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MILESTONE SCIENTIFIC INC.

MILESTONE SCIENTIFIC INC.MLSSEarnings & Financial Report

NYSE · Health Care · Orthopedic, Prosthetic & Surgical Appliances & Supplies

Boston Scientific Corporation (BSC) is an American biotechnology and biomedical engineering firm and multinational manufacturer of medical devices used in interventional medical specialties, including interventional radiology, interventional cardiology, peripheral interventions, neuromodulation, neurovascular intervention, electrophysiology, cardiac surgery, vascular surgery, endoscopy, oncology, urology and gynecology.

What changed in MILESTONE SCIENTIFIC INC.'s 10-K — 2022 vs 2023

Top changes in MILESTONE SCIENTIFIC INC.'s 2023 10-K

129 paragraphs added · 159 removed · 90 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

55 edited+7 added−38 removed116 unchanged
Item 1A. Risk Factors You should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K. If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.
Item 1A. Risk Factors You should consider carefully the risks and uncertainties described below, together with all the other information in this Annual Report on Form 10-K. If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.
Safeguards we implement to discourage improper payments or offers of payments by our employees, consultants, sales agents, or distributors may be ineffective, and violations of the FCPA and similar laws may result in severe criminal or civil sanctions, or other liabilities or proceedings against us, any of which would likely harm our reputation, business, results of operations and financial condition.
Safeguards we implement to discourage improper payments or offers of payments by our employees, consultants, sales agents, or distributors may be ineffective, and violations of the FCPA and similar laws may result in severe criminal or civil sanctions, or other liabilities or proceedings against us, any of which would likely harm our reputation, business, results of operations and financial condition.
Section 404 of the Sarbanes-Oxley Act of 2002 requires management of public companies to develop and implement internal controls over financial reporting and evaluate the effectiveness thereof.
Section 404 of the Sarbanes-Oxley Act of 2002 requires the management of public companies to develop and implement internal controls over financial reporting and evaluate the effectiveness thereof.
A failure to protect, defend or enforce our intellectual property rights could have an adverse effect on our results of operations. Third parties could obtain patents that may require us to negotiate licenses to commercialize our technologies, and we cannot assure you that the required licenses would be available on reasonable terms or at all.
A failure to protect, defend or enforce our intellectual property rights could have an adverse effect on the results of operations. Third parties could obtain patents that may require us to negotiate licenses to commercialize our technologies, and we cannot assure you that the required licenses would be available on reasonable terms or at all.
Issues with product quality could have a material adverse effect upon our business, subject us to regulatory actions and cause a loss of customer confidence in us or our products. In general, our success depends upon the quality of our products.
Issues with product quality could have a material adverse effect upon our business, subject us to regulatory actions and cause a loss of customer confidence in us or our products. In general, our success depends upon the quality of our products.
Quality management plays an essential role in meeting customer requirements, preventing defects, improving our products and services, and assuring the safety and efficacy of our products. Our future success depends on our ability to maintain and continuously improve our quality management program.
Quality management plays an essential role in meeting customer requirements, preventing defects, improving our products and services, and assuring the safety and efficacy of our products. Our future success depends on our ability to maintain and continuously improve our quality management program.
A quality or safety issue may result in adverse inspection reports, warning letters, product recalls or seizures, monetary sanctions, injunctions to halt manufacture and distribution of products, civil or criminal sanctions, costly litigation, refusal of a government to grant approvals and licenses, restrictions on operations or withdrawal of existing approvals and licenses.
A quality or safety issue may result in adverse inspection reports, warning letters, product recalls or seizures, monetary sanctions, injunctions to halt manufacture and distribution of products, civil or criminal sanctions, costly litigation, refusal of a government to grant approvals and licenses, restrictions on operations or withdrawal of existing approvals and licenses.
An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity, a loss of customer confidence in us or our current or future products, which may result in the loss of sales and difficulty in successfully launching new products.
An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity, a loss of customer confidence in us or our current or future products, which may result in the loss of sales and difficulty in successfully launching new products.
Efficacy or safety concerns, an increase in trends of adverse events in the marketplace, and/or manufacturing quality issues with respect to our products could lead to product recalls or related field actions, withdrawals, and/or declining sales. 16 We may be subject, directly, or indirectly, to U.S. federal and state health care fraud and abuse and false claims laws and regulations.
Efficacy or safety concerns, an increase in trends of adverse events in the marketplace, and/or manufacturing quality issues with respect to our products could lead to product recalls or related field actions, withdrawals, and/or declining sales. We may be subject, directly, or indirectly, to U.S. federal and state health care fraud and abuse and false claims laws and regulations.
As a result, we may not be able to compete effectively against these companies or their products. 13 Our ability to commercialize our products will depend in part on the extent to which reimbursement will be available from governmental agencies, health administration authorities, private health maintenance organizations and health insurers and other healthcare payers.
As a result, we may not be able to compete effectively against these companies or their products. Our ability to commercialize our products will depend in part on the extent to which reimbursement will be available from governmental agencies, health administration authorities, private health maintenance organizations and health insurers and other healthcare payers.
Healthcare payers, including Medicare, are challenging the prices charged for medical products and services. Government and other healthcare payers increasingly attempt to contain healthcare costs by limiting both coverage and the level of reimbursement for products. Insurance coverage may not be available, or reimbursement levels may be inadequate, to cover the charges for the use of such product.
Healthcare payers, including Medicare, are challenging the prices charged for medical products and services. Government and other healthcare payers increasingly attempt to contain healthcare costs by limiting both coverage and the level of reimbursement for products. Insurance coverage may not be available, or reimbursement levels may be inadequate to cover the charges for the use of such a product.
China also faces many social, economic, and political challenges that may produce instabilities in both its domestic arena and in its relationship with other countries. 15 These instabilities may significantly and adversely affect our supply of dental handpieces which would in turn adversely affect our financial performance.
China also faces many social, economic, and political challenges that may produce instabilities in both its domestic arena and in its relationship with other countries. These instabilities may significantly and adversely affect our supply of dental handpieces which would in turn adversely affect our financial performance.
Milestone Scientific Scientific’s principal stockholders, Leonard Osser and Gian Domenico Trombetta control approximately 25% of the issued and outstanding shares of common stock. As a result, they can exercise substantial control over our affairs and corporate actions requiring stockholder approval, including electing directors, selling all or substantially all our assets, merging with another entity, or amending our certificate of incorporation.
Milestone Scientific Scientific’s principal stockholders, Leonard Osser and Gian Domenico Trombetta control approximately 20% of the issued and outstanding shares of common stock. As a result, they can exercise substantial control over our affairs and corporate actions requiring stockholder approval, including electing directors, selling all or substantially all our assets, merging with another entity, or amending our certificate of incorporation.
In the medical device industry, the majority of an innovative product’s commercial value is realized during the early stages of commercialization, before competing products are developed. Our market advantage is based, in part, on patent rights and the need for new competing products and systems to obtain regulatory approval before they can be commercialized.
In the medical device industry, most of an innovative product’s commercial value is realized during the early stages of commercialization, before competing products are developed. Our market advantage is based, in part, on patent rights and the need for new competing products and systems to obtain regulatory approval before they can be commercialized.
Because the sole manufacturer of our dental handpieces is located in China, our business is disproportionately exposed to the economic, environmental, and political conditions of the region.
Because the sole manufacturer of our dental handpieces is in China, our business is disproportionately exposed to the economic, environmental, and political conditions of the region.
If government and other healthcare payers do not provide adequate coverage and reimbursement for any of our products, market acceptance of such product could be reduced. Prices in many countries, including many in Europe, are subject to local regulation and price controls.
If the government and other healthcare payers do not provide adequate coverage and reimbursement for any of our products, market acceptance of such products could be reduced. Prices in many countries, including many in Europe, are subject to local regulation and price controls.
Milestone Scientific relies on a number of third parties to supply and manufacture the components and raw materials for its products and its does not have long-term supply agreements with suppliers of these component parts and raw materials, and its arrangements with these suppliers are on a purchase-order basis.
Milestone Scientific relies on several third parties to supply and manufacture the components and raw materials for its products and its does not have long-term supply agreements with suppliers of these component parts and raw materials, and its arrangements with these suppliers are on a purchase-order basis.
Any curtailment or interruptions of the supply, whether as a result of termination of the relationship or otherwise, would have a material adverse effect on our financial condition, business, and results of operations. Our business is exposed to risks associated with the economic, environmental, and political conditions in China because the sole manufacturer of our handpieces is located in China.
Any curtailment or interruptions of the supply, whether because of termination of the relationship or otherwise, would have a material adverse effect on our financial condition, business, and results of operations. Our business is exposed to risks associated with the economic, environmental, and political conditions in China because the sole manufacturer of our handpieces is in China.
Milestone Scientific may make similar modifications or add additional features in the future that it believes does not require a new 510(k) clearance.
Milestone Scientific may make similar modifications or add additional features in the future that it believes do not require a new 510(k) clearance.
These products we obtain from suppliers are subject to fluctuations in price and availability attributable to a number of factors, including general economic conditions, commodity price fluctuations, the demand by other companies for the same raw materials and the availability of complementary and substitute materials.
These products we obtain from suppliers are subject to fluctuations in price and availability attributable to several factors, including general economic conditions, commodity price fluctuations, the demand by other companies for the same raw materials and the availability of complementary and substitute materials.
Failure by us to comply with these standards could have an adverse effect on our business, financial condition, or results of operations. The FDA regulates the approval, manufacturing and sales and marketing of many of our products in the United States. Significant government regulation also exists in other countries in which we conduct business.
Failure by us to comply with these standards could have an adverse effect on our business, financial condition, or results of operations. The FDA regulates the approval, manufacturing and sales and marketing of many of our products in the United States. Significant government regulations also exist in other countries in which we conduct business.
Until such time, if ever, as we can generate a sufficient amount of product revenue and achieve positive cash flow, we expect to seek to finance future cash needs through equity financings or corporate collaboration and licensing arrangements and may seek the sale of non-medical assets.
Until such time, if ever, as we can generate enough product revenue and achieve positive cash flow, we expect to seek to finance future cash needs through equity financings or corporate collaboration and licensing arrangements and may seek the sale of non-medical assets.
Each of these risks could delay the commercialization of our CompuFlo Epidural Computer Controlled Anesthesia System, limit our available supply of The Wand/ STA for dental applications, cause damage to our reputation, result in higher costs and/or deprive us of potential product revenues.
Establishing new manufacturing relationships could involve significant expense and delay. Each of these risks could delay the commercialization of our CompuFlo Epidural Computer Controlled Anesthesia System, limit our available supply of The Wand/ STA for dental applications, cause damage to our reputation, result in higher costs and/or deprive us of potential product revenues.
Almost all our 69,306,497 outstanding shares of common stock on December 31, 2022, as well as a substantial number of shares of our common stock underlying outstanding warrants, are available for sale in the public market, either freely or pursuant to Rule 144 under the Securities Act of 1933, as amended.
Almost all our 75,881,840 outstanding shares of common stock on December 31, 2023, as well as a substantial number of shares of our common stock underlying outstanding warrants, are available for sale in the public market, either freely or pursuant to Rule 144 under the Securities Act of 1933, as amended.
A court also could enter orders that temporarily, preliminary, or permanently prohibit us, our licensees, if any, and our customers from making, using, selling, offering to sell, or importing one or more of our products or using our proprietary technologies or processes, or could enter an order mandating that we undertake certain remedial activities. 20 Any of these events could seriously harm our business, operating results, and financial condition.
A court also could enter orders that temporarily, preliminary, or permanently prohibit us, our licensees, if any, and our customers from making, using, selling, offering to sell, or importing one or more of our products or using our proprietary technologies or processes, or could enter an order mandating that we undertake certain remedial activities.
See Item 1; “Government Regulation.” Use of third parties to manufacture our products may increase the risk that we will not have sufficient quantities of our products or such quantities at acceptable levels of cost and quality, which could impair our commercialization efforts.
The use of third parties to manufacture our products may increase the risk that we will not have enough of our products or such quantities at acceptable levels of cost and quality, which could impair our commercialization efforts.
Third-party suppliers may encounter problems during manufacturing for a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction, component part supply constraints, and environmental factors, any of which could delay or impede their ability to supply the components and raw materials for Milestone Scientific’s products.
The termination, reduction or interruption in supply of these raw materials and components could adversely impact Milestone Scientific Scientific’s ability to manufacture and sell certain of its products. 13 Third-party suppliers may encounter problems during manufacturing for a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction, component part supply constraints, and environmental factors, any of which could delay or impede their ability to supply the components and raw materials for Milestone Scientific’s products.
We have exposure to risks of operating in many foreign countries, including: ● fluctuations in foreign currency exchange rates, could increase the end user cost for instruments; ● restrictions on, or difficulties and costs associated with, the currency exchange from foreign countries to obtain U.S. dollars; ● difficulties and costs associated with complying with a wide variety of complex laws, treaties, and regulations; ● unexpected changes in political or regulatory environments; ● political and economic instability; ● import and export restrictions and other trade barriers; and ● difficulties in obtaining approval for significant transactions.
We have exposure to risks of operating in many foreign countries, including: ● fluctuations in foreign currency exchange rates, could increase the end user cost for instruments. ● restrictions on, or difficulties and costs associated with, the currency exchange from foreign countries to obtain U.S. dollars; ● difficulties and costs associated with complying with a wide variety of complex laws, treaties, and regulations; ● unexpected changes in political or regulatory environments; ● political and economic instability; ● import and export restrictions and other trade barriers; and ● difficulties in obtaining approval for significant transactions. 10 If physicians do not accept nor use our CompuFlo Epidural System, our ability to generate revenue from sales will be materially impaired.
If we are found to be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, or an administrative action of suspension or exclusion from government health care reimbursement programs and the curtailment or restructuring of our operations In addition, we are subject to the Foreign Corrupt Practices Act (“FCPA”) and other countries’ anti-corruption/anti-bribery regimes, such as the U.K.
If we are found to be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, or an administrative action of suspension or exclusion from government health care reimbursement programs and the curtailment or restructuring of our operations.
Inadequate disclosure controls and procedures and internal controls over financial reporting could also cause investors to lose confidence in the Company’s public disclosures and reported financial information, which could have a negative effect on the trading price of our common stock. 18 The market price of our common stock may be volatile and may fluctuate significantly, and stockholders could lose all or part of their investment in Milestone Scientific Our stock price may experience substantial volatility because of many factors, including: ● our failure to meet analysts’ expectations; ● sales or potential sales of substantial amounts of our common stock; ● delay or failure in initiating our strategy to commercialize our CompuFlo Epidural System; ● the success of our strategy to commercialize our CompuFlo Epidural System; ● announcements about us or about our competitors, including clinical trial results, regulatory approvals or new product introductions that could adversely impact the market acceptance or competitive advantages of our CompuFlo Epidural System; ● developments concerning our licensors or product manufacturers; ● litigation and other developments relating to our patents or other proprietary rights or those of our competitors; ● our ability to successfully develop and commercialize products and services for the healthcare industry; ● conditions in the medical device industry; ● governmental regulation and legislation; ● variations in our anticipated or actual operating results; and ● change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations.
The market price of our common stock may be volatile and may fluctuate significantly, and stockholders could lose all or part of their investment in Milestone Scientific Our stock price may experience substantial volatility because of many factors, including: ● our failure to meet analysts’ expectations; ● sales or potential sales of substantial amounts of our common stock; ● delay or failure in initiating our strategy to commercialize our CompuFlo Epidural System; ● the success of our strategy to commercialize our CompuFlo Epidural System; ● announcements about us or about our competitors, including clinical trial results, regulatory approvals or new product introductions that could adversely impact the market acceptance or competitive advantages of our CompuFlo Epidural System; ● developments concerning our licensors or product manufacturers; ● litigation and other developments relating to our patents or other proprietary rights or those of our competitors; ● our ability to successfully develop and commercialize products and services for the healthcare industry; ● conditions in the medical device industry; ● variations in our anticipated or actual operating results; and ● change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations. 16 Many of these factors are beyond our control.
Many of these factors are beyond our control. The stock markets in general, and the market for small, medical device companies, in particular, have historically experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies.
The stock markets in general, and the market for small, medical device companies have historically experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance.
The Affordable Care Act includes provisions known as the Physician Payments Sunshine Act (section 6002), which require manufacturers of drugs, biologics, devices, and medical supplies covered under Medicare and Medicaid to disclose to the Centers for Medicare and Medicaid Services any transfers of value to physicians and teaching hospitals.
Most states have enacted state false claims laws, and many of those states included laws with qui tam provisions. 14 The Affordable Care Act includes provisions known as the Physician Payments Sunshine Act (section 6002), which require manufacturers of drugs, biologics, devices, and medical supplies covered under Medicare and Medicaid to disclose to the Centers for Medicare and Medicaid Services any transfers of value to physicians and teaching hospitals.
If physicians do not accept nor use our CompuFlo Epidural System, our ability to generate revenue from sales will be materially impaired. Although the FDA has cleared our application to begin marketing the CompuFlo Epidural System, this is no assurance that physicians, hospitals, clinics, and other health care providers will accept and use it.
Although the FDA has cleared our application to begin marketing the CompuFlo Epidural System, this is no assurance that physicians, hospitals, clinics, and other health care providers will accept and use it.
In addition, if we raise additional funds through licensing arrangements or the disposition of any of our assets, it may be necessary to relinquish potentially valuable rights to our product candidates or grant licenses on terms that are not favorable to us.
In addition, if we raise additional funds through licensing arrangements or the disposition of any of our assets, it may be necessary to relinquish potentially valuable rights to our product candidates or grant licenses on terms that are not favorable to us. 9 Recent developments in financial institutions could adversely affect our current and projected business operations, financial condition and results of operations.
Our failure to adequately protect our intellectual property rights, through patents or otherwise, or limitations on the use or loss of such rights, could have a material adverse effect on our ability to prevent the commercialization of competing anesthetic delivery systems.
The scope of our patent rights may be limited and may also depend on the availability of meaningful legal remedies. 11 Our failure to adequately protect our intellectual property rights, through patents or otherwise, or limitations on the use or loss of such rights, could have a material adverse effect on our ability to prevent the commercialization of competing anesthetic delivery systems.
Though other alternate sources of supply for dental handpieces exist, Milestone Scientific would need to establish relationships with new suppliers, and with respect to the Wand/STA System recover its existing tools or have new tools produced and “burned in” and other manufacturing and quality control software re-produced. Establishing new manufacturing relationships could involve significant expense and delay.
We may be required to pay fees or other costs for access to such improvements. 12 Though alternate sources of supply for dental handpieces exist, Milestone Scientific would need to establish relationships with new suppliers, and with respect to the Wand/STA System recover its existing tools or have new tools produced and “burned in” and other manufacturing and quality control software re-produced.
Future increases of the borrowing rate by the Federal Reserve Board, to slow inflation or for other reasons, may expose other financial institutions to greater interest rate risk and exacerbate liquidity and other adverse developments affecting such institutions.
On March 12, 2023, Signature Bank and Silvergate Capital Corp. were also placed into receivership. Future increases of the borrowing rate by the Federal Reserve Board, to slow inflation or for other reasons, may expose other financial institutions to greater interest rate risk and exacerbate liquidity and other adverse developments affecting such institutions.
In 2022, export sales outside of the United States made up approximately 63% of our total sales, and we sell our products to customers in approximately 30 countries and U.S. territories.
We are exposed to the risks inherent in international sales. In 2023, export sales outside of the United States made up approximately 45% of our total sales, and we sell our products to customers in approximately 41 countries and U.S. territories.
Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets, and stockholders' equity. Because of the risks and uncertainties associated with product acceptance, we are unable to predict the extent of any future losses, whether we will ever generate significant revenues or if we will ever achieve or sustain profitability.
Because of the risks and uncertainties associated with product acceptance, we are unable to predict the extent of any future losses, whether we will ever generate significant revenues or if we will ever achieve or sustain profitability.
These broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance. We have never paid and do not intend to pay cash dividends in the foreseeable future. As a result, capital appreciation, if any, will be your sole source of gain.
We have never paid and do not intend to pay cash dividends in the foreseeable future. As a result, capital appreciation, if any, will be your sole source of gain.
It is also possible that other federal, state or foreign enforcement authorities might take action if they consider Milestone Scientific’s promotional or training materials to constitute off-label, false or misleading, unfair or deceptive promotion of its products, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement, and reputational harm.
If the FDA, the FTC or another regulatory agency determines that Milestone Scientific’s promotional or training material constitutes off-label, false or misleading, unfair or deceptive promotion of its products, it could request that Milestone Scientific modify its training or promotional materials or subject Milestone Scientific to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties. 15 It is also possible that other federal, state or foreign enforcement authorities might act if they consider Milestone Scientific’s promotional or training materials to constitute off-label, false or misleading, unfair or deceptive promotion of its products, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement, and reputational harm.
Any failure at any time to meet the continuing NYSE American listing requirements could have an adverse impact on the value of and trading activity in our common stock. 19 Your percentage of ownership in Milestone Scientific may be diluted in the future In the future, your percentage ownership in Milestone Scientific may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including any equity awards that Milestone Scientific will grant to its directors, officers, employees and consultants.
In the future, your percentage ownership in Milestone Scientific may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including any equity awards that Milestone Scientific will grant to its directors, officers, employees and consultants.
In addition, political tensions between the United States and China have escalated in recent years. Rising political tensions could reduce trade, investment and other economic activities between the two major economies.
In addition, political tensions between the United States and China have escalated in recent years. Rising political tensions could reduce trade, investment and other economic activities between the two major economies. Any of these factors could have a material adverse effect on Milestone Scientific’s business, prospects, financial condition, and results of operations.
Risks Related to Our Intellectual Property If we are unable to adequately protect our patents, trade secrets and other proprietary rights, if our patents are challenged or if our provisional patent applications do not get approved, our competitiveness and business prospects may be materially damaged.
Such awards will have a dilutive effect on outstanding share count which could adversely affect the market price of Milestone Scientific’s common stock. 17 Risks Related to Our Intellectual Property If we are unable to adequately protect our patents, trade secrets and other proprietary rights, if our patents are challenged or if our provisional patent applications do not get approved, our competitiveness and business prospects may be materially damaged.
Furthermore, if any such claim is successful, a court could order us to pay substantial damages, including compensatory damages for any infringement, plus prejudgment interest and could, in certain circumstances, treble the compensatory damages and award attorney fees. These damages could be substantial and could harm our reputation, business, financial condition, and operating results.
Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim and could distract our management from our business. 18 Furthermore, if any such claim is successful, a court could order us to pay substantial damages, including compensatory damages for any infringement, plus prejudgment interest and could, in certain circumstances, treble the compensatory damages and award attorney fees.
We expect to continue to spend substantial amounts on commercialization and marketing activities, including the continued commercialization and marketing of our FDA-approved CompuFlo Epidural Computer Controlled Anesthesia System.
During the years ended December 31, 2023 and 2022, net cash flow used in operations was approximately $5.3 million and approximately $6.0 million, respectively. We expect to continue to spend substantial amounts on commercialization and marketing activities, including the continued commercialization and marketing of our FDA-approved CompuFlo Epidural Computer Controlled Anesthesia System.
Bribery Act. The FCPA prohibits improper payments or offers of payments to foreign governments and their officials for obtaining or retaining business.
In addition, we are subject to the Foreign Corrupt Practices Act (“FCPA”) and other countries’ anti-corruption/anti-bribery regimes, such as the U.K. Bribery Act. The FCPA prohibits improper payments or offers of payments to foreign governments and their officials for obtaining or retaining business.
Any of these factors could have a material adverse effect on Milestone Scientific’s business, prospects, financial condition and results of operations. 17 Certain modifications to Milestone Scientific ’ s products may require new 510(k) clearances or other marketing authorizations and may require Milestone Scientific to recall or cease marketing its products.
Certain modifications to Milestone Scientific ’ s products may require new 510(k) clearances or other marketing authorizations and may require Milestone Scientific to recall or cease marketing its products.
A decline in the value of our company could also cause our shareholders to lose all or part of their investment We may require additional funding and may be unable to raise capital when needed, which may force us to delay, curtail or eliminate commercialization efforts of our CompuFlo Epidural Computer Controlled Anesthesia System.
We anticipate that we will need additional funding for our operations and may be unable to raise capital when needed, which may force us to delay, curtail or eliminate parts of the commercialization efforts of our CompuFlo Epidural Computer Controlled Anesthesia System. Our operations have consumed substantial amounts of cash since inception.
For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or FDIC, as receiver. On March 12, 2023, Signature Bank and Silvergate Capital Corp. were also placed into receivership.
Recent events involving limited liquidity, defaults, non-performance and other adverse developments that affect financial institutions have led to market-wide liquidity concerns. For example, on March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or FDIC, as receiver.
Our future success depends upon the continued service of our executive officer and other key management and technical personnel, and on our ability to continue to identify, attract, retain, and motivate them. Implementing our business strategy requires specialized territory managers and other talent, as our revenues are highly dependent on technological and product innovations.
Risks Related to Employee Matters We may not be able to attract and retain qualified employees. Our future success depends upon the continued service of our executive officer and other key management and technical personnel, and on our ability to continue to identify, attract, retain, and motivate them.
The combined price of the shares and warrants was $2.15 per share. The warrants are exercisable at $2.60 and expire three (3) years from the issue date. Raising additional capital by issuing securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish proprietary rights.
Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may adversely impact the price of our common stock. Raising additional capital by issuing securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish proprietary rights.
The market for employees in our industry is extremely competitive, a number of such competitors are significantly larger than us and are able to offer compensation in excess of what we are able to offer. If we are unable to attract and retain qualified employees, our business may be harmed.
Implementing our business strategy requires specialized territory managers and other talent, as our revenues are highly dependent on technological and product innovations. The market for employees in our industry is extremely competitive, several such competitors are significantly larger than us and can offer compensation more than what we are able to offer.
While we are unable to predict the continued duration and severity of any adverse conditions in the United States and other countries, any of the circumstances mentioned above could adversely affect our business, financial condition, operating results and cash flow or cash position. Our business and operations would suffer in the event of cybersecurity or other system failures.
Any of these events could seriously harm our business, operating results, and financial condition. General Business Risks Our business and operations would suffer in the event of cybersecurity or other system failures.
Milestone Scientific believes that a significant portion of its sales will continue to be to independent distributors for the foreseeable future, and it is possible that the percentage of its sales to independent distributors could increase.
Risks Related to Sales and Distribution of Milestone Scientific Products Milestone Scientific ’ s sales and marketing efforts in the United Stated rely upon its E-Commerce platform. Milestone Scientific believes that a significant portion of its sales will continue to be from its E-Commerce platform launched in January 2023, for the foreseeable future.
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The operating losses were $8.8 million and $7.4 million, for the years ended December 31, 2022, and 2021, respectively. We expect to make substantial expenditures and incur increasing operating costs in the future and our accumulated deficit will increase significantly as we undertake to commercialize our CompuFlo Epidural System.
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The operating losses were $7.1 million and $8.8 million, for the years ended December 31, 2023, and 2022, respectively. Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets, and stockholders' equity.
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Our operations have consumed substantial amounts of cash since inception. During the years ended December 31, 2022 and 2021, net cash flow used in operations was approximately $6.0 million and approximately $4.0 million, respectively.
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A decline in the value of our company could also cause our shareholders to lose all or part of their investment.
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Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may adversely impact the price of our common stock. ● In February 2019, we issued 6,282,400 shares and 1,570,600 warrants to purchase common shares under our S-3 registration statement.
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We have exposure to risks of operating in an E-commerce platform: ● Refunds and customer disputes due to issues like wrong product delivery or defective items can impact your business. ● Online security breaches and cyberattacks ● Poor search engine visibility affects traffic and sales. ● Unexpected changes in political or regulatory environments; If Milestone Scientific is unable to maintain or expand its E-Commerce platform its sales may be negatively affected.
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During 2019 the Company issued 639,375 shares associated the warrants issued in February 2019.
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If we are unable to attract and retain qualified employees, our business may be harmed.
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Since the year ended December 31, 2019, the Company issued 675,000 shares of common stock for warrants exercised at $0.50 for proceeds of $337,500. ● In February 2019, in a private placement we issued 714,286 restricted common shares and 178,571 warrants to purchase common stock. ● In April 2020, we completed a Common Stock offering generating gross proceeds of approximately $5.1 million (5,420,000 common shares and 2,710,000 warrants).
Added
Inadequate disclosure controls and procedures and internal controls over financial reporting could also cause investors to lose confidence in the Company’s public disclosures and reported financial information, which could have a negative effect on the trading price of our common stock.
Removed
The combined price of the 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 (3) years from the issue date. 11 ● In June 2020, we completed a second Common Stock offering generating gross proceeds of approximately $14.6 million (6,770,000 common shares and 3,749,000 warrants).
Added
As a result, an investor might find it more difficult to dispose of our common stock. Any failure at any time to meet the continuing NYSE American listing requirements could have an adverse impact on the value of and trading activity in our common stock. Your percentage of ownership in Milestone Scientific may be diluted in the future.
Removed
Recent developments in financial institutions could adversely affect our current and projected business operations, financial condition and results of operations. Recent events involving limited liquidity, defaults, non-performance and other adverse developments that affect financial institutions have led to market-wide liquidity concerns.
Added
This damage could be substantial and could harm our reputation, business, financial condition, and operating results.
Removed
Risks Related to Sales and Distribution of Milestone Scientific Products Changes in our distribution arrangements exposes us to risks of interruption of marketing efforts and building new marketing channels. Effective December 31, 2022, the Company's termination of its U.S. distribution agreement with Henry Schein became effective.
Removed
The goal of changing our marketing plan from a sole exclusive distributor in the United States and Canada, to a large number of non-exclusive distributors and an e-commerce platform, may not be seamless or uninterrupted .
Removed
Returns under our Distribution and Supply Agreement with Henry Schein, Inc. could have a material adverse effect on our business, financial condition, and results of operations.
Removed
Under our Distribution and Supply Agreement with Henry Schein, Henry Schein has a right to return our products for full credit against the purchase price paid by them in accordance with such agreement, including but not limited to, returns due to shipment error by us or factory defect.
Removed
On December 31, 2022, such non-exclusive distribution arrangement terminated, subject to certain post-termination rights and obligations of the parties, all in accordance with such agreement. Milestone Scientific ’ s International Operations Subject it to Certain Business Risks.
Removed
A substantial amount of Milestone Scientific’s sales come from its operations outside the United States and we intend to continue to pursue growth opportunities outside of the United States.
Removed
Milestone Scientific’s international operations subject it to certain risks relating to, among other things, fluctuations in foreign currency exchange, local economic and political conditions, competition from local companies, increases in trade protectionism, United States relations with the governments of the foreign countries in which Milestone Scientific operates, foreign regulatory requirements or changes in such requirements, changes in local healthcare payment systems and healthcare delivery systems, local product preferences and requirements, longer payment terms for account receivables than we experience in the United States, difficulty in establishing and managing foreign operations, weakening or loss of the protection of intellectual property rights in some countries and import or export licensing requirements. 12 We are exposed to the risks inherent in international sales.
Removed
Milestone Scientific ’ s sales and marketing efforts rely upon independent distributors that are free to market products that compete with Milestone Scientific ’ s products, and if Milestone Scientific is unable to maintain or expand its network of independent distributors, its business could be materially adversely affected.
Removed
None of Milestone Scientific’s independent distributors in the United States have been required to sell Milestone Scientific products exclusively, and each of them may freely sell the products of Milestone Scientific’s competitors. If Milestone Scientific is unable to maintain or expand its network of independent distributors, its sales may be negatively affected.
Removed
If any of its key independent distributors were to cease to distribute Milestone Scientific’s products or reduce their promotion of such products as compared to the products of Milestone Scientific’s competitors, Milestone Scientific may need to seek alternative independent distributors or increase its reliance on other independent distributors which alternative arrangements may not be sufficient to prevent a material reduction in sales of its products.
Removed
The scope of our patent rights may be limited and may also depend on the availability of meaningful legal remedies.

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Item 2. Properties

Properties — owned and leased real estate

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Milestone Scientific currently has no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities. Item 3. Legal Proceedings Milestone Scientific is not involved in any material litigation. Item 4. Mine Safety Disclosure Not applicable. 22 PART II Item 5.
Milestone Scientific currently has no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities. Item 3. Legal Proceedings Milestone Scientific is not involved in any material litigation. Item 4. Mine Safety Disclosure Not applicable. 20 PART II Item 5.
Market for Common Equity, and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities Market Information On June 1, 2015, our common stock was listed on the NYSE American under the symbol “MLSS”.
Market for Common Equity, and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities Market Information Since June 1, 2015, our common stock has been listed on the NYSE American under the symbol “MLSS”.
Item 2. Description of Property The headquarters for Milestone Scientific is located at 425 Eagle Rock Avenue, Roseland, New Jersey 07068, and our telephone number is (973) 535-2717. In August 2019, the Company signed a seven year lease for a facility in Roseland, New Jersey (the “Roseland Facility”).
Item 2. Description of Property The headquarters for Milestone Scientific is located at 425 Eagle Rock Avenue, Roseland, New Jersey 07068, and our telephone number is (973) 535-2717. In August 2019, the Company signed a seven-year lease for a facility in Roseland, New Jersey (the “Roseland Facility”). The Roseland Facility carries monthly lease payments of $9,275, commencing April 1, 2021.
The following table sets forth the high and low sales prices of Milestone’s common stock for the periods presented. 2022 High Low 2021 High Low First Quarter $ 2.20 $ 1.13 First Quarter $ 4.85 $ 2.11 Second Quarter $ 1.60 $ 0.75 Second Quarter $ 3.83 $ 1.88 Third Quarter $ 1.27 $ 0.71 Third Quarter $ 2.51 $ 1.47 Fourth Quarter $ 0.87 $ 0.45 Fourth Quarter $ 3.00 $ 1.79 Holders As of March 31, 2023, we had approximat ely 99 stockholders of record of our common stock.
The following table sets forth the high and low sales prices of Milestone’s common stock for the periods presented. 2023 High Low 2022 High Low First Quarter $ 1.00 $ 0.46 First Quarter $ 2.20 $ 1.13 Second Quarter $ 1.22 $ 0.72 Second Quarter $ 1.60 $ 0.75 Third Quarter $ 1.35 $ 0.81 Third Quarter $ 1.27 $ 0.71 Fourth Quarter $ 1.00 $ 0.56 Fourth Quarter $ 0.87 $ 0.45 Holders As of March 29, 2024, we had approximate ly 97 stockholders of record of our common stock.
We believe that we have approxima tely 3,911 beneficial owners of our common stock. Dividends The holders of common stock are entitled to receive such dividends as may be declared by Milestone Scientific’s Board of Directors. Milestone Scientific has not paid and does not expect to declare or pay any dividends in the foreseeable future.
W e believe that, in addition to the record owners, we have approximately 3,318 beneficial owners of our common stock. Dividends The holders of common stock are entitled to receive such dividends as may be declared by Milestone Scientific’s Board of Directors.
The Company will also be required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts. A third-party distribution and logistics center in Pennsylvania handles shipping and order fulfillment on a month-to-month basis. Milestone Scientific does not own or intend to invest in any real property.
A third-party distribution and logistics center in Pennsylvania handles shipping and order fulfillment on a month-to-month basis. Milestone Scientific does not own or intend to invest in any real property.
The Roseland Facility carries monthly lease payments of $9,275, commencing April 1, 2021. The Company is also responsible for electric charges equal to $2.00 per square foot, which is equal to $11,130 annually, payable in equal monthly installments of $928.
The Company is also responsible for electric charges equal to $2.00 per square foot, which is equal to $11,130 annually, payable in equal monthly installments of $928. The Company will also be required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises more than the new base year amounts.
Added
Milestone Scientific has not paid and does not expect to declare or pay any dividends in the foreseeable future. Sales of Unregistered Securities Not applicable.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities 23 Item 6. Selected Financial Data 23 Item 7. Management's Discussion and Analysis or Plan of Operations 24 Item 7A. Quantitative and Qualitative Disclosure about Market Risk 29 Item 8. Financial Statements 29 Item 9.
Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities 21 Item 6. Reserved 21 Item 7. Management's Discussion and Analysis or Plan of Operations 22 Item 7A. Quantitative and Qualitative Disclosure about Market Risk 28 Item 8. Financial Statements 28
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 29 Item 9A. Controls and Procedures 30

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Building on the success of our proprietary, core technology platform for dental injections, and desiring to pursue other growth opportunities, we have recently begun to expand the uses and applications of our proprietary, patented technologies to achieve greater operational efficiencies, enhanced patient safety and therapeutic adherence, patient satisfaction, and improved quality of care across a broad range of medical specialties.
Building on the success of our proprietary, core technology platform for dental injections, and desiring to pursue other growth opportunities, we have begun to expand the uses and applications of our proprietary, patented technologies to achieve greater operational efficiencies, enhanced patient safety and therapeutic adherence, patient satisfaction, and improved quality of care across a broad range of medical specialties.
However, the Company’s continued operations will depend on its ability to raise additional capital through various potential sources until it achieves profitability, if ever. 26 Inventories Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in, first-out method) or net realizable value.
However, the Company’s continued operations will depend on its ability to raise additional capital through various potential sources until it achieves profitability, if ever. Inventories Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in, first-out method) or net realizable value.
Certain statements in this discussion and elsewhere in this report constitute forward-looking statements, within the meaning of section 21E of the Exchange Act, that involve risks and uncertainties. The actual results may differ materially from those anticipated in these forward-looking statements. See "Risk Factors" elsewhere in this Form 10-K.
Certain statements in this discussion and elsewhere in this report constitute forward-looking statements, within the meaning of section 21E of the Exchange Act, which involve risks and uncertainties. The actual results may differ materially from those anticipated in these forward-looking statements. See "Risk Factors" elsewhere in this Form 10-K.
Description of Business. Summary of Critical Accounting Policies and Significant Judgments and Estimates The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
Description of Business. Summary of Critical Accounting Estimates The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
Milestone Scientific remains focused on advancing efforts to achieve the following three primary objectives: ● Establishing Milestone’s DPS Dynamic Pressure Sensing technology platform as the standard-of-care in painless and precise drug delivery, providing for the first time, objective visual and audible in-tissue pressure feedback, and continuing to expand platform applications; ● Following obtaining successful FDA clearance of our first medical device, Milestone Scientific is transitioning from a research and development organization to a commercially focused medical device company; and ● Expanding our global footprint of our CompuFlo Epidural and CathCheck System by utilizing a targeted field sales force and partnering with distribution companies worldwide.
Milestone Scientific remains focused on advancing efforts to achieve the following three primary objectives: ● Establishing Milestone’s DPS Dynamic Pressure Sensing technology platform as the standard-of-care in painless and precise drug delivery, providing for the first time, objective visual and audible in-tissue pressure feedback, and continuing to expand platform applications; ● Following obtaining successful FDA clearance of our first medical device, Milestone Scientific is transitioning from a research and development organization to a commercially focused medical device company; and ● Expanding our global footprint of our CompuFlo Epidural and CathCheck System by utilizing a targeted field sales force and partnering with distribution companies worldwide. 22 Our dental devices have been used to administer over 92 million injections worldwide.
The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. Total operating losses since inception of $116.4 million.
The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The Company has incurred total losses since inception of $123.3 million.
OVERVIEW Milestone Scientific is a biomedical technology research and development company that patents, designs, develops and commercializes innovative diagnostic and therapeutic injection technologies and devices for medical, dental and cosmetic use. Since our inception, we have engaged in pioneering proprietary, innovative, computer-controlled injection technologies, and solutions for the medical and dental markets.
OVERVIEW Milestone Scientific is a biomedical technology company that patents, designs, develops and commercializes innovative diagnostic and therapeutic injection technologies and devices for medical and dental use. Since our inception, we have engaged in pioneering proprietary, innovative, computer-controlled injection technologies, and solutions for the medical and dental markets. We believe our technologies are proven and well established.
Milestone Scientific has developed a proprietary, computer-controlled anesthetic delivery device, using The Wand®, a single use disposable handpiece. The device is marketed in dentistry under the trademark CompuDent ®, and STA Single Tooth Anesthesia System ® and is suitable for all dental procedures that require local anesthetic.
It has specific medical applications for epidural space identification in regional anesthesia procedures. Our device, using The Wand®, a single use disposable handpiece, is marketed in dentistry under the trademark CompuDent®, and STA Single Tooth Anesthesia System® and is suitable for all dental procedures that require local anesthetic.
Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence and product expiration requirement and regulations.
Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence and product expiration requirement and regulations. 25 Results of Operations The following table sets forth the consolidated results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue from its dental business and the medical business worldwide, and a reduction in operating expenses. On December 31, 2022, Milestone Scientific had cash and cash equivalents of approximately $8.7 million and working capital of approximately $9.7 million.
Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue from its dental business worldwide, the generation of revenue from its medical devices and disposables business in the United States and worldwide, and a reduction in operating expenses.
We have focused our resources on redefining the worldwide standard of care for injection techniques by making the experience more comfortable for the patient by reducing the anxiety and stress of receiving injections from the healthcare provider. Our computer-controlled injection devices make injections precise, efficient, and virtually painless.
Our common stock was initially listed on the NYSE American on June 1, 2015, and trades under the symbol “MLSS”. We have focused our resources on redefining the worldwide standard of care for injection techniques by making the experience more comfortable for the patient by reducing the anxiety and stress of receiving injections from the healthcare provider.
At present, we sell disposable handpieces unique to our legacy product (the Wand and CompuDent ) to users who have not upgraded to our current dental product, the Wand STA System.
Each of our devices has a related single use disposable handpiece, leading to a continuing revenue stream following the sale of the device. At present, we sell disposable handpieces unique to our legacy product (the Wand and CompuDent) to users who have not upgraded to our current dental product, the STA Single Tooth Anesthesia System.
The operating losses were $8.8 million and $7.4 million, for the years ended December 31, 2022, and 2021, respectively. Management has prepared cashflow forecasts covering a period of 12 months from the date of issuance of these financial statements.
For the twelve months ended December 31, 2023 and 2022, we had cash flows used in operating activities of approximately $5.3 million and $6.0 million, respectively. Management has prepared cashflow forecasts covering a period of 12 months from the date of issuance of these financial statements.
We believe that we and our technology solutions are widely recognized by key opinion leaders (i.e., academics, anesthesiologists and practicing dentists whose opinions are widely respected), industry experts and medical and dental practitioners as a leader in the emerging, computer-controlled injection industry. 24 Wand/STA Dental Product Since its market introduction in early 2007, the Wand STA System and prior C-CLAD devices have been used to deliver over 80 million safe, effective, and comfortable injections.
We intend to continue to expand the uses and applications of our DPS Dynamic Pressure Sensing technology. We believe that we and our technology solutions are recognized by key opinion leaders (i.e., academics, anesthesiologists and practicing dentists whose opinions are widely respected), industry experts and medical and dental practitioners as a leader in the emerging, computer-controlled injection industry.
Selling, general and administrative expenses for years ended December 31, 2022 and 2021 were as follows: 2022 2021 Change Dental $ 3,225,032 $ 2,946,108 $ 278,924 Medical 4,183,983 4,106,689 77,294 Corporate 5,105,308 5,685,565 (580,257 ) Total selling, general and administrative expenses $ 12,514,323 $ 12,738,362 $ (224,039 ) Consolidated selling, general and administrative expenses for the years ended December 31, 2022 and 2021 were approximately $12.5 million and $12.7 million, respectively.
Selling, general and administrative expenses for years ended December 31, 2023, and 2022 were as follows: 2023 2022 Change Dental $ 4,330,219 $ 3,225,032 $ 1,105,187 Medical 3,381,551 4,183,983 (802,432 ) Corporate 5,424,026 5,105,308 318,718 Total selling, general and administrative expenses $ 13,135,796 $ 12,514,323 $ 621,473 Consolidated selling, general and administrative expenses for the years ended December 31, 2023 and 2022 were approximately $13.1 million and $12.5 million, respectively.
December 31, 2022 December 31, 2021 Operating results: Product sales, net $ 8,805,906 $ 10,304,711 Cost of products sold 3,905,092 3,992,811 Gross profit 4,900,814 6,311,900 Operating expenses: Selling, general and administrative expenses 12,514,323 12,738,362 Research and development expenses 1,150,209 878,210 Depreciation and amortization expense 63,755 73,836 Total operating expenses 13,728,287 13,690,408 Loss from operations (8,827,473) (7,378,508 ) Other income, and interest expense net 54,607 502,076 Net loss (8,772,866 ) (6,876,432 ) Net loss attributable to noncontrolling interests 66,735 58,115 Net loss attributable to Milestone Scientific Inc.
December 31, 2023 December 31, 2022 Operating results: Product sales, net $ 9,827,444 $ 8,805,906 Cost of products sold 3,034,832 3,905,092 Gross profit 6,792,612 4,900,814 Operating expenses: Selling, general and administrative expenses 13,135,796 12,514,323 Research and development expenses 701,378 1,150,209 Depreciation and amortization expense 61,912 63,755 Total operating expenses 13,899,086 13,728,287 Loss from operations (7,106,474 ) (8,827,473 ) Other income, and interest net 125,527 54,607 Net loss (6,980,947 ) (8,772,866 ) Net loss attributable to noncontrolling interests (51,843 ) (66,735 ) Net loss attributable to Milestone Scientific Inc. $ (6,929,104 ) $ (8,706,131 ) Net sales for year ended December 31, 2023, compared to year ended December 31, 2022 2023 2022 Change Dental $ 9,761,444 $ 8,753,156 $ 1,008,288 Medical 66,000 52,750 $ 13,250 Total sales, net $ 9,827,444 $ 8,805,906 $ 1,021,538 Consolidated revenue for the years ended December 31, 2023 and 2022 was approximately $9.8 million and $8.8 million, respectively, an increase of approximately $1.0 million.
The decrease of approximately $224,000 is categorized in several areas. Employee salaries, and benefits expenses decreased approximately $886,000 during the year ended December 31, 2022 compared to the same period in 2021. The Company reduced director fees, bonuses, employee recruiting fees, and medical insurance for year ended December 31, 2022.
The increase of approximately $621,000 is due to several factors. Employee salaries and benefits expenses increased approximately $44,000 for the year ended December 31, 2023 compared to the same period in 2022. The Company decreased quality control, regulatory, and travel expenses by approximately $367,000 compared to the same period in 2022.
Gross Profit for years ended December 31, 2022 and 2021 were as follows: 2022 2021 Change Dental $ 5,446,175 $ 6,223,051 $ (776,876 ) Medical (545,361 ) 88,849 $ (634,210 ) Total gross profit $ 4,900,814 $ 6,311,900 $ (1,411,086 ) Consolidated gross profit for the years ended December 31, 2022 and 2021 decreased approximately $1.4 million or 22%.
Gross Profit for years ended December 31, 2023, and 2022 were as follows: 2023 2022 Change Dental $ 7,030,018 $ 5,446,175 $ 1,583,843 Medical (237,406 ) (545,361 ) $ 307,955 Total gross profit $ 6,792,612 $ 4,900,814 $ (1,891,798 ) Consolidated gross profit for the year ended December 31, 2023 increased by approximately 1.9 million or 40%, compared to the same period in 2022.
The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category: For the Year Ended December 31, 2022 Domestic: US Dental Medical Grand Total Instruments $ 524,715 $ 7,500 $ 532,215 Handpieces 2,653,914 25,250 2,679,164 Accessories 78,493 - 78,493 Grand Total $ 3,257,122 $ 32,750 $ 3,289,872 International: Rest of World Dental Medical Grand Total Instruments $ 1,413,525 $ - $ 1,413,525 Handpieces 3,391,748 20,000 3,411,748 Accessories 60,797 - 60,797 Grand Total $ 4,866,070 $ 20,000 $ 4,886,070 International: China Dental Medical Grand Total Instruments $ 270,000 $ - $ 270,000 Handpieces 359,964 - 359,964 Accessories - - - Grand Total $ 629,964 $ - $ 629,964 Total Product Sales $ 8,753,156 $ 52,750 $ 8,805,906 For the Year Ended December 31, 2021 Domestic: US Dental Medical Grand Total Instruments $ 560,424 $ - $ 560,424 Handpieces 2,905,354 35,200 2,940,554 Accessories 69,271 1,300 70,571 Grand Total $ 3,535,049 $ 36,500 $ 3,571,549 International: Rest of World Dental Medical Grand Total Instruments $ 1,226,486 $ 70,000 $ 1,296,486 Handpieces 3,246,302 44,900 3,291,202 Accessories 46,546 800 47,346 Grand Total $ 4,519,334 $ 115,700 $ 4,635,034 International: China Dental Medical Grand Total Instruments $ 303,000 $ - $ 303,000 Handpieces 1,795,128 - 1,795,128 Accessories - - - Grand Total $ 2,098,128 $ - $ 2,098,128 Total Product Sales $ 10,152,511 $ 152,200 $ 10,304,711 25 Current Product Platform See Item 1.
This approval expands upon the Company’s prior approval of CompuFlo for use within the lumbar region of the spine, where the focus has been epidural analgesia during labor and delivery procedures. 23 The following table shows a breakdown of Milestone Scientific’s product sales (net), domestically and internationally, by business segment product category: 2023 Domestic: US Dental Medical Grand Total Instruments $ 1,002,697 $ 1,000 $ 1,003,697 Handpieces 4,270,898 12,000 4,282,898 Accessories 75,285 - 75,285 Grand Total $ 5,348,880 $ 13,000 $ 5,361,880 International: Rest of World Instruments $ 1,251,354 $ 25,000 $ 1,276,354 Handpieces 2,845,734 28,000 2,873,734 Accessories 45,476 - 45,476 Grand Total $ 4,142,564 $ 53,000 $ 4,195,564 International: China Instruments $ 270,000 $ - $ 270,000 Handpieces - - - Accessories - - - Grand Total $ 270,000 $ - $ 270,000 Total Product Sales $ 9,761,444 $ 66,000 $ 9,827,444 2022 Domestic: US Dental Medical Grand Total Instruments $ 524,715 $ 7,500 $ 532,215 Handpieces 2,653,914 25,250 2,679,164 Accessories 78,493 78,493 Grand Total $ 3,257,122 $ 32,750 $ 3,289,872 International: Rest of World Instruments $ 1,413,525 $ - $ 1,413,525 Handpieces 3,391,748 20,000 3,411,748 Accessories 60,797 - 60,797 Grand Total $ 4,866,070 $ 20,000 $ 4,886,070 International: China Instruments $ 270,000 $ - $ 270,000 Handpieces 359,964 - 359,964 Accessories - - - Grand Total $ 629,964 $ - $ 629,964 Total Product Sales $ 8,753,156 $ 52,750 $ 8,805,906 24 Current Product Platform See Item 1.
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.
Moreover, there appears to be a growing consensus among users that the STA Instrument is proving to be a valuable and beneficial instrument that is positively impacting the practice of dentistry worldwide. Medical Market Product In June 2017, we received FDA regulatory clearance to sell the CompuFlo Epidural Computer Controlled Anesthesia System in the United States for epidural injections.
On an on-going basis, Milestone Scientific evaluates its estimates, including those related to accounts receivable, inventories, stock-based compensation, and contingencies.
On an on-going basis, Milestone Scientific evaluates its estimates, including those related inventory valuation and cash flow assumptions regarding evaluations for going concern considerations.
The increase of approximately $272,000 is related to the Company developing the next generation to the STA Single Tooth Anesthesia System product line. 28 Profit (Loss) from Operations for years ended December 31, 2022 and 2021 were as follows: 2022 2021 Change Dental $ 1,121,815 $ 2,475,059 $ (1,353,244 ) Medical (4,788,105 ) (4,105,854 ) (682,251 ) Corporate (5,161,183 ) (5,747,713 ) 586,530 Total loss from operations $ (8,827,473 ) $ (7,378,508 ) $ (1,448,965 ) The loss from operations was approximately $8.8 million and $7.4 million for the years ended December 31, 2022 and 2021, respectively.
Profit (Loss) from Operations for 2023 and 2022 were as follows: 2023 2022 Change Dental $ 2,128,199 $ 1,121,815 $ 1,006,384 Medical (3,708,170 ) (4,788,105 ) 1,079,935 Corporate (5,526,503 ) (5,161,183 ) (365,320 ) Total loss from operations $ (7,106,474 ) $ (8,827,473 ) $ 1,720,999 27 The loss from operations was approximately $7.2 million and $8.8 million for the years ended December 31, 2023 and 2022, respectively, a decrease of approximately $1.7 million.
The decrease in Dental revenue of approximately $1.4 million for the year ended December 31, 2022, as compared to 2021 was driven by lower revenue from China of approximately $1.5 million and a decrease in domestic revenue of approximately $278,000 of which $179,000 related to an allowance for sales returns from Henry Schein due to the termination of the distribution agreement.
For the year ended December 31, 2023, international revenue was approximately $4.1 million, a decrease of $724,000 compared to December 31, 2022. For the year ended December 31, 2023, the Company reported approximately $270,000 revenue from China, a decrease of approximately $356,000.
The Company reduced marketing expense for the year ended December 31, 2022 by approximately $86,000 due to decreased trade show participation and decrease royalties expenses by approximately $4,000. The Company increased employee travel and professional fees by approximately $322,000 for the years ended December 31, 2022 compared to December 31, 2021 due to international commercial efforts.
The Company increased professional fees, and royalties’ expenses by approximately $317,000 compared to the same period in 2022.With the launch of the E-Commerce platform marketing and warehousing expense increased for the year ended December 31, 2023, by approximately $320,000 compared to the same period in 2022.
During year ended December 31, 2022 warehousing, and quality control expenses associated with quality assurance in connection with ISO certification and digitizing parts of our quality control increased approximately $379,000, and other selling, general and administrative expenses increased approximately $51,000 due to the additional professional services quality control required in the compliance and regulations Research and Development for years ended December 31, 2022 and 2021 were as follows: 2022 2021 Change Dental $ 1,095,523 $ 797,509 $ 298,014 Medical 54,686 80,701 (26,015 ) Corporate - - - Total research and development $ 1,150,209 $ 878,210 $ 271,999 Consolidated research and development expenses for the years ended December 31, 2022, and 2021, were approximately $1.2 million and $878,000, respectively.
Research and Development for years ended December 31, 2023, and 2022 were as follows: 2023 2022 Change Dental $ 567,357 $ 1,095,523 $ (528,166 ) Medical 86,426 54,686 31,740 Corporate 47,595 - 47,595 Total research and development $ 701,378 $ 1,150,209 $ (448,831 ) Consolidated research and development expenses for the years ended December 31, 2023 and 2022 were approximately $701,000 and $1.2 million respectively.
Dental revenue for the years ended December 31, 2022 and 2021 was approximately $8.8 million and $10.1 million, respectively.
The operating losses were $7.1 million and $8.8 million, for the years ended December 31, 2023, and 2022, respectively. On December 31, 2023, Milestone Scientific had cash and cash equivalents and marketable securities of approximately $6.0 million and working capital of approximately $7.7 million.
The following table sets forth the consolidated results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Year end December 31, 2023, compared to year ended December 31, 2022.
Removed
We believe our technologies are proven and well established. Our common stock was initially listed on the NYSE American on June 1, 2015, and trades under the symbol “MLSS”.
Added
Our computer-controlled injection devices make injections precise, efficient, and virtually painless. We have developed a proprietary, revolutionary, computer-controlled anesthetic delivery device, our DPS Dynamic Pressure Sensing Technology® System, to meet the needs of various subcutaneous drug delivery injections and fluid aspiration – enabling healthcare practitioners to achieve multiple unique benefits that cannot currently be accomplished with the 160-year-old manual syringe.
Removed
It has specific medical applications for epidural space identification in regional anesthesia procedures and intra-articular joint injections.
Added
The dental devices currently are sold in the United States, Canada and in over 41 other countries. Milestone Scientific also has 510(k) marketing clearance from the U.S. Food and Drug Administration (FDA) on the CompuFlo® Epidural Computer Controlled Anesthesia System in the lumbar, thoracic and cervical thoracic junction of the spine region.
Removed
Because of combining the ability to regulate the flow rate and monitor pressure at the tip of the needle, Milestone Scientific developed the industry’s first solution for painlessly administering an intra-ligamentary injection, i.e., “ single-tooth anesthesia ” which could be used as the only injection necessary for achieving dental anesthesia, foregoing the need to administer traditional injections such as a nerve branch block.
Added
In addition, Milestone Scientific has obtained CE mark approval and can be marketed and sold in most European countries. Our recent receipt of chronology-Specific CPT Code for the Company's technology by the American Medical Association marks an important milestone, that could increase the potential number of anesthesia pain management clinics adopting the CompuFlo instrument.
Removed
In addition to single-tooth anesthesia , the STA System can effectively perform all the traditional injections that dentists routinely give but can provide them virtually pain free and with numerous clinical advantages. This device, which also utilizes a disposable handpiece, is currently marketed by Milestone Scientific as the Wand STA ® System.
Added
A CPT code expands the potential for reimbursement of epidural procedures in pain management utilizing the CompuFlo Epidural System., which should help accelerate the commercial roll-out of CompuFlo in the U.S Milestone Scientific and its subsidiaries currently hold over 245 U.S. and foreign patents, and many patents pending and patent applications.
Removed
Our dental devices have been used to administer tens of millions of injections worldwide. Each of our devices has a related single use disposable handpiece, leading to a continuing revenue stream following sale of the device.
Added
The Company’s patents and patent applications relate to drug delivery methodologies, Peripheral Nerve Block, drug flow rate measurement, pressure/force computer-controlled drug delivery with exit pressure, dynamic pressure sensing, automated rate control, automated charging, drug profiles, audible and visual pressure/force feedback, tissue identification, identification of a target region drug delivery injection unit, drug drive unit for anesthetic, handpiece, and injection device.
Removed
In June 2017, we received FDA regulatory clearance to sell the CompuFlo Epidural Computer Controlled Anesthesia System in the United States for certain medical applications. We intend to continue to expand the uses and applications of our DPS Dynamic Pressure Sensing technology.
Added
The Single Tooth Anesthesia System (Dental) Since its market introduction in early 2007, the STA Single Tooth Anesthesia System and prior C-CLAD devices have been used to deliver over 92 million safe, effective, and comfortable injections. The instrument has also been favorably evaluated in numerous peer-reviewed, published clinical studies and associated articles.
Removed
Medical Market Product During 2016, Milestone Scientific filed for 510(k) marketing clearance with the U.S. Food and Drug Administration (FDA) for both intra-articular and epidural injections with the CompuFlo Epidural System. In June 2017, the FDA approved the CompuFlo Epidural System for epidural injections.
Added
In May, 2022, the Company received a chronology-specific CPT Code for the Company’s technology by the American Medical Association, which marks an important milestone that could increase the potential number of anesthesia pain management clinics adopting the CompuFlo instrument.
Removed
While significant accounting policies are more fully described in Note C to the consolidated financial statements included elsewhere in this report, Milestone Scientific believes that the following accounting policies and significant judgment and estimates are most critical in understanding and evaluating the reported financial results.
Added
Effective January 1, 2023, this temporary tracking code allows clinicians to submit claims to healthcare insurance providers using the Company’s technology for Epidural Sterile Injections in the lumbar, thoracic, and cervical thoracic junction of the spinal region for reimbursement.
Removed
Principles of Consolidation Milestone Scientific's discussion and analysis of the financial condition and results of operations is based upon its consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and include the accounts of Milestone Scientific and its wholly-owned and majority-owned subsidiaries including, Wand Dental, and Milestone Medical.
Added
A CPT code expands the potential for reimbursement of epidural procedures in pain management utilizing the CompuFlo Epidural System, which should help accelerate the commercial roll-out of CompuFlo in the United States.
Removed
All significant, intra-entity transactions and balances are eliminated in the consolidation. 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.
Added
On February 27, 2023, the Company announced that its CompuFlo® Epidural System has received 510(k) FDA clearance for use in the thoracic region of the spine, including the cervical thoracic junction.
Removed
Milestone Scientific’s involvement constitutes power that is most significant to the entity when it has unconstrained decision-making ability over key operational functions within the entity. Milestone Scientific has completed the VIE analysis relating to Milestone China and Anhui Maishida Medical Technology, Co. Ltd. (“Anhui”).
Added
Our accounting policies are more fully described in Note C of the financial statements to this Annual Report on Form 10-K. As disclosed in Note C, the preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes.
Removed
Milestone Scientific has determined that due to the loss of equity investment in Anhui, the company no longer has significant influence of Anhui and therefore Anhui is not a variable interest.
Added
Actual results could differ significantly from those estimates. We believe that the following discussion addresses our most critical accounting estimates, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
Removed
Milestone Scientific has a variable interest in Milestone China, it considered the guidance in ASC 810, “Consolidation” as it relates to determining whether Milestone China is a VIE and, if so, identifying the primary beneficiary.
Added
Additionally, the Company was approved on September 12, 2023 to sell Net Operating Losses through the New Jersey Technology Business Tax Certificate Transfer Program (“NJ NOL Program”), a program administered by the New Jersey Economic Development Authority (“NJEDA”). Management believes this program will generate positive cash flow in the near future.
Removed
Milestone Scientific would be considered the primary beneficiary of the VIE if it has both of the following characteristics: ● Power Criterion: The power to direct the activities that most significantly impact the entity’s economic performance; and ● Losses/Benefits Criterion: The obligation to absorb losses that could potentially be significant or the right to receive benefits that could potentially be significant to the VIE Milestone Scientific does not have the ability to control the activities that most significantly impact Milestone China's economics and, therefore, the power criterion has not been met.
Added
As of January 3, 2023, the Company launched an E-Commerce platform, selling and shipping the STA Single Tooth Anesthesia System® (STA) and handpieces directly to end users, including dental offices and dental groups, within the U.S. E-commerce revenue for the year ended December 31, 2023 was approximately $4.8 million.
Removed
Management placed the most weight on the relationship and significance of activities of Milestone China to the CEO of Milestone China who have the power to direct the activities that most significantly impact the economic performance of Milestone China. Management has concluded that Milestone Scientific is not the primary beneficiary under ASC 810.
Added
The Company ended the agreement with its major United States distributor, Henry Schein, as of December 31, 2022. 26 The Company recorded no revenue from Henry Schein for the year ended December 31, 2023, compared to approximately $2.6 million recorded for the year ended December 31, 2022.
Removed
Accordingly, Milestone China has not been consolidated into the financial statements of Milestone Scientific and is accounted for under the equity method. See Note F.
Added
Revenue from other U.S. distributors was approximately $485,000 for the year ended December 31, 2023, a decrease of $97,000 compared to December 31, 2022. The Company terminated all non-exclusive agreements with other distributors in the US in September 2023.
Removed
Management believes that the Company will have sufficient cash reserves to meet its anticipated obligations for at least the next twelve months from the filing date of this report.
Added
The increase was due to higher margins in sales associated with the launch of E-Commerce platform. The Company recorded approximately $258,000 and $550,000 allowance for medical inventory that was obsolete and or expired for the years ended December 31, 2023 and 2022, respectively.
Removed
Revenue Recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.
Added
The Company recorded an increase in other selling, general and administrative expenses of approximately $306,000 for the year ended December 31, 2023, compared to the same period in 2022 due to the launch of E-Commerce.
Removed
To perform revenue recognition the Company performs the following five steps: 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 selling prices; and v. recognition of revenue when (or as) the Company satisfies each performance obligation.
Added
The decrease of approximately $449,000 is related to the Company's near completion in developing the next generation STA Single Tooth Anesthesia System, offset by an increase in medical cost for the epidural consumables.
Removed
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. The Company derives its revenues from the sale of its products, primarily dental instruments, handpieces, and other related products.
Added
As stated above, the decrease in the loss from operations is driven by higher dental sales, and increased margins, which offset the higher selling, general and administrative expenses during period.
Removed
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 FOB destination, revenue is recognized upon delivery.
Added
Liquidity and Capital Resources C ash Flows The following table summarizes our sources and uses of cash for each of the periods presented: 2023 2022 Change Cash flows used in operating activities $ (5,326,129 ) $ (6,031,996 ) $ 705,867 Cash flows used in investing activities (2,972,172 ) (8,527 ) (2,963,645 ) Cash flows provided by (used in) financing activities 2,560,735 (8,544 ) 2,569,279 Total $ (5,737,566 ) $ (6,049,067 ) $ 311,501 Operating Activities Cash flows used in operating activities decreased $0.7 million from $6.0 million for the year ended December 31, 2022 compared to $5.3 million for the year ended December 31, 2023.
Removed
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 sale is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty period. Results of Operations.
Added
The decrease was driven by an increase of $0.8 million in cash used in work capital activities offset by employees paid in common stock of $0.1 million. Investing Activities Cash flows used in investing activities increased $3.0 million for the year ended December 31, 2023 compared to an immaterial amount for the year ended December 31, 2022.
Removed
(8,706,131 ) $ (6,818,317 ) Cash flow: December 31, 2022 December 31, 2021 Net cash used in operating activities (6,031,996) (4,033,664) Net cash used in investing activities (8,527) (15,189) Net cash (used in) provided by financing activities (8,544) 4,589,282 27 Year ended December 31, 2022, compared to year ended December 31, 2021.
Added
The increase in cash used in investing activities was driven by the Company’s purchase of marketable securities of $7.9 million, offset by the sale of $5.0 million of marketable securities during the current year.
Removed
Net sales for years ended December 31, 2022, and 2021were as follows: 2022 2021 Change Dental $ 8,753,156 $ 10,152,511 $ (1,399,355 ) Medical 52,750 152,200 $ (99,450 ) Total sales, net $ 8,805,906 $ 10,304,711 $ (1,498,805 ) Consolidated revenue for the years ended December 31, 2022, and 2021 was approximately $8.8 million and $10.3 million, respectively.
Added
Financing Activities Cash flows provided by financing activities increased $2.6 million for the year ended December 31, 2023, compared to an immaterial amount for the year ended December 31, 2022.
Removed
Dental international revenue increased approximately $347,000 compared to December 31, 2021. Medical revenue decreased approximately $100,000 for the year ended December 31, 2022 , as compared to December 31, 2021, which was primarily the result of changes to the Company’s near term commercial strategy.
Added
The increase in cash used in financing activities was the result of gross proceeds of approximately $3.0 million received from a public offering of common stock, offset by $0.4 million of offering costs associated with the public offering during the current year. Consideration of Company ’ s ability to continue as a going concern.
Removed
The decrease was driven by an allowance of approximately $550,000 on slow moving Medical finished goods.
Added
The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The Company has incurred total losses since inception of $123.3 million.
Removed
The increase in the loss from operations was primarily driven the decrease in gross profit. Liquidity and Capital Resources Milestone Scientific has incurred annual operating losses and negative cash flows from operating activities since its inception.

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