UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

●☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~quarterly period~~quarter ended ~~September~~June 30, ~~2017~~2021

●☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the transition period from to

Commission ~~File Number:~~file number 001-14053

~~MILESTONE SCIENTIFIC INC.~~Milestone Scientific Inc.

(Exact name of registrant as specified in its charter)

Delaware		13-3545623
(State or other jurisdiction of ~~incorporation~~ Incorporation or ~~organization)~~organization		(I.R.S. Employer Identification No.)

~~220 South Orange~~425 Eagle Rock Avenue ~~Livingston, New Jersey 07039~~Suite 403, Roseland, NJ 07068

(Address of principal executive offices)

~~(973) 535-2717~~

~~(Registrant~~’sRegistrant’s telephone number, including area ~~code)~~code: 973-535-2717

~~(Former name, former address and former fiscal year, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

Common Stock, par value $.001 per share		NYSE ~~MKT LLC~~American

Securities registered pursuant to section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller ~~reporti~~ngreporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company ☑
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of Exchange on which registered
Common Stock	MLSS	NYSE American

As ~~November 14, 2017,~~of August 13, 2021, the registrant ~~had~~has a total of ~~32,989,724~~67,166,428 shares of Common Stock, ~~$.001~~$0.001 par value outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

MILESTONE SCIENTIFIC INC.

Form 10-Q

TABLE OF CONTENTS

	PART I—I—FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements

	~~Condensed Consolidated~~ Balance Sheets ~~September~~as of June 30, ~~2017 (Unaudited)~~2021 and December 31, ~~2016 (Audited)~~2020	4
		~~Condensed Consolidated~~
	Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016 (Unaudited)~~2020	5
		~~Condensed Consolidated Statement~~
	Statements of Changes in ~~Stockholders~~’Stockholders’ Equity for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017 (Unaudited)~~2021 and 2020	6
		~~Condensed Consolidated~~
	Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016 (Unaudited)~~2020	78

	Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~	9
		8
Item 2.	~~Management~~’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations	26
		21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
~~Item 4.~~	~~Controls and Procedures~~	2632
	~~PART II—OTHER INFORMATION~~
Item 1. 4.	Controls and Procedures	32

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	33
27
Item 1A.	Risk Factors	33
27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
27
Item 3.	Defaults Upon Senior Securities	34
27
Item 4.	Mine Safety Disclosures	34
27
Item 5.	Other Information	34
27
Item 6.	Exhibits	35
28
Signatures		36 29

When used in this Quarterly Report on Form 10-Q, the words “~~may”~~“may”, “will”, “should”, “expect”, “believe”, “anticipate”, “continue”, “estimate”, “project”, “intend” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding events, conditions and financial trends that may affect Milestone Scientific’s future plans of operations, business strategy, results of operations and financial condition. Milestone Scientific wishes to ensure that such statements are accompanied by meaningful cautionary statements pursuant to the safe harbor established in the Private Securities Litigation Reform Act of 1995. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Milestone Scientific’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. Considering the significant uncertainties inherent in the forward-looking statements included herein, our history of operating losses that are expected to continue during the ongoing COVID-19 pandemic, the early stage operations of and relative 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 manufacturers of our products and disruptions at the manufacturing facilities of our manufacturers exposes us to risks that may harm our business, restrict our operations or require us to relinquish proprietary rights, if physicians do not accept or 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. Prospective investors are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and the actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such forward-looking statements should, therefore, be considered in light of various important factors, including those set forth herein and others set forth from time to time in Milestone Scientific’s reports, including without ~~limitations,~~limitation, Milestone Scientific's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 filed with the Securities and Exchange Commission (the “SEC”). Milestone Scientific disclaims any intent or obligation to update such forward-looking statements.

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

	*June 30, 2021*			*December 31, 2020*

ASSETS
Current assets:
Cash and cash equivalents	$	15,977,330		$	14,223,917
Accounts receivable, net		812,341			1,080,656
Accounts receivable, related party net		0			0
Prepaid expenses and other current assets		442,295			415,915
Inventories, net		1,479,391			2,420,179
Advances on contracts		1,393,817			414,202
Total current assets		20,105,174			18,554,869
Furniture, fixtures and equipment, net		30,749			30,729
Intangibles, net		306,544			329,249
Right of use assets		593,049			632,453
Other assets		24,150			24,150
Total assets	$	21,059,666		$	19,571,450

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	582,684		$	482,972
Accounts payable, related party		201,887			385,138
Accrued expenses and other payables		1,390,560			824,454
Accrued expenses, related party		352,209			586,734
Current portion of finance leases liabilities		8,162			7,796
Current portion of operating lease right-of-use liabilities		76,008			72,031
Deferred profit, related party		337,145			242,589
Note payable		0			276,180
Total current liabilities		2,948,655			2,877,894
Finance lease liabilities		24,433			28,607
Operating lease liabilities		518,408			557,981
Total liabilities	$	3,491,496		$	3,464,482

Commitments and contingencies

Stockholders’ equity
Common stock, par value $.001; authorized 100,000,000 shares; 67,055,869 shares issued and 67,022,536 shares outstanding as of June 30, 2021; 64,171,435 shares issued and 64,138,102 shares outstanding as of December 31, 2020;		67,055			64,171
Additional paid in capital		123,075,664			117,934,696
Accumulated deficit		(104,539,294	)		(100,885,957	)
Treasury stock, at cost, 33,333 shares		(911,516	)		(911,516	)
Total Milestone Scientific Inc. stockholders' equity		17,691,909			16,201,394
Noncontrolling interest		(123,739	)		(94,426	)
Total stockholders’ equity		17,568,170			16,106,968
Total liabilities and stockholders’ equity	$	21,059,666		$	19,571,450

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

MILESTONE SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Revenue

Product sales, net
$ 2,853,813 $ 3,186,596 $ 9,066,550 $ 8,973,726
Cost of products sold
1,044,540 1,517,561 3,320,411 3,675,552
Gross profit
1,809,273 1,669,035 5,746,139 5,298,174

Selling, general and administrative expenses
3,205,996 2,933,950 8,996,092 9,226,062
Research and development expenses
16,884 303,268 241,964 756,045
Total operating expenses
3,222,880 3,237,218 9,238,056 9,982,107
Loss from operations
(1,413,607 ) (1,568,183 ) (3,491,917 ) (4,683,933 )
Other (expenses)
(1,046 ) (846 ) (3,278 ) (2,782 )
Interest income
3,582 - 6,495 -
Loss before provision for income tax and equity in net earnings of equity investments
(1,411,071 ) (1,569,029 ) (3,488,700 ) (4,686,715 )
Provision for income tax
(6,475 ) (16,522 ) (18,339 ) (80,147 )
Loss before equity in net earnings of equity investments
(1,417,546 )

(1,585,551 )

(3,507,039 )

(4,766,862 )
Loss on earnings from China Joint Venture
- (253,451 ) (28,941 ) (554,766 )
Loss in equity investments
- (253,451 ) (28,941 ) (554,766 )
Net Loss
(1,417,546 ) (1,839,002 ) (3,535,980 ) (5,321,628 )
Net loss attributable to noncontrolling interests
(6,605 ) (137,752 ) (138,915 ) (1,113,958 )
Net loss attributable to Milestone Scientific Inc.
$ (1,410,941 ) $ (1,701,250 ) $ (3,397,065 ) $ (4,207,670 )

Net loss per share applicable to common stockholders—

Basic
$ (0.04 ) $ (0.06 ) $ (0.10 ) $ (0.16 )
Diluted
$ (0.04 ) $ (0.06 ) $ (0.10 ) $ (0.16 )

Weighted average shares outstanding and to be issued—

Basic
33,573,676 29,155,712 32,501,221 25,965,566
Diluted
33,573,676 29,155,712 32,501,221 25,965,566

	*For the Three Months Ended June 30,*						*For the Six Months Ended June 30,*
	*2021*			*2020*			*2021*			*2020*
Product sales, net	$	2,425,738		$	167,674		$	5,350,445		$	1,979,060
Cost of products sold		1,056,384			55,626			2,178,797			615,326
Gross profit		1,369,354			112,048			3,171,648			1,363,734

Selling, general and administrative expenses		4,011,672			3,155,630			6,760,969			5,875,123
Research and development expenses		14,834			108,170			35,760			215,650
Depreciation and amortization expense		215,420			21,138			231,864			54,457
Total operating expenses		4,241,926			3,284,938			7,028,593			6,145,230
Loss from operations		(2,872,572	)		(3,172,890	)		(3,856,945	)		(4,781,496	)
Interest expense		(4,461	)		(4,062	)		(6,996	)		(8,159	)
Gain on debt extinguishment-PPP		276,180			0			276,180			0
Loss before provision for income taxes and net of equity investments		(2,600,853	)		(3,176,952	)		(3,587,761	)		(4,789,655	)
Provision for income taxes		(83	)		(1,250	)		(333	)		(1,500	)
Loss before equity in net earnings (losses) of equity investments		(2,600,936	)		(3,178,202	)		(3,588,094	)		(4,791,155	)
Loss from China Joint Venture		(95,857	)		0			(94,556	)		0
Net loss		(2,696,793	)		(3,178,202	)		(3,682,650	)		(4,791,155	)
Net loss attributable to noncontrolling interests		(16,325	)		(11,738	)		(29,313	)		(24,476	)
Net loss attributable to Milestone Scientific Inc.	$	(2,680,468	)	$	(3,166,464	)	$	(3,653,337	)	$	(4,766,679	)

Net loss per share applicable to common stockholders—
Basic		(0.04	)		(0.06	)		(0.05	)		(0.09	)
Diluted		(0.04	)		(0.06	)		(0.05	)		(0.09	)

Weighted average shares outstanding and to be issued—
Basic		69,220,795			56,694,793			68,286,033			51,728,806
Diluted		69,220,795			56,694,793			68,286,033			51,728,806

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

	*Common Stock Share*		*Common Stock Amount*		*Additional Paid in Capital*		*Accumulated Deficit*			*Noncontrolling Interest*			*Treasury Stock*			*Total*
Balance, January 1, 2021		64,171,435	$	64,171	$	117,934,696	$	(100,885,957	)	$	(94,426	)	$	(911,516	)	$	16,106,968
Stock based compensation		-		-		113,507		-			-			-			113,507
Common stock issued to employee for compensation expensed in prior periods		7,075		7		-		-			-			-			7
Common stock to be issued for payment of consulting services expensed in prior periods		40,010		40		-		-			-			-			40
Common stock issued to board of directors for services expensed in prior periods		18,879		18		-		-			-			-			18
Common stock issued to employee for stock options exercised		435,558		436		689,754											690,190
Common stock to be issued to employees for bonuses		-		-		100,000		-			-			-			100,000
Common stock issued for warrants exercised		1,918,925		1,919		3,010,297		-			-			-			3,012,216
Net loss		-		-		-		(972,869	)		(12,988	)		-			(985,857	)
Balance, March 31, 2021		66,591,882	$	66,591	$	121,848,254	$	(101,858,826	)	$	(107,414	)	$	(911,516	)	$	19,037,089
Stock based compensation		-		-		193,824		-			-			-			193,824
Common stock issued to employee for compensation		4,202		4		14,996		-			-			-			15,000
Common stock to be issued for payment of consulting services		96,018		94		262,589		-			-			-			262,683
Common stock issued to board of directors for services		277,767		280		617,887		-			-			-			618,167
Common stock issued for warrants exercised		86,000		86		138,114		-			-			-			138,200
Net loss		-		-		-		(2,680,468	)		(16,325	)					(2,696,793	)
Balance, June 30, 2021		67,055,869	$	67,055	$	123,075,664	$	(104,539,294	)	$	(123,739	)	$	(911,516	)	$	17,568,170

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

	Common Stock Share		Common Stock Amount		Additional Paid in Capital			Accumulated Deficit			Noncontrolling Interest			Treasury Stock			Total
Balance, January 1, 2020		49,410,176		$49,410		$96,082,324			$(93,524,297	)		$(67,274	)		$(911,516	)		$1,628,647
Stock based compensation		-		-		30,715			-			-			-			30,715
Common stock issued to employee for compensation		22,633		23		14,989			-			-			-			15,012
Common stock to be issued for payment of consulting services		-		-		25,000			-			-			-			25,000
Common stock to be issued to employees for bonuses		-		-		171,046			-			-			-			171,046
Common stock issued for warrants		460,725		460		229,902			-			-			-			230,362
Net loss		-		-		-			(1,600,215	)		(12,738	)		-			(1,612,953	)
Balance, March 31, 2020		49,893,534		49,893		96,553,976			(95,124,512	)		(80,012	)		(911,516	)		487,829
Stock based compensation		-		-		23,946			-			-			-			23,946
Common stock issued to employee for compensation		11,450		11		14,989			-			-			-			15,000
Common stock to issued for payment of consulting services		278,581		279		381,520			-			-			-			381,799
Common stock to issued to board of directors for services		39,233		39		53,967			-			-			-			54,006
Common stock issued to employees for bonuses		202,617		203		(203	)		-			-			-			0
Common stock to be issued to employees for bonuses		-		-		462,504			-			-			-			462,504
Common stock issued in public offering April 6,2020		5,420,000		5,420		4,621,022			-			-			-			4,626,442
Common stock issued in public offering-June 30, 2020		6,770,000		6,770		13,369,845			-			-			-			13,376,615
Acquired controlling interest in Milestone Advanced Cosmetic Systems		-		-		-			(24,387	)		24,387			-			-
Common stock issued for warrants		620,750		621		718,029												718,650
Net loss									(3,166,464	)		(11,738)			-			(3,178,202	)
Balance, June 30, 2020		63,236,165		$63,236		$116,199,595			$(95,148,899	)		$(55,625	)		$(911,516	)		$16,968,589

~~See Notes to Condensed Consolidated Financial Statements~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

~~See Notes to Condensed Consolidated Financial Statements~~MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES

	*For the Six Months Ended June 30,*
	*2021*			*2020*

Cash flows from operating activities:	$	(3,682,650	)	$	(4,791,155	)
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		13,055			31,851
Amortization of patents		22,705			26,506
Stock compensation		307,331			58,219
Employees paid in stock		748,171			714,005
Expense paid in stock		262,713			406,800
Loss on China joint venture		94,556			0
Non-cash operating lease expense		3,808			28,901
Gain on debt extinguishment-PPP		(276,180	)		0
Changes in operating assets and liabilities:
Decrease in accounts receivable		268,315			1,603,379
Increase in accounts receivable, related party		0			0
Decrease in other assets		0			11,755
(Increase) decrease in inventories		940,788			(231,944	)
Decrease in advances on contracts		(979,615	)		(131,518	)
Decrease in prepaid expenses and other current assets		(26,380	)		50,162
Increase (Decrease) in accounts payable		99,713			(917,898	)
(Decrease) increase in accounts payable, related party		(183,251	)		(839,359	)
Decrease in accrued expenses		551,136			272,953
Increase in accrued expenses, related party		(234,525	)		(404,161	)
Net cash used in operating activities	$	(2,070,310	)	$	(4,111,504	)
Cash flows from investing activities:
Purchase of property and equipment		(13,075	)		(15,499	)
Net cash used in investing activities	$	(13,075	)	$	(15,499	)
Cash flows from financing activities:
Proceeds from exercise of warrants		3,150,416			949,012
Payments finance lease obligations		(3,808	)		(3,200	)
Net proceeds from employee options exercised		690,190			0
Net proceeds from note payable		0			272,099
Net proceeds from Public Placement Offering		0			18,003,037
Net cash provided by financing activities	$	3,836,798		$	19,220,948
Net increase in cash and cash equivalents		1,753,413			15,093,945
Cash and cash equivalents at beginning of period		14,223,917			1,516,272
Cash and cash equivalents at end of period	$	15,977,330		$	16,610,217

Supplemental non-cash disclosure of cash flow information:
Initial recognition of operating lease-right of use assets		0			(706,071	)
Initial recognition of operating lease right to used liabilities		0			706,071

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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

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 ~~instrument~~device is marketed in dentistry under the trademark ~~CompuDent®~~CompuDent®, and STA Single Tooth Anesthesia ~~System®~~System® and in medicine under the trademark ~~CompuMed®~~CompuMed®. ~~CompuDent®~~CompuDent® is suitable for all dental procedures that require local anesthetic. ~~CompuMed®~~CompuMed® is suitable for many medical procedures regularly performed in ~~Plastic Surgery, Hair Restoration Surgery, Podiatry, Colorectal Surgery, Dermatology, Orthopedics~~plastic surgery, hair restoration surgery, podiatry, colorectal surgery, dermatology, orthopedics, and ~~a number of~~many other disciplines. The dental ~~instruments~~devices are sold in the United States, Canada and in 47approximately 60 other countries. ~~To date there have been no~~Certain medical ~~instruments sold in the United States and limited amounts sold internationally, although certain medical instruments~~devices have obtained CE mark approval and can be marketed and sold in most European countries. In June 2017, Milestone Scientific received ~~510(k)~~510(k) marketing clearance from the U.S. Food and Drug Administration (FDA) on the CompuFlo® Epidural Computer Controlled Anesthesia System.

D~~uring 2015, our common stock was listed on the NYSE MKT under the ticker symbol “MLSS”.~~

During 2016, Milestone Scientific filed for 510(k) marketing clearance with the FDA for both intra-articular and epidural injections with the CompuFlo® Computer Controlled Anesthesia System. In June 2017, the FDA approved the ~~CompuFlo~~® Epidural Computer Controlled Anesthesia System for epidural injections. Milestone Scientific is in the process of introductory meetings with medical device distributors within the United States and foreign markets. Milestone Scientific’s immediate focus is on marketing its epidural instrument throughout the United States and Europe.

In December 2016, we received notification from the FDA that based upon the ~~510(k) application~~510(k)-application submitted for intra- articular injections, we did not adequately document that the device met the equivalency standard required for ~~510(k) clearance.~~510(k) clearances. Following consultation with the FDA Office of Device Evaluation, we ~~intend~~intended to ~~provide additional data, which could include~~file a new ~~Human Factor Validation study (HFV Study) in support of a new 510(k)~~510(k) application for the ~~device. An HFV Study demonstrates~~device in 2019, however, due to financing constraints, a new 510(k) application was not filed in 2019 or 2020. As of June 30,2021, the ~~ease of use of a product.~~Company has decided not to proceed with securing the FDA approval for the intra-articular instrument at this time. Milestone Medical’s immediate focus is on marketing its epidural device throughout the United States and Europe.

In April and June of 2020, the Company completed two Common Stock offerings generating net proceeds of approximately $4.6 million and $13.4 million, respectively (see Note 9). As of June 30,2021, cash on hand was approximately $16 million, an increase of $1.8 million from December ~~2016, we completed~~31, 2020.

The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. As of June 30, 2021, the Company had an ~~underwritten public offering~~accumulated deficit of ~~2,000,000 shares~~$104,539,294 and has incurred a net loss of c~~ommon stock~~approximately $2.7 million and ~~warrants to purchase up to 1,592,775 shares of common stock. The public offering price~~$3.7 million for ~~each share~~the three and ~~related warrant was $1.50. The gross proceeds from this offering were approximately $3,000,000, before deducting underwriting discounts and commissions and other offering expenses.~~six month period ending June 30, 2021.

In ~~January 2017,~~April and June of 2020, the ~~underwriter exercised~~Company completed Common Stock Offerings generating net proceeds of approximately $4.6 million and $13.4 million, respectively (see Note 9). As of June 30,2021, cash on hand was approximately $16 million, an increase of $1.8 million from December 31, 2020. Management believes the Company has sufficient liquidity to support operations beyond a ~~portion~~year after the unaudited condensed consolidated financial statements issue date.

The coronavirus (COVID-19) adversely impacted our operations and those of ~~its over-allotment option~~our third-party partners. As a result of the reduced hours and ~~purchased an additional 123,700 shares~~closings of ~~common stock at~~dental offices throughout the ~~public offering price~~country and the rest of ~~$1.499 per share. The gross proceeds were approximately $186,000 before deducting underwriting discounts and commissions and other offering expenses.~~

~~In June 2017, Milestone Scientific entered into an agreement~~the world due to the continuing spread of COVID-19, revenues for the ~~sale~~three and six months ended June 30, 2020, were adversely affected. Business interruptions, including any interruptions resulting from COVID-19 could significantly disrupt our operations and could have a material adverse impact on our business during 2021. All of ~~its interest~~our employees are located in ~~Milestone China (a forty (40%) percent interest) (the “Milestone China Shares”) to an unaffiliated United States domiciled purchaser and a 10-year option agreement to repurchase~~ the Milestone China Shares. The purchase price for the Milestone China Shares was $1,400,000 of which $125,000 was paid in cash and $1,275,000 was paid by delivery of a non-interest bearing secured promissory note. The note is payable in quarterly installments of $125,000 and is secured by the Milestone China Shares until full repayment. U.S.

In addition to our employees, we rely on (i) distributors, agents, and third-party logistics providers in connection with product sales and distribution and (ii) raw material and component suppliers in the ~~purchaser is precluded from selling all~~U.S., Europe, and China. If we, or ~~substantially all~~any of ~~its assets prior~~these third-party partners encounter any disruptions to ~~repayment~~our or their respective operations or facilities, or if we or any of ~~the note. The 10-year option agreement provides Milestone Scientific an option~~these third-party partners were to ~~repurchase the Milestone China Shares at $1,400,000 within the first two years and at fair market value (as defined in~~shut down for any reason, including by fire, natural disaster, such ~~agreement) for the remainder of the 10-year term. The transaction has been accounted for~~ as a secured financing and Milestone Scientific will continue to account for its relationship with Milestone China under the equity method of accounting. A note receivable is presented on the Company’s balance sheet, along with a deferralhurricane, tornado or severe storm, power outage, systems failure, labor dispute, pandemic or other public health crises, or other unforeseen disruption, then we or they may be prevented or delayed from ~~financing transaction ($1,400,000). The carrying value of the forty (40%) percent investment at the transaction date was zero (see Note 5).~~

~~On July 13, 2017, Milestone Scientific consummated a previously disclosed Asset Purchase Agreement (the “~~Agreement”) with APAD Octrooi B.V. and APAD B.V. (each, a “Seller” and collectively, the “Sellers”) pursuant to which Milestone Scientific acquired certain patent rights and other intellectual property rights related to the Sellers’ computer controlled injection instrument (the “Purchased Assets”) which has been accounted for as an asset acquisition. On the closing date, Milestone Scientific issued to the Sellers an aggregate of 1,646,358 shares of its common stock, valued at $2,486,000 which shares are subject to certain post-closing upwardeffectively operating our or downward adjustments not to exceed twenty-five percent of the initial shares as of the purchase date or 250,000 Euros, as defined in the Agreement. As of September 30, 2017, Milestone Scientific has recorded a $167,000 liability relating to the estimated additional shares that would have to be issued according this provision in the Agreement. Milestone Scientific paid approximately $153,000 in legal fees on behalf of the Seller as stipulated based on the terms of the Agreement. The patents and other intellectual property purchased in the amount of approximately $2,639,000 have been capitalized and will amortized over their ~~five year estimated useful life and tested for impairment as a finite lived intangible asset.~~business, respectively.

In ~~July 2017, Milestone Scientific's Compensation Committee approved~~addition, it is uncertain as to what effect the ~~issuance~~continuing spread of ~~400,000 stock options~~COVID-19 (such as the Delta variant) will have on our commercialization efforts of our CompuFlo Epidural and CathCheck system as medical devices. Such future developments could have a material adverse effect on our financial results and our ability to ~~Gian Domenico Trombetta, CEO of Wand Dental, a Direc~~tor of Milestone Scientific and a director of Innovest S.p.A., an Italian investor (250,000 options at an exercise price of $2.55 per share were issued on July 7, 2017 and 150,000 options having an exercise price at the higher of $2.55 or the market price of the stock on the date of the 2018 Annual Stockholder meeting, subject to approval of a new or amended equity incentive plan at such meeting.)conduct business as expected.

~~Milestone Scientific has incurred operating losses and negative cash flows from operating activities in virt~~ually each year since its inception. Milestone Scientific is actively pursuing the generation of revenue, positive operating income and net income. The capital raised in December 2016 and January 2017 provided Milestone Scientific with working capital to continue to develop its medical instruments and obtain regulatory approval for one of its medical instruments ( the June, 2017 FDA approval of the epidural instrument), as well as to aggressively market its dental instruments. Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue from its dental business worldwide, the generation of revenue from its medical instruments and disposables business in the United States (following June 2017 FDA approval of its ~~CompuFlo~~® Computer Controlled Anesthesia System ) and worldwide, and a reductions in operating expenses. Management believes that Milestone Scientific will have sufficient cash reserves to meet its anticipated obligations over the next twelve month period following the date of this report. However, Milestone Scientific will likely need to raise additional capital prior to the expected generation of sustainable positive cash flow from operating activities and may also need to raise additional capital to effectively launch its approved medical instrument and eventually generate positive cash flow from the anticipated medical business.NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The ~~accompanying~~unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally ~~accepted~~accepted in the United States ("GAAP") and include the accounts of Milestone Scientific and its wholly owned and majority owned subsidiaries, including, Wand Dental (wholly owned), Milestone Advanced Cosmetic (majority owned), and Milestone Medical (majority owned). ~~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 unaudited condensed consolidated financial statements of Milestone Scientific have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information with the instructions for Form ~~10Q~~10-Q and Article 8 of Regulation ~~S-X.~~S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, ~~2016,~~ 2020, included in Milestone Scientific's Annual Report on Form ~~10-K.~~10-K.

Certain ~~reclassifications have~~reclassification has been made to the ~~2016~~2020 unaudited condensed consolidated financial statements to conform to the 2021 unaudited condensed consolidated ~~2017~~ financial statement presentation. These reclassifications had no effect on net loss or cash flows as previously reported.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to the allowance for doubtful accounts, inventory valuation, cash flow assumptions regarding evaluations for impairment of long-lived assets and going concern considerations, and valuation allowances on deferred tax assets. Actual results could differ from those estimates.

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To perform revenue recognition for customer arrangements 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 upon transfer of control of a product to a customer, generally upon date of shipment. For certain arrangements where the shipping terms are freight-on-board (FOB) shipping, revenue is recognized upon delivery. The Company has no obligation on product sales for any installation, set-up, or maintenance, these being the responsibility of the buyer. Milestone Scientific's only obligation after transfer of control, except for specific contracts and arrangements that provide for customer right to return provisions, is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty period.

The Company records allowances for product returns as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns is required, including the customers’ return rights and the Company’s historical experience with returns and the amount of product in the distribution channel not consumed by end users and subject to return. The Company relies on historical return rates to estimate returns. In the future, if any of these factors and/or the history of product returns change, adjustments to the allowance for product returns may be required.

Our payment terms differ by geography and customer, but payment is generally required within 90 days from the date of shipment or delivery.

We operate in two operating segments: dental and medical. Therefore, results of our operations are reported on a dental and medical basis for purposes of segment reporting, consistent with internal management reporting. See Note 11 for revenues by geographical market, and product category for the six months ended June 30, 2021

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~~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~~ is the primary beneficiary of Milestone Education as of January 2016. Accordingly, the assets and liabilities of Milestone Education are included in the accompanying condensed consolidated financial statements.

Because Milestone Scientific ~~had an increasing~~has a variable interest in Milestone China it ~~further~~ considered the guidance in ~~Accounting Standard Codification ("ASC")~~ ASC 810, “Consolidation” as it relates to determining whether Milestone China is a VIE and, if so, identifying the primary beneficiary. ~~As Milestone China’s equity at risk and voting rights were not proportional to their economic interest, Milestone China was determined to be a VIE.~~ Milestone Scientific would be considered the primary beneficiary of the VIE if it has both of the following characteristics:

Milestone ~~management~~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. ~~Managemen~~t placed the most weight on the relationship and significance of activities of Milestone China to the majority shareholder/CEO of Milestone China. As majority shareholder, majority holder of voting rights, and the active CEO, the 53% investor has 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 continues to be accounted for under the equity method.~~ See Note 6.

Milestone Scientific considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of June 30, 2021, and December 31, 2020 Milestone Scientific has approximately $14.8 million and $13.1 million, respectively, of investments with short term maturities classified as a cash equivalent. At times, such investments, may be more than the Federal Deposit Insurance Corporation insurance limit.

Milestone Scientific sells a significant amount of its product on credit terms to its major distributors. Milestone Scientific estimates losses from the inability of its customers to make payments on amounts billed. ~~A majority of~~Most credit sales are due ~~within ninety~~within 90 days from invoicing. There have not been any significant credit losses incurred to date. As of June 30, 2021, and December 31, 2020, accounts receivable was recorded, net of allowance for doubtful accounts of $280,864 and $10,000 respectively.

Milestone Scientific generally does not accept non-defective returns from its customers. Product returns under warranty are accepted, evaluated and repaired or replaced in accordance with the Warranty Policy. Returns not within the Warranty Policy are eva~~luated and the customer is charged for the repair.~~

Inventories principally consist of finished goods and component parts stated at the lower of cost ~~(first-in, first-out~~(first-in, first-out method) or ~~market.~~net realizable value. Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess, slow moving, defective, and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence, and product expiration requirements. The valuation allowance creates a new cost basis for the inventory, and it is not subsequently marked up through a reduction in the valuation allowance based on any changes in the underlying facts and circumstances. When the valuation allowance is initially recorded, the increase to the allowance is recognized as an increase in cost of sales. The valuation allowance is only reduced if or when the underlying inventory is sold or destroyed, at which time cost of sales recognized would include the previous adjusted cost basis. As of June 30,2021, and December 31, 2020, inventory was recorded net of a valuation allowance for slow moving and defective inventory of approximately $450,000, and $453,000, respectively. See Note 4.

Investments in wh~~ich~~which Milestone Scientific ~~has the ability to~~can exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included within long-term assets in the ~~long term assets on the condensed consolidated balance sheets.~~unaudited Condensed Consolidated Balance Sheets. Under this method of accounting, Milestone Scientific's share of the net earnings or losses of the investee is presented below the income tax line onin the ~~condensed consolidated statements~~unaudited Condensed Consolidated Statements of ~~operations.~~

Operations. Milestone Scientific evaluates its equity method investments ~~wheneve~~rwhenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. See Note 6.

Equipment is recorded at cost, less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets, which range from ~~five~~two to seven ye~~ars.~~ years. The costs of maintenance and repairs are charged to ~~operations~~expense, as incurred.

Patents are recorded at cost to prepare and file the applicable documents with the US Patent Office, or internationally with the applicable g~~overnmental~~governmental office in the respective country. The costs related to these patents are being amortized using the straight-line method over the estimated useful life of the patent. Patents and other developed technology acquired from another business entity will be amortized atbased on the estimated ~~average~~ useful life of the patent. These patents and developed technology are recorded at the acquisition ~~cost and included legal fees.~~cost.

~~Milestone Scientific reviews long-lived~~Long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances ~~(i.e. a triggering event)~~ indicate that the carrying ~~amounts~~ amount of an asset may not be recoverable. The ~~carrying value~~Company’s impairment review process is based upon an estimate of ~~the assets is evaluated in relation to the operating~~ ~~performance and~~ future undiscounted cash flow. Factors the Company considers that could trigger an impairment review include the following:

Recoverability of assets that will continue to be used in the Company's operations is measured by comparing the carrying value to the future net undiscounted cash flows expected to be generated by the asset or asset group. Future undiscounted cash flows include estimates of future revenues, driven by market growth rates, and estimated future costs.

On April 27, 2020, the Company, was granted a loan (the “Loan”) from Savoy Bank. in the aggregate amount of approximately $276,000, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the underlying assets. Milestone Scientific adjusts the net book value of an underlying asset if its fair value is determined to be less than its net book value. There have been no impairment indicators or triggering events and therefore, no impairment reviews have been performed in the period ending September 30, 2017.

Revenue from product sales is recognized, net of discounts and allowances to domestic distributors, on the date of shipment for substantially all shipments, since the shipment terms are FOB warehouse. Milestone Scientific recognizes revenue on date of arrival of the goods at the customer's location, where shipments are FOB destination. In all cases the price to the buyer is fixed and the collectability is reasonably assured. Further, Milestone Scientific has no obligation on these 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. Instrument and hand pieces are not bundled but rather sold separately and, as such, there are no multiple element determinations in connection with the revenue recognition.

~~Milestone Scientific includes shipping and~~ handling costs in cost of goods sold. These costs are paid by or billed to customers at the time of shipment for domestic shipments. International shipments are FOB warehouse, therefore no costs are incurred by Milestone Scientific.

Research and development costs, which consist principally of new product development costs payable to third parties, are expensed as incurred. Advance payments received for the research are amortized to expense either as services are performed or over the relevant service period using the ~~straight line~~straight-line method.

Milestone Scientific accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed for ~~temporar~~ytemporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. See Note 10.

~~17. Use~~On June 30, 2021 and December 31, 2020, we had 0 uncertain tax positions that required recognition in the unaudited condensed consolidated financial statements. Milestone Scientific's policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the condensed consolidated statements of ~~Estimates~~operations. NaN interest and penalties are present for periods open. Tax returns for the 2017,2018, and 2019 years are subject to audit by federal and state jurisdictions.

Milestone Scientific presents “basic” earnings (loss) per common share applicable to common stockholders and, if applicable, “diluted” earnings (loss) per common share applicable to common stockholders pursuant to the provisions of ASC 260, “Earnings Per Share”. Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding and to be issued during each period. The ~~preparation~~calculation of ~~financial statements~~diluted earnings per common share is like that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options and warrants were issued during the period.

Since Milestone Scientific had net losses in ~~conformity with GAAP requires management to make estimates~~ the six months ended June 30, 2021, and ~~assumptions in determining~~2020, the ~~reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date~~assumed effects of the ~~financial statements~~exercise of potentially dilutive outstanding stock options, and ~~reported amounts of revenues~~warrants, were not included in the calculation as their effect would have been anti-dilutive. Such outstanding options, and ~~expenses during the reporting period. The most significant estimates relate to the allowance for doubtful accounts, inventory valuation,~~warrants totaled 8,015,193 and ~~cash flow assumptions regarding evaluations for impairment of long-lived assets~~ 7,686,628 on June 30, 2021, and ~~going concern considerations, and valuation allowances on deferred tax assets. Actual results could differ from those estimates~~.2020, respectively.

~~Fair Value Measurements:~~ Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction ~~between~~between market participants in the principal market at the measurement date (exit price). We are required to classify fair value measurements in one of the following categories:

● ~~Level 1 inputs which are defined as quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.~~

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of ~~a particular~~an input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. As of June 30, 2021 and December 31, 2020, the Company does not have any assets or liabilities that were measured at fair value on a recurring basis. The carrying amounts reported in the accompanying unaudited condensed consolidated financial statements for current assets and current liabilities approximate the fair value because of the immediate or short-term maturities of the financial instruments.

In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance for revenue recognition for contracts, superseding the previous revenue recognition requirements, along with most existing industry-specific guidance. The guidance requires an entity to review contracts in five steps: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. The new standard will result in enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. In August 2015, the FASB issued guidance approving a one-year deferral, making the standard effective for reporting periods beginning after December 15, 2017. The FASB continues to release guidance clarifying certain aspects of the revenue guidance. We do not believe that this new accounting pronouncement will have a material impact on our financial statements.

~~In November 2015,~~Milestone Scientific accounts for stock-based compensation under ASC 718, "Compensation - Stock Compensation" (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options and restricted stock units, to be recognized in the ~~FASB issued guidance simplifying~~Condensed Consolidated Statements of Operations over the balance sheet classification of deferred taxes. The new guidance requires that all deferred taxes be presented as noncurrent, rather than separated into current and noncurrent amounts. The guidance is effective for reporting periods beginning after December 15, 2016 and early adoption is permitted. In addition, the adoption of guidance can be applied either prospectively or retrospectively to all periods presented. The Company has adopted this pronouncement as of January 1, 2017, and applied retrospectively, for its provision for income taxes disclosure. The adoption did not have an impactvesting period based on the ~~presentation~~grant-date fair values.

At the inception of an arrangement, we determine whether an arrangement is, or contains, a lease. An arrangement is, or contains, a lease if the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases with a term greater than one year are generally recognized on the balance sheet as ~~the Company assigns a full valuation allowance to its net deferred tax asset.~~

~~In February 2016, the FASB~~ issued a new standard Accounting Standards Update ("ASU ") No.2016-02, "Leases"(Topic 842). The new standard is intended to increase transparency and comparability among organizations to recognize leaseright-of-use assets and current and non-current lease liabilities, as applicable. We have elected not to recognize on the balance sheet leases with terms of 12 months or less. We typically only include the initial lease term in our assessment of a lease arrangement. Options to extend a lease are not included in our assessment unless there is reasonable certainty that we will renew.

Finance and ~~disclose key information about leasing arrangements. It will be~~operating lease right-of-use assets represent the Company’s right to use an underlying asset over the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. These assets and obligations are recognized at the lease commencement date based on the present value of lease payments, net of incentives, over the lease term. The interest rate implicit in our leases is typically not readily determinable. As a result, we utilize our incremental borrowing rate, which reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

We evaluate the classification of our leases as either finance leases or operating leases. Leases that are economically similar to the purchase of assets are generally classified as finance leases; otherwise, the leases are classified as operating leases. Lease cost for our operating leases is recognized on a straight-line basis over the lease term. Included in lease cost are any variable lease payments incurred in the period that are not included in the initial lease liability and lease payments incurred in the period for any leases with an initial term of 12 months or less. See Note 14.

In December 2019, FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which clarifies the accounting treatment for the accounting tax aspects relating, in part, to the intra-period allocations and foreign subsidiaries. ASU 2019-12 is effective for all entities with fiscal years beginning after December 15, ~~2018. Milestone Scientific is in the process of determining what impact, the~~2020. The adoption of this ~~ASU will~~standard as of January 1, 2021, did not have a material effect on ~~its~~the Company’s unaudited condensed consolidated financial ~~position, results of operations and cash flows.~~statement presentation.

In ~~March~~June 2016, the FASB issued a new standard ASU ~~No.2016-07, “Investments~~ No.2016- Equity Method and Joint Ventures” (Topic 323): The new standard is intended to eliminate the requirement that when an investment qualifies for the use of the equity method as a result of an in increase in the level of ownership or degree of influence, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect all of the previous periods that the investment was held. It will be effective for all entities for fiscal years and interim periods, beginning after December 15, 2016. The adoption of this standard did not have a material impact on our financial statements.

~~In March 2016, the FASB issued a new standard ASU No.2016-07, “~~Investments - Equity Method and Joint Ventures” (Topic 323): The new standard is intended to eliminate the requirement that when an investment qualifies for the use of the equity method as a result of an in increase in the level of ownership or degree of influence, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect all of the previous periods that the investment was held. It will be effective for all entities for fiscal years and interim periods, beginning after December 15, 2016. The adoption of this standard did not have a material impact on our financial statements.

~~In June 2016, the FASB issued a new standard ASU No.2016-13, “Financial~~13, “Financial Instruments – Credit Losses” (Topic ~~326)~~326).: The new standard is intended to replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. It will be effective for all smaller reporting entities for fiscal years and interim periods, beginning after December 15, ~~2018. Milestone Scientific~~2022. The Company is inanalyzing the ~~process~~impact of ~~determining what impact, if any,~~ the adoption of this ~~ASU will have on its financial position, results of operations and cash flows.~~standard.

In ~~August 2016, the~~ January 2020, FASB issued ~~a new standard~~ ASU ~~No.2016-15, "Statement Cash Flows “Classification of Certain Cash Receipts~~2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and ~~Cash Disbursements" Topic 230). The new standard~~Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)”, which, generally, provides guidance ~~as to~~for investments in entities accounted for under the ~~conformity~~equity method of ~~presentation of certain cash receipts and disbursements. It will be~~accounting. ASU 2020-01 is effective for all entities ~~for~~with fiscal years ~~and~~beginning after December 15, 2021, including interim periods ~~beginning after December 15, 2017. Milestone Scientific~~therein. The Company is inanalyzing the ~~process~~impact of ~~determining what impact, if any,~~ the adoption of this ~~ASU will have on its presentation within the statement of cash flows.~~

~~In October 2016, the FASB issued a new s~~tandard ASU No.2016-17, "Consolidation Interests Held through Related Parties That Are under Common Control"(Topic 810). The new standard provides guidance as to consideration of consolidation requirements of a primary beneficiary and variable interest entity that are part of related party group under common control. It will be effective for fiscal years and interim periods, beginning after December 15, 2016. Milestone Scientific has adopted the standard, effective January 1, 2017, which did not have an impact on its financial reporting.

~~In November 2016, the FASB issued a new standard ASU No.2016-18, “~~Statement of Cash Flows – Restricted Cash” (Topic 230). The new standard provides guidance as to address the diversity of treatment of restricted cash on the statement of cash flows. It will be effective for all entities for fiscal years and interim periods, beginning after December 15, 2017 and

~~interim periods therein. Milestone Scientific~~ ~~does not expect~~standard; however, the adoption ~~of this ASU~~is not expected to have a material effect on ~~its presentation within~~ the Company’s unaudited condensed consolidated financial statement ~~of cash flows.~~presentation.

In ~~January 2017, the~~ August 2020, FASB issued ~~a new standard~~ ASU ~~No.2017-01, “Business Combinations” (Topic 805). The new standard~~2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which, generally, provides guidance for accounting regarding derivatives relating to ~~clarify the definition of a ‘business’,~~entities common stock and ~~assist entities in evaluation whether a transaction should be accounted for as an acquisition/disposal of assets or a business. It will be~~earnings per share. ASU 2020-06 is effective for ~~public~~all entities ~~for~~with fiscal years ~~and~~beginning after December 15, 2021, including interim periods ~~beginning after December 15, 2017, with limited early application. Milestone Scientific~~therein. The Company is inanalyzing the ~~process~~impact of ~~determining what impact, if any,~~ the adoption of this ~~ASU will have on its presentation within the statement of cash flows.~~

~~In May 2017, the FASB issued a new standard ASU No.2017-09, “~~Compensation – Stock Compensation” (Topic 718). The new standard provides guidance and clarity for modification to equity based compensation programs. It will be effective for all entities for fiscal years and interim periods, beginning after December 15, 2017. Milestone Scientific is in the process of determining what impact, if any,standard; however, the adoption of this ~~ASU will~~standard is not expected to have a material effect on ~~its presentation within~~ the ~~statement of cash flows.~~Company’s unaudited condensed consolidated financial statement.

In May 2021, FASB issued ASU 2021-04, Earnings Per Share (topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts in an Entity’s Own Equity (Subtopic 815-40) – Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, which provides guidance of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related earnings per share (EPS) effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. The amendments in this ASU are effective January 1, 2022, including interim periods. Early adoption is permitted. The Company will apply the amendments prospectively to modifications or exchanges occurring on or after January 1, 2022. The Company will evaluate the impact of ASU 2021-04 on any future changes to the terms and conditions of its warrants.

NOTE ~~- 3~~ 4 — INVENTORIES~~Basic and Diluted Net INCOME (Loss) Per Common Share~~

~~Milestone Scientific presents "basic" earnings (loss) per common share applicable to common stockholders~~Inventories consist of the following:

On June 30, 2021, there are allowances for slow moving medical finished goods of approximately $450,000. As of December 31, 2020, there are allowances for slow moving medical finished goods of approximately $450,000 and ~~if applicable, "diluted" earnings (loss) per common share applicable to common stockholders pursuant to the provisions~~damaged slow moving dental finished goods of ~~Statement of Financial~~ Accounting Standards ASC Topic 260. Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding and to be issued during each period. The calculation of diluted earnings per common share is similar to that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options, warrants, and the conversion of debt were issued during the period.approximately $3,000.

~~Since Milestone Scientific had net losses for three months~~The advances on contracts represent funding of future STA inventory purchases, epidural instruments, and ~~nine months ended September 30, 2017 and 2016, the~~ ~~assumed effects~~epidural replacements parts. The balance of the ~~exercise~~advances as of ~~potentially dilutive outstanding stock options~~June 30, 2021 and ~~warrants were not included in the calculation as their effect would have been anti-dilutive. Such outstanding options~~December 31, 2020 is $1,393,817 and ~~warrants totaled 4,629,557 and 1,885,010 at September 30, 2017 and 2016,~~$414,202, respectively.

NOTE ~~- 4 CONSOLIDATION OF VARIABLE INTEREST ENTITY~~6 — INVESTMENT IN AND TRANSACTIONS WITH EQUITY INVESTEES

Milestone ~~Education is a 50% owned subsidiary of Milestone Scientific which began operations in 2013 to provide training and education to dentists thr~~oughout the world. Milestone Scientific accounted for its investment in Milestone Education using the equity method of accounting through December 31, 2015. Approximately 81% of the revenue earned by Milestone Education is from services performed for Milestone Scientific as of September 30, 2017. As a result of this dependency and relationship, we determined that we had the power to direct the activities that most significantly impact Milestone Education's economic performance, and therefore is consolidated in our financial statements. China Ltd.

~~Advanced Ocular Sciences SA ("Advanced Ocular") is a shell company attempting to develop an instrument~~ to deliver injections into the eyes. As of September 30, 2017, Milestone Scientific owns 25% of this entity. During 2015, Milestone Scientific advanced $78,798 for marketing and strategy planning to Advanced Ocular and it, or its organizers, were obligated to repay this advance if a public offering of Advanced Ocular equity was approved and funded in Poland during 2016. However, a public offering has yet to be completed in Poland. As a result, Milestone Scientific wrote-off the $78,798 advanced to Advanced Ocular as of December 31, 2016. Advance Ocular was not included in the condensed consolidated financial statements at September 30, 2017 as no further investment has been made by Milestone Scientific.

In June 2014, Milestone Scientific invested $1 million in Milestone China Ltd. (“Milestone China”), by contributing ~~772 STA Instruments~~dental instruments to Milestone China for a ~~40%~~(40%) ownership interest. Milestone ~~Scientific recorded this investment under~~China owns approximately 75% of Milestone Beijing Medical Equipment Company, Ltd (“Milestone Beijing”). Milestone Beijing has primary responsibility for the ~~equity method~~sales, marketing, and distribution of ~~accounting.~~the Company’s dental products in China. Milestone Scientific recorded ~~a loss on its~~their investment in Milestone China of $0 and $164,837, as of September 30, 2017 and 2016, respectively. Milestone Scientific's investment in Milestone China was $0 as of September 30, 2017 and December 31, 2016, respectively. Milestone Scientific incurred cumulative losses on its investment in Milestone China of $2,078,484 and $1,124,350 as of September 30, 2017 and December 31, 2016, respectively, which have been suspended.

In June 2017, Milestone Scientific entered into an agreement for the sale of the Milestone China Shares to an unaffiliated United States domiciled purchaser and a 10-year option agreement to repurchase the Milestone China Shares. The purchase price for the Milestone China Shares was $1,400,000 of which $125,000 was paid in cash and $1,275,000 was paid by delivery of a non-interest bearing secured promissory note. The note is payable in quarterly installments of $125,000 until paid in full and is secured by the Milestone China Shares until full repayment. In addition, pursuant to such note, the purchaser is precluded from selling all or substantially all of its assets prior to repayment of the note. The 10-year option agreement provides Milestone Scientific an option to repurchase the 40% equity interest at $1,400,000 within the first two years and at fair value (as defined in such agreement) for the remainder of the 10-year term. The transaction has been accounted for as a secured financing and Milestone Scientific will continue to account for its relationship with Milestone China under the equity method of accounting. ~~A note receivable is presented on~~

In first quarter 2020, Milestone China and certain marketing affiliates entered into a plan to merge (the Transaction) into an affiliated manufacturing company, Anhui Maishida Medical Technology, Co. Ltd. (Anhui). Anhui will be the ~~Balance Sheet, along with a deferral from financing transaction ($1,400,000). The carrying value~~surviving entity after the merger and will have complete responsibility for sales, marketing, and distribution for the Company’s dental products in China.

However, as of the ~~forty (40%) percent investment at~~filing date of this Quarterly Report, due to the COVID-19 pandemic, the regulatory documentation for the planned merger has been placed in suspense since applicable government offices are still closed in China and Hong Kong. According to documentation provided to Milestone Scientific with respect to transaction, ~~date was zero.~~Milestone Scientific is expected to have an approximate 28.4% direct ownership in Anhui. Milestone China and certain marketing affiliates are expected to be dissolved upon completion of the merger and upon the required regulatory filings in China and Hong Kong. However, this transaction has not been completed, and the participation of Milestone Scientific and the final terms may change.

Milestone Scientific, in previous years, reduced its investment in Milestone China to 0 and had ~~$356,400~~accumulated losses over the investment balance of approximately $5.9 million at December 31, 2020, which have been suspended.

For the three and ~~$1,714,600 of related party sales of~~six months ended June 30, 2021, Milestone Scientific shipped instruments and handpieces ~~and instruments~~ to Milestone China and ~~Milestone China’s agent during the three~~its agents and ~~nine months ended September 30, 2017~~recognized revenue approximately of $525,000 and $1 million, respectively. ~~Milestone Scientific had $1,977,862 and $3,203,466 of~~The Company did not recognize any revenue related ~~party sales of handpieces and instruments~~ to Milestone China ~~during~~for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, respectively.~~ 2020. As of ~~September~~June 30, ~~2017~~2021, the Company has approximately $178,000 of deposits from Milestone China for future shipment of goods included in accrued expenses, related party on the accompanying condensed consolidated balance. Due to the current geo economic situation and ~~December 31, 2016,~~the US-China relations, Milestone Scientific recorded ~~deferred revenues~~an allowance against accounts receivable, related party and ~~deferred costs associated with~~ sales allowance of $270,864 for the quarter ended June 30, 2021. This reserve will be reviewed quarterly and adjusted based on updated fact and circumstances.

Milestone China is Milestone Scientific’s exclusive distributor in China. During 2017 and prior to the payment default during 2018, Milestone Scientific agreed to sell inventory to Milestone China and its agent. During 2018, Milestone Scientific entered into a payment arrangement with Milestone China to satisfy past due receivables from Milestone China and its agents which amounted to $2.8 million at the time of ~~$712,800 and $362,718, and $1,001,800 and $620,041, respectively. As~~ the payment arrangement. Milestone Scientific collected $950,000 under this arrangement, until Milestone China defaulted on the payment arrangements.

In April of ~~September 30, 2017 and December 31, 2016, Milestone China’s agent owed $712,800 and $2,714,600, respectively,~~2020, the Company entered into an agreement with United Systems, Inc., related party (see Note 13) regarding certain handpieces supplied to Milestone ~~Scientific which is included~~China in ~~related party accounts receivable on the condensed consolidated balance sheets.~~

~~Milestone Scientific defers the total revenue~~2018, that were billed and ~~costs of goods sold when instruments and handpieces are~~ shipped to Milestone China by United Systems, as well as STA instruments billed to United Systems and delivered to Milestone China, and not paid by Milestone China. United Systems sold their entire accounts receivable due from Milestone China for the above- described handpieces and STA instruments for $370,260 to Milestone Scientific. Milestone Scientific paid United Systems as follows; $100,000 in cash paid in April 2020, $170,260 in shares of the Company’s Common Stock (priced as of the close of business on April 23, 2020, $1.59 ) issued in June 2020, and $100,000 in cash paid in July 2020. The Company is entitled to the cash collections, if and when received, on the accounts receivable due to United Systems prior to this agreement up to approximately $1.4 million.

In the ~~nine months ended September 30, 2017~~second quarter of 2020, the Company completed two public offerings. In April 2020, a Common Stock offering generating gross proceeds of approximately $5.1 million (5,420,000 common shares and ~~2016,~~2,710,000 warrants). The combined price of the ~~loss on equity investment~~shares and warrants was ~~$28,941~~$0.95 per share. The warrants are exercisable at a price of $1.20 per share and ~~$554,766, respectively, which is included in~~have an expiration of three years from the ~~condensed consolidated statements~~issue date. In June 2020, the Company completed a second Common Stock offering generating gross proceeds of ~~operation. For~~approximately $14.6 million (6,770,000 common shares and 3,749,000 warrants). The combined price of the ~~three months ended September 30, 2017~~shares and ~~2016,~~warrants was $2.15 per share. The warrants are exercisable at $2.60 and expire three years from the ~~loss on equity investment was $0 and $253,451, respectively, which is included in the condensed consolidated statements of operation.~~issue date.

The following table ~~includes summarized financial~~summarizes information ~~(unaudited)~~about shares issuable under warrants outstanding as of June 30, 2021 :

As of June 30, 2021 and 2020, there were 2,264,127 and 2,370,345 shares to be issued whose issuance has been deferred to the certain executives and employees of Milestone ~~China:~~Scientific, respectively.

As of June 30, 2021 and 2020, there were 144,024 and 149,285 shares, respectively, to be issued to non-employees, that will be issued for services rendered. The number of shares was fixed at the date of grant and were fully vested upon grant date.

The following table summarizes information about shares to be issued on June 30, 2021 and 2020, respectively.

In June 2011, the stockholders of Milestone Scientific approved the 2011 Stock Option Plan (the "2011 Plan") which originally provided for stock options to our employees, directors and consultants to purchase, and restricted common stock, restricted stock units, and other awards for, up to 2,000,000 shares of common stock and was later amended in 2016 to increase the maximum number of shares reserved for grant to 4,000,000. Generally, options become exercisable over a three-year period from the grant date and expire five years after the date of grant. As of June 30, 2021, and December 31, 2020, the Company had 2,471,659, and 424,425, respectively, remaining options available for grants.

The Milestone Scientific Inc. 2020 Equity Compensation Plan, as amended and restated (the "2020 Plan"), provides for awards of restricted common, stock restricted stock units, and other awards for options to purchase, up to a maximum 4,000,000 shares of common stock and expires in June 2031. Options may be granted to employees, directors, and consultants of Milestone Scientific for the purchase of shares of common stock at a price not less than the fair market value of common stock on the date of grant. In general, options become exercisable over a three-year period from the grant date and expire five years after the date of grant.

On April 8, 2021, as part of its Succession Plan going into effect on April 23, 2021, the Company announced that Leonard Osser, the Interim Chief Executive Officer, would be accepting the role of Vice Chairman of the Board of Directors. As part of accepting this role, he would be granted options to purchase 2,000,000 shares of common stock, exercisable at the fair market value of the common stock on the date of grant, vesting over the five-year period after he steps down as Chief Executive Officer of the Company or ten years from the date of grant, whichever shall end first. The options were issued pursuant to the 2020 Plan.

Milestone Scientific recognizes compensation expense ~~on a straight line basis~~ over the requisite service period and in the case of ~~performance based~~performance-based options over the period of the expected performance. For the ~~three and nine~~six months ended ~~September~~ June 30, ~~201~~72021 and 2020, Milestone Scientific recognized ~~$299,175~~approximately $286,00 and ~~$543,290~~$48,000 of total employee ~~stock based compensation cost, respectively. For the three and nine months ended September 30, 2016, Milestone Scientific recognized $81,678 and $107,205 of total employee stock based~~ compensation cost, respectively. As of ~~September~~June 30, ~~2017 and 2016,~~ 2021 there was ~~$1,389,525 and $580,331~~approximately $3.5 million of total unrecognized compensation cost related to ~~nonvested options, respectively, which~~non- vested options. Milestone Scientific expects to recognize these ~~cost~~costs over a weighted average period of ~~2.5 years and 2.49 years as of September 30, 2017 and 2016, respectively.~~4.4 years.

A summary of option activity for employees under the plans and changes during the ~~nine month~~six months ended ~~September~~June 30, ~~2017,~~2021 and 2020 is presented below:

The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the six month period ended June 30, 2021 risk free interest rate of .19%-1.15% , Volatility of 69.1%-94% (which is based on the Company’s historical volatility over the expected term), expected term of 3-6.5 years, 0% dividend rate and closing price of the stock of $2.46-$3.79.

A summary of option activity for non-employees under the plans ~~As of September 30, 2017~~ and changes during thesix ~~month~~ months ended June 30, 2021 and 2020is presented below:

The fair value of the non-employee options was estimated on the date of grant using the Black Scholes option-pricing model at the date of grant. ~~In accordance with~~For the ~~provisions of FASB ASC 505,~~ three and six months ended June 30, 2021, Milestone Scientific ~~re-measures~~recognized approximately $4,800 and $15,000 expense related to non-employee options, respectively. For thesix months ended June 30, 2020, Milestone Scientific recognized approximately $7,000 expense related to non-employee options, respectively.

The Company used the following assumptions to calculate the fair value of the ~~grant at each presentation~~stock option grants using the Black-Scholes option pricing model on the measurement date ~~unless there is a significant disincentive for non-performance or until performance has been. For~~during the ~~three~~six month ended June 30, 2021, risk free interest rate of 0.3 %, Volatility of 86.97% to 94.05%, expected term of 5 years, 0% dividend rate and ~~nine months ended September 30, 2017, Milestone Scientific~~ ~~recognized income of $6,067 and~~ $12,324, respectively related to non-employee options. For the three and nine months ended September 30, 2016, Milestone Scientific recognized expense of $2,807 and $8,421 respectively related to non-employee options.

Milestone Scientific's consolidated financial instruments that are exposed to concentrations of credit risk consist primarily of cash, trade accounts receivable, and advances on contracts. Milestone Scientific places its cash and cash equivalents with lar~~ge financial institutions. At times, such investments may be in excess~~closing price of the ~~Federal Deposit Insurance Corporation insurance limit. Milestone Scientific has not experienced any losses in such accounts and believes it is not exposed~~stock of $3.57 to any significant credit risks. Financial instruments which potentially subject Milestone Scientific to credit risk consist principally of trade accounts receivable, as Milestone Scientific does not require collateral or other security to support customer receivables, and advances on contracts. Milestone Scientific closely monitors the extension of credit to its customers while maintaining allowances, if necessary, for potential credit losses. On a periodic basis, Milestone Scientific evaluates its accounts receivable and esta~~blishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit conditions.~~

The ~~advances on contracts represent funding of future STA inventory purchases and Epidural replacements parts. The balance of~~information below summarizes the ~~advances As of September~~restricted stock activity for the six months ended June 30, ~~2017 and December 31, 2016 is $992,242 and $700,900, respectively. The advance is classified as current based on the estimated annual usage of the underlying inventory.~~ 2021:

For the three and six months ended June 30,2021, stock compensation expense for restricted stock was $20,833.

Due to Milestone Scientific's history of operating losses, a full valuation allowances has been provided for all of Milestone Scientific's deferred tax assets At September 30, 2017 and December 31, 2016, no recognit~~ion was given to the utilization of the remaining net operating loss carryforwards in each of these periods.~~

The utilization of Milestone Scientific's net operating losses may be subject to a substantial limitation due to the "change of ownership ~~provisions"~~provisions" under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carry forwards before their utilization. Milestone Scientific has established a 100% valuation allowance for all of its deferred tax assets due to uncertainty as to their future realization.

We conduct our business through 2 reportable segments: Dental and Medical. These segments offer different products and services to different customer bases. The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under “Corporate Services” below and these include costs associated with executive management, investor relations, patents, trademarks, licensing agreements, new instruments developments, financing activities and public company compliance.

The following tables present information about our reportable and operating segments:

The following table presents information about our operations by geographic area for three months ended June 30, 2021 and 2020. Net sales by geographic area are based on the respective locations of ~~September~~our subsidiaries:

The following table presents information about our operations by geographic area for six months ended June 30, ~~2017~~ 2021 and ~~December 31, 2016, state tax liability was approximately $18,339 and $63,000, respectively. Such expense was recognized in~~2020. Net sales by geographic area are based on the ~~accompanying condensed consolidated financial statements.~~respective locations of our subsidiaries:

NOTE ~~– 10 SIGNIFICANT~~12 -- CONCENTRATIONS ~~& GEOGRAPHICAL INFORMATION~~

~~Milestone Scientific’s consolidated dental sales by product and by geographical region are as follows: Revenue from the medical segment is not material as of September 2017.~~

Milestone Scientific has informal arrangements with a third ~~party manufacturer~~-party manufacturers of the STA, ~~CompuDent®~~epidural, and ~~CompuMed® instruments,~~intra-articular devices, pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. The termination of the manufacturing relationship with any of these manufacturers could have a material adverse effect on Milestone Scientific’s ability to produce and sell its products. Although alternate sources of supply exist, and new manufacturing relationships could be established, Milestone Scientific would need to recover its existing tools or have new tools produced. Establishment of new manufacturing relationships could involve significant expense and delay. Any curtailment or interruption of the supply, because of termination of such a relationship, would have a material adverse effect on Milestone Scientific’s financial condition, business, and results of operations.

For the three months ended June 30, 2021, domestic and international net product sales were approximately 41% and 57% respectively, of aggregate net product sales. For the six months ended June 30, 2021, domestic and international net product sales were approximately 37% and 63%, respectively, of aggregate net product sales.

For the three months ended June 30, 2020, domestic and international net product sales were approximately 24% and 76%, respectively, of aggregate net product sales. For the six months ended June 30, 2020, domestic and international net product sales were approximately 33% and 67%, respectively, of aggregate net product sales.

Accounts receivable for domestic and international distributors was approximately 41% and 59%, respectively, of Milestone Scientific's gross accounts receivable as of June 30, 2021. Accounts receivable for the major customer/distributor amounted to approximately 61% of Milestone Scientific's gross accounts receivable as of June 30, 2020.

Milestone Scientific has a manufacturing agreement with United Systems (whose controlling shareholder, Tom Cheng, is a significant stockholder of Milestone Scientific), the sole manufacturer of its handpieces, pursuant to which it manufactures products under specific purchase orders, but without minimum purchase commitments. Purchases from this manufacturer were approximately $384,000 and $751,000 for the three months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, and December 31, 2020, Milestone Scientific owed this manufacturer approximately $200,000 and $362,000, respectively, which is included in accounts payable, related party on the condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020, respectively. In June 2021, the Company signed a ten year agreement with United Systems for manufacturing the handpieces.

On April 29, 2020, the Board of Directors approved the purchase of United Systems’ accounts receivable ($370,260). See Note 6.

As of June 30, 2021 and December 31, 2020, Milestone Scientific had deferred compensation for Gian Domenico Trombetta, a director of the Company and the previous Chief Executive Officer of Wand Dental, of approximately $0.00 and $275,000, respectively, which is included in accrued expenses related party.

The Company engaged Mr. Trombetta as a consultant for a period of twelve months (beginning October 1, 2020 and ending September 30, 2021), to provide International Business, Dental Segment information and business contacts to the Company and provide consulting services for new International Business and dental segment. For the three and six months ended June 30, 2021 the Company expensed $15,000 and $30,000, respectively, for services.

In August 2016, K. Tucker Andersen, a significant stockholder of Milestone Scientific, entered into an agreement with Milestone Scientific to provide financial and business strategic services. Expenses recognized on this agreement were $25,000 and $50,000 for each of the three and six months ended June 30, 2021 and 2020, respectively.

Milestone Scientific has informal arrangements with third-party manufacturers of the STA, epidural, and intra-articular devices, pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. In ~~March 2016, Milestone Scientific~~January 2021, the Company entered into a ~~purchase commitment for delivery of 3,000 instruments, as of September 30, 2017 all instruments have been received. In January 2017, Milestone Scientific entered into a~~new purchase commitment for the delivery of 2,000 dental instruments beginning in 2021. As of June 30, 2021, the 4^th ~~quarter~~purchase order commitment for dental instruments was approximately $2.9 million and advances of approximately $1 million are reported in advances on contracts in the unaudited condensed consolidated balance sheet.

As of ~~2017. An advance~~June 30, 2021, the purchase order commitment for epidural instruments was approximately $328,000 and advances of ~~$948,094 was recorded at September 30, 2017. At September 30, 2017, Milestone Scientific~~’sapproximately $150,000 are reported in advances on contract in the unaudited condensed consolidated balance sheet.

In February 2021, the Company entered a new purchase commitment for ~~this~~the delivery of 1,185 cases of Epidural and CathCheck disposable kits beginning in April 2021. As of June 30, 2021, we have an open purchase order ~~was $431,619. Consequently,~~of approximately $197,000 for 1,185 cases of Epidural and CathCheck disposable kits and have advanced approximately $172,000, reported in advances on ~~contracts~~contract in the unaudited condensed consolidated balance sheet.

In June 2015, the Company amended its original office lease for its headquarters in Livingston, New Jersey. Under the amendment, the Company leased an additional 774 square feet of rentable area of the building and extended the term of the lease through January 31, 2020 at a monthly cost of $12,522. The Company had an option to further extend the term of the lease, however, this option was not included in the determination of the lease’s right-of-use asset or lease liability. Per the terms of the lease agreement, the Company did not have a residual value guarantee. The Company was required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts. These costs were considered to be variable lease payments and were not included in the determination of the lease’s right-of-use asset or lease liability.

In August 2019, the Company made the decision to not renew the existing office lease for its corporate headquarters located in Livingston, New Jersey and instead signed a new seven year lease in a new facility located in Roseland, New Jersey (the “Roseland Facility”), which commenced of January 8, 2020. Under the Roseland Facility lease, rent payments commenced on April 1, 2020 and the monthly lease payments escalate annually on January 1 of each year, and range from $9,275 to $10,898 per month over the lease term. The Company is also required to pay a fixed electric charge equal to $2.00 per square foot which is paid in equal monthly installments over the lease term or $11,130 annually. These fixed monthly payments have been included in the measurement of the operating lease liability and related operating lease right-of-use asset as the Company has elected the practical expedient to not separate lease and non-lease components for all leases. The Company is also required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts, which are accounted for as variable lease expenses.

As of June 30, 2021, total operating lease right-of-use assets were $593,049 and total operating lease liabilities were $594,416, of which $76,008 and $518,408 were classified as current ~~at September~~and non-current, respectively. As of June 30, ~~2017~~2021, total finance lease liabilities were $32,595, of which $8,162 and $24,433 were classified as current and non-current, respectively. As of December 31, ~~2016.~~2020, total operating lease right-of-use assets were $597,770 and total operating lease liabilities were $630,012, of which $72,031 and $557,981 were classified as current and non-current, respectively. As of December 31, 2020, total finance lease liabilities were $36,403, of which $7,796 and $28,607 were classified as current and non-current, respectively.

~~For~~Cash flow information related to the ~~three months ended September 30, 2017 , an aggregate of approximately 67% of Milestone Scientific's net product sales~~Company's right-of-use assets and related lease liabilities were ~~to two customers/ distributors (one of which,~~ Milestone China, is a related party), 54%, and 13%, respectively. For the nine months ended September 30, 2017, an aggregate of approximately 72% of Milestone Scientific's net product sales were to two customers/distributors (one of which, Milestone China, is a related party), 53%, and 19%, respectively. Accounts receivable for the major customer/distributors amounted to an aggregate of approximately $1,403,148, or 70% of Milestone Scientific's accounts receivable for nine months ended September 30, 2017. For the three months ended September 30, 2016, an aggregate of 61% of Milestone Scientific's net product sales were to two customers/distributors (one of which ,Milestone China, is a related party), 44%, and 17%, respectively. For the nine months ended September 30, 2016, an aggregate of approximately 70% of Milestone Scientific's net product sales were to two customers/distributors (one of which, Milestone China, is a related party), 62%, and 8%, respectively.as follows:

~~NOTE~~ ~~– 11 Employment and Consulting Agreements~~(3) Other Commitments

In July 2017, Milestone Scientific entered into a three-year employment agreement with Daniel Goldberger to serve as President and Chief Executive Officer of Milestone Scientific. Under the agreement, Mr. Goldberger would receive base compensation of $300,000 per annum and may additionally earn annual bonuses of up to an aggregate of $400,000, payable one half in cash and one half in Milestone Scientific common stock (“Bonus Shares”) contingent upon achieving performance benchmarks periodically set for each year by the compensation committee of the Board. In addition to any such shares of common stock, Mr. Goldberger was entitled to receive stock options (“Bonus Options”) to acquire twice the number of any Bonus Shares earned, pursuant to a non-qualified stock option grant agreement under Milestone Scientific’s then existing equity compensation plan. The Bonus Options had a five-year term and were to vest in equal annual installments on each of the first, second and third anniversary of the grant date, subject to continued employment on such vesting date and accelerated vesting upon the occurrence of certain events. The exercise price of the Bonus Options was based on the fair market value of per share of common stock on the date of grant.

~~In July 2017, Mile~~stone Scientific granted to Mr. Goldberger non-qualified stock options to purchase 921,942 shares of common stock at an exercise price of $2.00 per share. Those options had a five-year term and were to vest in equal annual installments on each of the first, second and third anniversaries of the grant date, subject to his continued employment on the vesting date and accelerated vesting upon the occurrence of certain events.

~~On October 5, 2017, Milestone Scientific Inc. announced that Daniel Goldberger had~~ ~~resigned as President and Chief Executive Officer effective October 2, 2017, upon which the previously described stock options granted to him in July 2017 terminated prior to vesting (see Note 14).~~

~~In July 2017, Milestone Scientific entered into a ten-ye~~ar new employment agreement with Leonard Osser, who previously served as the Company’s President and Chief Executive Officer, to serve as Managing Director – China Operations. This new agreement provides for annual compensation of $300,000 consisting of $100,000 in cash and $200,000 in the Company’s common stock valued at the average closing price of the Company’s common stock on the NYSE or such other market or exchange on which its shares are then traded during the first fifteen (15) trading days of the last full calendar month of each year during the term of this agreement. This agreement supersedes all prior employment agreements between Mr. Osser and Milestone Scientific. If the Company terminates Mr. Osser’s employment “Without Cause,” other than due to his death or disability, or if Mr. Osser terminates his employment for “Good Reason” (both as defined in the agreement), Mr. Osser is entitled to be paid in one lump sum payment as soon as practicable following such termination: an amount equal to the aggregate present value (as determined in accordance with Section 280G(d)(4) of the Code) of all compensation pursuant to this agreement from the effective date of termination hereunder through the remainder of the Employment Term.

~~In July 2017, Mr. Osser~~ also resigned from his positions of Chairman of the Board, Chief Executive Office and President of Milestone Medical. Upon his resignation, Milestone Medical entered in a consulting agreement with U.S. Asian Consulting Group LLC, an entity controlled by Mr. Osser, pursuant to which he will provide specific services to Milestone Medical for a ten- year term. Pursuant to the consulting agreement, U.S. Asian Consulting Group, LLC, is entitled to receive $100,000 per year for Mr. Osser's services.

~~Milestone Scientific has a manufacturing agreement with United Systems (a significant stockholder of Milestone), the principal manufacturers of its handpieces, pursuant to which~~ it manufactures products under specific purchase orders, but without minimum purchase commitments. Purchases from this manufacturer were $721,225 and $1,690,582 for the three and nine months ended September 30, 2017, respectively. Purchases of handpieces from this manufacturer were $967,003 and $2,088,229 for the three and nine months ended September 30, 2016, respectively. Milestone Scientific owed $902,341 and $984,286 to this manufacturer as of September 30, 2017 and December 31, 2016, respectively.

~~Milestone Scientific had $356,400 and $1,714,600 of related party sales of handpieces and instruments to Milestone China and Milestone China~~’s agent during the three and nine months ended September 30, 2017 respectively. Milestone Scientific had $1,977,862 and $3,203,466 of related party sales of handpieces and instruments to Milestone China during the three and nine months ended September 30, 2016, respectively. As of September 30, 2017 and December 31, 2016, Milestone Scientific recorded deferred revenues and deferred costs associated with sales to Milestone China of $712,800 and $362,718, and $1,001,800 and $620,041, respectively. As of September 30, 2017 and December 31, 2016, Milestone China’s agent owed $712,800 and $2,714,600, respectively, to Milestone Scientific which is included in related party accounts receivable on the condensed consolidated balance sheets.

~~In August 2016, a stockholder of Milestone Scientific entered a three-year agreement with Milestone Scientific to provide financial and business strategic services. Expenses~~ recognized on this agreement were $25,000 and $75,000 for the three and nine months ended September 30, 2017, respectively. Expenses recognized on this agreement were $25,000 and $75,000 for the three and nine months ended September 30, 2016, respectively.

~~In January 2017, Milestone Scientific entered into a 12 month~~ ~~agreement with Innovest S.p.A. to provide consulting services (see Note 13).~~

The headquarters for Milestone Scientific is located at 220 South Orange Ave, Livingston, New Jersey. Milestone Scientific leases approximately 7,625 square feet of office space. The lease term expires January 31, 2020 and provides for a monthly lease payment of $12,522. Additionally, Milestone Scientific has other smaller insignificant leases ending through 2017. Further, a third party distribution and logistics center in Pennsylvania handles shipping and order fulfillment on a month-to-month basis. For the three and nine months ended September 30, 2017, rent expense amounted to $36,658 and $106,828 respectively. For the three and nine months ended September 30, 2016 rent expense amounted to $25,031 and $95,019, respectively.

~~Milestone Scientific's employment agreement (the “~~2009 Agreement”) with Leonard Osser, its former Chief Executive Officer, provided for payments of $203,111 per year for five years to the executive or as he directs such payments, to a third party, to fund his acquisition of, or contribution to, an annuity, pension, or deferred distribution plan; or for an investment for the benefit of the executive and his family. Milestone Scientific expensed approximately $51,000 and $152,000 for the three and nine months ended September 30, 2017, and 2016 respectively to fund this obligation. In July 2017, Milestone Scientific entered into a new employment agreement with Mr. Osser, which superseded the 2009 Agreement pursuant to which he stepped down from his position as Chief Executive Officer and became Managing Director – China Operations (see Note 11). Pursuant to the new agreement, Milestone Scientific agreed to fund the last installment of $203,111 in January 2018 as provided for in the 2009 Agreement.

The technology underlying the ~~SafetyWand®~~Safety Wand® and ~~CompuFlo®~~CompuFlo®, and an improvement to the controls for ~~CompuDent®~~CompuDent®, were developed by Dr. Mark Hochman, the Company’s Director of Clinical Affairs, ~~and assigned to Milestone Scientific. Milestone~~.Milestone Scientific purchased this technology pursuant to ~~an agreement~~that certain Technology Sale Agreement, dated January 1, ~~2005.~~2005, as amended. The Director of Clinical Affairs will receive additional payments of 2.5% of the total sales of products using certain of these technologies, and 5% (or 2.5% effective as of May 9, 2027 – see below) of the total sales of products using certain other of the technologies until the expiration of the last patent. The Director of Clinical Affairs was granted, pursuant to the agreement, an option to purchase, at fair market value on the date of the grant 8,333 shares of common stock upon the issuance of each additional patent ~~relating to these technologies. If products produced by third parties use any of~~covering these technologies ~~(under license from us) then the Director of Clinical Affairs will receive the corresponding percentage of the consideration received by Milestone Scientific for such sale or license.~~

~~The Director of Clinical Affairs’ royalty fee was $122,606 and $446,098 for the three and nine months ended September 30, 2017, respectively.~~ ~~The Director of Clinical Affairs~~’ royalty fee was $148,185 and $449,875 for the three and nine months ended September 30, 2016, respectively. Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $68,751 and $206,253 for the three and nine months ended September 30, 2017, and 2016 respectively.(see Note 13).

~~In January 2017,~~ On March 2, 2021, Milestone Scientific entered into a ~~12 month agreement~~Royalty Sharing Agreement with Innovest S.p.A. to provide consulting services. This agreement will renew for successive 12 month terms unless terminated by Innovest S.p.A or Milestone Scientific. Expenses recognized on this agreement were $20,000 and $60,000 for the three and nine months ended September 30, 2017, respectively.

~~On October 2, 2017, Milestone Scientific accepted the resignation of the then CEO, Daniel Goldberger. Subsequent to that date, Mr. Goldberger through his attorney advised Milestone Scientific~~’s attorneys, that Mr. Goldberger was entitled, based on the circumstances he asserted with respect to his resignation after acceptance of such resignation, to his basic salary ($300,000) for one year and certain other benefits (health and disability insurance for one year ($30,000 estimated) and a car allowance of $1,200 per month), in accordance with his employment contract dated July 10, 2017. Under the circumstances asserted by Mr. Goldberger, he would also be entitled to the immediate vesting of options under the Milestone Scientific’s Stock Option Plan agreed to be granted to him pursuant to his employment agreement, exercisable for ninety days after his resignation, for 921,942 shares of Milestone Scientific at a price of $2.00 per share, which exercise price is in excess of the market price of Milestone Scientific’s shares on the date hereof. Milestone Scientific believes that the assertion of Mr. Goldberger is not in accordance with the facts or the requirements of his employment contract, and Milestone Scientific intends to vigorously contest his assertion.

~~On October 5, 2017, Milestone Scientific announced that Daniel Goldberger had resigned as President and Chief Executive Officer effective October 2, 2017.~~

~~On October 5, 2017, Milestone Scientific also announced the appointment of Leslie Bernhard, the Company’s current Chairman of the Board, as~~Leonard Osser, the Company’s Interim Chief Executive Officer, pursuant to ~~serve~~which Mr. Osser sold, transferred and assigned to the Company all of his rights in and to a certain patent application as to which he is a co-inventor with Dr. Hochman, and the Company agreed to pay to Mr. Osser, beginning May 9, 2027, half of the royalty (2.5%) on net sales that would otherwise be payable to Dr. Hochman and his wife under the Technology Sale Agreement referred to above, the Hochman's having agreed with the Company pursuant to an addendum to such ~~role until~~Technology Sale Agreement dated February 25, 2021 to reduce from 5% to 2.5% the ~~appointment of a new Chief Executive Officer.~~payments due to them on May 9, 2027 and thereafter, with respect to dental products.

With respect to ~~serve~~(i) the Employment Agreement dated as of July 10, 2017 between Mr. Osser and the Company,~~’s Interim~~ pursuant to which upon Mr. Osser stepping down as Chief Executive Officer ~~Ms. Bernhard will be paid an annual salary of $200,000 and receive a one-time bonus of 100,000 shares~~ of the ~~Company’s Common Stock. In addition, at~~Company the ~~completion~~Company agreed to employ him as Managing Director, China Operations of ~~her service~~the Company (the “China Operations Agreement”), and (ii) the Consulting Agreement dated as ~~Interim Chief Executive Officer, Ms. Bernhard shall be entitled~~of July 10, 2017 (the “Consulting Agreement”) between the Company and U.S. Asian Consulting Group, LLC, a company of which Mr. Osser is a principal, the compensation under the China Operations Agreement is modified to ~~receive~~reduce the overall compensation by $100,000 to $200,000, split equally between a cash ~~bonus in~~amount and an amount in shares, and the compensation under the Consulting Agreement is increased by $100,000 to ~~be determined by~~ $200,000, equally split between a cash amount and an amount in shares, which shares were formerly payable under the China Operations Agreement. Compensation under the China Operations Agreement and the Consulting Agreement are payable for 9.5 years from May 19, 2021.

On May 12, 2021, the Board of Directors appointed Scott Kahn as the Chief Financial Officer of the Company, effective May 24, 2021, at ~~that time.~~

a base salary of $200,000 per year. On July 2, 2021, Mr. Kahn and the Company reached a mutual decision to part ways.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations

The following discussions of ~~our~~the financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements ~~included elsewhere~~contained in this report and in connection with management's discussion and analysis and the audited consolidated financial statements and notes thereto included in our Annual Report on Form ~~10-Q.~~10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission, or SEC, on March 31, 2021. Certain statements in this discussion and el~~sewhere~~elsewhere in this report constitute forward-looking statements, within the meaning of section 21E of the ~~Securities~~ Exchange Act, ~~of 1934, as amended (the “Exchange Act”),~~ that involve risks and uncertainties. ~~Our~~The actual results may differ materially from those anticipated in these forward-looking statements.

Our common stock was listed on the NYSE ~~MKT~~American on June 1, 2015 and trades under the symbol “MLSS”. We have developed a proprietary, computer-controlled anesthetic delivery instrument, ~~through the use of~~ using The ~~Wand®~~,Wand, a single use disposable handpiece. The instrument is marketed in ~~dentistry~~the dental sector under the trademark ~~CompuDent®~~CompuDent®, and STA Single Tooth Anesthesia ~~System®~~System, and in ~~medicine~~the medical sector under the trademark ~~CompuMed®. CompuDent®~~CompuMed. CompuDent is suitable for all dental procedures that require local anesthetic. ~~CompuMed®~~CompuMed is suitable for many medical procedures regularly performed in plastic surgery, hair restoration surgery, podiatry, colorectal surgery, dermatology, orthopedics, and ~~a number of~~several other disciplines. The dental instruments are sold in the United States, U.S. territories, Canada, and in over 4760 other countries abroad. ~~There~~In June 2017, the FDA approved our 510(k) applications for marketing clearance in the United States of our CompuFlo Epidural Computer Controlled Anesthesia System. We are in the process of meeting with medical facilities and device distributors within the United States and Europe. To date there have been notwelve medical ~~instruments~~devices sold in the United States and limited amounts sold ~~internationally as of the reporting date.~~internationally. Certain of our medical instruments have obtained European CE mark approval and can be marketed and sold in most European countries. ~~In June 2017, the FDA approved our 510(k) application for marketing clearance in the United States of our~~ ~~CompuFlo~~~~® Epidural Computer Controlled Anesthesia System. We are in the process of introductory meetings with medical device distributors within the United States and foreign markets.~~

~~In 2017, we remained~~Milestone Scientific remains focused on advancing efforts to achieve ~~our~~the following four primary ~~objectives; those being:~~

~~● Obtaining the 510(k) marketing clearance with the FDA for the intra articular instruments~~

Since its market introduction in early 2007, the Wand/STA Instrument and prior C-CLAD ~~products~~devices have been used to deliver over 66 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~~entered into a non-exclusive distribution agreement with Henry Schein, Inc. (“Henry Schein”). In June 2016, that agreement was replaced with an exclusive distribution arrangement for our dental products for the United States and Canada with Henry Schein. Under this arrangement we have a semi-dedicated independent sales force visiting dentists. We believe that this arrangement will be more effective than previous arrangements which primarily relied upon appearances at dental shows and catalog sales.

~~To date,~~ ~~Henry Schein has endeavored to accomplish the goals set forth in~~In December 2020, the exclusive distribution ~~agreement for~~ ~~The 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, as business volume increases.~~

~~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, together~~was replaced with a ~~select group of other devices~~non-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 exclusivity~~dental distributors in specific geographical locations in the ~~third through tenth year of~~United States and Canada. To date there are eight new non-exclusive dental distributors engaged in the ~~term of~~USA and Canada. The goal is to add an additional non-exclusive distributor in three main cities in the ~~agreement.~~ USA.

The 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 instrument and thus the expansion of our dental disposables.

On the global front, we have granted exclusive marketing and distribution rights for the Wand/STA Instrument to select dental suppliers in various international regions in Asia, Africa, South America, and Europe. They include I~~strodent (Pty) Ltd.~~FM Produkty Dla Stomatologii in ~~South Africa~~Poland 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.

During 2016, Milestone Scientific filed for 510(k) marketing clearance with the ~~State~~U.S. Food and Drug Administration ~~(CFDA) of~~(FDA) for both intra-articular and epidural injections with the ~~People’s Republic of China approved our~~ ~~STA Single Tooth Anesthesia System®~~ ~~(STA System).~~CompuFlo Epidural System. In ~~May 2014,~~June 2017, the ~~CFDA also~~FDA approved the ~~STA handpieces~~CompuFlo Epidural System for ~~sale~~epidural injections. Milestone Scientific is in ~~China.~~the process of meeting with medical device distributors within the United States and foreign markets. Milestone Scientific’s immediate focus is on marketing its epidural device throughout the United States and Europe.

In ~~September 2014, Milestone Medical~~December 2016, we received ~~CE clearance~~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 ~~distribute their epidural and intra-articular instruments in the European Community (EU).~~ ~~Milestone Medical signed~~file a ~~distribution agreement in March 2015 with a medical distributor in Poland~~new 510(k) application for the ~~distribution~~device in 2019, however, due to financing constraints, a new 510(k) application was not filed in 2019. As of June 30, 2021, the Company has decided not to proceed with securing FDA approval for the intra-articular instrument at this time.

On April 21, 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.

On October 13, 2020, 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 terms pre-negotiated by Premier for the CompuFlo Epidural System and CathCheck. This agreement expires on February 28, 2022.

The 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 last fiscal year and only began to increase during the first quarter of 2021. However, such increased demand may or may not continue and/or demand may or may not increase from historical levels depending on the duration and severity of the ~~epidural instrument. This distribution agreement was terminated~~COVID-19 pandemic, the effectiveness of the on-going vaccination process, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extensions of time for restrictions that have been imposed to date, and numerous other uncertainties. Such events may result in ~~late 2016 due~~business and manufacturing disruption, inventory shortages, delivery delays, and reduced sales and operations, any of which could materially affect our business, financial condition, and results of operations.

The Company’s employees 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 ~~distributor’s inadequate performance under~~coronavirus. Further, our management team is focused on mitigating the ~~distribution agreement. Milestone Medical is continuing to pursue distributors for the instrument in the EU community.~~

~~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. Milestone Scientific recorded a loss on its investment in Milestone China of $0 and $164,837, as of September 30, 2017 and 2016, respectively. Milestone Scientific's investment in Milestone China was $0 as of September 30, 2017 and December 31, 2016, respectively. Milestone Scientific incurred cumulative losses beyond its investment in Milestone China of $1,606,913 and $1,124,350 as of September 30, 2017 and December 31, 2016, respectively, which have been suspended.

~~In June 2017, Milestone Scientific entered into an agreement for the sale of its interest in Milestone China (a forty (40%) percent interest) (th~~e “Milestone China Shares”) to an unaffiliated United States domiciled purchaser and a 10-year option agreement to repurchase the Milestone China Shares. The purchase price for the Milestone China Shares was $1,400,000 of which $125,000 was paid in cash and $1,275,000 was paid by delivery of a non-interest bearing secured promissory note. The note is payable in quarterly installments of $125,000 until paid in full and is secured by the Milestone China Shares until full repayment. In addition, pursuant to such note, the purchaser is precluded from selling all or substantially all of its assets prior to repaymentadverse effects of the ~~note. The 10-year option agreement provides Milestone Scientific an option to repurchase the Milestone China Shares at $1,400,000 within the first two years~~COVID-19 pandemic, which has required and ~~at fair market value (as defined in such agreement) for the remainder of the 10-year term. The transaction has been accounted for as a secured financing and Milestone Scientific~~ will continue to ~~account~~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 ~~relationship with Milestone China under~~business may be impaired, and operational risks, cybersecurity risks and other risks facing the ~~equity method~~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.

All of ~~accounting. A note receivable is presented~~these factors may have far reaching impacts on the Company’s ~~balance sheet, along with a deferral from financing transaction ($1,400,000). The carrying value~~business, operations, and financial results and conditions, directly and indirectly, including without limitation impacts on the health of the ~~forty (40%) percent investment at the transaction date was zero.~~

~~The sale of the Milestone China~~ ~~Shares allows Milestone Scientific to continue to expand in the China market by supplying Milestone China with the~~ ~~STA Single Tooth Anesthesia System~~® and related hand pieces, while eliminating the burden on Milestone Scientific's management as a 40% minority owner. Milestone Scientific believes that the sale will provide Milestone China with a new partner that may accelerate its penetration of the China market.

Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the three and six month period ended June 30, 2021 are not necessarily indicative of the results to be expected for the full fiscal year.

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 each~~business segment product category:

~~Milestone Scientific plans to support increased sales~~Current Product Platform

See Note 1, “Organization 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. Additionally with the recent FDA marketing clearance for the epidural instrument, Milestone Scientific is initiating marketing and sales efforts in the US to establish medical sector distributors for the sale of this instrumentBusiness”.

The following table sets forth ~~for~~ the consolidated results of operations for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017, respectively, as a percentage of revenues.~~2021 and 2020, respectively. The trends suggested by this table may not be indicative of future operating ~~results:~~ results:

Milestone Scientific earned gross profit of approximately $1.8 million and $5.7 million in the three and nine months ended September 30, 2017. Milestone Scientific earned gross profit of approximately $1.7 million and $5.3 million in the three and nine mo~~nths ended September 30, 2016. However, the revenues and related gross profits have not been sufficient to support overhead, new product introduction and research and development expenses.~~

The following table sets forth the consolidated results of operations for the six months ended June 30, 2021 and 2020, respectively. The trends suggested by this table may not be indicative of future operating results:

Three ~~Months Ended September~~months ended June 30, ~~2017~~2021 compared to ~~the Three Months Ended September~~three months ended June 30, ~~2016~~2020

Consolidated revenue for the three months ended, ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 were approximately ~~$2.9~~$2.4 million and ~~$3.2~~$168,000, respectively. Dental revenue increased approximately $2.3 million ~~respectively.~~ ~~Total revenues decreased by approximately 10% which was principally related~~for the three months ending June 30, 2021 as compared to the ~~decrease in international sales of approximately $1.6 million, offset by the increase in domestic sales of approximately $1.2 million in 2017. International sales in 2017 decreased~~three months ended June 30, 2020, due to ~~a reduction in shipments~~re-opening of ~~handpieces~~dental offices throughout the country, and ~~instruments~~the rest of the world, including China. Medical revenue increased approximately $19,000 for the three months ending June 30, 2021 as compared to ~~Milestone China. The decrease in Milestone China revenue is~~the three months ending June 30, 2020 due to Milestone China working through its current inventories and adjusting its business model. This trend of reduced revenue for shipments of Milestone China is not expected to continue in 2018. However, we believe that the June 2016 exclusive distribution agreement with Henry Schein will continue to lead to increased domestic sales in 2017 as the product and ~~sales force training has been substantially completed as of September 30, 2017. Additionally,~~ the Company ~~has increased its exposure to~~attending introductory meetings with medical device distributors within the ~~general dentist population in~~United States and European markets. The Company recorded an allowance against revenue and accounts receivable, related party of $270,864 for the ~~USA by expanding our “KOL” (Key Opinion Leaders) coverage~~quarter ended June 30, 2021.

Gross Profit for 2021 and ~~specific hands on continuing education course throughout the USA.~~2020 were as follows:

Consolidated gross profit for the three months ended ~~September~~June 30, ~~2017 was~~ ~~63%~~2021 and 2020 were approximately 56% and 67%, which increased from 52% for the three months ended September 30, 2016. The increase in gross profit relates to the increase in US sales in 2017 which is was offset by special pricing in China to facilitate an increase in market share.respectively.

Consolidated selling, general and administrative expenses for the three months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020, were approximately ~~$3.2~~$4 million ~~versus $2.9~~and 3.1 million ~~respectively.~~respectively. The increase of approximately ~~$272,000 predominantly~~$856,000 is categorized in several areas. Employee salaries, and benefits expenses increased approximately $152,000 during the three months ended June 30, 2021, as the Company hired additional employees to work on the commercialization of the CompuFlo® Epidural System. During the three months ended June 30, 2021, royalties, employee travel and marketing expenses increased approximately $187,000 due to the ~~additional selling, general~~re-opening of dental, and ~~administrative expenses is resulting from~~medical offices throughout the ~~completion~~country, and the rest of the ~~clinical studies relating~~world. During the three months ended June 30, 2021, the Company expensed board fees of approximately $643,000 and issued 267,980 shares of restricted stock to ~~Milestone Medical's epidural instruments in 2016~~the board of directors for services provided over the next year. The Company's trade shows, professional fees, quality control, and ~~Milestone Scientific initiating marketing and sales efforts in the U.S. to establish the medical sector.~~ general expenses decreased approximately $304,000 during for three months ended June 30, 2021.

Consolidated research and development expenses for the three months ended, ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020, were approximately ~~$17,000 verse $303,000,~~$215,000 and $108,000, respectively. The ~~decrease~~increase of ~~approximately $286,000~~approximately $107,000 is ~~predominantly due~~related to the ~~completion~~Company exploring possible development of ~~the clinical studies relating to Milestone Medical's epidural instruments in 2016.~~our proprietary STA Single Tooth Anesthesia System.

The loss from operations was approximately $2.9 million and $3.2 million for the three months ~~ended September~~ending June 30, ~~2017~~2021 and ~~2016 was approximately $1.4 million, verse $1.6 million respectively, a decrease of approximately $155,000. This~~2020, respectively. The decrease is ~~primarily attributable~~the result of increased in dental revenue, due to re-opening of dental offices throughout the country, the rest of the world, and China, and increase in selling, general and administrative expenses as discussed above.

Consolidated revenue for the six months ended, June 30, 2021 and 2020 were approximately $5.3 million and $2.0 million, respectively. Dental revenue increased approximately $3.4 million for the six months ending June 30, 2021 as compared to the ~~completion~~six months ended June 30, 2020, due to re-opening of dental offices throughout the country, and the rest of the ~~clinical studies relating to Milestone Medical's epidural and intra articular instruments in 2016.~~

~~Nine~~world, including China. Medical revenue increased approximately $82,000 for the six months ~~ended September~~ending June 30, ~~2017~~2021 as compared to ~~Nine Months Ended September~~the six months ending June 30, ~~2016~~

~~Total revenues for~~2020 due to the ~~nine months ended September 30, 2017 and 2016, was from dental revenues, were approximately $9.1 million and $9.0 million, respectively. Total revenues increased by~~ ~~approximately 1% which was principally related to increased handpiece sales in~~Company attending introductory meetings with medical device distributors within the United States ~~domestic sales by~~and European markets. The Company recorded an allowance against revenue and accounts receivable, related party of $270,864 for the quarter ended June 30, 2021.

Consolidated gross profit for the six months ended June 30, 2021 and 2020 approximately ~~$1.7 million~~61% and 71%, respectively. The decreased in ~~2017 to 2016. International sales in 2017 decreased by approximately $1.6 million over~~ the ~~same period in 2016 due to a reduction in shipments to Milestone China. The reductions in shipments to Milestone China~~gross profit is due to ~~Milestone China working through inventory purchases from late 2016. However, we believe that~~ the ~~June 2016 exclusive distribution agreement with Henry Schein will continue~~lower margin in sales to ~~increase domestic sales in 2017 as the product and sales force training has been substantially completed as of September 30, 2017.~~

~~Gross margin for the nine months ended September 30, 2017 was~~ 63%, which increased from 59% for the nine months ended September 30, 2016. The increase in gross profit relates to the increase in US sales in which was offset by special pricing in China to facilitate an increase in market share.China.

Consolidated selling, general and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020, were approximately $9$6.8 million ~~versus $9.2~~and 5.9 million,, respectively. The ~~decrease~~increase of approximately ~~$230,000~~$885,000 is ~~predominantly~~categorized in several areas. Employee salaries, and benefits expenses increased approximately $568,000 during the six months ended June 30, 2021, as the Company hired additional employees to work on the commercialization of the CompuFlo® Epidural System. During the six months ended June 30, 2021, the Company expensed board fees of approximately $643,000 and issued 267,980 shares of restricted stock to the board of directors for services provided over the next year.

During the sixmonths ended June 30, 2021, royalties, and marketing expenses increased approximately $246,000 due to the ~~reduction in expenses resulting from~~re-opening of dental, and medical offices throughout the ~~completion~~country, and the rest of the ~~clinical studies relating to Milestone Medical's epidural~~world. The Company's trade shows, professional fees, quality control, and ~~intra articular instruments in 2016.~~general expenses decreased approximately $782,000 marketing for three months ended June 30, 2021.

Consolidated research and development expenses for the ~~nine~~six months ended, ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020, were approximately ~~$242,000~~$23,000 and ~~$756,000,~~$215,000, respectively. The ~~decrease~~increase of approximately $16,000 is ~~due~~related to ~~reduction~~ inthe Company exploring possible development ~~cost associated with epidural~~of our proprietary STA Single Tooth Anesthesia System.

Profit (Loss) from Operations for 2021 and ~~intra articular instruments.~~2020 were as follows:

The loss from operations ~~for the nine months ended September 30, 2017 and 2016~~was approximately ~~$3.5million~~$3.9 million and $4.7 million ~~respectively, a decrease of approximately $1.2 million. This~~for the six months ending June 30, 2021 and 2020, respectively. The decrease is ~~primarily attributable~~the result of increased in dental revenue, due to re-opening of dental offices throughout the ~~completion~~country, the rest of the ~~clinical studies~~world, and ~~reduced research~~China, and ~~development~~increase in selling, general and administrative expenses ~~relating to our epidural and intra articular instruments in 2017 and gross profit.~~as discussed above.

~~At September~~On June 30, ~~2017,~~2021, Milestone Scientific had cash and cash equivalents of approximately ~~$2.3 million, total current assets of approximately $11.6~~$16.0 million and working capital of approximately ~~$6.5~~$17.2 million versus working capital of $15.7 million on December 31, 2020. For the six months ended June 30, 2021 and 2020, we had cash flows used in operating activities of approximately $2.1 million. ~~We believe that our cash on hand, accounts receivable~~

In the second quarter of 2020 the Company completed two capital raises. In April 2020, the Company completed a Common Stock offering generating gross proceeds of approximately $5.1 million (5,420,000 common shares and 2,710,000 warrants). The combined price of the ~~anticipated revenues~~shares and warrants was $0.95 per share. The warrants are exercisable at a price of $1.20 per share and have an expiration of three years from the ~~dental business will be~~issue date. In June 2020, the Company completed a second Common Stock offering generating gross proceeds of approximately $14.6 million (6,770,000 common shares and 3,749,000 warrants). The combined price of shares and warrants of was $2.15 per share. The warrants are exercisable at a of $2.60 and expire three years from the issue date (see Note 9). With the combination of these two Common Stock offerings, the Company has sufficient liquidity to ~~fund our business~~support operations for at least a year after the ~~next 12 months from~~date the ~~filing date of this Form 10-Q.~~unaudited condensed consolidated financial statements are issued.

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 nine months ended September 30, 2017 and 2016, our net cash used in operating activities was approximately $1.6 million and $4.1 million, respectively, which represents a decrease of approximately $2.5 million year over year.

Milestone Scientific has incurred annual operating losses and negative cash flows from operating activities since its inception. The capital raised in December 2016 and January 2017 provided Milestone Scientific with working capital to continue to develop its medical instruments and obtain regulatory approval for one of its medical instruments (the June 2017 FDA approval of the epidural instrument), as well as to aggressively market its dental instruments. Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue from its dental business worldwide, and a reductions in operating expenses. Management believes that the Company will have sufficient cash and liquidity to meet its anticipated obligations over the next twelve-month period following the date of this report.

~~Milestone Scientific believes that~~ ~~the FDA clearance of its 510(k) application with respect to the~~ ~~CompuFlo~~® Epidural Computer Controlled Anesthesia will provide Milestone Scientific with the opportunity to enter the US medical device market and generate revenues in the future. Milestone Scientific believes that it has sufficient inventory of the epidural instruments to satisfy the near term marketing opportunities.

Our condensed consolidated balance sheets included in this Report reflects a decrease of approximately $1.8 million in current assets from December 31, 2016 to September 30, 2017. This decrease in current assets was primarily due to a reduction in cash, accounts receivable from related parties, deferred cost, other receivables and inventory of approximately $4 million. This was offset by an increase in accounts receivable, advances on contracts, note receivable and prepaid expenses and other current assets of an aggregate of approximately $2.2 million.

~~Current liabilities~~ decrease by approximately $591,000 from approximately $5.6 million to approximately $5.1 million. The decrease is primarily due to a decrease in accounts payable of approximately $725,000, accounts payable related party of approximately $333,000, deferred revenue of approximately $289,000 offset by an increase in deferred profit China of approximately $29,000, and an increase in accrued expenses of approximately $727,000.

~~On October 5, 2017, Milestone Scientific announced that Daniel Goldberger had resigned as President and Chief Executive Officer effective October 2, 2017.~~

On October 5, 2017, Milestone Scientific also announced the appointment of Leslie Bernhard, the Company’s current Chairman of the Board, as the Company’s Interim Chief Executive Officer, to serve in such role until the appointment of a new Chief Executive Officer.

~~In connection with her appointment to serve as the Company~~’s Interim Chief Executive Officer, Ms. Bernhard will be paid an annual salary of $200,000 and receive a one-time bonus of 100,000 shares of the Company’s Common Stock. In addition, at the completion of her service as Interim Chief Executive Officer, Ms. Bernhard shall be entitled to receive a cash bonus in an amount to be determined by the Board of Directors at that time.

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.

Milestone ~~Scientific’s Interim~~Scientific’s Chief Executive Officer ~~and Chief Financial Officer have~~has evaluated the effectiveness of the design and operation of Milestone Scientific’s 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 ~~Interim~~ Chief Executive Officer ~~and Chief Financial Officer have~~has concluded that the disclosure controls and procedures as of ~~September~~June 30, ~~2017~~2021 are effective to ensure that information required to be disclosed in the reports

Milestone Scientific files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to Milestone Scientific's management, including the ~~Interim~~ Chief Executive Officer, ~~and Chief Financial Officer, as appropriate~~ to allow timely decisions regarding required disclosure.

There ~~were~~have been no changes in Milestone Scientific’s internal control over financial reporting ~~identified in connection with the evaluation~~ that occurred during Milestone Scientific’s last fiscal quarter ~~ended September 30, 2017~~ that have materially affected, or that are reasonably likely to materially affect, Milestone Scientific’s internal controls over financial reporting.

~~ITEM 1A.~~ ~~RISK FACTORS~~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.

AsThe COVID-19 pandemic did materially adversely affect the Company’s financial results and business operations in the Company’s fiscal year ended December 31, 2020, while economic and health conditions in the United States and across most of the globe have continued to change rapidly since the end of 2020. In the short-term, demand for the Company’s dental products is showing an increase in sell through activity to dental offices. However the change in demand may or may not continue and/or demand may or may not increase from historical levels depending on the duration and severity of the COVID-19 pandemic, the effectiveness of the ongoing vaccination process, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extensions of time for restrictions that have been imposed to date, and numerous other uncertainties. Such events may result in business and manufacturing disruption, inventory shortages, delivery delays, and reduced sales and operations, any of which could materially affect our business, financial condition, and results of operations.

The ability of the Company’s employees to work may be significantly impacted by the Coronavirus.

The Company’s employees are being affected by the COVID-19 pandemic. The majority of our office and management personnel are working remotely. The health of the Company’s workforce is of primary concern and the Company may need to enact further precautionary measures to help minimize the risk of our employees being exposed to the coronavirus. Further, our management team is focused on mitigating the adverse effects of the COVID-19 pandemic, which has required and will continue to require a ~~smaller reporting company, we~~large investment of time and resources across the entire Company, thereby diverting their attention from other priorities that existed prior to the outbreak of the pandemic. If these conditions worsen, or last for an extended period of time, the Company’s ability to manage its business may be impaired, and operational risks, cybersecurity risks and other risks facing the Company even prior to the pandemic may be elevated.

The COVID-19 pandemic is affecting the Company’s customers, suppliers, vendors, and other business partners, but the Company is not able to assess the full extent of the current impact nor predict the ultimate consequences that will result therefrom.

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

The COVID-19 pandemic affected the Company’s operations in the fiscal year ended December 31, 2020 and may continue to do so 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.

Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the three-month period ended March 31, 2021 are not ~~required~~necessarily indicative of the results to ~~provide~~be expected for the ~~information required by this Item.~~full fiscal year. Management cannot predict the continued impact of the COVID-19 pandemic on the Company’s sales channels, supply chain, manufacturing, and distribution nor to economic conditions generally, including the effects on consumer spending. The ultimate extent of the effects of the COVID-19 pandemic on the Company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of time even after the pandemic might end.

~~ITEM~~Item 2. ~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~Unregistered Sales of Equity Securities and use of proceeds

~~In the quarter ended September 30, 2017, Milestone Scientific issued a total of~~ ~~352,015 shares of its common stock as follows:~~

In addition, as of July 13, 2017, pursuant to the Asset Purchase Agreement with APAD Octrooi B.V. and APAD B.V. (collectively, the “Sellers”), Milestone Scientific issued an aggregate of 1,646,358 shares of its common stock to the Sellers in consideration for certain patent rights and other intellectual property rights related to the Sellers’ computer controlled injection instrument.

~~The foregoing shares were issued in reliance upon the exemptions from the registration requirements of the Securities Act o~~f 1933, as amended (the "Act"), pursuant to Sections 4(a)(2), Section 4(a)(5) and/or Regulation D promulgated thereunder. A legend restricting resale, transfer, or other disposition of these shares other than in compliance with the Act was imprinted on the stock certificates evidencing such shares.

~~ITEM~~Item 3. ~~DEFAULT UPON SENIOR SECURITIES~~ Default upon Senior Securities

~~ITEM~~Item 5. ~~OTHER INFORMATION~~Other Information-Departure of Officer; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2017			December 31, 2016
	(Unaudited)			(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$	2,307,497		$	3,602,229
Accounts receivable, net of allowance for doubtful accounts of $10,000 as of September 30, 2017 and $5,000 as of December 31, 2016		1,999,636			802,384
Accounts receivable from related party		712,800			2,714,600
Other receivable		-			10,000
Notes receivable from financing transaction, short term		500,000			-
Inventories		4,165,721			4,602,719
Advances on contracts		992,242			700,900
Deferred Cost		362,718			620,041
Prepaid expenses and other current assets		552,010			291,929
Total current assets		11,592,624			13,344,802
Furniture, fixtures & equipment net of accumulated depreciation of $703,191 as of September 30, 2017 and $659,144 as of December 31, 2016		119,729			159,026
Patents, net of accumulated amortization of $904,295 as of September 30, 2017 and $717,086 as of December 31, 2016		3,152,415			660,457
Notes receivable from financing transaction long term		650,000			-
Other assets		26,878			17,355
Total assets	$	15,541,646		$	14,181,640

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	616,036		$	1,341,207
Accounts payable related party		902,341			1,235,052
Accrued expenses and other payables		2,162,786			1,436,262
Deferred profit, related party		659,931			630,990
Deferred revenue		712,800			1,001,800
Total current liabilities		5,053,894			5,645,311

Deferral from financing transaction		1,400,000			-
Total liabilities		6,453,894			5,645,311

Commitments and Contingencies
Stockholders’ Equity
Series A convertible preferred stock, par value $.001, authorized 5,000,000 shares, 33,333 shares held in the treasury, and 7,000 shares issued and outstanding as September 30, 2017 and December 31, 2016		7			7
Common stock, par value $.001; authorized 50,000,000 shares;33,023,057 shares issued, 1,404,405 shares to be issued and 32,989,724 shares outstanding as of September 30, 2017; 30,457,224 shares issued, 1,270,481 shares to be issued and 30,423,891 shares outstanding as of December 31, 2016		34,426			31,720
Additional paid-in capital		86,442,802			82,761,503
Accumulated deficit		(76,778,556	)		(73,381,491	)
Treasury stock, at cost, 33,333 shares		(911,516	)		(911,516	)
Total stockholders' equity		8,787,163			8,500,223
Noncontrolling interest		300,589			36,106
Total Equity		9,087,752			8,536,329
Total liabilities and stockholders’ equity	$	15,541,646		$	14,181,640

MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)

	Preferred Stock		Common Stock
	Shares	Amount	Shares	Amount	Additional Paid-in Capital	Accumulated Deficit	Noncontrolling interest	Treasury Stock	Total
Balance, January 1, 2017	7,000	$ 7	31,727,705	$ 31,720	$ 82,761,503	$ (73,381,491)	$ 36,106	$ (911,516)	$ 8,536,329
Stock based compensation	-	-			530,966	-	-	-	530,966
Common stock to be issued to employee for compensation			10,913	11	14,989	-	-	-	15,000
Common stock issued to employee for exercise of stock options			83,333	83	62,417	-	-	-	62,500
Common stock issued for payment of consulting services			245,373	260	422,249	-	-	-	422,509
Common stock to be issued to employee for bonuses			158,082	151	259,841	-	-	-	259,992
Common stock issued for assets acquired			1,646,358	1,646	2,484,354				2,486,000
Common Stock exchanged for MMD			311,998	311	(403,709)	-	403,398	-	-
Common stock issued to directors for bonuses			120,000	120	159,480	-	-	-	159,600
Sale of Common Stock - Public Offering			123,700	124	150,712	-	-	-	150,836
Net loss	-	-			-	(3,397,065)	(138,915)	-	(3,535,980)
Balance, September 30, 2017	7,000	$ 7	34,427,462	$ 34,426	$ 86,442,802	$ (76,778,656	$ 300,589	$ (911,516)	$ 9,087,752

MILESTONE SCIENTIFIC INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Nine Months Ended September 30,
		2017		2016
Cash flows from operating activities:
Net loss	$	(3,535,980)	$	(5,321,628)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		44,046		69,345
Amortization of patents		187,209		53,017
Stock compensation		530,966		1,136,430
Loss China joint venture		28,941		545,950
Changes in operating assets and liabilities:
(Increase) in accounts receivable		(1,197,252)		(759,385)
Decrease in accounts receivable related party		2,001,800		-
Decrease in other receivable		10,000		58,140
Decrease (increase) in inventories		436,998		(225,998)
(Increase) to advances on contracts		(291,342)		(53,566)
Increase (Decrease) to prepaid expenses and other current assets		(260,081)		27,701
(Increase) in other assets		(9,523)		-
(Decrease) increase in accounts payable		(725,170)		169,388
(Decrease) in accounts payable related party		(332,711)		-
Increase in deferred profit, related party		257,323
Increase in accrued expenses and other payables		1,583,624		181,324
(Decrease) in deferred revenue		(289,000)		-
Net cash used in operating activities		(1,560,152)		(4,119,282)
Cash flows from investing activities:
Purchase of intangible assets		(39,520)		(15,616)
Purchase of property and equipment		(4,749)		(14,945)
Purchase of intangibles assets-Apad		(153,647)		-
Consolidation of variable interest entity		-		50,621
Net cash (used in) provided by investing activities		(197,916)		20,060
Cash flows from financing activities:
Capital contribution from noncontrolling interest		-		2,543
Proceeds from Private Placement Offering		-		2,225,000
Proceed from financing transaction		250,000		-
Proceeds from exercise of stock options		62,500		-
Net proceeds on Private Placement Offering		150,836		-
Net cash provided by investing activities		463,336		2,227,543
Net decrease in cash and cash equivalents		(1,294,732)		(1,871,679)
Cash and cash equivalents at beginning of period		3,602,229		4,194,384
Cash and cash equivalents at end of period	$	2,307,497	$	2,322,705

Supplemental disclosure of cash flow information:
Net assets acquired from variable entity			$	14,076
Shares issued to for assets acquired	$	2,484,354		-
Sale of Milestone China shares, financing transaction	$	1,400,000		-
Shares issued to employees for bonus	$	259,841	$	389,318
Shares issued to consultants in lieu of cash payments	$	422,249	$	366,299

	i.	identification of the promised goods or services in the contract;
	ii.	determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;
	iii.	measurement of the transaction price, including the constraint on variable consideration;
	iv.	allocation of the transaction price to the performance obligations based on estimated standalone selling prices; and selling prices; and
	v.	recognition of revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606, “Revenue from Contracts with Customers”.

	*June 30, 2021*		*December 31, 2020*

Dental finished goods, net	$	764,434	$	1,888,141
Medical finished goods, net		533,633		200,327
Component parts and other materials		181,324		331,711
Total inventories	$	1,479,391	$	2,420,179

MILESTONE SCIENTIFIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue
Product sales, net	$	2,853,813		$	3,186,596		$	9,066,550		$	8,973,726
Cost of products sold		1,044,540			1,517,561			3,320,411			3,675,552
Gross profit		1,809,273			1,669,035			5,746,139			5,298,174

Selling, general and administrative expenses		3,205,996			2,933,950			8,996,092			9,226,062
Research and development expenses		16,884			303,268			241,964			756,045
Total operating expenses		3,222,880			3,237,218			9,238,056			9,982,107
Loss from operations		(1,413,607	)		(1,568,183	)		(3,491,917	)		(4,683,933	)
Other (expenses)		(1,046	)		(846	)		(3,278	)		(2,782	)
Interest income		3,582			-			6,495			-
Loss before provision for income tax and equity in net earnings of equity investments		(1,411,071	)		(1,569,029	)		(3,488,700	)		(4,686,715	)
Provision for income tax		(6,475	)		(16,522	)		(18,339	)		(80,147	)
Loss before equity in net earnings of equity investments		(1,417,546	)		(1,585,551	)		(3,507,039	)		(4,766,862	)
Loss on earnings from China Joint Venture		-			(253,451	)		(28,941	)		(554,766	)
Loss in equity investments		-			(253,451	)		(28,941	)		(554,766	)
Net Loss		(1,417,546	)		(1,839,002	)		(3,535,980	)		(5,321,628	)
Net loss attributable to noncontrolling interests		(6,605	)		(137,752	)		(138,915	)		(1,113,958	)
Net loss attributable to Milestone Scientific Inc.	$	(1,410,941	)	$	(1,701,250	)	$	(3,397,065	)	$	(4,207,670	)

Net loss per share applicable to common stockholders—
Basic	$	(0.04	)	$	(0.06	)	$	(0.10	)	$	(0.16	)
Diluted	$	(0.04	)	$	(0.06	)	$	(0.10	)	$	(0.16	)

Weighted average shares outstanding and to be issued—
Basic		33,573,676			29,155,712			32,501,221			25,965,566
Diluted		33,573,676			29,155,712			32,501,221			25,965,566

	●	significant under performance relative to expected historical or projected future operating results;
	●	significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
	●	significant negative industry or economic trends; and
	●	significant technological changes, which would render the technology obsolete.

	*June 30, 2021*
	*Cost*		*Accumulated Amortization*			*Net*
Patents-foundation intellectual property	$	1,377,863	$	(1,071,319	)	$	306,544
Total	$	1,377,863	$	(1,071,319	)	$	306,544

	*Warrant shares outstanding*			*Weighted Average exercise price*		*Weighted Average remaining life*		*Intrinsic value*

Outstanding at January 1, 2021		6,369,396		$	1.97	$	2.48	$	2,784,117
Issued		0			0
Exercised		(2,004,926	)		1.57		-
Expired or cancelled		0			0		-		-
Outstanding and exercisable at June 30, 2021		4,364,470		$	2.15	$	2.01	$	1,796,413

	September 30, 2017		December 31, 2016
Assets:
Current Assets	$	7,127,064	$	9,362,198
Non-Current Assets		2,981,574		2,467,547
Total Assets:		10,108,638		11,829,745

Liabilities:
Current Liabilities		10,449,791		9,900,611
Stockholders' equity		(341,153)		1,929,134
Total liabilities and stockholders’ equity	$	10,108,638	$	11,829,745

	*June 30, 2021*			*June 30, 2020*

Shares-to-be-issued, outstanding January 1, 2021 and 2020, respectively		2,428,329			2,375,760
Granted in current period		33,238			358,482
Issued in current period		(53,416	)		(214,612	)
Shares-to be issued outstanding June 30, 2021 and 2020, respectively		2,408,151			2,519,630

	Number of Options	Weighted Averaged Exercise Price $	Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Options Value $
Options outstanding January 1, 2017	1,511,995	1.74	2.97	-
Granted	1,383,121	2.04	4.26
Exercised during 2017	(83,333)	0.75
Forfeited or expired
Options outstanding September 30, 2017	2,811,783	1.98	3.31
Exercisable, September 30, 2017	1,380,958	1.98	2.22

	*Number of Options*			*Weighted Averaged Exercise Price $*		*Weighted Average Remaining Contractual Life (Years)*		*Aggregate Intrinsic Options Value $*
Options outstanding January 1, 2021		1,953,443			1.88		3.09		476,964
Granted		2,032,175			2.48		-		-
Exercised during 2021		(435,558	)		1.58		-		-
Forfeited or expired		0			0		-		-
Options outstanding June 30, 2021		3,550,060			2.26		7.00		188,018
Exercisable, June 30, 2021		745,092			1.93		2.41		124,701

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Options outstanding January 1, 2017		224,999		2.52		5.32		-
Granted		-
Exercised during 2017		-
Forfeited or expired		-
Options outstanding September 30, 2017		224,999		2.52		4.57		-
Exercisable, September 30, 2017		12,960		2.33		3.68		-

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Options outstanding January 1, 2020		49,998		1.87		2.94		0
Granted		8,333		1.65				-
Exercised during 2020		0		0		-		-
Options outstanding June 30, 2020		58,331		1.87		2.94
Exercisable, June 30, 2020		41,663		1.71		2.03		84,579

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Net Sales	$	1,382,588		$	329,617		$	2,548,140		$	658,939
Cost of Goods Sold		556,430			262,576			1,445,634			546,440
Gross Profit		826,158			(67,041	)		1,102,506			112,499
Other Expenses		(1,886,180	)		(1,160,834	)		(3,487,845	)		(1,673,731	)
Net Losses	$	(1,060,022	)	$	(1,093,793	)	$	(2,385,339	)	$	(1,561,232	)

Restricted Stock Awards	*Shares*		Weighted Average Grant-Date Fair Value per Award

Non-vested as December 31, 2020		0	$	0
Granted		79,365		2.52
Vested		0		0
Non-vested as June 30, 2021		79,365	$	2.52

Net Sales:	*Three months ended June 30, 2021*		*Three months ended June 30, 2020*		*Six months ended June 30, 2021*		*Six months ended June 30, 2020*

Dental	$	2,404,738	$	165,674	$	5,258,395	$	1,969,260
Medical		21,000		2,000		92,050		9,800
Total net sales	$	2,425,738	$	167,674	$	5,350,445	$	1,979,060

Operating Income (Loss):	*Three months ended June 30, 2021*			*Three months ended June 30, 2020*			*Six months ended June 30, 2021*			*Six months ended June 30, 2020*

Dental	$	524,798		$	(650,236	)	$	1,650,831		$	(223,856	)
Medical		(1,135,001	)		(814,429	)		(2,030,720	)		(1,484,241	)
Corporate		(2,262,369	)		(1,708,225	)		(3,477,056	)		(3,073,399	)
Total operating loss	$	(2,872,572	)	$	(3,172,890	)	$	(3,856,945	)	$	(4,781,496	)

Depreciation and Amortization	*Three months ended June 30, 2021*		*Three months ended June 30, 2020*		*Six months ended June 30, 2021*		*Six months ended June 30, 2020*

Dental	$	860	$	3,101	$	2,566	$	8,800
Medical		1,165		621		5,016		4,333
Corporate		12,809		17,416		28,178		45,224
Total depreciation and amortization	$	14,834	$	21,138	$	35,760	$	54,457

Income (loss) before taxes and equity in earnings of affiliates:	*Three months ended June 30, 2021*			*Three months ended June 30, 2020*			*Six months ended June 30, 2021*			*Six months ended June 30, 2020*

Dental	$	598,166		$	(651,384	)	$	1,723,284		$	(225,845	)
Medical		(1,136,271	)		(815,391	)		(2,033,260	)		(1,486,310	)
Corporate		(2,062,748	)		(1,710,177	)		(3,277,785	)		(3,077,500	)
Total loss before taxes and equity in earnings of affiliate	$	(2,600,853	)	$	(3,176,952	)	$	(3,587,761	)	$	(4,789,655	)

	*Three Months Ended June 30, 2021*						*Three Months Ended June 30, 2020*
	*Dental*		*Medical*		*Grand Total*		*Dental*		*Medical*		*Grand Total*
Domestic: US
Instruments	$	178,752	$	0	$	178,752	$	0	$	0	$	0
Handpieces		802,916		0		802,916		36,812		2,000		38,812
Accessories		18,974		0		18,974		1,542		0		1,542
Total Domestic US	$	1,000,642	$	0	$	1,000,642	$	38,354	$	2,000	$	40,354

International: Rest of World		Dental		Medical		Grand Total		Dental		Medical		Grand Total
Instruments		156,588	$	15,500	$	172,088	$	31,800	$	0	$	31,800
Handpieces		709,624		5,500		715,124		87,632		0		87,632
Accessories		12,548		0		12,548		7,888		0		7,888
Total International	$	878,761	$	21,000	$	899,761	$	127,320	$	0	$	127,320

International: China		Dental		Medical		Grand Total		Dental		Medical		Grand Total
Instruments	$	78,000	$	0	$	78,000	$	0	$	0	$	0
Handpieces		447,336		0		447,336		0		0		0
Other		0		0		0		0		0		0
Total International		525,336		0		525,336		0		0		0

Total Product Sales	$	2,404,738	$	21,000	$	2,425,738	$	165,674	$	2,000	$	167,674

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
Lease cost	*2021*		*2020*		*2021*		*2020*
Cash paid for operating lease liabilities		31,303		30,820		62,606		48,084
Cash paid for finance lease liabilities		2,685		2,685		5,370		4,937
Right-of-use assets obtained in exchange for new operating lease liabilities (1)		0		0		0		663,009
Property and equipment obtained in exchange for new finance lease liabilities		0		0		0		43,242
(1) For the six months ended June 30, 2021, the balance includes operating leases existing as of the adoption of ASC 842 on January 1, 2021

Weighted-average remaining lease term - operating leases (years)		-		-		5.8		6.8
Weighted-average remaining lease term- finance leases (years)		-		-		3.6		4.60

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Domestic-US
Instruments	$	178,752	$	-	$	354,768	$	525
Handpieces		802,916		38,812		1,606,050		635,490
Accessories		18,974		1,542		36,882		21,590
Total Domestic US	$	1,000,642	$	40,354	$	1,997,700	$	657,605

International ROW
Instruments	$	172,088	$	31,800	$	597,841	$	281,904
Handpieces		715,124		87,632		1,689,459		1,018,123
Accessories		12,548		7,888		33,109		21,428
Total International-ROW	$	899,761	$	127,320	$	2,320,409	$	1,321,455

International-China
Instruments	$	78,000	$	-	$	228,000	$	-
Handpieces		447,336		-		804,336		-
Accessories		-		-		-		-
Total International	$	525,336	$	-	$	1,032,336	$	-

Total Product Sales	$	2,425,738	$	167,674	$	5,350,445	$	1,979,060

Cash flow:	June 30, 2021			June 30, 2020
Net cash used in operating activities	$	(2,070,310	)	$	(4,111,504	)
Net cash used in investing activities	$	(13,075	)	$	(15,499	)
Net cash provided by financing activities	$	3,836,798		$	19,220,948

	2021		2020		Increase (Decrease)

Dental	$	2,404,738	$	165,674	$	2,239,064
Medical		21,000		2,000		19,000
Total sales, net	$	2,425,738	$	167,674	$	2,258,064

	2021			2020			Increase Decrease

Dental	$	524,798		$	(650,236	)	$	1,175,034
Medical		(1,135,001	)		(814,429	)		(320,572	)
Corporate		(2,262,369	)		(1,708,225	)		(554,144	)
Total loss from operations	$	(2,872,572	)	$	(3,172,890	)	$	300,318

~~ITEM~~ 6.Exhibit No	~~EXHIBITS~~	Description

~~10.5~~	~~New Employment Agreement between Milestone Scientific Inc. and Leonard Osser dated as of July 10, 2017. (1)~~
~~10.6~~	~~Employment Agreement between Milestone Scientific Inc. and Daniel Goldberger dated as of July 10, 2017. (1)~~
~~10.7~~	~~Covenant Agreement between Milestone Scientific Inc. and Daniel Goldberger dated and effective as of July 10, 2017. (1)~~
~~10.8~~	~~Consultant Agreement between Milestone~~ Medical Inc. and U.S. Asian Consulting Group, LLC dated as of July 10, 2017*

31.1	Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.*
~~31.2~~	Chief Operating Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.Rule 13a-14(a) Certification-Chief Executive Officer
32.1	~~Chief~~	Section 1350 Certifications-Chief Executive ~~Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.~~Officer***
~~32.2~~101.INS	Chief Operating Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.**

~~101.INS~~	Inline XBRL Instance Document.Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document.Document
~~101.CAL~~101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.Document
101.LAB	��	Inline XBRL Taxonomy Extension Label Linkbase Document.Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	MILESTONE SCIENTIFIC INC.

	/s/ ~~Leslie Bernhard~~Jan A. Haverhals
	~~Leslie Bernhard~~Jan Haverhals
	~~Interim~~ Chief Executive Officer
	(Principal Executive and Acting Chief Accounting Officer)
Date: August 13, 2021
	~~/s/ Joseph D’Agostino~~
	~~Joseph D’Agostino~~
	~~Chief Operating Officer~~
	~~Chief Financial Officer~~
	~~(Principal Financial Officer)~~