{"url_path":"/sec/mlss/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/855683/0001493152-26-022701-index.html","accession_number":"0001493152-26-022701","cik":"0000855683","ticker":"MLSS","issuer_name":"MILESTONE SCIENTIFIC INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/855683/0001493152-26-022701-index.html","primary_entity_key":"0000855683","primary_entity_name":"MILESTONE SCIENTIFIC INC."},"word_count":1517,"has_tables":true,"body_markdown":"**Item\n1A. Risk Factors**\n\n \n\nExcept\nas disclosed below, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A, of our 2025 Annual\nReport.\n\n \n\n**Our\nability to continue as a going concern may adversely affect our business**\n\n \n\nThe\nCompany has incurred significant losses since its inception and continues to experience operating losses. Although operating performance\nimproved during the three months ended March 31, 2026, including positive operating cash flow, there can be no assurance that the Company\nwill sustain profitability or positive cash flows in future periods. As of March 31, 2026, the Company had limited cash resources, and\nthese conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company may need to raise\nadditional capital through equity or debt financings, and such financing may not be available on acceptable terms, or at all.\n\n \n\n**We\nare dependent on our dental product line for the majority of our revenue**\n\n** **\n\nA\nsignificant portion of the Company’s revenue is derived from its dental products, particularly the STA Single Tooth Anesthesia\nSystem® and related handpieces. Any decline in demand, increased competition, pricing pressures, or disruption in distribution channels\nfor these products could have a material adverse effect on the Company’s financial condition and results of operations.\n\n** **\n\n**Our\nmedical product commercialization efforts may not achieve the expected adoption**\n\n \n\nThe Company is in the process of expanding the commercialization\nof its medical products, including the CompuFlo® Epidural Computer Controlled Anesthesia System. While the Company has obtained 510(k)\nclearance from the FDA, CE mark approval for European markets, and a Category III CPT code to support reimbursement submissions, adoption\nby healthcare providers may take longer than expected and the Company has maintained a material allowance against slow-moving Medical\nfinished goods inventory as a result. Factors such as continued reimbursement uncertainty, clinician adoption rates, competition, and\nsales execution capacity may further limit the Company’s ability to generate meaningful revenue from its medical segment, and there\ncan be no assurance that the Company’s investment in medical inventory and commercialization efforts will be recovered.\n\n \n\n25\n\n \n\n \n\n**Changes\nto United States tariff and import/export regulations may have a material adverse effect on our business, financial condition and results\nof operations.**\n\n \n\nThe\nUnited States has recently enacted and proposed to enact significant new tariffs, and President Trump has directed various federal agencies\nto evaluate key aspects of U.S. trade policy further. There have been and are ongoing discussions and commentaries regarding potential\nsignificant changes to U.S. trade policies, treaties and tariffs. There exists significant uncertainty about the future relationship\nbetween the U.S. and other countries with respect to such trade policies, treaties and tariffs. These developments, or the perception\nthat any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial\nmarkets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. We source important\nelements used in our products from China. We have significant sales in jurisdictions outside the United States. Any of these factors\ncould depress economic activity and restrict our access to suppliers or customers and have a material adverse effect on our business,\nfinancial condition and results of operations.\n\n \n\n**Government\nAction on tariffs, research grants, and other funding may impede our ability to conduct our research and to raise capital.**\n\n \n\nFederal government actions to impose tariffs and limit\nresearch grants and other funding, including funding for universities and research enterprises, may cause disruption to our business.\nTo the extent the Company seeks to invest in product enhancements or next-generation development, including further advancement of the\nCompuFlo® Epidural platform, government actions that constrain collaborative research funding may reduce the pool of available research\npartners and increase the cost and difficulty of such efforts. In addition, tariffs are likely to increase the cost of doing business,\nparticularly given the Company’s reliance on Chinese manufacturers for handpieces and other key components, and reduced research funding\nmay make it more difficult for the Company to attract capital from investors who consider the availability of funded development partners\nas part of their investment analysis.\n\n \n\n**We\nare subject to risks related to international operations and geopolitical conditions**\n\n \n\nThe\nCompany generates a meaningful portion of its revenue from international markets through a global distribution network spanning more\nthan 30 countries. International operations are subject to risks including economic instability, regulatory changes, supply chain disruptions,\nand geopolitical events. For example, ongoing geopolitical tensions, including conflicts in Eastern Europe and the Middle East, have\ndisrupted certain markets served by the Company’s international distributors and may adversely impact demand, distribution, and\nrevenue in affected regions. Continued or escalating geopolitical instability could further negatively impact the Company’s international\nsales.\n\n \n\nOur business is subject to significant risks arising\nfrom our dual exposure to China as both a manufacturing source and a sales market.\n\n \n\nThe Company relies on Chinese third-party manufacturers\nfor a substantial portion of its products and also previously generated revenue from Chinese distributors. During the three months ended\nMarch 31, 2026, revenue from China declined to $0, compared to $110,000 in the prior period. Simultaneously, escalating U.S.-China\ntrade tensions and newly imposed tariffs have increased the cost of sourcing products and components from China. This dual exposure -\nreduced revenue from Chinese customers and increased costs from Chinese suppliers - may materially and adversely affect our results of\noperations. Furthermore, regulatory actions by either the U.S. or Chinese government, including export controls, retaliatory trade measures,\nrestrictions on technology transfer, or sanctions, could further disrupt our supply chain or eliminate our ability to sell into the Chinese\nmarket entirely. Any such developments could have a material adverse effect on our business, financial condition, and results of operations.\n\n \n\nO**ur\noperating results may fluctuate due to changes in product mix and demand**\n\n \n\nThe\nCompany’s results of operations may fluctuate from period to period due to changes in product mix, including variations between\ninstrument and handpiece sales, as well as geographic demand. Shifts in product mix, pricing, or customer purchasing patterns may impact\non gross margins and overall profitability.\n\n \n\n**We\nrely on key personnel and consultants**\n\n \n\nThe\nCompany’s success depends in part on the continued services of key executives, consultants, and technical personnel. The loss of\nkey individuals or the inability to attract and retain qualified personnel could adversely affect the Company’s ability to execute\nits business strategy, maintain key relationships, and advance its commercialization efforts.\n\n \n\n**Our common stock may be delisted from NYSE American\nif we fail to regain compliance with continued listing standards by April 8, 2027.**\n\n** **\n\nOur common stock is listed on NYSE American under\nthe symbol “MLSS.” On October 8, 2025, the Company received a written notice from NYSE American stating that it is not in compliance\nwith the continued listing standards set forth in Sections 1003(a)(ii) and 1003(a)(iii) of the NYSE American Company Guide, which require\nminimum stockholders’ equity of $4 million and $6 million, respectively, for companies with sustained operating losses. As of March 31,\n2026, the Company’s total stockholders’ equity was approximately $2.3 million - below both thresholds - and the Company has reported net\nlosses in each of the past five fiscal years. The Company submitted a plan of compliance to NYSE American and has been permitted to continue\nlisting during the plan period, subject to periodic review. The compliance deadline is April 8, 2027. While the April 2026 Private Placement\nincreased the Company’s stockholders’ equity and liquidity, the Company cannot assure that it will achieve the required equity thresholds\nwithin the required timeframe, particularly given its ongoing operating losses and going concern uncertainty. If NYSE American initiates\ndelisting proceedings, the liquidity and market price of our common stock would likely be materially and adversely affected, and our ability\nto raise additional capital through equity or debt financing - which we may need to fund continuing operations - would be significantly\nimpaired.\n\n \n\n**Our April 2026 private placement and outstanding\nconvertible instruments create significant dilution risk for existing stockholders.**\n\n** **\n\nIn April 2026, the Company issued 7,962,963 units\nin a private placement at $0.27 per unit, each consisting of one share of common stock and one warrant to purchase one share of common\nstock at an exercise price of $0.3375, exercisable for three years. This issuance increased the Company’s outstanding shares by approximately\n10%. If all warrants are exercised, existing stockholders would experience an additional approximately 10% dilution, generating up to\napproximately $2.69 million in gross proceeds. In addition, following the partial conversion of $351,000 of principal in connection with\nthe private placement, the Company has approximately $449,000 in aggregate outstanding principal under its Convertible Notes, which\nare convertible into shares of common stock at the option of the holders or the Company at a conversion price not less than $0.50 per\nshare. Given the Company’s recurring operating losses and going concern uncertainty, we may need to pursue additional equity or debt financings\nin the future, which would further dilute existing stockholders. Cumulative dilution from these instruments and any future financings\nmay depress the trading price of our common stock and adversely affect stockholder value."}