##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-14053
 MILESTONE
SCIENTIFIC INC.
  Delaware
    
    13-3545623(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 220
South Orange Avenue, Livingston, New Jersey
07039  (Address of principal executive offices)
 (973) 535-2717
 
  þ o
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ
 
 o o
 SEC1296 (02-08)
    
    Potential persons who are to respond to the collection of information contained in this form are not required
to respond unless the form displays a currently valid OMB control number.




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##### 



MILESTONE SCIENTIFIC INC
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements.Condensed Balance SheetsSeptember 30, 2008 (Unaudited) and December 31, 2007Condensed Statements of OperationsThree Months and Nine Months Ended September 30, 2008 and 2007 (Unaudited)Condensed Statements of Changes in Stockholders Equity (Deficiency)Nine Months Ended September 30, 2008 (Unaudited)Condensed Statements of Cash FlowNine Months Ended September 30, 2008 and 2007 (Unaudited)Notes to Condensed Financial Statement (Unaudited)Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.Item 3. Quantitative and Qualitative Disclosures About Market Risk.Item 4. Controls and Procedures.PART II  OTHER INFORMATIONItem 1. Legal Proceedings.Item 1A. Risk Factors.Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.Item 3. Defaults Upon Senior Securities.Item 4. Submission of Matters to a Vote of Security Holders.Item 5. Other Information.Item 6. Exhibits.SIGNATURESCERTIFICATIONSEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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FORWARD-LOOKING STATEMENTS
 When used in this Quarterly Report on Form 10-Q, the words may, will, should, expect,
believe, anticipate, continue, estimate, project, intend and similar expressions are
intended to identify forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act regarding events, conditions and financial trends that may
affect Milestones future plans of operations, business strategy, results of operations and
financial condition. Milestone wishes to ensure that such statements are accompanied by meaningful
cautionary statements pursuant to the safe harbor established in the Private Securities Litigation
Reform Act of 1995. Prospective investors are cautioned that any forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties and that actual results
may differ materially from those included within the forward-looking statements as a result of
various factors. Such forward-looking statements should, therefore, be considered in light of
various important factors, including those set forth herein and others set forth from time to time
in Milestones reports and registration statements filed with the Securities and Exchange
Commission (the Commission). Milestone disclaims any intent or obligation to update such
forward-looking statements.
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September 30, 2008
    
    
    December 31, 2007(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    286,020
    
    
    $
    745,003Accounts receivable, net of allowance for doubtful accounts of $5,000 in 2008 and 2007
    
    
    743,763
    
    
    
    346,347Royalty receivable
    
    
    5,111
    
    
    
    15,358Inventories
    
    
    845,297
    
    
    
    1,636,744Advances to contract manufacturer
    
    
    842,401
    
    
    
    1,192,584Prepaid expenses
    
    
    43,685
    
    
    
    169,727Total current assets
    
    
    2,766,277
    
    
    
    4,105,763Investment in distributor, at cost
    
    
    76,319
    
    
    
    76,319Equipment, net of accumulated depreciation of $328,407 as of September 30, 2008
and $284,145 as of December 31, 2007
    
    
    162,174
    
    
    
    220,808Patents, net of accumulated amortization of $117,367 as of September 30, 2008
and $79,498 as of December 31, 2007
    
    
    789,340
    
    
    
    559,378Other assets
    
    
    9,268
    
    
    
    27,297Total assets
    
    $
    3,803,378
    
    
    $
    4,989,565LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Notes Payable  Short Term borrowing
    
    
    200,000
    
    
    
    Accounts payable
    
    $
    828,374
    
    
    $
    1,855,835Accrued expenses
    
    
    372,198
    
    
    
    201,103Deferred compensation payable to officers
    
    
    22,875
    
    
    
    15,833Total current liabilities
    
    
    1,423,447
    
    
    
    2,072,771Long-term Liabilities:Accounts payable-long term
    
    
    
    
    
    
    443,847Line of credit-net of discount of $65,324 and $65,371 respectively
    
    
    1,234,676
    
    
    
    934,629Total long-term liabilities
    
    
    1,234,676
    
    
    
    1,378,476Commitments and ContingenciesStockholders EquityCommon stock, par value $.001; authorized 50,000,000 shares; 12,302,524 shares issued;
504,639 shares to be issued, and 12,269,191 shares outstanding as of September 30, 2008;
11,787,572 shares issued, 421,306 shares to be issued, and 11,754,239 shares outstanding
as of December 31, 2007
    
    
    12,807
    
    
    
    12,210Additional paid-in capital
    
    
    59,365,614
    
    
    
    58,483,539Accumulated deficit
    
    
    (57,321,650
    )
    
    
    (56,045,915
    )Treasury stock, at cost, 33,333 shares
    
    
    (911,516
    )
    
    
    (911,516
    )Total stockholders equity
    
    
    1,145,255
    
    
    
    1,538,318Total liabilities and stockholders equity
    
    $
    3,803,378
    
    
    $
    4,989,565
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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Product sales, net
    
    $
    1,813,103
    
    
    $
    1,134,468
    
    
    $
    4,741,976
    
    
    $
    5,166,832Royalty income
    
    
    5,112
    
    
    
    28,977
    
    
    
    28,282
    
    
    
    112,747Total revenue
    
    
    1,818,215
    
    
    
    1,163,445
    
    
    
    4,770,258
    
    
    
    5,279,579Cost of products sold
    
    
    740,398
    
    
    
    631,584
    
    
    
    1,798,758
    
    
    $
    2,418,068Royalty expense
    
    
    
    
    
    
    (1,675
    )
    
    
    
    
    
    $
    (3,261
    )Total cost of revenue
    
    
    740,398
    
    
    
    629,909
    
    
    
    1,798,758
    
    
    
    2,414,807Gross profit
    
    
    1,077,817
    
    
    
    533,536
    
    
    
    2,971,500
    
    
    
    2,864,772Selling, general and administrative expenses
    
    
    1,199,353
    
    
    
    1,465,493
    
    
    
    4,039,137
    
    
    
    5,111,935Research and development expenses
    
    
    35,181
    
    
    
    45,574
    
    
    
    119,500
    
    
    
    345,538Total operating expenses
    
    
    1,234,534
    
    
    
    1,511,067
    
    
    
    4,158,637
    
    
    
    5,457,473Loss from operations
    
    
    (156,717
    )
    
    
    (977,531
    )
    
    
    (1,187,137
    )
    
    
    (2,592,701
    )Interest expense
    
    
    (23,863
    )
    
    
    (5,599
    )
    
    
    (73,455
    )
    
    
    (5,599
    )Interest  Amortization of debt issuance
    
    
    (7,926
    )
    
    
    
    
    
    
    (21,622
    )
    
    
    Interest income
    
    
    1,773
    
    
    
    1,342
    
    
    
    6,479
    
    
    
    12,477Net loss applicable to common stockholders
    
    $
    (186,733
    )
    
    $
    (981,788
    )
    
    $
    (1,275,735
    )
    
    $
    (2,585,823
    )Loss per share applicable to common stockholders 
basic and diluted
    
    $
    (0.02
    )
    
    $
    (0.08
    )
    
    $
    (0.10
    )
    
    $
    (0.21
    )Weighted average shares outstanding and to be issued 
basic and diluted
    
    
    12,709,260
    
    
    
    12,096,518
    
    
    
    12,631,311
    
    
    
    12,077,642
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AdditionalCommon Stock
    
    Paid-in
    
    Accumulated
    
    TreasuryShares
    
    Amount
    
    Capital
    
    Deficit
    
    Stock
    
    TotalBalance, January 1, 2008
    
    
    12,208,878
    
    
    $
    12,210
    
    
    $
    58,483,539
    
    
    $
    (56,045,915
    )
    
    $
    (911,516
    )
    
    $
    1,538,318Options issued to employees and consultants
    
    
    
    
    
    
    
    
    
    
    119,708
    
    
    
    
    
    
    
    
    
    
    
    119,708Common stock issued for payment of services
to settle accounts payable
    
    
    156,448
    
    
    
    156
    
    
    
    262,590
    
    
    
    
    
    
    
    
    
    
    
    262,746Common stock issued for payment of
consulting services to settle accounts payable
    
    
    257,188
    
    
    
    257
    
    
    
    285,842
    
    
    
    
    
    
    
    
    
    
    
    286,099Common stock issued for payment of
employee compensation
    
    
    101,316
    
    
    
    101
    
    
    
    92,443
    
    
    
    
    
    
    
    
    
    
    
    92,544Common stock to be issued for settlement of
deferred compensation
    
    
    83,333
    
    
    
    83
    
    
    
    99,917
    
    
    
    
    
    
    
    
    
    
    
    100,000Warrants issued in connection with
amendment of Line of Credit
    
    
    
    
    
    
    
    
    
    
    21,575
    
    
    
    
    
    
    
    
    
    
    
    21,575Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,275,735
    )
    
    
    
    
    
    
    (1,275,735
    )Balance, September 30, 2008
    
    
    12,807,163
    
    
    $
    12,807
    
    
    $
    59,365,614
    
    
    $
    (57,321,650
    )
    
    $
    (911,516
    )
    
    $
    1,145,255
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NINE MONTHS ENDED SEPTEMBER 30,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (1,275,735
    )
    
    $
    (2,585,823
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    54,367
    
    
    
    85,604Amortization of patents
    
    
    37,869
    
    
    
    17,136Amortization of debt discount
    
    
    21,622
    
    
    
    485Common stock and options issued for compensation, consulting
and vendor services
    
    
    312,252
    
    
    
    405,160Loss on sale/disposal of equipment
    
    
    2,255
    
    
    
    232,259Bad debt expense
    
    
    
    
    
    
    69,378Changes in operating assets and liabilities:(Increase) in accounts receivable
    
    
    (397,416
    )
    
    
    (317,538
    )Decrease in royalty receivable
    
    
    10,247
    
    
    
    31,131Decrease (Increase) in inventories
    
    
    791,447
    
    
    
    (341,900
    )Decrease to advances to contract manufacturer
    
    
    350,183
    
    
    
    57,391Decrease to prepaid expenses and other current assets
    
    
    126,042
    
    
    
    24,795Decrease (Increase) in other assets
    
    
    18,029
    
    
    
    (13,289
    )(Decrease) Increase in accounts payable (short & long term)
    
    
    (922,463
    )
    
    
    926,493Increase (Decrease) in accrued expenses
    
    
    171,095
    
    
    
    (133,669
    )Increase in deferred compensation
    
    
    7,042
    
    
    
    130,000Net cash used in operating activities
    
    
    (693,164
    )
    
    
    (1,412,387
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (5,738
    )
    
    
    (85,254
    )Proceeds on sale of equipment
    
    
    7,750
    
    
    
    Payment for patents rights
    
    
    (267,831
    )
    
    
    (88,893
    )Net cash used in investing activities
    
    
    (265,819
    )
    
    
    (174,147
    )Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    71,201Notes Payable-Short Term borrowing
    
    
    200,000
    
    
    
    Long-term borrowing-other
    
    
    300,000
    
    
    
    400,000Net cash provided by financing activities
    
    
    500,000
    
    
    
    471,201NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (458,983
    )
    
    
    (1,115,333
    )Cash and cash equivalents at beginning of period
    
    
    745,003
    
    
    
    1,160,116Cash and cash equivalents at end of period
    
    $
    286,020
    
    
    $
    44,783Supplemental disclosure of cash flow information:Interest expense paid in cash
    
    
    3,000
    
    
    
    4,000Income taxes paid
    
    $
    4,720
    
    
    
    Warrants issued in connection with Line of Credit
    
    $
    21,575
    
    
    
    24,557Stocks issued to employees in lieu of cash compensation
    
    $
    92,544
    
    
    
    44,693Shares issued to settle accounts payable
    
    $
    548,845
    
    
    
    
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MILESTONE SCIENTIFIC INC.
 
 NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
 ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
          8




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NOTE  1 SUMMARY OF ACCOUNTING POLICIES
           .
   9




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The Fair
Value Option for Financial Assets and Financial Liabilities Including an amendment of FASB
Statement No. 115.
 Summary No. 141 (revised 2007)
 Non-controlling Interest in Consolidated Financial Statements  and amendment of ARB No. 51.
    NOTE  2 BASIC AND DILUTED NET LOSS PER COMMON SHARE
  10




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NOTE  3 STOCK OPTION PLANS
 Share-Based Payment
  WeightedWeighted
    
    Average
    
    AggregateNumber
    
    Averaged
    
    Remaining
    
    Intrinsicof
    
    Exercise
    
    Contractual
    
    OptionsOptions
    
    Price
    
    Life (Years)
    
    ValueOutstanding, January 1, 2008
    
    
    391,334
    
    
    
    1.86
    
    
    
    2.54
    
    
    $
    108,800Granted
    
    
    211,666
    
    
    
    0.88
    
    
    
    4.65
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (51,334
    )
    
    
    1.19
    
    
    
    
    
    
    
    Outstanding, September 30, 2008
    
    
    551,666
    
    
    
    1.55
    
    
    
    3.52
    
    
    
    Exercisable, September 30, 2008
    
    
    360,888
    
    
    
    1.85
    
    
    
    2.94
    
    
    
    
      11




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WeightedWeighted
    
    Average
    
    AggregateNumber
    
    Averaged
    
    Remaining
    
    Intrinsicof
    
    Exercise
    
    Contractual
    
    OptionsOptions
    
    Price
    
    Life (Years)
    
    ValueOutstanding, January 1, 2008
    
    
    639,133
    
    
    
    3.15
    
    
    
    2.56
    
    
    $
    20,667Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (11,666
    )
    
    
    
    
    
    
    
    
    
    
    Outstanding, September 30, 2008
    
    
    627,467
    
    
    
    3.14
    
    
    
    1.86
    
    
    
    Exercisable, September 30, 2008
    
    
    564,967
    
    
    
    3.29
    
    
    
    1.70
    
    
    
    
    NOTE  4 CONCENTRATION OF CREDIT RISK
 CompuDent
  NOTE  5 LINE OF CREDIT
  12




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NOTE  6 STOCK ISSUANCE
   NOTE  7 SIGNIFICANT CUSTOMERS
   Three Months Ended September 30,2008
    
    
    2007Units
    
    $
    498,879
    
    
    $
    299,019Handpieces
    
    
    1,297,654
    
    
    
    825,813Other
    
    
    16,570
    
    
    
    9,636$
    1,813,103
    
    
    $
    1,134,468United States
    
    $
    1,322,665
    
    
    $
    669,158Canada
    
    
    111,570
    
    
    
    148,978Other Foreign
    
    
    378,868
    
    
    
    316,332$
    1,813,103
    
    
    $
    1,134,468
 Nine Months Ended September 30,2008
    
    
    2007Units
    
    $
    1,061,109
    
    
    $
    1,873,007Handpieces
    
    
    3,735,200
    
    
    
    3,184,761Other
    
    
    (54,333
    )
    
    
    109,064$
    4,741,976
    
    
    $
    5,166,832United States
    
    $
    3,209,684
    
    
    $
    3,968,837Canada
    
    
    428,048
    
    
    
    148,978Other Foreign
    
    
    1,104,244
    
    
    
    1,049,017$
    4,741,976
    
    
    $
    5,166,832
 13




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STA CompuDent CompuMed
 NOTE  8 COMMITMENTS AND OTHER
 Contract Manufacturing Arrangement
 CompuDent, STA CompuMed The Wand The Wand
  Other Commitments
 CoolBlue Ionic White
   NOTE  9 SUBSEQUENT EVENTS
  14




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15




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ITEM 2. Managements Discussion and Analysis and Plan of Operation.
  OVERVIEW
   
    
    Optimizing our tactical approach to product sales and marketing in order to materially
increase penetration of the global dental and medical markets with our proprietary,
patented Computer-Controlled Local Anesthesia Delivery (C-CLAD) solution, the STA System;
and
    
    Identifying and pursuing strategic collaborations with third parties to jointly develop
new products utilizing our CompuFlopressure force technology for innovative new dental and
medical applications.
    New Messaging Platform
 STA System
  16




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Industry Recognition
 STA System STA System STA STA
System
 STA System STA System STA System Dentistry Today
 Domestic Dental Distribution Network
 STA System
 STA System
     International Dental Distribution Network
 17




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STA System The Wand
 STA System
 STA System
 New Product Development and Commercialization
 CompuFlo
 CompuFlo
 CompuFlo
 Segmented Sales Performance
  Three Months Ended September 30,2008
    
    
    2007DOMESTICUnits
    
    $
    365,887
    
    
    
    27.7
    %
    
    $
    112,486
    
    
    
    16.8
    %Handpieces
    
    
    942,613
    
    
    
    71.3
    %
    
    
    545,498
    
    
    
    81.5
    %Other
    
    
    14,165
    
    
    
    1.0
    %
    
    
    11,174
    
    
    
    1.7
    %Total Domestic
    
    $
    1,322,665
    
    
    
    100.0
    %
    
    $
    669,158
    
    
    
    100.0
    %INTERNATIONALUnits
    
    $
    132,992
    
    
    
    27.1
    %
    
    $
    186,533
    
    
    
    40.1
    %Handpieces
    
    
    355,041
    
    
    
    72.4
    %
    
    
    280,315
    
    
    
    60.2
    %Other
    
    
    2,405
    
    
    
    0.5
    %
    
    
    (1,538
    )
    
    
    (0.3
    )Total International
    
    $
    490,438
    
    
    
    100.0
    %
    
    $
    465,310
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL
ANALYSISDomestic
    
    $
    1,322,665
    
    
    
    73.0
    %
    
    $
    669,158
    
    
    
    59.0
    %International
    
    
    490,438
    
    
    
    27.0
    %
    
    
    465,310
    
    
    
    41.0
    %Total Product Sales
    
    $
    1,813,103
    
    
    
    100.0
    %
    
    $
    1,134,468
    
    
    
    100.0
    %
 Nine Months Ended September 30,2008
    
    
    2007DOMESTICUnits
    
    $
    621,078
    
    
    
    19.4
    %
    
    $
    1,595,579
    
    
    
    40.2
    %Handpieces
    
    
    2,635,290
    
    
    
    82.1
    %
    
    
    2,295,735
    
    
    
    50.5
    %Other
    
    
    (46,684
    )
    
    
    -1.5
    %
    
    
    77,523
    
    
    
    2.0
    %Total Domestic
    
    $
    3,209,684
    
    
    
    100.0
    %
    
    $
    3,968,837
    
    
    
    100.0
    %INTERNATIONALUnits
    
    $
    440,031
    
    
    
    28.7
    %
    
    $
    277,428
    
    
    
    23.2
    %Handpieces
    
    
    1,099,910
    
    
    
    71.8
    %
    
    
    889,026
    
    
    
    74.2
    %Other
    
    
    (7,649
    )
    
    
    -0.5
    %
    
    
    31,541
    
    
    
    2.6
    %Total International
    
    $
    1,532,292
    
    
    
    100.0
    %
    
    $
    1,197,995
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL
ANALYSISDomestic
    
    $
    3,209,684
    
    
    
    67.7
    %
    
    $
    3,968,837
    
    
    
    76.8
    %International
    
    
    1,532,292
    
    
    
    32.3
    %
    
    
    1,197,995
    
    
    
    23.2
    %Total Product Sales
    
    $
    4,741,976
    
    
    
    100.0
    %
    
    $
    5,166,832
    
    
    
    100.0
    %
  18




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##### Table of Contents



Technology Rights
 SafetyWand CompuFlo CompuDent CompDent STA
 Summary of Significant Accounting Policies, Judgments and Estimates
  Accounts Receivable
  Inventories
  Impairment of Long-Lived Assets
  Revenue Recognition
  19




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##### Table of Contents



Results of Operations
 STA System CompuFlo
  Three Months Ended September 30
    
    
    Nine Months Ended September 302008
    
    
    2007
    
    
    2008
    
    
    2007Products sales, net
    
    $
    1,813,103
    
    
    
    100
    %
    
    $
    1,134,468
    
    
    
    98
    %
    
    $
    4,741,976
    
    
    
    99
    %
    
    $
    5,166,832
    
    
    
    98
    %Royalty income
    
    
    5,112
    
    
    
    0
    %
    
    
    28,977
    
    
    
    2
    %
    
    $
    28,282
    
    
    
    1
    %
    
    
    112,747
    
    
    
    2
    %Total revenue
    
    
    1,818,215
    
    
    
    100
    %
    
    $
    1,163,445
    
    
    
    100
    %
    
    
    4,770,258
    
    
    
    100
    %
    
    $
    5,279,579
    
    
    
    100
    %Cost of products sold
    
    
    740,398
    
    
    
    41
    %
    
    
    631,584
    
    
    
    54
    %
    
    
    1,798,758
    
    
    
    38
    %
    
    
    2,418,068
    
    
    
    46
    %Royalty expense
    
    
    
    
    
    
    
    
    
    
    (1,675
    )
    
    
    0
    %
    
    
    
    
    
    
    
    
    
    
    (3,261
    )
    
    
    0
    %Total cost of revenue
    
    
    740,398
    
    
    
    41
    %
    
    
    629,909
    
    
    
    54
    %
    
    
    1,798,758
    
    
    
    38
    %
    
    
    2,414,807
    
    
    
    46
    %Gross Profit
    
    
    1,077,817
    
    
    
    59
    %
    
    
    533,536
    
    
    
    46
    %
    
    
    2,971,500
    
    
    
    62
    %
    
    
    2,864,772
    
    
    
    54
    %Selling, general and
administrative expenses
    
    
    1,199,353
    
    
    
    66
    %
    
    
    1,465,493
    
    
    
    125
    %
    
    
    4,039,137
    
    
    
    85
    %
    
    
    5,111,935
    
    
    
    96
    %Research and development expenses
    
    
    35,181
    
    
    
    2
    %
    
    
    45,574
    
    
    
    4
    %
    
    
    119,500
    
    
    
    3
    %
    
    
    345,538
    
    
    
    7
    %Total operating expenses
    
    
    1,234,534
    
    
    
    68
    %
    
    
    1,511,067
    
    
    
    109
    %
    
    
    4,158,637
    
    
    
    88
    %
    
    
    5,457,473
    
    
    
    98
    %Loss from operations
    
    
    (156,717
    )
    
    
    -9
    %
    
    
    (977,531
    )
    
    
    -84
    %
    
    
    (1,187,137
    )
    
    
    -25
    %
    
    
    (2,592,701
    )
    
    
    -49
    %Other income  interest & expense
    
    
    (30,016
    )
    
    
    -2
    %
    
    
    (4,257
    )
    
    
    0
    %
    
    
    (88,598
    )
    
    
    -2
    %
    
    
    6,878
    
    
    
    0
    %Net loss
    
    $
    (186,733
    )
    
    
    -11
    %
    
    $
    (981,788
    )
    
    
    -84
    %
    
    $
    (1,275,735
    )
    
    
    -27
    %
    
    $
    (2,585,823
    )
    
    
    -49
    %
 Three months ended September 30, 2008 compared to three months ended September 30, 2007
 CompuDent STA CompuDent
 Ionic White
  20




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STA
 STA
     Nine months ended September 30, 2008 compared to the nine months ended September 30, 2007
 STA STA CompuDent CompuDent Ionic White
  21




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##### Table of Contents



STA STA
 STA CompuFlo
     Liquidity and Capital Resources
   22




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
  23




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PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  We have no history of profitable operations. Continuing losses could exhaust our capital resources
and force us to discontinue operations.
    24




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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   Shares
    
    
    $Shares issued for Employee Compensation
    
    
    21,272
    
    
    $
    12,125Shares issued for services
    
    
    55,256
    
    
    
    30,00076,528
    
    
    $
    42,125
 
 ITEM 3. DEFAULT UPON SENIOR SECURTIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  31.1
    
    Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
 25




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MILESTONE SCIENTIFIC INC./s/ Joe W. MartinJoe W. MartinChief Executive Officer/s/ Joseph DAgostinoJoseph DAgostinoChief Financial Officer  26