Milestone Scientific third quarter total revenues increase to $1.93 million

Milestone Scientific Inc.Nov 15 2010

Milestone Scientific Inc. (OTC BB: MLSS), the recognized leader in advanced, computer-controlled drug delivery technologies, announces its financial results for the third quarter and nine months ended September 30, 2010.

“During the third quarter we implemented a number of refinements to our domestic sales strategy, the positive results, of which, have already begun to take hold. We expect these changes will significantly increase the amount of instruments, and more importantly, disposables in the market.”

Financial Highlights for the Third Quarter 2010 vs. Third Quarter 2009 Include:

• Total revenues were $1.93 million compared with $1.91 million in the year-ago quarter;
  
  • Total instrument sales of $427,000 compared with $512,000 in the year-ago quarter
  • Sales of disposable handpieces for the quarter were $1.48 million compared with $1.37 million in the year-ago quarter, an increase of $104,000, or 7.6%
  • International sales were $1.06 million, a 40% increase over last year's sales of $758,000
  • Domestic sales of $866,000 compared with $1.15 million in the year-ago quarter. The decrease in domestic sales incorporates the Company's planned reduction in its sales force in 2009. In 2010 the company implemented a new sales strategy involving the deployment of a professionally trained group of independent hygienists to train, educate and sell its customers.
• Gross profit margin was 62.3% for the quarter compared with 62.9% last year's third quarter
• Total operating expenses of $1.77 million compared with $1.54 million in the year-ago third quarter
  
  • Selling, general and administrative expenses were $1.70 million compared with $1.48 million in the year-ago quarter
  • Research and development expenses were $61,000 compared with $58,000 for the year-ago third quarter
• Net loss for the quarter was $584,000 or $0.04 per diluted share, compared with a net loss of $373,000 or $0.03 per diluted share during last year's third quarter
• Net cash decreased during the third quarter 2010 by $612,000. This reduction in cash is due primarily to the advances to contract manufacturers related to the China purchase order of 12,000 instruments.

Financial Highlights for the Nine Months 2010 vs. Nine Months 2009 Include:

• Total revenues were $7.71 million compared with $6.16 million in the year-ago nine month period;
  
  • Total instrument sales were $2.85 million compared with $2.11 million in the year-ago nine month period, an increase of $738,000 or 34.9%
  • Sales of disposable handpieces for the nine months were $4.78 million, compared with $3.97 million, an increase of $813,000 or 20.5%
  • International sales were $4.38 million for the nine months, more than double last year's sales of $2.11 million
  • Domestic sales of $3.33 million for the nine months compared with $4.04 million last year. The decrease in domestic sales is a result of the Company's planned reduction in its domestic sales force in 2009, and lowered advertising expenditures, as management implemented its new sales strategy focused on concentrated geographical sales efforts and the deployment of professionally trained independent hygienists to support its sales efforts.

• Gross profit margin was 63.8% for the nine months compared with 59.5% for last year's comparable period
• Total operating expenses of $5.25 million compared with $5.12 million in the nine-month period
  
  • Selling, general and administrative expenses were $5.02 million compared with $4.96 million in the year-ago period
  • Research and development expenses were $229,000 compared with $158,000 for the year-ago period
• Net loss for the nine months was $319,000 or $0.02 per diluted share, compared with a net loss of $1.59 million or $0.12 per diluted share during last year's nine-month period
• Net cash decreased during the nine months ended September 30, 2010 by $821,000. This is primarily attributable to the advances to contract manufacturers related to the China purchase order of 12,000 instruments.

As of September 30, 2010, Milestone had $2.3 million in cash, cash equivalents and accounts receivables, working capital of $1.96 million and total shareholders' equity of $2.81 million. Additionally, advances to contract manufacturers increased by $1.7 million from December 31, 2009 as the Company prepared for the production and shipment of instruments relating to the 12,000 unit China purchase order. This advanced payment reduced our cash on hand by approximately $900,000 for the nine-month period.

Leonard Osser, Chief Executive Officer of Milestone Scientific said, "During the third quarter we implemented a number of refinements to our domestic sales strategy, the positive results, of which, have already begun to take hold. We expect these changes will significantly increase the amount of instruments, and more importantly, disposables in the market."

Joseph D'Agostino, Chief Financial Officer said, "In order for us to market to large dental practices in the United States, it is imperative that we have a strong customer service/education team. Our team of professionally trained independent dental hygienists, which now number more than thirty, is responsible for selling our STA Single Tooth Anesthesia System® directly to dental offices in key markets throughout the United States and Canada. Our hygienists sell the product and also provide training and hands-on support to our customers, adding significant depth and strength as we market to the larger dental chains. This team, along with our proven management in this sector, is expected to produce improved results as we ramp up with additional hygienists. This enhanced support, we believe, will result in improved instrument sales and handpiece usage on the part of both individual dentists and dental groups. We expect this strategy to produce measurable results beginning in the fourth quarter of this year."

He added, "We have begun investing efforts and capital in our sales and marketing to support the growth of our instruments and disposables in the domestic market. Towards that end, we hired Marvin Terrell as Director of Domestic Distribution, who is responsible for all U.S. and Canadian distribution and sales efforts. Marvin's impact on our new marketing strategy has already been taking hold, and we look forward to his continued contributions."

Mr. Osser continued, "On the international side of our business, we continue our efforts, and are benefiting from the strengthening of our distribution partners. We also continue to wait for regulatory approval in China to sell the STA Single Tooth Anesthesia System, and are not aware of any regulatory issues that would deter the sale of the product. We eagerly await the government's final decision, which would then enable our distribution partner to launch the product."

Mr. Osser concluded, "As we enter the final quarter of the year, we remain focused on our strategy of optimizing our sales and marketing efforts for our STA Single Tooth Anesthesia System, and identifying and pursuing strategic collaborations in order to jointly develop new products that utilize our patented CompuFlo system's pressure force technology. Our recently announced agreement with Ordway Research Institute is a prime example of how our technology can be used for novel new medical applications that provide us the platform to become a participant in the burgeoning medical markets. We remain confident that we have implemented strategies that will result in continued growth in the dental market, and also enable us to identify and seek additional opportunities that will expand our portfolio of products into other areas of the medical industry."