10-Q: Milestone Scientific Q3 2025: Losses Persist Amid Revenue Shifts

Milestone Scientific reports continued operating losses in Q3 2025, with a 6% revenue decline driven by lower dental sales, despite re-entry into the China market.

Summary

• Incurred a net loss of $1.15 million for the three months ended September 30, 2025, compared to a net loss of $1.46 million for the same period in 2024.
• Reported a net loss of $4.63 million for the nine months ended September 30, 2025, a significant increase from $2.68 million for the same period in 2024 (the 2024 period included a $1.98 million gain from the sale of net operating losses).
• Consolidated revenue decreased by 6% to $2.36 million in Q3 2025 from $2.51 million in Q3 2024.
• Consolidated revenue increased by 5% to $6.92 million for the nine months ended September 30, 2025, from $6.62 million in the prior year.
• Operating loss improved by 22% in Q3 2025 to $1.13 million from $1.47 million in Q3 2024.
• Operating loss improved by 2% for the nine months ended September 30, 2025, to $4.62 million from $4.71 million in the prior year.
• Cash and cash equivalents stood at $1.35 million as of September 30, 2025, down from $3.26 million at December 31, 2024.
• Working capital was approximately $3.1 million as of September 30, 2025.
• Management has concluded that substantial doubt exists about the ability to continue as a going concern for a period of one year from the date of the financial statements due to recurring losses and the need for additional capital.

Sentiment

Score: 3

Explanation: While there are some cost-cutting efforts and re-entry into the China market, the company faces significant liquidity challenges, recurring losses, and explicitly states 'substantial doubt about its ability to continue as a going concern.' The cash burn rate is high, and overall revenue declined in the most recent quarter. The reliance on future capital raises and the delay in R&D for a next-gen product indicate underlying financial strain.

Positives

• Operating loss improved by 22% in Q3 2025 to $1.13 million, compared to $1.47 million in Q3 2024.
• Operating loss improved by 2% for the nine months ended September 30, 2025, to $4.62 million, compared to $4.71 million in the prior year.
• Selling, general, and administrative (SG&A) expenses decreased by 10% in Q3 2025 to $2.74 million, reflecting cost containment and operational efficiency.
• Research and development (R&D) expenses decreased significantly by 93% in Q3 2025 to $16,000 and by 32% for the nine months to $437,000.
• Successfully re-entered the China market, generating $200,000 in sales in Q3 2025 and $310,000 for the nine months, compared to no sales in the same periods of 2024.
• Medical revenue increased by 69% for the nine months ended September 30, 2025, totaling $125,000 compared to $74,000 in the prior year.
• The CompuFlo Epidural Computer Controlled Anesthesia System received a chronology-specific CPT code, expanding reimbursement potential for epidural procedures in pain management.

Negatives

• Net loss for the nine months ended September 30, 2025, was $4.63 million, significantly higher than $2.68 million in 2024 (though 2024 included a $1.98 million gain from NOL sale, making the underlying operational loss worse year-over-year).
• Consolidated revenue decreased by 6% in Q3 2025 to $2.36 million compared to $2.51 million in Q3 2024.
• Cash and cash equivalents decreased significantly to $1.35 million at September 30, 2025, from $3.26 million at December 31, 2024.
• Net cash used in operating activities increased by $1.3 million for the nine months ended September 30, 2025, compared to the same period in 2024, indicating a higher cash burn.
• International dental revenue decreased by 20% in Q3 2025 to $1.0 million, compared to $1.2 million in Q3 2024.
• E-commerce dental revenue decreased by 9% in Q3 2025 to $1.0 million and by 7% for the nine months to $3.3 million.
• Medical segment revenue decreased by 13% in Q3 2025 to $41,000, compared to $47,000 in Q3 2024.
• Revenue from Dental Service Organizations (DSOs), government agencies, and dental schools decreased by 12% for the nine months to $277,000.
• Accumulated deficit reached approximately $132.7 million since inception.
• Management has concluded that substantial doubt exists about the ability to continue as a going concern.

Risks

• History of operating losses that are expected to continue, requiring additional funding.
• Inability to raise capital when needed may force delays, curtailment, or elimination of commercialization efforts of the CompuFlo Epidural Computer Controlled Anesthesia System.
• Early stage operations and relative lack of acceptance of medical products.
• Reliance exclusively on two third parties to manufacture products, exposing the company to supply chain risks.
• Changes to distribution arrangements expose the company to risks of interruption of marketing efforts and building new marketing channels.
• Changes in informal manufacturing arrangements and disruptions at manufacturing facilities, including shortages of or delays in obtaining chips and other components, may harm the business.
• Raising additional funds by issuing securities or through licensing or lending arrangements may cause dilution to existing stockholders, restrict operations, or require relinquishing proprietary rights.
• If physicians do not accept or use the CompuFlo Epidural Computer Controlled Anesthesia System, the ability to generate revenue from sales will be materially impaired.
• Exposure to the risks inherent in international sales and operations, including China.
• The changing tariff and trade policies of the United States and China.
• Developments by competitors may render products or technologies obsolete or non-competitive.
• Potential liability to pay the state of New Jersey up to $2.2 million if the company does not retain a physical presence for 5 years after the sale of net operating losses (NOLs).
• Tariffs are likely to increase the cost of doing business and make it more difficult to obtain imported equipment.
• Ending or reducing government research funding is likely to make it more challenging to find collaborative research partners and raise capital.

Future Outlook

Management is actively pursuing additional sources of funding through equity and debt financing to support the current operating plan and is focused on generating positive cash flow from operations by increasing revenue from its dental business worldwide, expanding sales of its medical devices and disposables, and reducing operating expenses. The company maintains flexibility to resume next-generation product development based on market conditions and strategic priorities.

Management Comments

• "Management's ongoing cost-control initiatives, combined with the Company's focus on operational efficiency and disciplined spending, contributed to the improvement in quarterly operating performance despite a modest decline in consolidated revenue."
• "The reduction [in SG&A] primarily reflects management's continued focus on cost containment and operational efficiency."
• "The decrease [in R&D] reflects management's strategic decision to delay development activities related to the next-generation STA Single Tooth Anesthesia System instrument."
• "Management remains focused on further improving operating results through disciplined expense management, cost optimization initiatives, and the continued expansion of higher-margin product sales across both the dental and medical segments."
• "Management continues to monitor cash usage closely and implement measures aimed at improving operational efficiency and aligning expenses with revenue growth."
• "Management has concluded that substantial doubt exists about the Company's ability to continue as a going concern for a period of one year from the date these unaudited condensed financial statements are issued."

Industry Context

Milestone Scientific operates in the biomedical technology sector, focusing on computer-controlled injection systems for dental and medical applications. The company's dental products, like the STA Single Tooth Anesthesia System, are well-established globally. In the medical segment, the CompuFlo Epidural System is gaining traction, supported by a recent chronology-specific CPT code from the AMA, which is crucial for expanding reimbursement and adoption in the U.S. pain management market. The company's re-entry into the China market for dental products indicates efforts to diversify international revenue streams amidst slower activity in some European markets. The broader industry trend for medical devices emphasizes precision, patient comfort, and efficient drug delivery, areas where Milestone's DPS technology aims to set a new standard of care.

Management Changes

Corporate Governance

Related Party Transactions

• Issued $800,000 in promissory notes to directors Mr. Neal Goldman, Ms. Benedetta Casamento, and Dr. Didier Demesmin on April 9, 2025.
• Has a supply agreement with United Systems, the principal supplier of its handpieces; purchases were approximately $881,000 for Q3 2025 and $1.7 million for the nine months ended September 30, 2025. Owed United Systems approximately $1.0 million as of September 30, 2025.
• Paid royalty fees to the Director of Clinical Affairs of approximately $119,000 for Q3 2025 and $351,000 for the nine months ended September 30, 2025.
• Expensed consulting fees to the Director of Clinical Affairs of $25,000 for Q3 2025 and $103,000 for the nine months ended September 30, 2025.
• Owed the Director Clinical Affairs approximately $244,000 for royalties as of September 30, 2025.
• Leonard Osser (Vice Chairman) has a Royalty Sharing Agreement (effective May 9, 2027) and Employment/Consulting Agreements. Expenses related to his Employment Agreement were $50,000 for Q3 2025 and $100,000 for the nine months ended September 30, 2025. Expenses related to his Consulting Agreement were $50,000 for Q3 2025 and $100,000 for the nine months ended September 30, 2025. He owns 2,717,765 shares of stock and 2,481,048 shares to be issued.
• University Pain Medicine Center (STEMMEE), of which Dr. D. Demesmin (a Company board member) is the CEO, purchased medical products for approximately $12,000 for Q3 2025 and $33,000 for the nine months ended September 30, 2025.
• Arjan J. Haverhals (Director) has a consulting agreement (commenced January 1, 2025) with an annual fee of $350,000. Expenses were $67,000 for Q3 2025 and $283,000 for the nine months ended September 30, 2025. He will be issued 912,736 shares six months after his resignation as CEO.

Stakeholder Impact

• Shareholders face potential significant dilution from future equity financings and continued operating losses, which pose risks to investment value.
• Employees may be impacted by workforce realignment and headcount optimization, which led to decreased salaries and benefits, though stock-based compensation remains a component of overall compensation.
• Dental customers will continue to have access to STA Single Tooth Anesthesia System and handpieces, with re-entry into the China market, but may experience delays in next-generation products.
• Medical customers may benefit from ongoing efforts to expand awareness and adoption of CompuFlo Epidural and CathCheck Systems, supported by the CPT code for reimbursement.
• Suppliers, particularly key manufacturers like United Systems, are critical to the company's operations, and any termination of these informal arrangements could lead to significant supply chain disruptions.
• Creditors, including related parties holding convertible notes, face increased credit risk due to the company's recurring losses and stated going concern doubt.

Next Steps

• Generate positive cash flows from operating activities.
• Increase revenue from dental business worldwide.
• Generate revenue from medical devices and disposables business in the United States and worldwide.
• Reduce operating expenses.
• Raise additional capital through equity or debt financings.
• Expand awareness and adoption of CompuFlo Epidural and CathCheck Systems within the U.S. pain management market.
• Resume development activities for the next-generation STA Single Tooth Anesthesia System at a later date based on market conditions and strategic priorities.

Key Dates

Recommendation

The company explicitly states 'substantial doubt about its ability to continue as a going concern' due to recurring losses and a high cash burn rate, which increased significantly in the nine months ended September 30, 2025. Cash and cash equivalents have dwindled to $1.35 million. While cost-cutting measures are in place and there's some growth in medical sales and re-entry into China, overall Q3 revenue declined, and the accumulated deficit is substantial. The need for further capital raises, which may dilute existing shareholders, combined with the inherent risks of relying on third-party manufacturers and physician adoption, presents a highly speculative investment profile with significant downside risk. A seasoned investor would likely view the going concern warning and deteriorating cash position as a strong signal to exit the position.

Keywords

Milestone Scientific, MLSS, Quarterly Report, Medical Devices, Dental Devices, CompuFlo Epidural System, STA Single Tooth Anesthesia System, Dynamic Pressure Sensing, DPS Technology, Anesthesia, Pain Management, Dental Anesthesia, FDA Clearance, CE Mark, CPT Code, Going Concern, Operating Loss, Revenue, Cash Flow, Capital Raise, Biomedical Technology, SEC Filing