##### 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, 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.)
 45 Knightsbridge Road Piscataway, New Jersey 08854
 (973) 535-2717  (Registrants telephone number, including area code)
 220 South Orange Avenue Livingston, New Jersey 07039
 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




---



##### 



MILESTONE SCIENTIFIC INC
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Balance Sheets
September 30, 2009 (Unaudited) and December 31, 2008
    
    
    4Condensed Statements of Operations
Three Months and Nine Months Ended September 30, 2009 and 2008 (Unaudited)
    
    
    5Condensed Statements of Changes in Stockholders Equity
Nine Months Ended September 30, 2009 (Unaudited)
    
    
    6Condensed Statements of Cash Flows
Nine Months Ended September 30, 2009 and 2008 (Unaudited)
    
    
    7Notes to Condensed Financial Statements (Unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4T. Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 3. Defaults Upon Senior Securities
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 5. Other Information
    
    
    26Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    28Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




---



##### Table of Contents



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




---



##### Table of Contents



ITEM 1.
    
    Financial Statements.
  
  September 30, 2009
    
    
    December 31, 2008(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    497,455
    
    
    $
    743,665Accounts receivable, net of allowance for doubtful accounts of $5,000 in 2009 and 2008
    
    
    500,880
    
    
    
    925,742Stock Subscription Receivable
    
    
    112,500
    
    
    
    Inventories
    
    
    888,641
    
    
    
    719,902Advances to contract manufacturer
    
    
    148,960
    
    
    
    250,110Prepaid expenses and other current assets
    
    
    136,134
    
    
    
    218,296Total current assets
    
    
    2,284,570
    
    
    
    2,857,715Advances to contract manufacturer
    
    
    324,235
    
    
    
    415,780Investment in distributor, at cost
    
    
    76,319
    
    
    
    76,319Furniture, Fixtures & Equipment net of accumulated depreciation of $384,407
as of September 30, 2009 and $345,377 as of December 31, 2008
    
    
    149,820
    
    
    
    152,574Patents, net of accumulated amortization of $191,580 as of September 30, 2009
and $135,406 as of December 31, 2008
    
    
    921,858
    
    
    
    901,045Other assets-including advance payment for consulting services $127,772 in 2009
    
    
    143,645
    
    
    
    7,317Total assets
    
    $
    3,900,447
    
    
    $
    4,410,750LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    880,869
    
    
    $
    829,130Accrued expenses and other payable
    
    
    539,645
    
    
    
    495,897Line of credit-net of discount of $28,976
    
    
    1,271,024
    
    
    
    Total current liabilities
    
    
    2,691,538
    
    
    
    1,325,027Long-term Liabilities:Line of credit-net of discount of $52,530
    
    
    
    
    
    
    1,247,470Notes Payable-net of discount of $11,856 and $11,927, respectively
    
    
    438,144
    
    
    
    438,073Total long-term liabilities
    
    
    438,144
    
    
    
    1,685,543Commitments and ContingenciesStockholders EquityCommon stock, par value $.001; authorized 50,000,000 shares; 13,928,832 shares issued
550,093 shares to be issued and 13,895,499 shares outstanding as of September 30, 2009;
12,695,685 shares issued, 504,639 shares to be issued, and 12,662,352 shares outstanding
as of December 31, 2008
    
    
    14,478
    
    
    
    13,200Additional paid-in capital
    
    
    60,492,626
    
    
    
    59,531,865Accumulated deficit
    
    
    (58,824,823
    )
    
    
    (57,233,369
    )Treasury stock, at cost, 33,333 shares
    
    
    (911,516
    )
    
    
    (911,516
    )Total stockholders equity
    
    
    770,765
    
    
    
    1,400,180Total liabilities and stockholders equity
    
    $
    3,900,447
    
    
    $
    4,410,750
   4




---



##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Product sales, net
    
    $
    1,909,263
    
    
    $
    1,813,103
    
    
    $
    6,150,984
    
    
    $
    4,741,976Royalty income
    
    
    
    
    
    
    5,112
    
    
    
    
    
    
    
    28,282Total revenue
    
    
    1,909,263
    
    
    
    1,818,215
    
    
    
    6,150,984
    
    
    
    4,770,258Cost of products sold
    
    
    709,003
    
    
    
    740,398
    
    
    
    2,488,294
    
    
    
    1,798,758Gross profit
    
    
    1,200,260
    
    
    
    1,077,817
    
    
    
    3,662,690
    
    
    
    2,971,500Selling, general and administrative expenses
    
    
    1,477,948
    
    
    
    1,199,353
    
    
    
    4,960,000
    
    
    
    4,039,137Research and development expenses
    
    
    57,972
    
    
    
    35,181
    
    
    
    157,941
    
    
    
    119,500Total operating expenses
    
    
    1,535,920
    
    
    
    1,234,534
    
    
    
    5,117,941
    
    
    
    4,158,637Loss from operations
    
    
    (335,660
    )
    
    
    (156,717
    )
    
    
    (1,455,251
    )
    
    
    (1,187,137
    )Interest expense
    
    
    (30,230
    )
    
    
    (23,863
    )
    
    
    (115,619
    )
    
    
    (73,455
    )Interest-Amortization of debt issuance
    
    
    (7,875
    )
    
    
    (7,926
    )
    
    
    (23,625
    )
    
    
    (21,622
    )Interest income
    
    
    495
    
    
    
    1,773
    
    
    
    3,041
    
    
    
    6,479Net loss applicable to common stockholders
    
    $
    (373,270
    )
    
    $
    (186,733
    )
    
    $
    (1,591,454
    )
    
    $
    (1,275,735
    )Loss per share applicable to common stockholders 
basic and diluted
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.12
    )
    
    $
    (0.10
    )Weighted average shares outstanding and to be issued 
basic and diluted
    
    
    13,486,513
    
    
    
    12,709,260
    
    
    
    13,139,276
    
    
    
    12,631,311
   5




---



##### 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
    
    
    
    
    
    
    
    
    
    
    129,214
    
    
    
    
    
    
    
    
    
    
    
    129,214Common stock issued for payment of consulting
services to settle accounts payable
    
    
    502,660
    
    
    
    503
    
    
    
    481,997
    
    
    
    
    
    
    
    
    
    
    
    482,500Common stock issued for payment of employee
compensation
    
    
    312,371
    
    
    
    312
    
    
    
    150,013
    
    
    
    
    
    
    
    
    
    
    
    150,325Common stock issued in advance of services-Chairman
    
    
    84,783
    
    
    
    85
    
    
    
    (85
    )
    
    
    
    
    
    
    
    
    
    
    Common stock to be issued for settlement of
deferred compensation
    
    
    45,454
    
    
    
    45
    
    
    
    24,955
    
    
    
    
    
    
    
    
    
    
    
    25,000Sale of common stock
    
    
    333,333
    
    
    
    333
    
    
    
    149,667
    
    
    
    
    
    
    
    
    
    
    
    150,000Proceeds on the sale of stock option agreement
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    25,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,591,454
    )
    
    
    
    
    
    
    (1,591,454
    )Balance, September 30, 2009
    
    
    14,478,925
    
    
    $
    14,478
    
    
    $
    60,492,626
    
    
    $
    (58,824,823
    )
    
    $
    (911,516
    )
    
    $
    770,765
   6




---



##### Table of Contents



Nine Months Ended September 30,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (1,591,454
    )
    
    $
    (1,275,735
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    39,030
    
    
    
    54,367Amortization of patents
    
    
    56,174
    
    
    
    37,869Amortization of debt discount
    
    
    23,625
    
    
    
    21,622Common stock and options issued for compensation, consulting
and vendor services
    
    
    787,040
    
    
    
    312,252Loss on sale/disposal of equipment
    
    
    
    
    
    
    2,255Changes in operating assets and liabilities:Decrease (Increase) in accounts receivable
    
    
    424,862
    
    
    
    (397,416
    )Decrease in royalty receivable
    
    
    
    
    
    
    10,247(Increase) Decrease in inventories
    
    
    (168,739
    )
    
    
    791,447Decrease to advances to contract manufacturer
    
    
    192,695
    
    
    
    350,183Decrease to prepaid expenses and other current assets
    
    
    82,162
    
    
    
    126,042(Increase) Decrease in other assets
    
    
    (136,329
    )
    
    
    18,029Increase (Decrease) in accounts payable
    
    
    89,239
    
    
    
    (922,463
    )Increase in accrued expenses
    
    
    46,247
    
    
    
    171,095(Decrease) Increase in deferred compensation
    
    
    (2,500
    )
    
    
    7,042Net cash used in operating activities
    
    
    (157,948
    )
    
    
    (693,164
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (36,276
    )
    
    
    (5,738
    )Proceeds on sale of equipment
    
    
    
    
    
    
    7,750Payment for patents rights
    
    
    (76,986
    )
    
    
    (267,831
    )Net cash used in investing activities
    
    
    (113,262
    )
    
    
    (265,819
    )Cash flows from financing activities:Notes Payable-Short Term borrowing
    
    
    
    
    
    
    200,000Line of credit borrowing
    
    
    
    
    
    
    300,000Proceeds from sale of stock options
    
    
    25,000
    
    
    
    Net cash provided by financing activities
    
    
    25,000
    
    
    
    500,000NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (246,210
    )
    
    
    (458,983
    )Cash and cash equivalents at beginning of period
    
    
    743,665
    
    
    
    745,003Cash and cash equivalents at end of period
    
    $
    497,455
    
    
    $
    286,020Supplemental disclosure of cash flow information:Interest paid in cash
    
    $
    
    
    
    $
    3,000Income taxes paid
    
    $
    8,225
    
    
    $
    Stocks issued to employees in lieu of cash compensation
    
    $
    150,325
    
    
    $
    92,544Shares issued to officer in advance of services
    
    $
    97,500
    
    
    $
    Warrants issued in connection with line of credit
    
    $
    
    
    
    $
    21,575Shares issued to settle accounts payable
    
    $
    482,500
    
    
    $
    548,845
   7




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



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




---



##### Table of Contents



Reclassifications
  NOTE  2 BASIC AND DILUTED NET LOSS PER COMMON SHARE
    NOTE  3 STOCK OPTION PLANS
 Share-Based Payment
  11




---



##### Table of Contents



WeightedWeighted
    
    
    Average
    
    
    AggregateNumber
    
    
    Averaged
    
    
    Remaining
    
    
    Intrinsicof
    
    
    Exercise
    
    
    Contractual
    
    
    OptionsOptions
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding, January 1, 2009
    
    
    570,832
    
    
    $
    1.51
    
    
    
    3.01
    
    
    $
    75Granted
    
    
    528,056
    
    
    
    0.62
    
    
    
    4.59
    
    
    
    194,122Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (371,890
    )
    
    
    0.88
    
    
    
    
    
    
    
    Outstanding, September 30, 2009
    
    
    726,998
    
    
    
    1.19
    
    
    
    3.16
    
    
    
    106,766Exercisable, September 30, 2009
    
    
    464,330
    
    
    
    1.40
    
    
    
    2.37
    
    
    
    45,433
     WeightedWeighted
    
    
    Average
    
    
    AggregateNumber
    
    
    Averaged
    
    
    Remaining
    
    
    Intrinsicof
    
    
    Exercise
    
    
    Contractual
    
    
    OptionsOptions
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding, January 1, 2009
    
    
    627,467
    
    
    $
    3.14
    
    
    
    1.61
    
    
    $
    Granted
    
    
    140,000
    
    
    
    0.32
    
    
    
    2.91
    
    
    
    35,250Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (352,468
    )
    
    
    3.45
    
    
    
    
    
    
    
    Outstanding, September 30, 2009
    
    
    414,999
    
    
    
    1.93
    
    
    
    2.69
    
    
    
    87,900Exercisable, September 30, 2009
    
    
    347,499
    
    
    
    1.97
    
    
    
    2.80
    
    
    
    87,900
    12




---



##### Table of Contents



NOTE  4 CONCENTRATION OF CREDIT RISK
 CompuDent
  NOTE  5 LINE OF CREDIT AND NOTE PAYABLE
    13




---



##### Table of Contents



NOTE  6 STOCK ISSUANCE
   NOTE  7 SIGNIFICANT CUSTOMERS
   Three Months Ended September 30,2009
    
    
    2008Instruments
    
    $
    511,531
    
    
    $
    498,879Handpieces
    
    $
    1,373,255
    
    
    $
    1,297,654Other
    
    $
    24,477
    
    
    $
    16,570$
    1,909,263
    
    
    $
    1,813,103United States
    
    $
    1,151,475
    
    
    $
    1,322,665Canada
    
    $
    148,916
    
    
    $
    111,570Other Foreign
    
    $
    608,872
    
    
    $
    378,868$
    1,909,263
    
    
    $
    1,813,103
 Nine Months Ended September  30,2009
    
    
    2008Instruments
    
    $
    2,113,653
    
    
    $
    846,558Handpieces
    
    $
    3,968,836
    
    
    $
    3,840,723Other
    
    $
    68,495
    
    
    $
    54,695$
    6,150,984
    
    
    $
    4,741,976United States
    
    $
    4,038,306
    
    
    $
    3,209,683Canada
    
    $
    441,366
    
    
    $
    429,077Other Foreign
    
    $
    1,671,312
    
    
    $
    1,103,216$
    6,150,984
    
    
    $
    4,741,976
 STA CompuDent STA CompuDent
 STA System STA System
  14




---



##### Table of Contents



NOTE  8 COMMITMENTS AND OTHER
 Contract Manufacturing Arrangement
 CompuDent, STA CompuMed The Wand The Wand STA
  NOTE  9 SUBSEQUENT EVENTS
 STA Systems
   15




---



##### Table of Contents



ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
  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 CompuFlopressure 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. STA System Dental Products Report DPR DPR DPRs STA System
 Second Annual Symposium on C-CLAD
 STA
System STA System
  16




---



##### Table of Contents




    
    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 Hand piece 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
  17




---



##### Table of Contents



STA System STA System
 Segmented Sales Performance
  Three Months Ended September 30,2009
    
    
    2008DOMESTICInstruments
    
    $
    263,451
    
    
    
    22.9
    %
    
    $
    365,887
    
    
    
    27.6
    %Handpieces
    
    
    865,508
    
    
    
    75.1
    %
    
    
    942,613
    
    
    
    71.3
    %Other
    
    
    22,516
    
    
    
    2.0
    %
    
    
    14,165
    
    
    
    1.1
    %Total Domestic
    
    $
    1,151,475
    
    
    
    100.0
    %
    
    $
    1,322,665
    
    
    
    100.0
    %INTERNATIONALInstruments
    
    $
    248,080
    
    
    
    32.7
    %
    
    $
    132,992
    
    
    
    27.1
    %Handpieces
    
    
    507,747
    
    
    
    67.0
    %
    
    
    355,041
    
    
    
    72.4
    %Other
    
    
    1,961
    
    
    
    0.3
    %
    
    
    2,405
    
    
    
    0.5
    %Total International
    
    $
    757,788
    
    
    
    100.0
    %
    
    $
    490,438
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL
ANALYSISDomestic
    
    $
    1,151,475
    
    
    
    60.3
    %
    
    $
    1,322,665
    
    
    
    73.0
    %International
    
    
    757,788
    
    
    
    39.7
    %
    
    
    490,438
    
    
    
    27.0
    %Total Product Sales
    
    $
    1,909,263
    
    
    
    100.0
    %
    
    $
    1,813,103
    
    
    
    100.0
    %
 Nine Months Ended September 30,2009
    
    
    2008DOMESTICInstruments
    
    $
    1,317,589
    
    
    
    32.6
    %
    
    $
    420,028
    
    
    
    13.0
    %Handpieces
    
    
    2,659,310
    
    
    
    65.8
    %
    
    
    2,743,031
    
    
    
    85.5
    %Other
    
    
    61,407
    
    
    
    1.6
    %
    
    
    46,625
    
    
    
    1.5
    %Total Domestic
    
    $
    4,038,306
    
    
    
    100.0
    %
    
    $
    3,209,684
    
    
    
    100.0
    %INTERNATIONALInstruments
    
    $
    796,064
    
    
    
    37.7
    %
    
    $
    426,530
    
    
    
    27.8
    %Handpieces
    
    
    1,309,526
    
    
    
    62.0
    %
    
    
    1,097,692
    
    
    
    71.7
    %Other
    
    
    7,088
    
    
    
    0.3
    %
    
    
    8,070
    
    
    
    0.5
    %Total International
    
    $
    2,112,678
    
    
    
    100.0
    %
    
    $
    1,532,292
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL
ANALYSISDomestic
    
    $
    4,038,306
    
    
    
    65.7
    %
    
    $
    3,209,684
    
    
    
    67.7
    %International
    
    
    2,112,678
    
    
    
    34.3
    %
    
    
    1,532,292
    
    
    
    32.3
    %Total Product Sales
    
    $
    6,150,984
    
    
    
    100.0
    %
    
    $
    4,741,976
    
    
    
    100.0
    %
  New Product Development and Commercialization Utilizing CompuFlo Technology
   18




---



##### Table of Contents



CompuFlo CompuFlo CompuFlo
 Executive Management Change
  Technology Rights
 SafetyWand CompuFlo CompuDent CompuDent STA
 Intellectual Property
 STA CompuDent CompuMed
   Summary of Significant Accounting Policies, Judgments and Estimates
   19




---



##### Table of Contents



Accounts Receivable
  Inventories
  Impairment of Long-Lived Assets
  Revenue Recognition
  Results of Operations
 STA System CompuFlo
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Products sales, net
    
    $
    1,909,263
    
    
    
    100
    %
    
    $
    1,813,103
    
    
    
    100
    %
    
    $
    6,150,984
    
    
    
    100
    %
    
    $
    4,741,976
    
    
    
    99
    %Royalty income
    
    
    
    
    
    
    0
    %
    
    
    5,112
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
    
    
    28,282
    
    
    
    1
    %Total revenue
    
    
    1,909,263
    
    
    
    100
    %
    
    
    1,818,215
    
    
    
    100
    %
    
    
    6,150,984
    
    
    
    100
    %
    
    
    4,770,258
    
    
    
    100
    %Cost of products sold
    
    
    709,003
    
    
    
    37
    %
    
    
    740,398
    
    
    
    41
    %
    
    
    2,488,294
    
    
    
    40
    %
    
    
    1,798,758
    
    
    
    38
    %Gross Profit
    
    
    1,200,260
    
    
    
    63
    %
    
    
    1,077,817
    
    
    
    59
    %
    
    
    3,662,690
    
    
    
    60
    %
    
    
    2,971,500
    
    
    
    62
    %Selling, general and
administrative expenses
    
    
    1,477,948
    
    
    
    77
    %
    
    
    1,199,353
    
    
    
    66
    %
    
    
    4,960,000
    
    
    
    81
    %
    
    
    4,039,137
    
    
    
    85
    %Research and development expenses
    
    
    57,972
    
    
    
    3
    %
    
    
    35,181
    
    
    
    2
    %
    
    
    157,941
    
    
    
    3
    %
    
    
    119,500
    
    
    
    3
    %Total operating expenses
    
    
    1,535,920
    
    
    
    80
    %
    
    
    1,234,534
    
    
    
    68
    %
    
    
    5,117,941
    
    
    
    83
    %
    
    
    4,158,637
    
    
    
    88
    %Loss from operations
    
    
    (335,660
    )
    
    
    -18
    %
    
    
    (156,717
    )
    
    
    -9
    %
    
    
    (1,455,251
    )
    
    
    -24
    %
    
    
    (1,187,137
    )
    
    
    -25
    %Other income  interest & expense
    
    
    (37,610
    )
    
    
    -2
    %
    
    
    (30,016
    )
    
    
    -2
    %
    
    
    (136,203
    )
    
    
    -2
    %
    
    
    (88,598
    )
    
    
    -2
    %Net loss
    
    $
    (373,270
    )
    
    
    -20
    %
    
    $
    (186,733
    )
    
    
    -11
    %
    
    $
    (1,591,454
    )
    
    
    -26
    %
    
    $
    (1,275,735
    )
    
    
    -27
    %
  20




---



##### Table of Contents



Three months ended September 30, 2009 compared to three months ended September 30, 2008
 STA STA STA
System STA System
   STA Systems STA System
      21




---



##### Table of Contents



Nine months ended September 30, 2009 compared to the nine months ended September 30, 2008
 STA STA CompuDent CompuDent
 STA
 STA
      22




---



##### Table of Contents



Liquidity and Capital Resources
     STA System
     23




---



##### Table of Contents



ITEM 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.
  
 ITEM 4T.
    
    Controls and Procedures.
    24




---



##### 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
 Recent Sales of Unregistered Securities
  Shares
    
    
    $Shares issued for employee compensation
    
    
    112,562
    
    
    $
    110,000Shares issued for services
    
    
    365,363
    
    
    
    416,500Shares sold
    
    
    333,333
    
    
    
    150,000811,258
    
    
    $
    676,500
  25




---



##### Table of Contents



ITEM 3.
    
    DEFAULT UPON SENIOR SECURITIES
 NONE
 
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 NONE
 
 ITEM 5.
    
    OTHER INFORMATION
 NONE
  26




---



##### 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.
  27




---



##### Table of Contents



SIGNATURES
  MILESTONE SCIENTIFIC INC./s/ Leonard OsserLeonard OsserChief Executive Officer/s/ Joseph DAgostinoJoseph DAgostinoChief Financial Officer   28