Business Context and Reporting Period
Company: Milestone Scientific Inc. (MLSS)
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Overview: Milestone Scientific develops and commercializes computer-controlled drug delivery systems for dental and medical applications. Key products include the CompuDent/STA Single Tooth Anesthesia System (dental) and the CompuFlo Epidural Computer Controlled Anesthesia System (medical). The company relies on proprietary Dynamic Pressure Sensing (DPS) technology.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Net Product Sales | $8,973,982 | $8,629,928 |
| Gross Profit | $6,407,577 | $6,434,588 |
| Gross Margin | 71.4% | 74.6% |
| Operating Loss | $(5,696,617) | $(6,756,957) |
| Net Loss | $(5,722,216) | $(4,713,597) |
| Cash and Cash Equivalents (End of Period) | $1,112,642 | $3,258,058 |
| Net Cash Used in Operating Activities | $(2,916,627) | $(2,919,875) |
| Working Capital | $3,346,572 | $5,542,427 |
| Convertible Notes Payable (Related Party) | $800,000 | $0 |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased by 4.0% ($344,054) year-over-year. Dental sales grew 3.1% to $8.79 million, driven by a 9% increase in international sales (including new sales in China), partially offset by a 7% decline in domestic U.S. dental sales. Medical sales grew 75% to $183,250, primarily due to higher domestic handpiece sales.
- Expense Reduction: Total operating expenses decreased by 8.2% ($1.09 million). Selling, General, and Administrative (SG&A) expenses fell 5.8% to $11.58 million due to reduced headcount, marketing, and regulatory costs. Research and Development (R&D) expenses dropped 47.7% to $449,469, reflecting a strategic decision to delay R&D on the next-generation Single Tooth Anesthesia System.
- Operating Loss Improvement: The operating loss narrowed by 15.7% to $5.70 million, improving from 78% of net sales in 2024 to 63% in 2025.
- Liquidity Decline: Cash and cash equivalents decreased by approximately $2.15 million during the year, driven by operating cash outflows and minimal investing activity.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern Warning: The company has incurred recurring losses and an accumulated deficit of $133.8 million. Management has concluded that substantial doubt exists regarding the company's ability to continue as a going concern without raising additional capital. Cash on hand is insufficient to fund operations for the next 12 months.
- Capital Raising: In April 2025, the company secured $800,000 in related-party convertible promissory notes. The company is actively pursuing additional financing through equity offerings or other sources.
- Listing Compliance: The company received notice from NYSE American regarding non-compliance with stockholders' equity requirements due to recurring losses. A compliance plan was submitted, with a deadline to regain compliance by April 8, 2027, to avoid delisting.
- Regulatory Updates: The company is compliant with the new FDA Quality Management System Regulation (QMSR) effective February 2, 2026. It expects to obtain EU Medical Device Regulation (MDR) certification for its devices in 2027.
- Management Changes: Eric Hines was appointed CEO and Director in July 2025, replacing Arjan Haverhals who retired at the end of 2024. Jason Papes was appointed Senior VP of Global Sales and Marketing in August 2025.
- Unusual Items: In 2024, the company recorded a $1.98 million gain from the sale of New Jersey net operating losses. No such gain was recorded in 2025.
Key Facts for Investor Verification
- Liquidity Runway: Verify the company's ability to secure the necessary capital to fund operations beyond the current cash balance of ~$1.1 million.
- NYSE American Status: Monitor progress on the compliance plan to avoid delisting due to insufficient stockholders' equity.
- Medical Product Adoption: Assess the commercial traction of the CompuFlo Epidural System, which currently represents a small fraction of total revenue but is a key growth driver.
- Supply Chain Concentration: Review risks associated with reliance on third-party manufacturers, particularly the sole manufacturer of dental handpieces located in China.
- Related Party Transactions: Examine the terms of the $800,000 convertible notes issued to directors and ongoing payments to related parties (e.g., United Systems, Director of Clinical Affairs).