Milestone Scientific (PINK:MLSS)

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Wednesday, March 30, 2011

Comments & Business Outlook

MILESTONE SCIENTIFIC INC.

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2010 AND 2009


	2010			2009
Product sales, net	$	9,749,968		$	8,549,060

Cost of products sold		3,531,452			3,458,279

Gross profit		6,218,516			5,090,781

Selling, general and administrative expenses		6,648,859			6,952,976
Research and development expenses		270,494			241,318

		6,919,353			7,194,294

Loss from operations		(700,837	)		(2,103,513	)
Other income (expense)
Other income		183,673			777,609
Interest income		587			3,146
Interest expense		(95,135	)		(154,027	)
Amortized debt issuance		(2,796	)		(53,300	)

Total other income		86,329			573,428

Net loss	$	(614,508	)	$	(1,530,085	)


Net loss applicable to common stockholders	$	(614,508	)	$	(1,530,085	)

Loss per share applicable to common stockholders - basic and diluted	$	(0.04	)	$	(0.11	)

Weighted average shares outstanding and to be issued - basic and diluted		14,824,802			13,389,872

GeoTeam Note: Fourth Quarter 2010 vs. 2009 was $(0.02) vs. $0.01

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Liquidity Requirements

As of December 31, 2010, the Company had cash and cash equivalents of $627,082 and a negative working capital of $6,685. The significant decrease in working capital of $1,632,758 in 2010 was caused by a delay in obtaining regulatory approval to sell our instruments and handpieces in China. Based on the initial purchase order from our distributor in China in 2009, the Company ramped up purchasing of parts in anticipation of significant sales in 2010 and future years. As a result of the delay in shipping, the advances to contract manufacturer has increased significantly, (current and long term), in 2010 as compared to 2009. Additionally, the accounts payable due to suppliers has also increased and is classified as current and long term. And finally, the accounts receivable from the China distributor has been classified between current and long term net of a reserve of doubtful accounts of $636,000.

The Company’s recurring losses and negative operating cash flows raises substantial doubt about its ability to continue as a going concern. The accompanying financial statements do not include any adjustment that might result from the outcome of this uncertainty.

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