##### 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, 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)
 45 Knightsbridge Road, Piscataway, New Jersey 08854  (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer oAccelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ




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##### 



PART I  FINANCIAL INFORMATIONItem 1. Finanacial StatementsCondensed Balance Sheets June 30, 2010 (Unaudited) and December 31, 2009 (Audited)
    
    
    4Condensed Statements of Operations Three Months and Six Months Ended June 30, 2010 and 2009 (Unaudited)
    
    
    5Condensed Statement of Changes in Stockholders Equity Six Months Ended June 30, 2010 (Unaudited)
    
    
    6Condensed Statements of Cash Flows Six Months Ended June 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
    
    
    26SIGNATURES
    
    
    27Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### 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




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##### Table of Contents



June 30, 2010
    
    
    December 31, 2009(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    819,589
    
    
    $
    1,029,129Accounts receivable, net of allowance for doubtful accounts of $10,000 in 2010 and $5,000
in 2009
    
    
    1,804,267
    
    
    
    1,063,742Inventories
    
    
    1,265,025
    
    
    
    804,736Advances to contract manufacturer
    
    
    1,033,348
    
    
    
    151,995Prepaid expenses and other current assets
    
    
    239,274
    
    
    
    254,501Total current assets
    
    
    5,161,503
    
    
    
    3,304,103Advances to contract manufacturer, non current
    
    
    268,645
    
    
    
    311,230Investment in distributor, at cost
    
    
    76,319
    
    
    
    76,319Furniture, Fixtures & Equipment net of accumulated depreciation of $433,293
as of June 30 ,2010 and $395,630 as of December 31, 2009
    
    
    62,959
    
    
    
    77,353Patents, net of accumulated amortization of $252,795 as of June 30, 2010
and $211,539 as of December 31, 2009
    
    
    962,798
    
    
    
    947,315Other assets
    
    
    99,641
    
    
    
    133,674Total assets
    
    $
    6,631,865
    
    
    $
    4,849,994LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    2,252,566
    
    
    $
    1,154,013Accrued interest  6% note, current
    
    
    92,000
    
    
    
    Accrued expenses and other payable
    
    
    505,502
    
    
    
    524,017Total current liabilities
    
    
    2,850,068
    
    
    
    1,678,030Long-term Liabilities:Accrued Interest  6% note, non current
    
    
    40,491
    
    
    
    92,000Accrued Interest  12% note, non current
    
    
    92,628
    
    
    
    Notes Payable-net of discount of $9,759 and $11,157 respectively
    
    
    440,241
    
    
    
    438,843Total long-term liabilities
    
    
    573,360
    
    
    
    530,843Commitments and ContingenciesStockholders EquityCommon stock, par value $.001; authorized 50,000,000 shares; 14,838,348 shares issued
692,499 shares to be issued and 14,805,015 shares outstanding as of June 30, 2010;
14,781,296 shares issued, 692,499 shares to be issued, and 14,747,962 shares outstanding
as of December 31, 2009
    
    
    15,530
    
    
    
    15,472Additional paid-in capital
    
    
    62,603,594
    
    
    
    62,300,619Accumulated deficit
    
    
    (58,499,171
    )
    
    
    (58,763,454
    )Treasury stock, at cost, 33,333 shares
    
    
    (911,516
    )
    
    
    (911,516
    )Total stockholders equity
    
    
    3,208,437
    
    
    
    2,641,121Total liabilities and stockholders equity
    
    $
    6,631,865
    
    
    $
    4,849,994
   4




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Product sales, net
    
    $
    3,218,669
    
    
    
    2,036,902
    
    
    $
    5,781,247
    
    
    $
    4,241,721Cost of products sold
    
    
    1,161,847
    
    
    
    862,741
    
    
    
    2,062,558
    
    
    
    1,779,291Gross profit
    
    
    2,056,822
    
    
    
    1,174,161
    
    
    
    3,718,689
    
    
    
    2,462,430Selling, general and administrative expenses
    
    
    1,778,193
    
    
    
    1,753,237
    
    
    
    3,319,896
    
    
    
    3,482,052Research and development expenses
    
    
    79,736
    
    
    
    32,347
    
    
    
    168,200
    
    
    
    99,969Total operating expenses
    
    
    1,857,929
    
    
    
    1,785,584
    
    
    
    3,488,096
    
    
    
    3,582,021Income (loss) from operations
    
    
    198,893
    
    
    
    (611,423
    )
    
    
    230,593
    
    
    
    (1,119,591
    )Other income (expense)
    
    
    
    
    
    
    
    
    
    
    61,916
    
    
    
    Interest expense
    
    
    (17,946
    )
    
    
    (37,986
    )
    
    
    (27,288
    )
    
    
    (85,389
    )Interest-Amortization of debt issuance
    
    
    (699
    )
    
    
    (7,875
    )
    
    
    (1,398
    )
    
    
    (15,750
    )Interest income
    
    
    112
    
    
    
    742
    
    
    
    459
    
    
    
    2,547Net income (loss) applicable to common stockholders
    
    $
    180,360
    
    
    $
    (656,542
    )
    
    $
    264,282
    
    
    $
    (1,218,183
    )Net income (loss) per share applicable to common
stockholders -Basic
    
    $
    0.01
    
    
    $
    (0.05
    )
    
    $
    0.02
    
    
    $
    (0.09
    )Diluted
    
    $
    0.01
    
    
    $
    (0.05
    )
    
    $
    0.02
    
    
    $
    (0.09
    )Weighted average shares outstanding and to be issued -Basic
    
    
    14,795,432
    
    
    
    13,062,102
    
    
    
    14,778,134
    
    
    
    12,965,658Diluted
    
    
    15,172,700
    
    
    
    13,062,102
    
    
    
    15,185,304
    
    
    
    12,965,658
   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
    
    
    
    
    
    
    
    
    
    
    213,680
    
    
    
    
    
    
    
    
    
    
    
    213,680Common stock issued for payment of
consulting services to settle accounts payable
    
    
    46,611
    
    
    
    48
    
    
    
    70,952
    
    
    
    
    
    
    
    
    
    
    
    71,000Common stock issued for payment of
employee compensation
    
    
    10,442
    
    
    
    10
    
    
    
    18,344
    
    
    
    
    
    
    
    
    
    
    
    18,354Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    264,282
    
    
    
    
    
    
    
    264,282Balance, June 30, 2010
    
    
    15,530,847
    
    
    $
    15,530
    
    
    $
    62,603,594
    
    
    $
    (58,499,171
    )
    
    $
    (911,516
    )
    
    $
    3,208,437
   6




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##### Table of Contents



SIX MONTHS ENDED JUNE 30,2010
    
    
    2009Cash flows from operating activities:Net Income (loss)
    
    $
    264,282
    
    
    $
    (1,218,183
    )Adjustments to reconcile net income (loss) to net cash used in operating activities:Depreciation expense
    
    
    37,663
    
    
    
    28,193Amortization of patents
    
    
    41,257
    
    
    
    37,043Amortization of debt discount
    
    
    1,398
    
    
    
    15,750Common stock and options issued for compensation, consulting
and vendor services
    
    
    249,594
    
    
    
    337,182Bad debt expense
    
    
    5,000
    
    
    
    Changes in operating assets and liabilities:(Increase) Decrease in accounts receivable
    
    
    (745,525
    )
    
    
    128,122(Increase) Decrease in inventories
    
    
    (460,289
    )
    
    
    87,277(Increase) Decrease to advances to contract manufacturer
    
    
    (838,768
    )
    
    
    140,205Decrease to prepaid expenses and other current assets
    
    
    68,667
    
    
    
    112,787Decrease (Increase) in other assets
    
    
    34,033
    
    
    
    (8,557
    )Increase in accounts payable
    
    
    1,098,552
    
    
    
    179,580Decrease (Increase) in accrued expenses
    
    
    114,605
    
    
    
    (34,790
    )Net cash used in operating activities
    
    
    (129,532
    )
    
    
    (195,391
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (23,269
    )
    
    
    (30,130
    )Payment for patents rights
    
    
    (56,739
    )
    
    
    (44,568
    )Net cash used in investing activities
    
    
    (80,008
    )
    
    
    (74,698
    )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
    
    
    (209,540
    )
    
    
    (245,089
    )Cash and cash equivalents at beginning of period
    
    
    1,029,129
    
    
    
    743,665Cash and cash equivalents at end of period
    
    $
    819,589
    
    
    $
    498,576Supplemental disclosure of cash flow information:Income taxes paid
    
    $
    4,146
    
    
    $
    5,821Interest paid
    
    $
    46,000
    
    
    $
    Stocks issued to employees in lieu of cash compensation
    
    $
    18,354
    
    
    $
    134,825Shares issued to settle accounts payable
    
    $
    71,000
    
    
    $
    66,000
   7




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##### Table of Contents



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,
 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
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (74,500
    )
    
    
    2.76
    
    
    
    
    
    
    
    Outstanding, June 30, 2010
    
    
    1,058,975
    
    
    
    1.24
    
    
    
    3.72
    
    
    
    187,124Exercisable, June 30, 2010
    
    
    543,860
    
    
    
    1.18
    
    
    
    2.52
    
    
    
    122,795
    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
    
    
    
    0.95
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    (8,333
    )
    
    
    2.46
    
    
    
    
    
    
    
    Outstanding, June 30, 2010
    
    
    534,999
    
    
    
    1.85
    
    
    
    1.94
    
    
    
    125,667Exercisable, June 30, 2010
    
    
    513,331
    
    
    
    1.88
    
    
    
    1.83
    
    
    
    123,805
     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
  NOTE  7 SIGNIFICANT CUSTOMERS
   12




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##### Table of Contents



Three Months Ended June 30,2010
    
    
    2009Instruments
    
    $
    1,824,364
    
    
    $
    815,905Handpieces
    
    $
    1,372,480
    
    
    $
    1,200,370Other
    
    $
    21,825
    
    
    $
    20,628$
    3,218,669
    
    
    $
    2,036,903United States
    
    $
    1,258,856
    
    
    $
    1,408,337Canada
    
    $
    188,239
    
    
    $
    151,171Other Foreign
    
    $
    1,771,574
    
    
    $
    477,395$
    3,218,669
    
    
    $
    2,036,903
 Six Months Ended June 30,2010
    
    
    2009Instruments
    
    $
    2,424,252
    
    
    $
    1,602,122Handpieces
    
    $
    3,308,783
    
    
    $
    2,595,582Other
    
    $
    48,212
    
    
    $
    44,017$
    5,781,247
    
    
    $
    4,241,721United States
    
    $
    2,463,827
    
    
    $
    2,886,831Canada
    
    $
    370,509
    
    
    $
    292,450Other Foreign
    
    $
    2,946,911
    
    
    $
    1,062,440$
    5,781,247
    
    
    $
    4,241,721
  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 novel new medical applications.
 STA Single Tooth Anesthesia System® Awards  Industry Recognition
 STA Single Tooth Anesthesia System® Medical
Device & Diagnostic Industry STA Single Tooth Anesthesia System® STA Single Tooth Anesthesia
System®
 Dentistry Today 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®
 STA Single Tooth Anesthesia System® Dentistry Today
  14




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##### Table of Contents



STA Single Tooth Anesthesia System®
 Second Annual Symposium on C-CLAD ®
 STA
Single Tooth Anesthesia System® C-CLAD ® )
 C-CLAD STA Single Tooth Anesthesia System®
 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
 C-CLAD
 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®
 Global Distribution Network
 STA Single Tooth Anesthesia System®
  15




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##### Table of Contents



STA Single Tooth Anesthesia System®
 STA Single Tooth
Anesthesia Systems®
  STA Single Tooth Anesthesia System® CompuDent®
  Segmented Sales Performance
   16




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Three Months Ended June 30,2010
    
    
    2009DOMESTICInstruments
    
    $
    332,392
    
    
    
    26.4
    %
    
    $
    527,725
    
    
    
    37.5
    %Handpieces
    
    
    908,626
    
    
    
    72.2
    %
    
    
    861,991
    
    
    
    61.2
    %Other
    
    
    17,838
    
    
    
    1.4
    %
    
    
    18,620
    
    
    
    1.3
    %Total Domestic
    
    $
    1,258,856
    
    
    
    100.0
    %
    
    $
    1,408,336
    
    
    
    100.0
    %INTERNATIONALInstruments
    
    $
    1,491,972
    
    
    
    76.1
    %
    
    $
    288,180
    
    
    
    45.8
    %Handpieces
    
    
    463,854
    
    
    
    23.7
    %
    
    
    338,378
    
    
    
    53.8
    %Other
    
    
    3,987
    
    
    
    0.2
    %
    
    
    2,008
    
    
    
    0.4
    %Total International
    
    $
    1,959,813
    
    
    
    100.0
    %
    
    $
    628,566
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL
ANALYSISDomestic
    
    $
    1,258,856
    
    
    
    39.1
    %
    
    $
    1,408,336
    
    
    
    69.1
    %International
    
    
    1,959,813
    
    
    
    60.9
    %
    
    
    628,566
    
    
    
    30.9
    %Total Product Sales
    
    $
    3,218,669
    
    
    
    100.0
    %
    
    $
    2,036,902
    
    
    
    100.0
    %
 Six Months Ended June 30,2010
    
    
    2009DOMESTICInstruments
    
    $
    583,989
    
    
    
    23.7
    %
    
    $
    1,054,138
    
    
    
    36.5
    %Handpieces
    
    
    1,838,610
    
    
    
    74.6
    %
    
    
    1,793,801
    
    
    
    62.1
    %Other
    
    
    41,228
    
    
    
    1.7
    %
    
    
    38,892
    
    
    
    1.4
    %Total Domestic
    
    $
    2,463,827
    
    
    
    100.0
    %
    
    $
    2,886,831
    
    
    
    100.0
    %INTERNATIONALInstruments
    
    $
    1,840,263
    
    
    
    55.5
    %
    
    $
    547,984
    
    
    
    40.4
    %Handpieces
    
    
    1,470,173
    
    
    
    44.3
    %
    
    
    801,780
    
    
    
    59.2
    %Other
    
    
    6,984
    
    
    
    0.2
    %
    
    
    5,126
    
    
    
    0.4
    %Total International
    
    $
    3,317,420
    
    
    
    100.0
    %
    
    $
    1,354,890
    
    
    
    100.0
    %DOMESTIC/INTERNATIONAL
ANALYSISDomestic
    
    $
    2,463,827
    
    
    
    42.6
    %
    
    $
    2,886,831
    
    
    
    68.1
    %International
    
    
    3,317,420
    
    
    
    57.4
    %
    
    
    1,354,890
    
    
    
    31.9
    %Total Product Sales
    
    $
    5,781,247
    
    
    
    100.0
    %
    
    $
    4,241,721
    
    
    
    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 June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Products sales, net
    
    $
    3,218,669
    
    
    
    100
    %
    
    $
    2,036,902
    
    
    
    100
    %
    
    $
    5,781,247
    
    
    
    100
    %
    
    $
    4,241,721
    
    
    
    100
    %Cost of products sold
    
    
    1,161,847
    
    
    
    36
    %
    
    
    862,741
    
    
    
    42
    %
    
    
    2,062,558
    
    
    
    36
    %
    
    
    1,779,291
    
    
    
    42
    %Gross Profit
    
    
    2,056,822
    
    
    
    64
    %
    
    
    1,174,161
    
    
    
    58
    %
    
    
    3,718,689
    
    
    
    64
    %
    
    
    2,462,430
    
    
    
    58
    %Selling, general and
administrative expenses
    
    
    1,778,193
    
    
    
    55
    %
    
    
    1,753,237
    
    
    
    86
    %
    
    
    3,319,896
    
    
    
    57
    %
    
    
    3,482,052
    
    
    
    82
    %Research and development
expenses
    
    
    79,736
    
    
    
    2
    %
    
    
    32,347
    
    
    
    2
    %
    
    
    168,200
    
    
    
    3
    %
    
    
    99,969
    
    
    
    2
    %Total operating expenses
    
    
    1,857,929
    
    
    
    57
    %
    
    
    1,785,584
    
    
    
    88
    %
    
    
    3,488,096
    
    
    
    60
    %
    
    
    3,582,021
    
    
    
    84
    %Income (loss) from operations
    
    
    198,893
    
    
    
    6
    %
    
    
    (611,423
    )
    
    
    -30
    %
    
    
    230,593
    
    
    
    4
    %
    
    
    (1,119,591
    )
    
    
    -26
    %Other income  interest &
expense
    
    
    (18,533
    )
    
    
    -1
    %
    
    
    (45,119
    )
    
    
    -2
    %
    
    
    33,689
    
    
    
    1
    %
    
    
    (98,592
    )
    
    
    -2
    %Net income (loss)
    
    $
    180,360
    
    
    
    5
    %
    
    $
    (656,542
    )
    
    
    -32
    %
    
    $
    264,282
    
    
    
    5
    %
    
    $
    (1,218,183
    )
    
    
    -28
    %
 Three months ended June 30, 2010 compared to three months ended June 30, 2009
 STA Single Tooth Anesthesia System® STA Single Tooth Anesthesia System®
  STA
Single Tooth Anesthesia System®
   20




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##### Table of Contents



Six months ended June 30, 2010 compared to the six months ended June 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




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##### Table of Contents



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




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##### 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
    
    
    $Shares issued for employee compensation
    
    
    6,388
    
    
    $
    10,854Shares issued for services
    
    
    20,154
    
    
    
    28,00026,542
    
    
    $
    38,854
  
 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