affected.

At this point in time, it is too early to determine what effect Covid-19 may have on our fourth quarter revenue.

Our ability to continue as a going concern will be determined by our ability to generate sufficient revenues from the sale of our products to sustain our operations and/or raise additional capital in the form of debt or equity financing or the sale of assets.

Our consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

The COVID-19 pandemic is adversely affecting the Company ’ s business currently.

Additional factors could exacerbate such negative consequences and/or cause other materially adverse effects.

The COVID-19 pandemic did materially adversely affect the Company’s financial results and business operations in the Company’s fiscal year ended December 31, 2020, while economic and health conditions in the United States and across most of the globe have continued to change rapidly since the end of the year.

In the short-term, demand for the Company’s dental products is showing an increase in sell through activity to dental offices.

However the change in 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 ability of the Company ’ s employees to work may be significantly impacted by the coronavirus.

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 full effects of the COVID-19 pandemic are highly uncertain and cannot be predicted.

The COVID-19 pandemic affected the Company’s operations in 2020 and the first quarter of 2021 and may continue to do so for the rest of 2021.

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.

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.

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.

We require additional funding and may be unable to raise capital when needed, which may force us to delay, curtail or eliminate commercialization efforts of our CompuFlo Epidural Computer Controlled Anesthesia System .

12 unchanged sentences

If we, or any of these third-party partners encounter any disruptions to our or their respective operations or facilities, or if we or any of these third-party partners were to shut down for any reason, including by fire, natural disaster, such as a hurricane, tornado or severe storm, power outage, systems failure, labor dispute, pandemic, or other unforeseen disruption, then we or they may be prevented or delayed from effectively operating our or their business, respectively.

The coronavirus (COVID-19) that was reported to have surfaced in Wuhan, China in December 2019 and that has now spread to other countries throughout the world could adversely impact our operations or those of our third-party partners.

Additionally, the continued spread of the virus could negatively impact the manufacture, supply, distribution and sale of our products and our financial results.

The extent to which the coronavirus impacts our operations or those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

Any losses or damages we incur could have a material adverse effect on our financial results and our ability to conduct business as expected.

Relying exclusively on third parties to manufacture our products, changes in our informal manufacturing arrangements made by the manufacturer of our products and disruptions at the manufacturing facility of our manufacturers and failure to maintain existing supply relationships exposes us to risks that may harm our business.

23 unchanged sentences

We may be required to pay fees or other costs for access to such improvements.

Though other alternate sources of supply for handpieces exist, Milestone Scientific would need to establish relationships with new suppliers, and with respect to the Wand/STA System recover its existing tools or have new tools produced and “burn in” and other manufacturing and quality control software re-produced.

Though other alternate sources of supply for dental handpieces exist, Milestone Scientific would need to establish relationships with new suppliers, and with respect to the Wand/STA System recover its existing tools or have new tools produced and “burn in” and other manufacturing and quality control software re-produced.

Establishing new manufacturing relationships could involve significant expense and delay.

2 unchanged sentences

Our business is exposed to risks associated with the economic, environmental, and political conditions in China because the sole manufacturer of our handpieces is located in China.

Because the sole manufacturer of our handpieces is located is located in China, our business is disproportionately exposed to the economic, environmental and political conditions of the region.

Because the sole manufacturer of our dental handpieces is located is located in China, our business is disproportionately exposed to the economic, environmental, and political conditions of the region.

China’s political and economic systems are very different from most developed countries in many respects, including, the amount of government involvement, the level of development, the control of foreign exchange and the allocation of resources.

1 unchanged sentence

China also faces many social, economic, and political challenges that may produce instabilities in both its domestic arena and in its relationship with other countries.

These instabilities may significantly and adversely affect our supply of handpieces which would in turn adversely affect our financial performance.

In addition, as the Chinese legal system develops, there can be no assurance that changes in laws and regulations and their interpretation or their enforcement will not have a material adverse effect on our business relationship with the sole manufacturer of our handpieces.

Any adverse change in the economic, environmental and political conditions in China could have a material adverse effect on economic growth and the level of investments and availability of capital in China, which in turn could lead to a reduction in the supply of our handpieces and consequently have a material adverse effect on our businesses.

Risks related to Human Capital Management

We may not be able to attract and retain qualified employees.

Our future success depends upon the continued service of our executive officers and other key management and technical personnel, and on our ability to continue to identify, attract, retain, and motivate them.

Implementing our business strategy requires specialized territory managers and other talent, as our revenues are highly dependent on technological and product innovations.

The market for employees in our industry is extremely competitive, and competitors for talent.

A number of such competitors for talent are significantly larger than us and are able to offer compensation in excess of what we are able to offer.

Further, existing immigration laws make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the United States, making the pool of available talent even smaller.

If we are unable to attract and retain qualified employees, our business may be harmed.

These instabilities may significantly and adversely affect our supply of dental handpieces which would in turn adversely affect our financial performance.

Any adverse change in the economic, environmental and political conditions in China could have a material adverse effect on economic growth and the level of investments and availability of capital in China, which in turn could lead to a reduction in the supply of our dental handpieces and consequently have a material adverse effect on our businesses.

Issues with product quality could have a material adverse effect upon our business, subject us to regulatory actions and cause a loss of customer confidence in us or our products.

28 unchanged sentences

If we are unable to adequately protect our patents, trade secrets and other proprietary rights, if our patents are challenged or if our provisional patent applications do not get approved, our competitiveness and business prospects may be materially damaged.

Intellectual property rights, including patents, trade secrets, confidential information, trademarks, trade names and trade dress, are important to our business.

Intellectual property rights, including patents, trade secrets, confidential information, trademarks, trade names and trade address, are important to our business.

We will endeavor to protect our intellectual property rights in key jurisdictions in which our products are produced or used and in jurisdictions into which our products are imported.

26 unchanged sentences

In addition, the patent environment can be unpredictable, and the validity and enforceability of patents cannot be predicted with certainty.

Our failure to adequately protect our intellectual property rights, through patents or otherwise, or limitations on the use or loss of such rights, could have a material adverse effect on our ability to prevent the commercialization of competing anesthetic delivery systems.

In some countries, basic patent protections for our products may not exist because certain countries did not historically offer the right to obtain specific types of patents and/or we (or our licensors) did not file in those markets.

In addition, the patent environment can be unpredictable, and the validity and enforceability of patents cannot be predicted with certainty.

Third parties could obtain patents that may require us to negotiate licenses to commercialize our technologies, and we cannot assure you that the required licenses would be available on reasonable terms or at all.

88 unchanged sentences

A partially or completely uninsured claim, if successful and of significant magnitude, could have a material adverse effect on our business, financial condition, and results of operations.

Excessive returns under our Exclusive Distribution and Supply Agreement with Henry Schein, Inc.

Excessive returns under our Distribution and Supply Agreement with Henry Schein, Inc.

could have a material adverse effect on our business, financial condition, and results of operations.

In June 2016, we entered into a new exclusive distribution and supply agreement with Henry Schein pursuant to which they were appointed as the exclusive distributor for our dental products in the United States and Canada.

Under that agreement, Henry Schein has a right to return our products for full credit against the purchase price paid by them under limited circumstances in accordance with such agreement, including but not limited to, returns due to shipment error by us or factory defect.

Under our Distribution and Supply Agreement with Henry Schein, Henry Schein has a right to return our products for full credit against the purchase price paid by them under limited circumstances in accordance with such agreement, including but not limited to, returns due to shipment error by us or factory defect.

Excessive returns during any calendar year could have a material adverse effect on our business, financial condition, and results of operations.

8 unchanged sentences

Milestone Scientific is effectively controlled by a limited number of stockholders.

Milestone Scientific’s principal stockholders, Leonard Osser, Gian Domenico Trombetta and K.

Tucker Andersen beneficially own approximately 35.5% of the issued and outstanding shares of common stock.

Milestone Scientific’s principal stockholders, Leonard Osser, and Gian Domenico Trombetta beneficially own approximately 23% of the issued and outstanding shares of common stock.

As a result, they can exercise substantial control over our affairs and corporate actions requiring stockholder approval, including electing directors, selling all or substantially all our assets, merging with another entity, or amending our certificate of incorporation.

32 unchanged sentences

Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may adversely impact the price of our common stock.

In the second quarter of 2020, the Company completed two public offerings.

In April 2020, 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 the shares and warrants was $2.15 per share.

The warrants are exercisable at $2.60 and expire three (3) years from the issue date.

We have never paid and do not intend to pay cash dividends in the foreseeable future.

21 unchanged sentences

Any failure at any time to meet the continuing NYSE American listing requirements could have an adverse impact on the value of and trading activity in our common stock.

Currently we are not in compliance with NYSE America Exchange, Stockholder Equity listing requirements.

We filed a plan to regain compliance in December 2018, which the NYSE American Exchange has accepted.

Under the plan, we will review our progress to regain compliance with the staff of the Exchange on a periodic timetable during the period covered by the plan.

Failure to adhere to the plan or regain compliance status with NYSE America Exchange requirements will result in the Company's shares being delisted from NYSE American Exchange.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors