29 unchanged sentences
Interim Chief Executive Officer and Director
−Removed: Brent Johnston
+Added: Jan Adriaan (Arjan ) Haverhals
Joseph D'Agostino
15 unchanged sentences
From July 2017 to December 2017, he had been Managing Director –China Operations.
−Removed: Prior to that, he served as Milestone Scientific’s Chairman from 1991 until September of 2009, and during that time, from 1991 until 2007, was also Chief Executive Officer of Milestone Scientific.
+Added: Prior to that, he served as Milestone Scientific’s Chairman from 1991 until September 2009, and during that time, from 1991 until 2007, was also Chief Executive Officer of Milestone Scientific.
In September 2009, he resigned as Chairman of Milestone Scientific, but remained director, and assumed the position of Chief Executive Officer.
3 unchanged sentences
Osser’s knowledge of our business and background with us since 1980 provides the Board with valuable leadership skills and insight into our business and accordingly, the expertise needed to serve as one of our directors.
+Added: J an Adriaan (Arjan) Haverhals , President
+Added: Haverhals has been Milestone Scientific's President since September 2020 and as the President and Chief Executive Officer of Milestone Scientific’s Dental Division (Wand Dental Inc.) since June 2020.
+Added: He brings more than 30 years of sales, marketing, product development, and international expansion experience within the medical device, pharmaceutical, and other industries.
+Added: Prior to joining Wand Dental and Milestone Scientific, Mr.
+Added: Haverhals was senior vice president of sales at Xcentric Mold & Engineering from 2019 until 2020 where he was instrumental in increasing sales productivity and efficiency for the company's prototype injection molding services, which included leading healthcare company clients.
+Added: From 2012 until 2018, Mr.
+Added: Haverhals worked at Straumann, LLC, a global leader in manufacturing medical and dental devices, where he held a series of senior sales and marketing roles including vice president of customer marketing & education, where he oversaw all product franchises and led the launch of more than 30 products in the North American market.
+Added: He also served as senior vice president for the Nordic Region at Straumann AB, senior vice president of global sales digital solutions, which included oversight of the strategic acquisition of Etkon;
+Added: and served as vice president of the Prosthetics Business Unit, where he introduced a new implant and prosthetics product line within a new market segment.
+Added: He also served as senior vice president for the Nordic Region at Straumann AB, senior vice president of global sales digital solutions, which included oversight of the strategic acquisition of Etkon;
+Added: and served as vice president of the Prosthetics Business Unit, where he introduced a new implant and prosthetics product line within a new market segment.
+Added: He also served as vice president of global marketing & sales at Elkem AS, one of Norway's largest industrial companies.
+Added: Previously, Mr.
+Added: Haverhals served as executive vice president of marketing & sales at Cresco Ti Systems Sàrl, a global dental implant company, where he was responsible for turning around and managing global sales, marketing, international business.
+Added: Haverhals holds an MS in Pharmacy from the University of Leyden in the Netherlands.
Joseph D’Agostino, Chief Financial Officer and Chief Operating Officer
13 unchanged sentences
Since 2017, Ms.
−Removed: Bernhard has been an independent director of Sachem Capital Corp (NYSE American:
−Removed: SACH) a Connecticut based real-estate investment trust.
+Added: Bernhard has been an independent director of Sachem Capital Corp a Connecticut based real-estate investment trust.
From 2007, Ms.
5 unchanged sentences
Gian Domenico Trombetta, Director
−Removed: Gian Domenico Trombetta has been a director of Milestone Scientific in May 2014 and the President and Chief Executive Officer of Milestone Scientific’s Dental Division (Wand Dental Inc.) since October 2014.
+Added: Gian Domenico Trombetta has been a director of Milestone Scientific in May 2014 and served as the President and Chief Executive Officer of Milestone Scientific’s Dental Division (Wand Dental Inc.) from October 2014 until May 2020.
He founded Innovest S.p.A in 1993, a special situation firm acting in development and distressed capital investments.
8 unchanged sentences
Leonard Schiller has been a director of Milestone Scientific since April 1997.
−Removed: Schiller has been a partner in the Chicago law firm of Schiller Strauss & Lavin PC since 1977 and since 2002, its President.
−Removed: Schiller also serves as a director on the boards of Jerrick Media Holdings, Inc., a public media company, since February 2016 and Point Capital, Inc., a business development company, since July 2014.
+Added: Schiller has been a partner in the Chicago law firm of Schiller Law P.C.
+Added: and it's predecessors since 1977 and since 2002, its President.
+Added: Schiller also serves as a director on the board of Creatd, Inc., a Nasdaq listed social media company since February 2016.
+Added: He also is a general partner of Gravitas Capital LP, a hedge fund.
Schiller’s professional experience and background have given him the expertise needed to serve as Chairman of the Compensation Committee and as one of our directors.
−Removed: Michael McGeehan
−Removed: Michael McGeehan has been a director of Milestone Scientific since October 2017.
−Removed: McGeehan is a business consultant with 30 years of experience in a variety of business domains, including financial services, medical and healthcare products, consumer package goods and the software technology industry.
−Removed: McGeehan started his career at Metaphor Computer Systems in 1988 and then went to work at Microsoft Corporation in 1991.
−Removed: McGeehan left Microsoft and founded Forefront Information Strategies, an information technology consulting firm.
−Removed: McGeehan returned to Microsoft where he worked until 2017, when he returned to and re-started Forefront.
−Removed: McGeehan professional experience and background have given him the expertise needed to serve as Chairman of the Corporate Governance and Nominating Committee and as one of our directors.
−Removed: McGeehan was on the Board of Directors of Wand Dental Inc., (subsidiary of Milestone Scientific) a maker of a painless, anesthetic injection system for dentists.
−Removed: McGeehan has a Master’s in Business Administration from Pace University and a Bachelor of Science in Electrical Engineering and Computer Science from Marquette University.
−Removed: McGeehan background has given him the experience needed to serve as one of our directors.
Goldman is the President and Founder of Goldman Capital Management, Inc., a family office since 2018, which was previously an investment advisory firm founded in 1985.
9 unchanged sentences
degree in Economics from The City University of New York (City College).
−Removed: Brent Johnston, President
−Removed: Brent Johnston has been Milestone Scientific's President since September 2019.
−Removed: Johnston is a senior level, medical device industry executive with over 25 years of experience in sales, marketing and organizational efficiency.
−Removed: Prior to joining the Company, Mr.
−Removed: Johnston served as Vice President of Sales at Clariance, a spinal device company, since 2016.
−Removed: From 2015 until December 2016, Mr.
−Removed: Johnston served as Chief Executive Officer at ExsoMed, an upper extremity orthopedic company.
−Removed: Johnston founded and served as Chief Operating Officer at Aurora Spine, Inc., from 2011 until 2015.
−Removed: Johnston held senior executive roles at Phygen Spine (from 2009 until 2011) and Lanx, Inc.
−Removed: (from 2007 until 2009).
−Removed: Johnston also founded Corvus Medical, Inc., a company focused on products in spine, orthopedics, biologics and durable goods, in 2004.
−Removed: Johnston received a bachelor’s degree in Political Science and Business Administration from Eastern Washington University and received a Master of Business Administration from Norwich University.
+Added: Michael McGeehan
+Added: Michael McGeehan has been a director of Milestone Scientific since October 2017.
+Added: McGeehan is a business consultant with 30 years of experience in a variety of business domains, including financial services, medical and healthcare products, consumer package goods and the software technology industry.
+Added: McGeehan started his career at Metaphor Computer Systems in 1988 and then went to work at Microsoft Corporation in 1991.
+Added: McGeehan left Microsoft and founded Forefront Information Strategies, an information technology consulting firm.
+Added: McGeehan returned to Microsoft where he worked until 2017, when he returned to and re-started Forefront.
+Added: McGeehan professional experience and background have given him the expertise needed to serve as Chairman of the Corporate Governance and Nominating Committee and as one of our directors.
+Added: McGeehan was on the Board of Directors of Wand Dental Inc., (subsidiary of Milestone Scientific) a maker of a painless, anesthetic injection system for dentists.
+Added: McGeehan has a Master’s in Business Administration from Pace University and a Bachelor of Science in Electrical Engineering and Computer Science from Marquette University.
+Added: McGeehan background has given him the experience needed to serve as one of our directors.
Mark Hochman, D.D.S., Director of Clinical Affairs
42 unchanged sentences
Other Compensation
+Added: Osser (1) (8)
Interim Chief Executive Officer
1 unchanged sentence
Chief Executive Officer - Wand Dental Inc
+Added: Jan Adriaan (Arjan) Haverhals (3)
+Added: Chief Executive Officer - Wand Dental Inc
+Added: President of Milestone Scientific Inc.
Joseph D'Agostino (4) (8)
5 unchanged sentences
Vice President US Sales and Marketing
−Removed: Leonard Osser deferred a portion of his yearly compensation of approximately $175,000 in 2019 and 2018, respectively.
+Added: Leonard Osser during 2020 other compensation represents payments made for health insurance coverage of approximately $6,800 and car allowance of approximately $14,400 in 2020.
+Added: During 2020 the deferred compensation of approximately $175,000 from both 2019 and 2018, respectively was paid.
+Added: Osser received $143,000 and 60,000 of the deferred pensions from 2018 in 2020 and 2019 respectively.
During 2019 other compensation represents payments made for health insurance coverage of approximately $25,000 and car allowance of approximately $14,400 in 2019.
−Removed: Osser, deferred his pension of approximately $203,111 which was included in other payments.
−Removed: Osser received $60,000 of the deferred pension from 2018.
−Removed: Osser received a discretionary performance bonus in 2019 of $350,000 ( which will be paid stock) and no bonus was award for 2018 respectively.
−Removed: During 2018, other compensation represents payments made for health insurance coverage $19,000 and car allowance $14,400, pension payment $203,111.
−Removed: Gian Domenico Trombetta deferred a portion of his yearly compensation of approximately $180,000 in 2019 and 2018, respectively.
+Added: Gian Domenico Trombetta as of December 31, 2020, the company owes $275,000 of deferred compensation from 2019 and 2018, respectively.
Trombetta did not receive a performance bonus in 2020 and 2019.
−Removed: Joseph D’Agostino deferred a portion of his yearly compensation of approximately $28,400 in 2019 and 2018.
−Removed: During 2019 other compensation represents payments made for health insurance coverage of approximately $16,000 and car allowance of approximately $9,000.
−Removed: D'Agostino received a discretionary performance bonus in 2019 of $175,000 (which will be paid stock) and no bonus was awarded in 2018.
+Added: In May 2020 Mr.
+Added: Trombetta resigned as CEO of Wand Dental wholly-owned subsidiary of Milestone Scientific, Inc.
+Added: The Company engaged Gian Domenico Trombetta, former CEO of Wand Dental Inc.
+Added: as a consultant to Leonard Osser, Interim – Chief Executive Officer of Milestone Scientific for a period of twelve months.
+Added: Trombetta received 15,000 in other compensation.
+Added: Jan Adriaan (Arjan) Haverhals was hired in June 2020 a Chief Executive Officer of Wand Dental, Inc., a wholly-owned subsidiary of Milestone Scientific, Inc.
+Added: and in September 2020 Mr.
+Added: Haverhals was appointed to President of Milestone Scientific Inc.
+Added: Haverhals received $90,000, in a discretionary performance bonus for the year ended December 31, 2020.
+Added: Joseph D’Agostino during 2020 other compensation represents payments made for health insurance coverage of approximately $15,000 and car allowance of approximately $9,000.
+Added: During 2020 the deferred compensation of approximately $28,400 from both 2019 and 2018, respectively was paid.
+Added: D'Agostino received a discretionary performance bonus in 2020 and 2019 of $150,000 and $175,000 respectively (which will be paid stock).
During 2019 other compensation represents payments made for health insurance coverage of approximately $16,000 and car allowance of approximately $9,000.
Brent Johnston was hired in September 2019 as President.
−Removed: His yearly compensation was approximately $86,000 in 2019.
Other compensation represents payments made for health insurance coverage of approximately $2,755 and car allowance of approximately $9,600.
+Added: Johnston received a bonus in 2020 of approximately $34,000.
+Added: Johnston resigned in August 2020.
+Added: Other compensation represents payments made for health insurance coverage of approximately $4,800 and car allowance of approximately $4,200.
Johnston received a discretionary performance bonus in 2019 of approximately $16,000.
−Removed: Sharon Smith received $116,500, in a discretionary performance bonus for the year ended December 31, 2018, which was paid in common stock upon her termination with the Company in October 2019.
+Added: Sharon Smith resigned from her position with the Company in October 2019.
Eric Gilbert received $40,000, in a discretionary performance bonus for the year ended December 31, 2019 and will be paid in common stock upon the termination of his employment with the Company.
+Added: The amounts in this column reflect the fair value of the options on the date of grant.
+Added: For details used in the assumption calculating the fair value of the option reward, see Note C to the Financial Statements for the year ended December 31, 2020 a which is located on pages F-8 through F-12 of this Report.
+Added: Compensation cost is generally recognized over the vesting period of the award.
+Added: See the table below entitled Outstanding Equity Awards at December 31, 2020.
Employment Contracts
9 unchanged sentences
In July 2017, Mr.
−Removed: Osser also resigned from his positions of Chairman of the Board, Chief Executive Office and President of Milestone Medical.
+Added: Osser resigned from his positions of Chairman of the Board, Chief Executive Office and President of Milestone Medical.
Upon his resignation, Milestone Medical entered in a consulting agreement with U.S.
8 unchanged sentences
Osser as Interim Chief Executive Officer receives a base salary and may receive bonus determined by the compensation committee of Company.
+Added: On March 2, 2021, Milestone Scientific Inc.
+Added: (the “Company”) entered into a Royalty Sharing Agreement with Leonard Osser, the Company’s Interim Chief Executive Officer, pursuant to which Mr.
+Added: Osser sold, transferred and assigned to the Company all of his rights in and to a certain patent application as to which he is a co-inventor with Mark Hochman, a consultant to the Company, and the Company agreed to pay to Mr.
+Added: Osser, beginning May 9, 2027, half of the royalty (2.5%) on net sales that would otherwise be payable to Mark and Claudia Hochman under their existing Technology Sale Agreement, dated January 1, 2005 and amended from time to time, with the Company, the Hochman's having agreed with the Company pursuant to an addendum to such Technology Sale Agreement dated February 25, 2021 to reduce from five percent (5%) to two and one-half percent (2.5%) the payments due to them under their Technology Sale Agreement on May 9th, 2027 and thereafter, with respect to dental products.
+Added: The Agreement confirms an understanding of the Company, Leonard Osser, and the Hochman's on sharing the five percent (5%) royalty to be paid by the Company beginning on May 9, 2027 with respect to dental products embodying the new invention.
Objective of Executive Compensation Program
19 unchanged sentences
Outstanding Equity Awards at December 31, 2020
+Added: The following table includes certain information with respect to all unexercised stock options and unvested shares of common stock of Milestone Scientific outstanding owned by the Named Executive Officers at December 31, 2020.
Options Awards
7 unchanged sentences
Gian Domenico Trombetta
−Removed: Brent Johnston
+Added: Jan Adriaan (Arjan ) Haverhals
Joseph D'Agostino
−Removed: The following table includes certain information with respect to all unexercised stock options and unvested shares of common stock of Milestone Scientific outstanding owned by the Named Executive Officers at December 31, 2019.
Represents stock option grants at fair market value on the date of grant.
9 unchanged sentences
Leonard Schiller
−Removed: Edward Zelnick
Michael McGeehan
+Added: Gian Domenico Trombetta
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
2 unchanged sentences
Shares of Common Stock Beneficially Owned (2)
−Removed: Percentage of Ownership
Executive Officers and Directors
Leonard Osser (3)
−Removed: Brent Johnston
+Added: Jan Adriaan (Arjan) Haverhals (4)
Joseph D'Agostino (5)
2 unchanged sentences
Michael McGeehan (8)
+Added: Neal Goldman (9)
Gian Domenico Trombetta (10)
1 unchanged sentence
Tucker Andersen
+Added: * Less than 1%
The addresses of the persons named in this table are as follows:
−Removed: Leonard Osser, Joseph D'Agostino, Gian Domenico Trombetta, Leslie Bernhard, Edward Zelnick, M.D and Michael McGeehan are at 425 Eagle Rock Avenue, Roseland, New Jersey 07068;
+Added: Leonard Osser, Jan Adriaan (Arjan) Haverhals, Joseph D'Agostino, Gian Domenico Trombetta, Leslie Bernhard, Neal Goldman and Michael McGeehan are at 425 Eagle Rock Avenue, Roseland, New Jersey 07068;
Schiller, c/o Schiller, Klein & McElroy, P.C., 33 North Dearborn Street, Suite 1030, Chicago, Illinois 60602;
−Removed: Tucker Andersen, c/o Above All Advisers, 61 Above All Road, Warren, CT 06754, and Tom Cheng, c/o United Systems 18725 E.
−Removed: Gale Ave Suite 221, City of Industry, CA 91748.
A person is deemed to be a beneficial owner of securities that can be acquired by such person within 60 days from March 29, 2021, as applicable, upon the exercise of options and warrants or conversion of convertible securities.
14 unchanged sentences
Goldman and 142,500 shares subject to common stock warrants.
−Removed: Includes 202,617 shares to be issued at the termination of his employment, 232,158 shares subject to common stock options, 178,571 shares subject to warrants to purchase common stock of the Company in the name of Bp4 Sr.l, and 9,697,192 shares held directly by BP4 S.r.l.
+Added: Includes 99,378 shares subject to common stock options, 178,571 shares subject to warrants to purchase common stock of the Company in the name of Bp4 Sr.l, and 10,048,670 shares held directly by BP4 S.r.l.
("BP4") of which 5,982,906 shares were issued upon the conversion of $7 million of preferred stock at $1.17 per share, as adjusted to date.
5 unchanged sentences
Equity Compensation Plan Information
−Removed: The following table summarizes, as of December 31, 2019, the (i) options granted under the Milestone Scientific 2004 Stock Option Plan (the “2004 Plan”) and (ii) options granted under the Milestone Scientific 2011 Equity Compensation Plan (f/k/a Milestone Scientific 2011 Stock Option Plan) (the “2011 Plan”).
+Added: The following table summarizes, as of December 31, 2020, the (i) options granted under the Milestone Scientific 2004 Stock Option Plan (the “2004 Plan”), (ii) options granted under the Milestone Scientific 2011 Equity Compensation Plan (f/k/a Milestone Scientific 2011 Stock Option Plan) (the “2011 Plan”) and (iii) options granted under the Milestone Scientific 2020 Equity Incentive Plan (the “2020 Plan”).
The shares covered by outstanding options and warrants are subject to adjustment for changes in capitalization, stock splits, stock dividends and similar events.
6 unchanged sentences
Grants under our 2011 Stock Option Plan (2)
+Added: Grants under our 2020 Stock Option Plan (3)
The 2004 Plan, as amended, provided for awards of options up to a maximum 750,000 shares of Milestone Scientific's common stock and expired in July 2014.
6 unchanged sentences
In general, options become exercisable over a three-year period from the grant date and expire five years after the date of grant.
−Removed: For the years ended December 31, 2019 and 2018, zero were exercised.
+Added: For the years ended December 31, 2020 and 2019, 336,970 and 0 were exercised.
+Added: The 2020 provides for awards of restricted common stock and options to purchase up to a maximum 2,000,000 shares of common stock and expires in December 2030.
+Added: Options may be granted to employees, directors, and consultants of Milestone Scientific for the purchase of shares of common stock at a price not less than the fair market value of common stock on the date of grant.
+Added: In general, options become exercisable over a three-year period from the grant date and expire five years after the date of grant.
+Added: For the years ended December 31, 2030 zero shares were issued.
Certain Relationships and Related Transactions and Director Independence.
−Removed: Milestone Scientific has a manufacturing agreement with United Systems (whose controlling shareholder, Tom Cheng, is a significant stockholder of Milestone Scientific), the principal manufacturers of its handpieces, pursuant to which it manufactures products under specific purchase orders, but without minimum purchase commitments.
−Removed: Purchases from this manufacturer were $1.2 million for the years ended December 31, 2019 and 2018.
−Removed: As December 31, 2019 and 2018, Milestone Scientific owed this manufacturer approximately $943,000 and $1.3 million, respectively, which is included in accounts payable, related party on the consolidated balance sheets.
−Removed: In February 2019, Milestone Scientific board of directors granted United Systems 285,714 shares of stock at $0.35 or $100,000 for consulting services.
−Removed: These shares were issued in July 2019.
−Removed: During 2018, Milestone Scientific through its wholly owned subsidiary, Wand Dental, entered into an agreement with United Systems.
−Removed: The agreement was a Royalty Agreement for handpieces sold to Milestone China by United Systems.
−Removed: United Systems will pay Wand Dental a royalty equal to the net profit that Wand Dental would have received if the handpieces were sold directly to Milestone China or its Agent.
−Removed: As of December 31, 2019, Wand Dental has deferred royalty income of $342,500 that will be recognized at the earlier of when payment of the royalties is received from United Systems or when collectability is deemed to be assured and is included in accounts receivable, related party and deferred revenue, related party on the consolidated balance sheets.
−Removed: This receivable is included in the reserved receivables in Note F.
−Removed: Also, during the year ended December 31, 2018, a Distribution Agreement between Wand Dental and United Systems was formed.
−Removed: Under the Distribution Agreement United Systems purchased 1,000 STA instruments in June 2018, for delivery to Milestone China.
−Removed: Due to the related party nature and collectability concerns Wand Dental has deferred the sale.
−Removed: Milestone Scientific has deferred approximately $750,000 of related party sales of devices to Milestone China under the agreement with United Systems as of December 31, 2018.
−Removed: As of December 31, 2019, Milestone Scientific recorded accounts receivable, related party and deferred revenue, related party of $750,000 and deferred cost, related of $686,365, respectively.
−Removed: The deferred revenue, accounts receivable and deferred cost from this transaction are included in accounts receivable, deferred revenue and deferred cost related, party related to Milestone China disclosed on the consolidated balance sheets.
−Removed: This receivable, deferred revenue and deferred cost is included in the reserved receivables in Note F.
−Removed: In June 2014, Milestone Scientific invested $1 million in Milestone China by contributing 772 STA Instruments to Milestone China for a 40% ownership interest.
−Removed: Milestone Scientific recorded this investment under the equity method of accounting.
−Removed: Milestone Scientific entered into a payment arrangement with Milestone China to satisfy past due receivables from Milestone China and it’s agents which amounted to $ 2.8 million at the time of the payment arrangement.
−Removed: The payment terms required payments of $200,000 per month beginning in July 2018 through November 2018 and a balloon payment of approximately $1,425,000 during December 2018.
−Removed: Due to the default on the arrangement and Milestone China’s liquidity constraints, Milestone Scientific halted shipments to Milestone China.
−Removed: The Company has adjusted the accounts receivable related party and the deferred revenue related party based on the expected payment realization and recorded a reserve against the related deferred cost of $1.25 million which includes the sales to United Systems.
−Removed: The amounts due from United Systems described above are included in the adjustments and reserves for Milestone China.
−Removed: See note F for a description of related party transactions with Milestone China.
−Removed: In July 2019, United System issued a credit to the Company for approximately $151,000 for handpieces found to be defective.
−Removed: The Company recorded the credit in cost of sales since the Company previously
−Removed: recorded an allowance for against inventory during 2018.
−Removed: In August 2016, K.
−Removed: Tucker Andersen, a significant stockholder of Milestone Scientific, entered into a three-year agreement with Milestone Scientific to provide financial and business strategic services.
−Removed: Expenses recognized on this agreement were $100,000 for years ended December 31, 2019 and 2018, respectively.
−Removed: In December 2019, Milestone Scientific extended this agreement for one year at a cost of $100,000.
+Added: As of December 31, 2020, Milestone Scientific owned a 40% interest in Milestone China.
In January 2017, Milestone Scientific entered into a twelve-month agreement with Innovest S.p.A., a significant stockholder of Milestone Scientific, to provide consulting services.
This agreement will renew for successive twelve-month terms unless terminated by Innovest S.p.A or Milestone Scientific.
−Removed: Expenses recognized on this agreement were $80,000 for years ended December 31, 2019 and 2018, respectively.
+Added: Expenses recognized on this agreement were $60,000 and $80,000 for years ended December 31, 2020 and 2019, respectively.
+Added: This agreement was terminated September 30, 2020.
The Director of Clinical Affairs’ royalty fee was approximately $267,000 and $403,000 for the years ended December 31, 2020 and 2019, respectively.
−Removed: Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $156,000 and $186,000 for the years ended December 31, 2019, and 2018, respectively.
+Added: Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $156,000 for the years ended December 31, 2020, and 2019, respectively.
As of December 31, 2020 and 2019 Milestone Scientific owed the Director Clinical Affairs for royalties of approximately $127,000 and $390,000, respectively, which is included in accounts payable, related party and accrued expense, related party.
+Added: The Company engaged Gian Domenico Trombetta, former CEO of Wand Dental Inc.
+Added: as a consultant to Leonard Osser, Interim – Chief Executive Officer of Milestone Scientific for a period of twelve months (beginning October 1, 2020 and ending September 30, 2021).
+Added: Gian Domenico Trombetta will provide historical International Business, Dental Segment information and business contacts to Mr.
+Added: Osser and provide consulting services for new International Business and Dental Segment concepts during this twelve-month consulting period.
+Added: Under this agreement, Mr.
+Added: Trombetta is to receive $60,000 payable in Milestone Scientific shares.
Principal Accounting Fees and Services
4 unchanged sentences
All Other Fees
−Removed: Milestone Scientific incurred other accounting fees of approximately $0 and $50,000 from Friedman LLP, its principal accountant in both 2019 and 2018, respectively.
+Added: Milestone Scientific did not incur other accounting fees from Friedman LLP, its principal accountant in either 2020 or 2019.
Audit Committee Administration of the Engagement
17 unchanged sentences
Amended and Restated By-laws of Milestone filed April 1, 2019 (23)
+Added: Certificate of Amendment to Restated Certificate of Incorporation (24)
Specimen stock certificate (2)
4 unchanged sentences
2019 Private Placement (22)
+Added: Description of Registrant’s Securities*
+Added: Form of Common Stock Purchase Warrant issued in the Apr.
+Added: 2020 Public offering (25)
+Added: Form of Common Stock Purchase Warrant issued in the Jun.
+Added: 2020 Public Offering (26)
Lease dated November 25, 1996 between Livingston Corporate Park Associates, L.L.C.
30 unchanged sentences
and BP4 S.p.A.
+Added: Underwriting Agreement, dated as of April 9, 2020 between the Company and Maxim Group LLC (25)
+Added: Underwriting Agreement, dated as of June 25, 2020 between the Company and Maxim Group LLC (26)
List of Subsidiaries*
32 unchanged sentences
Incorporated by reference to Milestone Scientific’s Form 10-K filed with the SEC on April 1, 2019.
+Added: Incorporated by reference to Milestone Scientific’s Form 10-K/A filed with the SEC on April 2, 2020.
+Added: Incorporated by reference to Milestone Scientific’s Form 8-K filed with the SEC on April 9, 2020.
+Added: Incorporated by reference to Milestone Scientific’s Form 8-K filed with the SEC on June 25, 2020
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
43 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of Milestone Scientific, Inc.
−Removed: and subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, statements of changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively referred to as the consolidated financial statements).
+Added: We have audited the accompanying consolidated balance sheets of Milestone Scientific, Inc., and subsidiaries (the “Company”) as of December 31, 2020, and 2019, and the related consolidated statements of operations, statements of changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
−Removed: Ability to Continue as a Going Concern
−Removed: The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
−Removed: As discussed in Note B to the consolidated financial statements, the Company has recurring losses and negative cash flows from operations.
−Removed: These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
−Removed: Management’s plans in regard to these matters are also described in Note B.
−Removed: The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
8 unchanged sentences
Accordingly, we express no such opinion.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
1 unchanged sentence
We believe that our audits provide a reasonable basis for our opinion.
+Added: Critical Audit Matters
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:
+Added: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: Critical Audit Matter Description
+Added: Certain inventory requires management to make significant assumptions and subjective judgments about the net realizable value when such medical devices are approved by the appropriate regulatory agencies, but also represent new technology with unproven market acceptance.
+Added: These estimates include future demand, comparable market data and other assumptions within the sales forecasts without the benefit of historical experience.
+Added: Given the subjectivity of these estimates, performing audit procedures to evaluate whether inventory was appropriately recorded at December 31, 2020 required a high degree of auditor judgment and an increased extent of effort.
+Added: How We Addressed the Matter in Our Audit
+Added: The following are the most relevant procedures :
+Added: Testing of whether the data used to assess potential obsolescence and net realizable value of inventory at December 31, 2020 was complete and sufficiently precise.
+Added: Evaluating whether the expected market demand used was reasonable, considering the Company’s current and past marketing efforts, their market studies, as well as current market penetration and comparable market data.
+Added: Evaluating whether the inventory’s estimated useful life, the current economic conditions, and the expected timing of potential new or enhanced company products would impact the expected sale of this inventory.
+Added: Evaluating the reasonableness of assumptions related to the potential for technological or competitive obsolescence considering such experience within similar products used in the Company’s other business segment.
/s/ Friedman LLP
9 unchanged sentences
Accounts receivable, net
−Removed: Accounts receivable, related party, net
Prepaid expenses and other current assets
−Removed: Deferred cost, related party
Inventories, net
Advances on contracts
−Removed: Operating lease-right of use assets
Total current assets
Furniture, fixtures and equipment, net
+Added: Intangibles, net
+Added: Right of use assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
4 unchanged sentences
Accrued expenses, related party
−Removed: Operating lease liabilities
+Added: Current portion of finance leases liabilities
+Added: Current portion of operating lease right-of-use liabilities
Deferred profit, related party
−Removed: Deferred revenue, related party
Total current liabilities
+Added: Finance lease liabilities
+Added: Operating lease liabilities
Total liabilities
1 unchanged sentence
Stockholders’ equity
−Removed: Series A convertible preferred stock, par value $.001, authorized 5,000,000 shares, 0 and 7,000 shares issued and outstanding as of December 31, 2019 and 2018.
Common stock, par value $.001;
1 unchanged sentence
64,171,435 shares issued and 64,138,102 shares outstanding as of December 31, 2020;
−Removed: 33,859,034 shares issued, 2,470,566 shares to be issued, and 33,825,701 shares outstanding as of December 31, 2018;
+Added: 49,410,176 shares issued and 49,376,843 shares outstanding as of December 31, 2019;
Additional paid in capital
14 unchanged sentences
Research and development expenses
−Removed: Impairment of long -lived assets
Total operating expenses
2 unchanged sentences
Interest income
−Removed: Change in fair value of derivative liabilities
+Added: Change in fair value of derivative liability
Loss before provision for income taxes and net of equity investments
1 unchanged sentence
Loss before equity in net earnings of equity investments
−Removed: Earnings from Milestone Education
−Removed: Earnings from Milestone China
+Added: Earnings from equity method investment
Net loss attributable to noncontrolling interests
15 unchanged sentences
Balance, January 1, 2019
−Removed: Stock based compensation
−Removed: Common stock issued to employee for bonuses
−Removed: Common stock issued for payment of consulting services
−Removed: Common stock issued to employee for compensation
−Removed: Common stock issued for Asset Acquisition
−Removed: Common stock to be issued to employee for bonuses
−Removed: Common stock to be issued for payment of consulting services
−Removed: Common stock to be issued to employee for compensation
−Removed: Acquired controlling interest in Milestone Education
−Removed: Balance as December 31, 2018
Stock Compensation
−Removed: Conversion of Preferred Shares to Common Stock
−Removed: Common stock issued for warrants exercised
−Removed: Common stock issued in private offering
−Removed: Common stock issued in public offering
+Added: Conversion of Preferred Shares to Common Stock (Mandatory)
+Added: Common stock issued for warrants exercised Total
+Added: Common stock issued in private offering Total
+Added: Common stock issued in public offering Total
Common stock to be issued for bonus and compensation
2 unchanged sentences
Common stock issued for payment of consulting services
−Removed: Reclassification to derivative liability for securities issued in excess of shares authorized
−Removed: Reversal of derivative liability for exercise of Warrants
−Removed: Reversal of derivative liability for the issuance of shares-to-be-issued
−Removed: Reversal of derivative liability to equity upon authorized share increase
+Added: Overallotment of securities, initial derivative reclassifications
+Added: Shares and warrants issued, previously classified as derivative liability
+Added: Settlement of derivative liability
+Added: Balance as December 31, 2019
+Added: Stock based compensation
+Added: Common stock issued to employee for compensation
+Added: Common stock issued for payment of consulting services
+Added: Common stock issued to board of directors for services
+Added: Common stock issued to employees for bonuses
+Added: Common stock issued in public offering April 6,2020
+Added: Common stock issued in public offering-June 30, 2020
+Added: Acquired controlling interest in Milestone Advanced Cosmetic Systems
+Added: Common stock issued for warrants
+Added: Common stock issued to employee for option exercised
+Added: Balance as Balance at December 31, 2020
See notes to Consolidated Financial Statements
5 unchanged sentences
Depreciation expense
−Removed: Amortization of patents
−Removed: Impairment to long lived assets
−Removed: Stock compensation
−Removed: Loss from earnings on China joint venture
−Removed: Inventory reserve
−Removed: Deferred cost reserve
+Added: Amortization of intangibles
+Added: Stock based compensation
+Added: Employees paid in stock
+Added: Consulting expense paid in stock
+Added: Non-cash operating lease expense
+Added: Earnings on China joint venture
Change in fair value of derivative liability
−Removed: Amortization of right-of-use assets
Changes in operating assets and liabilities:
−Removed: Decrease (Increase) in accounts receivable
−Removed: Decrease (Increase) in accounts receivable, related party
−Removed: (Increase) in other receivables
−Removed: Decrease in inventories
−Removed: (Increase) Decrease in advances on contracts
−Removed: (Increase) Decrease in prepaid expenses and other current assets
−Removed: Increase in accounts payable
−Removed: (Decrease) Increase in accounts payable, related party
−Removed: Decrease (Increase) in deferred cost, related party
+Added: Decrease in accounts receivable
+Added: Decrease in accounts receivable, related party
+Added: Decrease (increase) in other assets
+Added: (Increase) decrease in inventories
+Added: Decrease (increase) in advances on contracts
+Added: Decrease (increase) in prepaid expenses and other current assets
+Added: Decrease in accounts payable
+Added: Decrease in accounts payable, related party
+Added: Decrease in deferred cost, related party
Increase in accrued expenses
−Removed: Increase (Decrease) in accrued expenses, related party
−Removed: Decrease in operating lease liability
−Removed: (Decrease) Increase in deferred revenue, related party
+Added: (Decrease) in accrued expenses, related party
+Added: (Decrease) in deferred revenue, related party
Net cash used in operating activities
Cash flows from investing activities:
−Removed: Purchase of intangible assets
Purchase of property and equipment
−Removed: Acquisition of Milestone Education
Net cash used in investing activities
Cash flows from financing activities:
−Removed: Payments for financing transaction
Proceeds from exercise of warrants
−Removed: Net proceeds from Public Placement Offering
+Added: Payments finance lease obligations
+Added: Common stock issued to employee for option exercised
+Added: Net proceeds from note payable
+Added: Net proceeds from Public Offering
Net proceeds from Private Placement Offering
4 unchanged sentences
Supplemental non-cash disclosure of cash flow information:
−Removed: Shares issued to employee for bonuses
−Removed: Shares issued to board of directors for services rendered
−Removed: Shares issued to employees for compensation
−Removed: Shares issued to consultants in lieu of cash payments
−Removed: Sale of Milestone China share, financing transaction
−Removed: Credit from United Systems for defective handpieces
Initial recognition of operating lease-right of use assets
18 unchanged sentences
The dental devices are sold in the United States, Canada and in 60 other countries.
−Removed: To date there have been five (5) medical devices sold in the United States and limited amounts sold internationally, although certain medical devices have obtained CE mark approval and can be marketed and sold in most European countries.
+Added: Certain medical devices have obtained CE mark approval and can be marketed and sold in most European countries.
In June 2017, Milestone Scientific received 510(k) marketing clearance from the U.S.
Food and Drug Administration (FDA) on the CompuFlo ® Epidural Computer Controlled Anesthesia System (“Epidural”).
+Added: Through December 31, 2020 date there have been seven (7) medical devices sold in the United States and limited amounts sold internationally.
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.
1 unchanged sentence
The Company plans to file a new 510(k) application for the device in 2021, subject to sufficient funds being available.
−Removed: In November 2018, Milestone Scientific received a letter from NYSE American LLC (the “Exchange”) stating that the Company was not in compliance with the continued listing standards as set forth in Section(s) 1003(a)(i), (ii), and (iii) of the NYSE American Company Guide (the “Company Guide”).On December 20, 2018, the Company submitted a plan of compliance (the “Plan”) to the Exchange addressing how it intends to regain compliance with Section(s) 1003(a)(i), (ii) and (iii) of the Company Guide by May 20, 2020.
−Removed: On January 24, 2019, the Company received a letter from the Exchange stating that the Company’s Plan has been accepted.
−Removed: The Company is not in compliance with Section(s) 1003(a)(i), (ii) and (iii) of the Company Guide.
In February 2019, Milestone Scientific consummated a public offering and a private placement of common stock.
The public offering generated gross proceeds of approximately $2.0 million for the issuance of 5,715,000 shares of common stock and warrants to purchase 1,428,750 shares of common stock.
−Removed: The warrants terms are 5 years and they are exercisable at $0.50 per share.
−Removed: Subsequent to the public offering the underwriter exercised its over-allotment option and paid approximately $198,000 for 567,400 additional shares of common stock and as well as 141,850 warrants.
+Added: Subsequently the underwriter exercised its over-allotment option and paid approximately $198,000 for 567,400 additional shares of common stock and 141,850 warrants.
Also, in February 2019, the Company generated gross proceeds from a private placement of approximately $250,000 for 714,286 shares of common stock and warrants to purchase 178,571 shares of common stock from Bp4 S.p.A., a principal stockholder of Milestone Scientific, that exercised its right to participate on a pro-rata basis on the aforementioned public offering.
−Removed: Bp4’s CEO is a director of Milestone Scientific and also Chief Executive Officer and Director of Wand Dental, a wholly owned subsidiary of Milestone Scientific.
−Removed: The warrants terms are 5 years and they are exercisable at $0.50 per share.
−Removed: NOTE B- GOING CONCERN AND LIQUIDITY
+Added: In April and June of 2020, the Company completed two Common Stock Offerings generating net proceeds of approximately $4.6 million and $13.4 million, respectively (see Note I).
+Added: NOTE B- LIQUIDITY AND UNCERTAINTIES
The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
−Removed: Milestone Scientific has incurred operating losses and negative cash flows from operating activities in virtually each year since its inception.
−Removed: At December 31, 2019, the Company’s cash on hand of $1.5 million.
−Removed: Based on the expected cash needed for operating activities, the Company’s current cash and liquidity is not sufficient to finance the operating requirements for at least the next 12 months from the filing date of this annual report.
−Removed: These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
−Removed: 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, the reduction in operating expenses and other strategic plans or transactions.
−Removed: 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, we anticipate that our revenue for the second quarter, and possibly the third quarter, will be materially and adversely affected.
−Removed: At this point in time, it is too early to determine an estimate of what the second or third quarter impact will be or the effect Covid-19 may have on our fourth quarter revenue.
−Removed: In addition, it is too early to determine what the effect will be on the anticipated commercialization of our CompuFlow Epidural system as a medical device in 2020.
−Removed: See Note R- Subsequent Events.
−Removed: Management is actively pursuing financing and/or other strategic plans but can provide no assurances that such financing or other strategic plans will be available on acceptable terms, or at all.
−Removed: Further, as a result of the extreme volatility in the financial markets due to the continuing spread of Covid-19, we may not be able to raise capital when needed or in sufficient amounts or execute other strategic plans or transactions.
−Removed: These consolidated financial statements have been prepared with the assumption that the Company will continue as a going concern and will be able to realize its assets and discharge its liabilities in the normal course of business and do not include any adjustments to reflect the possible future effects on the recover ability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern.
+Added: In April and June of 2020, the Company completed two Common Stock Offerings generating net proceeds of approximately $4.6 million and $13.4 million, respectively.
+Added: As of December 31, 2020, cash on hand was approximately $14.2 million, an increase of $12.7 million from December 31, 2019.
+Added: With the combination of these two Common Stock Offerings, the Company has sufficient liquidity to support operations beyond one year from the consolidated financial statement filing date.
+Added: 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 has adversely impact our operations and those of our third-party partners.
+Added: As a result of the reduced hours and closings of dental offices throughout the country and the rest of the world, revenues for the 12 months ended December 31, 2020 were adversely affected.
+Added: Although there was an increase in dental instrument and disposable sell through to dentists beginning in the third quarter of 2020, it is too early to determine what the continuing effect COVID-19 may have on the Company.
+Added: In addition, it is uncertain as to what the effect will be on our commercialization effort of our CompuFlo Epidural and CathCheck system as a medical device.
+Added: Such future developments could have a material adverse effect on our financial results and our ability to conduct business as expected.
+Added: See Note N- Concentrations
NOTE C — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1 unchanged sentence
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of Milestone Scientific and its wholly owned and majority owned subsidiaries, including, Wand Dental (wholly owned), Milestone Advanced Cosmetic (majority owned) and Milestone Medical (majority owned).
−Removed: Milestone Education was a variable interest entity of which Milestone Scientific is the primary beneficiary and is consolidated into Milestone Scientific's financial statements.
−Removed: During 2018, Milestone Scientific purchased the remaining 50% increasing its ownership of Milestone Education to 100%.
All significant, intra-entity transactions and balances have been eliminated in the consolidation.
1 unchanged sentence
Certain reclassifications have been made to the 2019 financial statements to conform to the condensed consolidated 2020 financial statement presentation.
−Removed: These reclassification had no effect on net loss or cash flows as previously reported.
+Added: These reclassifications had no effect on net loss or cash flows as previously reported.
Use of Estimates
3 unchanged sentences
Revenue Recognition
−Removed: Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.
−Removed: To perform revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps:
+Added: The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.
+Added: To perform revenue recognition, the Company performs the following five steps:
identification of the promised goods or services in the contract;
40 unchanged sentences
Milestone Scientific considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
−Removed: At times, such investments, may be more than the Federal Deposit Insurance Corporation insurance limit.
+Added: As of December 31, 2020 and 2019 Milestone Scientific has approximately $13.1 million and $302,000 of investments with short term maturities classified as cash equivalents.
+Added: At times, such cash, may be more than the Federal Deposit Insurance Corporation insurance limit.
+Added: As of December 31, 2020, the Company has approximately $700,000 of cash in excess of FDIC coverage.
Accounts Receivable
3 unchanged sentences
There have not been any significant credit losses incurred to date.
−Removed: As of December 31, 2019 and 2018, accounts receivable (non- related party) was recorded, net of allowance for doubtful accounts of $10,000.
+Added: As of December 31, 2020 and 2019, accounts receivable was recorded, net of allowance for doubtful accounts of $10,000.
Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in, first-out method) or net realizable value.
Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess, slow moving, defective, and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence, and product expiration requirements.
−Removed: As of December 31, 2019 and 2018, inventory was recorded net of a valuation allowance for slow moving and defective inventory of approximately $768,000 and $763,000, respectively.
+Added: The valuation allowance creates a new cost basis for the inventory, and it is not subsequently marked up through a reduction in the valuation allowance based on any changes in the underlying facts and circumstances.
+Added: When the valuation allowance is initially recorded, the increase to the allowance is recognized as an increase in cost of sales.
+Added: The valuation allowance is only reduced if or when the underlying inventory is sold or destroyed, at which time cost of sales recognized would include the previous adjusted cost basis.
Equity Method Investments
10 unchanged sentences
The costs related to these patents are being amortized using the straight-line method over the estimated useful life of the patent.
−Removed: Patents and other developed technology acquired from another business entity will be amortized at the estimated useful life of the patent.
−Removed: These patents and developed technology are recorded at the acquisition cost.
+Added: Patents and other developed technology acquired from another business entity are recorded at acquisition cost and be amortized at the estimated useful life.
Patent defense costs, to the extent applicable, are expensed as incurred.
9 unchanged sentences
Future undiscounted cash flows include estimates of future revenues, driven by market growth rates, and estimated future costs.
+Added: On April 27, 2020, the Company, was granted a loan (the “Loan”) from Savoy Bank.
+Added: in the aggregate amount of approximately $276,000, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.
+Added: The Loan, which was in the form of a Note dated April 27, 2020, matures on April 27, 2022, and bears interest at a rate of 1.00% per annum, payable monthly commencing on November 26, 2020.
+Added: The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties.
+Added: Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020.
+Added: The Company intends to use the entire Loan amount for qualifying expenses.
+Added: Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.
+Added: The company is in the process of applying for loan forgiveness.
Research and Development
8 unchanged sentences
Basic and diluted net loss per common share
−Removed: Basic earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period.
−Removed: In periods where there is net income, we apply the two-class method to calculate basic and diluted net income (loss) per share of common stock, as our Series A Convertible Preferred Stock is a participating security.
−Removed: The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders.
−Removed: In periods where there is a net loss, the two-class method of computing earnings per share does not apply as our Series A Convertible Preferred Stock does not contractually participate in our losses.
−Removed: The Company did not include any portion of outstanding options, warrants or convertible preferred stock in the calculation of diluted loss per common share because all such securities are anti-dilutive for all periods presented.
−Removed: Since Milestone Scientific had net losses for 2019 and 2018, the assumed effects of the exercise of potentially dilutive outstanding stock options, warrants and convertible preferred stock were not included in the calculation as their effect would have been anti-dilutive.
−Removed: Such outstanding options, warrants, and convertible preferred stock totaled 2,336,611 and 9,279,234 at December 31, 2019 and 2018, respectively.
+Added: Milestone Scientific presents “basic” earnings (loss) per common share applicable to common stockholders and, if applicable, “diluted” earnings (loss) per common share applicable to common stockholders pursuant to the provisions of ASC 260, “Earnings per Share”.
+Added: Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding and to be issued during each period.
+Added: The calculation of diluted earnings per common share is like that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options and warrants were issued during the period.
+Added: Since Milestone Scientific had net losses in the year ended December 31, 2020 and 2019, the assumed effects of the exercise of potentially dilutive outstanding stock options, and warrants, were not included in the calculation as their effect would have been anti-dilutive.
+Added: Such outstanding options, and warrants totaled 8,397,836 and 2,336,611 on December 31, 2020 and 2019, respectively.
Fair Value of Financial Instruments
9 unchanged sentences
At December 17, 2019, the Company increased the number of authorized shares available, extinguishing the derivative liability.
−Removed: The roll forward of the liability associated with certain outstanding warrants an stock options which use level 3 inputs is as follows.
−Removed: Refer to Note K for more detail.
+Added: The roll forward of the liability associated with certain outstanding warrants and stock options which use level 3 inputs is as follows.
+Added: Refer to Note I for more detail.
December 31, 2019
1 unchanged sentence
Warrants issued in connection with public offering (See Note I)
+Added: Change in fair value of derivative liability
Employee options reclassified as derivative liability
1 unchanged sentence
Reversal of derivative liability for exercised warrants
−Removed: Change in fair value of derivative securities - not exercised
Reversal of Level 3 of derivative liability to equity upon authorized share increase
6 unchanged sentences
In addition, upon the occurrence of an event that requires a derivative liability to be reclassified to equity, the derivative liability is revalued to fair value at that date.
−Removed: See Note K, Outstanding Equity Instruments in Excess of Authorized Shares.
+Added: See Note I, Outstanding Equity Instruments in Excess of Authorized Shares.
Stock-Based Compensation
1 unchanged sentence
ASC Topic 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the Statements of Operations over the service period, as an operating expense, based on the grant-date fair values.
−Removed: The fair value of the non-employee options was estimated on the date of grant using the Black Scholes option-pricing model.
+Added: The fair value of the non-employee options were also estimated on the date of grant using the Black Scholes option-pricing model.
Recent Accounting Pronouncements
−Removed: In June 2016, the FASB issued a new standard ASU No.2016-13, “Financial Instruments – Credit Losses” (Topic 326).
−Removed: The new standard is intended to replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
−Removed: It will be effective for all entities for fiscal years and interim periods, beginning after December 15, 2022.
−Removed: In November 2016, the FASB issued a new standard ASU No.2016-18, “Statement of Cash Flows – Restricted Cash” (Topic 230).
−Removed: The new standard provides guidance as to address the diversity of treatment of restricted cash on the statement of cash flows.
−Removed: The adoption of this standard did not have a material effect on its presentation within the statement of cash flows.
−Removed: On November 28, 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-13, Fair Value Measurement:
−Removed: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820), which changes the fair value measurement disclosure requirements of ASC 820.
−Removed: This ASU removes certain disclosure requirements regarding the amounts and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of transfers between the levels.
−Removed: This ASU also adds disclosure requirements regarding unrealized gains and losses included in Other Comprehensive Income for recurring Level 3 fair value measurements and the range and weighted average of unobservable inputs used in Level 3 fair value measurements.
+Added: In December 2019, FASB issued ASU 2019-12, “Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes, which clarifies for the accounting treatment for the accounting tax aspects relating, in part, to the intraperiod allocations and foreign subsidiaries.
+Added: ASU 2019-12 is effective for all entities with fiscal years beginning after December 15, 2020.
+Added: The adoption of this standard is not expected to have a material effect on financial statement presentation.
+Added: In January 2020, FASB issued ASU 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), which, generally, provides guidance for investments in entities accounted for under the equity method of accounting.
ASU 2020-01 is effective for all entities with fiscal years beginning after December 15, 2021, including interim periods therein.
−Removed: Early adoption is permitted for any eliminated or modified disclosures upon issuance of ASU 2018-13.
−Removed: The Company intends to adopt this standard in 2020 and does not expect a significant impact from its adoption.
−Removed: On January 1, 2019, we adopted Accounting Standards Update No.
−Removed: 2016-02, Leases (Topic 842) (ASU 2016-02), by ASU 2018-11, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.
−Removed: We adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods.
−Removed: The most significant impact was the recognition of ROU assets and lease liabilities for operating leases.
−Removed: In adopting the new standard, the Company elected to utilize the available package of practical expedients permitted under the transition guidance, which does not require the reassessment of the following:
−Removed: i) whether existing or expired arrangements are or contain a lease, ii) the lease classification of existing or expired leases, and iii) whether previous initial direct costs would qualify for capitalization under the new lease standard.
−Removed: As of the adoption date, the Company identified three operating lease arrangements in which it is a lessee.
−Removed: The adoption of this standard resulted in the recognition of operating lease liabilities and right-of-use assets of $166,292 in the Company’s condensed consolidated balance sheets.
−Removed: The adoption of the standard did not have a material effect on the Company’s statements of operations or statements of cash flows.
−Removed: For information regarding the impact of Topic 842 adoption, see Note P – Commitments.
+Added: The company is analyzing the impact of the adoption of this standard is not expected to have a material effect on financial statement presentation.
+Added: In August 2020, FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
+Added: Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity;
+Added: which, generally, provides guidance for accounting regarding derivatives relating to entities common stock and earnings per share.
+Added: ASU 2020-06 is effective for all entities with fiscal years beginning after December 15, 2021, including interim periods therein.
+Added: The adoption of this standard is not expected to have a material effect on financial statement presentation.
NOTE D — INVENTORIES
6 unchanged sentences
Total inventories
−Removed: At December 31, 2019, there is a reserve for slow moving medical finished goods of approximately $450,000 and damaged slow moving dental finished goods of $318,000.
+Added: At December 31, 2020, there are allowances for slow moving medical finished goods of approximately $450,000 and damaged slow moving dental finished goods of approximately $3,000.
In July 2019, United System issued a credit to the Company for approximately $151,000 for handpieces found to be defective.
1 unchanged sentence
At December 31, 2019, there was a reserve for slow moving medical finished goods of $450,000 and damaged slow moving dental finished goods of $318,000.
+Added: During 2020 $315,000 of previously reserved for dental finished good inventory was destroyed.
The reserve for the medical finished goods was provided due to the delay in commercialization of the intra-articular medical instrument.
NOTE E — ADVANCES ON CONTRACTS
−Removed: The advances on contracts represent funding of future STA, and epidural inventory purchases and epidural replacements parts.
+Added: The advances on contracts represent funding of future dental STA, and epidural inventory purchases and epidural replacements parts.
The balance of the advances as of December 31, 2020 and 2019 is approximately $414,000 and $710,000, respectively.
−Removed: The advance is classified as current based on the estimated annual usage of the underlying inventory.
−Removed: NOTE F – INVESTMENT IN AND TRANSACTIONS WITH UNCONSOLIDATED SUBSIDIARIES
+Added: NOTE F – INVESTMENT IN AND TRANSACTIONS WITH EQUITY INVESTEES
Milestone China Ltd.
In June 2014, Milestone Scientific invested $1 million in Milestone China Ltd.
−Removed: (“Milestone China”) by contributing 772 STA Instruments to Milestone China for a 40% ownership interest.
−Removed: Milestone Scientific recorded this investment under the equity method of accounting.
+Added: (“Milestone China”), by contributing dental instruments to Milestone China for a forty (40%) ownership interest.
+Added: Milestone China owns approximately 75% of Milestone Beijing Medical Equipment Company, Ltd (“Milestone Beijing”).
+Added: Milestone Beijing has primary responsibility for the sales, marketing, and distribution of the Company’s dental products in China.
+Added: Milestone Scientific recorded their investment in Milestone China under the equity method of accounting.
+Added: In first quarter 2020, Milestone China and certain marketing affiliates entered into a plan to merge (the Transaction) into an affiliated manufacturing company, Anhui Maishida Medical Technology, Co.
+Added: Anhui will be the surviving entity after the merger and will have complete responsibility for sales, marketing, and distribution for the Company’s dental products in China.
+Added: However, as of the filing date of this Annual Report, due to the COVID-19 Pandemic, the regulatory documentation for the planned merger has been placed in suspense since applicable government offices are still closed in China and Hong Kong.
+Added: After completion of the Transaction, Milestone Scientific is expected to have an approximate 28.4% direct ownership in Anhui.
+Added: Milestone China and certain marketing affiliates are expected to be dissolved upon completion of the merger and upon the required regulatory filings in China and Hong Kong.
Related Party Transactions
1 unchanged sentence
During 2017 and prior to the payment default during 2018, Milestone Scientific agreed to sell inventory to Milestone China and its agent.
−Removed: During 2018 Milestone Scientific entered into a payment arrangement with Milestone China to satisfy past due receivables from Milestone China and it’s agents which amounted to $2.8 million at the time of the payment arrangement.
−Removed: The payment terms required payments of $200,000 per month beginning in July 2018 through November 2018 and a balloon payment of approximately $1,425,000 during December 2018.
−Removed: Milestone Scientific collected $950,000 under the payment arrangement which resulted in a deferred revenue and deferred cost balance of $1.8 million and $1.25 million, respectively, prior to Milestone China’s default of the payment arrangement.
−Removed: Milestone China failed to make all the payments under the arrangement and due to the default on the arrangement and Milestone China’s liquidity constraints, Milestone Scientific halted shipments to Milestone China and the Company has adjusted the accounts receivable related party and the deferred revenue related party based on the expected payment realization and recorded a reserve against the related deferred cost of $1.25 million during the fourth quarter of 2018.
−Removed: During the year ended December 31, 2019, Milestone Scientific recognized gross revenue associated with 2018 delivered products to Milestone China and its agents of approximately $259,000, offset by accepted returns of approximately $104,000.
−Removed: During 2018, Milestone Scientific recognized $900,000 of related party sales of handpieces and instruments to Milestone China and its agent.
−Removed: As of December 31, 2018, Milestone Scientific had recorded deferred revenues and deferred costs associated with sales to Milestone China and it’s agents of $100,000 and $50,000, respectively.
−Removed: After 2019 collections, no deferred costs or deferred revenue remained as of December 31, 2019.
+Added: During 2018, Milestone Scientific entered into a payment arrangement with Milestone China to satisfy past due receivables from Milestone China and its agents which amounted to $2.8 million at the time of the payment arrangement.
+Added: Milestone Scientific collected $950,000 under this arrangement, until Milestone China defaulted on the payment arrangements.
+Added: Milestone Scientific halted shipments to Milestone China.
+Added: During the year ended December 31, 2020 Milestone Scientific shipped 100 instruments to Milestone China and its agents and recognized revenue of $75,000.
+Added: As of December 31, 2020, the Company has approximately $183,000 of deposits from Milestone China for future shipment of goods included in accrued expenses, related party on the accompanying consolidated balance sheet.
+Added: During the year ended December 31, 2019, Milestone Scientific recognized gross revenue associated with 2018 delivered products to Milestone China and its agents of approximately $259,000, offset by accepted returns of approximately $104,000 that was previously deferred as a result of additional cash collected.
+Added: In April of 2020, the Company entered into an agreement with United Systems, Inc., related party (see Note O) regarding certain handpieces supplied to Milestone China in 2018, that were billed and shipped to Milestone China by United Systems, as well as STA instruments billed to United Systems and delivered to Milestone China, and not paid by Milestone China.
+Added: United Systems sold their entire accounts receivable due from Milestone China for the above- described handpieces and STA instruments for $370,260 to Milestone Scientific.
+Added: Milestone Scientific paid United Systems the sale price as follows;
+Added: $100,000 in cash paid in April 2020, $170,260 in shares of the Company’s Common Stock (priced as of the close of business on April 23, 2020, $1.59 ) issued in June 2020, and $100,000 in cash paid in July 2020.
+Added: The Company is entitled to the cash collections, if and when received, on the accounts receivable due to United Systems prior to this agreement up to approximately $1.4 million.
+Added: The Company has recorded a charge to the consolidated statement of operations for $370,260 during the twelve months ended December 31, 2020.
+Added: In May 2020, Milestone Scientific finalized an agreement for the purchase of Milestone China’s 50% interest in Advanced Cosmetic Systems Inc., for the forgiveness of $900,000 in accounts receivable owed by Milestone China to Milestone Scientific (and previously fully reserved for), resulting in a noncash transaction.
+Added: Milestone China will have the option to repurchase the 50% interest in Advanced Cosmetic Systems within one year from the sale date for $900,000 in cash.
+Added: As a result of the purchase Milestone Scientific will own 100% of Advanced Cosmetic Systems Inc.
+Added: at the expiration of the option period.
Gross Profit Deferral
1 unchanged sentence
In accordance with ASC 323 Equity Method and Joint Ventures, Milestone Scientific has deferred 40% of the gross profit associated with recognized revenue from sales to Milestone China until that product is sold to third parties.
−Removed: At December 31, 2019 and 2018, the deferred profit was $340,476 and $421,800 respectively, which is included in deferred profit, related party in the consolidated balance sheets.
+Added: At December 31, 2020 and 2019, the deferred profit was approximately $243,000 and $340,000, respectively, which is included in deferred profit, related party in the condensed consolidated balance sheets.
For twelve months ended December 31, 2020 and 2019 Milestone Scientific recorded earnings on equity investment of $97,887 and $81,324 respectively, for product sold by Milestone China to third parties.
Equity Method Disclosures
−Removed: As of December 31, 2019, and, 2018, Milestone Scientific's investment in Milestone China was $0.
−Removed: As of December 31, 2019, and 2018, Milestone Scientific’s share of cumulative losses of Milestone China were $4,308,596 and $3,380,388, respectively, which have been suspended.
−Removed: The following table includes summarized financial information (unaudited) of Milestone China:
−Removed: December 31, 2019
+Added: Milestone Scientific, in previous years, reduced its investment in Milestone China to zero and had accumulated losses over the investment balance of approximately $4.3 million as of December 31, 2019 and $ 5.9 million at December 31, 2020, which have been suspended.
+Added: The following includes summarized financial information of Milestone China for the year ending December 31, 2019.
December 31, 2019
7 unchanged sentences
December 31, 2019
+Added: Cost of goods sold
+Added: Other expenses
+Added: In first quarter 2020, Milestone China and certain marketing affiliates entered into a plan to merge (the Transaction) into an affiliated manufacturing company, Anhui Maishida Medical Technology, Co.
+Added: Anhui will be the surviving entity after the merger and will have complete responsibility for sales, marketing, and distribution for the Company’s dental products in China.
+Added: However, as of the filing date of this Quarterly Report, due to the COVID-19 Pandemic, the regulatory documentation for the planned merger has been placed in suspense since applicable government offices are still closed in China and Hong Kong.
+Added: The following includes summarized combined financial information of Milestone China and Anhui for the year ending December 31, 2020.
December 31, 2020
+Added: Current assets
+Added: Non-current assets
+Added: Total assets:
+Added: Liabilities and stockholders’ deficit:
+Added: Current liabilities
+Added: Stockholders' deficit
+Added: Total liabilities and stockholders’ deficit
+Added: December 31, 2020
Cost of goods sold
19 unchanged sentences
Patents-foundation intellectual property
−Removed: Epidural-Apad acquired patents
Patents are amortized utilizing the straight-line method over estimated useful lives ranging from 3 to 20 years.
−Removed: Amortization expense was $53,013 and $814,681 for the year ended December 31, 2019 and 2018, respectively.
+Added: Amortization expense was $53,013 for the year ended December 31, 2020 and 2019, respectively.
The annual amortization expense expected to be recorded for existing intangibles assets for the years 2021 through 2025 is approximately $53,000, $53,000, $47,000, $33,000 and $24,000.
−Removed: On July 13, 2017, Milestone Scientific consummated an Asset Purchase Agreement (the “Agreement”) with APAD Octrooi B.V.
−Removed: and APAD B.V.
−Removed: (each, a “Seller” and collectively, the “Sellers”) pursuant to which Milestone Scientific acquired certain patent rights and other intellectual property rights related to the Sellers’ computer-controlled injection instrument (the “Purchased Assets”) accounted for as an asset acquisition.
−Removed: The patents purchased in the amount of approximately $2,639,000 were capitalized and were expected to be amortized over their three-year estimated useful life.
−Removed: During 2018, the Company determined that the APAD Patents will not be further developed or commercialized before their estimated useful life expires.
−Removed: As such, Management determined that these assets were impaired and a charge of approximately $1.5 million was recorded.
NOTE I — STOCKHOLDERS’ EQUITY
5 unchanged sentences
Also, in February 2019, the Company generated gross proceeds from a private placement of approximately $250,000 for 714,286 shares of common stock and warrants to purchase 178,571 shares of common stock from Bp4 S.p.A., a principal stockholder of Milestone Scientific, that exercised its right to participate on a pro-rata basis on the recent public offering.
−Removed: Bp4’s CEO is a director of Milestone Scientific and also Chief Executive Officer and Director of Wand Dental, a wholly owned subsidiary of Milestone Scientific.
−Removed: The warrants’ terms are 5 years and they are exercisable at $0.50 per share.
+Added: Bp4’s CEO is a director of Milestone Scientific.
+Added: The warrants’ term is 5 years, and they are exercisable at $0.50 per share.
+Added: In the second quarter of 2020, the Company completed two public offerings.
+Added: 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).
+Added: The combined price of the shares and warrants was $0.95 per share.
+Added: The warrants are exercisable at a price of $1.20 per share and have an expiration of three (3) years from the issue date.
+Added: 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).
+Added: The combined price of the shares and warrants was $2.15 per share.
+Added: The warrants are exercisable at $2.60 and expire three (3) years from the issue date.
The following table summarizes information about shares issuable under warrants outstanding at December 31, 2020:
6 unchanged sentences
Outstanding and exercisable at December 31,2019
−Removed: Exercisable at December 31, 2019
+Added: Expired or cancelled
+Added: Outstanding and exercisable at December 31, 2020
PREFERRED STOCK
4 unchanged sentences
SHARES TO BE ISSUED
−Removed: As of December 31, 2019, there were 2,226,473 shares to be issued whose issuance has been deferred under the terms of an employment agreements with the Chief Executive Officer, Chief Financial Officer and other employees of Milestone Scientific.
−Removed: As of December 31, 2018, there were 1,908,814 shares, whose issuance has been deferred under the terms of an employment agreements with the Chief Executive Officer, Chief Financial Officer and other employees of Milestone Scientific.
+Added: As of December 31, 2020 and 2019, there were 2,256,844 and 2,226,473 shares to be issued whose issuance has been deferred under the terms of an employment agreements with the Chief Executive Officer, Chief Financial Officer, and other employees of Milestone Scientific.
Such shares will be issued to each party upon termination of their employment.
3 unchanged sentences
December 31, 2020
−Removed: Shares-to-be-issued, outstanding December 31, 2018
−Removed: Granted in current year
−Removed: Issued in current year
−Removed: Shares-to-be-issued outstanding, December 31, 2019
+Added: December 31, 2019
+Added: Shares-to-be-issued, outstanding January 1, 2020 and 2019, respectively
+Added: Granted in current period
+Added: Issued in current period
+Added: Shares-to be issued outstanding December 31, 2020 and 2019, respectively
OUTSTANDING EQUITY INSTRUMENTS IN EXCESS OF AUTHORIZED SHARES
22 unchanged sentences
Number of shares underlying securities granted
−Removed: The reclassification to derivative liability for the 2016 warrants, 2019 warrants, and employee stock options was approximately $ 0, $376,00 and $422,000, respectively.
−Removed: The 3.4 million shares to be issued were reclassified to derivative liability at the average common stock trading price of $0.42 in the amount of approximately $1.4 million.
During the year ended December 31, 2019 approximately 675,000 liability classified warrants were exercised.
26 unchanged sentences
NOTE J — STOCK OPTION PLANS
−Removed: The 2004 Stock Option Plan provided for the grant of options to purchase up to 750,000 shares of Milestone Scientific's common stock.
−Removed: Options may be granted to employees, officers, directors and consultants of Milestone Scientific for the purchase of common stock at a price not less than the fair market value of the common stock on the date of the grant.
−Removed: Generally, options become exercisable over a three-year period from the grant date and expire five years after the date of grant.
−Removed: There were no shares available for grant at December 31, 2019 or 2018 under this plan.
In June 2011, the stockholders of Milestone Scientific approved the 2011 Stock Option Plan (the "2011 Plan") which originally provided for stock options to our employees, directors and consultants and incentive and non-qualified stock options to purchase up to 2,000,000 shares of common stock and was later amended in 2016 to increase the maximum number of shares reserved for grant to 4,000,000.
Generally, options become exercisable over a three-year period from the grant date and expire five years after the date of grant.
+Added: As of December 31, 2020 the company has 424,425 remaining options available for grants.
+Added: The Milestone Scientific Inc.
+Added: 2020 Equity Incentive Plan provides for awards of restricted common stock and options to purchase up to a maximum 2,000,000 shares of common stock and expires in December 2030.
+Added: Options may be granted to employees, directors, and consultants of Milestone Scientific for the purchase of shares of common stock at a price not less than the fair market value of common stock on the date of grant.
+Added: In general, options become exercisable over a three-year period from the grant date and expire five years after the date of grant.
+Added: For the year ended December 31, 2020 there were no shares issued, and the full 2,000,000 remain available for grants.
Milestone Scientific recognizes compensation expense over the requisite service period and in the case of performance-based options over the period of the expected performance.
−Removed: For the twelve months ended December 31, 2019 and 2018, Milestone Scientific recognized $181,448 and $398,301 of total employee compensation cost, respectively.
+Added: For the twelve months ended December 31, 2020 and 2019, Milestone Scientific recognized approximately $537,000, and $181,000 of total employee compensation cost, respectively, recorded in general and administrative expenses on the statement of operations.
As of December 31, 2020 and 2019, there was $936,442 and $82,526 of total unrecognized compensation cost related to non- vested options, respectively.
−Removed: Milestone Scientific expects to recognize these costs over a weighted average period of 1 year and 1.75 years as of December 31, 2019 and 2018, respectively.
+Added: Milestone Scientific expects to recognize these costs over a weighted average period of 2.98 and 1.75 years as of December 31, 2020 and 2019, respectively.
A summary of option activity for employees under the plans and changes during the years ended December 31, 2020 and 2019 is presented below:
7 unchanged sentences
Options outstanding December 31, 2019
−Removed: Exercisable, December 31, 2018
+Added: Granted during 2020
Exercised during 2020
−Removed: Forfeited or expired
+Added: Forfeited or expired during 2020
Options outstanding December 31, 2020
Exercisable, December 31, 2020
+Added: The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the year ended December 31, 2020, risk free interest rate of 1.73% to 1.81%, Volatility of 89.80% to 92.90% (which is based on the Company’s historical volatility over the expected term), expected term of 3 to 5 years, 0% dividend rate and closing price of the stock of $1.99 to $2.16.
A summary of option activity for non-employees under the plans and changes during the years ended December 31, 2020 and 2019, is presented below:
5 unchanged sentences
Exercised during 2019
−Removed: Forfeited or expired
Options outstanding December 31, 2019
−Removed: Exercisable, December 31, 2018
+Added: Granted during 2020
Exercised during 2020
−Removed: Forfeited or expired
+Added: Forfeited or expired during 2020
Options outstanding December 31, 2020
1 unchanged sentence
The fair value of the non-employee options was estimated on the date of grant using the Black Scholes option-pricing model at the date of grant.
−Removed: For the twelve months ended December 31, 2019 and 2018, Milestone Scientific recognized $2,439 and $9,384 expense related to non-employee options, respectively.
+Added: For the twelve months ended December 31, 2020 and 2019, Milestone Scientific recognized approximately $13,600 and $2,400 expense related to non-employee options, respectively.
+Added: The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the year ended December 31, 2020, risk free interest rate of 0.2% -0.5 %, Volatility of 86.97% to 94.05%, expected term of 5 years, 0% dividend rate and closing price of the stock of $1.65 to $1.75.
NOTE K–EMPLOYMENT CONTRACT AND CONSULTING AGREEMENTS
3 unchanged sentences
The Employment Term automatically renews for a one-year period, from September 1st through August 31st of each successive year (each a “Renewal Term”), unless prior to June 1st of the Employment Term or any Renewal Term, as applicable, either party notifies the other that he or it chooses not to extend the term of employment in accordance with the terms of the Agreement.
+Added: In May 2020, Trombetta resigned as Chief Executive Officer of Wand Dental.
In July 2017, Milestone Scientific entered into a ten-year employment agreement with Leonard Osser, who previously served as the Company’s President and Chief Executive Officer, to serve as Managing Director – China Operations.
27 unchanged sentences
Inventory Reserve
−Removed: Deferred officers' compensation
+Added: Deferred Officer's Compensation
Depreciation and Amortization
−Removed: Net operating loss carryforward
+Added: Net Operating Loss Carryforwards
Valuation allowance
3 unchanged sentences
Net operating losses generated before December 31, 2017 will be available to offset future income, if any, through December 2037.
−Removed: Net operating losses generated in 2018 or after can be carried forward indefinitely.
−Removed: As of December 31, 2019, state net operating losses were approximately 56,700,000.
−Removed: As of December 31, 2019 and 2018, Milestone, Scientific has state net operating loss carry-forwards of approximately $39,400,000 and $30,800,000, respectively.
+Added: During 2020 and 2019 approximately $3.4 million and $4.5 million of net operating losses expired, respectively.
+Added: Net operating losses generated in 2018 or after can be carried forward
+Added: indefinitely.
+Added: State net operating losses were approximately $56,300,000 and 56,700,000 for the periods ended December 31, 2020 and 2019, respectively.
Net operating losses will be available to offset future taxable income, if any, through December 2040.
3 unchanged sentences
As of December 31, 2020, and 2019, state tax liability was approximately $24,000 and $18,000, respectively.
−Removed: Such expense was recognized in the accompanying consolidated financial statements.
+Added: Such expense was recognized in selling, general and administrative expenses in the consolidated financial statements.
Accounting for uncertainties in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, disclosure, and transition.
6 unchanged sentences
State income tax-all states
−Removed: Change in fair value of derivative
+Added: Warrant Revaluation
NOL Expiration
5 unchanged sentences
These segments offer different products and services to different customer base.
+Added: The Company provides general corporate services to its segments;
+Added: however, these services are not considered when making operating decisions and assessing segment performance.
+Added: These services are reported under “Corporate Services” below and these include costs associated with executive management, investor relations, patents, trademarks, licensing agreements, new instruments developments, financing activities and public company compliance.
The following tables present information about our reportable and operating segments:
11 unchanged sentences
Total Product Sales-Dental
−Removed: Domestic-US and Canada
International Rest of World
2 unchanged sentences
Total Product Sales-Medical
−Removed: Domestic-US and Canada
International Rest of World
12 unchanged sentences
For the twelve months ended December 31,2020 an aggregate of approximately 38% of the Company’s net product sales were from one US Distributor.
−Removed: For the twelve months ended December 31, 2018, an aggregate of approximately 53% of Wand Dental’s net product sales were to two customers/distributors (one of which, Milestone China, is a related party), 43% and 10% respectively.
+Added: For the twelve months ended December 31, 2019, an aggregate of approximately 46% of Wand Dental’s net product sales were from one US Distributor.
Accounts receivable for the major customer/distributors amounted to approximately or 69%, of Milestone Scientific's gross accounts receivable as of December 31, 20120.
−Removed: Accounts receivable for the major customer/distributors amounted to approximately or 82%, or 49% and 33% of Milestone Scientific's gross accounts receivable as of December 31, 2018.
−Removed: As of December 31, 2018, Milestone China owed $1,917,990 to Milestone Scientific.
−Removed: Due to the delinquent nature of the scheduled payments and Milestone China’s further liquidity constraints, Milestone Scientific reduced accounts receivable, related party and deferred revenue, related party by $1,817,990 at December 31, 2018.
−Removed: Additionally, Milestone Scientific recorded a reserve of $1,250,928 against the associated deferred cost, related party.
−Removed: Business interruptions, including any interruptions resulting from COVID-19,(see Note R- Subsequent Events) could significantly disrupt our operations and could have a material adverse impact on our business.
−Removed: All of our employees are located in the U.S.
−Removed: In addition to our employees, we rely on (i) distributors, agents and third-party logistics providers in connection with product sales and distribution and (ii) raw material and component suppliers in the U.S., Europe and China.
−Removed: 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.
+Added: Accounts receivable for the major customer/distributors amounted to approximately or 71% of Milestone Scientific's gross accounts receivable as of December 31, 2019.
NOTE O -- RELATED PARTY TRANSACTIONS
United Systems
−Removed: Milestone Scientific has a manufacturing agreement with United Systems (whose controlling shareholder, Tom Cheng, is a significant stockholder of Milestone Scientific), the principal manufacturer of its handpieces, pursuant to which it manufactures products under specific purchase orders, but without minimum purchase commitments.
−Removed: Purchases from this manufacturer were $1.2 million for the years ended December 31, 2019 and 2018.
−Removed: As December 31, 2019 and 2018, Milestone Scientific owed this manufacturer $943,000 and $1.3 million, respectively, which is included in accounts payable, related party on the consolidated balance sheets.
+Added: Milestone Scientific has a manufacturing agreement with United Systems (whose controlling shareholder, Tom Cheng, is a significant stockholder of Milestone Scientific), the principal manufacturers of its handpieces, pursuant to which it manufactures products under specific purchase orders, but without minimum purchase commitments.
+Added: Purchases from this manufacturer were approximately $1,850,000 and $1,200,000 for the twelve months ended December 31, 2020 and 2019, respectively.
+Added: As December 31, 2020 and December 31, 2019, Milestone Scientific owed this manufacturer approximately $362,000 and $943,000, respectively, which is included in accounts payable, related party on the consolidated balance sheets.
In February 2019, Milestone Scientific Board of Directors granted United Systems 285,714 shares of stock at $0.35 or $100,000 for consulting services.
These shares were issued July 2019.
−Removed: During 2018 Milestone Scientific through its wholly owned subsidiary, Wand Dental, entered into an agreement with United Systems.
−Removed: The agreement was a Royalty Agreement for handpieces sold to Milestone China by United Systems.
−Removed: United Systems will pay Wand Dental a royalty equal to the net profit that Wand Dental would have received if the handpieces were sold directly to Milestone China or its Agent.
−Removed: As of December 31, 2019, Wand Dental has deferred royalty income of $342,540 that will be recognized at the earlier of when payment of the royalties is received from United Systems or when collectability is deemed to be assured and is included in accounts receivable, related party and deferred revenue, related party on the consolidated balance sheets.
−Removed: This receivable is included in the reserved receivables in Note F.
−Removed: Also, during the year ended December 31, 2018, a Distribution Agreement between Wand Dental and United Systems was formed.
−Removed: Under the Distribution agreement United Systems purchased 1,000 STA instruments in June 2018, for delivery to Milestone China.
−Removed: Due to the related party nature and collectability concerns Wand Dental has deferred the sale.
−Removed: Milestone Scientific has deferred approximately $750,000 of related party sales of devices to Milestone China under the agreement with United Systems as of December 31, 2018.
−Removed: As of December 31, 2018, Milestone Scientific recorded accounts receivable, related party and deferred revenue, related party of $750,000 and deferred cost, related of $686,365, respectively.
−Removed: The deferred revenue, accounts receivable and deferred cost from this transaction are included in accounts receivable, deferred revenue and deferred cost related, party related to Milestone China disclosed on the consolidated balance sheets.
−Removed: This receivable, deferred revenue and deferred cost is included in the reserved receivables in Note F.
−Removed: In July 2019, United System issued a credit to the Company for approximately $151,000 for handpieces founded to be defective.
−Removed: The Company recorded the credit in cost of sales since the Company previously recorded an allowance for against inventory during 2018.
+Added: On April 29, 2020, the Board of Directors approved the purchase of United Systems accounts receivable ($370,260) See Note F.
Milestone China
Milestone Scientific owns a 40% interest in Milestone China.
−Removed: As of December 31, 2019 and 2018 Milestone Scientific has deferred compensation and accrued pension due to Leonard Osser of approximately $493,000 and $386,000, respectively which is included accrued expenses related party.
−Removed: As of December 31, 2019 and 2018 Milestone Scientific has deferred compensation due to Joseph D'Agostino of $56,800 and $28,400, respectively which is included accrued expenses related party.
−Removed: As of December 31, 2019 and 2018 Milestone Scientific recorded deferred compensation for Gian Trombetta of approximately of and $380,000, and $216,000, respectively which is included accrued expenses related party.
In August 2016, K.
1 unchanged sentence
Expenses recognized on this agreement were $100,000 for years ended December 31, 2020 and 2019, respectively.
+Added: In December 2019, Milestone Scientific extended this agreement for one year at a cost of $100,000.
In January 2017, Milestone Scientific entered into a twelve-month agreement with Innovest S.p.A., a significant stockholder of Milestone Scientific, to provide consulting services.
This agreement will renew for successive twelve-month terms unless terminated by Innovest S.p.A or Milestone Scientific.
−Removed: Expenses recognized on this agreement were $80,000 for years ended December 31, 2019 and 2018, respectively.
+Added: Expenses recognized on this agreement were $60,000 and $80,000 for years ended December 31, 2019 and 2018, respectively.
+Added: This agreement was terminated September 30, 2020.
+Added: As of December 31, 2020 and 2019 Milestone Scientific recorded deferred compensation for Gian Trombetta of approximately of and $275,000, and $380,000, respectively which is included accrued expenses related party.
+Added: The Company engaged Gian Domenico Trombetta, former CEO of Wand Dental Inc.
+Added: as a consultant for a period of twelve months (beginning October 1, 2020 and ending September 30, 2021).
+Added: Gian Domenico Trombetta will provide International Business, Dental Segment information and business contacts to the Company and provide consulting services for new International Business and Dental Segment concepts during this twelve month consulting period.
+Added: Under this agreement, Mr.
+Added: Trombetta is to receive $60,000 payable in Milestone Scientific shares.
The Director of Clinical Affairs’ royalty fee was approximately $267,000 and $403,000 for the years ended December 31, 2020 and 2019, respectively.
−Removed: Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $156,000 and $186,000 for the years ended December 31, 2019, and 2018, respectively.
+Added: Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $156,000 for the both the years ended December 31, 2020, and 2019.
As of December 31, 2020 and 2019 Milestone Scientific owed the Director Clinical Affairs for royalties of approximately $127,000 and $390,000, respectively, which is included in accounts payable, related party and accrued expense, related party.
+Added: On March 2, 2021, the Company entered into a Royalty Sharing Agreement with Leonard Osser, the Company’s Interim Chief Executive Officer, pursuant to which Mr.
+Added: Osser sold, transferred and assigned to the Company all of his rights in and to a certain patent application as to which he is a co-inventor with Mark Hochman, a consultant to the Company, and the Company agreed to pay to Mr.
+Added: Osser, beginning May 9, 2027, half of the royalty (2.5%) on net sales that would otherwise be payable to Mark and Claudia Hochman under their existing Technology Sale Agreement, dated January 1, 2005 and amended from time to time, with the Company, the Hochman's having agreed with the Company pursuant to an addendum to such Technology Sale Agreement dated February 25, 2021 to reduce from five percent (5%) to two and one-half percent (2.5%) the payments due to them under their Technology Sale Agreement on May 9, 2027 and thereafter, with respect to dental products.
+Added: The Agreement confirms an understanding of the Company, Leonard Osser and the Hochman's on sharing the five percent (5%) royalty to be paid by the Company beginning on May 9, 2027 with respect to dental products embodying the new invention.
NOTE P — COMMITMENTS
2 unchanged sentences
In July 2019, the company entered into a new purchase commitment for the delivery of 1,400 STA CompuDent® instruments.
−Removed: As of December 31, 2019, the purchase order commitment was $1,067,073, and advances of $437,512 is reported in inventory advances.
−Removed: In August 2019, the company entered a new purchase commitment for the delivery of 100 Epidural instruments beginning in 2020.
−Removed: As of December 31, 2019, we have an open purchase order of $299,000 for 100 Epidural instruments and have advanced $149,500 against this purchase commitment.
−Removed: The company also has advances on an open purchase order for long lead items for a future purchase order for the manufacturing of Epidural instrument in 2021, in which an advance of $123,649 is reported in inventory advances.
+Added: As of December 31, 2020, the purchase order commitment was $147,224 and advances of $100,090 is reported in advances on contracts.
+Added: As of December 31, 2020, we have an open purchase order of $607,735 Epidural instruments and have advanced $259,435 against this purchase commitment.
+Added: The company also has advances on an open purchase order for long lead items for a future purchase order for the manufacturing of Epidural instrument in 2021 of $55,000.
See Note R- Subsequent Events
Operating Leases
−Removed: In June 2015, the Company amended its original office lease of approximately 6,851 square feet for its headquarters in Livingston, New Jersey.
−Removed: Under the amendment, the Company leased an additional 774 square feet of rentable area of the building and extended the term of the lease through January 31, 2020 at a monthly cost of $12,522.
−Removed: The Company had an option to further extend the term of the lease, however, this option was not included in the determination of the lease’s right-of-use asset or lease liability.
−Removed: Per the terms of the lease agreement, the Company does not have a residual value guarantee.
−Removed: The Company will also be required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts.
−Removed: These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.
−Removed: In August 2019, the Company made the decision to not renew the existing office lease and instead signed a seven (7) year lease in a new facility (the “Roseland Facility”).
−Removed: The new facility is located in Roseland, New Jersey, the monthly lease payment is escalating, with a range of $9,275 - $10,898, and commences April 1, 2020.The Company is also responsible for electric charge equal to $2.00 per square foot which is equal to $11,130 annually, which shall be paid in equal monthly installments of $927.50.
−Removed: The Company will also be required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts.
+Added: As of December 31, 2020, total operating lease right-of-use assets were $597,770 and total operating lease liabilities were $630,012, of which $72,031 and $557,981 were classified as current and non-current, respectively.
+Added: As of December 31, 2019, total operating right-of-use assets were $15,977 and total operating lease liabilities (current) were $15,977.
+Added: During the year ended December 31, 2020, the Company also entered into a five-year lease for copiers which resulted in the recognition of property and equipment and total finance lease liabilities of $34,683.
+Added: As of December 31, 2020, total finance lease liabilities were $36,403, of which $7,796 and $28,607 were classified as current and non-current, respectively.
+Added: In August 2019, the Company made the decision to not renew the its existing office lease for its corporate headquarters located in Livingston, New Jersey and instead signed a new seven (7) year lease in a new facility located in Roseland, New Jersey (the “Roseland Facility”), which commenced of January 8, 2020.
+Added: Under the Roseland Facility lease, rent payments commence on April 1, 2020 and the monthly lease payments escalate annually on January 1 of each year, and range from $9,275 to $10,898 per month over the lease term.
+Added: The Company is also required to pay a fixed electric charge equal to $2.00 per square foot which is paid in equal monthly installments over the lease term or $11,130 annually.
+Added: These fixed monthly payments have been included in the measurement of the operating lease liability and related operating lease right-of-use asset as the Company has elected the practical expedient to not separate lease and non-lease components for all leases.
+Added: The Company is also required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts, which are accounted for as variable lease expenses.
The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:
5 unchanged sentences
The components of lease expense as of December 31, 2020 were as follows:
−Removed: As of December 31,2019
−Removed: Operating lease expense
−Removed: Total lease expense
−Removed: Other information
−Removed: Cash paid for amounts included in the measurement of lease liabilities:
−Removed: Operating cash flows from operating leases
+Added: Cash paid for operating lease liabilities
+Added: Cash paid for finance lease liabilities
Right-of-use assets obtained in exchange for new operating lease liabilities (1)
−Removed: Weighted-average remaining lease term - operating leases
+Added: Property and equipment obtained in exchange for new finance lease liabilities
+Added: Weighted Average Remaining Lease Term
+Added: Finance leases
+Added: Operating leases
Weighted-average discount rate - operating leases
1 unchanged sentence
As of December 31, 2020
+Added: As of December 31, 2019
Total lease payments
Present value of lease liabilities
−Removed: Total lease payments presented in the table above excludes legally binding minimum lease payments for operating leases signed for a the Roseland Facility that will commence April 1, 2020.
−Removed: Milestone Scientific had not taken physical control of the Roseland Facility as of December 31, 2019 and as a result has not recorded lease liabilities or right of use assets for the Roseland Facility as of December 31, 2019.
(3) Other Commitments
4 unchanged sentences
The Director of Clinical Affairs’ royalty fee was approximately $267,000 and $403,000 for the years ended December 31, 2020 and 2019, respectively.
−Removed: Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $156,000 and $186,000 for the years ended December 31, 2019, and 2018, respectively.
+Added: Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $156,000 for the years ended December 31, 2020, and 2019, respectively.
As of December 31, 2020 and 2019 Milestone Scientific owed the Director Clinical Affairs for royalties of approximately $127,000 and $390,000, respectively, which is included in accounts payable, related party and accrued expense, related party.
−Removed: NOTE Q — PENSION PLAN
+Added: NOTE Q — BENEFIT PLAN
Milestone Scientific has a Defined Contribution Plan that allows eligible employees to contribute part of their salary through payroll deductions.
2 unchanged sentences
Since the year ended December 31, 2020, the Company issued 147,625 shares of common stock for warrants exercised at $0.50 for proceeds of $73,813.
−Removed: 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.
−Removed: Additionally, the continued spread of the virus could negatively impact the manufacture, supply, distribution and sale of our products and our financial results.
−Removed: 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.
−Removed: Such developments could have a material adverse effect on our financial results and our ability to conduct business as expected.
+Added: Since the year ended December 31, 2020, the Company issued 1,190,700 shares of common stock for warrants exercised at $1.20 for proceeds of $1,428,840.
+Added: Since the year ended December 31, 2020, the Company issued 580,601 shares of common stock for warrants exercised at $2.60 for proceeds of $1,509,563.
+Added: In January 2021, the company entered into a new purchase commitment for the delivery of 2,000 STA CompuDent® instruments.
+Added: The purchase order commitment was $1,518,364.
+Added: On March 2, 2021, the Company entered into a Royalty Sharing Agreement with Leonard Osser, the Company’s Interim Chief Executive Officer, pursuant to which Mr.
+Added: Osser sold, transferred and assigned to the Company all of his rights in and to a certain patent application as to which he is a co-inventor with Mark Hochman, a consultant to the Company, and the Company agreed to pay to Mr.
+Added: Osser, beginning May 9, 2027, half of the royalty (2.5%) on net sales that would otherwise be payable to Mark and Claudia Hochman under their existing Technology Sale Agreement, dated January 1, 2005 and amended from time to time, with the Company, the Hochman's having agreed with the Company pursuant to an addendum to such Technology Sale Agreement dated February 25, 2021 to reduce from five percent (5%) to two and one-half percent (2.5%) the payments due to them under their Technology Sale Agreement on May 9, 2027 and thereafter, with respect to dental products.
+Added: The Agreement confirms an understanding of the Company, Leonard Osser, and the Hochman's on sharing the five percent (5%) royalty to be paid by the Company beginning on May 9, 2027 with respect to dental products embodying the new invention.
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.