##### 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, 2010
 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
 (973) 535-2717  (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated Filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



PART I  FINANCIAL INFORMATIONItem 1. Finanacial StatementsCondensed Balance Sheets 
September 30, 2010 (Unaudited) and December 31, 2009 (Audited)
    
    
    4Condensed Statements of Operations 
Three Months and Nine Months Ended September 30, 2010 and 2009 (Unaudited)
    
    
    5Condensed Statement of Changes in Stockholders Equity 
Nine Months Ended September 30, 2010 (Unaudited)
    
    
    6Condensed Statements of Cash Flows 
Nine Months Ended September 30, 2010 and 2009 (Unaudited)
    
    
    7Notes to Condensed Financial Statements (Unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors.
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    25Item 3. Defaults Upon Senior Securities.
    
    
    25Item 4. [Removed and Reserved]
    
    
    25Item 5. Other Information.
    
    
    25Item 6. Exhibits
    
    
    26SIGNATURESExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   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 the actual results
may differ materially from those included within the forward-looking statements as a result of
various factors. Such forward-looking statements should, therefore, be considered in light of
various important factors, including those set forth herein and others set forth from time to time
in Milestone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.
  3




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##### Table of Contents



September 30, 2010
    
    
    December 31, 2009(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    207,726
    
    
    $
    1,029,129Accounts receivable, net of allowance for doubtful accounts of $10,000 in 2010 and $5,000 in 2009
    
    
    2,122,128
    
    
    
    1,063,742Inventories
    
    
    1,153,023
    
    
    
    804,736Advances to contract manufacturer
    
    
    1,941,946
    
    
    
    151,995Prepaid expenses and other current assets
    
    
    243,498
    
    
    
    254,501Total current assets
    
    
    5,668,321
    
    
    
    3,304,103Advances to contract manufacturer, non current
    
    
    252,070
    
    
    
    311,230Investment in distributor, at cost
    
    
    76,319
    
    
    
    76,319Furniture, Fixtures & Equipment net of accumulated depreciation of $435,443
as of September 30, 2010 and $395,630 as of December 31, 2009
    
    
    66,896
    
    
    
    77,353Patents, net of accumulated amortization of $273,767 as of September 30, 2010
and $211,539 as of December 31, 2009
    
    
    952,437
    
    
    
    947,315Other assets
    
    
    74,417
    
    
    
    133,674Total assets
    
    $
    7,090,460
    
    
    $
    4,849,994LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    3,054,048
    
    
    $
    1,154,013Accrued interest - 6% note, current
    
    
    92,000
    
    
    
    Accrued expenses and other payable
    
    
    564,031
    
    
    
    524,017Total current liabilities
    
    
    3,710,079
    
    
    
    1,678,030Long-term Liabilities:Accrued Interest - 6% note, non current
    
    
    18,409
    
    
    
    92,000Accrued Interest - 12% note, non current
    
    
    109,312
    
    
    
    Notes Payable-net of discount of $9,060 and $11,157 respectively
    
    
    440,940
    
    
    
    438,843Total long-term liabilities
    
    
    568,661
    
    
    
    530,843Commitments and ContingenciesStockholders EquityCommon stock, par value $.001; authorized 50,000,000 shares; 14,909,262 shares issued
692,498 shares to be issued and 14,875,929 shares outstanding as of September 30, 2010;
14,781,295 shares issued, 692,499 shares to be issued, and 14,747,962 shares outstanding
as of December 31, 2009
    
    
    15,601
    
    
    
    15,472Additional paid-in capital
    
    
    62,790,333
    
    
    
    62,300,619Accumulated deficit
    
    
    (59,082,698
    )
    
    
    (58,763,454
    )Treasury stock, at cost, 33,333 shares
    
    
    (911,516
    )
    
    
    (911,516
    )Total stockholders equity
    
    
    2,811,720
    
    
    
    2,641,121Total liabilities and stockholders equity
    
    $
    7,090,460
    
    
    $
    4,849,994
   4




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##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Product sales, net
    
    $
    1,926,889
    
    
    
    1,909,263
    
    
    $
    7,708,136
    
    
    $
    6,150,984Cost of products sold
    
    
    725,795
    
    
    
    709,003
    
    
    
    2,788,353
    
    
    
    2,488,294Gross profit
    
    
    1,201,094
    
    
    
    1,200,260
    
    
    
    4,919,783
    
    
    
    3,662,690Selling, general and administrative expenses
    
    
    1,704,896
    
    
    
    1,477,948
    
    
    
    5,024,791
    
    
    
    4,960,000Research and development expenses
    
    
    60,533
    
    
    
    57,972
    
    
    
    228,734
    
    
    
    157,941Total operating expenses
    
    
    1,765,429
    
    
    
    1,535,920
    
    
    
    5,253,525
    
    
    
    5,117,941Loss from operations
    
    
    (564,335
    )
    
    
    (335,660
    )
    
    
    (333,742
    )
    
    
    (1,455,251
    )Other income (expense)
    
    
    
    
    
    
    
    
    
    
    61,916
    
    
    
    Interest expense
    
    
    (18,552
    )
    
    
    (30,230
    )
    
    
    (45,841
    )
    
    
    (115,619
    )Interest-Amortization of debt issuance
    
    
    (699
    )
    
    
    (7,875
    )
    
    
    (2,097
    )
    
    
    (23,625
    )Interest income
    
    
    60
    
    
    
    495
    
    
    
    520
    
    
    
    3,041Net loss applicable to common stockholders
    
    $
    (583,526
    )
    
    $
    (373,270
    )
    
    $
    (319,244
    )
    
    $
    (1,591,454
    )Net loss per share applicable to common
stockholders -
Basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.12
    )Weighted average shares outstanding and to
be issued -
Basic and diluted
    
    
    14,862,549
    
    
    
    13,486,513
    
    
    
    14,806,272
    
    
    
    13,139,276
   5




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##### Table of Contents



AdditionalCommon Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    TreasuryShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    TotalBalance, January 1, 2010
    
    
    15,473,794
    
    
    $
    15,472
    
    
    $
    62,300,619
    
    
    $
    (58,763,454
    )
    
    $
    (911,516
    )
    
    $
    2,641,121Options issued to employees and consultants
    
    
    
    
    
    
    
    
    
    
    314,988
    
    
    
    
    
    
    
    
    
    
    
    314,988Common stock issued for directors compensation
    
    
    34,614
    
    
    
    35
    
    
    
    44,965
    
    
    
    
    
    
    
    
    
    
    
    45,000Common stock issued for payment of
consulting services to settle accounts payable
    
    
    76,661
    
    
    
    77
    
    
    
    103,923
    
    
    
    
    
    
    
    
    
    
    
    104,000Common stock issued for payment of
employee compensation
    
    
    16,692
    
    
    
    17
    
    
    
    25,838
    
    
    
    
    
    
    
    
    
    
    
    25,855Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (319,244
    )
    
    
    
    
    
    
    (319,244
    )Balance, September 30, 2010
    
    
    15,601,761
    
    
    $
    15,601
    
    
    $
    62,790,333
    
    
    $
    (59,082,698
    )
    
    $
    (911,516
    )
    
    $
    2,811,720
   6




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##### Table of Contents



NINE MONTHS ENDED SEPTEMBER 30,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (319,244
    )
    
    $
    (1,591,454
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation expense
    
    
    39,813
    
    
    
    39,030Amortization of patents
    
    
    62,228
    
    
    
    56,174Amortization of debt discount
    
    
    2,097
    
    
    
    23,625Common stock and options issued for compensation, consulting
and vendor services
    
    
    433,943
    
    
    
    787,040Bad debt expense
    
    
    5,000
    
    
    
    Changes in operating assets and liabilities:(Increase) Decrease in accounts receivable
    
    
    (1,063,386
    )
    
    
    424,862(Increase) in inventories
    
    
    (348,287
    )
    
    
    (168,739
    )(Increase) Decrease to advances to contract manufacturer
    
    
    (1,730,791
    )
    
    
    192,695Decrease to prepaid expenses and other current assets
    
    
    66,903
    
    
    
    82,162Decrease (Increase) in other assets
    
    
    59,257
    
    
    
    (136,329
    )Increase in accounts payable
    
    
    1,900,035
    
    
    
    89,239Increase in accrued expenses
    
    
    167,734
    
    
    
    46,247(Decrease) in deferred compensation
    
    
    
    
    
    
    (2,500
    )Net cash used in operating activities
    
    
    (724,698
    )
    
    
    (157,948
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (29,355
    )
    
    
    (36,276
    )Payment for patents rights
    
    
    (67,350
    )
    
    
    (76,986
    )Net cash used in investing activities
    
    
    (96,705
    )
    
    
    (113,262
    )Cash flows from financing activities:Proceeds from sale of stock options
    
    
    
    
    
    
    25,000Net cash provided by financing activities
    
    
    
    
    
    
    25,000NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (821,403
    )
    
    
    (246,210
    )Cash and cash equivalents at beginning of period
    
    
    1,029,129
    
    
    
    743,665Cash and cash equivalents at end of period
    
    $
    207,726
    
    
    $
    497,455Supplemental disclosure of cash flow information:Income taxes paid
    
    $
    4,357
    
    
    $
    8,225Interest paid
    
    $
    69,000
    
    
    $
    
   7




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MILESTONE SCIENTIFIC INC.
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
 ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
        NOTE 1  SUMMARY OF ACCOUNTING POLICIES
 Cash and Cash Equivalents
   8




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Inventories
  Patents
  Revenue Recognition
  Use of Estimates
  Fair Value Measurements
 Fair Value Measurements and Disclosures
      9




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##### Table of Contents



Recent Accounting Pronouncements
 Accounting for Transfers of Financial Assets
 Fair
Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements Fair Value Measurements and Disclosures
 Subsequent Events: Amendments to Certain
Recognition and Disclosure Requirements Subsequent
Events,
 Accounting Guidance Issued But Not Adopted as of September 30, 2010
  NOTE  2 BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE
   NOTE  3 STOCK OPTION PLANS
 Share-Based Payment
  10




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WeightedWeighted
    
    
    Average
    
    
    AggregateNumber
    
    
    Averaged
    
    
    Remaining
    
    
    Intrinsicof
    
    
    Exercise
    
    
    Contractual
    
    
    OptionsOptions
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding, January 1, 2010
    
    
    1,060,142
    
    
    $
    1.33
    
    
    
    3.61
    
    
    $
    Granted
    
    
    73,333
    
    
    
    1.49
    
    
    
    9.12
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (159,000
    )
    
    
    1.88
    
    
    
    
    
    
    
    Outstanding, September 30,
2010
    
    
    974,475
    
    
    
    1.26
    
    
    
    3.62
    
    
    
    136,549Exercisable, September 30,
2010
    
    
    561,671
    
    
    
    1.11
    
    
    
    2.60
    
    
    
    130,082
    WeightedWeighted
    
    
    Average
    
    
    AggregateNumber
    
    
    Averaged
    
    
    Remaining
    
    
    Intrinsicof
    
    
    Exercise
    
    
    Contractual
    
    
    OptionsOptions
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding, January 1, 2010
    
    
    414,999
    
    
    $
    1.90
    
    
    
    2.70
    
    
    $
    Granted
    
    
    128,333
    
    
    
    1.74
    
    
    
    0.70
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (8,333
    )
    
    
    2.46
    
    
    
    
    
    
    
    Outstanding, September 30,
2010
    
    
    534,999
    
    
    
    1.85
    
    
    
    1.69
    
    
    
    113,950Exercisable, September 30,
2010
    
    
    514,998
    
    
    
    1.88
    
    
    
    1.59
    
    
    
    112,783
     11




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##### Table of Contents



NOTE  4 CONCENTRATION OF CREDIT RISK
 CompuDent®
 STA Single Tooth Anesthesia System®
  NOTE  5 LINE OF CREDIT AND NOTE PAYABLE
   NOTE  6 STOCK ISSUANCE
   12




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##### Table of Contents



NOTE  7 SIGNIFICANT CUSTOMERS
   Three Months Ended September 30,2010
    
    
    2009Instruments
    
    $
    427,362
    
    
    $
    511,531Handpieces
    
    $
    1,477,715
    
    
    $
    1,373,255Other
    
    $
    21,812
    
    
    $
    24,477$
    1,926,889
    
    
    $
    1,909,263United States
    
    $
    865,967
    
    
    $
    1,151,475Canada
    
    $
    97,954
    
    
    $
    148,916Other Foreign
    
    $
    962,968
    
    
    $
    608,872$
    1,926,889
    
    
    $
    1,909,263
 Nine Months Ended September 30,2010
    
    
    2009Instruments
    
    $
    2,851,614
    
    
    $
    2,113,653Handpieces
    
    $
    4,781,987
    
    
    $
    3,968,836Other
    
    $
    74,535
    
    
    $
    68,495$
    7,708,136
    
    
    $
    6,150,984United States
    
    $
    3,329,793
    
    
    $
    4,038,306Canada
    
    $
    468,462
    
    
    $
    441,366Other Foreign
    
    $
    3,909,881
    
    
    $
    1,671,312$
    7,708,136
    
    
    $
    6,150,984
  STA Single Tooth
Anesthesia System® STA Single Tooth Anesthesia System®
  NOTE  8 COMMITMENTS AND OTHER
 Contract Manufacturing Arrangement
 CompuDent®, STA Single
Tooth Anesthesia System® CompuMed® The Wand® The Wand®
  Tooth Anesthesia System®
  13




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  CompuMed® CompuFlo® CompuDent® STA Single Tooth Anesthesia System®
 OVERVIEW
  
    
    Optimizing our tactical approach to product sales and marketing in order to
materially increase penetration of the global dental markets with our proprietary,
patented Computer-Controlled Local Anesthesia Delivery (C-CLAD) solution, the STA Single
Tooth Anesthesia System®; and
 
    
    Identifying and pursing strategic collaborations with third parties to jointly
develop new products utilizing our patented CompuFlo®systems pressure force technology
for new medical applications.
 STA Single Tooth Anesthesia System® Awards  Industry Recognition
 STA Single Tooth Anesthesia System®
 STA Single Tooth Anesthesia System® Dentistry Today
 STA Single Tooth Anesthesia System® Dentaltown Magazine CompuDent®/The Wand® . STA Single Tooth Anesthesia
System® Dental Products Report DPR DPR DPRs STA Single Tooth Anesthesia
System®
 Dentistry Today STA Single Tooth Anesthesia
System® STA Single Tooth
Anesthesia System® Dentistry Today
  14




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##### Table of Contents



STA Single Tooth Anesthesia System® Medical
Device & Diagnostic Industry STA Single Tooth Anesthesia System® STA Single Tooth Anesthesia
System®
 Second Annual Symposium on C-CLAD ®
 C-CLAD
 C-CLAD C-CLAD
 
    
    The History of C-CLAD
 
    
    Treating with Connection
 
    
    Heart Rate Study
 
    
    STA Single Tooth Anesthesia System®:Compassionate Care in the 21st
Century
 
    
    Injection Advances and Challenges
 
    
    Physiologic and Clinical Characteristics of PDL Anesthesia Delivered by a High
Pressure Hand piece and a Computerized Device
 
    
    The STA Single Tooth Anesthesia System®for Tots and Teens
 
    
    Computerized Local Anesthesia in Dentistry: A Review
 
    
    Todays Technology
 
    
    Managing a Successful Dental Practice: Why People Keep Coming Back
 
    
    STA Single Tooth Anesthesia System® The Dental Schools Perspective
 
    
    Futuristic Vistas: The Dentist/Hygienist Partnership
 STA
Single Tooth Anesthesia System® C-CLAD ® )
 C-CLAD STA Single Tooth Anesthesia System®
 STA Single Tooth Anesthesia System® Growth
 STA Single Tooth Anesthesia System®, C-CLAD CompuDent® The Wand® STA Single
Tooth Anesthesia System® STA Single Tooth Anesthesia System® Dental
Economics STA Single Tooth Anesthesia System®
  15




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##### Table of Contents



Global Distribution Network
 STA Single Tooth Anesthesia System®
 STA Single Tooth Anesthesia System®
 STA Single Tooth Anesthesia Systems®
  STA Single Tooth Anesthesia System® CompuDent®
   16




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Segmented Sales Performance
  Three Months Ended September 30,2010
    
    
    2009DOMESTICInstruments
    
    $
    177,387
    
    
    
    20.5
    %
    
    $
    263,451
    
    
    
    22.9
    %Handpieces
    
    
    672,817
    
    
    
    77.7
    %
    
    
    865,508
    
    
    
    75.1
    %Other
    
    
    15,763
    
    
    
    1.8
    %
    
    
    22,516
    
    
    
    2.0
    %Total Domestic
    
    $
    865,967
    
    
    
    100.0
    %
    
    $
    1,151,475
    
    
    
    100.0
    %INTERNATIONALInstruments
    
    $
    249,975
    
    
    
    23.6
    %
    
    $
    248,080
    
    
    
    32.7
    %Handpieces
    
    
    800,387
    
    
    
    75.3
    %
    
    
    507,747
    
    
    
    67.0
    %Other
    
    
    10,560
    
    
    
    1.0
    %
    
    
    1,961
    
    
    
    0.3
    %Total International
    
    $
    1,060,922
    
    
    
    100.0
    %
    
    $
    757,788
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL ANALYSISDomestic
    
    $
    865,967
    
    
    
    44.9
    %
    
    $
    1,151,475
    
    
    
    60.3
    %International
    
    
    1,060,922
    
    
    
    55.1
    %
    
    
    757,788
    
    
    
    39.7
    %Total Product Sales
    
    $
    1,926,889
    
    
    
    100.0
    %
    
    $
    1,909,263
    
    
    
    100.0
    %
 Nine Months Ended September 30,2010
    
    
    2009DOMESTICInstruments
    
    $
    761,376
    
    
    
    22.9
    %
    
    $
    1,317,589
    
    
    
    32.6
    %Handpieces
    
    
    2,511,426
    
    
    
    75.4
    %
    
    
    2,659,310
    
    
    
    65.8
    %Other
    
    
    56,991
    
    
    
    1.7
    %
    
    
    61,407
    
    
    
    1.6
    %Total Domestic
    
    $
    3,329,793
    
    
    
    100.0
    %
    
    $
    4,038,306
    
    
    
    100.0
    %INTERNATIONALInstruments
    
    $
    2,090,238
    
    
    
    47.7
    %
    
    $
    796,064
    
    
    
    37.7
    %Handpieces
    
    
    2,270,561
    
    
    
    51.9
    %
    
    
    1,309,526
    
    
    
    62.0
    %Other
    
    
    17,544
    
    
    
    0.4
    %
    
    
    7,088
    
    
    
    0.3
    %Total International
    
    $
    4,378,343
    
    
    
    100.0
    %
    
    $
    2,112,678
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL ANALYSISDomestic
    
    $
    3,329,793
    
    
    
    43.2
    %
    
    $
    4,038,306
    
    
    
    65.7
    %International
    
    
    4,378,343
    
    
    
    56.8
    %
    
    
    2,112,678
    
    
    
    34.3
    %Total Product Sales
    
    $
    7,708,136
    
    
    
    100.0
    %
    
    $
    6,150,984
    
    
    
    100.0
    %
  New Product Development and Commercialization Utilizing CompuFlo® System Technology
  CompuFlo ® . CompuFlo® DPS Dynamic Pressure Sensing ®
   17




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##### Table of Contents



In contrast, the technical advantages of the CompuFlo® system with DPS Dynamic Pressure
Sensing® technology are numerous and dramatic all
 
    
    a true painless experience for all injections
 
    
    eliminates disruptive injection behavior
 
    
    site specific targeting
 
    
    controlled needle exit-pressure
 
    
    precise flow rate and drug volumes
 
    
    patient treatment documentation
 
    
    superior ergonomics
 
    
    elimination of needle deflection (causing missed injections, lost time and anxiety )
 
    
    advanced tactile needle control
 
    
    precision fluid metering
  C-CLAD
 CompuFlo® CompuFlo® CompuFlo®
 CompuFlo® STA Single Tooth Anesthesia System®
 CompuFlo®
 Intellectual Property
 STA Single Tooth Anesthesia System®, the CompuDent® CompuMed®
  18




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##### Table of Contents



C-CLAD
 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 Single Tooth Anesthesia System® CompuFlo®
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Products sales, net
    
    $
    1,926,889
    
    
    
    100
    %
    
    $
    1,909,263
    
    
    
    100
    %
    
    $
    7,708,136
    
    
    
    100
    %
    
    $
    6,150,984
    
    
    
    100
    %Cost of products sold
    
    
    725,795
    
    
    
    38
    %
    
    
    709,003
    
    
    
    37
    %
    
    
    2,788,353
    
    
    
    36
    %
    
    
    2,488,294
    
    
    
    40
    %Gross Profit
    
    
    1,201,094
    
    
    
    62
    %
    
    
    1,200,260
    
    
    
    63
    %
    
    
    4,919,783
    
    
    
    64
    %
    
    
    3,662,690
    
    
    
    60
    %Selling, general and
administrative expenses
    
    
    1,704,896
    
    
    
    88
    %
    
    
    1,477,948
    
    
    
    77
    %
    
    
    5,024,791
    
    
    
    65
    %
    
    
    4,960,000
    
    
    
    81
    %Research and development expenses
    
    
    60,533
    
    
    
    3
    %
    
    
    57,972
    
    
    
    3
    %
    
    
    228,734
    
    
    
    3
    %
    
    
    157,941
    
    
    
    3
    %Total operating expenses
    
    
    1,765,429
    
    
    
    91
    %
    
    
    1,535,920
    
    
    
    80
    %
    
    
    5,253,525
    
    
    
    68
    %
    
    
    5,117,941
    
    
    
    84
    %Loss from operations
    
    
    (564,335
    )
    
    
    -29
    %
    
    
    (335,660
    )
    
    
    -18
    %
    
    
    (333,742
    )
    
    
    -4
    %
    
    
    (1,455,251
    )
    
    
    -24
    %Other income  interest & expense
    
    
    (19,191
    )
    
    
    -1
    %
    
    
    (37,610
    )
    
    
    -2
    %
    
    
    14,498
    
    
    
    0
    %
    
    
    (136,203
    )
    
    
    -2
    %Net loss
    
    $
    (583,526
    )
    
    
    -30
    %
    
    $
    (373,270
    )
    
    
    -20
    %
    
    $
    (319,244
    )
    
    
    -4
    %
    
    $
    (1,591,454
    )
    
    
    -26
    %
 Three months ended September 30, 2010 compared to three months ended September 30, 2009
 STA Single Tooth Anesthesia System®
     20




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##### Table of Contents



Nine months ended September 30, 2010 compared to the nine months ended September 30, 2009
 STA Single Tooth
Anesthesia System® STA Single Tooth Anesthesia
System® CompuDent® CompuDent®
 STA Single Tooth Anesthesia System®
   21




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##### Table of Contents



STA Single Tooth Anesthesia System®
     Liquidity and Capital Resources
        22




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
    23




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
   24




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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   Shares
    
    
    $ Value *Shares issued for employee compensation
    
    
    6,250
    
    
    $
    7,500Shares issued to directors
    
    
    34,614
    
    
    
    45,000Shares issued for services
    
    
    30,050
    
    
    
    33,00070,914
    
    
    $
    85,500
 *
    
    Based on the closing market price and the date of grant.  
 ITEM 3. DEFAULT UPON SENIOR SECURTIES
  
 ITEM 4. [Removed and Reserved]
  
 ITEM 5. OTHER INFORMATION
   25




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##### Table of Contents



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.
  26




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##### Table of Contents



SIGNATURES
  MILESTONE SCIENTIFIC INC./s/ Leonard OsserLeonard OsserChief Executive Officer/s/ Joseph DAgostinoJoseph DAgostinoChief Financial Officer   27