Milestone Scientific Announces Second Quarter Operating Results

LIVINGSTON, N.J., Aug. 14  /PRNewswire-FirstCall/ -- Milestone Scientific Inc. (AMEX:MSS), which develops, manufactures, and markets "intelligent" computer controlled local anesthetic delivery systems, today announced its operating results for the second quarter and first half of 2006.

For the three months ended June 30, 2006, net product sales decreased 2% to $1,425,821, compared with net product sales of $1,456,731 in the second quarter of 2005.  Royalty income from the Ionic White(TM) consumer tooth whitening system totaled $49,473, or 3% of total revenues, in the most recent quarter, compared with $219,210 (13% of revenues) in the year-earlier quarter. Gross profit decreased to $781,533 in the most recent quarter, versus $1,111,032 in the second quarter of 2005.  Net loss for the quarter increased to ($954,015), or ($0.08) per share, compared with a net loss of ($789,790), or ($0.07) per share, in the three months ended June 30, 2006.

Selling, general and administrative expenses for the three months ended June 30, 2006 and 2005 were $1,369,497 and $1,854,562, respectively.  The $485,065 decrease reflects reductions in salaries, fees and travel expenses.

Research and development expenses for the three months ended June 30, 2006 and 2005 were $390,741 and $69,844, respectively.  These increased costs are primarily associated with the accelerated development of the company's Single Tooth Anesthetic (STA) delivery system and CompuFlo(TM) technology.

Revenues for the six months ended June 30, 2006, increased 1% to $3,173,050, compared with $3,133,844 in the corresponding period of the previous year.  Product sales rose 3% to $2,986,740, compared with $2,914,634 in the first half of 2005.  During the six months ended June 30, 2006, the Company recorded $186,310 in royalties from sales of Ionic White, compared with $219,210 in the year-earlier period.  The Company reported a net loss of ($1,639,594), or ($0.14) per share, in the first six months of 2006, compared with a net loss of ($1,668,733), or ($0.16) per share, in the six months ended June 30, 2005.

Due to a planned curtailment of the CompuDent sales program in order to focus on the development of the Company's single tooth anesthetic delivery system (to be introduced in the first quarter of 2007), domestic sales of CompuDent systems declined 39% in the second quarter and 36% in the first half of 2006, when compared with the prior-year periods. On the other hand, second quarter domestic handpiece sales increased 15%, while international handpiece sales increased 92%.  Worldwide handpiece sales increased 17% in the six months ended June 30, 2006 over the same period in 2005.

As of June 30, 2006, Milestone's cash and cash equivalents approximated $2.0 million, and its working capital approximated $3.8 million.

"The decline in sales and profitability during the second quarter reflects the Company's current focus on readying its new products for commercialization," stated Leonard Osser, Chief Executive Officer of Milestone Scientific Inc.  "Shortly after the end of our second quarter, Milestone received 510(k) Premarket Notification acceptance from the FDA for the marketing and sale of our CompuFlo(TM) Computer Controlled Infusion Pump. This represents a very important accomplishment in the commercialization process for CompuFlo, which we believe can deliver anesthesia and medicines more safely and effectively than current procedures in a large number of medical and dental applications.  Our goal is to enter into strategic marketing relationships with one or more industry-leading companies during the second half of 2006."

"We also are finalizing the development of our Single Tooth Anesthesia (STA) delivery system, which incorporates our CompuFlo technology and has the potential to greatly expand the market appeal of our dental product line," continued Osser.  "By allowing dentists to achieve total tooth anesthesia with a predictable single-tooth injection, the STA can enhance patient comfort, while eliminating collateral numbness and other unpleasant side effects of currently used injection techniques.  By integrating our CompuFlo pressure feedback technology into the CompuDent platform, we have essentially 'repositioned' CompuDent as our new STA system -- an anesthetic delivery system that is not technique-dependent in its administration.  We have targeted the first quarter of 2007 for commercial launch of this new STA system."

"While we are disappointed to report continued losses during this period of transition, management has implemented a cost-control program in order to allocate corporate and financial resources in the most efficient manner. Although this strategy has negatively impacted sales of our current products, we are confident that our new products and technologies will address expanded market opportunities," concluded Osser.

The Company will host a conference call on Monday, August 14, 2006 at 4:30 p.m. EDT to discuss its second quarter operating results.  The dial-in number for the conference call is 888-889-5345 (international/local participants dial 973-935-8516) and referencing the Access Code 7734099. Parties interested in participating in the conference call should dial in approximately five minutes before 4:30 p.m. EDT.  A replay of the call will be available from two hours after the conclusion of the conference call until August 21, 2006 by dialing 877-519-4471 (international/local callers dial 973-341-3080) and entering the Access Code 7734099.

About Milestone Scientific Inc.

Milestone Scientific Inc. is the developer, manufacturer and marketer of CompuMed(R) and CompuDent(R) computer controlled local anesthetic delivery systems. These systems comprise a microprocessor controlled drive unit as well as The Wand(R) handpiece, a single patient use product that is held in a pen-like manner for injections.  The Company also sells the SafetyWand(R), which incorporates engineered sharps injury protection features to aid in the prevention of accidental needlesticks.  Milestone has also developed proprietary consumer (Ionic White) and professional (CoolBlue) teeth whitening systems that were introduced to the market in early 2005.

Milestone has also received broad United States patent protection on CompuFlo(TM), an enabling technology for computer controlled, pressure sensitive infusion, perfusion, suffusion and aspiration that provides real time displays of pressures, fluid densities and flow rates.  CompuFlo advances the delivery to and/or removal from patients of local anesthesia, medications and other fluids, and the Company is pursuing market opportunities in a variety of medical and dental applications.

The Company is headquartered in Livingston, New Jersey, and its common stock trades on the American Stock Exchange under the symbol "MSS".

This press release contains forward-looking statements regarding the timing and financial impact of the Milestone's ability to implement its business plan, expected revenues and future success.  These statements involve a number of risks and uncertainties and are based on assumptions involving judgments with respect to 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 Milestone's control. Some of the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements are general economic conditions, failure to achieve expected revenue growth, changes in our operating expenses, adverse patent rulings, FDA or legal developments, competitive pressures, changes in customer and market requirements and standards, and the risk factors detailed from time to time in Milestone's periodic filings with the Securities and Exchange Commission, including without limitation, Milestone's Annual Report on Form 10-KSB for the year ended December 31, 2005.  The forward looking-statements in this press release are based upon management's reasonable belief as of the date hereof. Milestone undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

  CONTACT

  Leonard Osser, CEO
  Milestone Scientific Inc.
  [phone]; [phone] (Fax)
  Web site: http://www.milesci.com/



                        MILESTONE SCIENTIFIC INC.
                         CONDENSED BALANCE SHEETS

                                          June 30, 2006   December 31, 2005*
                                           (Unaudited)
                       ASSETS
  Current Assets:
    Cash and cash equivalents               $1,999,019        $2,892,679
    Accounts receivable , net of
     allowance for doubtful accounts of
     $17,150 in 2006 and $27,117 in 2005       504,394           347,065
    Royalty receivable                          49,473           185,702
    Inventories                              1,285,771         1,371,354
    Advances to contract manufacturer        1,116,111         1,019,663
    Deferred debt financing costs, net
    Prepaid expenses                            85,917           109,691
       Total current assets                  5,040,685         5,926,154
  Investment in distributor, at cost            76,319            76,319
  Equipment, net of accumulated
   depreciation of $355,452 in 2006 and
   $307,000 in 2005                            496,432           536,295
  Patents, net of accumulated
   amortization of $30,514 in 2006 and
   $19,090 in 2005                             496,755           486,635
  Other assets                                  19,169            24,197
       Total assets                         $6,129,360        $7,049,600

         LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities:
    Accounts payable                        $1,031,554          $508,044
    Accrued expenses                           177,849           223,350
    Deferred compensation payable to
     officers                                  108,332
      Total current liabilities              1,317,735           731,394


  Stockholders' Equity
    Common stock, par value $.001;
     authorized 50,000,000 shares;
     11,594,547 shares issued, 207,726 shares
     to be issued, and 11,561,214 shares
     outstanding in 2006; 11,550,479
     shares issued, 207,726 shares to be
     issued, and 11,517,146 shares
     outstanding in 2005                        11,803            11,758
    Additional paid-in capital              57,305,883        57,172,915
    Accumulated deficit                    (51,594,545)      (49,954,951)
    Treasury stock, at cost,
     33,333 shares                            (911,516)         (911,516)
       Total stockholders' equity            4,811,625         6,318,206
         Total liabilities and
          stockholders' equity              $6,129,360        $7,049,600

   See Notes to Condensed Financial Statements
   * Derived from the audited financial statements as of December 31, 2005



                          MILESTONE SCIENTIFIC INC.
                      CONDENSED STATEMENTS OF CASH FLOWS
                   SIX MONTHS ENDED JUNE 30, 2006 AND 2005
                                 (Unaudited)

                                                 2006              2005
   Cash flows from operating
    activities:
   Net loss                                  $(1,639,594)      $(1,668,733)
   Adjustments to reconcile net loss to
    net cash used in operating
    activities:
     Depreciation expense                         48,661            49,700
     Amortization of patents                      11,424             7,053
     Common stock and options issued for
      compensation, consulting,
      and vendor services                        133,013           263,629
     Loss on disposal                              1,918
     Bad debt (recovery) expense                 (19,957)           11,769
     Changes in operating assets and
      liabilities:
       Increase in accounts receivable          (137,372)         (148,377)
       Decrease (increase) in royalty
        receivable                               136,229          (219,210)
       Decrease (increase) in inventories         85,583          (114,026)
       Increase in advances to contract
        manufacturer                             (96,448)         (258,182)
       Decrease  in prepaid expenses              23,774             7,976
       Decrease in other assets                    5,028             3,138
       Increase (decrease) in accounts
        payable                                  523,510          (117,179)
       (Decrease) increase  in accrued
        expenses                                 (45,501)          215,675
       Increase in deferred compensation         108,332            75,000
         Net cash used in operating
          activities                            (861,400)       (1,891,767)

   Cash flows from investing
    activities:
     Payment for capital expenditures            (10,716)          (19,462)
     Payment for patent rights                   (21,544)         (145,000)
         Net cash used in investing
          activities                             (32,260)         (164,462)

   Cash flows from financing
    activities:
     Proceeds from equity financing, net              --         3,528,037
       Net cash provided by financing
        activities                                    --         3,528,037

   NET (DECREASE) INCREASE IN CASH AND
    CASH EQUIVALENTS                            (893,660)        1,471,808
   Cash and cash equivalents at
    beginning of period                        2,892,679         3,041,306
   Cash and cash equivalents at end of
    period                                    $1,999,019        $4,513,114

     Supplemental disclosure of cash flow
      information:
     Cash paid during the period for
      interest                                       $--               $--

   See Notes to Condensed Financial Statements



                          MILESTONE SCIENTIFIC INC.
                       CONDENSED STATEMENTS OF OPERATIONS
              THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
                                 (Unaudited)

                             Three Months Ended        Six Months Ended
                            June 30,    June 30,     June 30,     June 30,
                              2006        2005         2006         2005

   Product sales, net      $1,425,821  $1,456,731   $2,986,740   $2,914,634
   Royalty income              49,473     219,210      186,310      219,210
   Total revenue            1,475,294  $1,675,941    3,173,050    3,133,844

   Cost of products sold      688,124     538,604   $1,439,286    1,253,310
   Royalty expense              5,637      26,305       22,057       26,305
   Total cost of revenue      693,761     564,909    1,461,343    1,279,615

   Gross profit               781,533   1,111,032    1,711,707    1,854,229

   Selling, general and
    administrative
    expenses                1,369,497   1,854,562    2,849,212    3,456,255
   Research and
    development expenses      390,741      69,844      554,183      101,389
   Total operating
    expenses                1,760,238   1,924,406    3,403,395    3,557,644

   Loss from operations      (978,705)   (813,374)  (1,691,688)  (1,703,415)

   Other income
     Interest income           24,690      23,584       52,094       34,682
     Total other income        24,690      23,584       52,094       34,682

   Net loss                  (954,015)   (789,790)  (1,639,594)  (1,668,733)

   Dividends applicable to
    preferred stock                --        (507)          --       (1,014)
   Net loss applicable to
    common stockholders     $(954,015)  $(790,297) $(1,639,594) $(1,669,747)

   Loss per share
    applicable to common
    stockholders -
   basic and diluted           $(0.08)     $(0.07)      $(0.14)      $(0.16)

   Weighted average shares
    outstanding and to be
    issued - basic and
    diluted                11,768,940  10,931,052   11,755,335   10,410,451

   See Notes to Condensed Financial Statements


DATASOURCE: Milestone Scientific Inc.



CONTACT:  Leonard Osser, CEO of Milestone Scientific Inc.,

[phone], or fax, [phone]



Web site:  http://www.milesci.com/ 

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