MLSS 10-K & 10-Q changes, risk factors and insider trading

You should carefully consider carefully the risks and uncertainties described below, together with all the other information included in this Annual Report on Form 10-K. If any of the following risks aredescribed realized,below occur, our business, financial condition, results of operationsoperations, and prospects could be materially and adversely affected. The risks described below are not the only risks facingwe us.face. RisksAdditional risks and uncertainties that we do not currently knownknow to usabout, or that we currently deembelieve toare be immaterialimmaterial, also may materially and adversely affect our business, financial condition, results of operationsoperations, and/or prospects.

We have incurred significant losses since our inception. These operating losses are expected to continue,continue and we are unable to predict the extent of future losses, whether we will generate significant revenuesrevenues, or whether we will achieve or sustain profitability.

We are a small, non-diversified medical device company with a history of limited revenue and significant operating losses,losses and our prospects must be evaluated considering the uncertainties, risks, expenses, and difficulties frequently encountered by similarly situated companies. We The Company hashave generated net losses in all periods since theinception, commencement of our operations. Theincluding operating losses wereof $6.8$5.7 million and $7.1 million,$6.8 million for the years ended December 31, 2024,2025, and 2023,2024, respectively. These losses have adversely affected, and are expected to continue to affect adversely, our working capital, total assets, and stockholders’ equity.

Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets, and stockholders' equity. Because of the risks and uncertainties associated with product acceptance andacceptance, sales expansion, and competitive conditions, we are unable tocannot predict the extent of any future losses, whether we will ever generate significant revenuesrevenues, or ifwhether we will ever achieve or sustain profitability. Even if we dobecome generate profits from operations,profitable, we may not be able to achieve, sustainmaintain or increase profitability on a quarterly or annual basis. OurIf failurewe todo not generate substantive sufficient profits from operations and to become and remain profitable could impairprofitable, our ability to raise capital, expand our business, and maintain our commercial effortsefforts, or continue ouroperations operations.could Abe impaired. In addition, a decline in the value of our companyvaluation could also cause our shareholdersstockholders to lose all or part of their investment.

We anticipate that we will need additional funding for our operations and may be unable to raise capital when needed, which may force us to delay, curtailcurtail, or eliminate parts of the Company’s operations.

Our operations have consumed substantial amounts of cash since inception. DuringNet cash used in operating activities was approximately $2.9 million for the years ended December 31, 20242025, and 2023, net cash flow used in operations was approximately $2.9 million and approximately $5.3 million,2024, respectively. We believe that our immediate futurenear-term viability is dependentdepends on our ability to raise additional capital to finance our operations through public or private equity offerings, collaborations andcollaborations, licensing arrangementsarrangements, or other sources. Although managementwe plansintend to pursue additional funding, there iscan be no assurance that we will be successful in obtainingobtain sufficient fundingcapital on terms acceptable to us to fund continuing operations,terms, or at all. If we are unable tocannot raise this capital when needed, we may be forced to delay, curtail, or eliminate our research and development programs or other operations. See also the risk factor titled “If we fail to regain compliance with the strict listing requirements of NYSE American, we may be subject to delisting. As a result, our stock price may decline, and our common stock may be delisted. If our stock were no longer listed on NYSE American, the liquidity of our securities likely would be impaired.”

Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may adversely impact on the price of our common stock.

Almost all our 78,047,79880,453,116 outstanding shares of common stock on December 31, 2024,2025, are available for sale in the public market, either freely or pursuant to Rule 144 under the Securities Act of 1933, as amended. Sales of a substantial number of shares of our common stock, or the perception that such sales may occur, may adversely impact on the price of our common stock.

To the extent that If we raise additional capital bythrough issuingthe issuance of equity securities, the share ownership of existing stockholders will beexperience diluted. Any future debtdilution. Debt financing maycould involveinclude covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, indebtedness, pay dividends, redeem our stock, make certain investments, andor engage in certainparticular merger, consolidation, or asset sale transactions, among other restrictions. In addition, iftransactions. If we raise additional funds through licensing arrangements or theasset dispositiondispositions, of any of our assets, itwe may be necessaryrequired to relinquish potentially valuable rights to our product candidates or grant licenses on terms that are not favorable to us.unfavorable.

ChangesFinancial institution in financial institutionsinstability could adversely affect our currentoperations and projected business operations, financial condition and results of operations.condition.

TheWe maintain Companydeposits currently keeps more than $250,000, the maximum amount insured by the Federal Deposit Insurance Corporation (“FDIC”), in its current bank depositary. The Companythat may exceed FDIC insurance limits. If our financial institution experiences distress or failure, we could experience delayed access to, or a loss of itsof, uninsured deposits or other financial assetsassets. should its existing financial institution experience financial distress. While theAlthough U.S. Departmentgovernment of Treasury, FDIC and Federal Reserve Board haveagencies provided access to uninsured funds deposits in connection with the Silicon Valley Bank crisis, there is no guaranteeassurance that thesesimilar institutionsactions willwould provide access to uninsured fundsoccur in the future in the event of the closure of other banks or financialoccur promptly. institutions,We or that they would do so in a timely fashion. The Company is currentlyare evaluating itsour banking relationships withto increase the intent of increasing the amountportion of deposits that are fully insured or invested in risk-free instruments. instruments.Any non-performance by financial institutions could adversely affect our business operations and financial condition, including through impaired access to cash, loss of deposits, or disruptions affecting our customers or vendors.

The results of events or concerns that involve non-performance by financial institutions could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations. In addition, any further deterioration in the macroeconomic economy or financial services industry, or delayed access or loss of uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution by our customers or vendors, could lead to losses or defaults by companies with whom we do business, which in turn could have a material adverse effect on our current and/or projected business operations, results of operations and financial condition. In addition, other companies could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution.

Risks Related to Sales and Distribution of Milestone ScientificOur Products

Milestone Scientific’s Our sales and marketing efforts in the United StatedStates rely upon its E-Commerce platform.

Milestone Scientific believesWe believe that a significant portion of itsour sales will continue to be from its E-Commerce platform launched in January 2023, for the foreseeable future. Currently, sales of the STA Single Tooth Anesthesia Systems® (STA) and handpieces in the United States are reliant on E-Commerce sales. We have exposure to risks of operating in an E-commerce platform:

If we Milestone Scientific isare unable to maintain or expand itsour E-Commerce platformplatform, itsour sales will be negatively affected.

There is no assurance that physicians, hospitals, clinics, and other healthcare providers will accept and use the CompuFlo Epidural System. Market acceptance depends on many factors, including perceived safety and effectiveness, cost-effectiveness relative to competing products, convenience and reliability, patient satisfaction, product availability, warranty and technical support, reimbursement availability, and the effectiveness of our marketing and distribution., Because we expect sales of the CompuFlo Epidural Computer Controlled Anesthesia System to generate substantially all our medical product revenues in the near-term, the failure of this product to find market acceptance would harm our businessmedical andbusiness. It could require us to seek additional financing or make such financing difficult to obtain on favorable terms, if at all. Since the Company generates a significant portion of its net sales from a single product category, a decline in demand for that product could significantly impact our net sales and gross margins.

Our ability to commercialize our products will depend in part on the extent to which reimbursement will be available from governmental agencies, health administration authorities, private health maintenance organizations andorganizations, health insurersinsurers, and other healthcare payers.

Our ability to generate revenues from our products will be diminished if the products sell for inadequate prices or hospitals or physicians are unable to obtain adequate levels of reimbursement for the cost they incur in connection with the use of the product. Significant uncertainty exists as to the reimbursement status of legacy and newly approved healthcare products. Healthcare payers, including Medicare, are challenging the prices charged for medical products and services. Government and other healthcare payers increasingly attempt to contain healthcare costs by limiting both coverage and the level of reimbursement for products. Insurance coverage may not be available, or reimbursement levels may be inadequate to cover the charges for the use of such a product. If the government and other healthcare payers do not provide adequate coverage and reimbursement for any of our products, market acceptance of such products could be reduced.

Our future success depends upon the services of aour executive officer.officers. The Company ishas currentlyrecently lookingappointed forEric Hines as President and Chief Executive Officer, and as a newdirector chiefof executivethe officerCompany, toreplacing replace Mr.Arjan Haverhals, who retired at the end of 2024.2024, Currentlyand oneappointed Jason Papes as Senior Vice President, Global Head of ourSales directors,and Mr. Goldman, is the Interim Chief Executive Officer.Marketing. We also rely on other key management and technical personnel, and on our ability to continue to identify, attract, retain, and motivate them. Implementing our business strategy requires specialized territory managers and other talent, as our revenues are highly dependent on technological and product innovations. The market for employees in our industry is extremely competitive,competitive; several such competitors are significantly larger than us and can offer compensation more than what we are able to offer. If we are unable to attract and retain aour new chief executive officer and other key officers and attract other qualified employees, as needed, our business may be harmed.

Relying exclusively on third parties to manufacture our products, changes in our informal manufacturing arrangements made by the manufacturer of our products andproducts, disruptions at the manufacturing facility of our manufacturersmanufacturers, and failure to maintain existing supply relationships exposes expose us to risks that may harm our business.

Milestone Scientific hasWe have been supplied by the manufacturer of the Wand/STA System and its predecessor, the CompuDent System, since the commencement of production in 1998, and by the manufacturer of its handpieces since 2003. The manufacturer of our handpieces is in the People’s Republic of China China, and the manufacturer of the Wand/STA System is in the United States. At present, we have an informal arrangement with the manufacturers of our products. Our current arrangement with our manufacturers is on a purchase order-by-purchase order basis. As a result, we do not have price protection or a supply commitment for our devices or handpieces. If either manufacturer insists on a material change in terms or determines to discontinue manufacture of our products, it could have an adverse effect on our financial condition and results of operation.

Each of these risks could delay the commercialization of our CompuFlo Epidural Computer Controlled Anesthesia System, limit our available supply of The Wand/ STA for dental applications, cause damage to our reputation, result in higher costs and/or deprive us of potential product revenues. Any curtailment or interruptionsinterruption of the supply, whether because of termination of the relationship or otherwise, would have a material adverse effect on our financial condition, business, and results of operations.

Because the sole manufacturer of our dental handpieces is in China, our business is disproportionately exposed to the economic, environmental, and political conditions of the region. China’s political and economic systems are very different from most developed countries in many respects, including,including the amount of government involvement, the level of development, the control of foreign exchangeexchange, and the allocation of resources. The increase in United States tariffs on products from China have impacted and will continue to impact the price of our goods sold. Uncertainties have arisen and may arise in the future with changing governmental policies and measures. China also faces many social, economic, and political challenges that may produce instabilities in both its domestic arena and in its relationship with other countries.

These instabilities may significantly and adversely affect our supply of dental handpieces and our ability to deliverydeliver reasonably priced products, which would in turn adversely affect our financial performance. In addition, as the Chinese legal system develops, there can be no assurance that changes in laws and regulations and their interpretation or their enforcement will not have a material adverse effect on our business relationship with the sole manufacturer of our dental handpieces. Any adverse change in the economic, environmental, and political conditions in China could have a material adverse effect on economic growth and the level of investments and availability of capital in China, which in turn could lead to a reduction in the supply of our dental handpieces and consequently have a material adverse effect on our businesses.

Milestone ScientificThe Company relies on several third parties to supply and manufacture the components and raw materials for its productsproducts, and itsit does not have long-term supply agreements with suppliers of these component parts and raw materials, and its arrangements with these suppliers are on a purchase-order basis. These products we obtain from suppliers are subject to fluctuations in price and availability attributable to several factors, including general economic conditions, commodity price fluctuations, the demand by other companies for the same raw materials materials, and the availability of complementary and substitute materials.

While we Milestone Scientific workswork with suppliers to ensure continuity of supply, no assurance can be given that these efforts will be successful. In the event that any of its existing supply arrangements are terminated or there is a reduction or interruption of supply under these existing arrangements, We Milestone Scientific expectsexpect that itwe will be able to enter into new arrangements with alternative suppliers, but these new arrangements may be on terms that are less favorable, including with respect to price and volume, and it may be costly or cause delays in our manufacturing process to transition to a new supplier, particularly in cases in which we must comply with regulatory requirements relating to qualification of new suppliers. The termination, reduction or interruption in supply of these raw materials and components could adversely impact Milestone Scientific Scientific’s our ability to manufacture and sell certain of its products.

Third-party suppliers may encounter problems during manufacturing for a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction, component part supply constraints, and environmental factors, any of which could delay or impede their ability to supply the components and raw materials for Milestone Scientific’sour products. Any such failure to perform or a reduction or interruption in supply could have a material adverse effect on Milestone Scientific’sour business and operations.

We may be subject, directly,directly or indirectly, to U.S. federal and state health carehealthcare fraud and abuse and false claims laws and regulations. Prosecutions under such laws have increased in recent years and we may become subject to such litigation. If we are unable to comply or have not fully complied with such laws, we could face substantial penalties.

Our operations are and will continue to be directly, or indirectly through our distributors, customers, and health carehealthcare professionals, subject to various U.S. federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, federal False Claims Act, and the Foreign Corrupt Practice Practices Act of 1977. These laws may impact, among other things, our proposed sales, and marketing and education programs. The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal health carehealthcare program such as Medicare or Medicaid. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal health care healthcare covered business, the statute has been violated. The Anti-Kickback Statute is broad and, despite a series of narrow safe harbors, prohibits many arrangements and practices that are lawful in businesses outside of the health carehealthcare industry. Penalties for violations of the federal Anti-Kickback Statute include criminal penalties and civil and administrative sanctions such as fines, imprisonment, and possible exclusion from Medicare, Medicaid, and other federal health carehealthcare programs. An alleged violation of the Anti-Kickback Statute may be used as a predicate offense to establish liability pursuant to other federal laws and regulationsregulations, such as the federal False Claims Act. Many states have also adopted laws like the federal Anti-Kickback Statute, some of which apply to the referral of patients for health carehealthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs.

The federal False Claims Act prohibits persons from knowingly filing, or causing to be filed, a false claim to, or the knowing use of false statements to obtain payment from, the federal government. Suits filed under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the governmentgovernment, and such individuals, commonly known as “relators” or “whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. The frequency of filing qui tam actions has increased significantly in recent years, causing greater numbers of medical device, pharmaceuticalpharmaceutical, and health carehealthcare companies to have to defend False Claim Act actions. The Affordable Care Act includes provisions expanding the ability of certain relators to bring actions that would have been previously dismissed under prior law. When an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties for each separate false claim. The Deficit Reduction Act of 2005 encouraged states to enact or modify their state falseFalse claimsClaims actAct to be at least as effective as the federal False Claims Act by granting states a portion of any federal Medicaid funds recovered through Medicaid-related actions. Most states have enacted state false claims laws, and many of those states includedinclude laws with qui tam provisions.

Manufacturers must also disclose investment interests held by physicians and their family members. Failure to submit the required information may result in civil monetary penalties of up to $1 million per year for knowing violations and may result in liability under other federal laws or regulations. Similar reporting requirements have also been enacted on the state level in the United States, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with health carehealthcare professionals. In addition, some states, such as Massachusetts and Vermont, impose an outright ban on certain gifts to physicians. These laws could affect our promotional activities by limiting the kinds of interactions we could have with hospitals, physicians or other potential purchasers or users of our products. Both the disclosure laws and gift bans will impose administrative, cost and compliance burdens on us. If we are found to be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, or an administrative action of suspension or exclusion from government health carehealthcare reimbursement programs and the curtailment or restructuring of our operations.

In addition, we are subject to the Foreign Corrupt Practices Act (“FCPA”) and other countries’ anti-corruption/anti-bribery regimes, such as the U.K. Bribery Act. The FCPA prohibits improper payments or offers of payments to foreign governments and their officials for obtaining or retaining business. Safeguards we implement to discourage improper payments or offers of payments by our employees, consultants, sales agents, or distributors may be ineffective, and violations of the FCPA and similar laws may result in severe criminal or civil sanctions, or other liabilities or proceedings against us, any of which would likely harm our reputation, business, results of operationsoperations, and financial condition.

The Company has incurred significant losses since its inception and continues to experience operating losses. Although operating performance improved during the threesix months ended MarchJune 31,30, 2026, including positive operating cash flow, there can be no assurance that the Company will sustain profitability or positive cash flows in future periods. As of MarchJune 31,30, 2026, the Company had limited cash resources, and these conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company may need to raise additional capital through equity or debt financings, and such financing may not be available on acceptable terms, or at all.

The Company relies on Chinese third-party manufacturers for a substantial portion of its products and also previously generated revenue from Chinese distributors. During the three months ended March 31,June 30, 2026, revenue from China declinedincreased to $0,$498,000, compared to $110,000$0 in the prior period. Simultaneously, escalating U.S.-China trade tensions and newly imposed tariffs have increased the cost of sourcing products and components from China. This dual exposure - reduced revenue from Chinese customers and increased costs from Chinese suppliers - may materially and adversely affect our results of operations. Furthermore, regulatory actions by either the U.S. or Chinese government, including export controls, retaliatory trade measures, restrictions on technology transfer, or sanctions, could further disrupt our supply chain or eliminate our ability to sell into the Chinese market entirely. Any such developments could have a material adverse effect on our business, financial condition, and results of operations.

Our common stock is listed on NYSE American under the symbol “MLSS.” On October 8, 2025, the Company received a written notice from NYSE American stating that it is not in compliance compliance with the continued listing standards set forth in Sections 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide, which require minimum stockholders’ equity of $4 million and $6 million, respectively, for companies with sustained operating losses. As of MarchJune 31, 30, 2026, the Company’s reported total stockholders’ equity was approximately $2.3$3.5 million - below both thresholds - and the Company has reported net losses in each of the past five fiscal years. The Company submitted a plan of compliance to NYSE American and has been permitted to continue listing during the plan period, subject to periodic review. The compliance deadline is April 8, 2027. While the April 2026 Private Placement increased the Company’s stockholders’ equity and liquidity, the Company cannot assure that it will achieve the required equity thresholds within the required timeframe, particularly given its ongoing operating losses and going concern uncertainty. If NYSE American initiates delisting proceedings, the liquidity and market price of our common stock would likely be materially and adversely affected, and our ability to raise additional capital through equity or debt financing - which we may need to fund continuing operations - would be significantly impaired.

The following table sets forth the consolidated results of operations for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The trends suggested by this table may not be indicative of future operating results:

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,3, 2025

Total product sales for the three months ended MarchJune 31,30, 2026 were approximately $2.2 $2.8 million, compared to approximately $2.2$2.3 million for the same period in 2025, representing aan decreaseincrease of approximately $70,000, $518,000, or 3%.22.3%.

Medical revenue increased to approximately $108,000,$106,000, compared to approximately $51,000 $32,000 in the prior period, representing growthan increase of approximately 110%,$74,000, reflectingor 231.5%. The increase reflects continued early-stage adoption and commercialization of the Company’s medical products.

Gross margin was approximately 72.3%,67.2% for the three months ended June 30, 2026, compared to with approximately 73.8%69.6% for the same period in the prior period.2025.

Research and development expense decreased by approximately $369,000,$45,000, as no major R&D expenses were incurred during the current period compared to the prior period. The Company continues to evaluate its research and development priorities and may make targeted investments in future periods to support product enhancements, new applications, and long-term growth initiatives.

Loss from operations improved to approximately $828,000 for the threesix months ended MarchJune 30, 31,2026 2026,was approximately $1.8 million, compared towith approximately $2.0$3.5 million in for the priorsix period,months representingended June 30, 2025, an improvement of approximately $1.2$1.7 million, or 58%.48.6%.

The following table summarizes our sources and uses of cash for the threesix months ended:

Net cash provided by operating activities was approximately $87,000 for the three months ended March 31, 2026, compared to net cash used in operating activities ofwas approximately $1.0$0.5 million infor the six months ended June 30, 2026, compared with approximately $2.8 million for the priorsix period.months Thisended improvementJune 30, 2025. The approximately $2.3 million decrease in cash used in operating activities was primarily drivenattributable byto reduceda reduction in net loss and favorable changes in certain working capital account Net cash used in workinginvesting capital.was minimal in both periods.

As of MarchJune 31,30, 2026, the Company had cash and cash equivalents of approximately $1.2$2.1 million and working capital of approximately $2.5 $3.7 million.

On April 20, 2026, the Company completed a private placement of 7,962,963 units at a purchase price of $0.27 per unit, generating gross proceeds of approximately $2.15 million, consisting of $1.80 million in cash and a reduction of $351,000 in outstanding principal of the Company’s outstanding convertible notes, the holders of which applied such principal amounts toward the purchase of units in the offering in lieu of cash (the “Private Placement”) The Company’s ability to continue as a going concern is dependent upon its ability to generate sufficient revenue, manage operating expenses, and obtain additional financing, if necessary.cash.