##### 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 June 30, 2009
 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 Yes þ No




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##### 



MILESTONE SCIENTIFIC INC
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Balance Sheets

June 30, 2009 (Unaudited) and December 31, 2008
    
    
    4Condensed Statements of Operations

Three Months and Six Months Ended June 30, 2009 and 2008 (Unaudited)
    
    
    5Condensed Statements of Changes in Stockholders Equity

Six Months Ended June 30, 2009 (Unaudited)
    
    
    6Condensed Statements of Cash Flows

Six Months Ended June 30, 2009 and 2008 (Unaudited)
    
    
    7Notes to Condensed Financial Statement (Unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    22Item 4T. Controls and Procedures
    
    
    22PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    25SIGNATURES
    
    
    26Exhibit 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



June 30, 2009
    
    
    December 31, 2008(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    498,576
    
    
    $
    743,665Accounts receivable, net of allowance for doubtful accounts of $5,000 in 2009 and 2008
    
    
    797,620
    
    
    
    925,742Inventories
    
    
    632,625
    
    
    
    719,902Advances to contract manufacturer
    
    
    124,950
    
    
    
    250,110Prepaid expenses and other current assets
    
    
    105,509
    
    
    
    218,296Total current assets
    
    
    2,159,280
    
    
    
    2,857,715Advances to contract manufacturer
    
    
    400,735
    
    
    
    415,780Investment in distributor, at cost
    
    
    76,319
    
    
    
    76,319Furniture, Fixtures & Equipment net of accumulated depreciation of $373,570
as of June 30 ,2009 and $345,377 as of December 31, 2008
    
    
    154,511
    
    
    
    152,574Patents, net of accumulated amortization of $172,449 as of June 30, 2009
and $135,406 as of December 31, 2008
    
    
    908,571
    
    
    
    901,045Other assets
    
    
    15,874
    
    
    
    7,317Total assets
    
    $
    3,715,290
    
    
    $
    4,410,750LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    1,008,710
    
    
    $
    829,130Accrued expenses and other payable
    
    
    461,108
    
    
    
    495,897Line of credit-net of discount of $36,152
    
    
    1,263,848
    
    
    
    Total current liabilities
    
    
    2,733,666
    
    
    
    1,325,027Long-term Liabilities:Line of credit-net of discount of $52,530
    
    
    
    
    
    
    1,247,470Notes Payable-net of discount of $12,555 and $11,927, respectively
    
    
    437,445
    
    
    
    438,073Total long-term liabilities
    
    
    437,445
    
    
    
    1,685,543Commitments and ContingenciesStockholders EquityCommon stock, par value $.001; authorized 50,000,000 shares; 13,117,574 shares issued
550,093 shares to be issued and 13,084,241 shares outstanding as of June 30, 2009;
12,695,685 shares issued, 504,639 shares to be issued, and 12,662,352 shares outstanding
as of December 31, 2008
    
    
    13,667
    
    
    
    13,200Additional paid-in capital
    
    
    59,893,580
    
    
    
    59,531,865Accumulated deficit
    
    
    (58,451,552
    )
    
    
    (57,233,369
    )Treasury stock, at cost, 33,333 shares
    
    
    (911,516
    )
    
    
    (911,516
    )Total stockholders equity
    
    
    544,179
    
    
    
    1,400,180Total liabilities and stockholders equity
    
    $
    3,715,290
    
    
    $
    4,410,750
   4




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Product sales, net
    
    
    2,036,902
    
    
    
    1,540,883
    
    
    $
    4,241,721
    
    
    $
    2,928,873Royalty income
    
    
    
    
    
    
    9,007
    
    
    
    
    
    
    
    23,170Total revenue
    
    
    2,036,902
    
    
    
    1,549,890
    
    
    
    4,241,721
    
    
    
    2,952,043Cost of products sold
    
    
    862,741
    
    
    
    594,437
    
    
    
    1,779,291
    
    
    
    1,058,361Total cost of revenue
    
    
    862,741
    
    
    
    594,437
    
    
    
    1,779,291
    
    
    
    1,058,361Gross profit
    
    
    1,174,161
    
    
    
    955,453
    
    
    
    2,462,430
    
    
    
    1,893,682Selling, general and administrative expenses
    
    
    1,753,237
    
    
    
    1,367,807
    
    
    
    3,482,052
    
    
    
    2,839,784Research and development expenses
    
    
    32,347
    
    
    
    36,000
    
    
    
    99,969
    
    
    
    84,319Total operating expenses
    
    
    1,785,584
    
    
    
    1,403,807
    
    
    
    3,582,021
    
    
    
    2,924,103Loss from operations
    
    
    (611,423
    )
    
    
    (448,354
    )
    
    
    (1,119,591
    )
    
    
    (1,030,421
    )Interest expense
    
    
    (37,986
    )
    
    
    (18,668
    )
    
    
    (85,389
    )
    
    
    (49,592
    )Interest-Amortization of debt issuance
    
    
    (7,875
    )
    
    
    (7,567
    )
    
    
    (15,750
    )
    
    
    (13,696
    )Interest income
    
    
    742
    
    
    
    1,471
    
    
    
    2,547
    
    
    
    4,707Net loss applicable to common stockholders
    
    
    (656,542
    )
    
    
    (473,118
    )
    
    $
    (1,218,183
    )
    
    $
    (1,089,002
    )Loss per share applicable to common stockholders 
basic and diluted
    
    $
    (0.05
    )
    
    $
    (0.04
    )
    
    $
    (0.09
    )
    
    $
    (0.09
    )Weighted average shares outstanding and to be issued 
basic and diluted
    
    
    13,062,102
    
    
    
    12,228,792
    
    
    
    12,965,658
    
    
    
    12,370,659
   5




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##### Table of Contents



AdditionalCommon Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    TreasuryShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    TotalBalance, January 1, 2009
    
    
    13,200,324
    
    
    $
    13,200
    
    
    $
    59,531,865
    
    
    $
    (57,233,369
    )
    
    $
    (911,516
    )
    
    $
    1,400,180Options issued to employees and consultants
    
    
    
    
    
    
    
    
    
    
    108,357
    
    
    
    
    
    
    
    
    
    
    
    108,357Common stock issued for payment of
consulting services to settle accounts payable
    
    
    137,297
    
    
    
    137
    
    
    
    65,863
    
    
    
    
    
    
    
    
    
    
    
    66,000Common stock issued for payment of
employee compensation
    
    
    284,592
    
    
    
    285
    
    
    
    137,540
    
    
    
    
    
    
    
    
    
    
    
    137,825Common stock to be issued for settlement of
deferred compensation
    
    
    45,454
    
    
    
    45
    
    
    
    24,955
    
    
    
    
    
    
    
    
    
    
    
    25,000Proceeds on the sale of stock option agreement
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    25,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,218,183
    )
    
    
    
    
    
    
    (1,218,183
    )Balance, June 30, 2009
    
    
    13,667,667
    
    
    $
    13,667
    
    
    $
    59,893,580
    
    
    $
    (58,451,552
    )
    
    $
    (911,516
    )
    
    $
    544,179
   6




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##### Table of Contents



SIX MONTHS ENDED JUNE 30,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (1,218,183
    )
    
    $
    (1,089,002
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation expense
    
    
    28,193
    
    
    
    37,214Amortization of patents
    
    
    37,043
    
    
    
    23,588Amortization of debt discount
    
    
    15,750
    
    
    
    13,696Common stock and options issued for compensation, consulting
and vendor services
    
    
    337,182
    
    
    
    267,232Loss on sale/disposal of equipment
    
    
    
    
    
    
    4,996Changes in operating assets and liabilities:Decrease (Increase) in accounts receivable
    
    
    128,122
    
    
    
    (217,739
    )Decrease in royalty receivable
    
    
    
    
    
    
    6,352Decrease in inventories
    
    
    87,277
    
    
    
    548,345Decrease to advances to contract manufacturer
    
    
    140,205
    
    
    
    215,151Decrease to prepaid expenses and other current assets
    
    
    112,787
    
    
    
    76,878(Increase) Decrease in other assets
    
    
    (8,557
    )
    
    
    17,216Increase (Decrease) in accounts payable
    
    
    179,580
    
    
    
    (560,010
    )(Decrease) Increase in accrued expenses
    
    
    (34,790
    )
    
    
    63,071Increase in deferred compensation
    
    
    
    
    
    
    3,959Net cash used in operating activities
    
    
    (195,391
    )
    
    
    (589,053
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (30,130
    )
    
    
    (4,296
    )Proceeds on sale of equipment
    
    
    
    
    
    
    7,749Payment for patents rights
    
    
    (44,568
    )
    
    
    (198,760
    )Net cash used in investing activities
    
    
    (74,698
    )
    
    
    (195,307
    )Cash flows from financing activities:Line of credit borrowing
    
    
    
    
    
    
    300,000Proceeds from sale of stock options
    
    
    25,000
    
    
    
    Net cash provided by financing activities
    
    
    25,000
    
    
    
    300,000NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (245,089
    )
    
    
    (484,360
    )Cash and cash equivalents at beginning of period
    
    
    743,665
    
    
    
    745,003Cash and cash equivalents at end of period
    
    $
    498,576
    
    
    $
    260,643Supplemental disclosure of cash flow information:Income taxes paid
    
    $
    5,821
    
    
    $
    3,140Stocks issued to employees in lieu of cash compensation
    
    $
    134,825
    
    
    $
    15,832Warrants issued in connection with line of credit
    
    $
    
    
    
    $
    21,575Shares issued to settle accounts payable
    
    $
    66,000
    
    
    $
    518,845
   7




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##### Table of Contents



MILESTONE SCIENTIFIC INC.
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)
 ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
         8




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##### Table of Contents



NOTE 1  SUMMARY OF ACCOUNTING POLICIES
 Cash and Cash Equivalents
  Inventories
  Patents
  Revenue Recognition
   Use of Estimates
  Recent Accounting Pronouncements
   9




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##### Table of Contents



Summary No. 141 (revised 2007)
 Non-controlling Interest in Consolidated Financial
Statements- and amendment of ARB No. 51.
        10




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Reclassifications
  NOTE  2 BASIC AND DILUTED NET LOSS PER COMMON SHARE
   NOTE  3 STOCK OPTION PLANS
 Share-Based Payment
  WeightedWeighted
    
    
    Average
    
    
    AggregateNumber
    
    
    Averaged
    
    
    Remaining
    
    
    Intrinsicof
    
    
    Exercise
    
    
    Contractual
    
    
    OptionsOptions
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding, January 1, 2009
    
    
    570,832
    
    
    $
    1.51
    
    
    
    3.01
    
    
    $
    75Granted
    
    
    403,056
    
    
    
    0.55
    
    
    
    4.74
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (263,556
    )
    
    
    4.40
    
    
    
    
    
    
    
    Outstanding, June 30, 2009
    
    
    710,332
    
    
    
    1.09
    
    
    
    3.27
    
    
    
    26,292Exercisable, June 30, 2009
    
    
    442,248
    
    
    
    0.64
    
    
    
    2.63
    
    
    
    1,389
    11




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##### Table of Contents



WeightedWeighted
    
    
    Average
    
    
    AggregateNumber
    
    
    Averaged
    
    
    Remaining
    
    
    Intrinsicof
    
    
    Exercise
    
    
    Contractual
    
    
    OptionsOptions
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding, January 1, 2009
    
    
    627,467
    
    
    
    3.14
    
    
    
    1.61
    
    
    
    Granted
    
    
    135,000
    
    
    
    0.25
    
    
    
    3.30
    
    
    
    35,250Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (352,468
    )
    
    
    3.44
    
    
    
    
    
    
    
    Outstanding, June 30, 2009
    
    
    409,999
    
    
    
    1.94
    
    
    
    2.98
    
    
    
    35,250Exercisable, June 30, 2009
    
    
    347,499
    
    
    
    1.89
    
    
    
    3.05
    
    
    
    35,250
   NOTE  4 CONCENTRATION OF CREDIT RISK
 CompuDent
   12




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NOTE  5 LINE OF CREDIT AND NOTE PAYABLE
   NOTE  6 STOCK ISSUANCE
  NOTE  7 SIGNIFICANT CUSTOMERS
   13




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##### Table of Contents



Three Months Ended June 30,2009
    
    
    2008Instruments
    
    $
    815,905
    
    
    $
    128,475Handpieces
    
    $
    1,200,369
    
    
    $
    1,394,124Other
    
    $
    20,628
    
    
    $
    18,284$
    2,036,902
    
    
    $
    1,540,883United States
    
    $
    1,408,336
    
    
    $
    989,303Canada
    
    $
    151,171
    
    
    $
    157,185Other Foreign
    
    $
    477,395
    
    
    $
    394,395$
    2,036,902
    
    
    $
    1,540,883
 Six Months Ended June 30,2009
    
    
    2008Instruments
    
    $
    1,602,122
    
    
    $
    347,679Handpieces
    
    $
    2,595,581
    
    
    $
    2,543,069Other
    
    $
    44,018
    
    
    $
    38,125$
    4,241,721
    
    
    $
    2,928,873United States
    
    $
    2,886,831
    
    
    $
    1,887,018Canada
    
    $
    292,450
    
    
    $
    317,507Other Foreign
    
    $
    1,062,440
    
    
    $
    724,348$
    4,241,721
    
    
    $
    2,928,873
 STA CompuDent STA CompuDent
 STA CompuDent CompuMed
 NOTE  8 COMMITMENTS AND OTHER
 Contract Manufacturing Arrangement
 CompuDent, STA CompuMed The Wand The Wand STA
  NOTE  9 SUBSEQUENT EVENTS
   14




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##### Table of Contents



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 Single Tooth Anesthesia System(STA System); and
    
    Identifying and pursing strategic collaborations with third parties to jointly
develop new products utilizing our patented CompuFlo pressure force technology for novel
new medical applications.
 STA System Awards  Industry Recognition
 STA System Dentistry Today STA System STA System Medical Device & Diagnostic Industry STA
System STA System
 STA System Dentaltown Magazine CompuDent/The Wand. Dental Products Report DPR DPR DPRs STA System
 Second Annual Symposium on C-CLAD
 STA
System STA System
  15




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##### Table of Contents



nd
 
    
    The History of C-CLAD
 
    
    Treating with Connection
 
    
    Heart Rate Study
 
    
    STACompassionate Care in the 21st Century
 
    
    Injection Advances and Challenges
 
    
    Physiologic and Clinical Characteristics of PDL Anesthesia Delivered by a High
Pressure Handpiece and a Computerized Device
 
    
    The STAfor Tots and Teens
 
    
    Computerized Local Anesthesia in Dentistry: A Review
 
    
    Todays Technology
 
    
    Managing a Successful Dental Practice: Why People Keep Coming Back
 
    
    STA The Dental Schools Perspective
 
    
    Futuristic Vistas: The Dentist/Hygienist Partnership
  STA System Growth
 STA System STA System STA System Dental Economics STA System
 Global Distribution Network
 STA System
 STA System
 STA System
  STA System, CompuDent
  16




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##### Table of Contents



STA System STA System
 Segmented Sales Performance
  Three Months Ended June 30,2009
    
    
    2008DOMESTICInstruments
    
    $
    527,725
    
    
    
    37.5
    %
    
    $
    (27,003
    )
    
    
    -2.8
    %Handpieces
    
    
    861,991
    
    
    
    61.2
    %
    
    
    1,000,737
    
    
    
    101.2
    %Other
    
    
    18,620
    
    
    
    1.3
    %
    
    
    15,569
    
    
    
    1.6
    %Total Domestic
    
    $
    1,408,336
    
    
    
    100.0
    %
    
    $
    989,303
    
    
    
    100.0
    %INTERNATIONALInstruments
    
    $
    288,180
    
    
    
    45.8
    %
    
    $
    155,478
    
    
    
    28.2
    %Handpieces
    
    
    338,378
    
    
    
    53.8
    %
    
    
    393,387
    
    
    
    71.3
    %Other
    
    
    2,008
    
    
    
    0.4
    %
    
    
    2,715
    
    
    
    0.5
    %Total International
    
    $
    628,566
    
    
    
    100.0
    %
    
    $
    551,580
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL ANALYSISDomestic
    
    $
    1,408,336
    
    
    
    69.1
    %
    
    $
    989,303
    
    
    
    64.2
    %International
    
    
    628,566
    
    
    
    30.9
    %
    
    
    551,580
    
    
    
    35.8
    %Total Product Sales
    
    $
    2,036,902
    
    
    
    100.0
    %
    
    $
    1,540,883
    
    
    
    100.0
    %
 Six Months Ended June 30,2009
    
    
    2008DOMESTICInstruments
    
    $
    1,054,138
    
    
    
    36.5
    %
    
    $
    54,141
    
    
    
    2.9
    %Handpieces
    
    
    1,793,801
    
    
    
    62.1
    %
    
    
    1,800,417
    
    
    
    95.4
    %Other
    
    
    38,892
    
    
    
    1.4
    %
    
    
    32,460
    
    
    
    1.7
    %Total Domestic
    
    $
    2,886,831
    
    
    
    100.0
    %
    
    $
    1,887,018
    
    
    
    100.0
    %INTERNATIONALInstruments
    
    $
    547,984
    
    
    
    40.4
    %
    
    $
    293,538
    
    
    
    28.2
    %Handpieces
    
    
    801,780
    
    
    
    59.2
    %
    
    
    742,652
    
    
    
    71.3
    %Other
    
    
    5,126
    
    
    
    0.4
    %
    
    
    5,665
    
    
    
    0.5
    %Total International
    
    $
    1,354,890
    
    
    
    100.0
    %
    
    $
    1,041,855
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL ANALYSISDomestic
    
    $
    2,886,831
    
    
    
    68.1
    %
    
    $
    1,887,018
    
    
    
    64.4
    %International
    
    
    1,354,890
    
    
    
    31.9
    %
    
    
    1,041,855
    
    
    
    35.6
    %Total Product Sales
    
    $
    4,241,721
    
    
    
    100.0
    %
    
    $
    2,928,873
    
    
    
    100.0
    %
  New Product Development and Commercialization Utilizing CompuFlo Technology
   17




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##### Table of Contents



CompuFlo CompuFlo
 Executive Management Change
  Technology Rights
 SafetyWand CompuFlo CompuDent CompuDent STA
 Summary of Significant Accounting Policies, Judgments and Estimates
  Accounts Receivable
  Inventories
  Impairment of Long-Lived Assets
   18




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##### Table of Contents



Revenue Recognition
  Results of Operations
 STA System CompuFlo
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Products sales, net
    
    $
    2,036,902
    
    
    
    100
    %
    
    $
    1,540,883
    
    
    
    99
    %
    
    $
    4,241,721
    
    
    
    100
    %
    
    $
    2,928,873
    
    
    
    99
    %Royalty income
    
    
    
    
    
    
    0
    %
    
    
    9,007
    
    
    
    1
    %
    
    
    
    
    
    
    0
    %
    
    
    23,170
    
    
    
    1
    %Total revenue
    
    
    2,036,902
    
    
    
    100
    %
    
    
    1,549,890
    
    
    
    100
    %
    
    
    4,241,721
    
    
    
    100
    %
    
    
    2,952,043
    
    
    
    100
    %Cost of products sold
    
    
    862,741
    
    
    
    42
    %
    
    
    594,437
    
    
    
    38
    %
    
    
    1,779,291
    
    
    
    42
    %
    
    
    1,058,361
    
    
    
    36
    %Gross Profit
    
    
    1,174,161
    
    
    
    58
    %
    
    
    955,453
    
    
    
    62
    %
    
    
    2,462,430
    
    
    
    58
    %
    
    
    1,893,682
    
    
    
    64
    %Selling, general and
administrative expenses
    
    
    1,753,237
    
    
    
    86
    %
    
    
    1,367,807
    
    
    
    88
    %
    
    
    3,482,052
    
    
    
    82
    %
    
    
    2,839,784
    
    
    
    96
    %Research and development expenses
    
    
    32,347
    
    
    
    2
    %
    
    
    36,000
    
    
    
    3
    %
    
    
    99,969
    
    
    
    2
    %
    
    
    84,319
    
    
    
    3
    %Total operating expenses
    
    
    1,785,584
    
    
    
    88
    %
    
    
    1,403,807
    
    
    
    91
    %
    
    
    3,582,021
    
    
    
    84
    %
    
    
    2,924,103
    
    
    
    99
    %Loss from operations
    
    
    (611,423
    )
    
    
    -30
    %
    
    
    (448,354
    )
    
    
    -29
    %
    
    
    (1,119,591
    )
    
    
    -26
    %
    
    
    (1,030,421
    )
    
    
    -35
    %Other income  interest & expense
    
    
    (45,119
    )
    
    
    -2
    %
    
    
    (24,764
    )
    
    
    -2
    %
    
    
    (98,592
    )
    
    
    -2
    %
    
    
    (58,581
    )
    
    
    -2
    %Net loss
    
    $
    (656,542
    )
    
    
    -32
    %
    
    $
    (473,118
    )
    
    
    -31
    %
    
    $
    (1,218,183
    )
    
    
    -29
    %
    
    $
    (1,089,002
    )
    
    
    -37
    %
 Three months ended June 30, 2009 compared to three months ended June 30, 2008
 STA STA STA System
    19




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##### Table of Contents



nd STA Systems STA System
      Six months ended June 30, 2009 compared to the six months ended June 30, 2008
 STA STA CompuDent CompuDent
 STA
  20




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Liquidity and Capital Resources
   STA System
  21




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4T. Controls and Procedures
    22




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##### Table of Contents



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.
    
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   Shares
    
    
    AmountShares issued for employee compensation
    
    
    46,447
    
    
    $
    18,000Shares issued for services
    
    
    31,250
    
    
    
    12,50077,697
    
    
    $
    30,500
  23




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##### Table of Contents



ITEM 3. DEFAULT UPON SENIOR SECURTIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    Election of five (5) Directors; and2.
    
    Ratification of the appointment of Holtz Rubenstein Reminick LLP as Milestones
independent auditors for the current fiscal year.
 (1)
    
    Election of Board of Directors
 Member
    
    Period to Serve
    
    
    Votes in Favor
    
    
    Votes Withheld
    
    
    AbstainLeonard Osser
    
    One Year
    
    
    10,784,981
    
    
    
    332,889
    
    
    
    0Leslie Bernhard
    
    One Year
    
    
    11,055,189
    
    
    
    62,681
    
    
    
    0Jeffrey Fuller
    
    One Year
    
    
    10,774,959
    
    
    
    342,911
    
    
    
    0Leonard M. Schiller
    
    One Year
    
    
    11,053,542
    
    
    
    64,328
    
    
    
    0Pablo F. Serna C.
    
    One Year
    
    
    11,063,017
    
    
    
    54,853
    
    
    
    0
 (2)
    
    Ratification of Holtz Rubenstein Reminick LLP as independent auditors of Milestone Scientific
Inc for the current fiscal year
 Votes in Favor
    
    Votes Against
    
    
    Abstain10,955,873
    
    
    39,387
    
    
    
    64,244
 
 ITEM 5. OTHER INFORMATION
   24




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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.
  25




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MILESTONE SCIENTIFIC INC./s/ Leonard OsserLeonard OsserInterim Chief Executive Officer/s/ Joseph DAgostinoJoseph DAgostinoChief Financial Officer   26




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##### Table of Contents



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.
  27