MILESTONE SCIENTIFIC INC

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 of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding events, conditions and financial trends that may affect Milestone Scientific’s future plans of operations, business strategy, results of operations and financial condition. Milestone Scientific 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. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Milestone Scientific’s plans and objectives are based, in part, on assumptions involving the continued expansion of its business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Milestone Scientific. Although Milestone Scientific believes that its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. Considering the significant uncertainties inherent in the forward-looking statements included herein, our history of operating losses that are expected to continue, requiring additional funding which we may be unable to raise capital when needed (which may force us to delay, curtail or eliminate commercialization efforts of our CompuFlo Epidural Computer Controlled Anesthesia System), the early stage operations of and relative lack of acceptance of our medical products, relying exclusively on two third parties to manufacture our products, changes to our distribution arrangements exposes us to risks of interruption of marketing efforts and building new marketing channels, changes in our informal manufacturing arrangements made by the manufacturer of our products and disruptions at the manufacturing facility of our manufacturers, including shortages of or delays in obtaining chips and other components, exposes us to risks that may harm our business, raising additional funds by issuing securities or through licensing or lending arrangements may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights, if physicians do not accept or use our CompuFlo Epidural Computer Controlled Anesthesia System, our ability to generate revenue from sales will be materially impaired, exposure to the risks inherent in international sales and operations, including China, and developments by competitors may render our products or technologies obsolete or non-competitive, the inclusion of such information should not be regarded as a representation by Milestone Scientific or any other person that the objectives and plans of Milestone Scientific will be achieved. 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 because of various factors. Except as required by the federal securities laws, Milestone Scientific undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, to reflect events or circumstances occurring after the date of this Annual Report on Form 10-K. Milestone Scientific is the owner of the following registered U.S. trademarks: CompuDent®; CompuMed®; CompuFlo®; DPS Dynamic Pressure Sensing technology®; Milestone Scientific ®; CathCheck®; the Milestone logo ®; SafetyWand®; STA Single Tooth Anesthesia Device®; and The Wand ®.

Part I- Financial Information

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THREE MONTHS ENDED MARCH 31, 2024 AND 2023

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THREE MONTHS ENDED

MILESTONE SCIENTIFIC, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE1 — ORGANIZATION AND BUSINESS

All references in this report to “Milestone Scientific,” the “Company” or “Milestone” refer to Milestone Scientific Inc., and its consolidated subsidiaries, Wand Dental, Inc., and Milestone Innovation Inc., unless the context otherwise indicates. Milestone Scientific is the owner of the following registered U.S. trademarks: CompuDent®; CompuFlo®; DPS Dynamic Pressure Sensing technology®; Milestone Scientific®; CathCheck®;the Milestone logo®; SafetyWand®; STA Single Tooth Anesthesia System®; and The Wand®.

Milestone Scientific was incorporated in the State of Delaware in* August 1989.Milestone Scientific has developed a proprietary, revolutionary, computer-controlled anesthetic delivery device, its DPS Dynamic Pressure Sensing Technology® System, to meet the needs of various subcutaneous drug delivery injections and fluid aspiration – enabling healthcare practitioners to achieve multiple unique benefits that cannot currently be accomplished with the160*-year-old manual syringe. The Company’s proprietary DPS Dynamic Pressure Sensing technology is the Company’s technology platform that advances the development of next-generation devices. It regulates flow rate and monitoring pressure from the tip of the needle, through platform extensions for local anesthesia for subcutaneous drug delivery, used in various dental and medical injections. It has specific medical applications for epidural space identification in regional anesthesia procedures and intra-articular joint injections.

The Company’s device, using The Wand®, a single use disposable handpiece, is marketed in dentistry under the trademarksCompuDent®* andSTA Single Tooth Anesthesia System*®, and is suitable for all dental procedures that require local anesthetic. The dental devices are currently sold in the United States, Canada and in over 41 other countries. Milestone Scientific also has510(k) marketing clearance from the U.S. Food and Drug Administration (FDA) on the* CompuFlo*® Epidural Computer Controlled Anesthesia System in the lumbar thoracic and cervical thoracic junction of the spinal region.

The Company is in the process of meeting with medical facilities and device distributors within the United States, Middle East and Europe. Certain of our medical instruments have obtained European CE mark approval and can be marketed and sold in most European countries.

In2020, the Company received a Notice of Allowance from the United States Patent and Trademark Office (USPTO) related to its new CompuPulse System, which combines the benefits of our CompuWave technology with a manual syringe. The new CompuPulse System allowsone to identify a pulsatile pressure waveform in a variety of applications, thereby improving the reliability and safety of a drug delivery procedure. Importantly,not all procedures require the sophistication of our CompuFlo system, which precisely controls the administration and flow rate of medication as it is being administered. This new technology provides an efficient and low-cost alternative for procedures where a manual syringe* may*suffice, while still providing the ability to verify needle and subsequent catheter placement.

NOTE2- LIQUIDITY AND UNCERTAINTIES ** **

The Company has evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern withinone year after the date that the consolidated financial statements are issued. The Company has incurred total losses since inception of $124.8 million. The operating losses were $1.5 million and $1.3 million, forthree months ended* March 31, 2024and2023* respectively. On* March 31, 2024,Milestone Scientific had cash and cash equivalents and marketable securities of approximately $5.0 million and working capital of approximately $7.2 million. Forthree* months ended* March 31, 2024,and2023,* we had cash flows used in operating activities of approximately $1.2 million and $2.0 million, respectively.

Management has prepared financial forecasts covering a period of12 months from the date of issuance of these financial statements. These forecasts include several revenue and operating expense assumptions which indicate that the Company’s current cash and liquidity is sufficient to finance the operating requirements for at least the next12 months from the filing date. Additionally, the Company was approved on* September 12, 2023to sell Net Operating Losses through the New Jersey Technology Business Tax Certificate Transfer Program (“NJ NOL Program”), a program administered by the New Jersey Economic Development Authority (“NJEDA”). On April 8, 2024,*the Company completed the net sale of $2.0 million worth of NOLs via the NJ NOL Program. Milestone Scientific is actively pursuing the generation of positive cash flows from operating activities through an increase in revenue from its dental business worldwide, the generation of revenue from its medical devices and disposables business in the United States and worldwide, and a reduction in operating expenses. However, the Company’s continued operations will depend on its ability to raise additional capital through various potential sources until it achieves profitability, if ever.

In addition to its employees, the Company relies on (i) distributors, agents, andthird-party logistics providers in connection with product sales and distribution and (ii) raw material and component suppliers in the U.S., Europe, and China. If the Company, or any of these entities encounter any disruptions to its or their respective operations or facilities, or if the Company or any of thesethird-party partners were to shut down for any reason, including by fire, natural disaster, such as a hurricane, tornado or severe storm, power outage, systems failure, labor dispute, pandemic or other public health crises, or other unforeseen disruption, then the Company or they* may*be prevented or delayed from effectively operating its or their business, respectively.

8

NOTE3 —** SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

1. ** Principles of Consolidation**

The accompanying consolidated unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), and the applicable rules and regulations of the Securities and Exchange Commission (SEC) include the accounts of Milestone Scientific and its wholly owned and majority owned subsidiaries, including, Wand Dental (wholly owned), and Milestone Innovations Inc. (wholly owned). All significant, intra-entity transactions and balances have been eliminated in the consolidation. Ownership interests in consolidated entities that are held by entities other than us are reported as noncontrolling interests in our consolidated balance sheets. Losses attributed to noncontrolling interests are reported separately in our consolidated statements of operations.

During* December 2023,*the Board of Directors of the Company approved a resolution to repurchase the remaining minority stake of Milestone Medical, Inc. for $214,000. Concurrently, the Company transferred the net assets of Milestone medical, Inc. to a newly created, wholly owned subsidiary, Milestone Innovations, Inc, a Delaware corporation.

2. Basis of Presentation

The unaudited consolidated financial statements of Milestone Scientific have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information with the instructions for Form10-Q and Article8 of Regulation S-X. Accordingly, they donot include all the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results arenot necessarily indicative of the results of operations which* maybe expected for a full year or any subsequent period. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2023,included in Milestone Scientific's Annual Report on Form10*-K.

3. Use of Estimates

The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to the inventory valuation and cash flow assumptions regarding evaluations of going concern considerations. The Company bases its estimates on historical experience, known trends and other market-specific or relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

4. ** Revenue Recognition**

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To perform revenue recognition, the Company performs the followingfive steps:

The Company derives its revenues from the sale of its products, primarily dental instruments, handpieces, and other related products. The Company sells its products directly to consumers in the United States and through a global distribution network that includes both exclusive and non-exclusive distribution agreements with related andthird parties.

Revenue from product sales is recognized upon transfer of control of a product to a customer, generally upon date of shipment. The Company hasno obligation on product sales for any installation, set-up, or maintenance, these being the responsibility of the buyer. Milestone Scientific's only obligation after sale is the normal commercial warranty against manufacturing defects if the alleged defective unit is returned within the warranty period.

E-Commerce

As of* January 3, 2023,the Company launched an E-Commerce platform, selling and shipping STA Single Tooth Anesthesia Systems® (STA) and handpieces directly to dental offices and dental groups within the United States. Our E-commerce portal accepts online payments via credit and debit cards. The cost of delivery is charged to the customer along with appropriate sales tax. The Company recognizes revenue from product sales at the time the product ships to a customer via athird*-party carrier.

9

Sales Returns

The Company records allowances for product returns as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns is required, including the customers’ return rights and the Company’s historical experience with returns and the amount of product in the distribution channelnot consumed by end users and subject to return. The Company relies on historical return rates to estimate returns.

The Company terminated its major U.S. distributor contract as of* December 31, 2022.That distributor had return rights in connection with this contract termination that extended through March 31, 2023.The Company recorded allowance of approximately $179,000 for those returns within its December 31, 2022financial statements. As of March 31, 2023**no* returns were presented, and the Company reversed the allowance for sales returns. As of* March 31, 2024,*the company recordedno sales returns.

Financing and Payment

The Company's payment terms differ by geography and customer, but payments from distributors are required within90 days or less from the date of shipment. The E-commerce portal sells directly to end users and accepts online payments via credit and debit cards via athird-party. These payments from thethird party are typically settled withintwo business days.

Disaggregation of Revenue

The Company operates intwo operating segments: dental and medical. Therefore, the results of the Company's operations are reported on a consolidated basis for the purposes of segment reporting, consistent with internal management reporting. See Note8 for revenues by geographical market, based on the customer’s location, and product category for thethree months ended* March 31, 2024,and2023,* respectively.

5. ** Cash and Cash Equivalents**

Milestone Scientific considers all highly liquid investments purchased with an original maturity ofthree months or less to be cash equivalents. As of* March 31, 2024and December 31, 2023,Milestone Scientific has approximately $4.0 million and $3.0 million, respectively of cash and cash equivalents. As of March 31, 2024,Milestone Scientific had approximately $3.4 million in cash, cash equivalents, and marketable securities in accounts that exceeded the Federal Deposit Insurance Corporation insurance limit of$250,000.*

6. Marketable Securities

The Company’s marketable securities are comprised of treasury bills with original maturity greater thanthree months from date of purchase. The Company’s marketable securities are measured at fair value and are accounted for in accordance with ASC825, Financial Instruments. Unrealized holding gains and losses on treasury bills are recorded in interest income on the unaudited condensed consolidated statements of operations. Dividend and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of the marketable securities.

The appropriate classification of marketable securities is determined at the time of purchase and evaluated as of each reporting balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Declines in the fair values of equity securities that are considered other-than-temporary, are charged to other income (expense), net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. As of* March 31, 2024,the Company held approximately $1.0 million in U.S. treasury securities, with maturity dates within3* and6 months of the balance sheet date.

7. ** Accounts Receivable**

The E-commerce portal sells directly to end users and accepts online payments via credit and debit cards via athird-party credit card processor. These payments are settled within2 business days of the transactions. Sales to distributors are on credit terms. The Company estimates losses from the ability or inability of its distributor to make payments on amounts billed.

Distributors credit sales are due90 days or less from the date of invoicing. As of* March 31, 2024and December 31, 2023,*accounts receivable was recorded, net of allowance for credit losses of $10,000, respectively.

8. ** Inventories**

Inventories principally consist of finished goods and component parts stated at the lower of cost (first-in,first-out method) or net realizable value. Inventory quantities on hand are reviewed on a quarterly basis and a provision for excess, slow moving, defective, and obsolete inventory is recorded if required based on past and expected future sales, potential technological obsolescence, and product expiration requirements.

The valuation allowance creates a new cost basis for the inventory, and it isnot subsequently marked up through a reduction in the valuation allowance based on any changes in the underlying facts and circumstances. When the valuation allowance is initially recorded, the increase to the allowance is recognized as an increase in cost of sales. The valuation allowance is only reduced if or when the underlying inventory is sold or destroyed, at which time cost of sales recognized would include the previous adjusted cost basis.

10

9. ** Basic and Diluted Net Loss Per Common Share**

Milestone Scientific presents “basic” earnings (loss) per common share applicable to common stockholders and, if applicable, “diluted” earnings (loss) per common share applicable to common stockholders pursuant to the provisions of ASC260, “Earnings per Share”. Basic earnings (loss) per common share is calculated by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding and to be issued common shares as follows:79,738,551 and 72,104,234 for thethree months ended* March 31, 2024and2023,* respectively. The calculation of diluted earnings per common share is like that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares, such as those issuable upon the exercise of stock options and warrants, were issued during the period. Since Milestone Scientific had net losses in thethree months ended* March 31, 2024and2023,* the assumed effects of the exercise of potentially dilutive outstanding stock options, unissued restricted stock awards (“RSA”) and warrants, werenot included in the calculation as their effect would have been anti-dilutive. Such outstanding options, RSA's and warrants totaled 3,296,480 and 7,670,661 for thethree months ended* March 31, 2024and2023,* respectively.

10. Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market at the measurement date (exit price). The Company required us to classify fair value measurements inone of the following categories.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of an input to the fair value measurement requires judgment and* mayaffect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. As of March 31, 2024,*the Company has the following assets that were measured at fair value on a recurring basis.

As of* March 31, 2024,and December 31, 2023*the Company has the following assets that were measured at fair value on a recurring basis:

Marketable Securities included US Treasury securities totaling $1,000,000 and $2,976,573 that are considered to be highly liquid and easily transferable at* March 31, 2024and December 31, 2023,respectively. US Treasury securities are valued using inputs observable in active markets for identical securities and are therefore classified at Level1* within the Company fair value hierarchy.

11. Stock-Based Compensation

Milestone Scientific accounts for stock-based compensation under ASC Topic718, Share-Based Payment (“ASC Topic718”). ASC Topic718 requires all share-based payments to employees, non-employees, directors, and officers, including grants of employee stock options, to be recognized in the unaudited condensed consolidated statements of operations over the service period, as an operating expense, based on the grant-date fair values.

11

12. Recent Accounting Pronouncements

Recently Issued Accounting Pronouncement

In* November 2023,FASB issued ASU2023*-07, Segment Reporting (Topic280*), Improvements to Reportable Segment Disclosures*, which provides improvements to reportable segment disclosure requirements, primarily through enhanced disclosures around segment expenses. ASU2023-07 requires us to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss. ASU2023-07 also requires that the Company disclose an amount for other segment items by reportable segment, a description of their composition and provide all annual disclosures about a reportable segment’s profit or loss and assets pursuant to Topic280 during interim periods. The Company must also disclose the CODM’s title and position, as well as certain information around the measures used by the CODM and an explanation of how the CODM uses the reported measures in assessing segment performance and deciding how to allocate resources. For public entities with a single reportable segment, the entity must provide all the disclosures required pursuant to ASU2023-07 and all existing segment disclosures under Topic280. The amendments of ASU2023-07 are effective for the Company for annual periods beginning* January 1, 2024,and effective for interim periods beginning January 1, 2025.Early adoption is permitted for annual financial statements that havenot* yet been issued or made available for issuance. The Company expects to adopt this standard effective* January 1, 2024,at December 31, 2024on the Company’s annual Form10*-K filing. The Company expects to update all required disclosures pursuant to this ASU2023-07 at that time. The Company is evaluating the impact of ASU2023-07 on our financial statements.

In* December 2023,FASB issued ASU2023*-09,** Income Taxes (Topic740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU2023-09 provide improvements primarily related to the rate reconciliation and income taxes paid information included in income tax disclosures. The Company would be required to disclose additional information regarding reconciling items equal to or greater thanfive percent of the amount computed by multiplying pretax income (loss) by the applicable statutory tax rate. Similarly, the Company would be required to disclose income taxes paid (net of refunds received) equal to or greater thanfive percent of total income taxes paid (net of refunds received). Additionally, the Company would be required to disclose income (loss) from continuing operations before income tax expense disaggregated by foreign and domestic jurisdictions, as well as income tax expense disaggregated by federal, state, and foreign jurisdictions. The amendments in ASU2023-09 are effective* January 1, 2025,including interim periods. Early adoption is permitted for annual financial statements that havenot* yet been issued or made available for issuance. The Company will evaluate the impact of ASU2023-09 on our financial statements.

Recently Adopted Accounting Pronouncement

In* June 2016,the FASB issued ASU2016*-13, Measurement of Credit Losses on Financial Instruments (“ASU2016-13”), which amends the guidance on measuring credit losses for certain financial assets measured at amortized cost, including trade receivables. The FASB has subsequently issued several updates to the standard, providing additional guidance on certain topics covered by the standard. This update requires entities to recognize an allowance for credit losses using a forward-looking expected loss impairment model, taking into consideration historical experience, current conditions, and supportable forecasts that impact collectability. As* January 1, 2023,the Company adopted ASU2016*-13, Measurement of Credit Losses on Financial Instruments (“ASU2016-13”) the adoption of this ASU doesnot have a material impact on our financial statements.

NOTE4 —** INVENTORIES**

Inventories consist of the following:

12

NOTE5 —** ADVANCES ON CONTRACTS**

The advances on contracts represent funding of future STA devices, epidural instruments, and epidural replacements parts. The balance of the advances as of* March 31, 2024and December 31, 2023*is approximately $1.4 million, respectively. The advance is classified as current based on the estimated annual usage of the underlying inventory.

NOTE6—** STOCKHOLDERS**’** EQUITY**

Public offering

On* December 10, 2023,the Company completed a public offering for sale of 4,765,000 common stock, at $0.63 per share which generated net proceeds of approximately $2.6 million. In addition, the Company granted the Underwriter a45*-day option to purchase up to an additional 714,750 shares of Common Stock at the same price to cover over-allotments.

In connection with the Company's capital raise on* December 10, 2023,on January 12, 2024*the underwriter exercised its over-allotment option as to 372,110 shares of common stock for net proceeds after discounts and commission of $192,156.

During thethree months ended* March 31, 2024,the Company issued 103,500 shares of common stock for warrants issued in2019.* The warrants were exercised at $0.50 for proceeds of $51,751.

Warrants

The following table summarizes information about shares issuable under warrants outstanding as of* March**31,2024:*

Shares to Be Issued

As of* March 31, 2024and2023,* there were 2,979,994 and 2,136,101 shares issuable, the issuance of which has been deferred under the terms of employment agreements with the Chief Executive Officer and other employees of Milestone Scientific. Such shares are issuable to each party upon termination of their respective employment.

As of* March 31, 2024and2023,* there were 527,624 and 382,697 shares issuable to non-employees, for services rendered. The number of shares was fixed at the date of grant and were fully vested upon grant date.

The following table summarizes activity for shares to be issued for thethree months periods ending* March 31, 2024and2023.*

13

Stock Options Plans

The Milestone Scientific Inc., Amended and Restated2020 Equity Incentive Plan, provides for awards of restricted common, stock restricted stock units, options to purchase and other awards. On* June**28,* 2023 the plan was amended and restated (the*"2020* Plan") the maximum 4,000,000 common stock share was increased to 11,500,000 shares of common stock. The plan expires in* June 2031.Options maybe granted to employees, directors, and consultants of Milestone Scientific for the purchase of shares of common stock at a pricenot* less than the fair market value of common stock on the date of grant. Generally, options become exercisable over athree-year period from the grant date and expire five years after the date of grant.

Milestone Scientific recognizes compensation expenses over the requisite service period and in the case of performance-based options over the period of the expected performance. As of* March 31, 2024and2023,* Milestone Scientific recognized approximately $175,000 and $362,000 of total employee compensation cost, respectively, recorded in general and administrative expenses on the statement of operations.

As of* March 31, 2024,*there was $1.4 million of total unrecognized compensation cost related to non-vested options. Milestone Scientific expects to recognize these costs over a weighted average period of 2.3 years.

A summary of option activity for employees under the plans and changesthree months ended* March 31, 2024*is presented below:

A summary of option activity for non-employees under the plans and changes during thethree months ended* March 31, 2024*presented below:

For thethree months ended* March 31, 2024and2023,* Milestone Scientific recognized approximately $1,100 and $7,800, respectively of expense related to non-employee options.

The information below summarizes the restricted stock award activity for thethree months ended* March 31, 2024.*

As of* March 31, 2024,all restricted shares granted and deferred under the terms of employment agreements with each Territory Manager of Milestone Scientific are fully vested. Such shares are expected to be issued to each party upon completion oftwo years of employment. For thethree* months ended* March 31, 2024,and2023,* the Company recognized stock compensation expense of approximately $2,100 and $9,400 respectively. For thethree months ended* March 31, 2024,*there wasno unrecognized compensation expense.

14

As of* June 28, 2023,the Company entered into restricted stock agreements with members of the Board of Directors of the Company. The Company granted 617,978 restricted stock awards with a fair market value of $0.89 per share. Such restricted stock vests as follows:25% on the grant date in June 2023,and 25% quarterly, on thefirst* day of the following months:* October 2023,** January 2024,and April 2024.These awards vest immediately upon a change of control as defined in the agreements. For thethree* months ended* March 31, 2024,and2023,* the Company recognized approximately $137,500 and $140,000, respectively, for restricted stock expenses recorded in general and administrative expenses on the statement of operations. For thethree months ended* March 31, 2024,*there wasno unrecognized compensation expense.

NOTE7 —** INCOME TAXES**

The utilization of Milestone Scientific's net operating losses* maybe subject to a substantial limitation due to the "change of ownership provisions" under Section382* of the Internal Revenue Code and similar state provisions. Such limitation* may*result in the expiration of the net operating loss carry forwards before their utilization. Milestone Scientific has established a 100% valuation allowance for all its deferred tax assets due to uncertainty as to their future realization.

NOTE 8 —** SEGMENT AND GEOGRAPHIC DATA**

The Company conducts its business throughtwo reportable segments: Dental and Medical. These segments offer different products and services to different customer base. The Company provides general corporate services to its segments; however, these services arenot considered when making operating decisions and assessing segment performance. These services are reported under “Corporate Services” below and these include costs associated with executive management, investor relations, patents, trademarks, licensing agreements, new instruments developments, financing activities and public company compliance.

The following tables present information about our reportable and operating segments:

15

NOTE9 –** CONCENTRATIONS**

Milestone Scientific has informal arrangements withthird-party U.S. manufacturers of the STA devices, and epidural instruments pursuant to which they manufacture these products under specific purchase orders which contains advance payments for long lead items for production. Advances on contracts have been classified as current at* March 31, 2024and December 31, 2023.*The termination of the manufacturing relationship with any of these manufacturers could have a material adverse effect on Milestone Scientific’s ability to produce and sell its products. Although alternate sources of supply exist, and new manufacturing relationships could be established, Milestone Scientific would need to recover its existing tools or have new tools produced. Establishment of new manufacturing relationships could involve significant expense and delay. Any curtailment or interruption of the supply, because of termination of such a relationship, would have a material adverse effect on Milestone Scientific’s financial condition, business, and results of operations.

On* January 3, 2023,the Company launched an E-Commerce platform selling and shipping STA Single Tooth Anesthesia System® (STA) and handpieces directly to dental offices and dental groups within the U.S. For thethree* months ended* March 31, 2024,E-Commerce accounted for 53% of net product sales andone international distributor accounted for 15% of net product sales. For thethree* months ended* March 31, 2023,*E-commerce accounted for 40% of net product sales andone international distributor accounted for 15% of net product sales.

The Company hadtwo distributors that accounted for 41% and 18% of accounts receivable, respectively, for thethree months ended* March 31, 2024.The Company hadthree distributors that accounted for 39%,38%, and 15% of accounts receivable, respectively as of December 31, 2023.*

As of* March 31, 2024,the Company hadtwo suppliers that accounted for 40% and 19%, respectively, of accounts payable and accounts payable related party. The Company hadthree vendors that accounted for 37%,17% and 12% respectively of accounts payable and accounts payable related to the party as of December 31, 2023.*

NOTE10 -- RELATED PARTY TRANSACTIONS

United Systems

Milestone Scientific has a supply agreement with United Systems (whose controlling shareholder, Tom Cheng, is a significant stockholder of Milestone Scientific), the principal manufacturer of our handpieces, pursuant to which manufacture is under specific purchase orders, but without minimum purchase commitments. Purchases from this manufacturer were approximately $777,000 for thethree months ended* March 31, 2024.Purchases from this manufacturer were approximately $667,000 forthree* months ended* March 31, 2023.*

As of* March 31, 2024and December 31, 2023,*Milestone Scientific owed this manufacturer approximately $776,700, and $402,000, respectively, which is included in accounts payable, related party and accrued expense, related party on the unaudited condensed consolidated balance sheets.

16

Director of Clinical Affairs

The Director of Clinical Affairs’ royalty fee was approximately $116,000 and $122,000 for thethree months ended* March 31, 2024and2023,* respectively. Additionally, Milestone Scientific expensed consulting fees to the Director of Clinical Affairs of $39,000 for thethree months ended* March 31, 2024and2023,* respectively. As of* March 31, 2024and December 31, 2023,*Milestone Scientific owed the Director of Clinical Affairs for royalties of approximately $121,000 and $114,000, respectively, which is included in accounts payable, related party and accrued expense, related party, in the consolidated balance sheets.

**Leonard Osser,**Director

On* March 2, 2021,the Company entered into a Royalty Sharing Agreement with Leonard Osser, pursuant to which Mr. Osser sold, transferred and assigned to the Company all of his rights in and to a certain patent application as to which he is a co-inventor with Mark Hochman, a consultant to the Company, and the Company agreed to pay to Mr. Osser, beginning May 9, 2027,half of the royalty (2.5%) on net sales that would otherwise be payable to Mark and Claudia Hochman under their existing Technology Sale Agreement, dated January 1, 2005and amended from time to time, with the Company. In connection with the Royalty Sharing Agreement, the Hochman's agreed with the Company, pursuant to an addendum to such Technology Sale Agreement dated February 25, 2021,to reduce from 5% to 2.5% the payments due to them under their Technology Sale Agreement beginning on May 9, 2027,*and thereafter with respect to dental products embodying the invention.

As part of the Succession Plan of the Company, Mr. Osser agreed, pursuant to an agreement dated* April 6, 2021 (*the “Succession Agreement”), to restructure certain of his existing agreements with the Company, which provide for additional and broader executive support, and at such time as he elects to step down as Interim Chief Executive Officer of the Company, to become the Vice Chairman of the Board of the Company.

With respect to Mr. Osser’s* July 2017Employment Agreement and July 2017Consulting Agreement (each as previously disclosed), the compensation under the Employment Agreement was modified to reduce the overall compensation by $100,000 to $200,000, split equally between a cash amount and an amount in shares, and the compensation under the Consulting Agreement was increased by $100,000 to $200,000, equally split between a cash amount and an amount in shares, which shares were formerly payable under the Employment Agreement. If the Company terminates Mr. Osser’s employment “Without Cause,” other than due to his death or disability, or if Mr. Osser terminates his employment for “Good Reason” (both as defined in the agreement), Mr. Osser is entitled to be paid inone* lump sum payment as soon as practicable following such termination: an amount equal to the aggregate present value (as determined in accordance with Section280G(d)(4) of the Code) of all compensation pursuant to this agreement from the effective date of termination hereunder through the remainder of the Employment Term. In connection with his acceptance of the Vice Chairman position and in consideration of his services as a member of the Board and agreement to provide certain additional general consulting services, Mr. Osser was granted options to purchase 2,000,000 shares of common stock, exercisable at the fair market value of the common stock on the date of grant, vesting over thefive-year period after he steps down as Interim Chief Executive Officer of the Company orten years from the date of grant, whichever shall end first. The Company believes that the effect of such existing agreements and the Succession Agreement, all of which relate to the period after such time Mr. Osser steps down as Interim Chief Executive Officer of the Company, collectively expand Mr. Osser’s consulting to and support of the Company beyond its Chinese operations to also include its medical and other products, while enhancing the retention aspects of the Company’s relationship with Mr. Osser. On* May 19, 2021,*Mr. Osser resigned as Interim Chief Executive Officer of the Company and assumed the role of Vice Chairman of the Board.

Compensation under the Employment Agreement and the Consulting Agreement is payable for9.5 years from* May 19, 2021.The Company recorded expenses of $50,000 related to the Employment Agreement for thethree* months ended* March 31, 2024and2023,* respectively. The Company recorded expenses of $50,000 related to the Consulting Agreement for thethree months ended* March 31, 2024and2023,* respectively.

Dr. D. Demesmin, Director

As of* February 2024,the University Pain Medicine Center (STEMMEE), of which Dr. D. Demesmin, a Company board member is the CEO agreed to purchases products from the Company under the same terms and conditions applying to other medical pain clinics in the United States. During thefirst* quarter of2024, STEMMEE purchased medical products in theamount of $3,000 from the Company.

NOTE11 —** COMMITMENTS**

(1) Contract Manufacturing Agreement

Milestone Scientific has informal arrangements withthird-party manufacturers of the STA devices, and epidural instruments pursuant to which they manufacture these products under specific purchase orders but without any long-term contract or minimum purchase commitment. The Company has a purchase commitment for the delivery of 2,000 STA instruments as of* March 31, 2024.As of March 31, 2024,the purchase order commitment was approximately $2.1 million, and approximately $1.1 million was paid and reported in advance on contracts in the condensed consolidated balance sheet. As of March 31, 2024the Company recorded approximately $98,000 for the development of the next generation instrument in advances on contracts in the consolidated balance sheet. As of December 31, 2023,*the purchase order commitment was approximately $2.3 million, and approximately $1.3 million was paid and reported in advance on contracts in the consolidated balance sheet.

The advances on contracts represent funding of future epidural instruments, and epidural replacements parts. As of* March 31, 2024and December 31, 2023*the company also has advances on an open purchase order for long lead items for a future purchase order for the manufacturing of Epidural instrument of approximately $165,000 and $41,000 respectively.

17

(2) Leases

Operating Leases

The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:

The components of lease expense were as follows:

NOTE12 —** SUBSEQUENT EVENTS**

Additionally, the Company was approved on* September 12, 2023to sell Net Operating Losses through the New Jersey Technology Business Tax Certificate Transfer Program (“NJ NOL Program”), a program administered by the New Jersey Economic Development Authority (“NJEDA”). On April 8, 2024,*the Company completed the net sale of $2.0 million worth of NOLs via the NJ NOL Program.

18