FORWARD-LOOKING STATEMENTS

Certain statements made in this Annual Report on Form 10-K are “forward-looking statements”“forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements of Milestone Scientific Inc. (“(“Milestone Scientific”Scientific”) to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Milestone Scientific’s’s plans and objectives are based, in part, on assumptions involving the continued expansion of its business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Milestone Scientific. Although Milestone Scientific believes that its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. In light ofConsidering the significant uncertainties inherent in the forward-looking statements included herein, particularly in view of Milestone Scientific’sour history of operating losses that are expected to continue, requiring additional funding which we may be unable to raise capital when needed (which may force us to delay, curtail or eliminate commercialization efforts of our CompuFlo Epidural Computer Controlled Anesthesia System), the early stage operations of and relatively lack of acceptance of our medical products, relying exclusively on two third parties to manufacture our products, changes in our informal manufacturing arrangements made by the manufacturer of our products and disruptions at the manufacturing facility of our manufacturers, including shortages of or delays in obtaining chips and other components, exposes us to risks that may harm our business, raising additional funds by issuing securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights, if physicians do not accept nor use our CompuFlo Epidural Computer Controlled Anesthesia System, our ability to generate revenue from sales will be materially impaired, exposure to the risks inherent in international sales and operations, including China, and developments by competitors may render our products or technologies obsolete or non-competitive, the inclusion of such information should not be regarded as a representation by Milestone Scientific or any other person that the objectives and plans of Milestone Scientific will be achieved. Milestone Scientific undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

Milestone Scientific is the owner of the following registered U.S. trademarks: CompuDent®; CompuMed®; CompuFlo®; DPS Dynamic Pressure Sensing Technology®; Milestone Scientific ®; the Milestone logo ®; SafetyWand®; STA Single Tooth Anesthesia System®; and The Wand ®.

PART

PART I

Item 1. Description of Business

All references in this report to “Milestone“Milestone Scientific, Inc.,” “us,” “our,” “we,” orthe “Company “or “Milestone” refer to Milestone Scientific Inc., and its consolidated subsidiaries, Wand Dental, Inc., Milestone Advanced Cosmetic Inc. and Milestone Medical (all described below)Inc. and affiliate, Milestone Education (described below), unless the context otherwise indicates. Milestone Scientific is the owner of the following registered U.S. trademarks: CompuDent®CompuDent®; CompuMed®CompuMed®; CompuFlo®CompuFlo®; DPS Dynamic Pressure Sensing Technology®technology®; Milestone Scientific ®; ®; CathCheck™, the Milestone logo ®; SafetyWand®®; Safety Wand®; STA Single Tooth Anesthesia System®System®; and The Wand ®.®. 

Item 1. Business

Overview 

Milestone Scientific was incorporated in the State of Delaware in August 1989. Milestone Scientific has developed a proprietary, computer-controlled anesthetic delivery instrument, through the use of device, using The Wand®Wand®, a single use disposable handpiece. The instrumentdevice is marketed in dentistry under the trademark CompuDent®CompuDent®, and STA Single Tooth Anesthesia System®System® and in medicine under the trademark CompuMed®. CompuDent® is suitable for all dental procedures that require local anesthetic. CompuMed® is suitable for many medical procedures regularly performed in Plastic Surgery, Hair Restoration Surgery, Podiatry, Colorectal Surgery, Dermatology, Orthopedics and a number of other disciplines. The dental instrumentsdevices are sold in the United States, Canada and in over 47 countries abroad. To date there have been noapproximately 60 other countries. Certain medical instruments sold in the United States and limited amounts sold internationally, although certain medical instrumentsdevices have obtained CE mark approval and now can be marketed and sold in most European countries. In June 2017, Milestone Scientific's products are manufactured by a third-party contract manufacturer.Scientific received 510(k) marketing clearance from the U.S. Food and Drug Administration (FDA) on the CompuFlo® Epidural Computer Controlled Anesthesia System.  

In May 2014, Milestone Scientific completedis a private placement (the “May 2014 Financing”), which raised aggregate gross proceeds $10 million, frombiomedical technology research and development company that patents, designs, develops and commercializes innovative diagnostic and therapeutic injection technologies and devices for medical, dental and cosmetic use. Since our inception, we have engaged in pioneering proprietary, innovative, computer-controlled injection technologies, and solutions for the sale of $3 million ofmedical and dental markets. We believe our common stock, $.001 par value per share (“common stock”) (two million shares at $1.50 per share)technologies are proven and $7 million of our Series A Convertible Preferred Stock (“preferred stock”) (7,000 shares at $1,000 per share), convertible into common stock at $2.37 per share (as adjusted to date) on May 14, 2019, or $1.50 per share if certain conditions are not met; both subject to anti-dilution adjustment.

In July 2014, Milestone Scientific acquired all of the outstanding shares of an inactive Florida corporation and changed its name to Wand Dental, Inc. ("Wand Dental"). In September 2014, that corporation was merged into a Delaware corporation, retaining the same name and capitalization. On July 1, 2014, Wand Dental was capitalized with cash and the contribution by Milestone Scientific of its dental business and related dental assets including the exclusive license of Milestone Scientific's patents, trademarks, and technology for use in the dental marketplace.

On June 1, 2015, ourwell established. Our common stock was initially listed on the NYSE MKT LLC (“NYSE MKT”)American on June 1, 2015 and trades under the ticker symbol “MLSS”.

In June 2016, we raised an additional $2.0 million of gross proceeds in a private placement of one million shares of common stock, at a price of $2.00 per share, to the same investors that participated in the May 2014 financing.

In the second quarter of 2016, Milestone Scientific initiated a share exchange program pursuant to which we exchanged one share of common stock for every two outstanding shares of Milestone Medical (described below) common stock, a previously consolidated variable interest entity. As a result of the exchange program, at December 31, 2016, Milestone Scientific owned approximately 91% of Milestone Medical.

In July 2016, Milestone Scientific raised gross proceeds of $250,000 in a registered direct offering of 104,200 shares of common stock at $2.40 per share. The transaction was covered by the prospectus supplement, filed with the United States Securities and Exchange Commission ("SEC")Company is focused on July 22, 2016, to our shelf registration statement on Form S-3 (SEC File No.: 333-209466).

In July 2016, Milestone Scientific filed for 510(k) marketing clearance with the United States Food and Drug Administration ("FDA") Milestone Medical's epidural anesthetic injections instrument. This clearance is necessary to begin commercialization of these medical instruments in the United States.building its intellectual; property portfolio across numerous indications.

In December 2016, we received notification from the FDA that based upon the 510(k) application submitted for the Company's Compu-Flo Intra Articular Computer Controlled Injection System, outintra-articular injections, we did not adequately document that the device met the equivalency standard required for 510(k) clearance.clearances. Following consultation with the FDA Office of Device Evaluation, we intendintended to provide additional data, which could include a new Human Factor Validation study (HFV Study) in support offile a new 510(k) application for the device. An HFV Study demonstratesdevice in 2019. However, due to financial constraints, a new 510(k) application was not filed in 2019 or 2020. The Company has decided not to proceed with securing the ease of use of a product. The cost to generateFDA approval for the intra-articular instrument at this incremental datatime. Our immediate focus is estimated to be approximately $100,000.on marketing its epidural device throughout the United States, Europe and other countries.

In December 2016, we completed an underwritten public offering of 2,000,000 shares of common stock and warrants to purchase up to 1,592,775 shares of common stock, including 92,775 additional warrants pursuant to a partial exercise of the over-allotment option granted to the underwriters. The public offering price for each share and related warrant was $1.50. The warrants have a three-year term and an exercise price of $2.55 per share. In JanuaryJune 2017, the underwriter exercised a portionFDA approved our 510(k) applications for marketing clearance in the United States of its over-allotment option to purchase an additional 123,700 sharesour CompuFlo Epidural Computer Controlled Anesthesia System. We are in the process of common stock atmeeting with medical facilities and device distributors within the public offering priceUnited States, Middle East  and Europe. To date there have been seventeen medical devices sold in the United States and limited amounts sold internationally. Certain of $1.499 per share. The gross proceeds from this offering, including proceeds from partial exercises of the over-allotment option, were approximately $3,200,000, before deducting underwriting discountsour medical instruments have obtained European CE mark approval and commissionscan be marketed and other offering expenses. This offering was covered by the prospectus supplement, filed with the SEC on December 16, 2016, to our shelf registration statement on Form S-3 (SEC File No.: 333-209466).sold in most European countries.

          As of December 31, 2016, Milestone Scientific's financial statements are consolidated to include the accounts of its wholly-owned and majority-owned subsidiaries including, Wand Dental, Milestone Advanced Cosmetic Systems, Inc., ("Milestone Advance Cosmetic"), and Milestone Medical Inc. ("Milestone Medical"). Milestone Education LLC ("Milestone Education") is a variable interest entity of which Milestone Scientific isremains focused on advancing efforts to achieve the following three primary beneficiary and is consolidated into Milestone Scientific's financial statements as of January 1, 2016.     objectives:

BUSINESS

Background

Since its inception, Milestone Scientific has engaged in pioneering proprietary, innovative, computer-controlled injection technologies and solutions for the medical and dental markets. Milestone Scientific hasWe have focused itsour resources on redefining the worldwide standard of care for injection techniques by making the experience more comfortable for the patient and by reducing the anxiety and stress of administeringreceiving injections forfrom the healthcare provider. Our computer-controlled injection devices make injections precise, efficient, and virtually painless. Milestone’s 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 cosmetic botulinum toxin injections, epidural space identification in regional anesthesia procedures and intra-articular joint injections. 

In 2020 the Company received a Notice of Allowance from the United States Patent and Trademark Office (USPTO) related to its new CompuPulse System, which combines the benefits of our CompuWave technology with a manual syringe. The new CompuPulse System allows one to identify a pulsatile pressure waveform in a variety of applications, thereby improving the reliability and safety of a drug delivery procedure. Importantly, not all procedures require the sophistication of our CompuFlo system, which precisely controls the administration and flow rate of medication as it is being administered. This new technology provides an efficient and low-cost alternative for procedures where a manual syringe may suffice, while still providing the ability to verify needle and subsequent catheter placement.

Milestone ScientificGiven our experience and its technology are widely recognized by key opinion leaders,established brand awareness within the dental industry expertsbeginning with our first commercial product, the first computer-controlled local anesthesia delivery (C-CLAD) system marketed as the Wand® and medical and dental practitionersre-branded as the noted leaderCompuDent® System, we elected to focus our initial product development efforts on the integration of CompuFlo’s DPS Dynamic Pressure Sensing Technology into our legacy dental injection device. In 2006, the FDA cleared the first system utilizing CompuFlo'sDPS Dynamic Pressure Sensing Technology— the STA (Single Tooth Anesthesia) System and handpiece for use in the emerging, highdental market, providing continuous real-time visual and audible pressure feedback from the tip of the needle while also precisely regulating the flow rate. Because of combining the ability to regulate the flow rate and monitor pressure at the tip of the needle, Milestone Scientific developed the industry’s first solution for painlessly administering an intra-ligamentary injection, i.e., “single-tooth anesthesia” which could be used as the only injection necessary for achieving dental anesthesia, foregoing the need to administer traditional injections such as a nerve branch block. In addition to single-tooth anesthesia,the STA System can effectively perform all the traditional injections that dentists routinely give but can provide them virtually pain free and with numerous clinical advantages. This device, which also utilizes a disposable handpiece, is currently marketed by Milestone Scientific as the WandSTA® System. 

Milestone Scientific believes its dental devices have set a new standard of care for dental injections. Our dental devices have been used to administer tens of millions of injections worldwide. Each of our devices has a related single use disposable handpiece, leading to a continuing revenue stream following 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 WandSTA System. 

Building on the success of our proprietary, core technology platform for dental injections, and desiring to pursue other growth computer-controlled injection industry;opportunities, we have recently begun to expand the uses and remains intent on expanding the use and applicationapplications of itsour proprietary, patented technologies to achieve greater operational efficiencies, enhanced patient safety and therapeutic adherence, patient satisfaction, and improved quality of care withinacross a broad range of medical disciplines.specialties. In June 2017, we received FDA regulatory clearance to sell the CompuFlo Epidural Computer Controlled Anesthesia System in the United States for certain medical applications. We intend to continue to expand the uses and applications of our DPS Dynamic Pressure Sensing technology.

In 1997, Milestone Scientific first introduced The Wand® (CompuDent® instrument)We believe that we and our technology solutions are widely 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 disposable Wand® handpiece. CompuDent® provides painless injections for all routine dental treatments, including implants, root canals, crowns, fillings and cleanings. Milestone Scientific's Computer-Controlled Local Anesthetic Delivery (C-CLAD) instrument handpiece does not look or feel like a syringe.

Milestone Scientific expanded its product offerings with the introduction of its CompuMed® advancedemerging, computer-controlled injection instrument, designed for use in a wide range of applications within the medical industry, including cosmetic surgery, hair restoration surgery, podiatry, colorectal surgery, nasal and sinus surgery, dermatology and orthopedics, among others.industry.

In 2007, Milestone Scientific received FDA 510(k) clearance for the marketing and sale of its STA Single Tooth Anesthesia System® instruments (dental instrument). Milestone Scientific introduced the instrument to the market in February 2007 and this instrument is currently being marketed throughout the world.DPS Dynamic Pressure Sensing Technology; Our Proprietary Core Technology Platform

Central to Milestone Scientific’sOur next significant intellectual property platform and current productadvancement was a quantum improvement over our CompuDent® System – the development strategy is its patented CompuFlo® technology for the precise delivery of medicaments. The CompuFlo® pressure/forceour proprietary CompuFlo® Computer-Controlled Local AnestheticDrug Delivery (C-CLAD) technology isSystem with DPS Dynamic Pressure Sensing Technology, an advanced patented and FDA-approved medical technology for the painless and accurate delivery of drugs, anesthetics, and other medicaments into all tissue types, as well as for the aspiration of bodily fluids or previously injected substances. Its regulation and control of the flow rate continues to provide the CompuDent®painless delivery benefits, of painless injections, while its DPS Dynamic Pressure Sensing Technology^®innovative dynamic pressure sensing capability provides visual and audible in-tissue pressure feedback, identifying tissue types to the healthcare provider. This pressure feedback extends the benefit of painlessness from anesthetics with known viscosities to a wide range of liquid drugs and other medicaments with varying viscosities and flow rates. The Such pressure feedback, part of our DPS Dynamic Pressure Sensing Technology,^® also allows the healthcare provider to know when certain types of tissues have been penetrated and permits the healthcare provider to inject medicaments precisely at the desired location. Thus, real-time continuous pressure feedback can prevent the suffusion ofinjection to tissue outside the intended target area, a vitallyan important characteristic in the injection of chemotherapeutics and other toxic substances.

The CompuFlo® technology consists of two critical elements. One element isIn addition to the ability to determine exit pressure In Situin-situ (in the injection site tissue) at the tip of the needle. This minimizesneedle, minimizing tissue damage (and eliminateseliminating the pain of the injection) because the flow rate and pressure of the injection are controlled. The other critical element of the technology is an integrated injection database of algorithms that have been definedprecisely controlled, CompuFlo® computer-controlled Drug Delivery Systems features a proprietary algorithm, which allow for the measurement of the exit pressure. This database ofThese algorithms containscontain the critical components of specific drugs, parameters of needles, tubing and syringes and all other pertinent components for the safe and efficacious delivery of medications for all procedures.CompuFlo®technology also enables devices to provide a digital record of the time and volume of anesthetic or medicament injected.

The CompuFlo® technologyEach CompuDent® and  Wand/STA System also consists ofincludes a disposable injection handpiece that providesis extremely comfortable, light, and easy to use, providing for precise tactile control during the injection, an electromechanicalelectro-mechanical (computer-controlled) fluid delivery instrument and the ability to record data from the injection event. The pencil grip used with the handpieces provides the practitioner with enhanced tactile sense and accurate control and allows bi-directional rotation, eliminating needle deflection, resulting in a greater accuracy and success. The handpiece is vibration-free because it does not have a motor or electrical component in it and, since the handpiece does not look like a typical syringe, we believe it also reduces patient anxiety and offers the possibility of curing dental phobia of which an estimated 40 million Americans suffer.

As confirmed by numerous noted medical and dental experts within academia and the clinical practice arenas, CompuFlo®CompuFlo Systems using DPS hasDynamic Pressure Sensing technology have the potential to greatly increase the safety and efficacy of many drug delivery procedures that currently rely upon the over 150-year-old hypodermic syringe technology and the tactile senses and delivery expertise of the administrator.

On September 14, 2004, Milestone Scientific was issued United States Patent No. 6,786,885 for theDevices using CompuFlo®DPS technology, entitled “Pressure/Force Computer Controlled Drug Delivery Instrument with Exit Pressure.” Proprietary software, working with an innovative technology, allows the instrument to continuously monitor and control the exit pressure of fluid and/or medication during an injection. This same technology also enables doctors to accurately identify different tissue types based on exit pressure during an injection. The technology has numerous applications in both medicine and dentistry, including epidural and intra-articular injections.

In December 2004, the United States Patent Office issued a “Notice of Allowance” for patent protection on two additional critical elements of the CompuFlo® automated drug delivery technology: “Drug Delivery Instrument with Profiles” and “Pressure/Force Computer Controlled Drug Delivery with Automated Charging”.

In December 2005, Milestone Scientific submitted a pre-market notification to the FDA on its CompuFlo® technology, which was subsequently cleared by the FDA in July of 2006. This initial submission was critical for Milestone Scientific’s continuing efforts to develop and commercialize this important technology. Milestone Scientific has identified a number of potential applications for CompuFlo®, including single-tooth dental injections, self-administered drug delivery, osteoarthritis joint pain management and epidurals.

Given Milestone Scientific’s experience and established brand awareness within the dental industry, it elected to focus its initial product development efforts on the integration of CompuFlo® into its legacy computer-controlled dental injection instrument. As a result, Milestone Scientific developed the industry’s first solution for painlessly administering a single-tooth injectionDynamic Pressure Sensing Technology such as the only injection necessary for achieving anesthesia, foregoing the need to administer a traditional nerve branch block. This instrument, which also utilizes a disposable handpiece, was trademarked the “STA Single Tooth Anesthesia System ®”.

After receiving FDA 510(k) approval for the marketing and sale of the STA Instrument, Milestone Scientific introduced the instrument to market in February 2007 at the Chicago Dental Society’s 143^rd Midwinter Meeting. The patented STA Instrument incorporates the "pressure feedback" elements of Milestone Scientific's patented CompuFlo® technology, thereby allowing dentists to administer injections accurately and painlessly into the periodontal ligament space, effectively anesthetizing a single tooth. This injection is of significant value in that it allows the dentist to profoundly anesthetize the tooth within one or two minutes, versus up to 15-18 minutes for a block injection to take effect. Utilizing the STA Instrument single tooth injection, the patient will suffer neither pain nor collateral anesthesia in the cheek, lips or tongue at any time. The STA Instrument is capable of performing all of the injections that can be done with a conventional dental syringe, including the palatal-anterior superior alveolar, anterior middle superior alveolar and inferior alveolar nerve block. The STA Instrument achieves these injections predictably and reliably.

Initial market response to the STA Instrument following its commercial debut in February 2007 proved to be less than robust. Moreover, at that time, Milestone Scientific had granted exclusive United States and Canadian distribution and marketing rights for the STA Instrument to Henry Schein, Inc. (“Henry Schein”), the largest distributor of healthcare products and services to office-based practitioners in the combined North American and European markets. Following several months of lackluster sales and after making critical senior management changes, Milestone Scientific initiated an in-depth market study to reassess its positioning and marketing strategies for the STA Instrument. The insight gained from this study led management to redefine and implement a new messaging platform, created to emphasize key benefits that Milestone Scientific discovered are of most value to dental professionals. This new product messaging was launched in January 2008 and has remained in constant review.

In the spring of 2009, Milestone Scientific signed a distribution and marketing agreement with China National Medicines Corporation, dba Sinopharm, which is China's largest domestic manufacturer, distributor and marketer of pharmaceuticals and importer of medical devices and China's largest domestic distributor of dental anesthetic carpules to the Chinese dental industry. The distribution and marketing agreement with China National Medicines was terminated in September 2014. Proximate to that time, we entered into a new distribution and marketing agreement with Milestone China Ltd. ("Milestone China") to be our distributor for the STA Instruments and handpieces in China. Milestone Scientific owns forty (40%) percent of Milestone China.

In early October 2012, the State Food and Drug Administration (“CFDA”) of the People’s Republic of China approved our STA Single Tooth Anesthesia System® Instrument. However, the CFDA’s approval of the Wand® handpieces was received in May 2014 and the distribution of these handpieces in China began in the fourth quarter of 2014.

According to a 2011 report published by the U.S. Department of Commerce, titled “China’s Emerging Markets: Opportunities in the Dental and Dental Lab Industry,” China’s dental market lags behind other healthcare services and has largely been neglected in the past. In fact, a CS Market Research report indicates that 50% of adults and 70% of children out of China’s estimated 1.3 billion plus population have tooth decay problems and over 90% have periodontal disease. (See Shuyu Sun & Seth Pierrepont. The Dental Equipment Market Over in China, CS Market Research (Sept. 20, 2005) and Opportunities Abound for Dental Care in China, CHINA BRIEFING (February 27, 2015)). However, with increasing affluence of the Chinese population, as well as increasing attention towards personal care, demand for dental services has been growing. Market research firm Freedonia agrees, noting that demand for dental products in China is expected to climb due primarily to escalating personal income levels and government programs promoting awareness of the benefits of good oral care.

Shortly before the end of the second quarter of 2009, Milestone Scientific elected to refine its international marketing strategy to gain greater access to and penetration of the international dental markets. The revised sales strategy provides for increasing hands-on oversight and support of its existing international distribution network, while also attracting new distributors throughout Europe, Asia and South America.

In November 2012, Milestone Scientific signed an exclusive distributor and marketing agreement with a well-known US domestic manufacturer and distributor, for the sale and distribution of the STA instrument and handpieces in the United States and Canada. The marketing initiative included participation in US and Canadian dental shows, as well as pediatric dental shows; an active advertising initiative targeting major dental publications; and direct mailing campaigns to over 150,000 dentists across the United States and Canada. The exclusive distributor and marketing agreement was converted to a non-exclusive agreement on December 31, 2016.

In January of 2015, Milestone Scientific added a President, a full-time CEO for Wand Dental, a Senior Business Brand Manager, and a Senior Manager of Project Management. This increase in staffing was to support the growth of our initiative in our CompuFlo® software for anticipated new medical and dental instruments.

In September 2016, Milestone Scientific added a senior Vice President of Marketing and Sales to focus on the medical sector of our business.

Beginning January 1, 2016, Milestone Scientific entered into a non-exclusive distribution agreement with Henry Schein. In June 2016, that agreement was replaced by a new agreement with Henry Schein providing for an exclusive distribution arrangement for our dental products in the United States and Canada. We believe that this exclusive arrangements will be more effective than previous arrangements relying on Wand Dental's appearances at dental shows and catalog sales.

CompuFlo® Advanced Injection Technology – Core Technology

Our next significant intellectual property was the development of our proprietary patented CompuFlo^® technology for the precise delivery of anesthetics and other medicaments into various tissues and bodily cavities. The CompuFlo^® technology has been FDA approved and allows the practitioner to precisely regulate and control the flow rate of the injectable material while receiving visual and audible in-tissue pressure feedback, allowing the practitioner to determine the tissue into which the injectable material is being delivered. The CompuFlo^® technology encompasses the painless delivery benefits of the CompuDent^® while allowing the practitioner to know which tissues have been penetrated and to inject medicaments precisely into the desired location. With CompuFlo^®, the injection of chemotherapeutics and other toxic substances outside the targeted area can be avoided. The instruments developed using the CompuFlo^® also provide a digital record of the time and amount of anesthetic or medicament injected.  

Our first system utilizing the CompuFlo^® technology was our STA instrument and related handpiece for the dental market. The STA instrument and handpiece continue to provide all of the benefits of the CompuDent^® system while better facilitating single tooth anesthesia (now generally performed with a high pressure spring loaded gun-like instrument) by allowing the practitioner to monitor and precisely control pressure, rate and volume. Instruments using the CompuFlo^® technology System can be used to inject a wide variety of liquid medicaments as well as anesthetics. We believe our CompuFlo^® System avoids the negative side effects from the use of traditional hypodermic drug delivery injection instruments,devices, which are well documented in dental and medical literature and include risk of death, transient or permanent paralysis, pain, tissue damage and post-operative complications. Pain and tissue damage often result from uncontrolled flow rates and pressure created during the administration of drug solutions into human tissue. While several technologies have been capable of controllingcan control the flow rate, we believe our patented DPS Dynamic Pressure Sensing technology and CompuFlo Systems provide the ability tocontrol of pressure during the injection as well accurately and precisely control pressure has been unobtainable untildelivery the development of drug.

CompuFlo^®.Epidural Computer Controlled Anesthesia System

The next systems utilizing CompuFlo Epidural Computer Controlled Anesthesia System (or the CompuFlo ^{Epidural System) is one such platform extension of our ®DPS} technology we developed were instruments for administering epidural injections and intra-articular related disposable and an instrument for administering hyaluronic acid Dynamic Pressure Sensing Technology platform, providing anesthesiologists and other medicaments into both major and minor jointshealthcare providers the ability, for the alleviation offirst time, to quantitatively determine and document the pressure at the needle tip in real-time for proper needle placement in epidural procedures used for labor/delivery and back pain associated with arthritismanagement. Our proprietary DPS Dynamic Pressure Sensing Technology allows the CompuFlo Epidural System to provide objective visual and other deleterious joint conditions.audible in-tissue pressure feedback that allows anesthesiologists to identify and confirm placement in the epidural space.

Our epidural injection instrument using CompuFlo^® pressure sensing technologyEpidural System provides an objective tool that we believe consistently and accurately identifies the epidural space by detecting the difference in pressure between the ligamentum flavum and the extraligamentaryintrafilamentary tissue. In studies, utilizing the CompuFlo^{Epidural System®} technologywith DPS Dynamic Pressure Sensing Technology has been shown to be effective in correctly identifying the epidural space has been correctly identified 100% of the time.space. Knowing the precise location of a needle tip during an epidural injection procedure provides a measure of safety not presently available to doctors using conventional syringes, insyringes. In the absence of fluoroscopy, who identifyidentifying the epidural space by relying on the subjective perception of loss of resistance to saline.saline requires a very long education period and learning curve and could result in morbidity and lack of efficacy. During back pain management epidural procedures, where fluoroscopy is commonly used, the CompuFlo Epidural System allows the clinician to locate the epidural space, without using fluoroscopy, thereby protecting the patient and clinician from unnecessary exposure to radiation along with significantly reducing capital and operating costs.

Wand/STA Dental Market

Since its market introduction in early 2007, the Wand/STA Instrument and prior C-CLAD devices have been used to deliver over 80 million safe, effective, and comfortable injections. The instrument has also been favorably evaluated in numerous peer-reviewed, published clinical studies and associated articles. Moreover, there appears to be a growing consensus among users that the STA Instrument is proving to be a valuable and beneficial instrument that is positively impacting the practice of dentistry worldwide.

Beginning January 1, 2016, Milestone Scientific entered into a non-exclusive distribution agreement with Henry Schein, Inc. (“Henry Schein”). In June 2016, that agreement was replaced with an exclusive distribution arrangement for our dental products for the United States and Canada with Henry Schein. In December 2020, the exclusive distribution arrangement with Henry Schein was replaced with a non-exclusive distribution arrangement, for distribution in the United States and Canada.

In January 2021, the Company began a process of signing non-exclusive dental distribution arrangements with dental distributors in specific geographical locations in the United States and Canada. To date, we have nine (9) new non-exclusive dental distributors engaged in the USA and Canada. The goal is to add additional non-exclusive distributors in the USA, but also to explore other co-operation opportunities with Dental Service Organizations, education institutions, dental schools and entities in specific dental market segments.

Precisely controlling in-tissue pressure increases patient safety by reducing

The goal of changing our marketing plan from a sole exclusive distributor in the riskUSA and Canada, to a large number of tissue damagenon-exclusive distributors is to increase placement of our Wand/STA instrument and post-treatment pain relatedthus the expansion of our dental disposables.

On the global front, we have granted exclusive marketing and distribution rights for the Wand/STA Instrument to excessive pressure that may occur during certain injections. Identificationselect dental suppliers in various international regions in Asia, Africa, South America, and Europe. They include FM Produkty Dla Stomatologii in Poland and Unident AB in the countries of Denmark, Sweden, Norway, and Iceland. Additionally, the Company is in the process of evaluating current international distributors and adding new distributors, globally as required based on the economics of the tissue, in whichregion. 

Medical Market

During 2016, Milestone Scientific filed for 510(k) marketing clearance with the needle tip is imbedded, is believed to be highly important inU.S. Food and Drug Administration (FDA) for both intra-articular and epidural injections intra-articular injections and numerous organ, subcutaneous and intramuscularwith the CompuFlo Epidural System.  In June 2017, the FDA approved the CompuFlo Epidural System for epidural injections.

We believe that our intra-articular injection instrument will be particularly efficacious for arthritis patients who are obliged to endure multiple painful injections annually for a lifetime. Often these injections are not efficacious because the doctor using a syringe fails to locate the intra-articular space or does not inject the appropriate volume of hyaluronic acid or other medicament into that space. The CompuFlo^® technology has been successful in administering hyaluronic acid and other medicaments into the intra-articular space in both small and large joints using its computer-controlled pressure sensing capabilities in an independent animal study.

Both the epidural and intra-articular instruments have obtained CE mark approval and may now be marketed and sold in most European countries and many other countries accepting CE approved instruments. In the United States, we have completed required testing for the epidural instrument for birthing and pain management and have submitted the favorable results of these tests to the FDA. We expect to receive FDA approval of our epidural instrument by During the end of the second quarter 20172021, Milestone Scientific invested in sales force expansion, thus building up a stronger direct sales force aiming at increasing the adoption and penetration of our intra-articular instrument someits technology. At the beginning of the year Milestone Scientific had three sales managers and by July 31, 2021 had established a direct sales force consisting of eleven full time later in 2017; however we are unableemployees covering the US North and Southeast regions along with California. Milestone Scientific continues to provide any assurances when approval will be received, if ever. Upon FDA approval, we intend to establish an international marketing network of independentpartner with distributors for the devices, although a limited number of Europeaninternational markets, and near-easthas begun to partner with regional distributors have already been appointed.in the United States as well.

In December 2016, we received notification from the FDA that based upon the 510(k) application submitted for the Company's Compu-Flo Intra Articular Computer Controlled Injection System,intra-articular injections, we did not adequately document that the device met the equivalency standard required for 510(k) clearance.clearances. Following consultation with the FDA Office of Device Evaluation, we intendintended to provide additional data, which could include a new Human Factor Validation study (HFV Study) in support offile a new 510(k) application for the device. An HFV Study demonstratesdevice in 2019. However, due to financial constraints, a new 510(k) application was not filed. The Company has decided not to proceed with securing FDA approval for the easeintra-articular instrument at the present time.

In January 2020, the Company received a Notice of Allowance for a key patent from the U.S. Patent and Trademark Office on its CompuWave technology, which is being integrated into the CompuFlo® Epidural System. The Company is constantly evolving and innovating the technology. This patent represents a significant achievement for the Company since it extends the intellectual property protection around the CompuFlo instrument for another 20 years and provides not only additional confirmation of placement, but also verification during the procedure that the catheter has not been displaced. 

In February 2020, the Company announced an abstract entitled "Confirmation of epidural catheter location by epidural pressure waveform recordings by the CompuFlo® Epidural Instrument (CompuFlo)," was accepted for presentation at the prestigious Euroanaesthesia 2020 Congress, which was to take place May 30 - June 1, 2020 in Barcelona, Spain. Euroanaesthesia is Europe’s largest annual event showcasing the latest news and innovations in the field of anesthesia, perioperative medicine, intensive care, emergency medicine and pain treatment. This international event gathers upwards of six thousand delegates from around the world. The abstract was to be presented during scientific poster sessions highlighting how CompuWave technology integrated with the CompuFlo Epidural System combines both objective in-line pressure measurements and the detection of a pulsatile pressure waveform in a single system. However due to the continual spread of COVID-19, the Company presented at the prestigious Euroanaesthesia 2020 Congress virtually, which was held in Barcelona in August 2020.

Moreover, also in February 2020, the Company introduced the new pre-assembled disposable kit for the CompuFlo® Epidural System that has received CE Mark approval in Europe through the Company’s supplier. The Board of Directors of the Company believes that this CE Mark approval overcomes an important hurdle to commercialization in Europe. Based on market feedback, it was evident that anesthesiologists using the epidural instrument preferred to have the disposable kit pre-assembled before packaging to save valuable minutes in the operatory.

On April 21, 2020, Milestone Scientific announced that it had validated and integrated the new CathCheck™ feature into the CompuFlo® Epidural System. Using CathCheck™. Physicians and nurses can monitor the placement of a catheter to determine the presence or absence of a pulsatile waveform (heartbeat) providing new information that can be used to determine if the catheter is in place or has become dislodged from the epidural space.

On May 13, 2020, the Company announced a study was published in the Open Journal of Anesthesiology validating the efficacy of the CompuFlo® CathCheck™ System to confirm the correct placement and positioning of an epidural catheter for use during and after an epidural procedure. This is another validation that the CathCheck™ feature will help to significantly reduce time and cost for the institution by providing a more reliable way to re-check the catheter throughout the day to ensure that the catheter has not been displaced. 

On October 13, 2020, Milestone Medical announced a Group Purchasing Agreement with Premier, a leading U.S. healthcare improvement company, utilizing an alliance of approximately 4,100 U.S. hospitals and 200,000 other providers to transform healthcare. Such Agreement, which was effective November 1, 2020, allows Premier members, at their discretion, to utilize pricing and terms pre-negotiated by Premier for the CompuFlo® Epidural System and CathCheck™. The Agreement expires on February 28, 2022. On November 24, 2021, a new Group Purchase Agreement was signed with Premier, becoming effective as of March 1, 2022, This agreement expires on February 28, 2025.

On January 20, 2021, the Company received a Notice of Allowance for a key patent from the U.S. Patent and Trademark Office related to CompuFlo disposables. This patent covers the interactions of the disposable assembly and a micro-chip security verification feature embedded in the disposables, which provides clinical and safety benefits for the patient and practitioner. This patent also covers the use of an embedded security chip, preventing improper reuse of the disposables, as well as ensuring the instrument can only be used with authenticated disposables for the current and future systems.

On February 24,2021, the Company received a product. The costNotice of Allowance for a key patent from the U.S. Patent and Trademark Office on its breakthrough CompuPulse System which combines the benefits of the CompuWave technology with a manual syringe. Our new CompuPulse System allows one to generate this incremental dataidentification of a pulsatile pressure waveform in a variety of applications, thereby improving the reliability and safety of a drug delivery procedure.

On March 10, 2021, the Company received a Notice of Allowance from the European Patent Office on the combination of Nerve Stimulation and DPS Dynamic Pressure Sensing Technology, to optimize needle tip location in Ultrasound-Guided Peripheral Nerve Block (PNB) procedures. This  Notice of Allowance clears an important hurdle to potentially develop a device specifically for PNB procedures, which would incorporate the CompuFlo® with Dynamic Pressure Sensing Technology® capabilities of precisely measuring, displaying, controlling, warning and recording needle tip pressure in real time. By combining CompuFlo with ultrasound guidance it is estimatedbelieved to be approximately $100,000.able to achieve multimodal PNB monitoring, safety and greater accuracy to identify needle tip location during PNB procedures.

At earlier stagesCosmetic Botulinum Market

Milestone Advanced Cosmetic Systems, Inc. (“Advanced Cosmetic Systems”), was originally owned 50% by us and 50% by Milestone China Company Limited (“Milestone China”), a company organized under the laws of development are potential products,Hong Kong and owned 40% by Milestone Scientific. Milestone China contributed $900,000 of cash to the joint venture, and we have provided a royalty-free license to utilize our technology to the joint venture to develop a botulinum toxin injection device.

In November 2017, we announced plans for the commercial launch of our proprietary cosmetic injection device using our DPS Dynamic Pressure Sensing technology platform and our CompuFlo Cosmetic System for delivery of botulinum toxin. Our proprietary cosmetic injection device features improved needle placement with a comfortable stylus grip, precise dosing, the same technology platform that has made dental and epidural injections painless, and a new, intuitive touch-screen interface. Although the Company received positive outcomes of multi-state human factor studies with targeted customers, the Company did not have the necessary capital to move forward with the commercial launch of our cosmetic device and applying for marketing clearance in Europe (CE clearance), and United States (FDA clearance). 

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. As a result of the purchase, Milestone Scientific owned 100% of Advanced Cosmetic Systems Inc.  Milestone China had the option to repurchase the 50% interest in Advanced Cosmetic Systems within one year from the sale date for $900,000 in cash.  On May 18, 2021, Milestone China’s repurchase option expired. Advanced Cosmetic Systems has been dissolved.

OtherPossible Products

The Company is reviewing using CompuFlo’s ^®DPS technologyDynamic Pressure Sensing Technology for less painful injections into the eye and for the subcutaneous injection of fillersuse in rhinoplasty, colorectal surgery, podiatry, and other substances in the dermatology market.disciplines. In the self-injectable market, there are a number ofmany injectable drugs routinely self-administered in a home or office setting using spring loaded automatic injection devices by people who suffer from long termlong-term chronic conditions such as Multiple Sclerosis, Rheumatoid Arthritis,multiple sclerosis, rheumatoid arthritis, and other diseases of the auto immune system. We believe the CompuFlo’s ^®DPS technology,Dynamic Pressure Sensing Technology, using pressure sensing capabilities, can serve as a less painless subcutaneous injection method for these self-administered drugs. A significant reduction in pain during delivery should have a positive impact on compliance, which is a major consideration when physicians are treating patients. In addition, the ability to record the injection will allow for significantly enhanced monitoring of the patient.

Instruments Platform-Medical and DentalHowever, there can be no assurance that we will be able to successfully develop any such products, or that if developed, that we will be able to obtain FDA approval to market any such products, or even if we do obtain such FDA approval, that any such products will generate any revenue for us or be a commercial success.

Milestone Scientific has developed and brought to market a highly differentiated portfolio of industry innovations. Milestone Scientific’s proprietary solutions have succeeded in elevating the innovation in the professional dental arena. The product portfolio includes:

STA Single Tooth Anesthesia System® InstrumentCOVID-19 Pandemic

The STA Single Tooth Anesthesia System® Instrument (or STA Instrument)COVID-19 pandemic materially adversely affected the Company’s financial results and business operations. Demand for the Company’s products decreased, notably in our dental division, during the 2020 fiscal year. During the year 2021, the demand increased and first signs of recovery of the dental business were seen. However it is a patented, computer-controlled local anesthesia delivery instrument that incorporatesunclear what the “pressure feedback” elementseffect of Milestone Scientific’s patented CompuFlo® technology, thereby allowing dentists to administer injections accurately into the periodontal ligament space, effectively anesthetizing a single tooth. While the periodontal ligament injection has been available for some time, there has been no effective technology that allows dentists to easily perform the procedure painlessly, safelyOmicron and predictably until now. With this STA Instrument dentists can easily and predictably anesthetize a single tooth root in one minute as the primary and sole injection, as compared to a general blocking injection with a waiting time of up to 18 minutes (or longer if the blocking injection needs to be re-administered) before proceeding to perform a procedureother variants might have on the targeted tooth. An instrument which allows dentists to effectively anesthetize a single tooth will greatly enhancebusiness during the productivityremainder of dental practices2022. Therefore, such increased demand may or may not continue and/or demand may or may not increase from historical levels depending on the duration and when combined with the painless injection capabilities already present in the CompuDent® instrument, such an instrument should provide a compelling value in the marketplace. The STA Instrument will generate recurring revenues from per-patient disposable handpieces.

Since its market introduction in the spring of 2007, the STA Instrument has received favorable reviews and awards from the dental industry. In July 2007, noted industry publication Dentistry Today featured the STA Instrument as oneseverity of the “Top 100 Products in 2007,” helping to promote much broader recognitionCOVID-19 pandemic, the transmissibility and severity of variants, the effectiveness of the instrumenton-going vaccination process, the length of time it takes for normal economic and validating STA’s value propositionoperating conditions to resume, additional governmental actions that may be taken and/or extensions of time for dentistsrestrictions that have been imposed to date, and patients, alike. In early 2008, Medical Device & Diagnostic Industry magazine distinguished the STA Instrument as a 2008 Medical Design Excellence Award winnernumerous other uncertainties. Such events may result in the “Dental Instruments, Equipmentbusiness and Supplies” product category. Of the 33 products to receive this coveted award, the STA was onemanufacturing disruption, inventory shortages, delivery delays, and reduced sales and operations, any of only two winning products that serve dental practitioners. In December 2008, Milestone Scientific continued to win broad acclaim for the STA Instrument by winning a “Townie Choice Award”. The “Townie Choice” awards were originally started by Dr. Howard Darranwhich could materially affect our business, financial condition, and Farran Media, publisherresults of Dentaltown Magazine, to assist dentists in making product purchasing decisions, and are considered the “people’s choice” of the products and services available to the dental industry today. That same month, the STA Instrument was also named as a Dental Products Report “Top 100 2008 Product of Distinction.” Additionally, the STA Instrument was named one of Dentistry Today’s “Top 100 Products” for the third consecutive year in 2010.operations.

CompuDent®The Company’s employees have been and are being affected by the COVID-19 pandemic. The majority of our office and management personnel are working remotely. The health of the Company’s workforce is of primary concern and the Company may need to enact further precautionary measures to help minimize the risk of our employees being exposed to the coronavirus. Further, our management team is focused on mitigating the adverse effects of the COVID-19 pandemic, which has required and will continue to require a large investment of time and resources across the entire Company, thereby diverting their attention from other priorities that existed prior to the outbreak of the pandemic. If these conditions worsen, or last for an extended period of time, the Company’s ability to manage its business may be impaired, and operational risks, cybersecurity risks and other risks facing the Company prior to the pandemic may be elevated. The COVID-19 pandemic is affecting the Company’s customers, suppliers, vendors, and other business partners, but the Company is not able to  predict the ultimate consequences that will result therefrom.

CompuDent®We are experiencing supply delays and shortages due to the disruptions the ongoing COVID-19 pandemic is Milestone Scientific’s proprietary, patented Computer-Controlled Local Anesthetic Delivery (C-CLAD) instrumenthaving on the global supply chain, especially with respect to goods from China. The ongoing COVID-19 pandemic has resulted in significant disruption to the operations of certain suppliers in China and predecessorthe related transportation of the STA Instrument. CompuDent® delivers anesthesia at a precise and consistent rate below a patient’s pain threshold. Over the years, CompuDent® has been widely heralded as a revolutionary instrument, considered one of the major advances in dentistry in the 20^th Century. The instrument has been favorably evaluated in more than 50 peer reviewed or independent clinical research reports. CompuDent®, including its ergonomically designed single-use handpieces (The Wand®), provides numerous, well documented benefits:

Despite CompuDent® many benefits, including the administration of less painful and more comfortable injections, dentists in the United States that are parts of our global supply chain. We have been slowable to give upmake alternative delivery arrangements for limited quantities of goods, at increased cost. While we have not yet experienced material shortages in supply because of these disruptions and our alternative delivery arrangements, if they were to be prolonged or expanded in scope, there could be resulting supply shortages which could impact our ability to have manufactured and delivered our products to the useUnited States and, ultimately to our customers. Accordingly, such supply shortages and delivery limitations could have a material adverse effect on our business, financial condition, results of traditional syringes. Dentistsoperations, and cash flows.  All of these factors may have all been trained to use syringes in dental schoolfar reaching impacts on the Company’s business, operations, and often have become accustomed tofinancial results and are comfortable with their use during many years of clinical practice, in spiteconditions, directly and indirectly, including without limitation impacts on the health of the obvious reluctance and/or fear of the patient in relation to injections administered by hypodermic syringe. There are approximately 40 million dental phobics, those people afraid to visit a dentist, in the United States. Therefore, Milestone Scientific believes there is a disconnect in the way dentists perceive their patients’ attitudes toward injection by hypodermic syringe. The CompuDent® is used today by thousands of dentists around the world, many of whom have long since abandoned the over 150-year old syringe.Company’s management.

CompuMed®

CompuMed® is a patented computer-controlled injection instrument geared to the needs of the medical market and providing benefits similar to CompuDent®. CompuMed® allows many medical procedures, now requiring intravenous sedation, to be performed with only local anesthesia due to dramatic pain reduction. Also, dosages of local anesthetic can often be significantly reduced, thus reducing side effects, accelerating recovery times, lowering costs and eliminating potential complications. CompuMed® has accumulated clinical evidence demonstrating benefits from use in colorectal surgery; podiatry; dermatology, including surgery for the removal of basal cell carcinomas and other oncological dermatologic procedures; nasal and sinus surgery, including rhinoplasty; hair transplantation and cosmetic surgery, among others. The CompuMed® is being replaced by instruments that include CompuFlo® technology geared to specific medical disciplines.

The Wand® 

Our first commercial product, the CompuDent^®, and its associated disposable The Wand^® handpiece for the dental market is intended to allow the dentist to provide painless injections for virtually all dental procedures, including routine cleanings and fillings, as well as more sophisticated implants, root canals and crowns. New injections made possible by the CompuDent^®eliminate collateral numbness of the tongue, lips and facial muscles and often hasten the onset of anesthesia by eliminating the need for mandibular blocks. The pencil grip used with The Wand^® handpieces provides the practitioner with unprecedented tactile sense and accurate control and allows bi-directional rotation eliminating needle deflection, resulting in a greater success rate. Since the Wand^® handpiece does not look like a typical syringe it also reduces patient anxiety and offers the possibility of curing dental phobia of which 40 million Americans suffer (see the Colgate Oral Care website). The CompuDent^®instrument is considered one of the major advances in dentistry in the 20^th Century and has been favorably evaluated in more than 50 peer reviewed or independent clinical research reports, which we have reviewed.

Competition

Milestone Scientific’s proprietary, patented Computer-Controlled Local Anesthesia Delivery (C-CLAD) instruments compete with disposable and reusable syringes that generally sell at lower prices and that use established and well-understood methodologies in both the dental and medical marketplaces. Upon commercial introduction and sale, Milestone Medical’s epidural injection instrument will also compete with APAD, a computer controlled injection instrument which claims to be able to reliably identify the epidural space.

Milestone Scientific’s instruments compete on the basis of their performance characteristics and the benefits provided to the practitioner, patient and the dental business operations. Clinical studies have shown that the instruments reduce fear, pain and anxiety for many patients, and Milestone Scientific believes that they can reduce practitioner stress levels, as well. Milestone Scientific’s newest product introduction, the STA Instrument, can be used for all dental injections that can be performed with a traditional dental syringe. Moreover, the STA Instrument can also be used for new and modified dental injection techniques that cannot be performed with traditional syringes. These new techniques allow for faster procedures shortening chair-time, minimizing the numbing of the lips and facial muscles, enhancing practice productivity, reducing stress and virtually eliminating pain and anxiety for both the patient and the dentist.

Milestone Scientific faces intense competition from many companies in the medical and dental device industry, possessing substantially greater financial, marketing, personnel, and other resources. Most competitors have established reputations, stemming from their success in the development, sale, and service of competing dental products. Further, rapid technological change and research may affect the products. Current or new competitors could, at any time, introduce new or enhanced products with features that render the products less marketable or even obsolete. Therefore, Milestone Scientific must devote substantial efforts and financial resources to improve existing products, bring products to market quickly, and develop new products for related markets. In addition, the ability to compete successfully requires that Milestone Scientific establish an effective distribution network with a strong marketing plan. Historically, Milestone Scientific has been unsuccessful in executing the marketing plans for its products, primarily due to resource constraints. New products must be approved by regulatory authorities before they may be marketed. Milestone Scientific cannot assure that it can compete successfully, that competitors will not develop technologies or products that render the products less marketable or obsolete, or, that Milestone Scientific will succeed in improving the existing products, effectively develop new products, or obtain required regulatory approval for those products.

Patents and Intellectual Property

Milestone Scientific holds the followingand its subsidiaries currently hold approximately 216 U.S. utility and design patents:  

During the 2016foreign patents, and 2015 fiscal years,many patent applications. The Company’s patents and patent applications relate to drug delivery methodologies, 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, drug delivery injection unit, drug drive unit for anesthetic, handpiece, and injection device. Milestone Scientific expended on a consolidated basis $1,270,471 and $100,856, respectively, on researchits subsidiaries also currently hold approximately 36 registered U.S. and development activities.foreign trademarks, including CompuDent®, CompuFlo®, DPS Dynamic Pressure Sensing technology®, Safety Wand®, STA Single Tooth Anesthesia System®, and The Wand®

Milestone Scientific relies on a combination of patent, copyright, trade secret and trademark laws and employee and third partythird-party non-disclosure agreements to protect its intellectualintellectual property rights. Despite the precautions taken by Milestone Scientific to protect products,its IP rights, unauthorized parties may attempt to reverse engineer, copy, or obtain and use products and information that Milestone Scientific regards as proprietary, or may design products serving similar purposes that do not infringe on Milestone Scientific’s patents. Milestone Scientific’s failure to protect its proprietary information and the expenses of doing so could have a material adverse effect on our business, financial condition, and results of operations.

In the event thatIf Milestone Scientific’sScientific’s products infringe upon patent or proprietary rights of others, we may be required to modify processes or to obtain licenses. There can be no assurance that Milestone Scientific would be able to do so in a timely manner, upon acceptable terms and conditions, or at all. The failure to do so could have a material adverse effect on our business, financial condition, and results of operations.

Government Regulation

Manufacturing

Milestone Scientific has informal arrangements with an US manufacturer of the Wand/STA System, epidural and intra-articular devices. Pursuant to these informal arrangements, our third-party manufacturer manufactures the Wand/STA System under specific purchase orders without minimum purchase commitments, and at prices to be agreed upon in each such purchase order.

Our agreement with the principal manufacturer of dental handpieces includes pricing terms. Milestone Scientific has been supplied by the manufacturer of the Wand/STA System and its predecessor, the CompuDent System, since the commencement of production in 1998, and by the manufacturer of its dental handpieces since 2003. The manufacturer of our dental handpieces is in the People’s Republic of China and the manufacturer of the Wand/STA System is in the United States. Refer to Item 1A. Risk Factors.

Changes to pricing of the Wand/STA System by the manufacturer could have a material adverse effect on our financial condition, business, and results of operations. Termination of the manufacturing relationship with any of these third-party manufacturers could significantly and adversely affect our ability to produce and sell the products. Though other alternate sources of supply for dental handpieces exist, Milestone Scientific would need to establish relationships with new suppliers, and with respect to the Wand/STA System recover its existing tools or have new tools produced and “burn in” and other manufacturing and quality control software re-produced. Establishing new manufacturing relationships could involve significant expense and delay. Any curtailment or interruptions of supply, whether as a result of the inability of a supplier to meet our product delivery needs or termination of the relationship, would have a material adverse effect on our financial condition, business, and results of operations.

Competition

As of this filing, there is no subcutaneous drug delivery platform or device on the market regulating the flow rate and pressure of an injection capable of delivering a painless injection at the desired location like Milestone Scientific’s proprietary, patented devices having our DPS Dynamic Pressure Sensing technology.

Milestone Scientific’s devices compete based on their performance characteristics and the benefits provided to the patient, practitioner, and their business operations. Clinical studies have shown that our devices reduce fear, pain and anxiety for many patients, and Milestone Scientific believes that they can reduce practitioner stress levels, as well. Other computer-controlled local anesthesia delivery (C-CLAD) options are the Quicksleeper and SleeperOne, from Dental Hi Tec, Dentapen from Septodant, the Calajet from Aseptico, and the Comfort Control Syringe by Dentsply.

The FDA clearedQuicksleeper was invented in France by Dr. Alain Villette in 1991. It is marketed as the CompuDent®only local anesthetic delivery device in France that allows the ability to perform all intraoral local anesthetic injection techniques, including osteocentral anesthesia, quickly and without failure. The extra feature that gives the Quicksleeper this ability is a built-in motor in the syringe/handpiece that renders the syringe both an injector and a perforator of bone. That is, the handpiece of the Quicksleeper can perform an intraosseous injection via a motor driven perforation of the cortical plate of bone. A standard dental needle that attaches to the syringe spins as the motor rotates the handpiece thus acting as a perforator. However, the handpiece is relatively heavy, weighing 240 g. as compared to a standard syringe that weighs 80 g. Injection speed increases during the injection, but the operator cannot control when the injection speed increases.

The Calajet instrument, and its disposable handpieces formanufactured in Europe, has been very slow to grow market acceptance. It recently began marketing in the United States for dental applicationswith similar slow acceptance. The instrument is a higher price than the Wand STA and does not provide dynamic pressure sensing technology. Although a competitor, we believe that without a substantial distribution network this instrument will have a difficult time to be successful in July 1996; the CompuMed® instrument forUSA.

The Dentapen from Septodent is the newest competitor in the market. This device is manufactured in Europe and began marketing in the United States for medical applicationsUSA in May 2001; and Safety Wand® for marketing2018. This device is priced similar to the Wand/STA device, but at this time, to our knowledge, it is slow to attract viable distribution in the United States forUSA.

Milestone Scientific’s proprietary, patented devices with its DPS Dynamic Pressure Sensing Technology platform also compete with disposable and reusable syringes that generally sell at lower prices and that use established and well-understood methodologies in both the dental applications in September 2003. For us to commercialize otherand medical marketplaces. 

Rapid technological change and research may affect our products. Current or new competitors could, at any time, introduce new or enhanced products in United States,with features that render our products less marketable or even obsolete. Therefore, Milestone Scientific would havemust devote substantial efforts and financial resources to submit additional 510(k) applicationsimprove existing products, bring products to market quickly, and develop new products for related markets. In addition, the FDA.ability to compete successfully requires that Milestone Scientific received FDA 510(k)maintain an effective distribution network with a strong marketing plan. Any new products must comply with applicable regulatory authorities before they may be marketed. Milestone Scientific cannot assure that it can compete successfully, that competitors will not develop technologies or products that render our products less marketable or obsolete, or, that Milestone Scientific will succeed in improving its existing products, effectively develop new products, or obtain required regulatory approval for the STA Instrument in August 2006.those products.

Government Regulation

The manufacture and sale of medical devices and other medical products are subject to extensive regulation by the FDAFood and Drug Administration  ("FDA") pursuant to the FDCU.S. Food, Drug and Cosmetic Act (“FD&C Act”), and by other federal, state, and foreign authorities. UnderUnder the FDCFD&C Act, medical devices must receive FDA clearance before they can be marketed commercially in the United StatesStates. Some medical products must undergo rigorous pre-clinical and clinical testing and an extensive FDA approval process before they can be marketed. 

These processes can take a number ofmany years and require the expenditure of substantial resources. The time required for completing such testing and obtaining such approvals is uncertain, and FDA clearance may never be obtained. Delays or rejections may be encountered based upon changes in FDA policy during the period of product development and FDA regulatory review of each product submitted. Similar delays also may be encountered in other countries. Following the enactment of the Medical Device Amendments to the FDCU.S. Food, Drug and Cosmetic Act in May 1976, the FDA classified medical devices in commercial distribution into one of three classes. This classification is based on the controls necessary to reasonably ensure the safety and effectiveness of the medical devices. Class I devices are those devices whose safety and effectiveness can reasonably be ensured through general controls, such as adequate labeling, pre-market notification, and adherence to the FDA’s Quality InstrumentSystem Regulation (“QSR”), also referred to as “Good Manufacturing Practices” (“GMP”) regulations. Some Class I devices are further exempted from some of the general controls. Class II devices are those devices whose safety and effectiveness reasonably can be ensured through the use ofusing special controls, such as performance standards, post-market surveillance, patient registries, and FDA guidelines. Class III devices are those which must receive pre-market approval by the FDA to ensure their safety and effectiveness. Generally, Class III devices are limited to life-sustaining, life-supporting or implantable devices.

If a manufacturer or distributor can establish that a proposed device is “substantially equivalent”Prior to a legally marketed Class I or Class II medical device or to a Class III medical device for which the FDA has not required pre-market approval, the manufacturer or distributor may seek FDA marketing clearance for the device by filing a 510(k) Pre-market Notification. The 510(k) Pre-market Notification and the claim of substantial equivalence may have to be supported by various types of data and materials, including test results indicating that the device is as safe and effective for its intended use as a legally marketed predicate device. Following submission of the 510(k) Pre-market Notification,clearance, the manufacturer or distributor may not place the device into commercial distribution until an order is issued by the FDA. By regulation, the FDA has no specific time limit by which it must respond to a 510(k) Pre-market Notification. At this time,Currently, the FDA typically responds to the submission of a 510(k) Pre-market Notification within 180 days. The FDA response may declare that the device is substantially equivalent to another legally marketed device and allow the proposed device to be marketed in the United StatesStates. However, the FDA may determine that the proposed device is not substantially equivalent or may require further information, such as additional test data, before the FDA is able to make a determinationdecide regarding substantial equivalence. Such determination or request for additional information could delay market introduction of products and could have a material adverse effect on our business, financial condition and results of operations.products. If a device that has obtained 510(k) Pre-market Notification clearance is changed or modified in design, components, method of manufacture, or intended use, such that the safety or effectiveness of the device could be significantly affected, separate 510(k) Pre-market Notificationnotification clearance must be obtained before the modified device can be marketed in the United States. If a manufacturer or distributor cannot establish that a proposed device is substantially equivalent to a legally marketed device, the manufacturer or distributor will have to seek pre-market approval of the proposed device, a more difficult procedure requiring extensive data, including pre-clinical and human clinical trial data, as well as extensive literature to prove the safety and efficacy of the device.

The FDA cleared the Wand, our CompuDent System, and its disposable handpieces, for marketing in the United States for dental applications in July 1996; the CompuMed® System for marketing in the United States for medical applications in May 2001; the Safety Wand® for marketing in the United States for dental applications in September 2003; the Wand/STA System for dental applications in August 2006; and our CompuFlo Epidural System in June 2017. For us to commercialize other products in the United States, Milestone Scientific would have to submit and have cleared additional 510(k) applications to the FDA.

In 2017, the FDA reduced the barrier to marketing clearance for certain dental devices. As a result, other manufacturers of injection devices could more easily enter the dental market. However, we believe that any new device will be very limited in sales volume without a significant distributor in the dental market.

Though the STA Instrument, CompuDent®, Safety Wand®certain dental and CompuMed®medical devices have received FDA marketing clearance, there can be no assurance that any of the other productsmedical devices under development will obtain the required regulatory clearance in a timely manner, or at all. If regulatory clearance of a product is granted, such clearance may entail limitations on the indicated uses for which the product may be marketed. In addition, modifications may be made to the products to incorporate and enhance their functionality and performance based upon new data and design review. There can be no assurance that the FDA will not request additional information relating to product improvements; that any such improvements would not require further regulatory review, thereby delaying the testing, approval, and commercialization of product improvements; or that ultimately any such improvements will receive FDA clearance.

Compliance with applicable regulatory requirements is subject to continual review and will beis monitored through periodic inspections by the FDA. Later discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions on such product or manufacturer, including fines, delays or suspensions of regulatory clearances, seizures or recalls of products, operating restrictions, and criminal prosecution and could have a material adverse effect on our business, financial condition and results of operations.prosecution.

Milestone Scientific is subject to pervasive and continuing regulation by the FDA, whose regulations require manufacturers of medicalmedical devices to adhere to certain QSR requirements as defined by the FDCFD&C Act. QSR compliance requires testing, quality control and documentation procedures. Failure to comply with QSR requirements can result in the suspension or termination of production, product recall or fines and penalties. Products also must be manufactured in registered establishments. In addition, labeling and promotional activities are subject to scrutiny by the FDA and, in certain circumstances, by the Federal Trade Commission. The export of devices is also subject to regulation in certain instances.instances

The Medical Device Reporting (“MDR”) regulation obligates us to provide information to the FDA on product malfunctions or injuries alleged to have been associated with the use of the product or in connection with certain product failures that could cause serious injury. If, as a resultbecause of FDA inspections, MDR reports or other information, the FDA believes that Milestone Scientific is not in compliance with the law, the FDA can institute proceedings to detain or seize products, enjoin future violations, or assess civil and/or criminal penalties against us, theour officers, or employees. Any action by the FDA could result in disruption of operations for an undetermined amount of time.

In March 2012, Milestone Scientific received approval for The Wand® and the STA Single Tooth Anesthesia System ^®Instrument from ANVISA in Brazil. In June 2007, Milestone Scientific received a CE mark for the marketing of the STA Instrument in Europe. In June 2003 Milestone Scientific received a CE mark for the marketing of the Safety Wand® and The Wand® handpieces with needle in Europe. In July 2003, Milestone Scientific obtained regulatory approval to sell CompuDent® and its handpieces in Australia and New Zealand.

As of May 2014, China National Medicines received the appropriate registration approval from the regulatory body in China, therefore, shipment of STA handpieces began in China. In the fourth quarter of 2014, the distribution agreement with China National Medicines was terminated and Milestone China Ltd. (owned 40% by Milestone Scientific) became the authorized distributor of the STA instruments and handpieces in China.

Product Liability

Failure to use any of the products in accordance with recommended operating procedures could potentially result in health hazards or injury. Failures of the products to function properly could subject Milestone Scientific to claims of liability. Milestone Scientific maintains liability insurance in an amount that Milestone Scientific believes is adequate. However, there can be no assurance that the insurance coverage will be sufficient to pay product liability claims brought against Milestone Scientific. A partially or completely uninsured claim, if successful and of significant magnitude, could have a material adverse effect on our business, financial condition and results of operations.

EmployeesHuman Capital

As of December 31, 2016, Milestone2021, the Company had a total 1726 full-time employees  consisting of twoincluding one executive officersofficer of Milestone Scientific,  a director of clinical affairs, a director of engineering, a senior vice president of marketing, a senior project manager, three customer service representatives, two accountants, four clinical hygienist, a quality engineer, and an administrative manager.Scientific. Milestone Scientific also has a consultant who serves as a Director of Clinical AffairsAffairs. None of our employees are subject to a collective bargaining agreement and a business development consultant.we believe our employee relations are good. The Company currently does not have any official training programs or performance evaluations for its employees.

Global Advisory BoardCorporate Information

We have a Global Advisory Board (GAB), whichwere organized in August 1989 under the laws of the State of Delaware. Our principal executive office is staffed by highly qualified consultants with the background and expertise we need to carry out our long-term business objectives.located at 425 Eagle Rock Avenue, Roseland, New Jersey 07068. Our GAB members work with our management team in the planning, development and execution of business strategies to commercialize our epidural and other medical instruments on a worldwide basis. It reviews, and advises management on our progress in research and clinical development as well as new scientific perspectives. The GABtelephone number is composed of well-respected, experienced leaders with diverse expertise and knowledge in a variety of areas, including developing partnerships with medical and healthcare organizations in the United States and around the world, public health, clinical research and trial management, US healthcare policy, and business development.(973) 535-2717. 

Item 1A. Risk Factors

The following factors may affect the growth and profitability of Milestone Scientific and should be considered by any prospective purchaser or current holder of our securities:securities.  Our business, financial condition, results of operations and stock price could be materially adversely affected by any of these risks.

Milestone Scientific does notWe have a consistent history of profitable operations. Continuingoperating losses could exhaustcapital resourcesthat are expected to continue, and force Milestone Scientificwe are unable to discontinue operations.predict the extent of future losses, whether we will generate significant revenues or whether we will achieve or sustain profitability.

ForWe are a small, non-diversified medical device company with a history of limited revenue and significant operating losses and our prospects must be evaluated considering the uncertainties, risks, expenses, and difficulties frequently encountered by similarly situated companies. The Company has generated net losses in all periods since the commencement of our operations. The operating losses were $7.4 million and $7.5 million, for the years ended December 31, 20162021, and 2015, revenues2020, respectively. The net losses were approximately $10.5$6.8 million and $9.4 million, respectively. Milestone Scientific has a net loss of approximately $5.9$7.4 million, for year the years ended December 31, 20162021, and a net loss2020, respectively. 

We expect to make substantial expenditures and incur increasing operating costs in the future and our accumulated deficit will increase significantly as we undertake to commercialize our CompuFlo Epidural System. Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets, and stockholders' equity.  Because of approximately $5.4 million forthe risks and uncertainties associated with product acceptance, we are unable to predict the extent of any future losses, whether we will ever generate significant revenues or if we will ever achieve or sustain profitability.

The COVID-19 pandemic has and may continue to adversely affect the Company’s business. Additional factors could exacerbate such negative consequences and/or cause other materially adverse effects.

The COVID-19 pandemic did materially adversely affect the Company’s financial results and business operations in the Company’s fiscal year ended December 31, 2015. In addition, Milestone Scientific has had losses2020. Increase in demand for each year since the commencement of operations with the exception of 2013. Milestone Scientific had an accumulated deficit of approximately $73 million at December 31, 2016. At December 31, 2016, Milestone Scientific had cash and cash equivalents approximately $3.6 million, and working capital of approximately $7.7 million. Dental revenues are projected to improvedental business started in the upcoming 12 months due tofirst quarter of the new exclusive distribution arrangementyear 2021 and continued throughout the year. However the arrival of the Omicron and other variants might have an impact on the business moving forward. In the short term, demand for itsthe Company’s dental products for the United States and Canada with Henry Schein and increase dental revenues from out China business sector. To further reduce our expenditures, Milestone Medical expenses related to FDA clearance for the epidural and intra-articular instruments can be controlled as required to meet our budget. By limiting the FDA related expenses and increasing the dental instrument and handpieces revenue through the new distribution agreement, management believes that Milestone Scientific will have sufficient cash to meet all of its anticipated obligations over the next twelve months from the filing date of this Form 10-K.

Milestone Scientific management continues to examine all areas of the business to manage our cash flow. Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities throughshowing an increase in revenue based upon management’s assessment of present contractssell through activity to dental offices. Therefore, the change in demand may or may not continue and/or demand may or may not increase from historical levels depending on the duration and reductions in operating expenses.

We cannot become successful unless we gain greater market acceptance for our products and technology.

As with any new technology, there is substantial risk that the marketplace will not accept the potential benefits of this technology or be unwilling to pay for any cost differential with the existing technologies. Market acceptance of CompuDent®, STA Instrument, The Safety Wand®, CompuMed® and CompuFlo® depends, in large part, upon the ability to educate potential customersseverity of the product’s distinctive characteristics and benefits and will require substantial marketing efforts and expense. More than 47,000COVID-19 pandemic, the effectiveness of the STA Instrumentongoing vaccination process, the length of time it takes for normal economic and its predecessorsoperating conditions to resume, additional governmental actions that may be taken and/or extensions of time for restrictions that have been sold worldwide since 1998. Since being introducedimposed to marketdate, and numerous other uncertainties. Such events may result in February 2007, more than 20,000 of the STA Instrument have been sold. Milestone Scientific cannot assure that its current or proposed products will obtain enough of a broad based acceptance practitioners or thatbusiness and manufacturing disruption, inventory shortages, delivery delays, and reduced sales and operations, any of the current or proposed products will be able to compete effectively against current and alternative products.

Our limited distribution channels must be expanded in order to become successful.

Future revenues depend on Milestone Scientific's ability to market and distribute its computer-controlled injection products successfully. Beginning January 1, 2016, Milestone Scientific entered into a non-exclusive distribution agreement with Henry Schein. In June 2016, we established new exclusive distribution arrangements for our dental products for the United States and Canada with Henry Schein. Under these arrangements we will, for the first time, have a semi-dedicated independent sales force visiting dentists. We believe that these arrangements will be more effective than previous arrangements which primarily relied on appearances at dental shows and catalog sales. To be successful, Milestone Scientific will need to engage additional distributors, on a worldwide bases provide for their proper training and ensure adequate customer support. Milestone Scientific cannot assure that it will be able to hire and retain an adequate sales force and modify management or engage suitable distributors, or that the sales efforts or distributors will be able to successfully market and sell the products.

Excessive returns under the June 2016 Exclusive Distribution and Supply Agreement with Henry Schein, Inc. could have amaterial adverse effect onmaterially affect our business, financial condition, and results of operations.operations.

In June 2016,We are experiencing supply delays and shortages due to the disruptions the ongoing COVID-19 pandemic is having on the global supply chain, especially with respect to goods from China.

We are experiencing supply delays and shortages due to the disruptions the ongoing COVID-19 pandemic is having on the global supply chain, especially with respect to goods from China. The ongoing COVID-19 pandemic has resulted in significant disruption to the operations of certain suppliers in China and the related transportation of their goods to the United States that are parts of our global supply chain. We have been able to make alternative delivery arrangements for limited quantities of goods, at increased cost. While we entered intohave not yet experienced material shortages in supply as a new exclusive distributionresult of these disruptions and supply agreement with Henry Schein pursuant to whichour alternative delivery arrangements, if they were appointed as the exclusive distributor forto be prolonged or expanded in scope, there could be resulting supply shortages which could impact our dentalability to have manufactured and delivered our products into the United States and, Canada.  Under that agreement, Henry Schein has a rightultimately to return our products for full credit against the purchase price paid by them under limited circumstances in accordance withcustomers. Accordingly, such agreement, including but not limited to, returns due to shipment error by us or factory defect.  Excessive returns during any calendar yearsupply shortages and delivery limitations could have a material adverse effect on our business, financial condition, and results of operations.operations, and cash flows.

Our near-term prospectsThe ability of the Company’s employees to work may be significantly impacted by the COVID-19 pandemic

The Company’s employees are dependentbeing affected by the COVID-19 pandemic. From time to time, we have had employees working in the office, depending on the marketing successlocal positivity rate of COVID-19. As a result of the Omicron variant, beginning in December 2021, most of our epidural anesthetic injectionsoffice and intra-articular injection instrumentsmanagement personnel were working remotely. The health of the Company’s workforce is of primary concern and the Company may need to enact further precautionary measures to help minimize the risk of our employees being exposed to the coronavirus. Further, our management team is focused on mitigating the adverse effects of the COVID-19 pandemic, which has required and will continue to require a large investment of time and resources across the entire Company, thereby diverting their attention from other priorities that existed prior to the outbreak of the pandemic. If these conditions worsen, or last for an extended period, the Company’s ability to manage its business may be impaired, and operational risks, cybersecurity risks and other risks facing the Company even prior to the pandemic may be elevated. The COVID-19 pandemic is affecting the Company’s customers, suppliers, vendors, and other business partners, but the Company is not able to assess the full extent of the current impact nor predict the ultimate consequences that will result therefrom.  

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

The COVID-19 pandemic affected the Company’s operations in the EU community. If we fail to successfully commercialize these instrumentsfiscal years ended December 31, 2020, and  2021 in particular for the EU, ourCompany’s medical business, and prospects would be harmed significantly.may continue to do so due to the arrival of the Omicron and other variants for an indeterminable period thereafter. All of these factors may have far reaching impacts on the Company’s business, operations, and financial results and conditions, directly and indirectly, including without limitation impacts on the health of the Company’s management and employees, manufacturing, distribution, marketing, sales operations, customer, and consumer behaviors, and on the overall economy. The scope and nature of these impacts, most of which are beyond the Company’s control, continue to evolve and the outcomes are uncertain.

Our near-term prospects are dependent upon our success in marketing our epidural anesthetic injectionsManagement cannot predict the continued impact of the COVID-19 pandemic on the Company’s sales channels, supply chain, manufacturing, and intra-articular injection instruments indistribution nor to economic conditions generally, including the EU community where we have previously received CE approval.  There can be no assurance that weeffects on consumer spending. The ultimate extent of the effects of the COVID-19 pandemic on the Company is highly uncertain and will be able to successfully commercialize these products independ on future developments, and such effects could exist for an extended period even after the EU. If we fail to successfully commercialize these products in the EU, our business and prospects would be harmed significantly.pandemic might end.

Our prospects are dependent on FDA approvalWe may require additional funding and may be unable to raise capital when needed, which may force us to delay, curtail or eliminate commercialization efforts of our epidural anesthetic injections instrumentCompuFlo Epidural Computer Controlled Anesthesia System.

Our operations have consumed substantial amounts of cash since inception.  During the years ended December 31, 2021 and 2020, net cash flow used in operations was approximately $4.0 million and approximately $7.0 million, respectively.  We expect to permitcontinue to spend substantial amounts on commercialization and marketing activities, including the continued commercialization and marketing of our FDA-approved CompuFlo Epidural Computer Controlled Anesthesia System.  Until such time, if ever, as we can generate a sufficient amount of product revenue and achieve positive cash flow, we expect to seek to finance future cash needs through equity financings or corporate collaboration and licensing arrangements and may seek the sale of non-medical assets. 

Raising additional capital by issuing securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish proprietary rights.

To the extent that we raise additional capital by issuing equity securities, the share ownership of existing stockholders will be diluted.  Any future debt financing may involve covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, redeem our stock, make certain investments, and engage in certain merger, consolidation, or asset sale transactions, among other restrictions.  In addition, if we raise additional funds through licensing arrangements or the disposition of any of our assets, it may be necessary to relinquish potentially valuable rights to our product candidates or grant licenses on terms that are not favorable to us. 

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

We have limited internal experience in manufacturing operations and have not historically established our own manufacturing facilities. We currently lack the internal resources to manufacture any of our products, including our CompuFlo® Epidural Computer Controlled Anesthesia System. 

Milestone Scientific has been supplied by the manufacturer of the Wand/STA System and its predecessor, the CompuDent System, since the commencement of production in 1998, and by the manufacturer of its handpieces since 2003. The manufacturer of our handpieces is in the United States If we fail to obtainPeople’s Republic of China and the regulatory approvals necessary to sell this instrument in the United States, or upon approval,fail to successfully commercialize this instrumentin the United States, our business and prospects would be harmed significantly.

Our prospects are dependent upon our receipt of FDA approval of our epidural anesthetic injections instrument.  We have filed a 510(k) application with respect to this instrument with the FDA and approval, which will permit us to commence marketingmanufacturer of the instruments in the United States,Wand/STA System is pending.  There can be no assurance that we will obtain the FDA approvals necessary to sell our epidural anesthetic injections instrument in the United States. In addition, even ifAt present, we obtain such regulatory approvals, there can be no assurance thathave an informal arrangement with certain manufacturers of our products. We have one manufacturer of the handpieces for our devices which is under a long-term contract. We have a single manufacturer manufacturing our devices. Our current arrangement with our manufacturers is on a purchase order-by-purchase order basis. As a result, we will be abledo not have price protection or a supply commitment for our devices or handpieces. If either manufacturer insists on a material change in terms or determines to successfully commercialize this productdiscontinue manufacture of our products, it could have an adverse effect on our financial condition and results of operation.

An operational disruption in the United States. If we failfacility of the manufacturer of or their ability to obtain the regulatory approvals necessary to sell this instrumentship our handpieces or fail to successfully commercialize this productdevices could negatively impact our financial results.  The occurrence of a natural disaster, such as a hurricane, tropical storm, earthquake, tornado, severe weather, flood, fire, or epidemic, pandemic, or other health emergency, or other unanticipated problems such as labor difficulties, equipment failure or unscheduled maintenance, in the United States, our business and prospects would be harmed significantly.each case could cause operational disruptions of varied duration.   

Changes

These types of disruptions could materially adversely affect our financial condition and results of operations to varying degrees dependent upon the facility, the duration of the disruption, our ability to shift business to another facility or find alternative sources of supply.  Any losses due to these events may not be covered by our existing insurance policies or may be subject to certain deductibles.  Given our current manufacturing relationships, it is possible that our manufacturing requirements may exceed the available supply allotments under our existing agreements.  Our anticipated future reliance on third-party manufacturers exposes us to the following additional risks:

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

Each of these risks could delay the commercialization of our CompuFlo Epidural Computer Controlled Anesthesia System, limit our available supply of The Wand/ STA for dental applications, cause damage to our reputation, result in laws and regulations over which wehigher costs and/or deprive us of potential product revenues.  Any curtailment or interruptions of the supply, whether as a result of termination of the relationship or otherwise, would have no control can significantly affecta material adverse effect on our financial condition, business, and results of operations.

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

Because the sole manufacturer of our dental handpieces is located in China, our business is disproportionately exposed to the economic, environmental, and political conditions of the region. China’s political and economic systems are very different from most developed countries in many respects, including, the amount of government involvement, the level of development, the control of foreign exchange and the allocation of resources. Uncertainties may arise with changing governmental entitypolicies and measures. China also faces many social, economic, and political challenges that regulatesmay produce instabilities in both its domestic arena and in its relationship with other countries.

These instabilities may significantly and adversely affect our operationssupply of dental handpieces which would in turn adversely affect our financial performance. In addition, as the countryChinese legal system develops, there can be no assurance that changes in which they are located may enact new legislation or adopt new laws and regulations and their interpretation or policies at any time, and new judicial decisions may change the interpretation of existing legislation or regulations at any time in any of the countries in which our operations or projects are located. Wetheir enforcement will not have no control over any such changes. Any new laws or regulations governing our operations could have an adverse impact on our business, results of operations and prospects.

Our planned operations in the developing world could cause us to incur additional costs and risks associated with doing business in developing markets.

We are seeking to operate in the developing world (e.g., China), which would make us vulnerable to political, economic and social instability in such areas. Many areas of the developing world have experienced political, economic and social uncertainty in recent years, including an economic crisis characterized in some cases by increased inflation, high domestic interest rates, negative economic growth, reduced consumer purchasing power and high unemployment. Political, economic and social instability in these countries may have ana material adverse effect on our business financial conditionrelationship with the sole manufacturer of our dental handpieces. Any adverse change in the economic, environmental, and resultspolitical conditions in China could have a material adverse effect on economic growth and the level of operations.investments and availability of capital in China, which in turn could lead to a reduction in the supply of our dental handpieces and consequently have a material adverse effect on our businesses.

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

Our future success depends upon the continued service of our executive officer and other key management and technical personnel, and on our ability to continue to identify, attract, retain, and motivate them. Implementing our business strategy requires specialized territory managers and other talent, as our revenues are highly dependent on technological and product innovations. The market for employees in our industry is extremely competitive, a highly competitive environment.number of such competitors are significantly larger than us and are able to offer compensation in excess of what we are able to offer. We are continuing to search for a Chief Financial Officer to replace our long-time Chief Financial Officer, who has retired. If we are unable to attract and retain qualified employees, our business may be harmed. 

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

In general, our success depends upon the quality of our products.  Quality management plays an essential role in meeting customer requirements, preventing defects, improving our products and services, and assuring the safety and efficacy of our products.  Our future success depends on our ability to maintain and continuously improve our quality management program.  A quality or safety issue may result in adverse inspection reports, warning letters, product recalls or seizures, monetary sanctions, injunctions to halt manufacture and distribution of products, civil or criminal sanctions, costly litigation, refusal of a government to grant approvals and licenses, restrictions on operations or withdrawal of existing approvals and licenses.  An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity, a loss of customer confidence in us or our current or future products, which may result in the loss of sales and difficulty in successfully launching new products.

If physicians do not accept nor use our CompuFlo Epidural System, our ability to generate revenue from sales will be materially impaired.

Although the FDA has cleared our application to begin marketing the CompuFlo Epidural System, this is no assurance that physicians, hospitals, clinics, and other health care providers will accept and use it.  Acceptance and use of the CompuFlo Epidural System will depend on many factors including:

Because we expect sales of the CompuFlo Epidural Computer Controlled Anesthesia System to generate substantially all our medical product revenues in the near-term, the failure of this product to find market acceptance would harm our business and could require us to seek additional financing or make such financing difficult to obtain on favorable terms, if at all.

Developments by competitors may render our products or technologies obsolete or non-competitive.

The medical device industry is characterized byintensely competitive and subject to rapid and significant technological change, changing customer needschange.  We expect that other companies (or individuals), whether located in the United States or abroad, will pursue the development of alternative injection-based or imaging-based systems that will compete with our products.  Many of these potential competitors have substantially greater capital resources, larger research and frequent newdevelopment staffs and facilities, longer product introductions. Our products may be rendered obsolete as a result of future innovations. We face intense competition from other manufacturers. Some of our competitors may be larger than we aredevelopment history in obtaining regulatory approvals and may have greater financial, technical, research,manufacturing and marketing sales, distribution and other resourcescapabilities than we do.  We believe that price competition will continue among products developed in our markets. Our competitorsThese companies also compete with us to attract qualified personnel and parties for acquisitions, joint ventures, or other collaborations.  As a result, we may developnot be able to compete effectively against these companies or market technologies and products that are more effective or commercially attractive than anytheir products.

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

Intellectual property rights, including patents, trade secrets, confidential information, trademarks, trade names and trade address, are important to our business.  We will endeavor to protect our intellectual property rights in key jurisdictions in which our products are produced or used and in jurisdictions into which our products are imported.  Our competitorssuccess will depend to a significant degree upon our ability to protect and preserve our intellectual property rights.  However, we may succeedbe unable to obtain or maintain protection for our intellectual property in obtaining regulatory approvalkey jurisdictions.  

Although we own and introducinghave applied for patents and trademarks throughout the world, we may have to rely on judicial enforcement of our patents and other proprietary rights.  Our patents and other intellectual property rights may be challenged, invalidated, circumvented, and rendered unenforceable or commercializing products before we do. Such developmentsotherwise compromised.  A failure to protect, defend or enforce our intellectual property could have a significant negativean adverse effect on our business, financial condition and results of operations.  Similarly, third parties may assert claims against us and our customers and distributors alleging our products infringe upon third party intellectual property rights.

We believe that the intellectual property underlying our products is a competitive advantage.  We rely on a combination of patent rights, trade secrets and nondisclosure and non-competition agreements to protect our proprietary intellectual property, and we will continue to do so.  There can be no assurance that our patents, trade secret policies and practices or other agreements will adequately protect our intellectual property.  Our issued patents may be challenged, found to be over-broad or otherwise invalidated in subsequent proceedings before courts or the U.S. Patent and Trademark Office.  Even if enforceable, we cannot provide any assurances that they will provide significant protection from competition.  The processes, systems, and/or security measures we use to preserve the integrity and confidentiality of our data and trade secrets may be breached, and we may not have adequate remedies resulting from such breaches.  In addition, our trade secrets may otherwise become known or be independently discovered by competitors.  There can be no assurance that the confidentiality, nondisclosure and non-competition agreements with employees, consultants and other parties with access to our proprietary information to protect our trade secrets, proprietary technology, processes and other proprietary rights, or any other security measures relating to such trade secrets, proprietary technology, processes and proprietary rights, will be adequate, will not be breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets or proprietary knowledge.  To the extent that our consultants, contractors, or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

If we must take legal action to protect, defend or enforce our intellectual property rights, any suits or proceedings could result in significant costs and diversion of our resources and our management’s attention, and we may not prevail in any such suits or proceedings.  A failure to protect, defend or enforce our intellectual property rights could have an adverse effect on our results of operations.

We could lose our market advantage earlier than expected.

We believe that our products represent a significant improvement over any existing drug delivery injection system in use today.  However, this competitive advantage can evaporate quickly if we are not able to compete successfully, wecommercialize our products quickly.  In the medical device industry, the majority of an innovative product’s commercial value is realized during the early stages of commercialization, before competing products are developed.  Our market advantage is based, in part, on patent rights and the need for new competing products and systems to obtain regulatory approval before they can be commercialized.  The scope of our patent rights may not be able to do so in a profitable manner.limited and may also depend on the availability of meaningful legal remedies. 

Our success depends upon the development of new products and product enhancements, which entails considerable time and expense.

We place a high priority on the development of new productsfailure to add to our product portfolio, as well as on the development of enhancements to our existing products. Product development involves substantial expense and we cannot be certain that a completed product will generate sufficient revenue for our business to justify the resources that we devote to research and development related to such product. The time and expense required to develop new products and product enhancements is difficult to predict and we cannot guarantee that we will succeed in developing, introducing and marketing new products and product enhancements. Our inability to successfully develop and introduce new or enhanced products on a timely basis or at all, or to achieve market acceptance of such products, could materially impair our business.

We are dependent on adequate protection of our patent and proprietary rights.

We rely on patents, trade secrets, trademarks, copyrights, know-how, license agreements and contractual provisions to establish andadequately protect our intellectual property rights. However, these legal means afford us only limited protection and may not adequately protect our rights, or remedies to gain or keep any advantages we may have over our competitors. We cannot guarantee that others may not independently develop the same or similar technologiesthrough patents or otherwise, obtain access to our technology and trade secrets. Our competitors, many of which have substantial resources and may make substantial investments in competing technologies, may apply for and obtain patents that will prevent, limit, or interfere with our ability to manufacturelimitations on the use or market our products. Further, while we do not believe that any of our products or processes interfere with the rights of others, third parties may nonetheless assert patent infringement claims against us in the future.

Costly litigation may be necessary to enforce patents issued to us, to protect trade secrets or know-how we own, to defend us against claimed infringement of the rights of others or to determine the ownership, scope, or validity of our proprietary rights and the rights of others. Any claims of infringement against us may involve significant liabilities to third parties, could require us to seek licenses from third parties and could prevent or delay us from manufacturing, selling or using our products. The occurrenceloss of such litigation or the effect of an adverse determination in any of this type of litigationrights, could have a material adverse effect on our ability to prevent the commercialization of competing anesthetic delivery systems.  In some countries, basic patent protections for our products may not exist because certain countries did not historically offer the right to obtain specific types of patents and/or we (or our licensors) did not file in those markets.  In addition, the patent environment can be unpredictable, and the validity and enforceability of patents cannot be predicted with certainty.

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

Third parties may claim that one or more aspects of our technologies or products may infringe on their intellectual property rights. 

Our computer-controlled anesthesia systems are complex systems and numerous U.S. and foreign patents and pending patent applications owned by third parties exist in fields that relate to the development and commercialization of drug delivery systems.  In addition, many companies have employed intellectual property litigation as a strategy to gain a competitive advantage.  It is possible that infringement claims may occur as the number of products and competitors in our market increases.  In addition, to the extent that we gain greater visibility and market exposure as a public company, we face a greater risk of being the subject of intellectual property infringement claims.  We cannot be certain that the conduct of our business does not and will not infringe intellectual property or other proprietary rights of others in the U.S. and in foreign jurisdictions.  If any of our computer-controlled anesthesia systems are found to infringe third party patent rights, we could be prohibited from manufacturing and commercializing the infringing technology unless we obtain a license under the applicable third-party patent and pay royalties or are able to design around such patent.  

We may be unable to obtain a license on terms acceptable to us, or at all, and we may not be able to redesign the system to avoid infringement.  Even if we can redesign our products or processes to avoid an infringement claim, our efforts to design around the patent could require significant time, effort and expense and ultimately may lead to an inferior or costlier product.  Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim and could distract our management from our business. 

Furthermore, if any such claim is successful, a court could order us to pay substantial damages, including compensatory damages for any infringement, plus prejudgment interest and could, in certain circumstances, treble the compensatory damages and award attorney fees.  These damages could be substantial and could harm our reputation, business, financial condition, and operating results.  A court also could enter orders that temporarily, preliminary, or permanently prohibit us, our licensees, if any, and our customers from making, using, selling, offering to sell, or importing one or more of our products or using our proprietary technologies or processes, or could enter an order mandating that we undertake certain remedial activities.  Any of these events could seriously harm our business, operating results, ofand financial condition.

We are exposed to the risks inherent in international manufacturing, sales, and operations.

In 2021, export sales outside of the United States made up approximately 62% of our total sales, and we sell our products to customers in approximately 49 countries and U.S. territories.  We have exposure to risks of operating in many foreign countries, including:

Continued instability in the credit and financial markets may negatively impact our ability to commercialize our products.

Financial markets in the United States, Canada, Europe, and Asia continue to experience disruption, including, among other things, significant volatility in security prices, declining valuations of certain investments, as well as severely diminished liquidity and credit availability.  Business activity across a wide range of industries and regions continues to be reduced.  As a small medical device company, we rely on third parties for several important aspects of our business, including contract manufacturing of products, distribution of our products and sales and marketing.  These third parties may be unable to satisfy their commitments to us due to tightening of global credit from time to time, which would adversely affect our business.  The continued volatility in the credit and financial market conditions may also negatively impact our ability to access capital and credit markets and our ability to manage our cash balance.  While we are unable to predict the continued duration and severity of any adverse conditions in the United States and other countries, any of the circumstances mentioned above could adversely affect our business, financial condition, operating results and cash flow or cash position.

Our ability to commercialize our products will depend in part on the extent to which reimbursement will be available from governmental agencies, health administration authorities, private health maintenance organizations and health insurers and other healthcare payers.

Our ability to generate revenues from our products will be diminished if the products sell for inadequate prices or hospitals or physicians are unable to obtain adequate levels of reimbursement for the cost they incur in connection with the use of the product.  Significant uncertainty exists as to the reimbursement status of newly approved healthcare products.  Healthcare payers, including Medicare, are challenging the prices charged for medical products and services.  Government and other healthcare payers increasingly attempt to contain healthcare costs by limiting both coverage and the level of reimbursement for products.  Insurance coverage may not be available, or reimbursement levels may be inadequate, to cover the charges for the use of such product.  If government and other healthcare payers do not provide adequate coverage and reimbursement for any of our products, market acceptance of such product could be reduced.  Prices in many countries, including many in Europe, are subject to local regulation and price controls.  In the United States, where pricing levels for medical products, procedures and services are substantially established by third-party payors, including Medicare, if payors reduce the amount of reimbursement for a product, it may cause groups or individuals dispensing the product to discontinue use of the product, to substitute lower cost products even if the alternatives are less effective or to seek additional price-related concessions.  These actions could have a negative effect on our financial results.  The existence of direct and indirect price controls and pressures on our products could materially adversely affect our financial prospects and performance. 

We are subject to substantial domestic and international government regulation, including regulatory quality standards applicable to our manufacturing and quality processes. Failure by us to comply with these standards could have an adverse effect on our business, financial condition, or results of operations.

The FDA regulates the approval, manufacturing and sales and marketing of many of our products in the United States. Significant government regulation also exists in other countries in which we conduct business. As a device manufacturer, we are required to register with the FDA and are subject to periodic inspection by the FDA for compliance with the FDA’sFDA’s Quality System Regulation requirements, which require manufacturers of medical devices to adhere to certain regulations, including testing, quality control and documentation procedures. In addition, the federal Medical Device Reporting regulations require us to provide information to the FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury or, if a malfunction were to occur, could cause or contribute to a death or serious injury. Compliance with applicable regulatory requirements is subject to continual review and is rigorously monitored through periodic inspections by the FDA.

In the European community, we are required to maintain certain ISO certifications to sell our products and must undergo periodic inspections by notified bodies to obtain and maintain these certifications. Failure to comply with current governmental regulations and quality assurance guidelines could lead to temporary manufacturing shutdowns, product recalls or related field actions, product shortages or delays in product manufacturing. Efficacy or safety concerns, an increase in trends of adverse events in the marketplace, and/or manufacturing quality issues with respect to our products could lead to product recalls or related field actions, withdrawals, and/or declining sales.

We may be subject, directly, or indirectly, to U.S. federal and state health care fraud and abuse and false claims laws and regulations. Prosecutions under such laws have increased in recent years and we may become subject to such litigation. If we are unable to comply or have not fully complied with such laws, we could face substantial penalties.

Our operations are and will continue to be directly, or indirectly through our distributors, customers, and health care professionals, subject to various U.S. federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, federal False Claims Act, and the Foreign Corrupt Practice Act of 1977 (“FCPA”). These laws may impact, among other things, our proposed sales, and marketing and education programs. The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal health care program such as Medicare or Medicaid. Several courts have interpreted the statute’sstatute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal health care covered business, the statute has been violated. The Anti-Kickback Statute is broad and, despite a series of narrow safe harbors, prohibits many arrangements and practices that are lawful in businesses outside of the health care industry. Penalties for violations of the federal Anti-Kickback Statute include criminal penalties and civil and administrative sanctions such as fines, imprisonment, and possible exclusion from Medicare, Medicaid, and other federal health care programs. An alleged violation of the Anti-Kickback Statute may be used as a predicate offense to establish liability pursuant to other federal laws and regulations such as the federal False Claims Act. Many states have also adopted laws similar tolike the federal Anti-Kickback Statute, some of which apply to the referral of patients for health care items or services reimbursed by any source, not only the Medicare and Medicaid programs.

The federal False Claims Act prohibits persons from knowingly filing, or causing to be filed, a false claim to, or the knowing use of false statements to obtain payment from, the federal government. Suits filed under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the government and such individuals, commonly known as “relators” or “whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. The frequency of filing qui tam actions has increased significantly in recent years, causing greater numbers of medical device, pharmaceutical and health care companies to have to defend False Claim Act actions. The Affordable Care Act includes provisions expanding the ability of certain relators to bring actions that would have been previously dismissed under prior law. When an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties for each separate false claim. The Deficit Reduction Act of 2005 encouraged states to enact or modify their state false claims act to be at least as effective as the federal False Claims Act by granting states a portion of any federal Medicaid funds recovered through Medicaid-related actions. Most states have enacted state false claims laws, and many of those states included laws with qui tam provisions. States had until March 31, 2013 to enact or amend their false claims laws modeled after the federal False Claims Act for review and approval to receive a greater portion of any recovery.

The Affordable Care Act includes provisions known as the Physician Payments Sunshine Act (section 6002), which require manufacturers of drugs, biologics, devices, and medical supplies covered under Medicare and Medicaid starting in 2012 to recorddisclose to the Centers for Medicare and Medicaid Services any transfers of value to physicians and teaching hospitals beginning in August 2013 and to report to the Centers for Medicare and Medicaid Services starting in 2014 for subsequent public disclosure.hospitals. Manufacturers must also disclose investment interests held by physicians and their family members. Failure to submit the required information may result in civil monetary penalties of up to $1 million per year for knowing violations and may result in liability under other federal laws or regulations.

Similar reporting requirements have also been enacted on the state level in the United States, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with health care professionals. In addition, some states, such as Massachusetts and Vermont, impose an outright ban on certain gifts to physicians. If we receive FDA clearance to market our epidural anesthetic injections and/or our intra-articular injection instruments in the United States, theseThese laws could affect our promotional activities by limiting the kinds of interactions we could have with hospitals, physicians or other potential purchasers or users of our system.products. Both the disclosure laws and gift bans will impose administrative, cost and compliance burdens on us.

We are unable to predict whether we could be subject to actions under any of these laws, or the impact of such actions. If we are found to be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, or an administrative action of suspension or exclusion from government health care reimbursement programs and the curtailment or restructuring of our operations.

In addition, we are subject to the FCPAForeign Corrupt Practices Act (“FCPA”) and other countries’countries’ anti-corruption/anti-bribery regimes, such as the U.K. Bribery Act. The FCPA prohibits improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business.

Safeguards we implement to discourage improper payments or offers of payments by our employees, consultants, sales agents, or distributors may be ineffective, and violations of the FCPA and similar laws may result in severe criminal or civil sanctions, or other liabilities or proceedings against us, any of which would likely harm our reputation, business, results of operations and financial condition.

We depend on two principal manufacturers. If Milestone Scientific cannot maintain its existingrelationships or develop new ones, it may have to cease operations.

Milestone Scientific and its subsidiary has informal arrangements with the manufacturer of the STA Instrument, CompuDent® and CompuMed® and with one of the principal manufacturers of the handpieces, for those items, respectively. Pursuant to the informal arrangements, they manufacture these instruments and handpieces under specific purchase orders without minimum purchase commitment. Milestone Scientific has a manufacturing agreement with one of the principal manufacturers, which is a related party, of its handpieces pursuant to which they manufacture products under specific purchase orders but without minimum purchase commitments. Milestone Scientific has been supplied by the manufacturer of the STA Instrument, CompuDent® and CompuMed® epidural and intra-articular instruments since the commencement of production in 1998, the manufacturer of its handpieces since 2003. However, termination of the manufacturing relationship with any of these manufacturers could significantly and adversely affect the ability to produce and sell the products. Though other alternate sources of supply for handpieces exist, Milestone Scientific would need to recover its existing tools or have new tools produced to establish relationships with new suppliers. Establishing new manufacturing relationships could involve significant expense and delay. Any curtailment or interruptions of the supply, whether or not as a result or termination of the relationship, would have a material adverse effect on our financial condition, business and results of operations.

We may be subject to product liability claims that are not fully covered by insurance and that could put Milestone Scientific under financial strain.

Milestone Scientific could be subject to claims for personal injury from the alleged malfunction or misuse of the dental and medical products. While Milestone Scientific carries liability insurance that is believed to be adequate, Milestone Scientific cannot assurethere is no assurance that the insurance coverage will be sufficient to pay such claims should they be successful. A partially or completely uninsured claim, if successful and of significant magnitude, could have a material adverse effect on our business, financial condition, and results of operations.

Milestone Scientific reliesExcessive returns under our Distribution and Supply Agreement with Henry Schein, Inc. could have a material adverse effect on our business, financial condition, and results of operations.

Under our Distribution and Supply Agreement with Henry Schein, Henry Schein has a right to return our products for full credit against the purchase price paid by them under limited circumstances in accordance with such agreement, including but not limited to, returns due to shipment error by us or factory defect.  Excessive returns during any calendar year could have a material adverse effect on our business, financial condition, and results of operations.

Changes in laws and regulations over which we have no control can significantly affect our business and results of operations.

Any governmental entity that regulates our operations in the country in which they are located may enact new legislation or adopt new laws and regulations or policies at any time, and new judicial decisions may change the interpretation of existing legislation or regulations at any time in any of the countries in which our operations or projects are located. We have no control over any such changes. Any new laws or regulations governing our operations could have an adverse impact on our business, results of operations and prospects.

We rely on the continuing services of its Chief Executive Officer andour Director of Clinical Affairs.Affairs and Chief Executive Officer.

Milestone Scientific dependsWe depend on the personal effortsefforts and abilities of its Chief Executive Officer andour Director of Clinical Affairs.Affairs and our Chief Executive Officer. Milestone Scientific maintains a key man life insurance policy in the amount of $1,000,000 on the life of its Chief Executive Officer. However,Milestone has begun the  process of transferring the existing policy from the former Interim Chief Executive Officer to the Arjan Haverhals, the current Chief Executive Officer. The loss of his services or the services of itsour Director of Clinical Affairs, on whom Milestone Scientific maintainswe maintain no insurance, could have a materially adverse effect on the business.our business results of operations and prospects

The market price of Milestone Scientific’s common stock has been volatile and may continue tofluctuate significantly because of various factors, some of which are beyondMilestone Scientific’s control.

Milestone Scientific’s stock price has been extremely volatile, fluctuating during the last two years between $4.00 and $1.27. The market price of common stock could continue to fluctuate significantly in response to a variety of factors, some of which may be beyond Milestone Scientific’s control.

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

Milestone Scientific’sScientific’s principal stockholders, Leonard Osser and Gian Domenico Trombetta K. Tucker Andersen, and Robert Gintel beneficially owncontrol approximately 50%22% of the issued and outstanding shares of common stock. As a result, they have the ability tocan exercise substantial control over Milestone Scientific’sour affairs and corporate actions requiring stockholder approval, including electing directors, selling all or substantially all of theour assets, merging with another entity, or amending itsour certificate of incorporation. This de facto control could delay, deter, or prevent a change in control and could adversely affect the price that investors might be willing to pay in the future for Milestone Scientific’s securities.  In addition, because of the concentration of ownership of our shares of common stock, our stockholders may from time to time, observe instances where there may be less liquidity in the public markets for our securities.

Future sales orFailure to implement effective internal controls required by the potential for saleSarbanes-Oxley Act of 2002 could result in material misstatements in our financial statements, cause investors to lose confidence in the Company’s reported financial information and have a substantial number of shares of common stock could causenegative effect on the trading price of our common stock.

Section 404 of the Sarbanes-Oxley Act of 2002 requires management of public companies to develop and implement internal controls over financial reporting and evaluate the effectiveness thereof. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual and interim financial statements will not be prevented or detected on a timely basis. Any failure to complete the Company’s assessment of its internal controls over financial reporting or to remediate any material weaknesses that management may identify could harm the Company’s operating results, cause the Company to fail to meet its reporting obligations or result in material misstatements in the Company’s financial statements. Inadequate disclosure controls and procedures and internal controls over financial reporting could also cause investors to lose confidence in the Company’s public disclosures and reported financial information, which could have a negative effect on the trading price of our common stock.

The market price of our common stock todeclinemay be volatile and may fluctuate in a way that is disproportionate to our operating performance.

Our stock price may experience substantial volatility because of many factors, including:

Many of these factors are beyond our control.  The stock markets in general, and the market for small, medical device companies, have historically experienced extreme price and volume fluctuations.  These fluctuations often have been unrelated or disproportionate to the operating performance of these companies.  These broad market and industry factors could impair Milestone Scientific’s ability to raise capital through subsequent equityofferings.reduce the market price of our common stock, regardless of our actual operating performance.

Sales of a substantial number of shares of our common stock, in the public markets, or the perception that thesesuch sales may occur, could causemay adversely impact the market price of the stock to decline and could materially impair its ability to raise capital through the sale of additional equity securities. At December 31, 2016, Milestone Scientific hadour common stock.

Almost all our 68,120,003 outstanding options to purchase 1,736,994 shares of common stock at prices ranging from $0.75on December 31, 2021, as well as a substantial number of shares of our common stock underlying outstanding warrants, are available for sale in the public market, either freely or pursuant to $3.89 per shareRule 144 under the Securities Act of 1933, as amended.  In addition, we have an effective S-3 registration statement on file with the SEC covering the sale by us of up to $30 million of securities, including common stock, preferred stock, debt, convertible debt, and warrants, of which $10.7 million remain available for sale. Sales of a weighted average exercisesubstantial number of shares of our common stock, or the perception that such sales may occur, may adversely impact the price of $1.85. Holders of these options are given the opportunityour common stock. 

We have never paid and do not intend to profit from a risepay cash dividends in the marketforeseeable future.As a result, capital appreciation, if any, will be your sole source of gain.

We have never paid cash dividends on any of our capital stock, and we currently intend to retain future earnings, if any, to fund the development and growth of our business.  In addition, the terms of existing and future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

Provisions in our certificate of incorporation, our by-laws and Delaware law might discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Provisions of our certificate of incorporation, our by-laws and Delaware law may have the effect of deterring unsolicited takeovers or delaying or preventing a change in control of our company or changes in our management, including transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices. In addition, these provisions may limit the ability of stockholders to approve transactions that they may deem to be in their best interests.  These provisions include:

In addition, Section 203 of the Delaware General Corporation Law prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years, has owned 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.  The existence of the forgoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock.  They could also deter potential acquirers of our Company, thereby reducing the likelihood that you could receive a premium for your common stock and are likely to exercise their securities at a time when Milestone Scientific would be able to obtain additional equity capital on more favorable terms. Thus, the terms upon which Milestone Scientific will be able to obtain additional equity capital may be adversely affected, since the holders of outstanding options and warrants can be expected to exercise them at a time when Milestone Scientific would, in all likelihood, be able to obtain any needed capital on terms more favorable than the exercise terms provided by such outstanding securities. The market price of the common stock has been volatile and may continue to fluctuate significantly because of various factors, many of which are beyond Milestone Scientific’s control.an acquisition. 

AdherenceIf we fail to Sarbanes-Oxley Act and SECrules concerning internal controlsadhere to the strict listing requirements of NYSE American, we may be so costly that compliance could havesubject to delisting. an adverse effectAs a result, our stock price may decline, and our common stock may be de-listed.If our stock were no longer listed on Milestone Scientific.NYSE American, the liquidity of our securities likely would be impaired.

The managementOur common stock currently trades on the NYSE American under the symbol “MLSS”. If we fail to adhere to NYSE American's strict listing criteria, including with respect to stock price, our market capitalization and stockholders’ equity, our stock may be de-listed. This could potentially impair the liquidity of Milestone Scientific has assessedour securities not only in the effectivenessnumber of internal control over financial reporting as of December 31, 2016. In making this assessment, management used the criteria established in Internal Control-Integrated Framework issuedshares that could be bought and sold at a given price, which may be depressed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Milestone Scientific complied with Sarbanes-Oxley requirements to includerelative illiquidity, but also through delays in the annual reporttiming of transactions and the potential reduction in media coverage.  As a management reportresult, an investor might find it more difficult to dispose of our common stock.  Any failure at any time to meet the continuing NYSE American listing requirements could have an adverse impact on the effectivenessvalue of the internal control over financial reporting. In 2005, Milestone Scientific hired an outside consultant to assist with the development and implementation of the necessary internal controls and reporting procedures. In 2016 and 2015, Milestone Scientific utilized the outside consultant on a quarterly basis to review compliance with the internal controls over financial reporting. This expense amounted to approximately $20,000 and $14,000trading activity in 2016 and 2015, respectively and the cost is expected to continue in 2017.

our common stock. 

Item

Item 1B. Unresolved Staff Comments

None.

Item 2. DescriptionDescription of Property

The headquarters for Milestone Scientific is located at 220 South Orange Ave, Livingston,425 Eagle Rock Avenue, Roseland, New Jersey. Milestone Scientific leases approximately 7,625Jersey 07068, and our telephone number is (973) 535-2717. In August 2019, the Company signed a seven (7) year lease in a facility in Roseland, New Jersey (the “Roseland Facility”). The Roseland Facility carries monthly lease payments of $9,275, commencing April 1, 2020. The Company is also responsible for electric charges equal to $2.00 per square feetfoot, which is equal to $11,130 annually, payable in equal monthly installments of office space.$928. The lease term expires January 31, 2020 at a monthly costCompany will also be required to pay its proportionate share of $12,522. Additionally, Milestone Scientific has other smaller insignificant leases ending through 2017.certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts. A third partythird-party distribution and logistics center in Pennsylvania handles shipping and order fulfillment on a month-to-month basis.

Milestone Scientific does not own or intend to invest in any real property. Milestone Scientific currently has no policy with respect to investments oror interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.

ItemItem 3. Legal Proceedings

At the present time, Milestone Scientific is not involved in any material litigation.

ItemItem 4. Mine Safety Disclosure

Not applicable.

PARTPART II

ItemItem 5. Market for Common Equity, and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

Market Information

On June 1, 2015, our common stock was listed on the NYSE MKTAmerican under the symbol “MLSS”. Prior to its listing on the NYSE MKT, Milestone’s common stock traded on the OTC Market on the OTCQB market tier under the same symbol. The following table sets forth the high and low sales prices of Milestone’s common stock for the periods presented.

Holders

As of March 29, 2017,31, 2022, we had approximately 13068 stockholders of record of our common stock. We believe that we have approximately 1,737 beneficial5,125 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.

For information regarding securities authorized under the equity compensation plan, see Item 12.

Sales of Unregistered Securities

See NOTE J – STOCKHOLDERS’ EQUITY, toDuring the audited financial statements that accompany this Report for information regardingyear ended December 31, 2021, the issuanceCompany issued 289,661 shares of unregistered securities. These issuancescommon stock in payment of $770,334 of consulting expenses incurred by the Company. 

The foregoing shares were exemptissued in reliance upon the exemptions from the registration pursuant to Section 4(a)(2)requirements of the Securities Act of 1933, as amended (the "Act"), pursuant to Sections 4(a)(2), Section 4(a)(5) and/or Regulation D promulgated there-under. These securities may not be offered or sold in the United States absent registration under or exemption from the Act and aany applicable state securities laws. A legend restricting the sale,resale, transfer, or other disposition of these shares other than in compliance with the Act was imprinted on the stock certificates evidencing thesuch shares.

ITEM 6. Selected Financial Data

MilestoneMilestone 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.

ITEM 7. Management’sManagement’s Discussion and Analysis of Financial conditionCondition 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, that 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 research and development company that patents, designs, develops and commercializes innovative diagnostic and therapeutic injection technologies and devices for medical, dental and cosmetic 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 MKTAmerican 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.

Milestone Scientific has developed a proprietary, computer-controlled anesthetic delivery instrument, through the use of device, using The Wand®, a single use disposable handpiece. The instrumentdevice is marketed in dentistry under the trademark CompuDent®CompuDent®, and STA Single Tooth Anesthesia System®System® and in medicine under the trademark CompuMed®. CompuDent® is suitable for all dental procedures that require local anesthetic. Our proprietary CompuMed®DPS Dynamic Pressure Sensing technology® is suitable for many medical procedures regularly performed in plastic surgery, hair restoration surgery, podiatry, colorectal surgery, dermatology, orthopedicsour technology platform that advances the development of next-generation devices. It regulates flow rate and a number of other disciplines. The dental instruments are sold inmonitoring pressure from the United States and in over 47 countries abroad. There have been no medical instruments sold in the United States and limited amounts sold internationally astip of the reporting date, although certainneedle, through platform extensions for local anesthesia for subcutaneous drug delivery, used in various dental and medical instruments have obtained CE mark approvalinjections. It has specific medical applications for cosmetic botulinum toxin injections, epidural space identification in regional anesthesia procedures and now can be marketed and sold in most European countries. Milestone Scientific’s products are manufactured by a third-party contract manufacturer.intra-articular joint injections.

In 2016, Milestone Scientific remainedremains focused on advancing efforts to achieve ourthe following three primary objectives; those being:objectives:

Because of combining the ability to regulate the flow rate and monitor pressure at the tip of the needle, Milestone Scientific developed the industry’s first solution for painlessly administering an intra-ligamentary injection, i.e., “single-tooth anesthesia” which could be used as the only injection necessary for achieving dental anesthesia, foregoing the need to administer traditional injections such as a nerve branch block. In addition to single-tooth anesthesia,the STA System can effectively perform all the traditional injections that dentists routinely give but can provide them virtually pain free and with numerous clinical advantages. This device, which also utilizes a disposable handpiece, is currently marketed by Milestone Scientific as the WandSTA® System. 

●        ObtainingMilestone Scientific believes its dental devices have set a new standard of care for dental injections. Our dental devices have been used to administer tens of millions of injections worldwide. Each of our devices has a related single use disposable handpiece, leading to a continuing revenue stream following sale of the 510(k) marketingdevice. 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 WandSTA System. 

Building on the success of our proprietary, core technology platform for dental injections, and desiring to pursue other growth opportunities, we have recently 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. In June 2017, we received FDA regulatory clearance withto sell the CompuFlo Epidural Computer Controlled Anesthesia System in the United States Foodfor certain medical applications. We intend to continue to expand the uses and Drug Administration ("FDA") forapplications of our DPS Dynamic Pressure Sensing technology.

We believe that we and our technology solutions are widely 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 epidural and intra articular instruments.emerging, computer-controlled injection industry.

●        Enhancing our global reach by partnering with distribution companies in the medical sector; and

●        Optimizing our tactical approach to product sales and marketing in order to materially increase penetration of the global dental and medical markets with our proprietary, patented Computer-Controlled Local Anesthesia Delivery (C-CLAD) solution, theWand STA Single Tooth Anesthesia System® Instrument (STA Instrument). 

STA Instrument GrowthDental Market

Since its market introduction in early 2007, the Wand  STA InstrumentSystem and prior C-CLAD productsdevices have been used to deliver over 6680 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.

Global Distribution Network

United States and Canadian Market

Beginning January 1, 2016, Milestone Scientific entered into a non-exclusive distribution agreement with Henry Schein, Inc. (“Henry Schein”). In June 2016, that agreement was replaced with an exclusive distribution arrangement for our dental products for the United States and Canada with Henry Schein. Under this arrangement we, for the first time, have a semi-dedicated independent sales force visiting dentists. We believe that this arrangement will be more effective than previous arrangements relying on appearances at dental shows and catalog sales.

To date, Henry Schein has endeavored to accomplish the goals set forth inIn December 2020, the exclusive distribution agreement forThe Wand® STA instrument and handpieces, including training of its exclusive products sales specialists. Specifically, 25 exclusive product sales specialists have now been fully trained as experts in the features, advantages and benefits of The Wand® STA instrument and handpieces and all 25 are currently in the field selling the instrument.arrangement with Henry Schein also plans to train an additional two to three dedicated customer service representatives to support dentists across North America through its exclusive product sales customer call center.  

Henry Schein’s exclusive products sales specialist team, which is comprised of 25 products sales specialists and supported by over 1,000 field service representatives, will exclusively market and distribute The Wand® STA instrument and handpieces, togetherwas replaced with a select group of other devicesnon-exclusive distribution arrangement, for distribution in the United States and Canada. Our agreement

In January 2021, the Company began a process of signing non-exclusive dental distribution arrangements with Henry Schein has minimum purchase order requirements to maintain exclusivitydental distributors in specific geographical locations in the third through tenth year ofUnited States and Canada. To date there are twelve new non-exclusive dental distributors engaged in the term ofUnited States and Canada. The goal is to add not only additional non-exclusive distributors in the agreement. United States, but as well as exploring  other co-operation opportunities with Dental Service Organization, education institutions, dental schools and entities in specific dental market segments.

International MarketThe goal of changing our marketing plan from a sole exclusive distributor in the USA and Canada, to a  large number of non-exclusive distributors is to increase placement of our Wand STA  System and thus the expansion of our dental disposables.

On the global front, we also have granted exclusive marketing and distribution rights for the WandSTA InstrumentSystem  to select dental suppliers in various international regions in Asia, Africa, South America, and Europe. They include IstrodentFM Produkty Dla Stomatologii in South AfricaPoland and Unident AB in the Scandinavian countries of Denmark, Sweden, Norway, and Iceland. Additionally, the Company is in the process of evaluating current international distributors and adding new distributors, globally as required based on the economics of the region.

Medical Market

During 2016, Milestone Scientific filed for 510(k) marketing clearance with the U.S. Food and Drug Administration (FDA) for both intra-articular and epidural injections with the CompuFlo Epidural System.  In June 2017, the FDA approved the CompuFlo Epidural System for epidural injections. During the end of the second quarter 2021, Milestone Scientific invested in sales force expansion, thus building up a stronger direct sales force aiming at increasing the adoption and penetration of its technology. At the beginning of the year Milestone Scientific had three sales managers  and by July 31, 2021 had established a direct sales force consisting of eleven full time employees covering the US North and Southeast regions along with California. Milestone Scientific continues to partner with distributors for the international markets

In December 2016, we received notification from the FDA that based upon the 510(k)-application submitted for intra-articular injections, we did not adequately document that the device met the equivalency standard required for 510(k) clearances. Following consultation with the FDA Office of Device Evaluation, we intended to file a new 510(k) application for the device in 2019. However, due to financing constraints, a new 510(k) application was not filed in 2019. The Company has decided not to proceed with securing FDA approval for the intra-articular instrument at the present time.

In April 2020, Milestone Scientific, announced that it has validated and integrated the new CathCheck™ feature into the CompuFlo® Epidural System. Using CathCheck, physicians and nurses can now monitor the placement of a catheter to determine the presence or absence of a pulsatile waveform (heartbeat), providing new information that can be used to determine if the catheter is in place or has become dislodged from the epidural space. This can be performed within seconds by measuring the pulsatile waveform within the epidural space.

In October 2012, the State Food2020, Milestone Scientific announced a Group Purchasing Agreement with Premier Inc., a leading healthcare improvement company. The Agreement, which became effective November 1, 2020, allows Premier members, at their discretion, to take advantage of special pricing and Drug Administration (CFDA) of the People’s Republic of China approved our STA Single Tooth Anesthesia System® (STA System). In May 2014, the CFDA also approved the STA handpieces for sale in China.

In September 2014, Milestone Medical received CE clearance to distribute their epidural and intra-articular instruments in European Community (EU). Milestone Medical is actively pursuing distributorsterms pre-negotiated by Premier for the instrumentCompuFlo Epidural System and CathCheck. This agreement expires on February 28, 2022. A new Group Purchase Agreement with Premier Inc. was signed in the EU community. Milestone Medical signed a distributionNovember 2021, effective as of March 1, 2022. This agreement in March 2015 with a medical distributor in Poland for the distribution of the epidural instrument. This distribution agreement was terminated in late 2016 due to the distributor’s inadequate performance under the distribution agreement.

In June 2014, Milestone Scientific invested $1 million in Milestone China Ltd. (“Milestone China”) by contributing 772 STA Instruments to Milestone China for a 40% ownership interest. Milestone Scientific recorded this investment under the equity method of accounting. Since September 2014, we have an established exclusive distribution arrangement with Milestone China for the distribution of the STA Instrument in China, which has led to the placement of our dental instruments in clinics serving major cities in China. Milestone China purchases STA Instruments from us for cash as required. We believe that Milestone China will make a positive impactexpires on the dental and future medical business opportunities in China and other parts of Asia.

In China, where the dental market lags behind other health care services and has largely been neglected in the past, a CS Market Research report indicates that 50% of adults and 70% of children out of China’s estimated 1.3 billion plus population have tooth decay problems and over 90% have periodontal disease. (See Shuyu Sun & Seth Pierrepont. The Dental Equipment Market Over in China, CS Market Research(Sept. 20, 2005) andOpportunities Abound for Dental Care in China,CHINA BRIEFING (February 27, 2015)). With increasing affluence and increasing attention towards personal care, the provision of dental services has been growing rapidly. We expect this will lead to both increased sales of dental instruments and our single-use handpieces.February 28, 2025.

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

Milestone Scientific earned gross profit of 60% and 68% in the years ended December 31, 2016 and 2015, respectively. However, the revenues and related gross profits have not been sufficient to support overhead, new product introduction and research and development expenses. Although Milestone Scientific anticipates expending funds for research and development in 2017, these amounts will vary based on the operating results for each quarter.

In 2017, Milestone Scientific plans to support increased sales and marketing activity through our current distributors and through newly appointed distributors of the STA instruments and handpieces in the international market. In the United States and Canada, Milestone Scientific will continue the utilization of independent hygienists for training individual practitioners and group practices domestically, refined and directed advertising to dental professionals, continue to develop Key Opinion Leaders (KOL) and support and broaden our global distribution network.

Current Product Platform

See Item 1. Description of Business.

Summary of Critical Accounting Policies and Significant Judgments and Estimates

Milestone Scientific's discussion and analysis of the financial condition and results of operations is based upon its consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of its wholly-owned and majority-owned subsidiaries including, Wand Dental, Milestone Advanced Cosmetic and Milestone Medical. Milestone Education is a variable interest entity of which Milestone Scientific is the primary beneficiary and is consolidated into Milestone Scientific's financial statements. All significant, intra-entity transactions and balances have been eliminated in the consolidation.   

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.liabilities. On an on-going basis, Milestone Scientific evaluates its estimates, including those related to accounts receivable, inventories, stock-based compensation, and contingencies. 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 readily apparentclear from other sources. Actual results may differ from those estimates under different assumptions or conditions.

While significant accounting policies are more fully described in Note BC to the consolidated financial statements included elsewhere in this report, Milestone Scientific believesbelieves that the following accounting policies and significant judgmentsjudgment and estimates are most critical in understanding and evaluating the reported financial results.

Principles of Consolidation

Milestone Scientific's discussion and analysis of the financial condition and results of operations is based upon its consolidated financial statements that 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, and Milestone Medical. All significant, intra-entity transactions and balances are eliminated in the consolidation. 

Variable Interest Entities

A variable interest entity ("VIE") is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary. The primary beneficiary has both the power to direct the activities that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the VIE. 

If Milestone Scientific determines that it has operating power and the obligation to absorb losses or receive benefits, Milestone Scientific consolidates the VIE as the primary beneficiary. Milestone Scientific’s involvement constitutes power that is most significant to the entity when it has unconstrained decision-making ability over key operational functions within the entity. Milestone Scientific has completed the VIE analysis relating to Milestone China and Anhui Maishida Medical Technology, Co. Ltd. (“Anhui”).

Milestone Scientific has determined that due to the loss of equity investment in Anhui, the company no longer has significant influence of Anhui and therefore Anhui is not a variable interest. Milestone Scientific has a variable interest in Milestone China, it considered the guidance in ASC 810, “Consolidation” as it relates to determining whether Milestone China is a VIE and, if so, identifying the primary beneficiary. Milestone Scientific would be considered the primary beneficiary of the VIE if it has both of the following characteristics:

Milestone Scientific does not have the ability to control the activities that most significantly impact Milestone China's economics and, therefore, the power criterion has not been met. Management placed the most weight on the relationship and significance of activities of Milestone China to the CEO of Milestone China who have the power to direct the activities that most significantly impact the economic performance of Milestone China. Management has concluded that Milestone Scientific is not the primary beneficiary under ASC 810. Accordingly, Milestone China has not been consolidated into the financial statements of Milestone Scientific and is accounted for under the equity method. See Note F.

Assessment of our Ability to Continue as a Going Concern

Our management has made various estimatesIn accordance with  (“ASC”) 205-40, “Presentation of Financial Statements – Going Concern”, the Company continually  evaluates whether there are conditions or events, considered in assessing ourthe aggregate, that raise substantial doubt about the Company's ability to continue as a going concern aswithin 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.

In the second quarter of 2020, the report date of our Friedman LLP's, our independent auditor's, report includedCompany was successful in this Form 10-K. These estimates include, an increaseraising approximately $19.7 million in the revenues generated by Wand Dental as a result of the new distribution agreement with Henry Schein, an increase in the revenues generated by Milestone China, a reduction in our profit margins due to the nature of the distribution relationships with both Henry Schein and Milestone China, and reduction our selling, general and administrative costs for one-time expenses incurred during 2016.public offerings.  Based on this assessment, management believes that ourthe expected cash on hand, accounts receivableneeded for operating activities, the Company’s current cash and the anticipated revenues from the dental business will beliquidity is sufficient to fund our business operationsfinance the operating requirements for at least the next 12 months from the filing date of this Form 10-K.annual report.

Other Uncertainties

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.  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, revenues for the years ended December 31, 2021, and 2020 were adversely affected.

There has been a slow pick up in dental instrument and disposable sell  through to dentists beginning in the third quarter. In addition, it is uncertain as to  what the effect will be on the anticipated commercialization of our CompuFlo Epidural and CathCheck system as a medical device . The extent to which the coronavirus impacts our operations,  our third-party partners, the dental offices and hospital operations and demand  depends on future developments which are still highly uncertain. Such future developments could have a material adverse effect on our financial results and our ability to conduct business as expected.

Accounts Receivable

Milestone Scientific sells a significant amount of its productproducts on credit terms to its major distributors. Milestone Scientific estimates losses from the ability or inability of its customers to make payments on amounts billed. A majorityMost of credit sales are due within ninety days from invoicing. Milestone Scientific has not incurred any significant credit losses.

Inventories

Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in, first-outfirst-out method) or market.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. 

Impairment of Long-Lived Assets

Milestone Scientific reviews long-lived assets for impairment whenever events or circumstances (i.e. a triggering event) indicate that the carrying amounts may not be recoverable.  

The carrying valueCompany’s impairment review process is based upon an estimate of the assets is evaluated in relation to the operating performance and future undiscounted cash flowsflow. Factors the Company considers that could trigger an impairment review include the following:

Recoverability of the underlying assets. Milestone Scientific adjusts the net book value of an underlying asset if its fair value is determinedassets that will continue to be less than itsused in the Company's operations is measured by comparing the carrying value to the future net book value. There have been no impairment indicatorsundiscounted cash flows expected to be generated by the asset or triggering eventsasset group. Future undiscounted cash flows include estimates of future revenues, driven by market growth rates, and therefore, no impairment reviews have been performed for the period ending December 31, 2016.estimated future costs. 

Revenue Recognition

Revenue RecognitionThe 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. To perform revenue recognition  the Company performs the following five steps:

The Company derives its revenues from the sale of its products, primarily dental instruments, handpieces, and other related products. The Company sells its products through a global distribution network and that includes both exclusive and non-exclusive distribution agreements with related and third parties.

Revenue from product sales is recognized netupon transfer of discounts and allowancescontrol of a product to domestic distributors on thea customer, generally upon date of shipment for essentially all shipments, sinceshipment. For certain arrangements where the shipmentshipping terms are FOB warehouse. Milestone Scientific will recognize revenue on date of arrival of the goods at the customer's location, where shipments are FOB destination. Shipments to international distributors are FOB warehouse, thereforedestination, revenue is recognized upon the shipment of the goods. In all cases the price to the buyer is fixed and the collectability is reasonably assured. Further, Milestone Scientificdelivery. The Company has no obligation on theseproduct sales for any post installation, set-up, or maintenance, these being the responsibility of the buyer. Milestone Scientific's only obligation after sale is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty period. The instrument sales and hand piece sales are sold separately and not bundled and, as such, there are no multiple element assessments or determinations for revenue recognition.

Results of OperationsOperations.

The following table sets forth for the consolidated results of operations for the year ended December 31, 20162021 compared to 2015 as a percentage of revenues. In 2015, the consolidated statement of operations do not include in the revenue and expenses of Milestone Medical and Milestone Education both of which were previously equity investments until they were determined as ofyear ended December 31, 2015 and January 1, 2016, respectively, to be variable interest entities for which Milestone Scientific is the primary beneficiary. The trends suggested by this table may not be indicative of future operating results:2020 .

Year ended December 31, 20162021, compared to year ended December 31, 20152020.

Total revenuesNet sales for the twelve monthsyears ended December 31,  20162021, and 2015, principally dental revenues,2020 were as follows:

Consolidated revenue for the years ended December 31, 2021, and 2020 were approximately $10.5$10.3 million and $9.4$5.4 million, respectively. The totalDental revenue for the years ended December 31, 2021, and 2020 were approximately $10.1 million and $5.4 million, respectively. Dental revenue increased byapproximately $1$4.7 million or 10%, which was principally relatedfor the year ended December 31, 2021, as compared to 2020, due to the  increasere-opening of dental offices throughout the country, and the rest of the world, including China. Medical revenue increased approximately $136,000 for the year ended December 31, 2021, as compared to 2020 due to the company arranging  meetings at hospital and pain clinics by the direct sales force organization and medical device distributors in instrumentEuropean markets. 

Gross Profit for years ended December 31,  2021 and handpiece2020 were as follows:

Consolidated gross profit for the years ended December 31, 2021, and 2020 were approximately 61% and 67%, respectively. The decreased in the gross profit is due to the lower margin in sales to China.

Domestic sales decreased by approximately $408,000 in 2016. In the fourth quarter of 2016, Henry Schein did not purchase instruments and handpieces as they continued to introduce our instrument to the market and sell down their existing inventory. International sales in 2016 increased by approximately $1.4 million over the same period in 2015 principally The Company incurred additional freight cost due to a shipment of STA Instruments and handpieces to Milestoneimporting delays from China. However, we believe that the June 2016 exclusive distribution agreement with Henry Schein will lead to increased domestic sales in 2017 as the product and sales force training has been substantially completed as of December 31, 2016.

Selling, general and administrative expenses for twelve monthsyears ended December 31,  20162021 , and 2020 were as follows: 

Consolidated selling, general and administrative expenses for the years ended December 31, 2021, and 2020 were approximately $11.5$12.7 million versus $9.4and $10.7 million, in 2015. Therespectively. This increase of approximately $2.1$2.0 million is predominantly duecategorized in several areas. Employee salaries, and benefits expenses increased approximately $1.4 million, and directors fees increased $500,000 during the year ended December 31, 2021, compared to the consolidation of Milestone Medical commencing onyear ended December 31, 2015 which had $ 2.5 million in2020. The Company hired additional employees to work on the commercialization of the CompuFlo® Epidural System. The Company's trade shows, royalty, marketing, quality control, and general expenses increased approximately $622,000 while other SG&A, expenses in 2016 versus $ 3.0 million in SG&A expenses in 2015 which was included within Loss on Earnings from Milestone Medical in the consolidated statement of operations. In 2015, Milestone Medical was accounted for under the equity method, until December 2015 when it was determined that Milestone Medical did not have sufficient capital at risk to support its activities without financial support from Milestone Scientificprofessional, and therefore consolidated (See Note Econsulting expense decreased approximately $544,000 compared to the consolidated financial statements).year ended December 31, 2020.

Research and Development for years ended December 31,  2021 and 2020 were as follows:

Consolidated research and development expenses for the twelve monthsyears ended December 31, 20162021, and 20152020, were approximately $1.3 million$878,000 and $100,000,$308,000, respectively. In 2015, Milestone Medical incurred $792,000 The increase of research and development expenses that were included in a single line item on loss on earning for Milestone Medical for reporting purposes. Giving the effectapproximately $570,000 is related to the Milestone Medical research development expenses on a consolidated basis in 2015,Company exploring possible enhancements to the comparable amount of researchproduct line STA Single Tooth Anesthesia System.

Profit (Loss) from Operations for years ended December 31,  2021 and development cost would be $892,000.2020 were as follows:

The loss from operations was approximately $7.4 million and $7.5 million for the twelve monthsyears ended December 31, 20162021, and 2015 was approximately $6.5 million and $3.1 million,2020, respectively, an increasedecrease of approximately $3.4 million.$74,610. The increase in loss from operations in 2016 is primarilydecrease the result of increased in dental revenue, due to re-opening of dental offices throughout the consolidationcountry, the rest of Milestone Medical in 2016. 

The loss on earnings from the world, including China, Joint Venture was approximately $796,000 and $418,000 for the twelve months ended December 31, 2016 and 2015, respectively,partially offset by an increase of approximately $378,000. The increase in loss on earnings from the China Joint Venture is primarily due to the China Joint Venture being in its initial operatingselling, general and expansion cycle in China.administrative expenses as discussed above.  

Liquidity and Capital Resources

At December 31, 2016, Milestone Scientific had cash and cash equivalents of approximately $3.6 million, total current assets of approximately $12.7 million and working capital of approximately $7.7 million.  We believe that our cash on hand, accounts receivable and the anticipated revenues from the dental business will be sufficient to fund our business operations for at least the next 12 months from the filing date of this Form 10-K.

Milestone Scientific continues to take positive steps to maintain adequate inventory levels and advances on contracts to maintain available inventory to meet our domestic and international sales requirements. For the twelve months ended December 31, 2016 and 2015, we had negative cash flows from operating activities of approximately $5.4 million and $2.9 million, respectively.

Milestone Scientific has incurred annual operating losses and negative cash flows from operating activities since its inception, except for the year ended December 31, 2013.inception. Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through increasesan increase in revenues based upon management's assessment of present contracts,revenue from its dental business and current negotiationsthe medical business worldwide, and reductionsa reduction in operating expenses. On December 31, 2021, Milestone Scientific believes that clearance to commercialize its epiduralhad cash and intra-articular instruments will improve ourcash equivalents of approximately $14.7 million and working capital raising opportunitiesof approximately $15.8  million. For the twelve years ended December 31, 2021 and financial condition.  Although there can be no assurances on the timing2020, we had cash flows used in operating activities of approximately $4.0 million and ultimate outcome, management believes that FDA clearance for Milestone Medical's 510(k) epidural application may occur by the end of the second quarter of 2017.$7.0 million, respectively.

Milestone ScientificManagement believes that the June 2016 exclusive distribution agreementCompany has sufficient cash, along with Henry Schein will improve its dental revenues in 2017. To further reduce Milestone Scientific's expenditures, Milestone Medical is carefully managing expenses related to obtaining FDA clearance for the epiduralcurrent cash flow and intra-articular instruments. By limiting the FDA related expenses and increasingsupport from the dental instrument revenue throughbusiness to  mitigate the new distribution agreement and performing a cash flow projectionexpected selling expenditures for commercialization of the consolidated companyEpidural medical device, as well as other operating expenditures and its subsidiaries, management believes that Milestone Scientific will have resources to fund its operationsplanned new product development programs, over the next 12twelve months from the filing date of this Form 10-K.report. Dental offices in the United States and world-wide are in the process of reopening to near pre COVID-19 volumes. For the medical sector, hospitals in the United States are opening for elective procedures  and as such we are looking for new and innovative medical solutions. The positive movement in the hospitals will be a beneficial step to our sales efforts for the epidural instrument.

Our consolidated balance sheet included in this report reflects an increase of approximately $890,000 in current assets from 2015 to 2016. This increase in current assets was primarily due to increases in the amount due from related party, deferred cost, and inventories of an aggregate of approximately $2.6 million, offset by decreases in cash and cash equivalents, accounts receivable and advances on contracts of approximately $1.8 million.

Current liabilities increased by approximately $1.4 million from approximately $3.7 million to approximately $5.0 million. The increase is primarily due to an increase in accounts payable and deferred revenue from a related party, as result of consolidating Milestone Medical at December 31, 2016.

In June 2016, we raised an additional $2.0 million of gross proceeds in a private placement of one million shares of common stock, at a price of $2.00 per share, to the same investors that participated in the May 2014 Financing.

In July 2016, Milestone Scientific raised gross proceeds of $250,000 in a registered direct offering of 104,200 shares of common stock at $2.40 per share. The transaction was covered by the prospectus supplement, filed with the SEC on July 22, 2016, to our shelf registration statement on Form S-3 (SEC File No.: 333-209466).

In December 2016, we completed an underwritten public offering of 2,000,000 shares of common stock and warrants to purchase up to 1,592,775 shares of common stock, including 92,775 additional warrants pursuant to a partial exercise of the over-allotment option granted to the underwriters.  Each share of common stock was sold in combination with a warrant to purchase 0.75 shares of common stock. The public offering price for each share and related warrant was $1.50. The warrants have a three-year term and an exercise price of $2.55 per share. In January 2017, the underwriter exercised a portion of its over-allotment option to purchase an additional 123,700 shares of common stock at the public offering price of $1.499 per share. The gross proceeds from this offering, including proceeds from partial exercises of the over-allotment option, were approximately $3.2 million, before deducting underwriting discounts and commissions and other offering expenses. This offering was covered by a prospectus supplement, filed with the SEC on December 16, 2016, to our shelf registration statement on Form S-3 (SEC File No.: 333-209466).

Off-Balance Sheet Arrangements

Milestone Scientific does not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to the financial position or results of operations.

Contractual Obligations

The impact of the consolidated contractual obligations at December 31, 2016,2021, expected on the liquidity and cash flows in future periods, is as follows:

(1)    Purchase obligations include agreements for the purchase of dental and medical devices, including purchase obligations entered into post year end, which will require payment in during the year ended 2022.

Recent Accounting Pronouncements

See “Note B“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 QualitativeQualitative Disclosures about Market Risk

Milestone Scientific is a “smaller“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. FinancialFinancial 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 AccountantsAccountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Milestone Scientific’s Chief Executive OfficerEvaluation of Disclosure Controls and Chief Financial Officer have evaluated the effectiveness of the design and operation of Milestone Scientific’sProcedures

We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, Milestone Scientific’s Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures as of December 31, 2016 are effectivedesigned to ensure that the information we are required to be discloseddisclose in the reports Milestone Scientific filesthat we file or submitssubmit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified inunder the SEC’s rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to Milestone Scientific'sour management, including theour Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.disclosures. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our principal executive) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Based on this evaluation, our Chief Executive Officer concluded that our disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) were not effective as December 31, 2021 due to a material weakness in our internal control over financial reporting as described below and in Note F of the consolidated financial statements. 

Management’s’s Annual Report on Internal Control over Financial Reporting

Milestone ScientificOur management is responsible for establishing and maintaining adequate internal controlscontrol over financial reporting. The internal controlsreporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Internal control over financial reporting includes those policies and procedures that:

that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. ProjectionsIn addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. All internal control instruments, no matter how well designed, have inherent limitations. Therefore, even those instruments determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Milestone Scientific management assessed the effectiveness of its internal control over financial reporting as of December 31, 2016.2021. In making this assessment, management used the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) adopted in 2013. Based on the assessment and the criteria set forth by COSO, management believes that Milestone Scientific maintaineddid not have effective internal control over financial reporting as of December 31, 2016.2021 due to the material weakness described below:

The Company has failed to design and maintain effective controls over the safeguard of assets by not appropriately mitigating the risk of theft of its equity interest in Anhui Maishida Medical Technology, Co. Ltd. (“Anhui”).  The Company did not design a control that would prevent, without the knowledge or approval of the Company’s management and board of directors, the transfer of equity interests in Anhui Maishida Medical Technology, Co. Ltd to the CEO of Milestone China Ltd. 

There have been no changesChanges in Milestone Scientific’s internal controlInternal Control over financial reporting identified in connection withFinancial Reporting

During the evaluation that occurred during Milestone Scientific’s last fiscal quarter ended December 31, 2016 that have materially affected, or that are reasonably likely to materially affect, Milestone Scientific’s internal controls over financial reporting.2021, the Company was in the process of remediating the identified material weakness.

Item 9B. Other Information

None. 

Item 9C. Disclosure regarding Foreign Jurisdiction that Prevent inspections

None.

PART

PART III

Item 10. Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16 (a) of the Exchange Act.

Milestone Scientific’sScientific’s directors are elected annually by the stockholders and serve for one-year terms until his/her successor is elected and qualified or until such director’s earlier death, resignation, or removal. The executive officers and key personnel are appointed by and serve at the pleasurediscretion of the Board of Directors.

Directors The current executive officers and directors of Milestone Scientific and their respective ages, as of MarchMarch 31, 2017 are as follows: 2022.

The following are1. Member of the namesAudit Committee

2. Member of individuals who are not executive officersthe Compensation Committee

3. Member of the Nominating and Corporate Governance Committee

Jan Adriaan (Arjan) Haverhals , President and Chief Executive Officer 

Jan Adriaan (Arjan) Haverhals has been Milestone Scientific's Chief Executive Officer since May 2021 and President since September 2020. Mr. Haverhals has also been the President and Chief Executive Officer of Milestone Scientific but are deemed key personnelScientific’s Dental Division (Wand Dental, Inc. or “Wand Dental”) since June 2020.  He brings more than 30 years of sales, marketing, product development, and international expansion experience within the medical device, pharmaceutical, and other industries. Prior to joining Wand Dental and Milestone Scientific, their respective agesMr. Haverhals was senior vice president of sales at Xcentric Mold & Engineering from 2019 until 2020 where he was instrumental in increasing sales productivity and positionsefficiency for the company's prototype injection molding services, which included leading healthcare company clients. From 2012 until 2018, Mr. 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. He also served as senior vice president for the Nordic Region at Straumann AB, senior vice president of March 31, 2017:global sales digital solutions, which included oversight of the strategic acquisition of Etkon; 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. 

Leslie Bernhard, Chairman of the Board

Leslie Bernhard has been servingserved as Milestone Scientific’s non-executiveScientific’s Chairman of the Board since October 2009.2009 and served as Interim Chief Executive Officer from October 2017 to December 2017. In addition, Ms. Bernhard has also had been serving as an Independent Director (as defined below)independent director of Milestone Scientific since May 2003. Since 2017, Ms. Bernhard has been an independent director of Sachem Capital Corp a Connecticut based real-estate investment trust. From 2007, Ms. Bernhard has also been servingserved as an independent director of Universal Power Group, Inc. (OTC Markets: UPGI), a global supplier of power solutions.solutions until it became a private company in 2018. In 1986 she co-founded AdStar, Inc., an electronic ad intake service to the newspaper industry, and served as its president, chief executive officer and executive director until 2012. Ms. Bernhard holds a BS Degree in Education from St. John’s University. Ms. Bernhard’s professional experience and background with AdStar and with us, as one of our directors since 2003, have given her the expertise needed to serve as Chairman of the Board.Board, and Chairman of the Audit Committee.

Leonard Osser,  Chief Executive Officer and DirectorVice Chairman of the  Board

Leonard Osser has been a director of Milestone Scientific’s since 1991 and has served as Milestone Scientific’s Vice Chairman of the Board since May 2021.  Mr. Osser had been Interim Chief Executive Officer and a director since September 2009.from December 2017 until May 2021. From July 2017 to December 2017, he had been Managing Director –China Operations. 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. In September 2009, he resigned as Chairman of Milestone Scientific, but remained a director, and assumed the position of Chief Executive Officer. From 1980 until the consummation of Milestone Scientific’s public offering in November 1995, Mr. Osser was primarily engaged as the principal owner and Chief Executive Officer of U.S. Asian Consulting Group, Inc., a New Jersey-based provider of consulting services specializing in distressed or turnaround situations in both the public and private markets. Mr. 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.

Joseph D’Agostino, Chief Financial Officer and Chief Operating Officer

Joseph D'Agostino has been Milestone Scientific's Chief Financial Officer since October 2008 and Chief Operating Officer since September 2011. Mr. D'Agostino joined Milestone Scientific in January 2008 as Acting CFO and has over 25 yearsOsser serves a special consultant to the board of finance and accounting experience serving both publicly and privately held companies. A results-oriented and decisive leader, he has specific proven expertise in treasury and cash management, strategic planning, information technology, internal controls, Sarbanes-Oxley compliance, operations and financial and tax accounting. Mr. D'Agostino served as Senior Vice President and Treasurer of Summit Global Logistics, a publicly traded, full service international freight forwarder and customs broker with operations indirectors for the United States and China. Previous executive posts also included Executive Vice President and CFO of Haynes Security, Inc., a leading electronic and manned security solutions company serving government agencies and commercial enterprises; Executive Vice President of Finance and Administration for Casio, Inc., the U.S. subsidiary of Casio Computer Co., Ltd., a leading manufacturer of consumer electronics with subsidiaries throughout the world; and Manager of Accounting and Auditing for Main Hurdman's National Office in New York City (merged into KPMG). Mr. D'Agostino is a Certified Public Accountant and holds memberships in the American Institute of CPA's, New Jersey Society of CPA's, Financial Executive Institute, He is a graduate of William Paterson UniversityNexalin Company where he earned a Bachelor of Arts degree in Science.

Leonard M. Schiller,is also Managing Director

Leonard Schiller has been a director of Milestone Scientific since April 1997. Mr. Schiller has been a partner in the Chicago law firm of Schiller Strauss & Lavin PC since 1977 and since 2002, its President. Mr. Schiller also serves as a director on the boards of Jerrick Media Holdings, Inc. (OTCQB: JMDA), a public media company, since February 2016 and Point Capital, Inc. (OTCQB: PTCI), a business development company, since July 2014. Mr. Schiller’s professional experience and background have given him the expertise needed to serve as one of our directors. –Asian Operations. 

Gian Domenico Trombetta, Director

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.) sincefrom October 2014.2014 until May 2020. He founded Innovest S.p.A in 1993, a special situation firm acting in development and distressed capital investments. He has been its President and Chief Executive Officer since its inception. He served as the Chief Executive Officer or a board member of several private commercial companies in different industries including both industrial (e.g. IT, media, web, and fashion) and holding companies. Before founding Innovest, Mr. Trombetta was Project Manager for Booz Allen & Hamilton Inc., a management consulting firm from 1988 to 1992. Mr. Trombetta holds a degree in business administration from the Luiss University in Rome, Italy, and aan MBA degree from INSEAD-Fontainbleau-France. Mr. Trombetta’sTrombetta business background and experience has given him the expertise needed to serve as one of our directors.

Edward J. Zelnick, M.D.,Leonard M. Schiller, Director

Edward J. Zelnick, M.D.Leonard Schiller has been a director of Milestone Scientific since February 2015. Dr. ZelnickApril 1997. Mr. Schiller has been a medical doctor for over 45 yearspartner in the Chicago law firm of Schiller Law P.C. and hasits predecessors  since 1977 and since 2002, its President. Mr. Schiller also serves as a background in clinical research. Since June 2002 he has beendirector on the chief executive officerboard of Horizon Institute for Clinical Research,Creatd, Inc., a Nasdaq listed social media company that recruits test subjects and clinicians for clinical research trials. Dr. Zelnick receivedsince February 2016. He serves as chairman of the compensation committee. He also is a Bachelorgeneral partner of Science degree in chemistry from the University of Pittsburgh in 1966 and his M.D. degree from New York Medical College in 1970. Dr. Zelnick'sGravitas Capital LP, a hedge fund. Mr. 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. 

Neal Goldman, Director

Mr. 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. He was First Vice President of Research at Shearson Lehman Hutton. He has also held senior positions as a medical doctormoney manager and research analyst with a variety of firms including Neuberger Berman, Moseley Hallgarten Estabrook and Weeden, Bruns Nordeman, and Russ and Company. Mr. Goldman serves as Chairman of Charles & Colvard, Ltd. (Nasdaq: CTHR) since 2016 and served on the board of Imageware Systems, Inc. (Nasdaq: IWSY) until November 2020. He also serves on the board of Deep-Down Inc. (DPDW). Prior to their acquisition, he served on the boards of Blyth Industries and IPASS Corporation. Mr. Goldman received his B.A. degree in clinical research,Economics from The City University of New York (City College). Mr. Goldman’s professional experience and financial background have given him the expertise needed to serve as one of our directors.

Mark Hochman, D.D.S.,Michael McGeehan, Director of Clinical Affairs

Mark Hochman, D.D.S.Michael McGeehan has served asbeen a director of Milestone Scientific’s Director since October 2017. Mr. McGeehan is a business consultant with 30 years of Clinical Affairsexperience in a variety of business domains, including financial services, medical and Directorhealthcare products, consumer package goods and the software technology industry. Mr. McGeehan started his career at Metaphor Computer Systems in 1988 and then went to work at Microsoft Corporation in 1991.  In 1995, Mr. McGeehan left Microsoft and founded Forefront Information Strategies, an information technology consulting firm. In 2002, Mr. McGeehan returned to Microsoft where he worked until 2017, when he returned to and re-started Forefront. Mr. McGeehan was on the Board of Research and Development since 1999. HeDirectors of Wand Dental. Mr. McGeehan has a DoctorateMaster’s in Business Administration from Pace University and a Bachelor of Dental Surgery with advanced trainingScience in Electrical Engineering and Computer Science from Marquette University.  Mr. McGeehan professional experience and background have given him the specialties of Periodontics and Orthodontics from New York University of Dentistry and has been practicing dentistry since 1984. He is a former clinical associate professor at NYU School of Dental Surgery. Recognizedexpertise needed to serve as a world authority on Advanced Drug Delivery Instruments, Dr. Hochman has published numerous articles in this area, and shares in the responsibility for inventing muchChairman of the technology currently available from Milestone Scientific.