Item 5. Market for Registrant’s Common Equity
Item 5. Market for Common Equity, and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
Market Information
Since June 1, 2015, our common stock has been listed on the NYSE American under the symbol “MLSS”. The following table sets forth the high and low sales prices of Milestone’s common stock for the periods presented.
2023
High
Low
2022
High
Low
First Quarter
$
1.00
$
0.46
First Quarter
$
2.20
$
1.13
Second Quarter
$
1.22
$
0.72
Second Quarter
$
1.60
$
0.75
Third Quarter
$
1.35
$
0.81
Third Quarter
$
1.27
$
0.71
Fourth Quarter
$
1.00
$
0.56
Fourth Quarter
$
0.87
$
0.45
Holders
As of March 29, 2024, we had approximate ly 97 stockholders of record of our common stock. W e believe that, in addition to the record owners, we have approximately 3,318 beneficial owners of our common stock.
Dividends
The holders of common stock are entitled to receive such dividends as may be declared by Milestone Scientific’s Board of Directors. Milestone Scientific has not paid and does not expect to declare or pay any dividends in the foreseeable future.
Sales of Unregistered Securities
Not applicable.
ITEM 6. Selected Financial Data
Milestone Scientific is a “smaller reporting company” as defined by Regulations S-K and as such, is not required to provide the information contained in this item pursuant to Regulation S-K.
21
ITEM 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations
The following discussions of the financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this annual report. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements, within the meaning of section 21E of the Exchange Act, which involve risks and uncertainties. The actual results may differ materially from those anticipated in these forward-looking statements. See "Risk Factors" elsewhere in this Form 10-K.
OVERVIEW
Milestone Scientific is a biomedical technology company that patents, designs, develops and commercializes innovative diagnostic and therapeutic injection technologies and devices for medical and dental use. Since our inception, we have engaged in pioneering proprietary, innovative, computer-controlled injection technologies, and solutions for the medical and dental markets. We believe our technologies are proven and well established. Our common stock was initially listed on the NYSE American on June 1, 2015, and trades under the symbol “MLSS”.
We have focused our resources on redefining the worldwide standard of care for injection techniques by making the experience more comfortable for the patient by reducing the anxiety and stress of receiving injections from the healthcare provider. Our computer-controlled injection devices make injections precise, efficient, and virtually painless.
We have developed a proprietary, revolutionary, computer-controlled anesthetic delivery device, our DPS Dynamic Pressure Sensing Technology® System, to meet the needs of various subcutaneous drug delivery injections and fluid aspiration – enabling healthcare practitioners to achieve multiple unique benefits that cannot currently be accomplished with the 160-year-old manual syringe. Our proprietary DPS Dynamic Pressure Sensing technology is our technology platform that advances the development of next-generation devices. It regulates flow rate and monitoring pressure from the tip of the needle, through platform extensions for local anesthesia for subcutaneous drug delivery, used in various dental and medical injections. It has specific medical applications for epidural space identification in regional anesthesia procedures.
Our device, using The Wand®, a single use disposable handpiece, is marketed in dentistry under the trademark CompuDent®, and STA Single Tooth Anesthesia System® and is suitable for all dental procedures that require local anesthetic. The dental devices currently are sold in the United States, Canada and in over 41 other countries. Milestone Scientific also has 510(k) marketing clearance from the U.S. Food and Drug Administration (FDA) on the CompuFlo® Epidural Computer Controlled Anesthesia System in the lumbar, thoracic and cervical thoracic junction of the spine region. In addition, Milestone Scientific has obtained CE mark approval and can be marketed and sold in most European countries.
Our recent receipt of chronology-Specific CPT Code for the Company's technology by the American Medical Association marks an important milestone, that could increase the potential number of anesthesia pain management clinics adopting the CompuFlo instrument. A CPT code expands the potential for reimbursement of epidural procedures in pain management utilizing the CompuFlo Epidural System., which should help accelerate the commercial roll-out of CompuFlo in the U.S
Milestone Scientific and its subsidiaries currently hold over 245 U.S. and foreign patents, and many patents pending and patent applications. The Company’s patents and patent applications relate to drug delivery methodologies, Peripheral Nerve Block, drug flow rate measurement, pressure/force computer-controlled drug delivery with exit pressure, dynamic pressure sensing, automated rate control, automated charging, drug profiles, audible and visual pressure/force feedback, tissue identification, identification of a target region drug delivery injection unit, drug drive unit for anesthetic, handpiece, and injection device.
Milestone Scientific remains focused on advancing efforts to achieve the following three primary objectives:
●
Establishing Milestone’s DPS Dynamic Pressure Sensing technology platform as the standard-of-care in painless and precise drug delivery, providing for the first time, objective visual and audible in-tissue pressure feedback, and continuing to expand platform applications;
●
Following obtaining successful FDA clearance of our first medical device, Milestone Scientific is transitioning from a research and development organization to a commercially focused medical device company; and
●
Expanding our global footprint of our CompuFlo Epidural and CathCheck System by utilizing a targeted field sales force and partnering with distribution companies worldwide.
22
Our dental devices have been used to administer over 92 million injections worldwide. Each of our devices has a related single use disposable handpiece, leading to a continuing revenue stream following the sale of the device. At present, we sell disposable handpieces unique to our legacy product (the Wand and CompuDent) to users who have not upgraded to our current dental product, the STA Single Tooth Anesthesia System.
Building on the success of our proprietary, core technology platform for dental injections, and desiring to pursue other growth opportunities, we have begun to expand the uses and applications of our proprietary, patented technologies to achieve greater operational efficiencies, enhanced patient safety and therapeutic adherence, patient satisfaction, and improved quality of care across a broad range of medical specialties.
We intend to continue to expand the uses and applications of our DPS Dynamic Pressure Sensing technology. We believe that we and our technology solutions are recognized by key opinion leaders (i.e., academics, anesthesiologists and practicing dentists whose opinions are widely respected), industry experts and medical and dental practitioners as a leader in the emerging, computer-controlled injection industry.
The Single Tooth Anesthesia System (Dental)
Since its market introduction in early 2007, the STA Single Tooth Anesthesia System and prior C-CLAD devices have been used to deliver over 92 million safe, effective, and comfortable injections. The instrument has also been favorably evaluated in numerous peer-reviewed, published clinical studies and associated articles. Moreover, there appears to be a growing consensus among users that the STA Instrument is proving to be a valuable and beneficial instrument that is positively impacting the practice of dentistry worldwide.
Medical Market Product
In June 2017, we received FDA regulatory clearance to sell the CompuFlo Epidural Computer Controlled Anesthesia System in the United States for epidural injections.
In May, 2022, the Company received a chronology-specific CPT Code for the Company’s technology by the American Medical Association, which marks an important milestone that could increase the potential number of anesthesia pain management clinics adopting the CompuFlo instrument. Effective January 1, 2023, this temporary tracking code allows clinicians to submit claims to healthcare insurance providers using the Company’s technology for Epidural Sterile Injections in the lumbar, thoracic, and cervical thoracic junction of the spinal region for reimbursement. A CPT code expands the potential for reimbursement of epidural procedures in pain management utilizing the CompuFlo Epidural System, which should help accelerate the commercial roll-out of CompuFlo in the United States.
On February 27, 2023, the Company announced that its CompuFlo® Epidural System has received 510(k) FDA clearance for use in the thoracic region of the spine, including the cervical thoracic junction. This approval expands upon the Company’s prior approval of CompuFlo for use within the lumbar region of the spine, where the focus has been epidural analgesia during labor and delivery procedures.
23
The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category:
2023
Domestic: US
Dental
Medical
Grand Total
Instruments
$
1,002,697
$
1,000
$
1,003,697
Handpieces
4,270,898
12,000
4,282,898
Accessories
75,285
-
75,285
Grand Total
$
5,348,880
$
13,000
$
5,361,880
International: Rest of World
Instruments
$
1,251,354
$
25,000
$
1,276,354
Handpieces
2,845,734
28,000
2,873,734
Accessories
45,476
-
45,476
Grand Total
$
4,142,564
$
53,000
$
4,195,564
International: China
Instruments
$
270,000
$
-
$
270,000
Handpieces
-
-
-
Accessories
-
-
-
Grand Total
$
270,000
$
-
$
270,000
Total Product Sales
$
9,761,444
$
66,000
$
9,827,444
2022
Domestic: US
Dental
Medical
Grand Total
Instruments
$
524,715
$
7,500
$
532,215
Handpieces
2,653,914
25,250
2,679,164
Accessories
78,493
78,493
Grand Total
$
3,257,122
$
32,750
$
3,289,872
International: Rest of World
Instruments
$
1,413,525
$
-
$
1,413,525
Handpieces
3,391,748
20,000
3,411,748
Accessories
60,797
-
60,797
Grand Total
$
4,866,070
$
20,000
$
4,886,070
International: China
Instruments
$
270,000
$
-
$
270,000
Handpieces
359,964
-
359,964
Accessories
-
-
-
Grand Total
$
629,964
$
-
$
629,964
Total Product Sales
$
8,753,156
$
52,750
$
8,805,906
24
Current Product Platform
See Item 1. Description of Business.
Summary of Critical Accounting Estimates
The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Milestone Scientific evaluates its estimates, including those related inventory valuation and cash flow assumptions regarding evaluations for going concern considerations. Milestone Scientific bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not clear from other sources. Actual results may differ from those estimates under different assumptions or conditions.
Our accounting policies are more fully described in Note C of the financial statements to this Annual Report on Form 10-K. As disclosed in Note C, the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates. We believe that the following discussion addresses our most critical accounting estimates, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
Assessment of our Ability to Continue as a Going Concern
In accordance with (“ASC”) 205-40, “Presentation of Financial Statements – Going Concern”, the Company continually evaluates 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. Milestone Scientific has incurred operating losses and negative cash flows from operating activities in virtually each year since its inception.
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. The Company has incurred total losses since inception of $123.3 million. The operating losses were $7.1 million and $8.8 million, for the years ended December 31, 2023, and 2022, respectively. On December 31, 2023, Milestone Scientific had cash and cash equivalents and marketable securities of approximately $6.0 million and working capital of approximately $7.7 million. For the twelve months ended December 31, 2023 and 2022, we had cash flows used in operating activities of approximately $5.3 million and $6.0 million, respectively.
Management has prepared cashflow forecasts covering a period of 12 months from the date of issuance of these financial statements. These forecasts include several revenue and operating expense assumptions which indicate that the Company’s current cash and liquidity is sufficient to finance the operating requirements for at least the next 12 months. Additionally, the Company was approved on September 12, 2023 to sell Net Operating Losses through the New Jersey Technology Business Tax Certificate Transfer Program (“NJ NOL Program”), a program administered by the New Jersey Economic Development Authority (“NJEDA”). Management believes this program will generate positive cash flow in the near future. 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, and a reduction in operating expenses. However, the Company’s continued operations will depend on its ability to raise additional capital through various potential sources until it achieves profitability, if ever.
Inventories
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 and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence and product expiration requirement and regulations.
25
Results of Operations
The following table sets forth the consolidated results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Year end December 31, 2023, compared to year ended December 31, 2022.
December 31, 2023
December 31, 2022
Operating results:
Product sales, net
$
9,827,444
$
8,805,906
Cost of products sold
3,034,832
3,905,092
Gross profit
6,792,612
4,900,814
Operating expenses:
Selling, general and administrative expenses
13,135,796
12,514,323
Research and development expenses
701,378
1,150,209
Depreciation and amortization expense
61,912
63,755
Total operating expenses
13,899,086
13,728,287
Loss from operations
(7,106,474
)
(8,827,473
)
Other income, and interest net
125,527
54,607
Net loss
(6,980,947
)
(8,772,866
)
Net loss attributable to noncontrolling interests
(51,843
)
(66,735
)
Net loss attributable to Milestone Scientific Inc.
$
(6,929,104
)
$
(8,706,131
)
Net sales for year ended December 31, 2023, compared to year ended December 31, 2022
2023
2022
Change
Dental
$
9,761,444
$
8,753,156
$
1,008,288
Medical
66,000
52,750
$
13,250
Total sales, net
$
9,827,444
$
8,805,906
$
1,021,538
Consolidated revenue for the years ended December 31, 2023 and 2022 was approximately $9.8 million and $8.8 million, respectively, an increase of approximately $1.0 million. As of January 3, 2023, the Company launched an E-Commerce platform, selling and shipping the STA Single Tooth Anesthesia System® (STA) and handpieces directly to end users, including dental offices and dental groups, within the U.S. E-commerce revenue for the year ended December 31, 2023 was approximately $4.8 million. The Company ended the agreement with its major United States distributor, Henry Schein, as of December 31, 2022.
26
The Company recorded no revenue from Henry Schein for the year ended December 31, 2023, compared to approximately $2.6 million recorded for the year ended December 31, 2022. Revenue from other U.S. distributors was approximately $485,000 for the year ended December 31, 2023, a decrease of $97,000 compared to December 31, 2022. The Company terminated all non-exclusive agreements with other distributors in the US in September 2023. For the year ended December 31, 2023, international revenue was approximately $4.1 million, a decrease of $724,000 compared to December 31, 2022. For the year ended December 31, 2023, the Company reported approximately $270,000 revenue from China, a decrease of approximately $356,000.
Gross Profit for years ended December 31, 2023, and 2022 were as follows:
2023
2022
Change
Dental
$
7,030,018
$
5,446,175
$
1,583,843
Medical
(237,406
)
(545,361
)
$
307,955
Total gross profit
$
6,792,612
$
4,900,814
$
(1,891,798
)
Consolidated gross profit for the year ended December 31, 2023 increased by approximately 1.9 million or 40%, compared to the same period in 2022. The increase was due to higher margins in sales associated with the launch of E-Commerce platform. The Company recorded approximately $258,000 and $550,000 allowance for medical inventory that was obsolete and or expired for the years ended December 31, 2023 and 2022, respectively.
Selling, general and administrative expenses for years ended December 31, 2023, and 2022 were as follows:
2023
2022
Change
Dental
$
4,330,219
$
3,225,032
$
1,105,187
Medical
3,381,551
4,183,983
(802,432
)
Corporate
5,424,026
5,105,308
318,718
Total selling, general and administrative expenses
$
13,135,796
$
12,514,323
$
621,473
Consolidated selling, general and administrative expenses for the years ended December 31, 2023 and 2022 were approximately $13.1 million and $12.5 million, respectively. The increase of approximately $621,000 is due to several factors. Employee salaries and benefits expenses increased approximately $44,000 for the year ended December 31, 2023 compared to the same period in 2022. The Company decreased quality control, regulatory, and travel expenses by approximately $367,000 compared to the same period in 2022. The Company increased professional fees, and royalties’ expenses by approximately $317,000 compared to the same period in 2022.With the launch of the E-Commerce platform marketing and warehousing expense increased for the year ended December 31, 2023, by approximately $320,000 compared to the same period in 2022. The Company recorded an increase in other selling, general and administrative expenses of approximately $306,000 for the year ended December 31, 2023, compared to the same period in 2022 due to the launch of E-Commerce.
Research and Development for years ended December 31, 2023, and 2022 were as follows:
2023
2022
Change
Dental
$
567,357
$
1,095,523
$
(528,166
)
Medical
86,426
54,686
31,740
Corporate
47,595
-
47,595
Total research and development
$
701,378
$
1,150,209
$
(448,831
)
Consolidated research and development expenses for the years ended December 31, 2023 and 2022 were approximately $701,000 and $1.2 million respectively. The decrease of approximately $449,000 is related to the Company's near completion in developing the next generation STA Single Tooth Anesthesia System, offset by an increase in medical cost for the epidural consumables.
Profit (Loss) from Operations for 2023 and 2022 were as follows:
2023
2022
Change
Dental
$
2,128,199
$
1,121,815
$
1,006,384
Medical
(3,708,170
)
(4,788,105
)
1,079,935
Corporate
(5,526,503
)
(5,161,183
)
(365,320
)
Total loss from operations
$
(7,106,474
)
$
(8,827,473
)
$
1,720,999
27
The loss from operations was approximately $7.2 million and $8.8 million for the years ended December 31, 2023 and 2022, respectively, a decrease of approximately $1.7 million. As stated above, the decrease in the loss from operations is driven by higher dental sales, and increased margins, which offset the higher selling, general and administrative expenses during period.
Liquidity and Capital Resources
C ash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
2023
2022
Change
Cash flows used in operating activities
$
(5,326,129
)
$
(6,031,996
)
$
705,867
Cash flows used in investing activities
(2,972,172
)
(8,527
)
(2,963,645
)
Cash flows provided by (used in) financing activities
2,560,735
(8,544
)
2,569,279
Total
$
(5,737,566
)
$
(6,049,067
)
$
311,501
Operating Activities
Cash flows used in operating activities decreased $0.7 million from $6.0 million for the year ended December 31, 2022 compared to $5.3 million for the year ended December 31, 2023. The decrease was driven by an increase of $0.8 million in cash used in work capital activities offset by employees paid in common stock of $0.1 million.
Investing Activities
Cash flows used in investing activities increased $3.0 million for the year ended December 31, 2023 compared to an immaterial amount for the year ended December 31, 2022. The increase in cash used in investing activities was driven by the Company’s purchase of marketable securities of $7.9 million, offset by the sale of $5.0 million of marketable securities during the current year.
Financing Activities
Cash flows provided by financing activities increased $2.6 million for the year ended December 31, 2023, compared to an immaterial amount for the year ended December 31, 2022. The increase in cash used in financing activities was the result of gross proceeds of approximately $3.0 million received from a public offering of common stock, offset by $0.4 million of offering costs associated with the public offering during the current year.
Consideration of Company ’ s ability to continue as a going concern.
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. The Company has incurred total losses since inception of $123.3 million. The operating losses were $7.1 million and $8.8 million, for the years ended December 31, 2023, and 2022, respectively. On December 31, 2023, Milestone Scientific had cash and cash equivalents and marketable securities of approximately $6.0 million and working capital of approximately $7.7 million. For the twelve months ended December 31, 2023 and 2022, we had cash flows used in operating activities of approximately $5.3 million and $6.0 million, respectively. Additionally, the Company was approved on September 12, 2023 to sell Net Operating Losses through the New Jersey Technology Business Tax Certificate Transfer Program (“NJ NOL Program”), a program administered by the New Jersey Economic Development Authority (“NJEDA”). Management believes this program will generate positive cash flow in the near future.
Management has prepared cashflow forecasts covering a period of 12 months from the date of issuance of these financial statements. These forecasts include several revenue and operating expense assumptions which indicate that the Company’s current cash and liquidity is sufficient to finance the operating requirements for at least the next 12 months. 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, and a reduction in operating expenses. However, the Company’s continued operations will depend on its ability to raise additional capital through various potential sources until it achieves profitability, if ever.
28
Contractual Obligations
The impact of the consolidated contractual obligations on December 31, 2023, expected on the liquidity and cash flows in future periods, is as follows:
Payments Due by Period
Total
Less than
1 Year
1-3 Years
3-5 Years
Operating lease obligations
$
1,055,975
$
144,300
$
911,675
$
-
Purchase obligations (1)
$
2,382,630
$
1,782,333
$
600,297
$
-
Total
$
3,438,605
$
1,926,633
$
1,511,972
$
-
Recent Accounting Pronouncements
See “Note C - Summary of Significant Accounting Policies” to the consolidated financial statements for explanation of recent accounting pronouncements impacting Milestone Scientific.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Milestone Scientific is a “smaller reporting company” as defined by Regulation S-K and, as such, is not required to provide the information required by this item.
Item 8. Financial Statements
The financial statements of Milestone Scientific required by this Item are set forth beginning on page F-1.
Item 9. Change in and Disagreements with Accountants on Accounting and Financial Disclosure
None